Greetings and welcome to the Bright Horizons Q3 2013 Earnings Conference Call. (Operator instructions) It is now my pleasure to introduce your host David Lissy, Chief Executive Officer of Bright Horizons. Thank you, Mr. Lissy, you may now begin.

Thanks, Shay, and hello to everybody on the call, and should I say with great respect to my friends and colleagues from St. Louis and greetings from where we’re still euphoric up here in Red Sox Nation. Joining me on the call today is Elizabeth Boland, fellow Red Sox fan and Chief Financial Officer, and before we kick off our formal remarks I’ll let Elizabeth go through a few administrative matters. Elizabeth?

Thank you. Hi, everybody. Our earnings release went out just after 4:00 today and is available on our website under the Investor Relations section at www.brighthorizons.com. As always, this call is being recorded and is being webcast, and a complete replay can be available either by call or on webcast. The phone replay number is 877-870-5176. If you’re an international caller it’s 858-384-5517. The conference ID is 10000747. The webcast is 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 recent business operations and financial performance along with forward-looking statements regarding our current expectations for the future. Forward-looking statements inherently involve risks or uncertainties that may cause actual operating and financial results to differ materially from those described in our forward-looking statements that are made during the call. These risks and uncertainties include our ability to successfully implement our growth strategies including executing contracts for new client commitments and enrolling children in our centers, obtaining client contracts, and operating profitably in the US and abroad; secondly, our ability to identify, complete and successfully integrate acquisitions and to realize the attendant operating synergies; third, our decisions around capital investment and employee benefits that employers are making; fourth, our ability to hire and retain qualified teachers and other key employees and management; next, our substantial indebtedness and the terms of such indebtedness; and lastly, the other risk factors that are set forth in our SEC filings. We also discuss certain non-GAAP financial measures on these calls and detailed disclosures and reconciliations relative to these measures are included in our press release as well as the Investor Relations section on our website. So Dave, back to you for the detailed review.

Thanks, Elizabeth, and hello again to everybody on our call today. As usual I’ll start things off and Elizabeth will follow with a more detailed review of the numbers and our outlook before we then open it back up for questions later on. First let me recap the quarter’s headline numbers for you. Revenue of $309 million was up 15% over the prior year and adjusted EBITDA of $15 million was up 13%. Adjusted net income more than doubled to $18 million which yielded adjusted earnings per share of $0.28, up from $0.16 in last year’s Q3. For the nine months through September, 2013, revenue was up 13% to $900 million and adjusted net income doubled to $57 million; and adjusted earnings per share of $0.87 compares to $0.54 for the same 2012 period. During this past quarter we added twelve new centers in addition to the 49 Children’s Choice centers that we acquired here in the US back in July. These centers included three sites for Anova Healthcare in Virginia, our second center for the University of Chicago, new centers for Biogen Idec here in Boston and Weill Cornell Medical College on the upper east side in Manhattan. Our backup and educational advisory services also grew in line with our plan once again this quarter, and some new client highlights in that area included Memorial Hermann Healthcare System, 21st Century FOX, and Liberty Mutual. In addition we continue to be very optimistic about the cross selling opportunity that exists for us to expand our relationships with existing and new clients through these valuable service channels. Recent cross-selling examples include Sony Electronics, Shell Oil, and T. Rowe Price. The strategy behind the development and expansion of our service offerings is simply this – to provide clients and families with a…

Thanks, Dave. So as we’ve done in previous conference calls I’m going to discuss our reported results as well as the certain metrics that we think help isolate unusual and nonrecurring charges. So as I said before the earnings release includes tables that reconcile our US GAAP reported numbers to these additional metrics for adjusted EBITDA, operating income, net income and EPS – specifically quantifying various one-time charges we recorded in Q1 of 2013 upon completion of our IPO as well as deal costs in relation to the acquisition of Kidsunlimited and Children’s Choice, as well as costs associated with the secondary offering that we completed in Q2 this year. Top line revenue growth of $41 million in Q3 was 15% with the full service center business increasing $33 million, backup increasing $6 million, and ed advisory adding $2 million. Revenue in our full service segment increased due to rate increases that Dave mentioned averaging 3% to 4%, enrollment gains of approximately 1% in our mature class of P&L centers, and from new organic and acquired centers. Gross profit increased $8 million to $68.5 million in the quarter with the full service segment adding $5 million of that growth. Gross margin for the quarter of 22.2% compares to 22.4% in 2012. As Dave mentioned there are a couple of factors that are affecting the full service margins resulting in the slight decrease year-over-year. First, as we talked about earlier this year we do have a larger class of lease/consortium centers that have opened this year compared to 2012. These centers generate losses during their ramp up period and we incurred approximately $1.5 million more in such ramp up losses in Q3 2013 than we did in 2012. In addition, the Kidsunlimited centers and Children’s Choice centers have operated at gross…

Thank you. We’ll now be conducting a question-and-answer session. (Operator instructions) Our first question comes from Sarah Gubins from Merrill Lynch. David Chu – BofA/Merrill Lynch: This is David Chu in for Sarah Gubins. Can you give us an update of margin expectations for 2014, just maybe high level?

Yeah, I think at this point for 2014 our view is pretty much what I talked about before, that we’re looking at the top line growth in the 11% to 12% and the adjusted EBITDA and adjusted net income in the levels that I talked about earlier. But we’ll continue to be more specific with overall guidance the next time we talk. David Chu – BofA/Merrill Lynch: Okay. And so this larger class of lease/consortium, does that impact 2014 as well?

Well, the way we think about this going forward is it really is the delta between a larger class this year and what we did last year that Elizabeth talked about in Q3 – that was about a $1.5 million difference in losses year-over-year. Because we still view the lease/consortium model as a strong growth engine we’re planning for a similar class in 2014, so the higher-level numbers that I talked about and previewed for 2014 anticipate a class that looks like the class this year in size. So the expectation is that as we play out that delta when you’re comping against a similar class, it won’t be as great as the impact that it was this year when you’re trying to comp it year-over-year. Does that make sense? David Chu – BofA/Merrill Lynch: Yeah, that’s very helpful. Sorry, Elizabeth, were you going to say something?

I was going to say that I think the point is that the investment in the lease model class does play out as Dave was alluding to over time. So the class that we’re opening this year will continue to ramp up next year and a new class will come in, so that you do have in 2014 some drag on the margins for that class next year – it’s just that the lapping effect is what we wouldn’t see. David Chu – BofA/Merrill Lynch: Sure, sure. And one last question: so both backup care and ed advisory saw a nice tick up in growth this quarter year-over-year. Is there anything particular to note here and do you think this is like a good run rate heading into 2014?

Yeah, I think as we’ve talked about in the past there’s always a little bit of quarterly movement based on the timing of sales and upgrades of existing clients, or cross-selling or whatever it might be. But we feel good about the performance in both of those segments and we feel like they’ll play and are trending well into 2014, and they’ll play a similar role in terms of their contribution to the overall whole as they did this past year. David Chu – BofA/Merrill Lynch: Okay, thank you.

Thanks, David.

Thank you. Our next question comes from Anj Singh from Credit Suisse. Anj Singh – Credit Suisse: Hi guys, thanks for taking my question. So first off I was wondering if you can comment a little bit on your international segment and if the stability and recovery headlines that we’re seeing is in line with what you’re seeing in your business?

Yeah, I mean obviously we feel good about what’s going on in Europe. Each country is a little bit of a different story. I mean longer-term we’re pleased to read some of the macroeconomic projections that exist for the UK for example, although I would say that those remain sort of projections and the environment there, we’re not projecting as we go into 2014 for some wild change that’s going to affect our business. I think the business is trending well and we’re expecting sort of a continuation of that; and obviously the integration of Kidsunlimited provides us with a specific opportunity over there. I hope that in time we’ll be able to report some pickup based on just a better macro environment, and we see the headlines in the news but I’m not sure that the operating reality has yet caught up with it. So it’s not a negative – it just means that we’re just sort of planning for a continuation of what we experienced this year. Anj Singh – Credit Suisse: Okay, got it. Another macro-level question: did the government shutdown have any tangible impact on your business?

No is the short answer. We had a few centers that were affected, that we had to close for short periods of time or were affected in some way. As you know, parents pay us a month in advance for tuition so we were successful in relocating virtually every child that wanted to be relocated to a nearby center that was open. So while there was some minimal effects nothing material that hurt the business. Anj Singh – Credit Suisse: Okay, thank you. And one last one from me regarding the pickup in your ancillary service businesses, can you comment on whether that’s coming from cross-selling opportunities, are they new clients? Any color you can give around that would be helpful.

Yeah, I’ll talk broadly about that. I can’t really be as specific to say “This is specifically the breakdown in the quarter,” because I don’t have that breakdown but I will say broadly speaking that within the backup world of business the growth comes pretty equally from new clients starting out with the service for the first time as it does from either up-selling or cross-selling existing clients that we have relationships with both here and in the UK; whereas in the educational advising services it’s probably somewhere in the neighborhood of about two thirds new clients that are new to Bright Horizons and about a third clients that we’re cross-selling that service into that had a previous relationship with Bright Horizons. And again that’s broad, that’s not specific to Q3. That’s just generally what we’re seeing. Anj Singh – Credit Suisse: Okay, that’s super helpful. That’s all from me, thank you.

Thanks, Anj.

Thank you. Our next question comes from Dan Dolev from Jefferies. Dan Dolev – Jefferies : Hey, thanks for taking my questions. You mentioned organic growth if I believe correctly is going to be about 8% for the year? Can you maybe walk us through the quarterly organic growth numbers from Q1 to Q3 and then how that’s sort of building up to the 8%? Thanks.

So I think that having covered off what the year will look like and we talk about what acquisitions have been, Dan, I think the math is there. The headline I think that, having had a few questions about this from folks over the last few months, I think we’re trying to help people understand that the organic growth is coming to us from the full service business as well as from the ancillary services. The latter piece there is contributing 1% to 2% in the year and then the full service business continues to deliver with its own organic new centers as well as rate increases and enrollment. So that performance this quarter is taxed as is the whole year by some center closings which are a detriment of between two and three percentage points overall, and so from that I think you can get the difference in the overall 14% top line growth and the acquisitions of $26 million. Dan Dolev – Jefferies : Okay, yeah. In my numbers I was calculating organic growth. If I look at the M&A every quarter I was calculating organic growth year-to-date of about 6%, that’s why I wanted to get some more color.

I think, Dan, maybe the additional color to add to that is the way we think about this is it’s in some ways unfair to simply report an organic net number and an acquisition gross number in the sense that if you take all the closings and net them against just the organic side of the business, we don’t look at that as sort of a fair way to look at it because those closings are representative of centers that we acquired, that we pruned in addition to other centers that we might close for a variety of reasons. And so instead of sort of trying to track it really as specific as that we just look at sort of the gross organic growth, the gross acquisition growth and then deduct the 2% - so really when you add the 8% to the 8% you get 16%, you deduct 2% and you’re at 14%. That’s kind of the formula, the way we think about the business here and we just wanted to relay that to you. Dan Dolev – Jefferies : Okay, thank you. I appreciate it.

Thank you. Our next question comes from Manav Patnaik with Barclays.

Hi, this is actually Greg calling in for Manav. I was wondering if I could get some of your thoughts on the competitive landscape in the UK nursery market, whether you expect to see increased competition following the Busy Bees acquisition.

Yeah, I mean look – Busy Bees was an organization that we had competed against for enrollment principally. They have not been a big player in the employer-sponsored space. We just acquired our principal competitor in that space in Kidsunlimited. There are a few other players in the employer-sponsored space in the UK. But Busy Bees largely, much like the company that that company owned in the US – Kindercare – was basically a retail childcare organization. So we competed for enrollment with them principally in sites that we might have nearby their sites. Busy Bees was really a roll up of a variety of different organizations that existed in the UK over the years that we were familiar with, many of whom we looked at and obviously they’re not part of our organization. But they were bought by not a financial buyer and I guess there is a question mark in terms of what the future will hold there. But I would say that we don’t look at that and anticipate much difference if you will, particularly as we go into 2014. We’ll keep watching that but I think we feel good about the positioning that we have both in the employer market in the UK and also in where we’ve chosen to either site ourselves or we’ve acquired lease/consortium centers with a major focus in the southern part of England, in and around London where we think the economics best support the level of quality and the kind of margins that we would expect. So we feel good about our competitive position in the UK. That’s an organization that’s been around that we’ve competed against for a long time and we like our position going forward.

Okay, that makes sense. And then on the 3% to 4% price increases do you expect the cost plus 1% approximation to be kind of what you’ll be able to do over the long term? And is there any potential to flex that higher? And that’s it from me, thanks.

Our view at least for this year and as we trend into 2012 is that we think the historic range that we’ve averaged really over the course of the past 10 years or so will continue to play forward, and that would look like in our estimation at this point what we’re experiencing now which is 3% to 4% pricing increases against 2% to 3% overall cost increases in the full service center segment. And that’s our expectation. There’s always within individual centers some fluctuation to that, there’s some bandwidth to that; but the average across the business we expect to continue to play out in that range.

Okay, thank you.

Thank you. Our next question comes from Timo Connor with William Blair. Timo Connor – William Blair: Thank you very much. I’ll follow up on the UK market: it looks like the government voucher market as well as just generally funding for childcare there appears to be relatively attractive. Have you seen an impact in any of the recent changes in funding, either the broad market or specifically the employer market?

Yeah, I think, Timo, that the changes have been sort of all baked into our business. We like the operating environment there because there are essentially two levels of incentive. There’s some incentive there for employers to invest in centers, not necessarily their own centers but make some investment in lease/consortium centers because there’s a tax advantaged program for that to happen through payroll deduct and a number of things that go on without getting into detail. So we like that from the employer perspective. We also like that the government voucher system effectively pays for some portion of the overall tuition costs regardless of salary level, and allows the employee to use that voucher at the center of their choice. And so in effect what we have in the UK is the environment that frankly we would love in every country that we would operate in, which is the employer paying for some portion of it, the government paying for some portion of it – thus the amount the parent has to pay being less than what exists for example here in America, where it’s either the employer or the employee. With the exception of very low income families there’s no real government piece of that pie if you will. So we like the environment with respect to how the overall cost of what we’re doing is subsidized by either the employer or the government in the UK, and obviously more of our focus in the UK has been on the lease/consortium model than in the cost plus or the single employer model as compared to the US. And it’s really because of that incentive structure that I just talked about there where there’s not as much of an incentive for an individual employer to do their own center. Not to say there aren’t some and there will be more but there’s just not as much a market opportunity for that model as there is in the US. And the same is true broadly in The Netherlands as well. Timo Connor – William Blair: Okay. Is that mix shift one of the reasons that your cost plus exposure seems to be turning down a little bit? And is that kind of more of a one-time impact as a result of taking on Kidsunlimited?

Yeah, it really is taking on Kidsunlimited, and even Children’s Choice had a smaller percentage of cost plus and P&L. So when you absorb that many centers at once between Children’s Choice and Kidsunlimited there was a very small portion that was cost plus. But contrast that for a second with our pipeline of centers, our employer-sponsored centers that we’re working on – there’s no material change in the US to our sort of historic mix. It’s really just the impact of absorbing all those acquisitions at once. Timo Connor – William Blair: Okay. And then as you get up to scale in the UK, and it sounds like that’s progressing, is there a potential that margins could be potentially higher in the UK as opposed to the US given the mix there?

I think that our goal really is… I think the margins in the UK will, there’s still a little bit of room I think to grow over time. We’re not forecasting any sort of wild gap between what the ultimate margins can be in the UK or the US. I think the work that we’ve done in the UK that’s really been extremely important, that improves the long-term health of the business over there, has to do with two very key factors. One is improving the size of the units, the centers over there because the problem we faced years ago when we first went there was it takes as much overhead really to operate the business if your centers are 50 in capacity and produce a certain level of pounds in revenue as it does if they were twice the size of that. So it’s a much more efficient business to manage when you can have the units producing more revenue and more margin against an overhead structure that you need to make the business work there. So I think we’ve done a lot of good work at pruning over the years some of our smaller sites, and a lot of our newer sites – both those we’ve acquired and those we’ve opened ourselves – have been larger. And then overall our scale there with these acquisitions has allowed us to lever down overall overhead as a percentage of revenue, and those two factors are really important as it relates to the operating margins that we’re achieving now and expect to continue to leverage a little further once we synergize the Kidsunlimited acquisition. So that’s more how we view the short-term view on the UK. Timo Connor – William Blair: Thank you, I appreciate the color.

Thank you, Timo.

Thank you. Our next question comes from Jeff Volshteyn from JP Morgan. Jeff Volshteyn – JP Morgan: Thank you for taking my questions. I wanted to ask about 2014 revenue guidance. First of all, does that only include existing operations or some base level of future acquisitions?

So broadly speaking, and again, we’re not going to get into the specifics or ’14 at this point other than what we’ve already said. But broadly speaking when we looked at it, our view includes the carry forward effect as you’d imagine of what’s occurring already in 2013, not only from the lapping or the carryover of acquisitions but also the ramp up of our class of centers that we’ve opened and what’s in the pipeline that we expect to open that we know of as of now, which will continue hopefully to grow. And so those things inform it. We have not included in that forecast an acquisition, an outsized acquisition like we have achieved two of in this year. So our normal bogey for acquisitions would be somewhere in the neighborhood of 10 to 15 single-center kind of or small groups of acquisitions that we would tuck in either in the US or the UK or in The Netherlands. And in our broad projections we would include that type of placeholder in our view because the pipeline that we’re working on suggests that’s a reasonable view to have at this point, Jeff. But there’s no forecast for any larger acquisition because those tend to be lumpy and less predictable. Jeff Volshteyn – JP Morgan: Excellent. This is very helpful. If I could ask on the centers in Q3, out of the 50 net new centers sequentially can you help us think through how many are new and how many closed in the quarter?

Yeah, so we added the 49 from Children’s Choice and another 12 through organic additions, and we closed a total of 11 centers. Jeff Volshteyn – JP Morgan: Great. And the last question from me: any color around the Affordable Care Act and possible changes in the way that your employees will see benefits in ’14, ’15 and going forward?

Overall the Affordable Care Act, Jeff, had I’d say minimal effect on us. We like everybody else had to incur the changes, things like dependents going to 26 and things like that, but our base, even our sort of baseline plan – we offer a variety of different health plans that people can buy up to, but our, if you will, the plan that costs the employees the least and has the most sort of co-pays associated with it already complies mostly with what the minimum levels in ACA were and what was required of employers. So we don’t view a major or really much cost differential related specifically to ACA and we’re not thinking about that in terms of having any meaningful effect either this year or next year. We’ll continue as every employer needs to as this plays out ,we’ll continue to evaluate what the right options are for us in synch with what’s going on in the overall market. We’re not forecasting for example going to exchanges anytime in the near future, but like any organization that’s got a significant line item in their healthcare we’ll continue to stay focused on how it is that we can deliver the best possible benefit to our employees at a cost we feel like is appropriate. So that’s sort of how we think about it. Jeff Volshteyn – JP Morgan: Great, thank you so much.

Thank you. Our next question comes from Brian Zimmerman from Goldman Sachs. Brian Zimmerman – Goldman Sachs: Hi, thanks and good evening. Now that you’ve had a few months to work through the integration of Kidsunlimited and Children’s Choice, have there been any surprises either on the positive or negative side? And then you mentioned some of the underperforming assets I think at Children’s Choice – how much time do you usually give those assets before you decide to either close a center or get them up to the company average?

So it really is a, I’ll go backwards and answer the last part of your question first. It’s really every one of them is unique, every one of them. Some come with client relationships; others less of a client relationship where it’s a lease kind of situation. So it’s hard to paint them with a brush but I would say broadly speaking in the first year of their existence with us, by the end of that we can generally reach a conclusion as to whether or not this is fixable and thus something we should continue to invest in; or something that we ought to exit. And the only caveat I would put on that is that dates that might be relevant with respect to leases ending and/or contracts expiring which obviously play quite heavily into how we looked at it in due diligence and quite heavily into how we’ll ultimately choose or not choose to operate going forward. So that’s broadly how it would look. With respect to the acquisitions and how they’re going I think the sort of differences… We tend to do what we like to think of as a really thorough job at diligence and doing all the work we can possibly do before we’re actually inside. I would say that now that we’re inside you know, you always make some assumptions with respect to who does what on the overhead level and where things will go. I’d say it’s safe to say that while we’re going to reach our overhead synergy targets in both cases the pro forma for how we thought we would get there when we drew it up before we got inside might look a little bit different from how it actually works. But I think in the end we’ll get to the same target. I think there are some surprises in both cases with some aspects of the curriculum and/or systems that were positive, more positive than we even anticipated. There’s always some negative things with respect to how things were done versus how we thought they would be done and us having to maybe support things a little differently than what we thought. So but moving away from that I would say that in both cases we’re tracking in line with where we would hope to be at this time. And granted, I will say it with the caveat that it’s early and it’s fair to say we’ll have even more to say about each one when we talk to you the next time. Brian Zimmerman – Goldman Sachs: Okay, that’s helpful. And then obviously the acquisitions you’ve had are affecting your margins a bit. Have you attempted to quantify this drag? In other words, what would your margins look like on a same-center basis or x the larger acquisitions?

What would they look like if they were at our level of if we hadn’t done them? Brian Zimmerman – Goldman Sachs: Yeah, so I guess I’m trying to get a better sense of during the integration costs you have a lot of one-time costs but then also there’s some overhead costs that are realized when you acquire a business. I’m trying to see what would be more of a steady state margin if you were to take out those acquisitions?

Yeah, let me see if I can take a look at that, Brian, and come back with something on this call. Brian Zimmerman – Goldman Sachs: Okay, sure. And then just a final question: can you give us a bit more detail on your investments in technology? What type of investments were those and how should we be thinking about additional costs going forward?

I would say that we have anticipated both this year and in 2014 continued investments in systems, and the key systems for us relate mostly to three or four different things. One is the system that we use to provide service delivery within our backup business; the second one is the same service delivery system within the ed assist business we operate. Thirdly we several years ago and we’re in the final stages of continuing to implement the improvements in our center operating systems on the full service side both here and in the UK – that’s not new. Some of these aren’t new projects, they’re just continued, sort of v1, v2, v3, or finalizing implementation of them. And then lastly this past year we implemented a new HRIS system which ultimately improves our ability to get analytics on the labor side. So those four things generally speaking have been the investments, but when we talk about obviously the guidance for the rest of this year and the broad level guidance that we’ve given for, or targets that we’ve given for ’14 it contemplates the investments that we’re making in these things. Brian Zimmerman – Goldman Sachs: Okay, thanks a lot guys.

Thank you. Our next question comes from Gary Bisbee from RBC Capital Markets. Gary Bisbee – RBC Capital Markets: Hey, good afternoon. A couple questions: first of all, Dave, you mentioned the opportunity with the acquisitions to drive backup and maybe ed advisory through those in cross-selling because they didn’t have the same level. I realize the scale of those relative to your company aren’t enormous but is that a material opportunity? And I guess I wanted to ask it particularly for backup from two angles: number one, the ability to sell the clients; number two, is the economics if you’re able to send existing backup contracts into some of their facilities, is that economics a lot better for you than when you use a third party if you didn’t have a school in that region?

Yeah, I mean clearly when we can drive backup business into Bright Horizons centers that’s both we think a really good quality answer for the user and also we have better economics in that situation. We enjoy really good relationships with other centers where we’re not and expect to continue to have those relationships going forward, but when we add groups like this and we have a key area where either their only choice maybe has been in-home care which is more expensive or another provider, if we can give them a Bright Horizons offering that will provide on the margin better economics to us. With respect to the clients both in the case of the UK and the US, I think it’s really fair to say that neither legacy organization had the ability to offer the kind of backup suite of solutions that we offer or the educational advisory services that we offer. So there’s some pretty, at least in the US there’s some very big and really good employers that they had relationships with that we’re meeting through this new partnership and that we hope will play out in the long run in more opportunity for us to sell them the kinds of things that we have that neither of those legacy organizations had. Gary Bisbee – RBC Capital Markets: And then just following up on that, over the last few years you’ve obviously bulked up the corporate account sales force and yet you talked about being only 15% of customers use more than one service. Can you give us an update on just in general how that’s going? How do you grade your performance in going after that opportunity and how quickly do you think-

Yeah, and we’ll update it in appropriate increments, how that 15% continues to change over time. We’re not going to do that every quarter but at some point we’ll give an update. But broadly as I said earlier, Gary, in the backup segment roughly half our business is coming from clients who we have never enjoyed any relationship with before they signed up for that service, and about half are coming from two facets of what I think is cross-selling. One is cross-selling literally meaning they had another relationship with us either on the center side or the educational assisting side and we sold them backup for the first time; or we’ve upsold them in the sense that they only offered backup to some portion of their workforce and now they’re going to roll it out nationally or internationally. And so we’re increasing the revenue per client even though they may have offered some level of backup with us in the past. So those two things account for about half the growth roughly speaking over time of backup. And obviously every time we do that and cross sell it’s going to kick up the 15% number as it will in the cases where we do that on the ed assist side, which is about one third of the time a new client joins the ed assist side we’ve enjoyed a relationship with them elsewhere. So that number will continue to tick up. When it becomes a meaningful milestone we’ll report on it but we continue to make good progress. Gary Bisbee – RBC Capital Markets: Okay, and then just one last one. I realize it’s real small numbers and maybe that’s just the answer, but with the ed advisory business I think Q4 last year it was like at a 35% year-over-year growth rate, then it dipped into the teens, low 20%s, almost 40% this quarter. I think of this business as having relatively stable contracts. I guess two things – what causes that volatility in the growth rate, number one; number two, what should we think about in the next couple of quarters?

Yeah, I think some of it is timing with respect to converting on sales contracts and working out partnerships. So I think that as I said earlier we think that business has long-term potential to look a lot like what backup has become to us over the years. I mean the piece of the business that’s growing is really in its third year of real maturity in terms of growth, and it got started a little before that but it was a sort of slow start and then we sort of reconfigured it in the way that it looks today. So it’s early days. The market opportunity there is substantial. I mean it’s the one place where there’s an existing spend going on of about $16 billion in tuition reimbursement, and we think we’ve got a value add service there that really helps the adult learner make better choices and the client be more efficient with their spending, and a really strong value proposition. So it’s us against the idea right now. It feels a lot to me like when I started 16 years ago trying to sell the concept of employer-sponsored childcare. It’s very early days, it’s missionary selling but it’s got good potential once it catches on. Gary Bisbee – RBC Capital Markets: Great, thanks for all the color.

Thank you. Our next question comes from Jerry Herman with Stifel. Jerry Herman – Stifel Nicolaus: Thanks, good evening everybody. Just two questions, I know it’s getting late. The first is in regards to seasonality. I know the fall is a little more important from the let’s call it “new enrollment” perspective. Was there any variance relative to your expectations in the fall? Did it come in in line with what you guys were expecting?

Yeah, I think that we’ve been pleased with the sort of continued progress, as we mentioned the year-over-year gains in our mature class. As you say the fall is the time when we have the older preschoolers going off to elementary school and that kind of churn, so as we’ve continued to see September’s and October’s enrollment come in and still be comping favorably, north of 1% over last year. We feel really good about those trends. Jerry Herman – Stifel Nicolaus: Great. And then I just wanted to flip around the sort of pricing question, Dave, with regards to any signs whatsoever of wage inflation at this juncture.

Obviously, Jerry, these things are geographically sensitive and you know, as I said earlier there’s some bandwidth to both the tuition increases and the wage increases in terms of where it gets to the average. But I guess I would say that we feel like the plan that we have in place on both the tuition side and on the wage side is trending well. I think we’ve talked about this on past calls – I think the strategy that we had to continue to increase wages and increase price during the tougher times has landed our absolute wage in a much better place than had we done what most of the market did during those times which was not increase either. And thus now they’re having to play catch-up. So our sort of smooth strategy of continued improvement I think continues to allow us to have a smoother landing and thus puts us in a place to be able to look out towards next year and think that we’re going to be in a good place. Jerry Herman – Stifel Nicolaus: That’s great. David, it’s been about a month since I’ve seen you, there’s a rumor that you’ve grown a beard in honor of the Red Sox.

Yeah, I’m about to shave it, Jerry, so I’ll send you some. Jerry Herman – Stifel Nicolaus: Thanks.

Thank you. (Operator instructions.) Our next question comes from Jeff Meuler from Robert W Baird. Jeff Meuler – Robert W Baird: Yeah, thanks for letting me sneak in, and as a Bruins fan who’s been caused a lot of pain by the Cards in recent years congratulations to you guys.

Jeff, we appreciate it. Thanks. Jeff Meuler – Robert W Baird: Elizabeth, if I recall correctly Children’s Choice had a business that was similar to the backup here that’s getting slotted into there for reporting purposes. I don’t recall how sizable that was but can you just give us any indication in terms of the contribution this quarter from Children’s Choice to the backup care reporting line?

Yeah, I think it’s fair to say that it was a very small portion, their business – more aspirational than operational. So they just had a couple of clients and it’s not meaningful at all in the quarter. Jeff Meuler – Robert W Baird: Okay, and then did you say that there’s a contribution from the two sizable acquisitions of $26 million in revenue this quarter?

Yeah, they had about $26 million in revenue in the quarter, yeah. Jeff Meuler – Robert W Baird: Okay. And then I guess it sounds like there’s some diminutive amount in backup care but if I were to apply that full $26 million to full service I get organic revenue growth of about 3%. Is that right? It sounds like that’s below what I would think the organic growth would be if I think about the individual pieces between price and organic growth at mature and organic growth in terms of enrollment growth at ramping centers. If you could just help us bridge that.

Yeah, I think it’s related to a couple of factors – the closings which we talked about, which is another around 2.5% in the quarter; and then the other factor which, without calling out every minor change but we’re affected by foreign exchange this quarter to the tune of about $1 million as well. So I think again the netting off of all the growth against the organic without disaggregating the closures will give you that net kind of an answer. But that is how the math works; it’s just we would look at is as more like 6% less the effect of the cost plus contracts and the bit of foreign exchange. Jeff Meuler – Robert W Baird: Okay. And then Dave, I understand that it can be lumpy so you don’t bake it into the guidance in terms of the larger acquisitions but how’s the pipeline there?

From an acquisitions standpoint? Jeff Meuler – Robert W Baird: Yeah.

I think the acquisitions pipeline remains similar to what I commented the last time we spoke, which is there are sort of two pieces of the pipeline – there’s conversations that go on on a regular basis with our team on the ground in Europe and also in the US with the smaller sort of ten or under center operators, and that’s a good pipeline that remains strong. We think there’s, as I said earlier, a continued conversion there into ’14 looks feasible. With respect to larger things those are, as you say, very lumpy and you know, we continue to have obviously the opportunities there in all the countries we operate in. There’s nothing obviously that we have our view on in terms of baking into our view for ’14 at this point but the conversations continue to go on and I would say the pipeline continues to be in the same good place that it’s been since we talked to you the last time. Jeff Meuler – Robert W Baird: Okay, thank you both.

Alright, thanks.

Thank you. Our next question comes from Trace Urdan from Wells Fargo Securities. Trace Urdan – Wells Fargo Securities: Hey guys. Just one really quick one and kind of a follow-up to Jeff’s question regarding the Affordable Care Act. So it’s very clear that you guys are at a scale and have plans that meet all the requirements. My guess is that maybe some of the smaller operators out there do not and I’m wondering whether the coming employer mandate may in fact be a catalyst to increase M&A activity and whether there’s a possibility that we’ll see a sort of opportunistic pickup on that in 2014.

Yeah, Trace it’s an interesting point and certainly one we’ve thought about both from an M&A perspective and just a general competitive standpoint. I think that there are many providers in our field that either don’t have healthcare plans of any substance or that have plans that just would never comply with ACA; and thus the potential cost creep that they’ll experience has got to manifest itself in terms of their need to increase tuitions greater than where they’re at if they’re going to absorb that or else it’s going to depress their margins. So from a price competitiveness standpoint, before I even talk about M&A we think that bodes well for us going forward. None of that we can see today in the market and I don’t know when we’ll actually see that manifest itself but we feel good about what the prospects of that will mean to us from a competitive standpoint. How that will manifest itself into M&A will also be interesting to watch. On one level you might suggest that in fact that would be the case but you also have to remember that some of the same criteria, particularly on the smaller deals – the criteria that we’re looking for, again, trying to look for accretive deals that operate at our level of quality and prices that are around our price point – are going to be able to need to absorb a benefits load like ours in order to work for us ultimately. So while it may motivate some people it still needs to be the kind of situation that we would have ultimately acquired or else we’re going to end up getting it at a lower margin and then we’re going to need to be the ones to increase price and suffer the enrollment losses associated with that. So we’re going to have to be careful to be sure that we still have the same sort of criteria that we have on the M&A front, but surely I think from a pure market competitive viewpoint I think it bodes well for how our price competes. Trace Urdan – Wells Fargo Securities: Got it, thank you.

Thank you. At this time we have no further questions. I would like to turn the call back over to Mr. Lissey for closing comments.

Thanks, Shay. We’ve run over time. I appreciate everybody’s questions and certainly everybody’s attention over the past hour and ten minutes or so, and we look forward to seeing you on the road. Have a good night.

Thanks, everybody.

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