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Bright Horizons Family Solutions Reports Fourth Quarter and Full Year 2016 Financial Results

February 9, 2017 4:27 PM

WATERTOWN, MA -- (Marketwired) -- 02/09/17 -- Bright Horizons Family Solutions® Inc. (NYSE: BFAM), a leading provider of high-quality child care, early education and other services designed to help employers and families better address the challenges of work and family life, today announced financial results for the fourth quarter and full year of 2016 and provided guidance for the full year of 2017.

Fourth Quarter 2016 Highlights (compared to fourth quarter 2015):

Non-GAAP measures

Year Ended December 31, 2016 Highlights (compared to year ended December 31, 2015):

Non-GAAP measures

"We are pleased to report strong financial results for the fourth quarter and the full year of 2016," said David Lissy, Chief Executive Officer. "Recent studies have shown that more and more young workers say that choosing the right employer is a key part of family planning. At Bright Horizons, we are leading the way in providing our employer clients and the working families that we serve across the world with the critical supports they need to successfully integrate work and life, and maximize their productivity."

"Our solid financial results in 2016 reflects the continued investments that we have made in the people and systems needed to strengthen our position as the leading provider in our field. Our deep commitment and long history of delivering high quality care, education and service allows us to grow and thrive as we engage employees through critical life stages in our broad suite of solutions. We are well positioned to continue to deliver on our growth plan in 2017," added Lissy.

Fourth Quarter 2016 Results

Revenue increased $26.9 million, or 7%, in the fourth quarter of 2016 from the fourth quarter of 2015 on contributions from new and ramping full service child care centers, average price increases of 3-4%, and expanded sales of back-up dependent care and educational advisory services.

Income from operations was $47.3 million for the fourth quarter of 2016 compared to $44.9 million in the same 2015 period, an increase of 6%, primarily due to an increase in gross profit, partially offset by increases in selling, general and administrative expenses including fees incurred to complete the refinancing of our debt in November 2016. The increase in gross profit and income from operations reflects operating leverage from enrollment gains in mature and ramping centers, contributions from new child care centers, new clients in the back-up dependent care and educational advisory services that have been added since the fourth quarter of 2015, and strong cost management. These contributions are partially offset by the costs during the ramp-up of certain new lease/consortium centers opened during 2015 and 2016, and ongoing investments in systems and personnel to support the delivery of our services. Net income was $17.1 million for the fourth quarter of 2016 compared to net income of $23.9 million in 2015, a decrease of 28.4%, due to the $11.1 million loss on extinguishment of debt related to the November 2016 debt refinancing. Diluted earnings per common share was $0.28 compared to $0.39 in the fourth quarter of 2015.

In the fourth quarter of 2016, adjusted EBITDA increased $8.3 million, or 12%, to $76.4 million, and adjusted income from operations increased $3.8 million, or 9%, to $49.1 million, from the fourth quarter of 2015, due primarily to the expanded gross profit. Adjusted net income increased by $4.7 million, or 17%, to $33.5 million as compared to the fourth quarter of 2015, on the expanded income from operations. Diluted adjusted earnings per common share increased 19% from $0.47 in the fourth quarter of 2015 to $0.56 in the fourth quarter of 2016.

As of December 31, 2016, the Company operated 1,035 early care and education centers with the capacity to serve 115,000 children and families.

*Adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share are non-GAAP measures. Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, straight line rent expense, stock-based compensation expense, expenses related to secondary offerings and debt financing transactions, and expenses associated with completed acquisitions. Adjusted income from operations represents income from operations before expenses related to the completion of secondary offerings and debt financing transactions, and expenses associated with completed acquisitions. Adjusted net income represents net income determined in accordance with GAAP, adjusted for stock-based compensation expense, amortization expense, secondary offering expenses, debt financing transaction expenses, expenses associated with completed acquisitions and the income tax provision (benefit) thereon. Diluted adjusted earnings per common share is a non-GAAP measure, calculated using adjusted net income. These non-GAAP measures are more fully described and are reconciled from the respective measures determined under GAAP in "Presentation of Non-GAAP Measures" and the attached table "Bright Horizons Family Solutions Inc. Non-GAAP Reconciliations."

Balance Sheet and Cash Flow

For the year ended December 31, 2016, the Company generated approximately $211.5 million of cash flows from operations compared to $170.1 million in 2015, and invested $302.8 million in fixed assets and acquisitions compared to $155.4 million in 2015. Net cash provided by financing activities totaled $93.8 million in 2016 compared to $90.6 million used in 2015. In 2016, the Company repurchased a total of 1.7 million shares of common stock for $112.8 million compared to a total of 2.2 million shares of common stock for $128.1 million repurchased in 2015. During the year ended December 31, 2016, the Company's cash and cash equivalents grew $1.3 million to $12.9 million.

2017 Outlook

As described below, the Company is providing certain financial guidance. For the full year 2017, the Company currently expects:

For a reconciliation, refer to the attached table "Bright Horizons Family Solutions Inc. Non-GAAP Reconciliations."

Conference Call

Bright Horizons Family Solutions will host an investor conference call today at 5:00 pm ET. Interested parties are invited to listen to the conference call by dialing 1-877-407-9039 or, for international callers, 1-201-689-8470, and asking for the Bright Horizons Family Solutions conference call, moderated by Chief Executive Officer David Lissy. Replays of the entire call will be available through February 23, 2017 at 1-844-512-2921 or, for international callers, at 1-412-317-6671, conference ID #13652937. The webcast of the conference call, including replays, and a copy of this press release are also available through the Investor Relations section of the Company's web site, www.brighthorizons.com.

Forward-Looking Statements

This press release includes statements that express the Company's opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, "forward-looking statements." The Company's actual results may vary significantly from the results anticipated in these forward-looking statements, which can generally be identified by the use of forward-looking terminology, including the terms "believes," "expects," "may," "will," "should," "seeks," "projects," "approximately," "intends," "plans," "estimates" or "anticipates," or, in each case, their negatives or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies, the industries in which we and our partners operate, our service offerings, and our 2017 financial guidance. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company believes that these risks and uncertainties include, but are not limited to, changes in the demand for child care and other dependent care services, including variation in enrollment trends and lower than expected demand from employer sponsor clients; the possibility that acquisitions may disrupt our operations and expose us to additional risk; our ability to pass on our increased costs; our indebtedness and the terms of such indebtedness; our ability to withstand seasonal fluctuations in the demand for our services; our ability to implement our growth strategies successfully; and other risks and uncertainties more fully described in the "Risk Factors" section of our Annual Report on Form 10-K filed February 29, 2016, and other filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the time of this release and we do not undertake to publicly update or revise them, whether as a result of new information, future events or otherwise, except as required by law.

Presentation of Non-GAAP Measures

In addition to the results provided in accordance with U.S. generally accepted accounting principles ("GAAP") throughout this press release, the Company has provided non-GAAP measurements -- adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share -- which present operating results on a basis adjusted for certain items. The Company uses these non-GAAP measures as key performance indicators for the purpose of evaluating performance internally, and in connection with determining incentive compensation for Company management, including executive officers. Adjusted EBITDA is also used in connection with the determination of certain ratio requirements under our credit agreement. We also believe these non-GAAP measures provide investors with useful information with respect to our historical operations. These non-GAAP measures are not intended to replace, and should not be considered superior to, the presentation of our financial results in accordance with GAAP. The use of the terms adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures. Adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share are reconciled from the respective measures under GAAP in the attached table "Bright Horizons Family Solutions Inc. Non-GAAP Reconciliations."

Guidance for non-GAAP financial measures excludes stock-based compensation, amortization of intangible assets, expenses related to the completion of secondary offerings and debt financing transactions, and expenses associated with completed acquisitions as well as tax effects associated with these items. The adjustments to net income and diluted earnings per common share in future periods are generally expected to be similar to the types of charges and costs excluded from adjusted net income and adjusted diluted earnings per common share in prior quarters. The exclusion of these charges and costs in future periods will have an impact on the Company's adjusted net income and adjusted diluted earnings per common share. The Company does not include potential expenses related to the completion of future secondary offerings and debt financing transactions, or expenses associated with completed acquisitions and the tax effects associated with these items in either the Company's non-GAAP financial guidance or in the corresponding GAAP measures because of the inherent difficulty in forecasting and quantifying such expenses due to the uncertainty and variability of the nature and amount of these future charges and costs.

About Bright Horizons Family Solutions® Inc.

Bright Horizons Family Solutions® is a leading provider of high-quality child care, early education and other services designed to help employers and families better address the challenges of work and family life. The Company provides center-based full service child care, back-up dependent care and educational advisory services to more than 1,100 clients across the United States, the United Kingdom, Ireland, the Netherlands, Canada and India, including 150 FORTUNE 500 companies and more than 80 of Working Mother magazine's 2016 "100 Best Companies for Working Mothers." Bright Horizons has been recognized 16 times as one of FORTUNE magazine's "100 Best Companies to Work For" and is one of the UK's Best Workplaces as designated by the Great Place to Work® Institute. Bright Horizons is headquartered in Watertown, MA. The Company's web site is located at www.brighthorizons.com.

                                                                            
                    BRIGHT HORIZONS FAMILY SOLUTIONS INC.                   
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME                
                      (In thousands, except share data)                     
                                 (Unaudited)                                
                                                                            
                                                                            
                                        Three Months Ended December 31,     
                                   -----------------------------------------
                                       2016        %        2015        %   
                                   -------------------- --------------------
Revenue                            $   398,537  100.0%  $   371,596  100.0% 
Cost of services                       299,321   75.1%      281,693   75.8% 
                                   -------------------- --------------------
  Gross profit                          99,216   24.9%       89,903   24.2% 
Selling, general and                                                        
 administrative expenses                43,564   10.9%       38,010   10.2% 
Amortization of intangible assets        8,304    2.0%        7,011    1.8% 
                                   -------------------- --------------------
  Income from operations                47,348   12.0%       44,882   12.2% 
Loss on extinguishment of debt         (11,117)  (2.8)%           -      -% 
Interest expense - net                 (11,434)  (3.0)%     (10,732)  (3.0)%
                                   -------------------- --------------------
  Income before income taxes            24,797    6.2%       34,150    9.2% 
Income tax expense                      (7,677)  (1.9)%     (10,232)  (2.8)%
                                   -------------------- --------------------
  Net income                       $    17,120    4.3%  $    23,918    6.4% 
                                   ==================== ====================
Earnings per common share:                                                  
  Common stock - basic             $      0.29          $      0.40         
  Common stock - diluted           $      0.28          $      0.39         
Weighted average number of common                                           
 shares outstanding:                                                        
  Common stock - basic              58,936,701           60,005,507         
  Common stock - diluted            60,168,025           61,548,783         
                                                                            
                    BRIGHT HORIZONS FAMILY SOLUTIONS INC.                   
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME                
                      (In thousands, except share data)                     
                                 (Unaudited)                                
                                                                            
                                                                            
                                            Years Ended December 31,        
                                   -----------------------------------------
                                       2016        %        2015        %   
                                   -------------------- --------------------
Revenue                            $ 1,569,841  100.0%  $ 1,458,445  100.0% 
Cost of services                     1,178,994   75.1%    1,100,690   75.5% 
                                   -------------------- --------------------
  Gross profit                         390,847   24.9%      357,755   24.5% 
Selling, general and                                                        
 administrative expenses               163,967   10.4%      148,164   10.2% 
Amortization of intangible assets       29,642    1.9%       27,989    1.9% 
                                   -------------------- --------------------
  Income from operations               197,238   12.6%      181,602   12.4% 
Loss on extinguishment of debt         (11,117)  (0.7)%           -      -% 
Interest expense - net                 (42,924)  (2.7)%     (41,446)  (2.8)%
                                   -------------------- --------------------
  Income before income taxes           143,197    9.2%      140,156    9.6% 
Income tax expense                     (48,437)  (3.1)%     (46,229)  (3.2)%
                                   -------------------- --------------------
  Net income                       $    94,760    6.1%  $    93,927    6.4% 
                                   -------------------- --------------------
Earnings per share:                                                         
  Common stock - basic             $      1.59          $      1.53         
  Common stock - diluted           $      1.55          $      1.50         
Weighted average number of common                                           
 shares outstanding:                                                        
  Common stock - basic              59,229,069           60,835,574         
  Common stock - diluted            60,594,895           62,360,778         
                                                                            
                    BRIGHT HORIZONS FAMILY SOLUTIONS INC.                   
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                               (In thousands)                               
                                 (Unaudited)                                
                                                                            
                                                                            
                                                           December 31,     
                                                     -----------------------
                                                         2016        2015   
                                                     ----------- -----------
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents                          $    12,856 $    11,539
  Accounts receivable - net                               97,212      97,295
  Prepaid expenses and other current assets               49,985      43,879
                                                     ----------- -----------
    Total current assets                                 160,053     152,713
Fixed assets - net                                       529,432     429,736
Goodwill                                               1,271,366   1,147,809
Other intangibles - net                                  374,566     389,331
Other assets                                              32,915      30,952
                                                     ----------- -----------
    Total assets                                     $ 2,368,332 $ 2,150,541
                                                     =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
Current liabilities:                                                        
  Current portion of long-term debt                  $    10,750 $     9,550
  Borrowings on revolving line of credit                  76,000      24,000
  Accounts payable and accrued expenses                  127,284     114,776
  Deferred revenue and other current liabilities         182,861     157,017
                                                     ----------- -----------
    Total current liabilities                            396,895     305,343
Long-term debt - net                                   1,054,009     905,661
Deferred income taxes                                    111,711     113,100
Other long-term liabilities                              117,850      98,829
                                                     ----------- -----------
    Total liabilities                                  1,680,465   1,422,933
                                                     ----------- -----------
    Total stockholders' equity                           687,867     727,608
                                                     ----------- -----------
    Total liabilities and stockholders' equity       $ 2,368,332 $ 2,150,541
                                                     =========== ===========
                                                                            
                    BRIGHT HORIZONS FAMILY SOLUTIONS INC.                   
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS              
                               (In thousands)                               
                                 (Unaudited)                                
                                                                            
                                                                            
                                                    Years Ended December 31,
                                                   -------------------------
                                                       2016         2015    
                                                   ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:                                       
Net income                                         $    94,760  $    93,927 
Adjustments to reconcile net income to net cash                             
 provided by operating activities:                                          
  Depreciation and amortization                         85,284       78,666 
  Loss on extinguishment of debt                        11,117            - 
  Stock-based compensation                              11,646        9,200 
  Deferred income taxes                                (12,121)        (758)
  Other non-cash adjustments - net                       5,936        6,902 
  Changes in assets and liabilities:                                        
    Accounts receivable                                    (78)     (13,340)
    Prepaid expenses and other current assets           (7,289)      (8,248)
    Accounts payable and accrued expenses                4,138       (6,448)
    Other - net                                         18,127       10,155 
                                                   ------------ ------------
      Net cash provided by operating activities        211,520      170,056 
                                                   ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:                                       
Purchases of fixed assets - net of disposals           (74,100)     (77,735)
Payments for acquisitions - net of cash acquired      (228,737)     (77.619)
                                                   ------------ ------------
      Net cash used in investing activities           (302,837)    (155,354)
                                                   ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:                                       
Line of credit - net                                    52,000       24,000 
Borrowings of long-term debt - net                   1,065,610            - 
Extinguishment of long-term debt                      (922,488)           - 
Payments for debt issuance costs                        (1,002)           - 
Payments of contingent consideration for                                    
 acquisitions                                             (914)           - 
Principal payments of long-term debt                    (7,163)      (9,550)
Purchase of treasury stock                            (112,792)    (128,103)
Proceeds from the issuance of common stock upon                             
 exercise of options                                    11,678        9,811 
Proceeds from the issuance of restricted stock           3,682        3,864 
Taxes paid related to the net share settlement of                           
 stock options                                          (7,747)           - 
Tax benefits from stock-based compensation              12,891        9,397 
                                                   ------------ ------------
      Net cash used in (provided by) financing                              
       activities                                       93,755      (90,581)
                                                   ------------ ------------
Effect of exchange rates on cash and cash                                   
 equivalents                                            (1,121)        (468)
                                                   ------------ ------------
      Net increase (decrease) in cash and cash                              
       equivalents                                       1,317      (76,347)
Cash and cash equivalents - beginning of period         11,539       87,886 
                                                   ------------ ------------
Cash and cash equivalents - end of period          $    12,856  $    11,539 
                                                   ============ ============
                                                                            
                   BRIGHT HORIZONS FAMILY SOLUTIONS INC.                    
                            SEGMENT INFORMATION                             
                               (In thousands)                               
                                (Unaudited)                                 
                                                                            
                                                         Other              
                              Full service  Back-up   educational           
Three months ended December   center-based dependent   advisory             
 31, 2016                         care        care     services      Total  
----------------------------- ------------ --------- ------------ ----------
Revenue                       $    330,566 $  54,097 $     13,874 $  398,537
Amortization of intangible                                                  
 assets                              7,729       431          144      8,304
Income from operations              28,109    15,879        3,360     47,348
Adjusted income from                                                        
 operations (1)                     29,826    15,879        3,360     49,065
                                                                            
Three months ended December                                                 
 31, 2015                                                                   
-----------------------------                                               
Revenue                       $    311,735 $  47,634 $     12,227 $  371,596
Amortization of intangible                                                  
 assets                              6,687       182          142      7,011
Income from operations              26,137    14,808        3,937     44,882
Adjusted income from                                                        
 operations (2)                     26,491    14,808        3,937     45,236
(1) Adjusted income from operations represents income from operations       
    excluding expenses incurred in connection with secondary offerings,     
    completed acquisitions and costs in connection with the November 2016   
    amendment to the Credit Agreement.                                      
(2) Adjusted income from operations represents income from operations       
    excluding expenses incurred in connection with secondary offerings and  
    completed acquisitions.                                                 
                                                                            
                                                         Other              
                              Full service  Back-up   educational           
                              center-based dependent   advisory             
Year ended December 31, 2016      care        care     services      Total  
----------------------------- ------------ --------- ------------ ----------
Revenue                       $  1,321,699 $ 200,106 $     48,036 $1,569,841
Amortization of intangibles                                                 
 assets                             27,862     1,204          576     29,642
Income from operations             129,693    57,620        9,925    197,238
Adjusted income from                                                        
 operations (1)                    132,178    57,620        9,925    199,723
                                                                            
Year ended December 31, 2015                                                
-----------------------------                                               
Revenue                       $  1,236,762 $ 181,574 $     40,109 $1,458,445
Amortization of intangibles                                                 
 assets                             26,690       725          574     27,989
Income from operations             115,149    56,891        9,562    181,602
Adjusted income from                                                        
 operations (2)                    116,014    56,891        9,562    182,467
(1) Adjusted income from operations represents income from operations       
    excluding expenses incurred in connection with secondary offerings,     
    completed acquisitions and costs in connection with the January and     
    November 2016 amendments to the Credit Agreement.                       
(2) Adjusted income from operations represents income from operations       
    excluding expenses incurred in connection with secondary offerings and  
    completed acquisitions.                                                 
                                                                            
                   BRIGHT HORIZONS FAMILY SOLUTIONS INC.                    
                          NON-GAAP RECONCILIATIONS                          
                     (In thousands, except share data)                      
                                (Unaudited)                                 
                                                                            
                             Three Months Ended                             
                                December 31,        Years Ended December 31,
                         ------------------------- -------------------------
                             2016         2015         2016         2015    
                         ------------ ------------ ------------ ------------
Net income               $    17,120  $    23,918  $    94,760  $    93,927 
Interest expense, net         11,434       10,732       42,924       41,446 
Income tax expense             7,677       10,232       48,437       46,229 
Depreciation                  14,890       13,116       55,642       50,677 
Amortization of                                                             
 intangible assets (a)         8,304        7,011       29,642       27,989 
                         ------------ ------------ ------------ ------------
  EBITDA                      59,425       65,009      271,405      260,268 
Additional adjustments:                                                     
Loss on extinguishment                                                      
 of debt (b)                  11,117            -       11,117            - 
Deferred rent (c)                948          432        2,562        2,736 
Stock-based compensation                                                    
 expense                       3,170        2,300       11,646        9,200 
Expenses related to                                                         
 Credit Agreement                                                           
 amendments, stock                                                          
 offerings, and                                                             
 completed acquisitions                                                     
 (d)                           1,717          354        2,485          865 
                         ------------ ------------ ------------ ------------
  Total adjustments           16,952        3,086       27,810       12,801 
                         ------------ ------------ ------------ ------------
  Adjusted EBITDA        $    76,377  $    68,095  $   299,215  $   273,069 
                         ============ ============ ============ ============
Income from operations   $    47,348  $    44,882  $   197,238  $   181,602 
Expenses related to                                                         
 Credit Agreement                                                           
 amendments, stock                                                          
 offerings, and                                                             
 completed acquisitions                                                     
 (d)                           1,717          354        2,485          865 
                         ------------ ------------ ------------ ------------
  Adjusted income from                                                      
   operations            $    49,065  $    45,236  $   199,723  $   182,467 
                         ============ ============ ============ ============
Net income               $    17,120  $    23,918  $    94,760  $    93,927 
Income tax expense             7,677       10,232       48,437       46,229 
                         ------------ ------------ ------------ ------------
  Income before tax           24,797       34,150      143,197      140,156 
Stock-based compensation                                                    
 expense                       3,170        2,300       11,646        9,200 
Amortization of                                                             
 intangible assets (a)         8,304        7,011       29,642       27,989 
Loss on extinguishment                                                      
 of debt (b)                  11,117            -       11,117            - 
Expenses related to                                                         
 Credit Agreement                                                           
 amendments, stock                                                          
 offerings, and                                                             
 completed acquisitions                                                     
 (d)                           1,717          354        2,485          865 
                         ------------ ------------ ------------ ------------
  Adjusted income before                                                    
   tax                        49,105       43,815      198,087      178,210 
Adjusted income tax                                                         
 expense (e)                 (15,650)     (15,109)     (67,350)     (62,819)
                         ------------ ------------ ------------ ------------
  Adjusted net income    $    33,455  $    28,706  $   130,737  $   115,391 
                         ============ ============ ============ ============
Weighted average number                                                     
 of common shares -                                                         
 diluted                  60,168,025   61,548,783   60,594,895   62,360,778 
                         ------------ ------------ ------------ ------------
  Diluted adjusted                                                          
   earnings per common                                                      
   share                 $      0.56  $      0.47  $      2.16  $      1.85 
                         ============ ============ ============ ============
                                                                            
                   BRIGHT HORIZONS FAMILY SOLUTIONS INC.                    
                          NON-GAAP RECONCILIATIONS                          
                     (In thousands, except share data)                      
                                (Unaudited)                                 
                                                                            
                                         Forward Guidance (g)               
                         ---------------------------------------------------
                          Three Months Ended March  Year Ended December 31, 
                                  31, 2017                    2017          
                         ------------------------- -------------------------
                              Low         High          Low         High    
                         ------------ ------------ ------------ ------------
Net income               $    26,000  $    26,600  $   122,000  $   124,000 
Adjustments:                                                                
  Stock-based                                                               
   compensation expense        3,000        3,000       13,000       14,000 
  Amortization of                                                           
   intangible assets (a)       8,000        8,250       32,000       33,000 
  Tax impact of                                                             
   adjustments (f)            (3,500)      (3,600)     (13,000)     (13,500)
                         ------------ ------------ ------------ ------------
  Adjusted net income    $    33,500  $    34,250  $   154,000  $   157,500 
                         ============ ============ ============ ============
                                                                            
Diluted earnings per                                                        
 common share            $      0.43  $      0.44  $      1.99  $      2.03 
Adjustments:                                                                
  Stock-based                                                               
   compensation expense         0.05         0.05         0.21         0.23 
  Amortization of                                                           
   intangible assets (a)        0.13         0.13         0.53         0.54 
  Tax impact of                                                             
   adjustments (f)             (0.06)       (0.06)       (0.21)       (0.22)
                         ------------ ------------ ------------ ------------
  Diluted adjusted                                                          
   earnings per common                                                      
   share                 $      0.55  $      0.56  $      2.52  $      2.58 
                         ============ ============ ============ ============
(a) Represents amortization of intangible assets, including approximately   
    $4.5 million for each of the three months ended December 31, 2016 and   
    2015, and approximately $18.1 million and $18.0 million for the years   
    ended December 31, 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 refinancing.                                          
(c) Represents rent 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 completed acquisitions,    
    secondary offerings of common stock, and the November and January 2016  
    amendments to the Credit Agreement.                                     
(e) Represents income tax expense calculated on adjusted income before tax  
    at the effective rate of approximately 34% and 35% in 2016 and 2015,    
    respectively.                                                           
(f) Represents estimated tax effects of the identified adjustments to net   
    income, using the effective rate of approximately 30-32%.               
(g) Forward guidance amounts are estimated based on a number of assumptions 
    and actual results could differ materially from estimates provided      
    herein.                                                                 
                                                                            
   Contacts:   Investors:  Elizabeth Boland  CFO Bright Horizons  [email protected]  617-673-8125   Kevin Doherty  MD Solebury Communications Group  [email protected]  203-428-3233   Media:  Ilene Serpa  VP - Communications Bright Horizons  [email protected]  617-673-8044 

Source: Bright Horizons Family Solutions

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