What changed in this filing

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Item 1A. Risk Factors

2023-02-28 compared with 2022-02-25 · 75 added, 74 removed, 211 unchanged (41% of the section changed)

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Business and Operational Risks

The global COVID-19 pandemic has significantly disrupted our business and our financial condition and operating results and will continue to adversely impact our business.

The COVID-19 pandemic has substantially disrupted our global operations, and we expect to continue to be impacted as the conditions persist.

The situation remains dynamic and subject to rapid and potentially material changes.

As of December 31, 2021, we operated 1,014 early education and child care centers with the capacity to serve approximately 114,000 children and their families, of which 977 child care centers were open.

While we are focused on the enrollment of our centers, the continued or additional disruptions to our business and potential adverse impacts to our financial condition and results of operations resulting from the COVID-19 pandemic include, but are not limited to:

• significant changes in the conditions of the markets we operate in limiting our ability to provide our services, especially center-based child care and center-based back-up child care, and potentially resulting in continued center closures or permanent center closures;

• reduced enrollment upon the re-opening of centers as families may limit their participation in various public activities and gatherings, including group child care;

• inability to hire and maintain an adequate level of center staff requiring us to reduce enrollment, close classrooms or centers in order to comply with mandated ratios, inability to retain teachers, and the impact to our operations if a significant percentage of our workforce is unable to return to work because of illness, quarantine, worker absenteeism, limitations on travel, or government or social distancing restrictions, or difficulty maintaining or retaining staff, which may have a disproportionate impact on our business compared to other companies that depend less on the in-person provision of services and do not directly provide care and education to young children;

• new or persistent COVID-19 variants could result in temporary classroom or center closures or permanent closure of centers outside of our control due in large part to the interdependence of our operations with our client partners’ operating decisions and requirements, which may result in reduced demand or the adoption of alternative child care options;

• the adoption and efficacy of vaccines may have a disproportionate impact on our business compared to other companies that depend less on the in-person provision of services;

The global COVID-19 pandemic and recovery therefrom has significantly disrupted our operations and our financial condition and operating results and may continue to adversely impact our business.

The COVID-19 pandemic and the recovery therefrom has substantially disrupted our global operations, and we expect to continue to be impacted as the conditions persist.

Although conditions continue to stabilize, the situation remains subject to rapid and potentially material changes.

As of December 31, 2022, we operated 1,078 early education and child care centers, 99% of which were open.

• significant changes in the conditions of the markets we operate in may limit our ability to provide our services, especially center-based child care and center-based back-up child care, and may result in center closures;

• inability to hire and maintain an adequate level of center staff requiring us to constrain or reduce enrollment, close classrooms or centers in order to comply with mandated ratios, inability to retain teachers, and the impact to our operations if a significant percentage of our workforce is unable to work because of illness, quarantine, government restrictions, or difficulty maintaining or retaining staff, which may have a disproportionate impact on our business compared to other companies that depend less on the in-person provision of services and do not directly provide care and education to young children;

• reduced or shifting demand for our services due to adverse and uncertain economic and demographic conditions, including as a result of clients that have been adversely impacted, and/or increased unemployment, school and business closures, lockdown orders, long-term shift to a remote workforce, and general effects of a broad-based economic recession;

• incremental costs and general disruption associated with additional procedures and protocols required to maintain health and safety at our centers, and costs and reputational harm associated with a potential COVID-19 outbreak at our centers, or the failure of compliance with COVID-19 health and safety protocols;

• a reduction or limit on governmental grant funding for COVID-19 relief at the federal, state and local level could adversely impact our results of operations;

• legal actions or proceedings related to COVID-19;

• potential asset impairments or write-downs as we review assets impacted as a result of the ongoing COVID-19 pandemic;

• reduction in our liquidity position limiting our ability to service our indebtedness and our future ability to incur additional indebtedness or financing;

• downgrades to our credit rating by ratings agencies which could reduce our ability to access capital markets.

• potential asset impairments or write-downs as we review assets impacted by the COVID-19 pandemic.

These factors could place limitations on our ability to operate effectively and could have a material adverse effect on our operations, financial condition and operating results.

As the situation continues to evolve and more information and guidance becomes available, we may adjust our current plans, policies and procedures to address the rapidly changing variables related to the pandemic.

The COVID-19 pandemic could continue to have a negative impact on our results of operations, the size and duration of which we are currently unable to predict.

The recovery from the COVID-19 pandemic could continue to have a negative impact on our results of operations, the size and duration of which we are currently unable to predict.

Additional impacts may arise of which we are currently not aware, the nature and extent of which will depend on future developments which are highly uncertain and cannot be predicted.

Vaccine and workplace safety mandates or guidance proposed or implemented by federal, state or local governments, or by clients, could disrupt the Company’s operations, increase costs and adversely affect its business, financial condition, or results of operations.

Notwithstanding the withdrawal of the federal Occupational Safety and Health Administration emergency rule on vaccine mandates, many state, county, and local jurisdictions have proposed or implemented some form of COVID-19 workplace safety guidance and requirements including vaccinations, masking and physical distancing or weekly testing requirements.

Further vaccine mandates or other requirements may be announced in jurisdictions in which our businesses operate, by state or local governments or by the clients we serve.

Complying with vaccine mandates may be costly and operationally complex.

Additionally, competing and potentially conflicting laws and regulations regarding vaccine mandates and testing requirements could further complicate compliance.

Such vaccination requirements may result in incremental employee turnover, recruiting challenges or additional costs, which could have a material adverse effect on our business, financial condition, and results of operations.

Our business depends largely on our ability to hire and retain qualified teachers and maintain strong employee relations.

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If we are unable to hire and retain qualified teachers at a center, we could be required to reduce enrollment, close classrooms or centers or be prevented from accepting additional enrollment in order to comply with such mandated ratios.

We may continue to experience difficulty in attracting, hiring and retaining qualified teachers due to tight labor pools.

We may experience difficulty in attracting and retaining teachers due to health concerns and changes in the work environment as a result of COVID-19.

We may continue to experience difficulty in attracting, hiring and retaining qualified teachers due to tight labor pools and we may experience difficulty in attracting and retaining teachers due to changes in the work environment as a result of the COVID-19 pandemic.

Such market pressures have required us to offer increased salaries, enhanced benefits and institute additional initiatives to maintain strong employee relations, which increase costs, and may further increase costs in the future.

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In addition, changes in demographic trends, including the number of dual working parent or working single parent families in the workforce, may impact the demand for our services.

Further, availability of work-from-home or hybrid work options may shift demand away from locations where we currently offer services.

Such changes could materially and adversely affect our business and operating results.

Even as employers recognize the value of our services, demand may be adversely affected by general economic conditions or changes in workforce demographics and work-place environments as a result of COVID-19.

Uncertainty or a deterioration in economic conditions could lead to reduced demand for our services as employer clients may reduce or eliminate their sponsorship of work and family services, and prospective clients may not commit resources to such services.

Uncertainty or a deterioration in economic conditions, including global inflationary pressures impacting our clients and customers, could lead to reduced demand for our services as employer clients may reduce or eliminate their sponsorship of work and family services, and prospective clients may not commit resources to such services.

In addition, a reduction in the size of an employer’s workforce could negatively impact the demand for our services and result in reduced enrollment or failure of our employer clients to renew their contracts.

A deterioration of general economic conditions or changes in workforce demographics may adversely impact the need for our services because out-of-work parents may decrease or discontinue the use of child care services, or be unwilling to pay tuition for high-quality services.

A deterioration of general economic conditions in both the U.S.

and globally, recessionary fears or changes in workforce demographics may adversely impact the need for our services because out-of-work parents may decrease or discontinue the use of child care services, or be unwilling to pay tuition for high-quality services.

Additionally, we may not be able to increase the price for our services at a rate consistent with increases in our operating costs.

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Any reputational damage could have a material adverse effect on our brand value and our business, which, in turn, could have a material adverse effect on our financial condition and results of operations.

Breaches in data security and other information technology interruptions or system failures could adversely affect our financial condition and operating results.

As part of our business, we collect and store sensitive data and certain personal information from our clients, the families and children we serve and our employees.

If we or our third-party vendors are subject to cyber-attacks, data breaches or other security incidents, or if there is a disruption or failure of our information technology systems or software, such events could expose us to liability and could adversely affect our financial condition and operating results.

As part of our business, we collect, process, use, and store sensitive data and certain personal information from our clients, the families and children we serve, and our employees.

We also utilize third-party vendors and electronic payment methods to process and store some of this information, including credit card information.

Storing this data exposes us to increased risk of privacy and/or security breaches as well as increased vulnerability to cyber-attacks.

Cybersecurity threats in particular are persistent, evolve quickly and include, but are not limited to, computer viruses, ransomware attacks, attempts to access information, phishing scams, denial of service attacks and other security breaches of software, systems or platforms.

Such cybersecurity threats may increase as a result of COVID-19 and the related shift to more employees working remotely, as cybercriminals attempt denial of service related attacks and other disruptive actions.

Like many businesses, we have in the past and will in the future continue to be subject to cybersecurity threats and attempts to compromise and penetrate our data security and systems.

We also face the potential for business disruptions from information technology interruptions associated with natural disasters and other events including power outages, catastrophic events, computer and network failures, inadequate or ineffective redundancy plans, system failures, and flaws in third-party software or services.

Our back-up care and educational advisory services are highly dependent on information technology for the coordination and delivery of services, which could be significantly impacted by a breach in our security and systems or other system interruptions.

Our policies and practices and operational safeguards, measures and controls aimed at protecting and recovering our data and ensuring business continuity, may not be sufficient to prevent cybersecurity breaches or ensure our key services are delivered without minimal disruption in the event of information technology system failures.

Failure of these systems to operate effectively or a compromise in the security of our systems that results in unauthorized persons or entities obtaining personal information could materially and adversely affect our reputation, operations, operating results, and financial condition.

Breaches in our data security, those of our affiliates or other third-parties, could expose us to risks of data loss, inappropriate disclosure of confidential or proprietary information, litigation or the imposition of penalties against us, liability, impede our processing of transactions and our financial reporting, and could result in a disruption of our operations.

The impact of these security threats and other disruptions are difficult to predict, our insurance coverage may not be adequate to cover all related costs, and we may not otherwise be fully indemnified for them.

Additionally, any related negative publicity could significantly harm our reputation and could materially and adversely affect our business and operating results.

Our business relies on information technology networks and systems to store this data, process financial and personal information, manage a variety of business processes, and comply with regulatory, legal and tax requirements.

We are also highly dependent on information technology for the coordination and delivery of our back-up care and educational advisory services.

Additionally, we maintain other confidential, proprietary, or otherwise sensitive information relating to our business and from third parties.

The information technology networks and systems owned, operated, controlled, or used by us or our third-party vendors may be vulnerable to damage, disruptions or shutdowns, software or hardware vulnerabilities, data breaches, security incidents, failures during the process of upgrading or replacing software or databases or components thereof, power outages, natural disasters, hardware failures, attacks by computer hackers, telecommunication failures, user errors, user malfeasance, computer viruses, unauthorized access, phishing or social engineering attacks, ransomware attacks, distributed denial-of-service attacks, brute force attacks, robocalls, and other real or perceived cyber-attacks or catastrophic events, all of which may not be prevented by our efforts to secure our networks and systems.

Security incidents can also occur as a result of non-technical issues, including intentional or inadvertent actions by our employees, our third-party vendors or their personnel, or other parties.

Security incidents are becoming increasingly prevalent and severe, as well as increasingly difficult to detect.

Any of these incidents could lead to interruptions or shutdowns of our platforms, disruptions in our ability to process service requests, record or analyze the use of our services, loss or corruption of data, or unauthorized access to, or acquisition of, personal information or other sensitive information, such as our intellectual property.

We maintain policies and practices and operational safeguards, measures and controls aimed at reducing our cyber risk, protecting and recovering our data and ensuring business continuity, which include reasonable efforts to ensure that our third-party vendors maintain reasonable security, including encryption and authentication technology, and will notify us promptly if a security incident occurs.

However, none of our or our vendors’ security measures can provide absolute security.

Advances in computer capabilities, increasingly sophisticated tools and methods used by hackers and cyber terrorists, new discoveries in the field of cryptography or other developments may result in our failure or inability, or the failure or inability of our vendors, to adequately protect personal or other sensitive information, and there can be no assurance that we or our vendors will not suffer a cyber-attack, that hackers or other unauthorized parties will not gain access to or exfiltrate personal information or other sensitive data, or that any such data compromise or unauthorized access will be discovered in a timely fashion.

Like many businesses, we, and our third-party vendors, have in the past and will in the future continue to be subject to cyber-attacks, cybersecurity threats and attempts to compromise and penetrate our data security and systems and disrupt our services.

Cyber-attacks against us or our third-party vendors could lead to operational disruptions that could have an adverse effect on our ability to provide services to clients and customers and on our results of operations and financial results.

For example, on December 12, 2022, we determined that a ransomware cyber incident had impacted and disrupted a number of our operational and information technology systems.

Promptly upon detecting and containing the incident, we launched an investigation and engaged the services of cybersecurity experts and advisors, incident response professionals, and external counsel to support the investigation and restored operational and business systems and functionality.

We are continuing to assess all actions that we will take to further improve our existing systems.

Based on the information currently available to us, we do not believe that the December 2022 ransomware attack will have a material impact on our business, results of operations, or financial condition, but no assurances can be given as we continue to assess the full impact from the incident, including costs, expenses, and insurance coverage.

Failure of our systems to operate effectively or a compromise in the security of our systems, or the systems of our affiliates or other third-party, that results in unauthorized persons or entities obtaining personal information or other sensitive information could materially and adversely affect our reputation, operations, operating results, and financial condition.

Actual or anticipated cyber-attacks may cause us to incur costs, including costs to deploy additional personnel and protection technologies, train employees, pay higher insurance premiums, and engage third-party specialists for additional services.

Breaches in our data security, those of our affiliates or other third-parties, could expose us to risks of data loss, inappropriate disclosure of confidential or proprietary information, potential claims, investigations, regulatory proceedings, litigation penalties and liability, could impede our processing of transactions and our financial reporting, and could result in a disruption of our operations.

In addition, we may incur other substantial costs in connection with remediating and otherwise responding to any data security incident, including potential liability for stolen client, customer, or employee data, repairing system damage, or providing credit monitoring or other benefits to clients, customers, or employees affected by the incident.

Additionally, if we or our third-party service providers experience security incidents that result in a decline in marketplace performance, availability problems, or the loss, corruption of, unauthorized access to, or disclosure of personal data or confidential information, people may become unwilling to provide us the information necessary to receive our services, and our reputation and market position could be harmed.

Existing customers may also decrease their use of our services or cease using our services altogether.

The impact of these security threats, incidents, and other disruptions are difficult to predict.

Our insurance coverage for such security threats, incidents, and other disruptions may not be adequate to cover all related costs, and we may not otherwise be fully indemnified for them.

This may result in an increase in our costs for insurance or insurance not being available to us on economically feasible terms or at all.

Insurers may also deny us coverage as to any future claim.

Any of these results could harm our growth prospects, financial condition, business, and reputation.

Our collection, use, storage, disclosure, transfer and other processing of personal information could give rise to significant costs and liabilities, including as a result of governmental regulations, uncertain or inconsistent interpretation and enforcement of legal requirements or differing views of personal privacy rights, which may have a material adverse effect on our reputation, business, financial condition and results of operation.

A variety of laws, regulations, industry self-regulatory principles, industry standards or codes of conduct and regulatory guidance relating to privacy, data protection, marketing and advertising, and consumer protection apply to the collection, use, retention, protection, disclosure, transfer and other processing of certain types of data.

As the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, with new and changing requirements applicable to our business, including the European Union’s General Data Protection Regulation and the California Consumer Privacy Act, among others, compliance with such requirements could impose significant limitations, require changes to our business, or restrict our use or storage of personal information, which may increase our compliance expenses and make our business more costly or less efficient to conduct.

Failure to comply with such regulations could result in significant penalties and damages which could materially and adversely affect our business and financial condition.

As the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, with new and changing requirements applicable to our business, including the European Union’s General Data Protection Regulation and various privacy legislation in the U.S., such as the California Consumer Privacy Act, compliance with such requirements could impose significant limitations, require changes to our business, or restrict our use or storage of personal information, which may increase our compliance expenses and make our business more costly or less efficient to conduct.

Failure to comply with such regulations could result in enforcement actions, significant fines, penalties and damages which could materially and adversely affect our business and financial condition.

Our continued profitability depends on our ability to pass on our increased costs, such as labor and related costs, to our customers.

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We expect to pay employees at rates above the minimum wage, and increases in the statutory minimum wage rates could result in a corresponding increase in the wages and benefits we pay to our employees.

Additionally, competition for teachers and staff, and costs associated with hiring, compensating and retaining employees, and costs of retraining teachers could result in significant increases in the cost of running our business, including costs to enhance employee compensation and benefit programs as an incentive and retentive tool.

Additionally, competition for teachers and staff, and costs associated with hiring, compensating and retaining employees, and costs of training teachers could result in significant increases in the cost of running our business, including costs to enhance employee compensation and benefit programs as an incentive and retentive tool.

Our success depends on our ability to continue to pass along these costs to our customers and to meet our changing labor needs while controlling costs.

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Failure to comply with or monitor contract terms or the termination or non-renewal of a significant number of contracts or the termination of a multiple-site or multiple-service client relationship could have a material adverse effect on our business, results of operations, financial condition or cash flows.

Additionally, our continued success depends on our ability to convert and retain new and existing clients and our ability to develop new consumer-oriented strategies or services to accommodate changing client, learner, or parent expectations and preferences around our services or service delivery.

Additionally, our continued success depends on our ability to convert and retain new and existing clients, cross-sell to existing clients, and our ability to develop new consumer-oriented strategies or services to accommodate changing client, learner, or parent expectations and preferences around our services or service delivery.

Our future success depends on our ability to continue to meet the evolving needs and expectations of our customers, including enhancing our existing services.

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Failure to meet these needs may result in client loss and reduced demand and could have a material impact on our financial results.

We depend on key management and key employees to manage our business.

We depend on key management and key employees to manage our business and timing considerations.

Our success depends on the efforts, abilities and continued services of our executive officers and other key employees.

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Health pandemics, natural disaster, sociopolitical or other catastrophic event could severely disrupt our business.

A regional or global health pandemic, not unlike COVID-19, depending on its duration and severity, could severely affect our business.

Enrollment in our child care centers could experience sharp declines as families might avoid taking their children out in public in the event of a health pandemic, and local, regional or national governments might limit or ban public interactions to halt or delay the spread of diseases causing business disruptions and the temporary closure of our centers.

A regional or global health pandemic, not unlike the COVID-19 pandemic, depending on its duration and severity, could severely affect our business.

Enrollment in our child care centers could experience sharp declines as families might avoid taking their children out in public or to center-based care in the event of a health pandemic, and local, regional or national governments might limit or ban public interactions to halt or delay the spread of diseases causing business disruptions and the temporary closure of our centers.

Additionally, a health pandemic could also impair our ability to hire and maintain an adequate level of staff and may have a disproportionate impact on our business compared to other companies that depend less on the in-person provision of services.

Other unforeseen events, including acts of violence, war, terrorism and other international, regional or local instability or conflicts (including labor issues), embargoes, natural disasters such as earthquakes, tsunamis, hurricanes, or other adverse weather and climate conditions, whether occurring in the United States or abroad, could restrict or disrupt our operations.

Enrollment in our child care centers could experience sharp declines as families might avoid taking their children out in public as a result of one or more of these events.

Other unforeseen events, including acts of violence, war, terrorism and other international, regional or local instability or conflicts (including labor issues), embargoes, natural disasters such as earthquakes, tsunamis, hurricanes, typhoons or other adverse weather and climate conditions, whether occurring in the United States or abroad, could restrict or disrupt our operations.

Enrollment in our child care centers could experience sharp declines as families might avoid taking their children out in public or to center-based care as a result of one or more of these events.

Further, climate change may increase both the frequency and severity of extreme weather conditions and natural disasters, which may affect our business operations and our clients, either in a particular region or globally.

In addition, changes in regulations brought about by climate change could impact our business, operating results, and financial condition.

Additionally, our information systems are essential to our back-up and educational advisory and other services segments as well as to the corporate departments that support our lines of business.

Our back-up care and educational advisory and other services segments as well as the corporate departments that support our lines of business are highly dependent on information technology for the coordination and delivery of services, which could be significantly impacted by system interruptions.

Our policies and practices and operational safeguards, measures and controls aimed at protecting and recovering our data and ensuring business continuity, may not be sufficient to ensure our key services are delivered without minimal disruption in the event of information technology system failures.

If those systems are damaged, interrupted or cease to function properly or if our disaster recovery and business continuity plans fail, it may have a material adverse effect on our business or results of operations.

Financing Related Risks

Our substantial indebtedness could adversely affect our financial condition.

Our substantial indebtedness could adversely affect our financial condition, and our variable interest rate indebtedness exposes us to interest rate volatility, which could cause our debt service obligations to increase significantly.

We have a significant amount of indebtedness from borrowings outstanding under our senior secured credit facilities.

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In addition, borrowings under our senior secured credit facilities bear interest at variable rates.

If market interest rates increase, variable rate debt will create higher interest service requirements, which could adversely affect our cash flows and impact future earnings.

While we have entered into interest rate caps to limit our exposure to higher interest rates on a portion of our debt, and may enter into additional agreements in the future, any such agreements may not offer complete protection from this risk and may carry additional risks.

Interest rates increased during 2022.

If market interest rates continue to increase, variable rate debt will create higher interest service requirements, which could adversely affect our cash flows and impact future earnings.

While we have entered into interest rate cap agreements to limit our exposure to higher interest rates on a portion of our debt, and may enter into additional agreements in the future, any such agreements may not offer complete protection from this risk posed by interest rate fluctuations and may carry additional risks.

For information regarding our sensitivity to changes in interest rates, refer to “ Quantitative and Qualitative Disclosures About Market Risk ” in Item 7A of this Annual Report on Form 10-K.

Our senior secured credit facilities are subject to variable interest rates that are indexed to LIBOR.

The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, previously announced on March 5, 2021 the future cessation or loss of representativeness of all remaining interest periods of U.S.

dollar LIBOR as of June 30, 2023.

Our credit agreement provides for application of the current LIBOR rate and it is not currently possible to predict the effect of the replacement of LIBOR with alternative reference rates.

The expected discontinuation and replacement of LIBOR may result in fluctuating interest rates, or higher interest rates, which could have an adverse effect on the Company’s interest expense and results of operations.

The terms of our indebtedness restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

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A permanent shift in workforce demographics and office environments may result in decreased demand for center-based child care and have an adverse effect on our results of operations.

During the ongoing COVID-19 pandemic, a substantial portion of the workforce, including parents of children we serve at our centers, transitioned from working in traditional office environments to working in “virtual” or “home” offices, including in our primary markets of the United States, United Kingdom, and the Netherlands.

While we expect that many employees will return to traditional office environments once the COVID-19 pandemic subsides, some employers may continue to encourage their employees to maintain a remote or work-from-home presence or may permanently move all or a portion of their workforce to remote or to a hybrid model.

While working parents continue to need child care regardless of their work location, there are no assurances that parents who work from home will continue to use our centers or will not require other part-time child care arrangements that accommodate different working arrangements.

During the COVID-19 pandemic, a substantial portion of the workforce, including parents of children we serve at our centers, transitioned from working in traditional office environments to working in “virtual” or “home” offices, including in our primary markets of the United States, United Kingdom, Australia, and the Netherlands.

While we expect that many employees will continue to return to traditional office environments, some employers may maintain a remote or work-from-home presence or may permanently move all or a portion of their workforce to remote or to a hybrid model.

While working parents continue to need child care regardless of their work location, there are no assurances that parents who work from home will continue to use our centers.

Additionally, we believe that as a result of COVID-19, more women have temporarily stepped back from the workforce and that traditional dual-career households may have temporarily decreased.

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We compete for enrollment and sponsorship of our early education and child care centers in a highly-fragmented market.

For enrollment, we compete with center-based child care (such as residential and worksite child care centers, full- and part-time nursery schools, private and public elementary schools and church-affiliated and other not-for-profit providers) as well as family child care (operated out of the caregiver’s home).

For enrollment, we compete with center-based child care (such as residential and worksite child care centers, full- and part-time nursery schools, private and public elementary schools and religious faith-affiliated and other not-for-profit providers) as well as family child care (operated out of the caregiver’s home).

In addition, alternatives to organized child care, such as relatives and nannies caring for children, can represent lower cost options to our services.

For sponsorship, we compete primarily with large community-based child care companies with divisions focused on employer sponsorship and with regional child care providers who target employer sponsorship.

We believe that our ability to compete successfully depends on a number of factors, including quality of care, site convenience and cost.

We believe that our ability to compete successfully depends on a number of factors, including quality of care, site convenience, breadth of service offering and cost.

We often face a price disadvantage to our competition, which may have access to greater financial resources, greater name recognition or lower operating or compliance costs.

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If we are unable to maintain our competitive advantage, our growth could be adversely impacted and our future operating results negatively impacted.

Governmental universal child care benefit programs could reduce the demand for our services.

Governmental child care benefit programs could reduce the demand for our services.

National, state or local child care benefit programs comprised primarily of subsidies in the form of tax credits or other direct government financial aid to parents provide us opportunities for expansion in additional markets.

However, a broad-based benefit with governmentally mandated or funded child care, such as universal pre-school, could reduce the demand for early care services at our existing early education and child care centers due to the availability of lower cost care alternatives, or could place downward pressure on the tuition and fees we charge, which could adversely affect our revenues and results of operations.

However, a broad-based benefit with governmentally mandated or funded child care or preschool, could reduce the demand for early care services at our existing early education and child care centers due to the availability of lower cost care alternatives, or could place downward pressure on the tuition and fees we charge, which could adversely affect our revenues and results of operations.

Additionally, changes in government support programs in our international jurisdictions, such as the reduction of government-funded tuition subsidies, could reduce the demand for our services in these markets, adversely impacting our results of operations.

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Our early education and child care centers, back-up care, and educational advisory services are subject to numerous national, state and local regulations and licensing requirements.

Although these regulations vary greatly from jurisdiction to jurisdiction, government agencies generally review, among other areas, the adequacy of buildings and equipment, licensed capacity, teacher-to-child ratios, educational qualifications and training of staff, record keeping, dietary program, daily curriculum, hiring practices, and compliance with changes in federal and local labor laws and regulations, health and safety standards and requirements, including COVID-19 protocols, and data privacy statutes.

In addition to costs associated with compliance of licensing requirements and changing laws and regulations, failure to comply with applicable regulations and requirements could subject us to governmental sanctions, which can include fines, corrective orders, probation or, in more serious cases, suspension or revocation of one or more of our child care centers’ licenses to operate, and require significant expenditures to bring those centers into compliance.

Our tax rate is dependent on a number of factors, a change in any of which could impact our future tax rates and net income.

As a global company, we are subject to income and other taxes in the U.S.

and foreign jurisdictions, and our future tax rates and operations may be adversely affected by a number of factors, including:

As a global company, we are subject to income and other taxes in the United States and foreign jurisdictions, and our future tax rates and operations may be adversely affected by a number of factors, including:

changes in tax rates, tax laws or the interpretation of such tax laws in the various jurisdictions in which we operate;

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Losses for which no tax benefits can be recorded could materially impact our tax rate and its volatility from one quarter to another.

Deductions associated with stock-based compensation may not be realized as a result of decreases in our stock price.

Any significant change in our jurisdictional earnings mix or in the tax laws in those jurisdictions could impact our future tax rates and net income in those periods and any increases in income tax rates or changes in income tax laws could have a material adverse impact on our financial results.

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We are also subject to inherent risks attributed to operating in a global economy.

As of December 31, 2021, we had 364 centers located in three foreign countries - United Kingdom, Netherlands and India.

If the international markets in which we compete are affected by changes in political, social, legal, economic, or other factors, such as the economic and political uncertainty resulting from the United Kingdom’s exit from the European Union (“Brexit”) and the global economic impact from the current COVID-19 pandemic, our business and operating results may be materially and adversely affected.

Uncertainty as a result of Brexit or COVID-19 may last for years and could also impact our clients’ businesses and operations.

As of December 31, 2022, we had 435 centers located in four foreign countries - the United Kingdom, the Netherlands, Australia and India.

If the international markets in which we compete are affected by changes in political, social, legal, economic, or other factors, such as the economic and political uncertainty following the United Kingdom’s exit from the European Union (“Brexit”), the global economic impact from the COVID-19 pandemic, and adverse global economic conditions, including slower growth or recession, higher interest rates, and foreign currency exchange rate fluctuations, our business and operating results may be materially and adversely affected.

Our international operations may subject us to additional risks that differ in each country in which we operate and such risks may negatively affect our results.

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As a multinational company, we conduct our business in a variety of markets and are therefore subject to market risk for changes in foreign currency exchange rates.

Instability in European financial markets or other events, such as the economic uncertainty resulting from Brexit and the impact of the COVID-19 pandemic, could cause fluctuations in exchange rates that may adversely affect our revenues and net earnings.

Instability in European financial markets or other events, such as the economic uncertainty resulting from Brexit, the impact from the COVID-19 pandemic, and adverse global economic conditions, including inflation, slower growth or recession, and higher interest rates, could cause fluctuations in exchange rates that may adversely affect our revenues and net earnings.

Approximately 26% of our revenue was generated outside the United States in 2022.

5 unchanged sentences

Stock repurchases could also increase the volatility of the price of our common stock and could diminish our cash reserves.

On December 16, 2021, our board of directors authorized a new share repurchase program under which up to $400 million of our outstanding common stock may be repurchased, of which $380.6 million remained available as of December 31, 2021.

On December 16, 2021, our board of directors authorized a share repurchase program under which up to $400 million of our outstanding common stock may be repurchased, of which $198.3 million remained available as of December 31, 2022.

The share repurchase program replaced and canceled the prior $300 million authorization announced in June 2018, of which approximately $0.2 million remained available as of the termination date.

18 unchanged sentences

• changes in accounting principles;

• impact from cyber events;

• changes in business activity or the economy;

• terrorist acts, acts of war, or periods of widespread civil unrest;

• pandemics, natural disasters and other calamities, including developments related to the COVID-19 pandemic;

• pandemics, natural disasters and other calamities, including the COVID-19 pandemic;

• changes in general market and economic conditions.

21 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors