KinderCare Announces the Third Quarter of Fiscal Year 2001 Results

Apr 18, 2001, 01:00 ET from KinderCare Learning Centers, Inc.

    PORTLAND, Ore., April 18 /PRNewswire/ -- KinderCare Learning Centers, Inc.
 ("KinderCare") is pleased to announce net revenues for the third quarter of
 fiscal 2001 of $168.0 million, an increase of $13.2 million, or 8.5 percent
 from the same period last year. The increased net revenues were a result of
 the $8.53, or 7.0 percent, growth in the average tuition rate to $130.48.
 Tuition increases and, to a lesser degree, the higher than average tuition
 rates experienced at newly opened centers were the reasons for the increase in
 the average tuition rate. Occupancy declined 1.5 percentage points to
 66.4 percent from 67.9 percent in the same period last year due partially to
 the new centers, which open with lower occupancy than mature centers, and
 lower full-time equivalent children in some of the older centers.
     Through the third quarter of fiscal 2001, 28 new centers were opened
 versus 17 through the same period last year. In the third quarter of fiscal
 2001, KinderCare acquired two centers located in the Chicago area of Illinois.
 KinderCare acquired an Ohio-based regional chain comprised of 13 centers
 during the third quarter of fiscal 2000. The 30 newly opened and/or acquired
 centers contributed additional net revenues in the third quarter of fiscal
 2001 of $4.2 million. This year, KinderCare accelerated its strategy of
 exiting underperforming assets by closing 43 versus 29 centers through the
 third quarter last year. The center closures reduced net revenues by
 $3.4 million in the third quarter.
     For the third quarter of fiscal 2001, operating income was $19.9 million,
 an increase of $0.1 million from the same period last year. Compared to the
 same period last year, KinderCare experienced $1.8 million of increased costs
 in the following key areas:  the accelerated openings and closings of centers
 this year resulted in incremental losses; acquisitions resulted in additional
 goodwill amortization; and the decision to convert from passenger vans to
 buses resulted in increased transportation expenses.
     Net income was $5.5 million in the third quarter of fiscal 2001, a
 decrease of $0.3 million from the same period last year. Net income declined
 $1.0 million as compared to the same period last year due to the factors
 discussed under operating income above and $0.4 million due to additional
 interest expense associated with KinderCare's recent education-based
 investments. For the third quarter of fiscal 2001, basic and diluted net
 income per share were $0.58 and $0.57. Both basic and diluted net income
 per share were $0.61 in the third quarter of fiscal 2000.
     EBITDA was $30.4 million for the third quarter of fiscal 2001, an increase
 of $2.0 million, or 7.1 percent, from the same period last year. This quarter,
 EBITDA was negatively impacted by $1.7 related to the incremental losses from
 new and closed centers and the higher costs due the decision to convert to
 busses. EBITDA represents net income before the cumulative effect of a change
 in accounting principle, investment income, interest expense, income taxes,
 depreciation and amortization. EBITDA is not intended to represent a measure
 of cash flow or operating results in accordance with generally accepted
 accounting principles. Rather, certain investors and creditors may find EBITDA
 a useful tool for measuring KinderCare's ability to service its debt. However,
 EBITDA should not be used as a tool for comparison as the computation may not
 be similar for all companies.
 
     Forty Weeks Ended March 9, 2001
     During the forty weeks ended March 9, 2001, net revenues were
 $551.4 million, an increase of $35.6 million, or 6.9 percent, from the same
 period last year. The primary reason for the increase in net revenues was the
 growth in the average tuition rate of $8.04, or 6.7 percent, to $128.04.
 Tuition increases and, to a lesser degree, the higher than average tuition
 rates experienced at newly opened centers resulted in the increased average
 tuition rate. Occupancy declined 1.2 percentage points to 67.5 percent from
 68.7 percent in the same period last year due partially to the new centers,
 which open with lower occupancy than mature centers, and reduced full-time
 equivalent children in some of the older centers. The newly opened and/or
 acquired centers contributed additional net revenues during the forty weeks
 ended December 15, 2000 of $8.0 million. The center closures reduced net
 revenues by $9.4 million.
     During the forty weeks ended March 9, 2001, operating income was
 $51.7 million, a decrease of $1.1 million, or 2.1 percent, from the same
 period last year. Compared to the same period last year, KinderCare
 experienced $5.5 million of increased costs in the following key areas:  new
 and closed centers resulted in incremental losses; acquisitions resulted in
 additional goodwill amortization; and the decision to convert from passenger
 vans to buses resulted in increased transportation expenses.
     Net income was $8.1 million in the forty weeks ended March 9, 2001
 compared to $12.1 million in the same period last year. Net income declined
 $3.1 million as compared to the same period last year due to the factors
 discussed under operating income above; $1.2 million due to additional
 interest expense associated with KinderCare's recent education-based
 investments; and $0.8 million due to the non-recurring deferral of fee
 revenues, net of taxes, from the fourth quarter of the previous fiscal year.
 For the forty weeks ended March 9, 2001, basic and diluted net income
 per share were $0.93 and $0.92, respectively, before the cumulative effect of
 a change in accounting principle and $0.85 and $0.84 after the cumulative
 effect, respectively. Basic and diluted net income per share were $1.28 and
 $1.26 in the forty weeks ended March 3, 2000.
     EBITDA was $86.0 million for the forty weeks ended March 9, 2001, an
 increase of $4.2 million, or 5.1 percent, from the same period last year. This
 year, EBITDA was negatively impacted by $5.3 related to the incremental losses
 from new and closed centers and the higher costs due the decision to convert
 to busses. EBITDA is not intended to represent a measure of cash flow or
 operating results in accordance with generally accepted accounting principles.
 Rather, certain investors and creditors may find EBITDA a useful tool for
 measuring KinderCare's ability to service its debt. However, EBITDA should not
 be used as a tool for comparison as the computation may not be similar for all
 companies.
 
     Fiscal Calendar
     KinderCare utilizes a fiscal reporting schedule comprised of 13 four-week
 periods with the fiscal year ended on the Friday closest to May 31st. The
 first quarter is comprised of 16 weeks, while the second, third and
 fourth quarters are each comprised of 12 weeks.
 
     Conference Call
     KinderCare will host a conference call at 800-553-0327, access
 identification number 582350, to discuss the results of the third quarter of
 fiscal 2001 on Thursday, April 19, 2001 at 10:00 a.m. Pacific Daylight Time.
 Replays will be available through Thursday, April 26, 2001, at 800-475-6701,
 access identification number 582350. This call will also be streamed over the
 internet at http://www.videonewswire.com/kindercare/041901 , user name
 KinderCare, access identification number 582350. Replays will be available at
 this Internet website for 90 days from the date of the call.
 
     About KinderCare
     Founded in 1969, KinderCare is the leading for-profit provider of
 educational services and care to children primarily between the ages of
 six weeks and twelve years in the United States. Recently, KinderCare has
 taken steps to become a more broad-based education company that serves infants
 to young adults. During the past year, our new subsidiary, KC Distance
 Learning, Inc., purchased a distance learning company that offers an
 accredited high school program delivered through correspondence format and
 over the internet. In addition, KinderCare made minority investments in
 Beacon Education Management, Inc., a charter school management company, and
 Voyager Expanded Learning, Inc., the developer of Universal Literacy
 Systems(TM), a reading program for students in grades kindergarten through
 sixth, and summer-school programs for elementary and middle schools.
     In April 2001, KinderCare acquired Mulberry Child Care Centers, Inc., a
 child care and early education company based in Dedham, Massachusetts.
 KinderCare currently plans to operate Mulberry's 74 centers and 12 before- and
 after-school programs, located primarily in the northeastern region of the
 United States and California, under the Mulberry name. This acquisition was
 part of KinderCare's continuing effort to grow its primary center-based early
 childhood educational services and care business.
     At April 13, 2001, KinderCare and its subsidiaries operated a total of
 1,242 early childhood education and care centers and served approximately
 133,000 children and their families. Of the 1,242 centers, 1,240 were located
 in 39 states in the United States and two centers were located in the
 United Kingdom. Total center licensed capacity at April 13, 2001 was
 approximately 163,000. KinderCare and its subsidiaries employed more than
 28,000 people at April 13, 2001.
     KinderCare is based in Portland, Oregon. The Internet website address for
 KinderCare is www.kindercare.com. Information about KC Distance Learning,
 Inc.'s educational programs is available at www.keystonehighschool.com and
 www.creditmakeup.com. Mulberry's Internet web site address is
 www.mulberrychildcare.com.
 
               KinderCare Learning Centers, Inc. and Subsidiaries
                       Financial and Operating Highlights
      (In thousands, except per share amounts and child care center data)
                                  (Unaudited)
 
                                    Twelve Weeks Ended     Forty Weeks Ended
                                  March 9     March 3     March 9     March 3
                                   2001         2000       2001        2000
     Results of operations:
     Revenues, net               $168,007    $154,852    $551,400   $515,757
 
     Operating expenses:
       Salaries, wages and
         benefits                  90,443      84,821     305,810    286,437
       Depreciation and
         amortization              10,551       8,663      34,272     28,977
       Rent                         9,496       6,804      28,253     22,682
       Provision for doubtful
         accounts                   1,227       1,251       3,638      3,095
       Other                       36,418      33,578     127,712    121,728
           Total operating
             expenses             148,135     135,117     499,685    462,919
         Operating income          19,872      19,735      51,715     52,838
     Investment income                177         100         432        297
     Interest expense            (11,174)    (10,441)    (37,694)   (33,769)
       Income before income
         taxes and cumulative
         effect of a change
         in accounting principle,
         net                        8,875       9,394      14,453     19,366
     Income tax expense             3,424       3,615       5,596      7,220
     Income before cumulative
       effect of a change in
       accounting principle, net    5,451       5,779       8,857     12,146
     Cumulative effect of a change
       in accounting principle,
       net of income tax benefit
       of $484                         --          --       (790)         --
     Net income                    $5,451      $5,779      $8,067    $12,146
 
     Net income per share:
     Basic -- income before
       cumulative effect of a
       change in accounting
       principle, net               $0.58       $0.61       $0.93      $1.28
     Cumulative effect of a
       change in accounting
       principle, net of taxes         --          --      (0.08)         --
     Net income                     $0.58       $0.61       $0.85      $1.28
 
     Diluted -- income before
       cumulative effect of a
       change in accounting
       principle, net               $0.57       $0.61       $0.92      $1.26
     Cumulative effect of a
       change in accounting
       principle, net of taxes         --          --      (0.08)         --
         Net income                 $0.57       $0.61       $0.84      $1.26
 
     Weighted average common
       shares outstanding:
       Basic                        9,469       9,477       9,470      9,475
       Diluted                      9,556       9,477       9,569      9,633
 
     Other Financial Data:
     EBITDA                       $30,423     $28,398     $85,987    $81,815
     Capital expenditures          29,798      18,077      68,003     59,784
 
     Child Care Center Data:
     Number of centers at end
       of period                    1,156       1,161       1,156      1,161
     Licensed capacity at end
       of period                  150,000     148,000     150,000    148,000
     Occupancy                      66.4%       67.9%       67.5%      68.7%
     Average tuition rate         $130.48     $121.95     $128.04    $120.00
 
     CONTACT:  Dan Jackson, Senior Vice President, Finance of KinderCare
 Learning Centers, Inc., 503-872-1317.
 
 

SOURCE KinderCare Learning Centers, Inc.
    PORTLAND, Ore., April 18 /PRNewswire/ -- KinderCare Learning Centers, Inc.
 ("KinderCare") is pleased to announce net revenues for the third quarter of
 fiscal 2001 of $168.0 million, an increase of $13.2 million, or 8.5 percent
 from the same period last year. The increased net revenues were a result of
 the $8.53, or 7.0 percent, growth in the average tuition rate to $130.48.
 Tuition increases and, to a lesser degree, the higher than average tuition
 rates experienced at newly opened centers were the reasons for the increase in
 the average tuition rate. Occupancy declined 1.5 percentage points to
 66.4 percent from 67.9 percent in the same period last year due partially to
 the new centers, which open with lower occupancy than mature centers, and
 lower full-time equivalent children in some of the older centers.
     Through the third quarter of fiscal 2001, 28 new centers were opened
 versus 17 through the same period last year. In the third quarter of fiscal
 2001, KinderCare acquired two centers located in the Chicago area of Illinois.
 KinderCare acquired an Ohio-based regional chain comprised of 13 centers
 during the third quarter of fiscal 2000. The 30 newly opened and/or acquired
 centers contributed additional net revenues in the third quarter of fiscal
 2001 of $4.2 million. This year, KinderCare accelerated its strategy of
 exiting underperforming assets by closing 43 versus 29 centers through the
 third quarter last year. The center closures reduced net revenues by
 $3.4 million in the third quarter.
     For the third quarter of fiscal 2001, operating income was $19.9 million,
 an increase of $0.1 million from the same period last year. Compared to the
 same period last year, KinderCare experienced $1.8 million of increased costs
 in the following key areas:  the accelerated openings and closings of centers
 this year resulted in incremental losses; acquisitions resulted in additional
 goodwill amortization; and the decision to convert from passenger vans to
 buses resulted in increased transportation expenses.
     Net income was $5.5 million in the third quarter of fiscal 2001, a
 decrease of $0.3 million from the same period last year. Net income declined
 $1.0 million as compared to the same period last year due to the factors
 discussed under operating income above and $0.4 million due to additional
 interest expense associated with KinderCare's recent education-based
 investments. For the third quarter of fiscal 2001, basic and diluted net
 income per share were $0.58 and $0.57. Both basic and diluted net income
 per share were $0.61 in the third quarter of fiscal 2000.
     EBITDA was $30.4 million for the third quarter of fiscal 2001, an increase
 of $2.0 million, or 7.1 percent, from the same period last year. This quarter,
 EBITDA was negatively impacted by $1.7 related to the incremental losses from
 new and closed centers and the higher costs due the decision to convert to
 busses. EBITDA represents net income before the cumulative effect of a change
 in accounting principle, investment income, interest expense, income taxes,
 depreciation and amortization. EBITDA is not intended to represent a measure
 of cash flow or operating results in accordance with generally accepted
 accounting principles. Rather, certain investors and creditors may find EBITDA
 a useful tool for measuring KinderCare's ability to service its debt. However,
 EBITDA should not be used as a tool for comparison as the computation may not
 be similar for all companies.
 
     Forty Weeks Ended March 9, 2001
     During the forty weeks ended March 9, 2001, net revenues were
 $551.4 million, an increase of $35.6 million, or 6.9 percent, from the same
 period last year. The primary reason for the increase in net revenues was the
 growth in the average tuition rate of $8.04, or 6.7 percent, to $128.04.
 Tuition increases and, to a lesser degree, the higher than average tuition
 rates experienced at newly opened centers resulted in the increased average
 tuition rate. Occupancy declined 1.2 percentage points to 67.5 percent from
 68.7 percent in the same period last year due partially to the new centers,
 which open with lower occupancy than mature centers, and reduced full-time
 equivalent children in some of the older centers. The newly opened and/or
 acquired centers contributed additional net revenues during the forty weeks
 ended December 15, 2000 of $8.0 million. The center closures reduced net
 revenues by $9.4 million.
     During the forty weeks ended March 9, 2001, operating income was
 $51.7 million, a decrease of $1.1 million, or 2.1 percent, from the same
 period last year. Compared to the same period last year, KinderCare
 experienced $5.5 million of increased costs in the following key areas:  new
 and closed centers resulted in incremental losses; acquisitions resulted in
 additional goodwill amortization; and the decision to convert from passenger
 vans to buses resulted in increased transportation expenses.
     Net income was $8.1 million in the forty weeks ended March 9, 2001
 compared to $12.1 million in the same period last year. Net income declined
 $3.1 million as compared to the same period last year due to the factors
 discussed under operating income above; $1.2 million due to additional
 interest expense associated with KinderCare's recent education-based
 investments; and $0.8 million due to the non-recurring deferral of fee
 revenues, net of taxes, from the fourth quarter of the previous fiscal year.
 For the forty weeks ended March 9, 2001, basic and diluted net income
 per share were $0.93 and $0.92, respectively, before the cumulative effect of
 a change in accounting principle and $0.85 and $0.84 after the cumulative
 effect, respectively. Basic and diluted net income per share were $1.28 and
 $1.26 in the forty weeks ended March 3, 2000.
     EBITDA was $86.0 million for the forty weeks ended March 9, 2001, an
 increase of $4.2 million, or 5.1 percent, from the same period last year. This
 year, EBITDA was negatively impacted by $5.3 related to the incremental losses
 from new and closed centers and the higher costs due the decision to convert
 to busses. EBITDA is not intended to represent a measure of cash flow or
 operating results in accordance with generally accepted accounting principles.
 Rather, certain investors and creditors may find EBITDA a useful tool for
 measuring KinderCare's ability to service its debt. However, EBITDA should not
 be used as a tool for comparison as the computation may not be similar for all
 companies.
 
     Fiscal Calendar
     KinderCare utilizes a fiscal reporting schedule comprised of 13 four-week
 periods with the fiscal year ended on the Friday closest to May 31st. The
 first quarter is comprised of 16 weeks, while the second, third and
 fourth quarters are each comprised of 12 weeks.
 
     Conference Call
     KinderCare will host a conference call at 800-553-0327, access
 identification number 582350, to discuss the results of the third quarter of
 fiscal 2001 on Thursday, April 19, 2001 at 10:00 a.m. Pacific Daylight Time.
 Replays will be available through Thursday, April 26, 2001, at 800-475-6701,
 access identification number 582350. This call will also be streamed over the
 internet at http://www.videonewswire.com/kindercare/041901 , user name
 KinderCare, access identification number 582350. Replays will be available at
 this Internet website for 90 days from the date of the call.
 
     About KinderCare
     Founded in 1969, KinderCare is the leading for-profit provider of
 educational services and care to children primarily between the ages of
 six weeks and twelve years in the United States. Recently, KinderCare has
 taken steps to become a more broad-based education company that serves infants
 to young adults. During the past year, our new subsidiary, KC Distance
 Learning, Inc., purchased a distance learning company that offers an
 accredited high school program delivered through correspondence format and
 over the internet. In addition, KinderCare made minority investments in
 Beacon Education Management, Inc., a charter school management company, and
 Voyager Expanded Learning, Inc., the developer of Universal Literacy
 Systems(TM), a reading program for students in grades kindergarten through
 sixth, and summer-school programs for elementary and middle schools.
     In April 2001, KinderCare acquired Mulberry Child Care Centers, Inc., a
 child care and early education company based in Dedham, Massachusetts.
 KinderCare currently plans to operate Mulberry's 74 centers and 12 before- and
 after-school programs, located primarily in the northeastern region of the
 United States and California, under the Mulberry name. This acquisition was
 part of KinderCare's continuing effort to grow its primary center-based early
 childhood educational services and care business.
     At April 13, 2001, KinderCare and its subsidiaries operated a total of
 1,242 early childhood education and care centers and served approximately
 133,000 children and their families. Of the 1,242 centers, 1,240 were located
 in 39 states in the United States and two centers were located in the
 United Kingdom. Total center licensed capacity at April 13, 2001 was
 approximately 163,000. KinderCare and its subsidiaries employed more than
 28,000 people at April 13, 2001.
     KinderCare is based in Portland, Oregon. The Internet website address for
 KinderCare is www.kindercare.com. Information about KC Distance Learning,
 Inc.'s educational programs is available at www.keystonehighschool.com and
 www.creditmakeup.com. Mulberry's Internet web site address is
 www.mulberrychildcare.com.
 
               KinderCare Learning Centers, Inc. and Subsidiaries
                       Financial and Operating Highlights
      (In thousands, except per share amounts and child care center data)
                                  (Unaudited)
 
                                    Twelve Weeks Ended     Forty Weeks Ended
                                  March 9     March 3     March 9     March 3
                                   2001         2000       2001        2000
     Results of operations:
     Revenues, net               $168,007    $154,852    $551,400   $515,757
 
     Operating expenses:
       Salaries, wages and
         benefits                  90,443      84,821     305,810    286,437
       Depreciation and
         amortization              10,551       8,663      34,272     28,977
       Rent                         9,496       6,804      28,253     22,682
       Provision for doubtful
         accounts                   1,227       1,251       3,638      3,095
       Other                       36,418      33,578     127,712    121,728
           Total operating
             expenses             148,135     135,117     499,685    462,919
         Operating income          19,872      19,735      51,715     52,838
     Investment income                177         100         432        297
     Interest expense            (11,174)    (10,441)    (37,694)   (33,769)
       Income before income
         taxes and cumulative
         effect of a change
         in accounting principle,
         net                        8,875       9,394      14,453     19,366
     Income tax expense             3,424       3,615       5,596      7,220
     Income before cumulative
       effect of a change in
       accounting principle, net    5,451       5,779       8,857     12,146
     Cumulative effect of a change
       in accounting principle,
       net of income tax benefit
       of $484                         --          --       (790)         --
     Net income                    $5,451      $5,779      $8,067    $12,146
 
     Net income per share:
     Basic -- income before
       cumulative effect of a
       change in accounting
       principle, net               $0.58       $0.61       $0.93      $1.28
     Cumulative effect of a
       change in accounting
       principle, net of taxes         --          --      (0.08)         --
     Net income                     $0.58       $0.61       $0.85      $1.28
 
     Diluted -- income before
       cumulative effect of a
       change in accounting
       principle, net               $0.57       $0.61       $0.92      $1.26
     Cumulative effect of a
       change in accounting
       principle, net of taxes         --          --      (0.08)         --
         Net income                 $0.57       $0.61       $0.84      $1.26
 
     Weighted average common
       shares outstanding:
       Basic                        9,469       9,477       9,470      9,475
       Diluted                      9,556       9,477       9,569      9,633
 
     Other Financial Data:
     EBITDA                       $30,423     $28,398     $85,987    $81,815
     Capital expenditures          29,798      18,077      68,003     59,784
 
     Child Care Center Data:
     Number of centers at end
       of period                    1,156       1,161       1,156      1,161
     Licensed capacity at end
       of period                  150,000     148,000     150,000    148,000
     Occupancy                      66.4%       67.9%       67.5%      68.7%
     Average tuition rate         $130.48     $121.95     $128.04    $120.00
 
     CONTACT:  Dan Jackson, Senior Vice President, Finance of KinderCare
 Learning Centers, Inc., 503-872-1317.
 
 SOURCE  KinderCare Learning Centers, Inc.