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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________
FORM 10-Q
__________________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from                      to                     
Commission File Number: 001-35780
__________________________________________________
BRIGHT HORIZONS FAMILY SOLUTIONS INC.
(Exact name of registrant as specified in its charter)
__________________________________________________
Delaware80-0188269
(State or other jurisdiction
of incorporation)
(I.R.S. Employer
Identification Number)
2 Wells Avenue
Newton, Massachusetts
02459
(Address of principal executive offices)(Zip code)
Registrant’s telephone number, including area code: (617) 673-8000
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareBFAMNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of July 29, 2021, there were 60,560,617 shares of common stock outstanding.


Table of Contents
BRIGHT HORIZONS FAMILY SOLUTIONS INC.
FORM 10-Q
For the quarterly period ended June 30, 2021
TABLE OF CONTENTS
Page
2

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
BRIGHT HORIZONS FAMILY SOLUTIONS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, 2021December 31, 2020
(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents$418,638 $384,344 
Accounts receivable — net of allowance for credit losses of $2,402 and $2,357 at June 30, 2021 and December 31, 2020, respectively
141,253 176,617 
Prepaid expenses and other current assets74,743 62,902 
Prepaid income taxes19,830 322 
Total current assets654,464 624,185 
Fixed assets — net617,248 628,757 
Goodwill1,451,041 1,431,967 
Other intangible assets — net261,013 274,620 
Operating lease right-of-use assets703,107 717,821 
Other assets54,010 49,298 
Total assets$3,740,883 $3,726,648 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt$10,750 $10,750 
Accounts payable and accrued expenses190,554 194,551 
Current portion of operating lease liabilities87,934 87,181 
Deferred revenue225,683 197,939 
Other current liabilities49,599 40,393 
Total current liabilities564,520 530,814 
Long-term debt — net1,015,433 1,020,137 
Operating lease liabilities712,399 729,754 
Other long-term liabilities117,822 105,980 
Deferred revenue10,421 10,215 
Deferred income taxes49,144 45,951 
Total liabilities2,469,739 2,442,851 
Stockholders’ equity:
Preferred stock, $0.001 par value; 25,000,000 shares authorized; no shares issued or outstanding at June 30, 2021 and December 31, 2020
  
     Common stock, $0.001 par value; 475,000,000 shares authorized; 60,278,756 and 60,466,168 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
60 60 
Additional paid-in capital868,289 910,304 
Accumulated other comprehensive loss(23,654)(27,069)
Retained earnings426,449 400,502 
Total stockholders’ equity1,271,144 1,283,797 
Total liabilities and stockholders’ equity$3,740,883 $3,726,648 
See accompanying notes to condensed consolidated financial statements.
3

Table of Contents
BRIGHT HORIZONS FAMILY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended June 30,Six months ended June 30,
2021202020212020
(In thousands, except share data)
Revenue$441,478 $293,772 $832,318 $800,095 
Cost of services335,496 228,536 644,978 626,000 
Gross profit105,982 65,236 187,340 174,095 
Selling, general and administrative expenses64,458 49,247 124,568 106,616 
Amortization of intangible assets7,512 7,875 15,052 16,084 
Income from operations34,012 8,114 47,720 51,395 
Interest expense — net(9,580)(9,129)(18,596)(19,335)
Income (loss) before income tax24,432 (1,015)29,124 32,060 
Income tax benefit (expense)(5,617)1,374 (3,177)(969)
Net income$18,815 $359 $25,947 $31,091 
Earnings per common share:
Common stock — basic$0.31 $0.01 $0.43 $0.53 
Common stock — diluted$0.31 $0.01 $0.42 $0.52 
Weighted average common shares outstanding:
Common stock — basic60,551,528 59,631,428 60,573,237 58,781,169 
Common stock — diluted61,106,792 60,266,102 61,216,383 59,572,444 
See accompanying notes to condensed consolidated financial statements.
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BRIGHT HORIZONS FAMILY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three months ended June 30,Six months ended June 30,
2021202020212020
(In thousands)
Net income$18,815 $359 $25,947 $31,091 
Other comprehensive income (loss):
Foreign currency translation adjustments1,213 1,557 699 (37,951)
Unrealized gain (loss) on cash flow hedges and investments, net of tax964 793 2,716 (3,477)
Total other comprehensive income (loss)2,177 2,350 3,415 (41,428)
Comprehensive income (loss)$20,992 $2,709 $29,362 $(10,337)
See accompanying notes to condensed consolidated financial statements.
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BRIGHT HORIZONS FAMILY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
Three months ended June 30, 2021
Common StockAdditional
Paid-in Capital
Treasury Stock,
at Cost
Accumulated Other
Comprehensive
Income (Loss)
Retained EarningsTotal
Stockholders’ Equity
SharesAmount
(In thousands, except share data)
Balance at April 1, 202160,726,701 $61 $928,761 $ $(25,831)$407,634 $1,310,625 
Stock-based compensation expense5,829 5,829 
Issuance of common stock under the Equity Incentive Plan75,169  5,341 5,341 
Shares received in net share settlement of stock option exercises and vesting of restricted stock(8,114)— (1,297)(1,297)
Purchase of treasury stock(70,346)(70,346)
Retirement of treasury stock(515,000)(1)(70,345)70,346  
Other comprehensive income2,177 2,177 
Net income18,815 18,815 
Balance at June 30, 202160,278,756 $60 $868,289 $ $(23,654)$426,449 $1,271,144 
Three months ended June 30, 2020
Common StockAdditional
Paid-in Capital
Treasury Stock,
at Cost
Accumulated Other
Comprehensive
Income (Loss)
Retained EarningsTotal
Stockholders’ Equity
SharesAmount
(In thousands, except share data)
Balance at April 1, 202057,920,154 $58 $627,337 $ $(94,109)$404,242 $937,528 
Issuance of common stock2,138,580 2 249,788 249,790 
Stock-based compensation expense5,155 5,155 
Issuance of common stock under the Equity Incentive Plan117,276  5,577 5,577 
Shares received in net share settlement of stock option exercises and vesting of restricted stock(23,823)— (2,484)(2,484)
Other comprehensive income2,350 2,350 
Net income359 359 
Balance at June 30, 202060,152,187 $60 $885,373 $ $(91,759)$404,601 $1,198,275 
See accompanying notes to condensed consolidated financial statements.
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BRIGHT HORIZONS FAMILY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
Six months ended June 30, 2021
Common StockAdditional
Paid-in Capital
Treasury Stock,
at Cost
Accumulated Other
Comprehensive
Income (Loss)
Retained EarningsTotal
Stockholders’ Equity
SharesAmount
(In thousands, except share data)
Balance at January 1, 202160,466,168 $60 $910,304 $ $(27,069)$400,502 $1,283,797 
Stock-based compensation expense11,135 11,135 
Issuance of common stock under the Equity Incentive Plan371,561 1 24,337 24,338 
Shares received in net share settlement of stock option exercises and vesting of restricted stock(43,973)— (7,142)(7,142)
Purchase of treasury stock(70,346)(70,346)
Retirement of treasury stock(515,000)(1)(70,345)70,346  
Other comprehensive income3,415 3,415 
Net income25,947 25,947 
Balance at June 30, 202160,278,756 $60 $868,289 $ $(23,654)$426,449 $1,271,144 
Six months ended June 30, 2020
Common StockAdditional
Paid-in Capital
Treasury Stock,
at Cost
Accumulated Other
Comprehensive
Income (Loss)
Retained EarningsTotal
Stockholders’ Equity
SharesAmount
(In thousands, except share data)
Balance at January 1, 202057,884,020 $58 $648,031 $ $(50,331)$373,510 $971,268 
Issuance of common stock2,138,580 2 249,788 249,790 
Stock-based compensation expense9,438 9,438 
Issuance of common stock under the Equity Incentive Plan416,152 1 18,038 18,039 
Shares received in net share settlement of stock option exercises and vesting of restricted stock(55,252)— (7,715)(7,715)
Purchase of treasury stock(32,208)(32,208)
Retirement of treasury stock(231,313)(1)(32,207)32,208  
Other comprehensive loss(41,428)(41,428)
Net income31,091 31,091 
Balance at June 30, 202060,152,187 $60 $885,373 $ $(91,759)$404,601 $1,198,275 
See accompanying notes to condensed consolidated financial statements.
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BRIGHT HORIZONS FAMILY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June 30,
20212020
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$25,947 $31,091 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization55,392 55,880 
Impairment losses on long-lived assets 16,857 
Impairment losses on equity investment 2,128 
Stock-based compensation expense11,135 9,438 
Deferred income taxes2,238 (2,783)
Other non-cash adjustments — net513 (1,187)
Changes in assets and liabilities:
Accounts receivable35,338 (73,449)
Prepaid expenses and other current assets(10,612)(33,156)
Accounts payable and accrued expenses(1,818)(19,824)
Income taxes(19,908)327 
Deferred revenue28,117 3,399 
Leases(2,143)30,003 
Other assets3,101 3,404 
Other current and long-term liabilities8,425 29,132 
Net cash provided by operating activities135,725 51,260 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets(33,953)(32,374)
Proceeds from the disposal of fixed assets5,490 7,352 
Proceeds from the maturity of debt securities and sale of other investments10,500 7,247 
Purchases of debt securities and other investments(10,611)(6,106)
Payments and settlements for acquisitions — net of cash acquired(9,082)(4,394)
Net cash used in investing activities(37,656)(28,275)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock issuance — net of issuance costs 249,937 
Borrowings under revolving credit facility 43,200 
Payments under revolving credit facility (43,200)
Principal payments of long-term debt(5,375)(5,375)
Payments of debt issuance costs(2,057)(2,818)
Purchase of treasury stock(70,346)(32,658)
Proceeds from issuance of common stock upon exercise of options and restricted stock upon purchase28,180 21,187 
Taxes paid related to the net share settlement of stock options and restricted stock(7,142)(7,715)
Payments of contingent consideration for acquisitions (1,088)
Net cash provided by (used in) financing activities(56,740)221,470 
Effect of exchange rates on cash, cash equivalents and restricted cash(675)(908)
Net increase in cash, cash equivalents and restricted cash40,654 243,547 
Cash, cash equivalents and restricted cash — beginning of period388,465 31,192 
Cash, cash equivalents and restricted cash — end of period$429,119 $274,739 
See accompanying notes to condensed consolidated financial statements.
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BRIGHT HORIZONS FAMILY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
Six months ended June 30,
20212020
(In thousands)
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents$418,638 $270,442 
Restricted cash and cash equivalents, included in prepaid expenses and other current assets10,481 4,297 
Total cash, cash equivalents and restricted cash — end of period$429,119 $274,739 
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash payments of interest$16,815 $18,117 
Cash payments of income taxes$21,200 $6,709 
Cash paid for amounts included in the measurement of lease liabilities$72,496 $51,397 
NON-CASH TRANSACTIONS:
Fixed asset purchases recorded in accounts payable and accrued expenses$2,849 $3,311 
Contingent consideration issued for acquisitions$7,337 $ 
Operating right-of-use assets obtained in exchange for operating lease liabilities — net$28,147 $71,677 
Restricted stock reclassified from other current liabilities to equity upon vesting $4,178 $4,424 
See accompanying notes to condensed consolidated financial statements.
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BRIGHT HORIZONS FAMILY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION
Organization — Bright Horizons Family Solutions Inc. (“Bright Horizons” or the “Company”) provides center-based early education and child care, back-up child and adult/elder care, tuition assistance and student loan repayment program administration, educational advisory services, and other support services for employers and families in the United States, the United Kingdom, the Netherlands, Puerto Rico and India. The Company provides services designed to help families, employers and their employees better integrate work and family life, primarily under multi-year contracts with employers who offer early education and child care, family care solutions, and workforce education services, as part of their employee benefits packages in an effort to support employees across life and career stages and improve employee engagement.
Basis of Presentation — The accompanying unaudited condensed consolidated balance sheet as of June 30, 2021 and the condensed consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the interim periods ended June 30, 2021 and 2020 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required in accordance with U.S. GAAP for complete financial statements and should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to prior period amounts within the condensed consolidated balance sheet and supplemental statement of cash flows information to conform to the current period presentation.
In the opinion of the Company’s management, the Company’s unaudited condensed consolidated balance sheet as of June 30, 2021 and the condensed consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the interim periods ended June 30, 2021 and 2020, reflect all adjustments (consisting only of normal and recurring adjustments) necessary to present fairly the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year.
Stockholders Equity — The board of directors of the Company authorized a share repurchase program of up to $300 million of the Company’s outstanding common stock, effective June 12, 2018. The share repurchase program has no expiration date. 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 three months ended June 30, 2021, 0.5 million shares were repurchased for $70.3 million under this authorization, and at June 30, 2021, $124.5 million remained available under the repurchase program.
On April 21, 2020, the Company completed the issuance and sale of 2,138,580 shares of common stock, par value $0.001 per share, to Durable Capital Master Fund LP at a price of $116.90 per share. The Company subsequently filed a registration statement to register the resale of these shares in accordance with the terms of the purchase agreement. The Company received net proceeds from the offering of $249.8 million.
COVID-19 Pandemic — Since March 2020, the Company's global operations have been significantly impacted by the COVID-19 pandemic. As of June 30, 2021, the Company operated 1,006 early education and child care centers, of which approximately 920 early education and child care centers were open. The Company remains focused on the re-enrollment of its centers and the phased re-opening of the limited number of centers that remain temporarily closed, which the Company expects will continue throughout 2021. The broad and long-term effects of COVID-19, its duration and the scope of ongoing and related disruptions, cannot be predicted. Given these factors, the Company currently expects the effects of COVID-19 to continue to adversely impact the results of its operations for the remainder of 2021.
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Government Support — The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and the Consolidated Appropriations Act, 2021 (“CAA”) were enacted in the United States on March 27, 2020 and January 1, 2021, respectively; both are economic aid packages to help mitigate the impact of the pandemic. Additionally, other foreign governmental legislation that provided relief provisions was enacted in response to the economic impact of COVID-19. The Company has participated in certain government support programs, including availing itself of certain tax deferrals and tax credits allowed pursuant to the CARES Act in the United States, as well as certain tax deferrals, tax credits, and employee wage support in the United Kingdom. On December 27, 2020, the employee retention tax credit, originally enacted under the CARES Act in the United States, was expanded and extended under the CAA to wages paid through the first two quarters of 2021, among other changes. Governmental support received is recorded on the consolidated statement of income as a reduction to the related expenses that the assistance is intended to defray. During the six months ended June 30, 2021 and 2020, $17.0 million and $39.6 million, respectively, was recorded as a reduction to cost of services in relation to these benefits. As of June 30, 2021 and December 31, 2020, $10.9 million and $8.4 million, respectively, was recorded in prepaid expenses and other current assets on the consolidated balance sheet for amounts due from government support programs. Additionally, the Company had payroll tax deferrals totaling $20.4 million as of June 30, 2021 and December 31, 2020, of which $10.2 million was recorded in accounts payable and accrued expenses and $10.2 million was included in other long-term liabilities.
Recently Adopted Pronouncement — In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The standard removes certain exceptions to the general principles in Topic 740 and improves the consistent application of U.S. GAAP by clarifying and amending certain areas of the existing guidance. The Company adopted the new guidance on January 1, 2021. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.
2. REVENUE RECOGNITION
Disaggregation of Revenue
The Company disaggregates revenue from contracts with customers into segments and geographical regions. Revenue disaggregated by segment and geographical region was as follows:
Full service
center-based
child care
Back-up careEducational
advisory and
other services
Total
(In thousands)
Three months ended June 30, 2021
North America$216,327 $76,660 $25,567 $318,554 
Europe118,100 4,824  122,924 
$334,427 $81,484 $25,567 $441,478 
Three months ended June 30, 2020
North America$92,572 $133,106 $20,562 $246,240 
Europe44,734 2,798  47,532 
$137,306 $135,904 $20,562 $293,772 
Full service
center-based
child care
Back-up careEducational
advisory and
other services
Total
(In thousands)
Six months ended June 30, 2021
North America$408,781 $147,842 $49,733 $606,356 
Europe215,965 9,997  225,962 
$624,746 $157,839 $49,733 $832,318 
Six months ended June 30, 2020
North America$390,639 $203,663 $41,327 $635,629 
Europe158,058 6,408  164,466 
$548,697 $210,071 $41,327 $800,095 
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The classification “North America” is comprised of the Company’s United States, Puerto Rico, and Canada operations and the classification “Europe” includes the United Kingdom, Netherlands, and India operations. During the third quarter of fiscal 2020, the Company divested its child care center business in Canada and ceased to operate its two centers in that geography.
Deferred Revenue
The Company records deferred revenue when payments are received in advance of the Company’s performance under the contract, which is recognized as revenue as the performance obligation is satisfied. During the six months ended June 30, 2021, $146.7 million was recognized as revenue related to the deferred revenue balance recorded at December 31, 2020. During the six months ended June 30, 2020, $151.4 million was recognized as revenue related to the deferred revenue balance recorded at December 31, 2019.
Remaining Performance Obligations
The Company does not disclose the value of unsatisfied performance obligations for contracts with an original contract term of one year or less, or for variable consideration allocated to the unsatisfied performance obligation of a series of services. The transaction price allocated to the remaining performance obligations relates to services that are paid or invoiced in advance. The Company’s remaining performance obligations not subject to the practical expedients were not material.
3. LEASES
The Company has operating leases for certain of its full service and back-up early education and child care centers, corporate offices, call centers, and to a lesser extent, various office equipment, in the United States, the United Kingdom, and the Netherlands. Most of the leases expire within 10 to 15 years and many contain renewal options and/or termination provisions. The Company does not have any finance leases as of June 30, 2021.
Lease Expense
The components of lease expense were as follows:
Three months ended June 30,Six months ended June 30,
2021202020212020
(In thousands)
Operating lease expense (1)
$33,652 $38,667 $67,277 $72,528 
Variable lease expense (1)
6,735 6,120 13,677 15,353 
Total lease expense$40,387 $44,787 $80,954 $87,881 
(1) Excludes short-term lease expense and sublease income, which were immaterial for the periods presented.
Operating lease expense for the three and six months ended June 30, 2020 includes an impairment loss on operating lease right-of-use assets of $5.2 million. Refer to Note 9, Fair Value Measurements, for additional information.
Other Information
The weighted average remaining lease term and the weighted average discount rate were as follows:
June 30, 2021December 31, 2020
Weighted average remaining lease term (in years)1010
Weighted average discount rate5.9%6.0%
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Maturity of Lease Liabilities
The following table summarizes the maturity of lease liabilities as of June 30, 2021:
Operating Leases
(In thousands)
Remainder of 2021$55,582 
2022133,656 
2023125,251 
2024114,428 
202599,967 
Thereafter540,141 
Total lease payments1,069,025 
Less imputed interest(268,692)
Present value of lease liabilities800,333 
Less current portion of operating lease liabilities
(87,934)
Long-term operating lease liabilities$712,399 
As of June 30, 2021, the Company had entered into additional operating leases that have not yet commenced with total fixed payment obligations of $21.8 million. The leases are expected to commence between the third quarter of fiscal 2021 and the fourth quarter of fiscal 2022 and have initial lease terms of approximately 10 to 15 years.
Lease Modifications
As of June 30, 2021, the Company had deferred lease payments of $2.0 million. The majority of these lease payments are payable over the next year. As of December 31, 2020, the Company had deferred lease payments of $7.7 million.
4. ACQUISITIONS
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 the Company's existing operations, including cost efficiencies and leveraging existing client relationships, as well as from benefits derived from gaining the related assembled workforce.
2021 Acquisitions
During the six months ended June 30, 2021, the Company acquired two centers as well as a camp and back-up care provider in the United States, in two separate business acquisitions, which were each accounted for as a business combination. These businesses were acquired for aggregate cash consideration of $8.6 million, net of cash acquired of $0.3 million, and consideration payable of $0.4 million. Additionally, the Company is subject to contingent consideration payments for these two acquisitions, and recorded a preliminary fair value estimate of $7.3 million in relation to these contingent consideration arrangements at acquisition. Contingent consideration of up to $1.2 million may be payable within one year if certain performance targets are met for one of the acquisitions, and contingent consideration is payable in 2026 based on certain financial metrics for the other acquisition. The Company recorded goodwill of $14.5 million related to the back-up care segment and of $3.4 million related to the full service center-based child care segment, all of which will be deductible for tax purposes. In addition, the Company recorded intangible assets of $1.3 million that will be amortized over five years, as well as fixed assets of $1.5 million in relation to these acquisitions.
The determination and 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 June 30, 2021, the purchase price allocations for these acquisitions remain open as the Company gathers additional information regarding the assets acquired and the liabilities assumed, and finalizes its determination of the estimated fair value of the contingent consideration at the date of acquisition. The operating results for the acquired businesses are included in the consolidated results of operations from the date of acquisition, and were not material to the Company’s financial results.
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2020 Acquisitions
During the year ended December 31, 2020, the Company acquired two child care centers and the Sittercity business, an online marketplace for families and caregivers, in the United States, in three separate business acquisitions, which were each accounted for as a business combination. These businesses were acquired for cash consideration of $8.1 million, net of cash acquired of $1.3 million, and consideration payable of $0.1 million, and included fixed assets and technology of $4.1 million, as well as a trade name of $0.7 million that will be amortized over five years. The Company recorded goodwill of $2.0 million related to the educational advisory and other services segment and $2.1 million related to the full-service center-based child care segment, all of which will be deductible for tax purposes.
The determination and 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 June 30, 2021, the purchase price allocation for one of the 2020 acquisitions remains open as the Company gathers additional information regarding the assets acquired and the liabilities assumed.
During the year ended December 31, 2020, the Company paid $1.2 million for contingent consideration related to acquisitions completed in 2018 and 2019, which had been recorded as a liability at the date of acquisition.
5. GOODWILL AND INTANGIBLE ASSETS
The changes in the carrying amount of goodwill were as follows:
Full service
center-based
child care
Back-up careEducational
advisory and
other services
Total
(In thousands)
Balance at January 1, 2021$1,197,658 $194,616 $39,693 $1,431,967 
Additions from acquisitions3,435 14,537  17,972 
Adjustments to prior year acquisitions  150 150 
Effect of foreign currency translation758 194  952 
Balance at June 30, 2021$1,201,851 $209,347 $39,843 $1,451,041 
The Company also has intangible assets, which consisted of the following at June 30, 2021 and December 31, 2020:
June 30, 2021Weighted average
amortization period
CostAccumulated
amortization
Net carrying
amount
(In thousands)
Definite-lived intangible assets:
Customer relationships14 years$402,965 $(325,348)$77,617 
Trade names6 years12,282 (10,039)2,243 
415,247 (335,387)79,860 
Indefinite-lived intangible assets:
Trade namesN/A181,153 — 181,153 
$596,400 $(335,387)$261,013 
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December 31, 2020Weighted average
amortization period
CostAccumulated
amortization
Net carrying
amount
(In thousands)
Definite-lived intangible assets:
Customer relationships14 years$402,319 $(310,587)$91,732 
Trade names6 years11,219 (9,633)1,586 
413,538 (320,220)93,318 
Indefinite-lived intangible assets:
Trade namesN/A181,302 — 181,302 
$594,840 $(320,220)$274,620 
6. CREDIT ARRANGEMENTS AND DEBT OBLIGATIONS
Senior Secured Credit Facilities
The Company’s senior secured credit facilities consist of a secured term loan facility (“term loan facility”) and a $400 million multi-currency revolving credit facility (“revolving credit facility”). The term loan matures on November 7, 2023 and requires quarterly principal payments of $2.7 million, with the remaining principal balance due on November 7, 2023.
Outstanding term loan borrowings were as follows:
June 30, 2021December 31, 2020
(In thousands)
Term loan$1,029,313 $1,034,688 
Deferred financing costs and original issue discount(3,130)(3,801)
Total debt1,026,183 1,030,887 
Less current maturities(10,750)(10,750)
Long-term debt$1,015,433 $1,020,137 
On May 26, 2021, the Company amended its existing senior credit facilities to, among other changes, extend the revolving credit facility maturity date from July 31, 2022 to May 26, 2026 (subject to a springing maturity to August 8, 2023 if more than $25 million of the term loans have not been repaid, refinanced or extended), and reduce the interest rates applicable to borrowings outstanding on the revolving credit facility. In conjunction with this credit amendment, the Company incurred $2.1 million in fees that have been capitalized in other assets on the consolidated balance sheet and are amortized over the contractual life of the revolving credit facility. There were no borrowings outstanding on the revolving credit facility at June 30, 2021 and December 31, 2020.
In April and May 2020, the Company amended its existing senior credit facilities to, among other things, increase the borrowing capacity of the revolving credit facility from $225 million to $400 million, modify the interest rates applicable to borrowings outstanding on the revolving credit facility, and modify the terms of the applicable covenants. In conjunction with these credit amendments, the Company incurred $2.8 million in fees that have been capitalized in other assets on the consolidated balance sheet and were being amortized over the contractual life of the revolving credit facility prior to the May 26, 2021 amendment.
All borrowings under the credit agreement are subject to variable interest. The effective interest rate for the term loan was 2.50% at June 30, 2021 and December 31, 2020, and the weighted average interest rate was 2.50% and 3.00% for the six months ended June 30, 2021 and 2020, respectively, prior to the effects of any interest rate hedge arrangements. Effective as of May 26, 2021, borrowings under the revolving credit facility bear interest at a rate per annum ranging from 0.50% to 0.75% over the base rate, or 1.50% to 1.75% over the eurocurrency rate. The weighted average interest rate for the revolving credit facility was 4.00% and 4.49% for the six months ended June 30, 2021 and 2020, respectively.
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All obligations under the senior secured credit facilities are secured by substantially all the assets of the Company’s U.S. subsidiaries. The senior secured credit facilities contain a number of covenants that, among other things and subject to certain exceptions, may restrict the ability of Bright Horizons Family Solutions LLC, the Company’s wholly-owned subsidiary, and its restricted subsidiaries, to: incur certain liens; make investments, loans, advances and acquisitions; incur additional indebtedness or guarantees; pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness; engage in transactions with affiliates; sell assets, including capital stock of the Company’s subsidiaries; alter the business conducted; enter into agreements restricting the Company’s subsidiaries’ ability to pay dividends; and consolidate or merge.
In addition, the credit agreement governing the senior secured credit facilities requires Bright Horizons Capital Corp., the Company’s direct subsidiary, to be a passive holding company, subject to certain exceptions. The revolving credit facility requires Bright Horizons Family Solutions LLC, the borrower, and its restricted subsidiaries, to comply with a maximum first lien net leverage ratio of 4.25 to 1.00 beginning June 30, 2021. A breach of the applicable covenant is subject to certain equity cure rights.
Future principal payments of long-term debt are as follows for the years ending December 31:
Term Loan
(In thousands)
Remainder of 2021$5,375 
202210,750 
20231,013,188 
Total future principal payments$1,029,313 
Derivative Financial Instruments
The Company is subject to interest rate risk as all borrowings under the senior secured credit facilities are subject to variable interest rates. In October 2017, the Company entered into variable-to-fixed interest rate swap agreements to mitigate the exposure to variable interest arrangements on $500 million notional amount of the outstanding term loan borrowings. These swap agreements, designated and accounted for as cash flow hedges from inception, are scheduled to mature on October 31, 2021. The Company is required to make monthly payments on the notional amount at a fixed average interest rate, plus the applicable rate for eurocurrency loans. Effective as of May 31, 2018, the notional amount is subject to a total interest rate of approximately 3.65%. In exchange, the Company receives interest on the notional amount at a variable rate based on the one-month LIBOR rate, subject to a 0.75% floor.
In June 2020, the Company entered into interest rate cap agreements with a total notional value of $800 million, designated and accounted for as cash flow hedges from inception, to provide the Company with interest rate protection in the event the one-month LIBOR rate increases above 1%. Interest rate cap agreements for $300 million notional value have an effective date of June 30, 2020 and expire on October 31, 2023, while interest rate cap agreements for another $500 million notional amount have a forward starting effective date of October 29, 2021, which coincides with the maturity of the interest rate swap agreements, and expire on October 31, 2023.
The interest rate swaps and interest rate caps are recorded on the Company’s consolidated balance sheet at fair value and classified based on the instruments’ maturity dates. The Company records gains and losses resulting from changes in the fair value of the interest rate swaps and interest rate caps to accumulated other comprehensive income or loss. These gains and losses are subsequently reclassified into earnings and recognized to interest expense in the Company’s consolidated statement of income in the period that the hedged interest expense on the term loan facility is recognized. The premium paid for the interest rate cap was recorded as an asset and will be allocated to each of the individual hedged interest payments on the basis of their relative fair values. The change in each respective allocated fair value amount will be reclassified out of accumulated other comprehensive income when each of the hedged forecasted transactions impacts earnings and recognized to interest expense in the Company's consolidated statement of income.
The fair value of the derivative financial instruments was as follows for the periods presented:
Derivative financial instrumentsConsolidated balance sheet classificationJune 30, 2021December 31, 2020
(In thousands)
Interest rate swaps - liabilityOther current liabilities$1,911 $4,775 
Interest rate caps - assetOther assets$1,141 $277 
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The effect of the derivative financial instruments on other comprehensive income (loss) was as follows:
Derivatives designated as cash flow hedging instrumentsAmount of gain (loss) recognized in other comprehensive income (loss)Consolidated statement of income classificationAmount of net gain (loss) reclassified into earningsTotal effect on other comprehensive income (loss)
(In thousands)(In thousands)
Three months ended June 30, 2021
Cash flow hedges$(138)Interest expense — net$(1,471)$1,333 
Income tax effect37 Income tax expense393 (356)
Net of income taxes$(101)$(1,078)$977 
Three months ended June 30, 2020
Cash flow hedges$(219)Interest expense — net$(1,356)$1,137 
Income tax effect59 Income tax expense365 (306)
Net of income taxes$(160)$(991)$831 
Derivatives designated as cash flow hedging instrumentsAmount of gain (loss) recognized in other comprehensive income (loss)Consolidated statement of income classificationAmount of net gain (loss) reclassified into earningsTotal effect on other comprehensive income (loss)
(In thousands)(In thousands)
Six months ended June 30, 2021
Cash flow hedges$840 Interest expense — net$(2,921)$3,761 
Income tax effect(224)Income tax expense780 (1,004)
Net of income taxes$616 $(2,141)$2,757 
Six months ended June 30, 2020
Cash flow hedges$(6,521)Interest expense — net$(1,641)$(