10-Q 1 cday-20220331.htm 10-Q 10-Q
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Table of Contents

 

 

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, 2022

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

img214249619_0.jpg 

 

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)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common stock, $0.01 par value

 

CDAY

 

New York Stock Exchange

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: 152,644,831 shares of common stock, $0.01 par value per share, as of April 27, 2022.

 

 


Table of Contents

 

Ceridian HCM Holding Inc.

Table of Contents

 

 

 

Page

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

3

 

 

PART I. FINANCIAL INFORMATION

4

 

 

 

Item 1.

Condensed Consolidated Financial Statements (unaudited)

4

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

39

 

 

 

Item 4.

Controls and Procedures

40

 

 

PART II. OTHER INFORMATION

41

 

 

 

Item 1.

Legal Proceedings

41

 

 

 

Item 1A.

Risk Factors

41

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

41

 

 

 

Item 3.

Defaults Upon Senior Securities

41

 

 

 

Item 4.

Mine Safety Disclosures

41

 

 

 

Item 5.

Other Information

41

 

 

 

Item 6.

Exhibits

42

 

2 | img214249619_1.jpg Q1 2022 Form 10-Q


Table of Contents

 

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. Consequently, 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. In particular:

 

our inability to manage our growth effectively or execute on our growth strategy;
our failure to provide new or enhanced functionality and features;
our inability to successfully compete in the market in which we operate and expand our current offerings into new markets or further penetrate existing markets due to competition;
our inability to offer and deliver high-quality technical support, implementation and professional services;
system breaches, interruptions or failures, including cyber-security breaches, identity theft, or other disruptions that could compromise customer information or sensitive company information;
our failure to comply with applicable privacy, security, data, and financial services laws, regulations and standards, including our ongoing consent order with the Federal Trade Commission regarding data protection;
our failure to properly update our solutions to enable our customers to comply with applicable laws;
our failure to manage our aging technical operations infrastructure;
our inability to maintain necessary third-party relationships, and third-party software licenses, and identify errors in the software we license;
our inability to attract and retain senior management employees and highly skilled employees;
the impact of our outstanding debt obligations on our financial condition, results of operations, and value of our common stock; or
the duration and scope of the Coronavirus disease 2019 (“COVID-19”) pandemic, including the uncertainty around the surge of different variants and the actions that governmental authorities may take in all the jurisdictions where we operate.

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 the year ended December 31, 2021 (“2021 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 | img214249619_1.jpg Q1 2022 Form 10-Q


Table of Contents

 

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Ceridian HCM Holding Inc.

Condensed Consolidated Balance Sheets

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

(Dollars in millions, except share data)

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and equivalents

 

$

354.8

 

 

$

367.5

 

Restricted cash

 

 

1.9

 

 

 

1.9

 

Trade and other receivables, net

 

 

144.5

 

 

 

146.3

 

Prepaid expenses and other current assets

 

 

112.6

 

 

 

92.6

 

Total current assets before customer funds

 

 

613.8

 

 

 

608.3

 

Customer funds

 

 

7,364.2

 

 

 

3,535.8

 

Total current assets

 

 

7,978.0

 

 

 

4,144.1

 

Right of use lease asset

 

 

28.7

 

 

 

29.4

 

Property, plant, and equipment, net

 

 

134.3

 

 

 

128.2

 

Goodwill

 

 

2,336.8

 

 

 

2,323.6

 

Other intangible assets, net

 

 

330.1

 

 

 

332.5

 

Other assets

 

 

251.6

 

 

 

208.4

 

Total assets

 

$

11,059.5

 

 

$

7,166.2

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current portion of long-term debt

 

$

8.3

 

 

$

8.3

 

Current portion of long-term lease liabilities

 

 

11.2

 

 

 

11.3

 

Accounts payable

 

 

49.4

 

 

 

51.7

 

Deferred revenue

 

 

48.1

 

 

 

48.7

 

Employee compensation and benefits

 

 

69.7

 

 

 

77.3

 

Other accrued expenses

 

 

23.7

 

 

 

24.7

 

Total current liabilities before customer funds obligations

 

 

210.4

 

 

 

222.0

 

Customer funds obligations

 

 

7,418.5

 

 

 

3,519.9

 

Total current liabilities

 

 

7,628.9

 

 

 

3,741.9

 

Long-term debt, less current portion

 

 

1,215.7

 

 

 

1,124.4

 

Employee benefit plans

 

 

20.2

 

 

 

20.7

 

Long-term lease liabilities, less current portion

 

 

31.1

 

 

 

32.7

 

Other liabilities

 

 

22.8

 

 

 

19.0

 

Total liabilities

 

 

8,918.7

 

 

 

4,938.7

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.01 par, 500,000,000 shares authorized, 152,530,449 and
   
151,995,031 shares issued and outstanding, respectively

 

 

1.5

 

 

 

1.5

 

Additional paid in capital

 

 

2,823.8

 

 

 

2,860.0

 

Accumulated deficit

 

 

(326.6

)

 

 

(309.2

)

Accumulated other comprehensive loss

 

 

(357.9

)

 

 

(324.8

)

Total stockholders’ equity

 

 

2,140.8

 

 

 

2,227.5

 

Total liabilities and equity

 

$

11,059.5

 

 

$

7,166.2

 

 

See accompanying notes to condensed consolidated financial statements.

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Ceridian HCM Holding Inc.

Condensed Consolidated Statements of Operations

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

(Dollars in millions, except share and per share data)

 

(unaudited)

 

Revenue:

 

 

 

 

 

 

Recurring

 

$

247.9

 

 

$

196.0

 

Professional services and other

 

 

45.4

 

 

 

38.5

 

Total revenue

 

 

293.3

 

 

 

234.5

 

Cost of revenue:

 

 

 

 

 

 

Recurring

 

 

82.3

 

 

 

59.7

 

Professional services and other

 

 

54.5

 

 

 

44.7

 

Product development and management

 

 

40.4

 

 

 

25.8

 

Depreciation and amortization

 

 

13.0

 

 

 

11.1

 

Total cost of revenue

 

 

190.2

 

 

 

141.3

 

Gross profit

 

 

103.1

 

 

 

93.2

 

Selling, general, and administrative

 

 

122.0

 

 

 

95.6

 

Operating loss

 

 

(18.9

)

 

 

(2.4

)

Interest expense, net

 

 

5.8

 

 

 

5.6

 

Other (income) expense, net

 

 

(0.3

)

 

 

4.6

 

Loss before income taxes

 

 

(24.4

)

 

 

(12.6

)

Income tax expense

 

 

3.0

 

 

 

6.6

 

Net loss

 

$

(27.4

)

 

$

(19.2

)

Net loss per share:

 

 

 

 

 

 

Basic

 

$

(0.18

)

 

$

(0.13

)

Diluted

 

$

(0.18

)

 

$

(0.13

)

Weighted-average shares outstanding:

 

 

 

 

 

 

Basic

 

 

152,124,151

 

 

 

148,716,050

 

Diluted

 

 

152,124,151

 

 

 

148,716,050

 

 

See accompanying notes to condensed consolidated financial statements.

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Ceridian HCM Holding Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

(Dollars in millions)

 

(unaudited)

 

Net loss

 

$

(27.4

)

 

$

(19.2

)

Items of other comprehensive loss before income taxes:

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

 

15.6

 

 

 

11.0

 

Change in unrealized loss from invested customer funds

 

 

(69.4

)

 

 

(16.7

)

Change in pension liability adjustment (a)

 

 

3.1

 

 

 

3.8

 

Other comprehensive loss before income taxes

 

 

(50.7

)

 

 

(1.9

)

Income tax benefit, net

 

 

(17.6

)

 

 

(3.4

)

Other comprehensive (loss) income after income taxes

 

 

(33.1

)

 

 

1.5

 

Comprehensive loss

 

$

(60.5

)

 

$

(17.7

)

 

(a)
The amount of the pension liability adjustment recognized in the condensed consolidated statements of operations within other expense, net was $2.9 million and $3.8 million during the three months ended March 31, 2022, and 2021, respectively.

 

See accompanying notes to condensed consolidated financial statements.

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Ceridian HCM Holding Inc.

Condensed Consolidated Statements of Stockholders’ Equity

 

 

 

Common Stock

 

 

Additional
Paid In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders'

 

 

 

Shares

 

 

$

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

 

 

(Dollars in millions, except share data, unaudited)

 

Balance as of December 31, 2021

 

 

151,995,031

 

 

$

1.5

 

 

$

2,860.0

 

 

$

(309.2

)

 

$

(324.8

)

 

$

2,227.5

 

Cumulative-effect adjustments related to the adoption of ASU 2020-06

 

 

 

 

 

 

 

 

(77.7

)

 

 

10.0

 

 

 

 

 

 

(67.7

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(27.4

)

 

 

 

 

 

(27.4

)

Issuance of common stock under share-based compensation plans

 

 

535,418

 

 

 

 

 

 

6.0

 

 

 

 

 

 

 

 

 

6.0

 

Share-based compensation

 

 

 

 

 

 

 

 

35.5

 

 

 

 

 

 

 

 

 

35.5

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15.6

 

 

 

15.6

 

Change in unrealized gain, net of tax of ($18.4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(51.0

)

 

 

(51.0

)

Change in pension liability adjustment, net of tax of $0.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.3

 

 

 

2.3

 

Balance as of March 31, 2022

 

 

152,530,449

 

 

$

1.5

 

 

$

2,823.8

 

 

$

(326.6

)

 

$

(357.9

)

 

$

2,140.8

 

 

 

 

 

 

 

Common Stock

 

 

Additional
Paid In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders'

 

 

 

Shares

 

 

$

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

 

 

(Dollars in millions, except share data, unaudited)

 

Balance as of December 31, 2020

 

 

148,571,412

 

 

$

1.5

 

 

$

2,606.5

 

 

$

(233.8

)

 

$

(276.0

)

 

$

2,098.2

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(19.2

)

 

 

 

 

 

(19.2

)

Issuance of common stock under share-based compensation plans

 

 

341,975

 

 

 

 

 

 

11.3

 

 

 

 

 

 

 

 

 

11.3

 

Share-based compensation

 

 

 

 

 

 

 

 

22.8

 

 

 

 

 

 

 

 

 

22.8

 

Equity component of convertible senior notes

 

 

 

 

 

 

 

 

77.7

 

 

 

 

 

 

 

 

 

77.7

 

Purchase of capped calls related to convertible senior notes

 

 

 

 

 

 

 

 

(33.0

)

 

 

 

 

 

 

 

 

(33.0

)

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11.0

 

 

 

11.0

 

Change in unrealized gain, net of tax of $(4.4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12.3

)

 

 

(12.3

)

Change in pension liability adjustment, net of tax of $1.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.8

 

 

 

2.8

 

Balance as of March 31, 2021

 

 

148,913,387

 

 

$

1.5

 

 

$

2,685.3

 

 

$

(253.0

)

 

$

(274.5

)

 

$

2,159.3

 

 

See accompanying notes to condensed consolidated financial statements.

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Ceridian HCM Holding Inc.

Condensed Consolidated Statements of Cash Flows

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

 

 

(Dollars in millions, unaudited)

 

Net loss

 

$

(27.4

)

 

$

(19.2

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Deferred income tax benefit

 

 

4.5

 

 

 

0.6

 

Depreciation and amortization

 

 

20.9

 

 

 

15.0

 

Amortization of debt issuance costs and debt discount

 

 

1.0

 

 

 

1.1

 

Provision for doubtful accounts

 

 

0.9

 

 

 

0.4

 

Net periodic pension and postretirement cost

 

 

1.2

 

 

 

2.2

 

Share-based compensation

 

 

35.5

 

 

 

22.8

 

Change in fair value of contingent consideration

 

 

0.8

 

 

 

 

Other

 

 

 

 

 

1.1

 

Changes in operating assets and liabilities excluding effects of acquisitions and divestitures:

 

 

 

 

 

 

Trade and other receivables

 

 

1.0

 

 

 

(8.1

)

Prepaid expenses and other current assets

 

 

(14.1

)

 

 

(7.1

)

Accounts payable and other accrued expenses

 

 

(4.6

)

 

 

(2.1

)

Deferred revenue

 

 

(1.1

)

 

 

4.9

 

Employee compensation and benefits

 

 

(8.2

)

 

 

(24.7

)

Accrued interest

 

 

(0.4

)

 

 

0.4

 

Accrued taxes

 

 

(3.3

)

 

 

8.6

 

Other assets and liabilities

 

 

(1.2

)

 

 

(0.4

)

Net cash provided by (used in) operating activities

 

 

5.5

 

 

 

(4.5

)

Cash Flows from Investing Activities

 

 

 

 

 

 

Purchase of customer funds marketable securities

 

 

(276.9

)

 

 

(148.5

)

Proceeds from sale and maturity of customer funds marketable securities

 

 

112.1

 

 

 

97.4

 

Expenditures for property, plant, and equipment

 

 

(2.1

)

 

 

(3.4

)

Expenditures for software and technology

 

 

(17.8

)

 

 

(11.9

)

Acquisition costs, net of cash and restricted cash acquired

 

 

 

 

 

(338.3

)

Net cash used in investing activities

 

 

(184.7

)

 

 

(404.7

)

Cash Flows from Financing Activities

 

 

 

 

 

 

Increase in customer funds obligations, net

 

 

3,879.8

 

 

 

513.2

 

Proceeds from issuance of common stock under share-based compensation plans

 

 

6.0

 

 

 

11.3

 

Repayment of long-term debt obligations

 

 

(2.1

)

 

 

(1.3

)

Proceeds from revolving credit facility

 

 

 

 

 

295.0

 

Repayment of revolving credit facility

 

 

 

 

 

(295.0

)

Proceeds from issuance of convertible senior notes, net of issuance costs

 

 

 

 

 

561.8

 

Purchases of capped calls related to convertible senior notes

 

 

 

 

 

(45.0

)

Net cash provided by financing activities

 

 

3,883.7

 

 

 

1,040.0

 

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

 

 

1.7

 

 

 

3.4

 

Net increase in cash, restricted cash, and equivalents

 

 

3,706.2

 

 

 

634.2

 

Cash, restricted cash, and equivalents at beginning of period

 

 

1,952.9

 

 

 

2,228.5

 

Cash, restricted cash, and equivalents at end of period

 

$

5,659.1

 

 

$

2,862.7

 

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

 

 

 

 

 

 

Cash and equivalents

 

$

354.8

 

 

$

339.6

 

Restricted cash

 

 

1.9

 

 

 

2.0

 

Restricted cash and equivalents included in customer funds

 

 

5,302.4

 

 

 

2,521.1

 

Total cash, restricted cash, and equivalents

 

$

5,659.1

 

 

$

2,862.7

 

 

See accompanying notes to condensed consolidated financial statements.

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Ceridian HCM Holding Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Organization

Ceridian HCM Holding Inc. and its subsidiaries (also referred to in this report as “Ceridian,” “we,” “our,” “us,” or the “Company”) 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.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accounting policies we follow are set forth in Note 2, “Summary of Significant Accounting Policies,” to our audited consolidated financial statements in our 2021 Form 10-K. The following notes should be read in conjunction with these policies and other disclosures in our 2021 Form 10-K.

In the opinion of management, the unaudited condensed consolidated financial statements contained herein reflect all adjustments (consisting only of normal recurring adjustments, except as set forth in these notes to condensed consolidated financial statements) necessary to present fairly in all material aspects the financial position, results of operations, comprehensive income (loss), and cash flows from all periods presented. Interim results are not necessarily indicative of results for a full year.

Deferred Costs

Deferred costs, which primarily consist of deferred sales commissions, included within Other assets on our condensed consolidated balance sheets were $143.8 million and $144.5 million as of March 31, 2022, and December 31, 2021, respectively. Amortization expense for the deferred costs was $12.6 million and $11.0 million for the three months ended March 31, 2022, and 2021, respectively.

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Recently Issued and Adopted Accounting Pronouncements from the Financial Accounting Standards Board

 

Standard

 

Issuance Date

 

Description

 

Adoption Date

 

Effect on the Financial Statements

Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)

 

August 2020

 

This amendment simplifies the accounting for convertible instruments by removing certain separation models required under current GAAP for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost.

 

January 2022

 

We adopted the guidance as of January 1, 2022, using the modified retrospective method of transition. The adoption resulted in the elimination of the debt discount (and related deferred tax liability) that was recorded within equity related to our Convertible Senior Notes. The net impact of the adjustments was recorded to the opening balance of retained earnings and additional paid in capital. The impact to the condensed consolidated balance sheet was as follows: (1) increase of $92.9 million to long-term debt, (2) decrease of $77.7 million to additional paid-in capital, net of allocated issuance costs of $2.7 million and deferred tax impact of $28.2 million, and (3) decrease to accumulated deficit of $10.0 million.

ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

 

March 2020

 

This amendment provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

 

Not yet adopted

 

This amendment may be elected over time through December 31, 2022 as reference rate reform activities occur. We do not expect the adoption of this guidance to have a significant impact on our financial statements.

 

3. Business Combinations

ADAM HCM

On December 3, 2021, we completed the acquisition of 100% of the outstanding interests in ATI ROW, LLC and ADAM HCM MEXICO, S. de R.L de C.V (collectively, "ADAM HCM") for $34.5 million. ADAM HCM is a payroll and HCM company in Latin America.

The purchase accounting has not been finalized as of March 31, 2022. Provisional amounts relate to the tax positions, and we expect to finalize the allocation of the purchase price within the one-year measurement period following the acquisition. Intangible assets recorded for this acquisition consist of $7.5 million of customer relationships, $2.9 million of developed technology, and $0.4 million of trade name. Of the goodwill associated with this acquisition, $24.0 million is deductible for income tax purposes.

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The major classes of assets and liabilities to which we have preliminarily allocated the purchase price were as follows:

 

 

 

(Dollars in millions)

 

Cash and equivalents

 

$

0.2

 

Trade receivables, prepaid expenses, and other current assets

 

 

0.9

 

Goodwill

 

 

24.0

 

Other intangible assets

 

 

10.8