Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can generally identify forward-looking statements by our use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek,” “vision,” or “should,” or the negative thereof or other variations thereon or comparable terminology. Forward-looking statements include those we make regarding the following matters:
our ability to address changes in the demand for child care and workplace solutions;
our ability to adjust to shifts in workforce demographics, economic conditions, office environments and unemployment rates;
our ability to hire and retain qualified teachers, management, employees, and maintain strong employee engagement;
the impact of public health crises, such as the COVID-19 pandemic, on our business, financial condition and results of operations;
our ability to address adverse publicity;
changes in federal child care and education spending policies and budget priorities;
our ability to acquire additional capital;
our ability to successfully identify acquisition targets, acquire businesses and integrate acquired operations into our business;
our reliance on our subsidiaries;
our ability to protect our intellectual property rights;
our ability to protect our information technology and that of our third-party service providers;
our ability to manage the costs and liabilities of collecting, using, storing, disclosing, transferring and processing personal information;
our ability to manage payment-related risks;
our expectations regarding the effects of existing and developing laws and regulations, litigation and regulatory proceedings;
our ability to maintain adequate insurance coverage;
the fluctuation in our stock price;
the occurrence of natural disasters, environmental contamination or other highly disruptive events;
expenses associated with being a public company; and
the other factors set forth under “Risk Factors.”
Any forward-looking statement that we make in this Annual Report on Form 10-K speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Annual Report on Form 10-K.
Channels of Disclosure of Information
We announce material information to the public through filings with the Securities and Exchange Commission (the "SEC"), our investor relations website (investors.kindercare.com), press releases, public conference calls and public webcasts. The information disclosed by the foregoing channels could be deemed to be material information. As such, we encourage investors, the media and others to follow the channels listed above and to review the information disclosed through such channels. Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website.
Summary Risk Factors
We are subject to a number of risks, including risks that may prevent us from achieving our business objectives or that may adversely affect our business, financial condition and results of operations. You should carefully consider the risks discussed in the section titled “Risk Factors,” including the following risks, before investing in shares of our common stock:
Risks Related to our Business
Changes in the demand for child care and workplace solutions, which may be negatively affected by demographic trends and economic conditions, including unemployment rates, may materially and adversely affect 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 engagement.
A permanent shift in workforce demographics and office environments may result in decreased demand for center-based or site-based child care and have a materially adverse effect on our business, financial condition and results of operations.
Because our success depends substantially on the value of our brands and reputation as a provider of choice, adverse publicity could impact the demand for our services.
Our continued profitability depends on our ability to offset our increased costs, such as labor and related costs, through increases in tuition rates.
Governmental universal child care benefit programs and changes in the spending policies or budget priorities for government funding of child care and education could impact demand for our services.
Our business, financial condition and results of operations may be materially and adversely affected by various litigation and regulatory proceedings.
Risks Related to our Capital Structure, Indebtedness and Capital Requirements
We may face risks related to our indebtedness.
The terms of our First Lien Term Loan Facility, First Lien Revolving Credit Facility and the LOC Agreement (in each case, as defined herein, and collectively, the "Credit Facilities") impose operating and financial restrictions on us that may impair our ability to respond to changing barriers and economic conditions.
We may require additional capital to meet our financial obligations and support business growth, and this capital may not be available on acceptable terms or at all.
Acquisitions present many risks and may disrupt our operations. We also may not realize the financial and strategic goals that were contemplated at the time of the transaction.
Any impairment of goodwill, other intangible assets or long-lived assets could negatively impact our results of operations.
We are a holding company with no operations of our own, and we depend on our subsidiaries for cash.
Risks Related to Intellectual Property, Information Technology and Data Privacy and Security
If we are unable to adequately protect our intellectual property rights, our business, financial condition and results of operations may be materially and adversely affected.
We rely significantly on the use of information technology, as well as those of our third-party service providers. Any significant failure, inadequacy, interruption or data security incident of our information systems, or those of our third-party service providers, could disrupt our business operations.
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 regulation, 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 operations.
We are subject to payment-related risks that may result in higher operating costs or the inability to process payments, either of which could harm our brand, reputation, business, financial condition and results of operations.
Risks Related to our Common Stock
If our stock price fluctuates, you could lose a significant part of your investment.
Because Partners Group Holding AG ("PG") owns a significant percentage of our common stock, it may control major corporate decisions and its interests may conflict with your interests as an owner of our common stock and our interests.
We are a “controlled company” within the meaning of the New York Stock Exchange (the "NYSE") rules and, as a result, will qualify for, and may rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.
Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management.
General Risks
Changes in tax laws or to any of the several factors upon which our tax rate is dependent could impact our future tax rates and net (loss) income and affect our profitability.
Inadequacy of our insurance coverage or an inability to procure contractually required coverage could have a material and adverse effect on our business, financial condition and results of operations.
We incur significant additional costs as a result of being a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.