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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 September 30, 2023
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 October 24, 2023, there were 57,904,906 shares of common stock outstanding.


Table of Contents
BRIGHT HORIZONS FAMILY SOLUTIONS INC.
FORM 10-Q
For the quarterly period ended September 30, 2023
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)
September 30, 2023December 31, 2022
(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents$40,927 $36,224 
Accounts receivable — net of allowance for credit losses of $2,747 and $2,947 at September 30, 2023 and December 31, 2022, respectively
223,318 217,170 
Prepaid expenses and other current assets105,003 94,316 
Total current assets369,248 347,710 
Fixed assets — net572,356 571,471 
Goodwill1,750,568 1,727,852 
Other intangible assets — net223,381 245,574 
Operating lease right-of-use assets788,483 801,626 
Other assets98,349 104,636 
Total assets$3,802,385 $3,798,869 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt$16,000 $16,000 
Borrowings under revolving credit facility29,400 84,000 
Accounts payable and accrued expenses241,578 230,634 
Current portion of operating lease liabilities96,388 94,092 
Deferred revenue210,002 222,994 
Other current liabilities150,057 138,574 
Total current liabilities743,425 786,294 
Long-term debt — net950,468 961,581 
Operating lease liabilities794,717 810,403 
Other long-term liabilities94,269 100,466 
Deferred revenue8,480 8,933 
Deferred income taxes45,606 50,739 
Total liabilities2,636,965 2,718,416 
Stockholders’ equity:
Preferred stock, $0.001 par value; 25,000,000 shares authorized; no shares issued or outstanding at September 30, 2023 and December 31, 2022
  
     Common stock, $0.001 par value; 475,000,000 shares authorized; 57,777,857 and 57,531,130 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively
58 58 
Additional paid-in capital635,731 599,422 
Accumulated other comprehensive loss(90,670)(70,629)
Retained earnings620,301 551,602 
Total stockholders’ equity1,165,420 1,080,453 
Total liabilities and stockholders’ equity$3,802,385 $3,798,869 
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 September 30,Nine months ended September 30,
2023202220232022
(In thousands, except share data)
Revenue$645,787 $540,215 $1,802,609 $1,490,965 
Cost of services488,142 411,406 1,386,787 1,123,572 
Gross profit157,645 128,809 415,822 367,393 
Selling, general and administrative expenses83,253 80,812 247,923 226,231 
Amortization of intangible assets7,568 8,948 24,898 23,127 
Income from operations66,824 39,049 143,001 118,035 
Loss on foreign currency forward contracts   (5,917)
Interest expense — net(12,222)(11,707)(37,357)(26,695)
Income before income tax54,602 27,342 105,644 85,423 
Income tax expense(14,623)(9,094)(36,945)(22,824)
Net income$39,979 $18,248 $68,699 $62,599 
Earnings per common share:
Common stock — basic$0.69 $0.32 $1.19 $1.06 
Common stock — diluted$0.69 $0.31 $1.18 $1.06 
Weighted average common shares outstanding:
Common stock — basic57,765,332 57,664,895 57,692,254 58,624,221 
Common stock — diluted58,045,137 57,740,013 57,886,823 58,802,742 
See accompanying notes to condensed consolidated financial statements.
4

Table of Contents
BRIGHT HORIZONS FAMILY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three months ended September 30,Nine months ended September 30,
2023202220232022
(In thousands)
Net income$39,979 $18,248 $68,699 $62,599 
Other comprehensive income (loss):
Foreign currency translation adjustments(31,179)(67,483)(14,843)(130,834)
Unrealized gain (loss) on cash flow hedges and investments, net of tax(1,604)14,016 (5,198)37,723 
Total other comprehensive loss(32,783)(53,467)(20,041)(93,111)
Comprehensive income (loss)$7,196 $(35,219)$48,658 $(30,512)
See accompanying notes to condensed consolidated financial statements.
5

Table of Contents
BRIGHT HORIZONS FAMILY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
Three months ended September 30, 2023
Common StockAdditional
Paid-in Capital
Treasury Stock,
at Cost
Accumulated Other
Comprehensive
Loss
Retained EarningsTotal
Stockholders’ Equity
SharesAmount
(In thousands, except share data)
Balance at July 1, 202357,740,699 $58 $627,275 $ $(57,887)$580,322 $1,149,768 
Stock-based compensation expense7,841 7,841 
Issuance of common stock under the Equity Incentive Plan45,077 — 1,382 1,382 
Shares received in net share settlement of stock option exercises and vesting of restricted stock(7,919)— (767)(767)
Other comprehensive loss(32,783)(32,783)
Net income39,979 39,979 
Balance at September 30, 202357,777,857 $58 $635,731 $ $(90,670)$620,301 $1,165,420 
Three months ended September 30, 2022
Common StockAdditional
Paid-in Capital
Treasury Stock,
at Cost
Accumulated Other
Comprehensive
Loss
Retained EarningsTotal
Stockholders’ Equity
SharesAmount
(In thousands, except share data)
Balance at July 1, 202258,622,868 $59 $680,618 $ $(77,003)$515,312 $1,118,986 
Stock-based compensation expense7,514 7,514 
Issuance of common stock under the Equity Incentive Plan13,400 — 859 859 
Shares received in net share settlement of stock option exercises and vesting of restricted stock(3,008)— (278)(278)
Purchase of treasury stock(98,106)(98,106)
Retirement of treasury stock(1,132,212)(1)(98,105)98,106  
Other comprehensive loss(53,467)(53,467)
Net income18,248 18,248 
Balance at September 30, 202257,501,048 $58 $590,608 $ $(130,470)$533,560 $993,756 
See accompanying notes to condensed consolidated financial statements.
6

Table of Contents
BRIGHT HORIZONS FAMILY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
Nine months ended September 30, 2023
Common StockAdditional
Paid-in Capital
Treasury Stock,
at Cost
Accumulated Other
Comprehensive
Loss
Retained EarningsTotal
Stockholders’ Equity
SharesAmount
(In thousands, except share data)
Balance at January 1, 202357,531,130 $58 $599,422 $ $(70,629)$551,602 $1,080,453 
Stock-based compensation expense21,154 21,154 
Issuance of common stock under the Equity Incentive Plan278,012 — 17,551 17,551 
Shares received in net share settlement of stock option exercises and vesting of restricted stock(31,285)— (2,396)(2,396)
Other comprehensive loss(20,041)(20,041)
Net income68,699 68,699 
Balance at September 30, 202357,777,857 $58 $635,731 $ $(90,670)$620,301 $1,165,420 
Nine months ended September 30, 2022
Common StockAdditional
Paid-in Capital
Treasury Stock,
at Cost
Accumulated Other
Comprehensive
Loss
Retained EarningsTotal
Stockholders’ Equity
SharesAmount
(In thousands, except share data)
Balance at January 1, 202259,305,160 $59 $745,615 $ $(37,359)$470,961 $1,179,276 
Stock-based compensation expense21,282 21,282 
Issuance of common stock under the Equity Incentive Plan229,354 1 11,483 11,484 
Shares received in net share settlement of stock option exercises and vesting of restricted stock(47,320)— (5,432)(5,432)
Purchase of treasury stock(182,342)(182,342)
Retirement of treasury stock(1,986,146)(2)(182,340)182,342  
Other comprehensive loss(93,111)(93,111)
Net income62,599 62,599 
Balance at September 30, 202257,501,048 $58 $590,608 $ $(130,470)$533,560 $993,756 
See accompanying notes to condensed consolidated financial statements.
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BRIGHT HORIZONS FAMILY SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30,
20232022
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$68,699 $62,599 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization82,732 77,958 
Stock-based compensation expense21,154 21,282 
Loss on foreign currency forward contracts 5,917 
Deferred income taxes(3,688)(8,209)
Non-cash interest and other — net8,867 1,894 
Changes in assets and liabilities:
Accounts receivable(7,166)16,369 
Prepaid expenses and other current assets(16,965)(7,204)
Accounts payable and accrued expenses6,549 27,122 
Income taxes1,822 (6,278)
Deferred revenue(13,283)(64,235)
Leases(167)703 
Other assets2,752 11,453 
Other current and long-term liabilities9,665 (8,393)
Net cash provided by operating activities160,971 130,978 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets(60,451)(48,228)
Proceeds from the disposal of fixed assets226 10,456 
Proceeds from the maturity of debt securities and sale of other investments15,451 16,009 
Purchases of debt securities and other investments(9,463)(13,838)
Payments and settlements for acquisitions — net of cash acquired(37,772)(209,421)
Settlement of foreign currency forward contracts (5,917)
Net cash used in investing activities(92,009)(250,939)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility286,000 167,000 
Payments under revolving credit facility(340,600)(54,000)
Principal payments of long-term debt(12,000)(12,000)
Proceeds from issuance of common stock upon exercise of options and restricted stock upon purchase8,764 11,412 
Taxes paid related to the net share settlement of stock options and restricted stock(2,396)(5,432)
Purchase of treasury stock (182,570)
Payments of contingent consideration for acquisitions(225)(13,865)
Net cash used in financing activities(60,457)(89,455)
Effect of exchange rates on cash, cash equivalents and restricted cash(1,280)(4,018)
Net increase (decrease) in cash, cash equivalents and restricted cash7,225 (213,434)
Cash, cash equivalents and restricted cash — beginning of period51,894 265,281 
Cash, cash equivalents and restricted cash — end of period$59,119 $51,847 
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)
Nine months ended September 30,
20232022
(In thousands)
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents$40,927 $32,604 
Restricted cash and cash equivalents, included in prepaid expenses and other current assets16,154 7,906 
Restricted cash and cash equivalents, included in other assets2,038 11,337 
Total cash, cash equivalents and restricted cash — end of period$59,119 $51,847 
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash payments of interest$54,896 $24,973 
Cash payments of income taxes$40,946 $38,013 
Cash paid for amounts included in the measurement of lease liabilities$115,537 $104,809 
NON-CASH TRANSACTIONS:
Fixed asset purchases recorded in accounts payable and accrued expenses$2,350 $2,121 
Deferred or contingent consideration issued for acquisitions$ $97,653 
Operating right-of-use assets obtained in exchange for operating lease liabilities — net$42,667 $44,575 
Restricted stock reclassified from other current liabilities to equity upon vesting$8,192 $3,160 
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 management, educational advisory services, and other support services for employers and families in the United States, the United Kingdom, the Netherlands, Australia, 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 child care, dependent care, 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.
On July 1, 2022, the Company acquired Only About Children, an operator of 75 child care centers in Australia. Refer to Note 4, Acquisitions, for additional information.
As of September 30, 2023, we operated 1,063 early education and child care centers.
Basis of Presentation — The accompanying unaudited condensed consolidated balance sheet as of September 30, 2023 and the unaudited condensed consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the interim periods ended September 30, 2023 and 2022 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, 2022. The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.
In the opinion of the Company’s management, the Company’s unaudited condensed consolidated balance sheet as of September 30, 2023 and the unaudited condensed consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the interim periods ended September 30, 2023 and 2022, 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.
During the nine months ended September 30, 2023, the Company recorded expense of $6.0 million for an immaterial correction of an error related to value-added tax incurred in prior periods, of which $4.3 million is included in cost of services and $1.7 million is included in selling, general and administrative expenses. Refer to Note 11, Segment Information, for additional information.
Stockholders Equity — The board of directors of the Company authorized a share repurchase program of up to $400 million of the Company’s outstanding common stock effective December 16, 2021. 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 nine months ended September 30, 2023, there were no share repurchases under the repurchase program and during the nine months ended September 30, 2022, the Company repurchased 2.0 million shares for $182.3 million. All repurchased shares have been retired and, at September 30, 2023, $198.3 million remained available under the Board-approved repurchase program.
Government Support — During the nine months ended September 30, 2023 and 2022, the Company participated in government support programs that were enacted in response to the economic impact of the COVID-19 pandemic, including availing itself of certain tax deferrals and federal block grant funding in the United States.
During the nine months ended September 30, 2023 and 2022, $48.3 million and $68.6 million, respectively, was recorded as a reduction to cost of services in relation to these benefits, of which $17.2 million and $25.6 million, respectively, reduced the operating subsidies paid by employers for the related child care centers. Additionally, during the nine months ended September 30, 2023 and 2022, $1.7 million and $4.6 million, respectively, was recorded to revenue related to amounts received for tuition support.
As of September 30, 2023 and December 31, 2022, $2.1 million and $1.2 million, respectively, was recorded in prepaid expenses and other current assets on the consolidated balance sheet for amounts due from government support programs, and as of September 30, 2023 and December 31, 2022, $3.3 million and $4.6 million, respectively, was recorded to other current liabilities related to government support received related to future periods.
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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 September 30, 2023
North America$287,526 $154,041 $31,923 $473,490 
International157,221 15,076  172,297 
$444,747 $169,117 $31,923 $645,787 
Three months ended September 30, 2022
North America$243,747 $119,555 $31,053 $394,355 
International136,809 9,051  145,860 
$380,556 $128,606 $31,053 $540,215 
Full service
center-based
child care
Back-up careEducational
advisory and
other services
Total
(In thousands)
Nine months ended September 30, 2023
North America$872,124 $349,982 $87,290 $1,309,396 
International461,345 31,868  493,213 
$1,333,469 $381,850 $87,290 $1,802,609 
Nine months ended September 30, 2022
North America$744,806 $280,580 $83,997 $1,109,383 
International360,998 20,584  381,582 
$1,105,804 $301,164 $83,997 $1,490,965 
The classification “North America” is comprised of the Company’s United States and Puerto Rico operations and the classification “International” includes the Company’s United Kingdom, Netherlands, Australia and India operations. On July 1, 2022, the Company acquired Only About Children, an operator of 75 child care centers in Australia. Refer to Note 4, Acquisitions, for additional information.
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 nine months ended September 30, 2023 and 2022, $200.7 million and $224.6 million was recognized as revenue related to the deferred revenue balance recorded at December 31, 2022 and December 31, 2021, respectively.
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.
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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, the Netherlands, and Australia. Most of the leases expire within 10 to 15 years and many contain renewal options and/or termination provisions. As of September 30, 2023 and December 31, 2022, there were no material finance leases.
Lease Expense
The components of lease expense were as follows:
Three months ended September 30,Nine months ended September 30,
2023202220232022
(In thousands)
Operating lease expense (1)
$38,461 $37,992 $115,888 $102,879 
Variable lease expense (1)
10,572 10,264 32,312 29,976 
Total lease expense$49,033 $48,256 $148,200 $132,855 
(1) Excludes short-term lease expense and sublease income, which were immaterial for the periods presented.
Other Information
The weighted average remaining lease term and the weighted average discount rate were as follows:
September 30, 2023December 31, 2022
Weighted average remaining lease term (in years)1010
Weighted average discount rate7.0%6.7%
Maturity of Lease Liabilities
The following table summarizes the maturity of lease liabilities as of September 30, 2023:
Operating Leases
(In thousands)
Remainder of 2023$26,767 
2024154,677 
2025144,758 
2026137,520 
2027128,226 
Thereafter674,892 
Total lease payments1,266,840 
Less imputed interest(375,735)
Present value of lease liabilities891,105 
Less current portion of operating lease liabilities
(96,388)
Long-term operating lease liabilities$794,717 
As of September 30, 2023, the Company had entered into additional operating leases with total fixed payment obligations of $18.7 million that have not yet commenced. The leases are expected to commence between the fourth quarter of fiscal 2023 and the first quarter of fiscal 2024 and have initial lease terms of approximately 12 to 15 years.
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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.
2023 Acquisitions
During the nine months ended September 30, 2023, the Company acquired four centers in the United States and four centers in Australia, in four separate business acquisitions, which were each accounted for as a business combination. The businesses were acquired for aggregate cash consideration of $37.6 million, which is subject to adjustments from the settlement of the final working capital and acquired enrollment. The Company recorded goodwill of $35.5 million related to the full service center-based child care segment in relation to these acquisitions, of which $25.4 million will be deductible for tax purposes. In addition, the Company recorded intangible assets of $3.7 million that will be amortized over four years.
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 September 30, 2023, the purchase price allocation for these acquisitions remains 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 and were not material to the Company’s financial results.
During the nine months ended September 30, 2023, the Company paid contingent consideration of $0.2 million related to an acquisition completed in 2021, which had been recorded as a liability at the date of acquisition and is presented as cash used in financing activities in the consolidated statement of cash flows.
2022 Acquisitions
Only About Children
On July 1, 2022, the Company, through wholly-owned subsidiaries, completed the acquisition of the outstanding shares of Only About Children, a child care operator in Australia with approximately 75 early education and child care centers, for aggregate consideration of AUD$450 million (USD$310 million), which was accounted for as a business combination. The Company paid approximately AUD$300 million (USD$207 million), net of cash acquired and subject to customary purchase price adjustments, and will pay an additional USD$106.5 million 18 months after closing. In October 2022, the Company reached an agreement with the sellers on the final net working capital, resulting in a refund of AUD$2.6 million (USD$1.8 million), which was received in the fourth quarter of 2022. The present value of the deferred consideration of USD$97.7 million at the acquisition date and USD$105.0 million at September 30, 2023 is included in other current liabilities on the consolidated balance sheet.
During the year ended December 31, 2022, the Company incurred acquisition-related transaction costs of approximately $9.2 million, which were included in selling, general and administrative expenses. In addition, the Company recognized realized losses of $5.9 million in relation to foreign currency forward contracts for the purchase of Australian dollars entered into in connection with settling the purchase price for the acquisition. Refer to Note 6, Credit Arrangements and Debt Obligations, for additional information on the foreign currency forward contracts.
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The purchase price for this acquisition has been allocated based on estimates of the fair value of the acquired assets and assumed liabilities at the date of acquisition as follows:
At acquisition date
as reported
September 30, 2022
Measurement period adjustmentsAt acquisition date
as reported
September 30, 2023
(In thousands)
Cash$4,705 $ $4,705 
Accounts receivable and prepaid expenses4,295 (54)4,241 
Fixed assets21,702 (1,850)19,852 
Goodwill 283,466 4,398 287,864 
Intangible assets30,945 (3,377)27,568 
Operating lease right of use assets156,678 (4,408)152,270 
Total assets acquired 501,791 (5,291)496,500 
Accounts payable and accrued expenses17,991 772 18,763 
Deferred revenue and parent deposits6,809 62 6,871 
Deferred tax liabilities3,392 (3,392) 
Operating lease liabilities161,405 (1,715)159,690 
Other long-term liabilities5,458 (1,018)4,440 
Total liabilities assumed195,055 (5,291)189,764 
Purchase price$306,736 $ $306,736 
The Company recorded goodwill of $287.9 million related to the full service center-based child care segment, which will not be deductible for tax purposes. Intangible assets consist of customer relationships of $19.7 million with a six year life and trade name of $7.9 million with an eleven year life.
The operating results for Only About Children are included in the consolidated results of operations from the date of acquisition, and are reported with the full service center-based child care segment.
The following table presents consolidated pro forma revenue as if the acquisition of Only About Children had occurred on January 1, 2021:
Pro forma
(Unaudited)
Nine months ended
September 30, 2022
(In thousands)
Revenue$1,559,882 
Other than the impact of shifting the transaction costs incurred in 2022 to 2021, consolidated pro forma net income would not materially change from the reported results. In assessing the impact to the unaudited pro forma results, we considered certain adjustments related to the acquisition, such as increased amortization expense related to the acquired intangible assets, adjusted depreciation associated with the fair value of the acquired fixed assets, and shifting of transaction costs.
Other 2022 Acquisitions
During the year ended December 31, 2022, the Company acquired one center in the United States, one center in the United Kingdom, and one center in the Netherlands, in three separate business acquisitions, which were each accounted for as a business combination. These businesses were acquired for aggregate cash consideration of $6.0 million, net of cash acquired of $0.2 million, and consideration payable of $0.2 million. The Company recorded goodwill of $5.6 million related to the full service center-based child care segment in relation to these acquisitions, of which $1.9 million will be deductible for tax purposes. In addition, the Company recorded intangible assets of $1.0 million that will be amortized over four years 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 September 30, 2023, the purchase price allocation for two of the acquisitions remains 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 and were not material to the Company’s financial results.
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During the year ended December 31, 2022, the Company paid contingent consideration of $19.1 million related to an acquisition completed in 2019 and contingent consideration of $0.2 million related to an acquisition completed in 2021. Of the total amounts paid of $19.3 million, $13.9 million had been recorded as a liability at the date of acquisition and was presented as cash used in financing activities in the consolidated statement of cash flows with remaining amounts reflected as cash used in operating activities.
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, 2023$1,481,936 $206,073 $39,843 $1,727,852 
Additions from acquisitions35,499   35,499 
Adjustments to prior year acquisitions1,202   1,202 
Effect of foreign currency translation(14,190)205  (13,985)
Balance at September 30, 2023$1,504,447 $206,278 $39,843 $1,750,568 
The Company also has intangible assets, which consisted of the following at September 30, 2023 and December 31, 2022:
September 30, 2023Weighted average
amortization period
CostAccumulated
amortization
Net carrying
amount
(In thousands)
Definite-lived intangible assets:
Customer relationships11 years$400,910 $(365,648)$35,262 
Trade names10 years19,028 (11,223)7,805 
419,938 (376,871)43,067 
Indefinite-lived intangible assets:
Trade namesN/A180,314 — 180,314 
$600,252 $(376,871)$223,381 
December 31, 2022Weighted average
amortization period
CostAccumulated
amortization
Net carrying
amount
(In thousands)
Definite-lived intangible assets:
Customer relationships12 years$398,238 $(341,918)$56,320 
Trade names10 years19,231 (10,236)8,995 
417,469 (352,154)65,315 
Indefinite-lived intangible assets:
Trade namesN/A180,259 — 180,259 
$597,728 $(352,154)$245,574 
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The Company estimates that it will record amortization expense related to intangible assets existing as of September 30, 2023 as follows:
Estimated amortization expense
(In thousands)
Remainder of 2023$8,635 
202417,566 
20255,628 
20263,963 
20272,824 
Thereafter4,451 
$43,067 
6. CREDIT ARRANGEMENTS AND DEBT OBLIGATIONS
Senior Secured Credit Facilities
The Company’s senior secured credit facilities consist of a $600 million term loan B facility (“term loan B”) and a $400 million term loan A facility (“term loan A” and, together with term loan B, the “term loan facilities” or “term loans”), as well as a $400 million multi-currency revolving credit facility (“revolving credit facility”).
Long-term debt obligations were as follows:
September 30, 2023December 31, 2022
(In thousands)
Term loan B$589,500 $594,000 
Term loan A382,500 390,000 
Deferred financing costs and original issue discount(5,532)(6,419)
Total debt966,468 977,581 
Less current maturities(16,000)(16,000)
Long-term debt$950,468 $961,581 
On December 21, 2022, the Company amended its existing senior secured credit facilities to replace the LIBOR-based benchmark rate with a term SOFR benchmark rate, which did not alter the applicable interest rates held in effect prior to the change. The amendment was treated as a modification and the related transaction costs were expensed as incurred.
All borrowings under the credit facilities are subject to variable interest. The effective interest rate for the term loans was 7.48% and 6.49% at September 30, 2023 and December 31, 2022, respectively, and the weighted average interest rate was 7.08% and 3.11% for the nine months ended September 30, 2023 and 2022, respectively, prior to the effects of any interest rate hedge arrangements. The effective interest rate for the revolving credit facility was 9.25% and 6.51% at September 30, 2023 and December 31, 2022, respectively, and the weighted average interest rate for the revolving credit facility was 7.44% and 4.30% for the nine months ended September 30, 2023 and 2022, respectively. The effective interest rate on the revolving credit facility may fluctuate from borrowing to borrowing for various reasons, including changes in the term benchmark or base interest rate, and the selected borrowing cycle as rates can vary between under-30 day and over-30 day borrowings.
Term Loan B Facility
The seven-year term loan B matures on November 23, 2028 and requires quarterly principal payments equal to 1% per annum of the original aggregate principal amount of the term loan B, with the remaining principal balance due at maturity. Borrowings under the term loan B facility bear interest at a rate per annum of 1.25% over the base rate, or 2.25% over the adjusted term SOFR rate. The base rate is subject to an interest rate floor of 1.50% and the adjusted term SOFR rate is subject to an interest rate floor of 0.50%.
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Term Loan A Facility
The five-year term loan A matures on November 23, 2026 and requires quarterly principal payments equal to 2.5% per annum of the original aggregate principal amount of the term loan A in each of the first three years, 5.0% in the fourth year, and 7.5% in the fifth year. The remaining principal balance is due at maturity. Borrowings under the term loan A 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 adjusted term SOFR rate. The base rate is subject to an interest rate floor of 1.00% and the adjusted term SOFR rate is subject to an interest rate floor of 0.00%.
Revolving Credit Facility
The $400 million multi-currency revolving credit facility matures on May 26, 2026. At September 30, 2023, borrowings outstanding on the revolving credit facility were $29.4 million and letters of credit outstanding were $19.2 million, with $351.4 million available for borrowing. At December 31, 2022, borrowings outstanding on the revolving credit facility were $84.0 million and letters of credit outstanding were $5.2 million.
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 adjusted term SOFR rate. The base rate is subject to an interest rate floor of 1.00% and the adjusted term SOFR rate is subject to an interest rate floor of 0.00%.
Debt Covenants
All obligations under the senior secured credit facilities are secured by substantially all the assets of the Company’s material 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 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 term loan A and the revolving credit facility require Bright Horizons Family Solutions LLC, the borrower, and its restricted subsidiaries, to comply with a maximum first lien net leverage ratio not to exceed 4.25 to 1.00. 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:
Long-term debt
(In thousands)
Remainder of 2023$4,000 
202418,500 
202528,500 
2026351,000 
20276,000 
Thereafter564,000 
Total future principal payments$972,000 
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. The Company’s risk management policy permits using derivative instruments to manage interest rate and other risks. The Company uses interest rate caps to manage a portion of the risk related to changes in cash flows from interest rate movements. On December 21, 2022, the Company amended its existing interest rate cap agreements in conjunction with the amendment to its senior secured credit facilities and replaced the one-month LIBOR rate with the one-month term SOFR rate.
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% (effective December 30, 2022, one-month term SOFR rate increases above 0.9%). 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 an effective date of October 29, 2021 and expire on October 31, 2023.
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In December 2021, the Company entered into additional interest rate cap agreements with a total notional value of $900 million designated and accounted for as cash flow hedges from inception. Interest rate cap agreements for $600 million, which have a forward starting effective date of October 31, 2023 and expire on October 31, 2025, provide the Company with interest rate protection in the event the one-month LIBOR rate increases above 2.5% (effective December 30, 2022, one-month term SOFR rate increases above 2.4%). Interest rate cap agreements for $300 million, which have a forward starting effective date of October 31, 2023 and expire on October 31, 2026, provide the Company with interest rate protection in the event the one-month LIBOR rate increases above 3.0% (effective December 30, 2022, one-month term SOFR rate increases above 2.9%).
During the year ended December 31, 2022, the Company entered into foreign currency forward contracts in connection with an acquisition in Australia completed on July 1, 2022. The Company entered into the foreign currency forwards to lock the purchase price in US dollars at closing and mitigate the impact of foreign currency fluctuations between signing of the definitive purchase agreement on May 3, 2022 and closing. The forward contracts had a total notional value of approximately AUD$320 million, which included the expected payments for the purchase price and for letters of credit used to guarantee certain lease arrangements. The cash flows associated with the business combination do not meet the criteria to be designated and accounted for as a cash flow hedge and, as such, foreign currency gains and losses on these forwards are recorded on the consolidated statement of income. During the year ended December 31, 2022, the Company recognized realized losses of $5.9 million in relation to these forwards due to fluctuations in the Australian dollar.
The fair value of the derivative financial instruments was as follows for the periods presented:
Derivative financial instrumentsConsolidated balance sheet classificationSeptember 30, 2023December 31, 2022
(In thousands)
Interest rate caps - assetPrepaid and other current assets$2,910 $25,464 
Interest rate caps - assetOther assets$43,272 $28,553 
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 September 30, 2023
Cash flow hedges$6,326 Interest expense — net$8,595 $(2,269)
Income tax effect(1,689)Income tax expense(2,295)606 
Net of income taxes$4,637 $6,300 $(1,663)
Three months ended September 30, 2022
Cash flow hedges$21,550 Interest expense — net$2,344 $19,206 
Income tax effect(5,754)Income tax expense(626)(5,128)
Net of income taxes$15,796 $1,718 $14,078 
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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)
Nine months ended September 30, 2023
Cash flow hedges$16,374 Interest expense — net$23,575 $(7,201)
Income tax effect(4,372)Income tax expense(6,295)1,923 
Net of income taxes$12,002 $17,280 $(5,278)
Nine months ended September 30, 2022
Cash flow hedges$53,310 Interest expense — net$2,173 $51,137 
Income tax effect(14,234)Income tax expense(1,057)(13,177)
Net of income taxes$39,076 $1,116 $37,960 
During the next 12 months, the Company estimates that a net gain of $22.8 million, pre-tax, will be reclassified from accumulated other comprehensive loss and recorded as a reduction to interest expense related to these derivative financial instruments.
7. EARNINGS PER SHARE
The following tables set forth the computation of basic and diluted earnings per share using the two-class method:
Three months ended September 30,Nine months ended September 30,
2023202220232022
(In thousands, except share data)
Basic earnings per share:
Net income$39,979 $18,248 $68,699 $62,599 
Allocation of net income to common stockholders:
Common stock$39,891 $18,170 $68,537 $62,334 
Unvested participating shares88 78 162 265 
Net income$39,979 $18,248 $68,699 $62,599 
Weighted average common shares outstanding:
Common stock57,765,332 57,664,895 57,692,254 58,624,221 
Unvested participating shares126,699 248,969 152,831 249,446 
Earnings per common share:
Common stock$0.69 $0.32 $1.19 $1.06 
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Three months ended September 30,Nine months ended September 30,
2023202220232022
(In thousands, except share data)
Diluted earnings per share:
Earnings allocated to common stock$39,891 $18,170 $68,537 $62,334 
Plus: earnings allocated to unvested participating shares88 78 162 265 
Less: adjusted earnings allocated to unvested participating shares(88)(78)(162)(264)
Earnings allocated to common stock$39,891 $18,170 $68,537 $62,335 
Weighted average common shares outstanding:
Common stock57,765,332 57,664,895 57,692,254 58,624,221 
Effect of dilutive securities279,805 75,118 194,569 178,521 
Weighted average common shares outstanding — diluted58,045,137 57,740,013 57,886,823 58,802,742 
Earnings per common share:
Common stock$0.69 $0.31 $1.18 $1.06 
Equity awards outstanding to purchase or receive 1.7 million and 2.3 million shares of common stock were excluded from diluted earnings per share for the three months ended September 30, 2023 and 2022, respectively, and 1.9 million and 1.8 million shares of common stock were excluded from diluted earnings per share for the nine months ended September 30, 2023 and 2022, respectively, since their effect was anti-dilutive. These equity awards may become dilutive in the future.
8. INCOME TAXES
The Company’s effective income tax rates were 26.8% and 33.3% for the three months ended September 30, 2023 and 2022, respectively, and 35.0% and 26.7% for the nine months ended September 30, 2023 and 2022, respectively. The effective income tax rate may fluctuate from quarter to quarter for various reasons, including changes to income before income tax, jurisdictional mix of income before income tax, unbenefited losses, valuation allowances, jurisdictional income tax rate changes, as well as discrete items such as non-deductible transaction costs, the settlement of foreign, federal and state tax issues and the effects of excess (shortfall) tax benefit (expense) associated with the exercise or expiration of stock options and vesting of restricted stock, which is included in tax expense.
During the three and nine months ended September 30, 2023, the net shortfall tax expense from stock-based compensation expense increased tax expense by $0.1 million and $3.0 million, respectively. During the three months ended September 30, 2022, the net shortfall tax expense from stock-based compensation expense increased tax expense by $0.1 million. During the nine months ended September 30, 2022, the excess tax benefit decreased tax expense by $2.6 million. For the three months ended September 30, 2023 and 2022, prior to the inclusion of the excess (shortfall) tax benefit (expense), other discrete items and unbenefited losses in certain foreign jurisdictions, the effective income tax rate approximated 28% and 29%, respectively. For the nine months ended September 30, 2023 and 2022, prior to the inclusion of the excess (shortfall) tax benefit (expense), other discrete items and unbenefited losses in certain foreign jurisdictions, the effective income tax rate approximated 28%.
The Company’s unrecognized tax benefits were $4.4 million and $3.8 million at September 30, 2023 and December 31, 2022, respectively, inclusive of interest. The Company does not expect the unrecognized tax benefits to change over the next twelve months.
The Company and its domestic subsidiaries are subject to U.S. federal income tax as well as tax in multiple state jurisdictions. U.S. federal income tax returns are typically subject to examination by the Internal Revenue Service and the statute of limitations for federal tax returns is three years. The Company’s filings for the tax years 2019 through 2021 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 four 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. The Company's filings for the tax years 2018 through 2021 are subject to audit based upon the statute of limitations.
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The Company is also subject to corporate income tax for its subsidiaries located in the United Kingdom, the Netherlands, Australia, India, 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 five years.
9. FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified using a three-level 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 and the lowest priority to unobservable inputs. The Company uses observable inputs where relevant and whenever possible. The three levels of the hierarchy are defined as follows:
    Level 1 — Fair value is derived using quoted prices from active markets for identical instruments.
    Level 2 — Fair value is derived using quoted prices for similar instruments from active markets or for identical or similar instruments in markets that are not active; or, fair value is based on model-derived valuations in which all significant inputs and significant value drivers are observable from active markets.
    Level 3 — Fair value is 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, restricted cash, accounts receivable, and accounts payable and accrued expenses approximates their fair value because of their short-term nature.
Financial instruments that potentially expose the Company to concentrations of credit risk consisted mainly of cash and accounts receivable. The Company mitigates its exposure by maintaining its cash in financial institutions of high credit standing. The Company’s accounts receivable is derived primarily from the services it provides, and the related credit risk is 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. No significant credit concentration risk existed at September 30, 2023.
Long-term Debt — The Company’s long-term debt is recorded at adjusted cost, net of original issue discounts and deferred financing costs. The fair value of the Company’s long-term debt is based on current bid prices or prices for similar instruments from active markets. As such, the Company’s long-term debt was classified as Level 2. As of September 30, 2023 and December 31, 2022, the estimated fair value approximated the carrying value of long-term debt.
Derivative Financial Instruments The Company’s interest rate cap agreements are recorded at fair value and 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 caps 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 caps, it was not considered a significant input. The fair value of the interest rate caps is classified as Level 2. As of September 30, 2023, the fair value of the interest rate cap agreements was $46.2 million, of which $2.9 million was recorded in prepaid expenses and other current assets and $43.3 million was recorded in other assets on the consolidated balance sheet. At December 31, 2022, the fair value of the interest rate cap agreements was $54.1 million, of which $25.5 million was recorded in prepaid expenses and other current assets and $28.6 million was recorded in other assets on the consolidated balance sheet.
Debt Securities — The Company’s investments in debt securities, which are classified as available-for-sale, consist of U.S. Treasury and U.S. government agency securities and certificates of deposit. These securities are held in escrow by the Company’s wholly-owned captive insurance company and were purchased with restricted cash. As such, these securities are not available to fund the Company’s operations. These securities are recorded at fair value using quoted prices available in active markets and are classified as Level 1. As of September 30, 2023, the fair value of the available-for-sale debt securities was $26.2 million and was classified based on the instruments’ maturity dates, with $23.4 million included in prepaid expenses and other current assets and $2.8 million in other assets on the consolidated balance sheet. As of December 31, 2022, the fair value of the available-for-sale debt securities was $29.6 million, with $17.7 million included in prepaid expenses and other current assets and $11.9 million in other assets on the consolidated balance sheet. At September 30, 2023 and December 31, 2022, the amortized cost was $26.4 million and $29.8 million, respectively. The debt securities held at September 30, 2023 had remaining maturities ranging from less than one year to approximately two years. Unrealized gains and losses, net of tax, on available-for-sale debt securities were immaterial for the three and nine months ended September 30, 2023 and 2022.
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Liabilities for Contingent Consideration The Company is subject to contingent consideration arrangements in connection with certain business combinations. Liabilities for contingent consideration are measured at fair value each reporting period, with the acquisition-date fair value included as part of the consideration payable for the related business combination and subsequent changes in fair value recorded to selling, general and administrative expenses on the Company’s consolidated statement of income. The fair value of contingent consideration was generally calculated using customary valuation models based on probability-weighted outcomes of meeting certain future performance targets and forecasted results. The key inputs to the valuations are the projections of future financial results in relation to the businesses and the company-specific discount rates. The Company classified the contingent consideration liabilities as a Level 3 fair value measurement due to the lack of observable inputs used in the model. During the nine months ended September 30, 2023, contingent consideration liabilities of $0.2 million were paid related to an acquisition completed in 2021. The contingent consideration liabilities outstanding as of September 30, 2023 relate to an acquisition completed in 2021.
The following table provides a roll forward of the recurring Level 3 fair value measurements:
Nine months ended September 30, 2023
(In thousands)
Balance at January 1, 2023$8,997 
Settlement of contingent consideration liabilities(225)
Changes in fair value1,314 
Balance at September 30, 2023$10,086 
10. ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated other comprehensive loss, which is included as a component of stockholders’ equity, is comprised of foreign currency translation adjustments and unrealized gains (losses) on cash flow hedges and investments, net of tax.
The changes in accumulated other comprehensive income (loss) by component were as follows:
Nine months ended September 30, 2023
Foreign currency
translation adjustments
(1)
Unrealized gain (loss) on
cash flow hedges
Unrealized gain (loss) on
investments
Total
(In thousands)
Balance at January 1, 2023$(105,138)$34,738 $(229)$(70,629)
Other comprehensive income (loss) before reclassifications — net of tax(14,843)12,002 (12)(2,853)
Less: amounts reclassified from accumulated other comprehensive income (loss) — net of tax 17,280 (92)17,188 
Net other comprehensive income (loss)(14,843)(5,278)80 (20,041)
Balance at September 30, 2023$(119,981)$29,460 $(149)$(90,670)
Nine months ended September 30, 2022
Foreign currency
translation adjustments
(1)
Unrealized gain (loss) on
cash flow hedges
Unrealized gain (loss) on
investments
Total
(In thousands)
Balance at January 1, 2022$(38,073)$738 $(24)$(37,359)
Other comprehensive income (loss) before reclassifications — net of tax(130,834)39,076 (237)(91,995)
Less: amounts reclassified from accumulated other comprehensive income (loss) — net of tax 1,116  1,116 
Net other comprehensive income (loss)(130,834)37,960 (237)(93,111)
Balance at September 30, 2022$(168,907)$38,698 $(261)$(130,470)
(1)Taxes are not provided for the currency translation adjustments related to the undistributed earnings of foreign subsidiaries that are intended to be indefinitely reinvested.
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11. SEGMENT INFORMATION
The Company’s reportable segments are comprised of (1) full service center-based child care, (2) back-up care, and (3) educational advisory and other services. The full service center-based child care segment includes the traditional center-based early education and child care, preschool, and elementary education. The Company’s back-up care segment consists of center-based back-up child care, in-home care for children and adult/elder dependents, school-age camps, tutoring, pet care and self-sourced reimbursed care. The Company’s educational advisory and other services segment consists of tuition assistance and student loan repayment program management, workforce education, related educational advising, college advisory services, and Sittercity, an online marketplace for families and caregivers, which have been aggregated. The Company and its chief operating decision maker evaluate performance based on revenue and income from operations. Intercompany activity is eliminated in the segment results. 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 segment asset information is produced or included herein.
Revenue and income from operations by reportable segment were as follows:
Full service
center-based
child care
Back-up careEducational
advisory and
other services
Total
(In thousands)
Three months ended September 30, 2023
Revenue$444,747 $169,117 $31,923 $645,787 
Income from operations6,990 51,684 8,150 66,824 
Three months ended September 30, 2022
Revenue$380,556