Good afternoon and welcome to Bright Horizons’ fiscal fourth quarter and full year 2012 earnings conference call. (Operator Instructions) Today’s call is being recorded. At this time, I would like to turn the conference call over to Mr. Dave Lissy. Please go ahead sir.

Thanks so much Robin and hello to everybody who is joining us on the call today. Joining me on the call is Elizabeth Boland, our Chief Financial Officer. And before I kick things off with more formal remarks, let me let Elizabeth go through a few administrative matters. Elizabeth?

Thanks. Hi everyone. Our release went out today after the close of the market and it is now also available on our website under the investor relations section at brighthorizons.com. This call is also being recorded and it’s being webcast and a complete replay is available in either medium. The phone replay number 877-870-5176 or for international callers 858-384-5571 with conference ID number 409846. This information is also in the release. The webcast will be available as well at our website under the Investor Relations section. In accordance with Regulation FD, we use these conference calls and other similar public forums to provide the public and the investing community with timely information about our business operations and financial performance, along with our current expectations for the future performance. We adhere to restrictions on selective disclosure and limit our comments to items previously discussed in these forums. Certain non-GAAP measures are also discussed during the call and detailed disclosures relative to these measures are included in our press release as well as the Investor Relations section of our website. The risks and uncertainties that might cause future operating results to vary from those we describe in our forward-looking statements made during this conference call include our ability to successfully implement our growth strategies, including executing contracts for new client commitment, enrolling children in our childcare centers, retaining client contracts and operating profitably in the U.S. and abroad. Secondly, our ability to identify complete and successfully integrate acquisitions, third, the capital investment and employee benefit decisions that employers are making, fourth, our ability to hire and maintain qualified teachers and other key employees and management. Next, our substantial indebtedness and terms of that indebtedness, and lastly, the other risk factors which are set forth in our SEC filings, including the registration statement on Form S-1. So now back to Dave.

Thanks Elizabeth. I know you waited five years to be able to read your safe harbor statement. Having recently met with some of you on the roadshow in January, it’s good to be here today talking with you again about how we finished up 2012 and to give you an update on how we see 2013 playing out. As you know, it’s been almost five years since we went private and we’re excited to once again be telling the Bright Horizons story to the public markets. Let me begin today with a review of our fourth quarter operating results and then when I am done, I’ll talk a little bit about where we see 2013 playing out and Elizabeth will follow up with a more granular detailed review of the numbers and our outlook for 2013. Afterwards we will open it up for questions. So first, let me recap the numbers for the quarter. Revenue of $273 million was in line with our forecast and up 10% over the prior year. Our adjusted EBITDA of $47 million was up 21% and adjusted net income of $9 million increased 10% in the fourth quarter of 2012. For the full year 2012 our revenue totaled $1.1 billion, a 10% increase over the $974 million we reported in 2011. Adjusted EBITDA of $181 million was up 22% representing an expansion of 160 basis points to 17% of revenue. Adjusted net income rose 62% to $38 million for the full year of 2012. Now let me give you a little more color on our operating performance. In 2012 we continued to deliver on our long-term plan to grow our core center business while expanding our newer lines of business and growing our footprint outside the United States. Overall we increased our full service center…

Great, thanks. So as Dave said, he’s gone through the top level results for the quarter and I will get into some of the details underlying those results. In general, as a reminder the figures that I am going to compare will exclude the $50.2 million in one-time stock comps that we had in 2012 and $1.8 million in IPO and debt refinancing related costs that had been recorded in the P&L in 2012. Reported overhead operating income and net income are all affected by these expenses. Also our earnings release includes the table that reconciles our US GAAP reported numbers to the additional metrics we report about our results, specifically adjusted EBITDA, adjusted income before taxes and adjusted net income. You can refer to the release for the detail on what comprise these measures. So topline revenue growth was $24.5 million for the fourth quarter and $97 million for the year. Overall the full service enter business increased 19.3 million in the fourth quarter and $78.4 million for the full year, including approximately $26 million from the acquisition of Casterbridge in May of 2012. New clients and expanded relationships with our existing clients drove increased revenue in both the back-up dependent care segment, which added $3.8 million in revenue for the fourth quarter and increased 13% for the full year to $129 million and in the educational advisory, which overall grew $4 million to 28% in 2012 to a total of $18.6 million. Gross profits increased $9.7 million to $63 million for the quarter and were 23.1% of revenue compared to 21.5% in Q4 of ’11. SG&A totaled $28.1 million or 10.3% in the fourth quarter and was $106.5 million or 9.9% of revenue for the full year 2012, again excluding the one-time costs for the exchange of stock…

(Operator Instructions) Our first question comes from the line of Gary Bisbee with Barclays.

So I guess I'll try to stick to the two questions. So the first one, the backup advantage, can you just give us an update on how successful you've been at up-selling this to existing customers? And where are we in the process? Have you gone out and made a sales call to all the existing customers? What's the penetration? How do we think about how big this can get, how quickly? Just any sort of color on that would be great.

Yeah obviously back-up has been a fast growing piece of our story, Gary, as you know for a while. And what the back-up advantage has done just backwards, I will go forward is really unlock what has been somewhat of a gating factor when we had a center-based back-up business, only in that we can only serve a certain slice of a given clients population and now for the past several years we have the ability to serve the full population of any given employer wherever they live or work, not only with childcare but through other issues to cause back-up challenges and people’s ability to get the work. So we've been out there for a couple of years, although the product itself has expanded pretty significantly really in the past 2 to 3 years in terms of its full capability. But I think it’s safe to say that we’re out there, talking to clients about it, we rebuilt our sales force to really contemplate this cross-selling effort, expand it, focus our team on it. But I still think it's relatively early days with respect to its full acceptance, not only by the way to selling it to our existing clients but to opening the door with new clients, which I think if we look at the growth in back-up it comes about half from clients who never had a relationship with Bright Horizons before and half from those who expanded. So we have been growing it, higher than the core business in 2013 much like it did in 12 and I think it's early days to comment on what the ultimate ceiling is on it. But we think there is good growth opportunity in that order of magnitude for several years.

And then a follow-up. Could you expand a little bit on what you said about what's going on in the UK? Have they changed the policies in a way that makes this a less attractive market opportunity or what exactly happened there?

No, no at all. In fact, what happened was we acquired a company almost 10 years ago now that had a group of contracts with some of the UK government agencies over there. And they were kind of cluster, they were groups of really small centers, and I think what happened was those agencies have been contemplating really for the past two years rethinking the financial model, how to sponsor it. And we worked with them and what we found was we were very comfortable in continuing to operate some of them but not all of them, because the ones we were uncomfortable with were either in geographies or were so small that didn't make it attractive to us. So what we weren’t comfortable with continuing ended up closing, and we ended up proceeding to manage the rest of the group within that cluster. So it was – well, it sort of adds to the number of closures in the quarter, as I said earlier they were so small that the financial effect was pretty immaterial, and we don’t see it, there is not much other – there is no sort of a – it’s not speaking to some kind of trend that will affect our business we think there in any kind of significant way.

Our next question comes from the line of Kelly Flynn with Credit Suisse.

Is there any chance you'd give us gross margin by segment?

We are reporting on income from ops, so no.

Okay, no problem. I also wanted to understand what utilization assumptions the 2013 guidance I guess bakes in, and maybe just a little bit of color on how we should think about the opportunity for utilization to improve and potentially be a source of upside if and as the economy improves more rapidly than expected?

Kelly, with respect to where we are for the 2013 plan, just for the context for everybody, we’re focused on those centers in which we have the P&L responsibility for, that are in our mature class and as we talked about on the road show in that class in 2009 and ‘10 we saw a reduction in occupancy really for the first time in our history of roughly 9 percentage points of occupancy in total in that class. For the past two years we have been positively comping against that enrollment and we’ve regained a few points of that enrollment but we still have roughly 7-ish percent of occupancy that we think we can regain to get back to the levels that preceded where we are now. And we are thinking that between -- and also there's the classes centers that are newer in the past three years that are in various stages of ramp. So we think that between the two of those things there is roughly 1% to 3% of growth year-over-year all-in, that's there and the mature class is probably more in the range of 1% to 2% regained this year, and that’s kind of how we see going forward. We don't necessarily feel as if thinking about a large gain in any one year is achievable in part a little bit due to the sort of schizophrenic economic recovery but also due to some of the gating factors that exist with our capacity being less in the younger age groups, and thus taking us a couple of years to grow our own pre-schoolers, which ultimately is the capacity group that needs to fill in the most. And so it’s just the natural sort of course within our business. So we expect – based on what we see now we expect a regain of that enrollment to happen over the next several years.

I also wanted to end by asking you about India. I know you've spoken mostly about UK as it relates to the international strategy, but at times, you've talked about India. Could you just be a little more specific about I guess the size of that business, if you could and why you are there and how you look at that opportunity in particular over the next let's say five years?

Sure, India is to be clear, I think we’ve talked about this on the road show, it’s a new market for us, we have one center. So it’s very small and not material to our overall company results. That center is a cost plus center for a large client of ours who we partner with in two other countries that run centers for us, and in Bangalore asked us to come there to partner with them at a center that’s doing really well. We are using this as in-market sort of R&D lab if you will to understand how and if we should continue to expand our footprint in India. So we will be evaluating that decision over the next year or two. There is no sort of rush to it, we think the market has some challenges with respect to us taking commercial risk there, just given what the prevailing rates that people tend to pay for care and the quality model like ours would be – posed some challenges. Of course, we are actively talking about other client sponsors about expanding their relationship into India and we will do that, we'll do as many of those as we possibly can but the real turning point will be on our decision of whether or not we want to tale P&L risk there which we don't have today, and we will keep you updated on that as time passes.

Our next question comes from the line of Sara Gubins with Bank of America Merrill Lynch.

I'm sorry if I missed this, but could you talk about what your organic growth was in 2012?

Sorry, I was focused on the David for that guidance, it’s about overall the acquisition growth was in the neighborhood of 40% and the organic growth was 50%.

Of the total growth?

Total reported revenue.

Of the total reported revenue was about 10%, so six percentage points organic and 4% from --

Mostly due, Sara, to the carryover effect of the Netherlands expansion from the prior year and the larger Casterbridge acquisition that was completed in May.

And then the closures that you mentioned, the 15 in the U.S. and 13 in Europe, is that a fairly typical number as you think about it from year to year? Is that how you're thinking about it going forward?

15 to 20 is a good number to sort of look out on average. We had the one-off as I said, center closures and openings for that matter can be a little -- centers are created differently on all different sizes. So we expanded capacity in the neighborhood of 5% year-over-year net and I think that sort of expansion give or take a percentage point either way is about what we expect to see a net in 2013.

Our next question comes from the line of Brian Karimzad with Goldman Sachs.

Hi, on the backup business projections, so I think in 2012, it looks like you ended up with about 15% growth combined with backup in the EdAssist. And then baking into what you're guiding for, it looks like at the high end, it's kind of about 15% growth combined for the two, and in the low-end in the single digits. So I guess the first question is, as you plan for the guidance for that part of the business, are you only incorporating contracts that you have kind of received a green light on for that. And then second, if that's not the case, what are the factors that are leading you to believe that it will decelerate this year?

So I think just starting off with your question or maybe your supposition around the range of guidance there, I think it’s probably fair to say that the range for those lines of business is, in our view is not taking at the low end into the single-digits. They were both north I’d say – north of 10% full service business will be the lion’s share of growth going forward, and we would expect to see it growing at a pace in the range to slightly lower than where we are right now. So I think overall those lines of business considering the growth we’ve seen this year with the range being – giving the room on the timing of when the contract would be coming but –

Brian, with respect to the second part of your question, our forecast takes into consideration what we know about today with respect to sales that have happened that our contracts to start, what the carryover effect of – contracts that started last year aren’t quite lapped yet and also price increases on existing contracts as well as little bit of speculative revenue that is not sold yet, because unlike the center business it's very possible to still sell business this year that will actually have effect on the revenue this year because unlike centers it doesn’t need to be billed and it starts – they tend to start relatively quickly after they’re sold.

Do you have any sense of kind of how much that was to the 2012 growth?

One of the things we’re going to talk about is the various variables, trying to get that granular on it but I think much like centers when we give forecast on these things we take all those factors into consideration before we put out the number.

Our next question comes from the line of Jeff Volshteyn with JPMorgan.

David, you mentioned -- you went through different industry categories. I didn't hear you mentioned government and financial services. I might have missed it, but I was wondering if you could give us some color on what are some of the trends that you see in those particular industries. Is there any impact from state and federal budget cuts that we might be seeing in the near future?

Jeff, I was commenting on the some things that I – within the pipeline are areas of momentum for us. I would tell you that for government specifically we operate a good percentage of the GSA for a variety of agencies and those programs are financed in the way where they put up the capital and then both the government employees and the surrounding community can use that, at the centers at varying tuition levels. But when we look at the pie that we went through on the road show the slice there I think was a little bit misleading in that it included both the government and higher education which we’re going to sort of split up in the future because I think it misrepresented a little bit particularly in the U.S. the amount of the centers or the amount of revenue that we have with government-sponsored centers. That’s a long winded answer to say we’re not seeing much impact of -- on our existing centers of things that are going on, or sequestration or anything along those lines. But it's also fair to say that I don’t point to the government as one of the key growth drivers in 2013 either.

What about financial services?

With respect to financial services, it’s all over the map depending on the financial services company. We’ve got really good things going on with some financial service clients. We were expanding the services that we offer with them and conversely we have some contraction based on mergers and acquisitions and rethinking of workforces that our deals that were done with legacy companies that have now merged and over time as we think how things are going to play off which I said earlier does lead in our history to one of the main reasons for center closures and we’re seeing that play out in certain cases. I would tell you that when we add it up, it’s probably the positives equal out to the negative, it continues to be – they offset each other but again I didn’t focus on it as a major growth theme for 2013 because it wouldn't be one of those as compared to the other initiatives I talked about.

If I could follow up with a question on backup, what percentage of revenues are related to the centers that you own or operate as opposed to network centers in the broader network?

Yeah I will talk about broadly, we’re not – we will report on it in sort of specific measure as each quarter. But the way the backup service works is when you look at utilization as a whole there are essentially three components there. They are the ability to use the Bright Horizons centers, the ability to use other partner centers in our network where we don't have a location or that might be the better choice for the individual user, or thirdly, the use of an in-home care provider with respect to either child care or eldercare. So if you were to isolate the center base use only which represents about two thirds roughly of our overall use, I would tell you that roughly 60% of it traditionally has been driven into the Bright Horizons centers maybe 65% of it, and about a third of it is driven to our network of partner centers.

Our next question comes from the line of Jerry Herman with Stifel Nicolaus.

First question is about pricing. Have you guys already raised prices for the year? Has that already happened?

A chunk of our centers do raise price in January and the largest segment raised price in September.

And then with regard to funding, and I guess government funding in this case, I realize that the Netherlands is a small operation for you, but there have been a couple of tranches of funding cuts and some problems from -- with some of the competitors. Can you talk about what you see as any vulnerabilities in that marketplace?

I think, I will just sort of go back two years ago to our thought process for why we entered the market. What we saw on the Netherlands was a market that had rapidly changed in five years. It went from essentially a market that didn't have a private sector childcare system of any magnitude to -- going through a lot of growth in the sector largely driven by lots of entrepreneurs that then got rolled up into a couple different companies, one of whom I think is a company you may be mentioning had some struggle. And we went over there and looked at the market and our calculus at that time was that – part of the reason is that a lot of these centers were developed had to do with the disproportionate amount of the government funding represented as it relates to somebody – individual’s cost of care, it was sort of over the top compared to any other country. And our calculus was that, that would continue to – it will continue to drop over time and if we’re going to play in the market we have to – the consumers will become more discerning with respect to quality. And so while you are right to say there has been series even we first entered a series of differences in the sub-sea levels, we anticipated that when we went in, we think that in part that really hurts the operators who have operated on a low-quality way and in some geographies where we wouldn't necessarily find attractive. So our focus is in or around the major cities, Amsterdam, Rotterdam and the Hague, and some others and I think we believe that the organization we acquired is among if not the best quality operator in market, and we think we have a good opportunity to expand around the cities that I just talked about and also to participate in some acquisition, to be opportunistic around acquisition as some of the larger players have had some challenge.

Our next question comes from the line of Jeff Silber with BMO Capital Markets.

Since you guys took the company public, President Obama has proposed expanding, or trying to get, I guess, universal preschool across the country. I'm wondering if that does happen and it's a big if -- what you think the impact on your business would be.

Jeff, this has been something that we’ve participated in the debate for years on. Obviously whenever the president talks about early child education in any form, that’s a positive because of what we believe in with respect to its effect on the children's future success in life and school. And so generally speaking I view that as a positive, I think it is a big if principally because I'm cynical on whether or not there will be funding to match that rhetoric and this is probably the third time over the course of the past maybe 15, 20 years where that idea has been discussed in this kind of significant way, only really to fall on to the states and not to be funded in ways that never allow to manifest itself into anything that's as expansive as what was desired. So if it did happen, we see a system where -- and we have this in some states, like Florida and Georgia where we –as some of these – we would be able to participate, I actually think that future where there is some level of funding preschool assess would actually create a model that would require employers subsidize less of the pie than they would have to subsidize and thus be a good thing to add another sort of piece to the funding model who achieved the end result that we do. And so we do play in universal pre-K systems in three or four states and we’ve managed to figure out how to do that are successfully. So we will be watching, we will be participating in the debates. I am not anticipating anything of significant magnitude based on what I hear, actually playing out. I think the first focus will be in children with need and low income and while I support that holistically it really have no effect on our business given the families that we tend to serve in our centers.

And on another note, the unemployment rate has been ticking down a bit. It's still fairly high. But I'm just wondering, are you having a little bit more difficulty finding staff for your centers?

I think our challenge for recruiting is always something that is -- we take seriously and I think the long-term challenge for us is less amounts of economic cycles at this stage and more about the shrinking supply of qualified labor coming out with four year degrees with early childhood majors around the country. And when we were last public, the tail end of the time, we invested in a system to be able to credential teachers ourselves online. And since that point in time several thousand teachers have gone through the system and we think taking matters into our own hands was critical as it relates to being able to qualify and train talented people we hired that may not have the full degree. That said, the competition for talent differs in each market we operate in, in some places it's a little more challenging today than it was a few years ago, it remains the same. But overall I think we're in good shape.

Our next question comes from the line of Mark Marcon with Robert W. Baird.

With regards to the organic growth that you experienced during the quarter, did you see roughly 1% to 2% growth in terms of enrollment within the existing centers?

In the fourth quarter? It was closer to 1% or so in the existing centers in Q4. So it’s comping against a year where we began to see the reacceleration of the enrolment. So that’s about what we saw in Q4.

And did you see any regional differences, or any differences related to levels of pricing?

Our centers where we have P&L responsibility tend for the most part to be concentrated around major metropolitan areas with specific density in places like New York, Washington DC, Boston and Chicago, San Francisco, Seattle, and I say that because I think those areas have outperformed if you will some of the other areas of the country with respect to economic recovery. And we don't see major differences between those markets. I suspect that we had – so to answer your question is it’s pretty – pretty much across the board but I suspect that we had more exposure in some areas that didn't share some of those same characteristics that might differ.

And then, with regards to the backup centers, the profitability levels that you are seeing there, would you expect that to continue to improve as this coming year unfolds, or what sort of leverage would you expect to see on the growth?

Yeah, as we look at the total back up business, which is how we are reporting it, we are expecting to see a continuation of the margins that we generated in 2012, once again in 2013.

Would you get any sort of incremental leverage, or it's because of the investments that you have to put in place in the infrastructure in the IT that would probably keep it down a little bit in ‘13, but then we'd see the expansion in ‘14?

It’s a combination of what you're talking in terms of investments. I think the business itself as we become the chair in, I think you fully contemplate all of the overhead costs associated with it. So our view on it is we aren’t clear about how to answer that questions in the long-term at this point. We will keep you in the loop as time plays out, but our visibility for 2013 is margins -- approximate the margins that we had in 2012.

And then, lastly, on the pipeline you ended up with some nice corporate wins. How is the pipeline looking for ‘13 in terms of big name brand wins like you ended up experiencing in 2012?

Yeah we will talk about specific client names once the centers become public and open, we’re not going to be able to talk about client names that are in the pipeline until they actually become public. A lot of times that's our responsibility to the clients when they're ready to announce, I will tell you that the pipeline broadly speaking is representative of mix and type of clients that you saw aw in 2012. So once again some brand names across variety of industry sectors.

There are no further questions at this time. I would like to turn the floor back over to management for closing comments.

Okay, well thanks everybody. Thanks for bearing with us for our first public conference call in almost 5 years. We are happy to be back talking to you about Bright Horizons story, feel good about what we achieved in 2012 and looking ahead into 2013. Look forward to working with you. As always we’re here with any other questions and look forward to seeing you down the road.

This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.