Company Quick10K Filing
Quick10K
Ceridian HCM Holding
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$49.86 138 $6,900
10-Q 2019-03-31 Quarter: 2019-03-31
S-1 2019-03-15 Public Filing
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
8-K 2019-05-21 Other Events, Exhibits
8-K 2019-05-07 Earnings, Exhibits
8-K 2019-05-01 Officers, Exhibits
8-K 2019-05-01 Shareholder Vote
8-K 2019-05-01 Earnings, Exhibits
8-K 2019-04-09 Officers
8-K 2019-03-14 Other Events
8-K 2019-02-14
8-K 2019-02-05 Earnings, Officers, Exhibits
8-K 2018-10-29 Earnings, Exhibits
8-K 2018-08-08 Earnings, Exhibits
8-K 2018-08-07 Officers, Exhibits
8-K 2018-07-22 Officers, Exhibits
8-K 2018-05-22 Earnings, Exhibits
8-K 2018-05-09 Earnings, Exhibits
8-K 2018-04-30 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
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SIGA Siga Technologies 449
PBBI PB Bancorp 82
BHTG Biohitech Global 40
BKYI Bio Key International 19
RASP Rasna Therapeutics 0
DGJI Dragon Jade 0
CDAY 2019-03-31
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.1 cday-ex101_130.htm
EX-31.1 cday-ex311_9.htm
EX-31.2 cday-ex312_6.htm
EX-32.1 cday-ex321_8.htm
EX-32.2 cday-ex322_12.htm

Ceridian HCM Holding Earnings 2019-03-31

CDAY 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 cday-10q_20190331.htm 10-Q cday-10q_20190331.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly reporting period ended March 31, 2019

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                     to                    

Commission file number 001-38467

 

Ceridian HCM Holding Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

46-3231686

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer

Identification Number)

3311 East Old Shakopee Road

Minneapolis, Minnesota 55425

(952) 853-8100

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes  ☐    No  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as the latest practicable date: 140,840,259 shares of Common Stock, $0.01 par value per share, as of April 29, 2019.

 

 

 

 


Ceridian HCM Holding Inc.

Table of Contents

 

 

2


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Form 10-Q”) contains, or incorporates by reference, not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”) and that are subject to the safe harbor created by those sections.  Forward-looking statements, including, without limitation, statements concerning the conditions of the human capital management solutions industry and our operations, performance, and financial condition, including, in particular, statements relating to our business, growth strategies, product development efforts, and future expenses. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “assumes,” “projects,” “could,” “may,” “will,” “should,” and similar references to future periods, or by the inclusion of forecasts or projections.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy, and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national, or global political, economic, business, competitive, market, and regulatory conditions and the following:

 

 

our inability to attain or to maintain profitability;

 

significant competition for our solutions;

 

our inability to continue to develop or to sell our existing Cloud solutions;

 

our inability to manage our growth effectively;

 

the risk that we may not be able to successfully migrate our Bureau customers to our Cloud solutions or to offset the decline in Bureau revenue with Cloud revenue;

 

the market for enterprise cloud computing develops slower than we expect or declines;

 

efforts to increase use of our Cloud solutions and our other applications may not succeed;

 

we fail to provide enhancements and new features and modifications to our solutions;

 

failure to comply the Federal Trade Commission’s (“FTC”) ongoing consent order regarding data protection;

 

system interruptions or failures, including cyber-security breaches, identity theft, or other disruptions that could compromise our information;

 

our failure to comply with applicable privacy, security and data laws, regulations and standards;

 

changes in regulations governing privacy concerns and laws or other domestic or foreign data protection regulations;

 

we are unable to successfully expand our current offerings into new markets or further penetrate existing markets;

 

we are unable to meet the more complex configuration and integration demands of our large customers;

 

our customers declining to renew their agreements with us or renewing at lower performance fee levels;

 

we fail to manage our technical operations infrastructure;

 

we are unable to maintain necessary third party relationships, and third party software licenses or there are errors in the software we license;

 

our inability to protect our intellectual property rights, proprietary technology, information, processes, and know-how;

 

we fail to keep pace with rapid technological changes and evolving industry standards; or

 

changes in laws and regulations related to the Internet or changes in the Internet infrastructure itself.

 

 

Please refer to Part II, Item IA, “Risk Factors” of this Form 10-Q and Part I, Item IA, “Risk Factors” of our most recently filed Annual Report on Form 10-K for a further description of these and other factors. Although we have attempted to identify important risk factors, there may be other risk factors not presently known to us or that we presently believe are not material that could cause actual results and developments to differ materially from those made in or suggested by the forward-looking statements contained in this Form 10-Q. If any of these risks materialize, or if any of the above assumptions underlying forward-looking statements prove incorrect, actual results and developments may differ materially from those made in or suggested by the forward-looking statements contained in this Form 10-Q. For the reasons described above, we caution you against relying on any forward-looking statements. Any forward-looking statement made by us in this Form 10-Q speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or to revise any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as may be required by law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should be viewed as historical data.

3


PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Ceridian HCM Holding Inc.

Condensed Consolidated Balance Sheets

(Unaudited, dollars in millions, except share data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

*As Adjusted

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and equivalents

 

$

206.3

 

 

$

217.8

 

Trade and other receivables, net

 

 

68.8

 

 

 

63.9

 

Prepaids expenses and other current assets

 

 

55.3

 

 

 

48.9

 

Total current assets before customer trust funds

 

 

330.4

 

 

 

330.6

 

Customer trust funds

 

 

4,559.7

 

 

 

2,603.5

 

Total current assets

 

 

4,890.1

 

 

 

2,934.1

 

Right of use lease asset

 

 

39.9

 

 

 

 

Property, plant, and equipment, net

 

 

103.9

 

 

 

104.4

 

Goodwill

 

 

1,944.9

 

 

 

1,927.4

 

Other intangible assets, net

 

 

184.3

 

 

 

187.5

 

Other assets

 

 

96.0

 

 

 

94.4

 

Total assets

 

$

7,259.1

 

 

$

5,247.8

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

6.8

 

 

$

6.8

 

Short-term lease liabilities

 

 

13.9

 

 

 

 

Accounts payable

 

 

31.8

 

 

 

41.5

 

Deferred revenue

 

 

23.0

 

 

 

23.2

 

Employee compensation and benefits

 

 

38.9

 

 

 

54.5

 

Other accrued expenses

 

 

15.3

 

 

 

23.9

 

Total current liabilities before customer trust funds obligations

 

 

129.7

 

 

 

149.9

 

Customer trust funds obligations

 

 

4,554.0

 

 

 

2,619.7

 

Total current liabilities

 

 

4,683.7

 

 

 

2,769.6

 

Long-term debt, less current portion

 

 

662.1

 

 

 

663.5

 

Employee benefit plans

 

 

151.1

 

 

 

153.3

 

Long-term lease liabilities

 

 

32.7

 

 

 

 

Other liabilities

 

 

42.7

 

 

 

45.9

 

Total liabilities

 

 

5,572.3

 

 

 

3,632.3

 

Commitments and contingencies (Note 15)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.01 par, 500,000,000 shares authorized, 140,675,332 and

    139,453,710 shares issued and outstanding as of March 31, 2019 and

    December 31, 2018, respectively

 

 

1.4

 

 

 

1.4

 

Additional paid in capital

 

 

2,351.7

 

 

 

2,325.6

 

Accumulated deficit

 

 

(297.3

)

 

 

(335.6

)

Accumulated other comprehensive loss

 

 

(369.0

)

 

 

(375.9

)

Total stockholders’ equity

 

 

1,686.8

 

 

 

1,615.5

 

Total liabilities and equity

 

$

7,259.1

 

 

$

5,247.8

 

 

*Please refer to Note 2 for a summary of adjustments.

 

See accompanying notes to condensed consolidated financial statements.

4


 

Ceridian HCM Holding Inc.

Condensed Consolidated Statements of Operations

(Unaudited, dollars in millions, except share and per share data)

 

 

 

Three Months Ended March 31,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

*As Adjusted

 

Revenue:

 

 

 

 

 

 

 

 

Recurring services

 

$

172.8

 

 

$

160.9

 

Professional services and other

 

 

30.9

 

 

 

27.9

 

Total revenue

 

 

203.7

 

 

 

188.8

 

Cost of revenue:

 

 

 

 

 

 

 

 

Recurring services

 

 

50.9

 

 

 

50.7

 

Professional services and other

 

 

35.3

 

 

 

32.8

 

Product development and management

 

 

15.2

 

 

 

13.7

 

Depreciation and amortization

 

 

8.7

 

 

 

8.7

 

Total cost of revenue

 

 

110.1

 

 

 

105.9

 

Gross profit

 

 

93.6

 

 

 

82.9

 

Selling, general, and administrative expense

 

 

66.2

 

 

 

54.9

 

Operating profit

 

 

27.4

 

 

 

28.0

 

Other expense (income), net

 

 

1.6

 

 

 

(2.2

)

Interest expense, net

 

 

8.9

 

 

 

22.2

 

Income from continuing operations before income taxes

 

 

16.9

 

 

 

8.0

 

Income tax expense

 

 

5.7

 

 

 

5.8

 

Income from continuing operations

 

 

11.2

 

 

 

2.2

 

Loss from discontinued operations

 

 

 

 

 

(2.1

)

Net income

 

 

11.2

 

 

 

0.1

 

Net loss attributable to noncontrolling interest

 

 

 

 

 

(0.5

)

Net income attributable to Ceridian

 

$

11.2

 

 

$

0.6

 

Net income (loss) per share attributable to Ceridian:

 

 

 

 

 

 

 

 

Basic

 

$

0.08

 

 

$

(0.07

)

Diluted

 

$

0.08

 

 

$

(0.07

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

140,149,271

 

 

 

65,314,462

 

Diluted

 

 

147,042,228

 

 

 

65,314,462

 

 

 

*Please refer to Note 2 for a summary of adjustments.

See accompanying notes to condensed consolidated financial statements.

5


Ceridian HCM Holding Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited, dollars in millions)

 

 

 

Three Months Ended March 31,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

*As Adjusted

 

Net income

 

$

11.2

 

 

$

0.1

 

Items of other comprehensive income (loss) before income taxes:

 

 

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

 

12.3

 

 

 

(16.6

)

Change in unrealized gain (loss) from invested customer trust funds

 

 

21.9

 

 

 

(13.4

)

Change in pension liability adjustment (1)

 

 

2.5

 

 

 

2.9

 

Other comprehensive income (loss) before income taxes

 

 

36.7

 

 

 

(27.1

)

Income tax expense, net

 

 

2.7

 

 

 

0.8

 

Other comprehensive income (loss) after income taxes

 

 

34.0

 

 

 

(27.9

)

Comprehensive income (loss)

 

 

45.2

 

 

 

(27.8

)

Comprehensive loss attributable to noncontrolling interest

 

 

 

 

 

(0.7

)

Comprehensive income (loss) attributable to Ceridian

 

$

45.2

 

 

$

(27.1

)

(1)

The amount of the pension liability adjustment recognized in the condensed consolidated statements of operations within other expense (income), net was $2.6 and $3.0 during the three months ended March 31, 2019, and 2018, respectively.

 

*Please refer to Note 2 for a summary of adjustments.

See accompanying notes to condensed consolidated financial statements.

 

6


Ceridian HCM Holding Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited, dollars in millions)

 

 

 

Common Stock

 

 

Additional

Paid In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders

 

 

 

Shares

 

 

$

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance as of December 31, 2018, as adjusted*

 

 

139,453,710

 

 

$

1.4

 

 

$

2,325.6

 

 

$

(335.6

)

 

$

(375.9

)

 

$

1,615.5

 

Cumulative-effect adjustment to accumulated deficit related to the adoption

   of ASU 2018-02 (Please refer to Note 2)

 

 

 

 

 

 

 

 

 

 

 

27.1

 

 

 

(27.1

)

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

11.2

 

 

 

 

 

 

11.2

 

Issuance of common stock upon exercise of options

 

 

1,221,622

 

 

 

 

 

 

20.1

 

 

 

 

 

 

 

 

 

20.1

 

Share-based compensation

 

 

 

 

 

 

 

 

6.0

 

 

 

 

 

 

 

 

 

6.0

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12.3

 

 

 

12.3

 

Change in unrealized loss, net of tax of ($2.7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19.2

 

 

 

19.2

 

Change in minimum pension & postretirement liability, net of tax of $0.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.5

 

 

 

2.5

 

Balance as of March 31, 2019

 

 

140,675,332

 

 

$

1.4

 

 

$

2,351.7

 

 

$

(297.3

)

 

$

(369.0

)

 

$

1,686.8

 

 

 

 

 

Senior Preferred

Stock

 

 

Junior Preferred

Stock

 

 

Common Stock

 

 

Additional Paid In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders

 

 

Non-controlling

 

 

Total

 

 

 

Shares

 

 

$

 

 

Shares

 

 

$

 

 

Shares

 

 

$

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

 

Interest

 

 

Equity

 

Balance as of December

   31, 2017, as adjusted*

 

 

16,802,144

 

 

$

184.8

 

 

 

58,244,308

 

 

$

0.6

 

 

 

65,285,962

 

 

$

0.7

 

 

$

1,565.4

 

 

$

(267.3

)

 

$

(311.0

)

 

$

1,173.2

 

 

$

37.8

 

 

$

1,211.0

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.6

 

 

 

 

 

 

0.6

 

 

 

(0.5

)

 

 

0.1

 

Issuance of common

   stock upon exercise

   of options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common

   stock upon vesting

   of restricted stock units

 

 

 

 

 

 

 

 

 

 

 

 

 

 

76,190

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior preferred dividends

   declared

 

 

 

 

 

5.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5.3

)

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.9

 

 

 

 

 

 

 

 

 

2.9

 

 

 

 

 

 

2.9

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16.4

)

 

 

(16.4

)

 

 

(0.2

)

 

 

(16.6

)

Change in unrealized

   loss, net of tax of ($0.8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12.6

)

 

 

(12.6

)

 

 

 

 

 

(12.6

)

Change in minimum

   pension & postretirement

   liability, net of tax of $0.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.9

 

 

 

2.9

 

 

 

 

 

 

2.9

 

Balance as of March 31,

   2018, as adjusted*

 

 

16,802,144

 

 

$

190.1

 

 

 

58,244,308

 

 

$

0.6

 

 

 

65,374,309

 

 

$

0.7

 

 

$

1,568.3

 

 

$

(272.0

)

 

$

(337.1

)

 

$

1,150.6

 

 

$

37.1

 

 

$

1,187.7

 

 

*Please refer to Note 2 for a summary of adjustments.

See accompanying notes to condensed consolidated financial statements.

 

7


Ceridian HCM Holding Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, dollars in millions)

 

 

 

Three Months Ended March 31,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

*As Adjusted

 

Net income

 

$

11.2

 

 

$

0.1

 

Loss from discontinued operations

 

 

 

 

 

2.1

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

 

 

Deferred income tax benefit

 

 

(1.9

)

 

 

(0.2

)

Depreciation and amortization

 

 

14.4

 

 

 

13.9

 

Amortization of debt issuance costs and debt discount

 

 

0.3

 

 

 

1.0

 

Net periodic pension and postretirement cost

 

 

1.3

 

 

 

0.6

 

Non-cash share-based compensation

 

 

6.0

 

 

 

2.7

 

Other

 

 

0.5

 

 

 

(0.2

)

Changes in operating assets and liabilities excluding effects of acquisitions and

   divestitures:

 

 

 

 

 

 

 

 

Trade and other receivables

 

 

(3.8

)

 

 

(1.3

)

Prepaid expenses and other current assets

 

 

(7.0

)

 

 

(13.3

)

Accounts payable and other accrued expenses

 

 

(5.8

)

 

 

(2.0

)

Deferred revenue

 

 

(0.2

)

 

 

3.3

 

Employee compensation and benefits

 

 

(16.9

)

 

 

(17.0

)

Accrued interest

 

 

3.4

 

 

 

(13.1

)

Accrued taxes

 

 

(8.1

)

 

 

6.3

 

Other assets and liabilities

 

 

(2.2

)

 

 

(5.2

)

Net cash used in operating activities - continuing operations

 

 

(8.8

)

 

 

(22.3

)

Net cash used in operating activities - discontinued operations

 

 

 

 

 

(1.1

)

Net cash used in operating activities

 

 

(8.8

)

 

 

(23.4

)

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Purchase of customer trust funds marketable securities

 

 

(143.3

)

 

 

(520.6

)

Proceeds from sale and maturity of customer trust funds marketable securities

 

 

49.8

 

 

 

175.4

 

Expenditures for property, plant, and equipment

 

 

(4.0

)

 

 

(2.9

)

Expenditures for software and technology

 

 

(9.9

)

 

 

(7.4

)

Acquisition costs, net of cash acquired

 

 

(10.2

)

 

 

 

Net cash used in investing activities

 

 

(117.6

)

 

 

(355.5

)

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Increase in customer trust funds obligations, net

 

 

1,916.1

 

 

 

230.4

 

Proceeds from issuance of common stock upon exercise of stock options

 

 

20.1

 

 

 

 

Repayment of long-term debt obligations

 

 

(1.7

)

 

 

(0.3

)

Net cash provided by financing activities

 

 

1,934.5

 

 

 

230.1

 

Effect of exchange rate changes on cash, restricted cash, and equivalents

 

 

3.9

 

 

 

(4.5

)

Net increase (decrease) in cash, restricted cash, and equivalents

 

 

1,812.0

 

 

 

(153.3

)

Elimination of cash from discontinued operations

 

 

 

 

 

1.0

 

Cash, restricted cash, and equivalents at beginning of period

 

 

1,106.3

 

 

 

2,411.8

 

Cash, restricted cash, and equivalents at end of period

 

$

2,918.3

 

 

$

2,259.5

 

Reconciliation of cash, restricted cash, and equivalents to the condensed consolidated

   balance sheets

 

 

 

 

 

 

 

 

Cash and equivalents

 

$

206.3

 

 

$

57.8

 

Restricted cash and equivalents included in customer trust funds

 

 

2,712.0

 

 

 

2,201.7

 

Total cash, restricted cash, and equivalents

 

$

2,918.3

 

 

$

2,259.5

 

 

 

*Please refer to Note 2 for a summary of adjustments.

 

See accompanying notes to condensed consolidated financial statements.

8


Ceridian HCM Holding Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited, dollars in millions, except share and per share data)

1. Organization

Ceridian HCM Holding Inc. and its subsidiaries (also referred to in this report as “Ceridian,” “we,” “our,” and “us”) offer a broad range of services and software designed to help employers more effectively manage employment processes, such as payroll, payroll-related tax filing, human resource information systems, employee self-service, time and labor management, employee assistance programs, and recruitment and applicant screening. Our technology-based services are typically provided through long-term customer relationships that result in a high level of recurring revenue. Our operations are primarily located in the United States and Canada.   

On March 22, 2019, we completed a secondary offering, in which certain of our stockholders (the “Selling Stockholders”) sold 13,000,000 shares of common stock, in an underwritten public offering at $50.50 per share.  The Selling Stockholders granted the underwriters a 30-day option to purchase an additional 1,950,000 shares of common stock at the offering price, which was partially exercised on April 3, 2019 for 1,222,142 shares.  A total of 14,222,142 shares of common stock were sold by the Selling Stockholders, with all proceeds going to the Selling Stockholders.  We incurred expenses of $0.9 during the three months ended March 31, 2019, related to the secondary offering within selling, general and administrative expense.  

2. Summary of Significant Accounting Policies

Recently Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” which replaced all existing revenue guidance created by Accounting Standards Codification (“ASC”) Topic 605, including prescriptive industry-specific guidance, and created ASC Topic 606 for revenue and ASC Subtopic 340-40 for incremental costs of obtaining a contract with customers. This standard’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We have adopted ASU No. 2014-09 as of January 1, 2019, using the full retrospective method for adoption. Please refer to the tables below for the retrospective impacts of the adoption of this guidance.  Adoption of the new standard resulted in changes to our accounting policies for revenue recognition, as detailed below.

The adoption of the new standard resulted in changes to the classification and timing of our revenue recognition. Specifically, revenue classified as professional services and other revenue was increased, and revenue classified as recurring services revenue was reduced under the new standard, compared to ASC Topic 605. Adoption of the new standard also resulted in changes to the timing of our revenue recognition compared to ASC Topic 605 because professional services and other revenue is generally recognized earlier in the contract period than recurring services revenue. In compliance with the new standard, a contract asset is reflected on the consolidated balance sheets when revenue recognized for professional service performance obligations exceed the billings and is amortized over the contract period, which is generally three years. We also have changed the timing of certain selling, general, and administrative expenses, as the new standard required capitalizing and amortizing certain selling expenses, such as commissions and bonuses paid to the sales force. These sales expenses are now amortized over the period of benefit, which we have determined to be five years.

In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. This standard requires balance sheet recognition for both finance leases and operating leases. In July 2018, the FASB issued ASU No. 2018-11 “Leases (Topic 842): Targeted Improvement,” which allowed an additional (and optional) transition method to adopt the new lease requirements.  We have adopted ASU No. 2016-02 and ASU No. 2018-11 as of January 1, 2019, by recording a cumulative-effect adjustment to the opening balance of accumulated deficit on this date.  Please refer to Note 14, “Leases,” for additional discussion of the impacts of adoption of this guidance.  

9


In November 2016, the FASB issued ASU No. 2016-18, “Restricted Cash,” which requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and restricted cash. We have adopted this guidance as of January 1, 2019 on a retrospective basis for all periods presented. Accordingly, the condensed consolidated statement of cash flows has been revised to include restricted cash and restricted cash equivalents held to satisfy customer trust funds obligations, as a component of cash, cash equivalents, restricted cash and restricted cash equivalents. Please refer to the tables below for the retrospective impacts of the adoption of this guidance.

In March 2017, the FASB issued ASU No. 2017-07, “Compensation—Retirement Benefits,” which aims to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost.  The amendments in this update require that an employer (a) report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period, and (b) report the other components of net benefit cost in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented.  We have adopted this guidance as of January 1, 2019, on a retrospective basis for all periods presented.  Please refer to the tables below for the retrospective impacts of the adoption of this guidance.  

In February 2018, the FASB issued ASU No. 2018-02, “Income Statement—Reporting Comprehensive Income,” in response to a narrow-scope financial reporting issue that arose as a consequence of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The amendment in this update allows entities to reclassify from accumulated other comprehensive income to retained earnings, the impact of the reduced federal statutory tax rate for corporations included in the Tax Act. We have adopted this guidance as of January 1, 2019, resulting in an increase in accumulated other comprehensive loss of $27.1, and a decrease in accumulated deficit for the same amount on our consolidated balance sheets.  As of January 1, 2019, we have changed our policy for releasing income tax effects from accumulated other comprehensive loss to comply with this guidance, which is considered a change in accounting principle.    

We have adjusted our condensed consolidated financial statements from amounts previously reported due to the adoption of ASC Topic 606, ASU No. 2017-07, and ASU No. 2016-18.  Selected condensed consolidated financial statement line items, which reflect the adoption of the new ASUs, are as follows:

 

 

 

December 31, 2018

 

Condensed Consolidated Balance Sheet

 

As previously

reported

 

 

ASC Topic 606

Adjustments

 

 

As adjusted

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Trade and other receivables, net

 

$

69.9

 

 

$

(6.0

)

 

$

63.9

 

Prepaid expenses and other current assets

 

 

42.3

 

 

 

6.6

 

 

 

48.9

 

Other assets

 

 

1.6

 

 

 

92.8

 

 

 

94.4

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue

 

$

17.2

 

 

$

6.0

 

 

$

23.2

 

Other liabilities

 

 

42.0

 

 

 

3.9

 

 

 

45.9

 

 

 

 

Three Months Ended March 31, 2018

 

Condensed Consolidated Statement of Operations

 

As previously

reported

 

 

ASC Topic 606

Adjustments

 

 

ASU 2017-07

Adjustments

 

 

As

adjusted

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring services

 

$

167.0

 

 

$

(6.1

)

 

$

 

 

$

160.9

 

Professional services and other

 

 

20.2

 

 

 

7.7

 

 

 

 

 

 

27.9

 

Total revenue

 

$

187.2

 

 

$

1.6

 

 

$

 

 

$

188.8

 

Selling, general, and administrative expense

 

 

56.8

 

 

 

(1.3

)

 

 

(0.6

)

 

 

54.9

 

Operating profit

 

 

24.5

 

 

 

2.9

 

 

 

0.6

 

 

 

28.0

 

Other income, net

 

 

(2.8

)

 

 

 

 

 

0.6

 

 

 

(2.2

)

Income tax expense

 

 

5.6

 

 

 

0.2

 

 

 

 

 

 

5.8

 

Net (loss) income attributable to Ceridian

 

$

(2.1

)

 

$

2.7

 

 

$

 

 

$

0.6

 

Net loss per share attributable to Ceridian, basic and diluted

 

$

(0.11

)

 

$

0.04

 

 

$

 

 

$

(0.07

)

10


 

 

 

Three Months Ended March 31, 2018

 

Condensed Consolidated Statement of Cash Flows

 

As previously

reported

 

 

ASC Topic 606

Adjustments

 

 

ASU 2016-18

Adjustments

 

 

As

adjusted

 

Net (loss) income

 

$

(2.6

)

 

$

2.7

 

 

$

 

 

$

0.1

 

Adjustments to reconcile net (loss) income to net cash used in

   operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred income tax benefit

 

 

(0.4

)

 

 

0.2