CDK Global
Annual Report 2019

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549______________ FORM 10-K______________☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2019OR☐ 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 001-36486______________CDK Global, Inc.(Exact name of registrant as specified in its charter)______________ Delaware46-5743146(State or other jurisdiction of incorporation ororganization)(IRS Employer Identification No.) 1950 Hassell Road, Hoffman EstatesIL, 60169(Address of principal executive offices)Registrant’s telephone number, including area code: (847) 397-1700______________Securities registered pursuant to Section 12(b) of the Act:Title of classTrading Symbol(s)Name of each exchange on which registeredCommon Stock, $0.01 Par ValueCDKNASDAQ Global Select Market Securities registered pursuant to Section 12(g) of the Act: None______________ Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No oIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No ýIndicate 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 1934during 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 filingrequirements for the past 90 days. Yes ý No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File requiredto be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). Yes ý No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or anemerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and "emerging growthcompany" in Rule 12b-2 of the Exchange Act.Large accelerated filerýAccelerated 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 extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act oIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ýThe aggregate market value of common stock held by non-affiliates of the registrant, as of December 31, 2018, the last business day of the registrant's mostrecently completed second fiscal quarter, was approximately $6.1 billion.The number of shares outstanding of the registrant’s common stock as of August 9, 2019 was 121,199,032.DOCUMENTS INCORPORATED BY REFERENCEPart III incorporates information by reference to the registrant's definitive proxy statement, to be filed with the Securities and Exchange Commission within120 days after the fiscal year end of June 30, 2019.Table of Contents PagePart I Item 1.Business1Item 1A.Risk Factors6Item 1B.Unresolved Staff Comments22Item 2.Properties22Item 3.Legal Proceedings22Item 4.Mine Safety Disclosures22 Part II Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities23Item 6.Selected Financial Data24Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations26Item 7A.Quantitative and Qualitative Disclosures About Market Risk60Item 8.Financial Statements and Supplementary Data61Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure114Item 9A.Controls and Procedures114Item 9B.Other Information116 Part III Item 10.Directors, Executive Officers and Corporate Governance117Item 11.Executive Compensation117Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters117Item 13.Certain Relationships and Related Transactions, and Director Independence117Item 14.Principal Accounting Fees and Services117 Part IV Item 15.Exhibits, Financial Statement Schedules118 Signatures121Part IItem 1. BusinessThis Annual Report on Form 10-K and the documents incorporated herein by reference contain forward-looking statements based onmanagement’s expectations and assumptions as of the date of this filing. Actual results may differ materially from those expressed in forward-lookingstatements. See Item 1A of Part I–“Risk Factors.”CDK Global, Inc. is the former Dealer Services division of Automatic Data Processing, Inc. ("ADP"). We were incorporated in Delaware as a wholly-owned subsidiary of ADP on September 29, 2014 and began operating as an independent public company on September 30, 2014. Our principal corporateoffices are located in Hoffman Estates, Illinois. Our common stock is listed on the NASDAQ Global Select Market under the symbol “CDK.”As used herein, "CDK Global," "CDK," the "Company," "we," "our," and similar terms include CDK Global, Inc. and its consolidated subsidiaries,unless the context indicates otherwise.OverviewOur purpose is to enable end-to-end automotive commerce across the globe. For over 40 years, CDK Global has served automotive retailers andoriginal equipment manufacturers ("OEMs") by providing innovative solutions that allow them to better connect, manage, analyze, and grow theirbusinesses. Our solutions automate and integrate all parts of the buying process, including the acquisition, sale, financing, insuring, parts supply, repair, andmaintenance of vehicles, in more than 100 countries around the world, for approximately 30,000 retail locations and most OEMs.We have organized our operations into two main operating groups, CDK North America ("CDKNA") and CDK International ("CDKI"), which are alsoreportable operating segments. We previously reported the results of Advertising North America ("ANA") as a reportable segment. During the fourth quarter offiscal year 2019, we committed to a plan to divest: (a) all of the assets of ANA; and (b) certain assets of our CDKNA segment related to mobile advertisingsolutions and website services (collectively, the "Digital Marketing Business") in order to focus on our core suite of software-as-a-service ("SaaS") softwareand technology solutions for the markets we serve through the CDKNA and CDKI segments. The Digital Marketing Business is presented as discontinuedoperations. Additional information on discontinued operations is contained in Item 8 of Part II, "Financial Statements and Supplementary Data - Note 4 -Discontinued Operations." Additional information on our reportable segments and geographic areas is contained in Item 8 of Part II, "Financial Statementsand Supplementary Data - Note 19 - Financial Data by Segment."Our StrategyTo enable end-to-end automotive commerce, our strategy is to invest for the long-term in integrated software products and an open technologyplatform that can deliver seamless, workflow-driven solutions for our customers. The automotive retail market is evolving and demand for new and integratedtechnology solutions is growing: consumers increasingly expect a seamless omnichannel experience when purchasing or servicing vehicles; OEMs seetechnology as a tool to ensure a consistent and positive customer experience across their retail networks; and retailers are seeking integrated workflowtechnology solutions to help them improve both customer satisfaction and dealership cost structure. We believe that the best way to compete in a world withnumerous providers of unconnected software solutions for numerous automotive retailers, OEMs, consumers, and vehicles is to provide integratedtechnology solutions and platform tools that can connect the disparate elements to create continuous retail workflows.Our BusinessWe generate revenue primarily by providing a broad suite of subscription-based software and technology solutions for automotive retailers throughour CDKNA and CDKI segments. We are focused on the use of SaaS and mobile-centric solutions that are highly functional, flexible, and fast. Our flagshipDealer Management System ("DMS") software solutions are hosted enterprise resource planning applications tailored to the unique requirements of the retailautomotive industry. Our DMS products facilitate the sale of new and used vehicles, consumer financing, repair and maintenance services, and vehicle andparts inventory management. Additionally, these solutions enable company-wide accounting, financial reporting, cash flow management, and payrollservices. Our DMSs are typically integrated with OEM data processing systems that enable automotive retailers to order vehicles and parts, receive vehiclerecords, process warranties, and check recall campaigns and service bulletins while helping them to fulfill their franchisee responsibilities to their OEMfranchisors.1Complementary to our core DMSs in the CDKNA segment, we also provide a portfolio of layered software applications and services to address theunique needs of automotive retail workflows. These solutions are often integrated to and targeted at users of our DMSs, but may, in some cases, be providedto customers that do not otherwise use our DMS. Our principal layered applications are:Solutions DescriptionVehicle Sales Solutions Technology tools and services to streamline the entire vehicle inventory, sales, andfinance and insurance ("F&I") processFixed Operations Solutions Solutions to manage the parts and service profit center of dealerships, including customertargeting, appointment scheduling, on-site workflow, and billingCustomer Relationship Management Solutions Software to manage interactions with current and prospective customersFinancial Management Solutions Value-added capabilities for accounts payable, payments, and payrollDocument Management Solutions Document creation and archiving solutions to address the complex automotive retail salesprocessNetwork Management Solutions Wired and wireless network solutions to support dealer connectivity and security effortsIntegrated Telephony Management Solutions Integrated telephony solutions that allow automotive retailers to connect andcommunicate via presence, instant messaging, voice, and videoIn the CDKNA segment, we further connect the automotive ecosystem by providing third party retail solution providers with robust and secureinterfaces to the core DMS through our Partner Program. For both automotive retailers and OEMs we provide data management and business intelligencesolutions that extract, cleanse, normalize, enhance, and distribute data and that provide actionable insights.In both our CDKNA and CDKI segments, we offer automotive retailers and OEMs a variety of professional services, custom programming,consulting, implementation and training solutions, as well as a full range of customer support solutions.In addition to providing solutions to automotive retailers and OEMs, our CDKNA segment also provides solutions to retailers and manufacturers ofheavy trucks, construction equipment, agricultural equipment, motorcycles, boats, and other marine and recreational vehicles.Product Development and InnovationOur ability to strengthen and extend our solutions portfolio is a key element of our business strategy. We execute on this strategy through acombination of development and the selective pursuit of strategic acquisitions.In addition to the ongoing investment to enhance existing solutions within our core business, we also invest in long- and medium-term productinnovation aligned with our strategy. For example, the Fortellis Automotive Commerce Exchange under development is expected to be the foundation of ouropen technology platform for automotive commerce. Within the automotive commerce market, Fortellis allows CDK Global and third parties to developadaptive and interchangeable application programming interfaces ("APIs") that can be used to connect existing technology solutions and build new solutionsquickly and with high levels of reliability. Similarly, we have developed Drive Flex, a cloud-based DMS. We are developing these solutions using amethodical and measured approach with respect to capital and resource allocation. We believe these investments align to our strategy and will position CDKGlobal to take advantage of the evolving automotive retail market.CompetitionOur industry is highly competitive and fragmented. We compete with a broad and diverse range of information, technology, services, and consultingcompanies, as well as with the in-house capabilities of OEMs. Our competitors range from local providers to regional and global competitors. However, webelieve that no competitor provides the same combination of geographical reach and breadth of solutions that we do.Each of our solutions faces competition from an array of solution providers. For our DMS solutions in North America, our principal competitors areReynolds and Reynolds, Dealertrack (Cox Automotive), Auto/Mate, AutoSoft, PBS Systems, and2various local and regional providers. For our CDKI segment, DMS competition is principally from local and regional providers. The most significantcompetitive factors that we face across our solutions are price, breadth of features and functionality, user experience, quality, brand, scalability, and servicecapability.RegulationThe automotive retail industry is highly regulated and automotive retailers and OEMs are subject to a broad array of complex regulations governingvirtually every aspect of their operations. Our customers must ensure their compliance with their regulatory requirements, and, in turn, we must ensure thatour solutions effectively address their regulatory compliance needs.Because our business delivers solutions across a broad spectrum of automotive retailer operations, our activities are impacted by a wide variety offederal, state, local, and international laws and regulations. Central to the value of our Document Management Solutions application, for example, is that theforms we provide for our customers meet the requirements of their applicable laws. Likewise, within our Vehicle Sales Solutions application, our electronicvehicle registration service is dependent on our compliance with complex and detailed regulatory requirements. Across our portfolio of automotive retailsolutions, we are focused on ensuring that we meet our regulatory compliance obligations and that our solutions enable our customers to comply with thelaws and regulations applicable to them. See “Risk Factors-Risks Relating to Our Business" for additional information regarding the application and impactof laws and regulations on our operations.Privacy and Data Protection RegulationsWe are subject to a number of federal, state, and foreign laws and regulations regarding data governance and the privacy and protection of personaldata. For example, under the Gramm-Leach-Bliley Act (the "GLB Act"), automotive retailers are generally deemed to be regulated financial institutions andtherefore are subject to the GLB Act and applicable regulations, including the Federal Trade Commission's ("FTC") Privacy Rule and Safeguards Rule. In ourcapacity as a service provider to automotive retailers, we generally commit to our customers that we will handle non-public personal information consistentwith the GLB Act and the related regulations. Similarly, many United States ("U.S.") states and foreign jurisdictions have adopted regulations that imposeobligations on businesses that handle personal information, including notification requirements in the event of data breaches relating to personal data, aswell as minimum security standards with respect to the handling and transmission of personal data. For a discussion of privacy and data protection regulationand the potential impacts on our business, see "Risk Factors - Risks Relating to Our Business."Seasonality in Our BusinessThough our business is not highly cyclical, a portion of it is seasonal. Our transaction revenues experience volatility around seasonal consumervehicle shopping activity, and our Other revenues have a seasonal increase in the third quarter of each fiscal year.EmployeesAs of June 30, 2019, we had a total of approximately 9,000 employees worldwide. None of our employees in the United States are represented by acollective bargaining agreement. We have work councils and statutory employee representation obligations in certain countries outside the United States.We believe that relations with our employees are good.3Information about our Executive OfficersThe executive officers of the Company, their ages, and positions are as follows:Name Age* Position(s)Brian M. Krzanich 59 President, Chief Executive Officer and DirectorJoseph A. Tautges 43 Executive Vice President, Chief Financial OfficerDan Flynn 49 Executive Vice President, Business Leader, Core DMSNeil Packham 48 President, CDK InternationalMahesh Shah 42 Executive Vice President, Chief Product & Technology OfficerLee J. Brunz 49 Executive Vice President, General Counsel and SecretaryAmy W. Byrne 48 Executive Vice President, Chief Human Resources OfficerDean Crutchfield 58 Executive Vice President, Chief Information Officer* As of June 30, 2019Brian M. Krzanich has served as our President, Chief Executive Officer and as a member of our Board of Directors since November 7, 2018. Prior tojoining CDK, Mr. Krzanich served as the Chief Executive Officer of Intel Corporation from 2013 to June 2018. As Chief Executive Officer, he led Intel’scorporate strategy and operations, including development of Intel’s business model and identification of emerging technologies. Mr. Krzanich joined Intel in1982, became a corporate Vice President in 2006, and served until 2010 as Vice President and General Manager of Assembly and Test. He was Senior VicePresident and General Manager of Manufacturing and Supply Chain from 2010 to 2012. He became Executive Vice President and Chief Operating Officer in2012, responsible for global manufacturing, supply chain, human resources, and information technology. Mr. Krzanich has served as a member of theSupervisory Board of ams AG since June 2019.Joseph A. Tautges has served as our Executive Vice President since August 1, 2017 and began service as our Executive Vice President, ChiefFinancial Officer on August 9, 2017. Prior to joining CDK, Mr. Tautges served as Chief Financial Officer of the $18 billion Enterprise Services segment ofHewlett Packard Enterprise (“HPE”) from May 2014 to April 2017. While at HPE, he led a transformation initiative which enabled significant marginexpansion and improved free cash flow resulting in the spin-merger of Enterprise Services with Computer Science Corporation to form DXC TechnologyCompany. Prior to HPE, Mr. Tautges held various levels of increasing responsibility in both operations and financial management with Sears Holdings from2011 to 2014 and Aon Hewitt from 2002 to 2011. Mr. Tautges is a Certified Public Accountant.Dan Flynn has served as our Executive Vice President, Business Leader, Core DMS since July 2019. Mr. Flynn joined CDK in February 2016 asExecutive Vice President, Business Transformation and served as our President, CDK North America from December 2017 through July 2019. Prior to joiningCDK, Mr. Flynn served as the Senior Vice President, North America Rent-A-Car Operations at Hertz from 2014 through 2016. He previously served asRegional Vice President, Southeast Region and Separation Management Office, for Hertz Equipment Rental Corporation.Neil Packham has served as our President, CDK International since January 18, 2017. Mr. Packham joined CDK in July 2013 as Vice President forCDK's UK region, which encompasses UK, Middle East, Ireland and Africa. Prior to joining CDK, Mr. Packham worked in the automotive, digital, andsoftware sectors working in a variety of business areas such as business development and strategy, sales and marketing, product development, and generalmanagement. He has held senior positions within a number of large corporations and start-ups.Mahesh Shah has served as our Chief Product & Technology Officer since April 22, 2019. Previously, Mr. Shah was Senior Vice President andGeneral Manager of Application Services & Business Process Services at DXC Technology Company until April 2019. He served as Vice President andGeneral Manager of Business Process Services at DXC Technology, including both the current portfolio of service offerings and next-generation businessprocess services at DXC Technology Company until 2018. Previously, Mr. Shah served as General Manager and Vice President of Acquisition andDivestiture, IT Consulting Services at Hewlett Packard Enterprise. Prior to DXC Technology, Mr. Shah spent 16 years, in various roles at HPE includingbuilding a consulting organization focused on M&A, serving as chief information officer, vice president, Product R&D and IT, and executive director,Security Product Management and Development.Lee J. Brunz has served as our Executive Vice President, General Counsel and Secretary since the spin-off. Prior to the spin-off, Mr. Brunz served asVice President, Counsel for the Digital Marketing business of the Dealer Services division of4ADP since Dealer Services’ 2010 acquisition of Cobalt Holding Company. Prior to joining the Dealer Services division of ADP, he served as Vice President,Finance & General Counsel of Cobalt from 2008 to 2010 and as Vice President & General Counsel from 2004 to 2008.Amy W. Byrne has served as our Executive Vice President, Chief Human Resources Officer since June 5, 2017. Prior to joining CDK, Ms. Byrneserved as Vice President, Human Resources, Latin America for Avon Products from 2011 to 2016 and as Vice President, Corporate Human Resources andGlobal Compensation and Benefits from 2006 to 2011.Dean Crutchfield has served as our Executive Vice President and Chief Information Officer since in June 8, 2016. Prior to joining CDK, Mr.Crutchfield served as the Chief Information Officer of Zebra Technologies from 2013 to 2016. He also previously held information technology leadershiproles at Dell from 1999 to 2013.Available InformationOur company website is cdkglobal.com. The investor relations section of our website is investors.cdkglobal.com. We encourage investors to use ourwebsite as a way of easily finding information about us. We promptly make available on the investor relations section of our website, free of charge, thereports that we file or furnish with the Securities and Exchange Commission ("SEC"), corporate governance information (including our Code of BusinessConduct and Ethics), and select press releases. The information contained on the websites referenced in this Annual Report on Form 10-K is not incorporatedby reference into this filing. Further, the Company’s references to website URLs are intended to be inactive textual references only.5Item 1A. Risk FactorsYou should carefully consider each of the following risks and all of the other information set forth in this Annual Report on Form 10-K. Based onthe information currently known to us, we believe that the following information identifies the risk factors that could materially affect our business, resultsof operations, and financial condition. If any of the following risks and uncertainties develop into actual events, they could have a material adverse effecton our business, results of operations, and financial condition.Risks Relating to Our BusinessWe face intense competition. If we do not continue to compete effectively against other providers of technology solutions to automotive retailers, OEMs,and other participants in the automotive retail industry, it could have a material adverse effect on our business, results of operations, and financialcondition.Competition among automotive retail solutions providers is intense. The industry is highly fragmented and subject to changing technology, shiftingcustomer needs, and frequent introductions of new solutions. We have a variety of competitors both for our integrated solutions and for each of ourindividual solutions. For example:•for our Dealer Management System (“DMS”) solutions in our CDKNA segment, our principal competitors are Reynolds and Reynolds, Dealertrack(Cox Automotive), Auto/Mate, AutoSoft, PBS Systems and various local and regional providers; and•for our CDKI segment, DMS competition is principally from local and regional providers.Our competitors may be able to respond more quickly or effectively to new or emerging technologies and changes in customer demands or to devotegreater resources to the development, promotion, and sale of their solutions than we can to ours. We expect the industry to continue to attract newcompetitors and new technologies, possibly involving alternative technologies that are more sophisticated and cost-effective than our solutions. There canbe no assurance that we will be able to compete successfully against current or future competitors or that the competitive pressures we face will not have amaterial adverse effect on our business, results of operations, and financial condition.Market trends influencing the automotive retail industry could have a negative impact on our business, results of operations, and financial condition.Market trends that negatively impact the automotive retail industry may affect our business by reducing the number and/or size of actual orpotential customers or the money that actual or potential customers are willing or able to spend on our solution portfolio. Such market factors include:•the adverse effect of long-term wage stagnation on the purchasing power of vehicle purchasers and the number of vehicle purchasers;•pricing and purchase incentives for vehicles;•disruption in the available inventory of vehicles;•disruption in the franchised automotive retailer dealership model, including potential disintermediation by emerging business models;•reductions in growth or decreases of automotive retailer spend on technology;•contractions in the number of franchised automotive retailers;•market oversupply of vehicles and declining used-vehicle pricing;•the expectation that consumers will be purchasing fewer vehicles overall during their lifetime as a result of better quality vehicles and longerwarranties and the development of shared-use mobility;•the cost of gasoline and other forms of energy;6•the availability and cost of credit to finance the purchase of vehicles and excess negative equity in existing vehicle loans;•the effect of adverse macroeconomic conditions on consumer shopping activity;•increased federal and other taxation; and•reductions in business and consumer confidence.Such market trends could have a material adverse effect on our business, results of operations, and financial condition.Market acceptance of and influence over our products and services is concentrated in a limited number of automobile OEMs and consolidated retailergroups, and we may not be able to maintain or grow these relationships.Although the automotive retail industry is fragmented, a relatively small number of OEMs, consolidated retailer groups and retailer associations exertsignificant influence over the market acceptance of automotive retail products and services due to their concentrated purchasing activity, their endorsementor recommendation of specific products and services and/or their ability to define technical standards and certifications. For example, our DMSs are certifiedto technical standards established by OEMs and certain of our products and services are provided pursuant to OEM-designated endorsement or preferredvendor programs. While automotive retailers are generally free to purchase the solutions of their choosing, when an OEM has endorsed or certified a providerof products or services to its associated franchised automotive retailers and if our solutions lack such certification or endorsement, adoption or retention ofour products and services among the franchised dealers of such OEM could be materially impaired.We may be unable to develop and bring products and services in development to market, or bring new products and services to market in a timely manneror at all.Our success depends in part upon our ability to bring to market new products and services, and enhancements thereto that address evolving customerdemands. The successful development of Drive Flex, for example, is important to our future product strategy. The time, expense, and effort associated withdeveloping and offering Drive Flex, Fortellis, and other new and enhanced products and services may be greater than anticipated. The length of thedevelopment cycle varies depending on the nature and complexity of the product, the availability of development, product management, and other internalresources and the role, if any, of strategic partners. If we are unable to develop and bring to market additional products and services, and enhancementsthereto, in a timely manner, or at all, we could lose market share to competitors who are able to offer these new products and services, which could have amaterial adverse effect on our business, results of operations, and financial condition.Our failure or inability to execute any element of our business strategy could negatively impact our business, results of operations, or financial condition.Our business, results of operations, and financial condition depend on our ability to execute our business strategy, which includes the following keyelements:•deepening relationships with our existing customer base;•continuing to expand our customer base;•strengthening and extending our solutions portfolio;•driving additional operational efficiency; and•selectively pursuing strategic acquisitions.We may not succeed in implementing a portion or all of our business strategy, and even if we do succeed, our strategy may not have the favorableimpact on our business, results of operations, or financial condition that we anticipate. We may not be able to effectively manage the expansion of ourbusiness or achieve the rapid execution necessary to fully avail ourselves of the market opportunity for our solution portfolio. If we are unable to adequatelyimplement our business strategy, our business, results of operations, and financial condition could suffer a material adverse effect.7We have announced that we intend to divest our Digital Marketing Business. The divestiture of the Digital Marketing Business will result in our completeexit from the ANA business, which we previously reported as a reportable segment. The failure to complete such divestiture, or if completed on terms thatare even less favorable than the Company currently anticipates, could have a material adverse effect on the Company.On June 27, 2019, we publicly announced that we have committed to a plan to divest our Digital Marketing Business, in order to focus on our coresuite of SaaS software and technology solutions for the markets we serve through the CDKNA and CDKI segments. The divestiture of the Digital MarketingBusiness will result in our complete exit from the ANA business, which we previously reported as a reportable segment, as well as certain assets formerlyincluded in our CDKNA segment related to mobile advertising solutions and website services. There can be no assurance that we will be successful indivesting the Digital Marketing Business. Although we are actively pursuing a sale of the Digital Marketing Business, no potential buyer has yet committedto purchasing the business and we have not yet entered into any agreement for the sale of such business. We may not be successful in selling our DigitalMarketing Business in a timely manner, if at all, or may do so on terms that are less favorable than the Company currently anticipates. If the DigitalMarketing Business is not sold as an ongoing business, we may have to liquidate those assets and incur substantial costs to shut down those operations. If weare unable to divest the Digital Marketing Business by June 27, 2020, whether through a sale or liquidation, on terms that we deem acceptable, we would berequired to reverse its treatment as a discontinued operation. In that event, we may be required to again reflect the Digital Marketing Business as part of ourcontinuing operations for financial accounting and reporting purposes. Such a change would also require us to restate our financial statements retroactivelyfor all reportable periods subsequent to its classification as a discontinued operation, which would change the information being reported herein and in ourother filings for those periods.In addition, in the fourth quarter of fiscal 2019 we recorded an impairment charge for goodwill of ANA, as described in this Annual Report on Form10-K under Item 8 of Part II, "Financial Statements and Supplementary Data - Note 4 - Discontinued Operations." If the Digital Marketing Business is sold, itis possible that the net proceeds from the sale could be less than its current carrying value on our books, which would require us to take an additionalimpairment charge against our earnings in the amount of the difference. Depending on the amount of net proceeds from the sale, the potential additionalcharge could be significant.We are dependent on our key management, direct sales force, and technical personnel for continued success.Our global senior management team is concentrated in a small number of key members, and our future success depends to a meaningful extent on theservices of our executive officers and other key team members, including members of our direct sales force and technology staff. Generally, our executiveofficers and employees can terminate their employment relationship at any time. The loss of any key employees or our inability to attract or retain otherqualified personnel could materially harm our business and prospects.Effective succession planning is important to our long-term success. Disruptions in future leadership transitions or reorganizations could have amaterial adverse effect on our business, results of operations, and financial condition and could adversely affect our ability to attract and retain other keyexecutives.Competition for qualified leadership and technical personnel in the technology industry is intense, and we compete for leadership and technicalpersonnel with other technology companies that have greater financial and other resources than we do. Our future success will depend in large part on ourability to attract, retain, and motivate highly qualified leadership and technical personnel, and there can be no assurance that we are able to do so. Anydifficulty in hiring or retaining needed personnel, or increased costs related thereto, could have a material adverse effect on our business, results ofoperations, and financial condition.Real or perceived errors or failures in our software and systems could negatively impact our results of operations and growth prospects.We depend upon the sustained and uninterrupted performance of numerous proprietary and third-party technologies to deliver our solutionportfolio. If one or more of those technologies cannot scale to meet demand, or if there are human or technological errors in our execution of any feature orfunctionality using any such technologies, then our business may be harmed. Because our software is often complex, undetected errors and failures mayoccur, especially when new versions or updates are made. Despite testing by us, errors or bugs in our solutions may not be found until the software or serviceis in active use by us or our customers. Moreover, our customers could incorrectly implement or inadvertently misuse our solutions, which could result incustomer dissatisfaction and adversely impact the perceived utility of our solutions as well as our brand. Any of these real or perceived errors, failures, or bugscould result in negative publicity, reputational harm, loss of or delay in8market acceptance of our solutions, loss of competitive position or claims by customers for losses sustained by them, all of which, along with the costs ofresponding to such effects, may have a material adverse effect on our business, results of operations, and financial condition.Data security concerns relating to our technology or services could damage our reputation and deter current and potential customers from using ourproducts and services. If our security measures fail to prevent the improper use and disclosure of our customers’ data, our products and services may beperceived as not being secure, customers may curtail or stop using our products and services, and we may incur significant legal and financial exposure. Asignificant breach of the data security of our customers’, vendors’ or other partners’ information technology systems may negatively impact our business,results of operations, and financial condition.We handle substantial amounts of confidential information, including personal information of our employees and customers' consumers andemployees. Our success depends on the confidence of OEMs, dealers, lenders, major credit reporting agencies and other data providers, and other users of (orparticipants in) our solutions, in our ability to store, process, and transmit this confidential information securely (whether over the internet or otherwise), andto operate our computer systems and operations without significant disruption or failure.Our computer systems experience cyber attacks and data security incidents of varying degrees on a regular basis. These events may lead tointerruptions and delays in our service and operations as well as loss, misuse, or theft of data that we store, process and transmit. Our security measures mayalso fail to prevent unauthorized access to our systems and data may be exfiltrated and improperly used or disclosed due to employee error, malfeasance,system errors, or vulnerabilities, including vulnerabilities of our vendors, suppliers, their products, or otherwise. While security measures are in place,concerns over the security of third-party data that we store, process, and transmit, which may be heightened by any well-publicized compromise of security,may deter customers from using our solution portfolio and/or deter vendors from providing their solutions to us. Moreover, if our security measures fail toprevent unauthorized access to such data, our solutions may be perceived as not being secure and our customers may curtail or stop using our solutionsand/or vendors may curtail or stop providing their solutions to us. Any failure of, or lack of confidence in, the security of our solutions could have a materialadverse effect on our business, results of operations, and financial condition.Despite our focus on data security, we may not be able to stop unauthorized attempts to gain access to data that we store and process, or to stopdisruptions in the transmission or provision of data and communications or other data by us. Advances in computer capabilities, new discoveries in the fieldof cryptography, or other events or developments could result in a compromise or breach of the controls used by our solutions to protect data contained inour, our customers’ and/or our vendors’ databases and the information being stored, transferred, or processed. While warranties and liabilities are usuallylimited in our customer and vendor contracts, they or other third parties may seek to hold us liable for any losses suffered as a result of unauthorized access totheir confidential information or non-public personal information of consumers. In addition, while effort has been expanded to have insurance to cover theselosses, we may be required to expend significant capital and other resources to protect against or alleviate any problems caused by actual or threatened cyberattacks or unauthorized access to such data. Our security measures may not be sufficient to prevent security breaches, and any failure to prevent the improperuse and disclosure of data and/or to adequately alleviate any problems caused by such improper use and disclosure could have a material adverse effect onour business, results of operations, and financial condition.Our customers, vendors and other partners are primarily responsible for the security of their information technology systems, and we rely on them tosupply clean data content and/or to utilize our products and services in a secure manner. While we provide guidance and specific requirements of datasecurity in some cases, we do not directly control any of such parties’ cyber security operations. If our customers, vendors and other partners fail to preventany significant cyber security breaches, their businesses could be disrupted and therefore may negatively impact our business, results of operations, andfinancial condition.Interruption or failure of our networks, systems, and infrastructure could hurt our ability to effectively provide our products and services, which coulddamage our reputation and/or subject us to litigation or contractual penalties.The availability of our products and services depends on the continuing operation of our network and systems. From time to time, we haveexperienced, and may experience in the future, network or system slowdowns and interruptions. These network and system slowdowns and interruptions mayinterfere with our ability to do business. While the appropriate upgrades to various systems, shoring up backup processes, and other measures to protectagainst data loss and system failures have been implemented and tested, there is still risk that we may lose critical data or experience network failures.Despite the resiliency plans and facilities we have in place, our ability to conduct business may be adversely impacted9by a disruption in the infrastructure that supports our businesses. This may include a disruption involving electrical, satellite, undersea cable or othercommunications, internet, cloud computing, transportation, or other services facilities used by us or third parties with which we conduct business. Thesedisruptions may occur as a result of events that affect only our buildings or systems or those of such third parties, or as a result of events with a broader impactglobally, regionally or in the cities where those buildings or systems are located, including, but not limited, to natural disasters, war, civil unrest, economic orpolitical developments, pandemics, and weather events.Such network, system or infrastructure failures or disruptions could result in lengthy interruptions in our service and lost revenue opportunities forour customers, which could result in litigation against us and/or our customers may curtail or stop using our solutions or vendors may curtail or stopproviding their solutions to us. Additionally, we have service level agreements with certain of our customers that may result in penalties or triggercancellation rights in the event of a network or system slowdown or interruption. Any of these could have a material adverse effect on our business, results ofoperations, and financial condition.Our business is directly and indirectly subject to, and impacted by, extensive and complex laws and regulations in the U.S. and abroad, and new laws andregulations and/or changes to existing laws and regulations may negatively impact our business, results of operations, and financial condition.Our business is directly and indirectly subject to, and impacted by, numerous U.S. and foreign laws and regulations covering a wide variety ofsubject matters. Compliance with complex foreign and U.S. laws and regulations that apply to our operations increases our costs and may impede ourcompetitiveness. In addition, failure to comply with such laws or regulations may result in the suspension or termination of our ability to do business inapplicable jurisdictions or the imposition of civil and criminal penalties, including fines or exposure to civil litigation. New regulations and/or changes toexisting regulations could require us to modify our business practices, including modify the manner in which we contract with or provide products andservices to our customers; directly or indirectly limit how much we can charge for our services; require us to invest additional time and resources to complywith such regulations; or limit our ability to update our existing products and services, or require us to develop new ones.In addition to the data privacy and security laws and regulations mentioned below, our business is also directly or indirectly governed by domesticand international laws and regulations relating to issues such as information services, telecommunications, antitrust or competition, employment, motorvehicle and manufacturer licensing or franchising, vehicle registration, advertising, taxation, consumer protection, and accessibility. We must also complywith anti-corruption laws such as the U.S. Foreign Corrupt Practices Act and local laws prohibiting corrupt payments to governmental officials and privateentities, such as the U.K. Anti-Bribery Act and the Criminal Law and Anti-Unfair Competition Law of the People’s Republic of China. In addition, motorvehicle and manufacturer licensing, franchising and advertising is highly regulated at the state level and is subject to changing legislative, regulatory,political, and other influences. Such state laws are complex and subject to frequent change. The application of this framework of laws and regulations to ourbusiness is complex and, in many instances, is unclear or unsettled, which in turn increases our cost of doing business, may interfere with our ability to offerour solutions competitively in one or more jurisdictions and may expose us and our employees to potential fines, penalties, or other enforcement actions. Insome cases, our customers may seek to impose additional requirements on our business in efforts to comply with their interpretation of their own or our legalobligations. These requirements may differ significantly from our existing solutions or processes and may require engineering and other costly resources toaccommodate.In addition, we are and expect to continue to be the subject of investigations, inquiries, data requests, actions, and audits from regulatory authorities,particularly in the area of competition. On June 22, 2017, the Company received from the Federal Trade Commission (“FTC”) a Civil Investigative Demandconsisting of interrogatories and a request to produce documents relating to any agreements between the Company and Reynolds and Reynolds. On April 22,2019, the Company received a subsequent request to schedule interviews with certain current and former Company employees. Parallel document requestshave been received from certain states’ Attorneys General. The Company is responding to the requests and no proceedings have been instituted. At this time,the Company does not have sufficient information to predict the outcome of, or the cost of responding to or resolving these investigations.These laws and regulations, as well as any associated inquiries or investigations or any other government actions, may be costly to comply with andmay delay or impede the development of new products, result in negative publicity, increase our operating costs, require significant management time andattention, and subject us to remedies that may harm our business, including fines or demands or orders that we modify or cease existing business practices.Our failure to comply, or to provide solutions that allow our customers to comply, or any new investments of additional time and resources necessary tocomply, or to provide solutions that allow our customers to comply, with any of the foregoing laws and regulations could have a material adverse effect onour business, results of operations, and financial condition.10We are subject to new regulations that restrict the manner and extent to which we can control access to our DMS and other software applications and limitwhat, if anything, we may charge for integration with those applications.Revenue from the Partner Program in our CDKNA segment is dependent on the business model of charging third party retail solution providers forintegration to our DMS through a program of robust and secure interfaces. Our ability to control the manner in which we provide this robust and secure accessto information in our systems, and our pricing model for this service, has been, and will likely continue to be, challenged, dictated and constrained in certainjurisdictions. For example, during our fourth quarter ending June 30, 2019, Arizona, Montana, North Carolina and Oregon passed legislation that wouldrequire us to provide access to our software, in order to copy, extract and modify all data within our systems. The legislation in some of these states purportsto impose such requirements on us at cost and without markup, to any third party designated by a dealer licensee of our software regardless of whether thedealer licensee has title to the data on our systems or the right under its software license to authorize non-licensee third parties access to our systems. Webelieve that compliance with such legislation will impair our ability to provide our customers with robust and secure technology solutions and will increaseour risk of data security and privacy breaches, system and data integrity problems, and associated adverse competitive, financial, operational, andreputational impacts. Similar legislation has been proposed in other states and we cannot predict whether other states will consider or pass similar legislation.We may incur significant legal and regulatory expenses in connection with assessing or challenging the applicability of this legislation to our products andofferings and while we seek legal, regulatory, or policy solutions to address concerns with respect to the validity of the legislation or our ability to complywith it. Ultimately, our failure to comply, or to provide solutions that allow our customers to comply, or any new investments of additional time and resourcesnecessary to comply, or to provide solutions that allow our customers to comply, with this legislation will increase our operating costs and reduce ourrevenue, and could have a material adverse effect on our business, results of operations, and financial condition.Our business is directly or indirectly subject to, or impacted by, complex and rapidly evolving U.S. and foreign laws and regulation regarding privacy anddata protection. Many of these laws and regulations are subject to change and uncertain interpretation and could result in claims, adjustments to ourbusiness practices, penalties, increased cost of operations, or declines in customer growth or engagement, or otherwise harm our business.Many U.S. and foreign jurisdictions have passed, or are currently contemplating, a variety of consumer protection, privacy, and data security lawsand regulations that may relate directly or indirectly to our business. For example, federal laws and regulations governing privacy and security of consumerinformation generally apply to our customers and/or to us as a service provider. These include, but are not limited to, the federal Fair Credit Reporting Act,the Gramm-Leach-Bliley Act (the "GLB Act") and regulations implementing its information safeguarding requirements, the Junk Fax Prevention Act of 2005,the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (the "CAN-SPAM Act"), the Telephone Consumer Protection Act, theDo-Not-Call-Implementation Act, applicable Federal Communications Commission (the “FCC”) telemarketing rules (including the declaratory rulingaffirming the blocking of unwanted robocalls), the FTC Privacy Rule, Safeguards Rule, Consumer Report Information Disposal Rule, Telemarketing SalesRule, Risk-Based Pricing Rule, and Red Flags Rule. Laws of foreign jurisdictions, such as Canada's Anti-Spam Law and Personal Information Protection andElectronic Documents Act, similarly apply to our collection, processing, storage, use, and transmission of protected data.In addition, the European Union's General Data Protection Regulation (the "GDPR"), which became effective on May 25, 2018, and superseded theprevious Data Protection Directive of 95/46/EC imposes more stringent operational requirements for entities processing personal information and greaterpenalties for noncompliance. While we have made adjustments to our operations in Europe to comply with new requirements contained in the GDPR and toaddress customer concerns related to the GDPR, we may need to make more adjustments as more clarification and guidance on compliance with the GDPRbecome available. Any such adjustments may result in costs and expenses, and any failure to meet the requirements of the GDPR may result in significantfines, penalties, or other liabilities (including possible fines of up to 4% of global annual turnover for the preceding financial year or €20 million (whicheveris higher) for the most serious infringements). Further, the European Union is expected to replace the EU Privacy and Electronic Communications Directive2002/58/EC (“ePrivacy Directive”) governing the use of technologies to collect consumer information with the ePrivacy Regulation. The ePrivacyRegulation may impose burdensome requirements around obtaining consent, and impose fines for violations that are materially higher than those imposedunder the European Union’s current ePrivacy Directive and related EU member state legislation.There is also rapid development of new privacy laws and regulations elsewhere around the globe, including amendments of existing data protectionlaws to the scope of such laws and penalties for noncompliance. Failure to comply with these international data protection laws and regulations could have anegative impact on our reputation and subject us to significant fines, penalties or other liabilities, all of which may cause increased cost of operations ordecline in customer growth, or otherwise harm our business, results of operations, and financial condition.11In the U.S., some state laws and regulations have imposed, and others have contemplated imposing, enhanced disclosure obligations and greaterrestrictions or prohibitions on the use of data than are already contained in federal laws such as the GLB Act and its implementing regulations or the FTCrules described above. For example, many states within the U.S. and certain countries have passed data protection laws that require notification to users whenthere is a security breach of personal data. While we have made adjustments to our operations in such states to comply with the requirements, any new lawsand regulations could further impact the way we collect, store, process, transmit, or otherwise interact with data, particularly consumer data. Theseadjustments could have consequences for the design, development, and delivery of our products and services. Any such adjustment may result in costs andexpenses, and any failure to meet the requirements may result in significant fines, penalties, or other liabilities.For example, on June 28, 2018, California passed the California Consumer Privacy Act of 2018 (“CCPA”), to be effective on January 1, 2020. Thenew law provides California consumers with a greater level of transparency and broader rights and choices with respect to their personal information thanthose contained in any existing state and federal laws in the U.S. The “personal information” regulated by CCPA is broadly defined to include identificationor association with a California consumer or household, including demographics, usage, transactions and inquiries, preferences, inferences drawn to create aprofile about a consumer, and education information. Compliance with CCPA requires the implementation of a series of operational measures such aspreparing data maps, inventories, or other records of all personal information pertaining to California residents, households and devices, as well asinformation sources, usage, storage, and sharing, maintaining and updating detailed disclosures in privacy policies, establishing mechanisms (including, at aminimum, a toll-free telephone number and an online channel) to respond to consumers’ data access, deletion, portability, and opt-out requests, providing aclear and conspicuous “Do Not Sell My Personal Information” link on the home page of the business’ website, etc. CCPA prohibits businesses fromdiscriminating against consumers who have opted out of the sale of their personal information, subject to a narrow exception. It allows companies to providefinancial incentives to California consumers in order to obtain their consent to the collection and use of their personal information. Violations of CCPA willresult in civil penalties up to $7,500 per violation. CCPA further allows consumers to file lawsuits against a business if a data breach has occurred and theCalifornia Attorney General does not prosecute the business. . In addition, on May 29, 2019, Nevada’s governor approved a bill (the “Amendment Bill”), tobe effective on October 1, 2019. The Amendment Bill provides amendments to an existing law that requires operators of websites and online services to posta notice on their websites regarding their privacy practices. The Amendment Bill requires operators of internet websites or online services to establish adesignated request address through which a consumer may submit a verified request directing such operators not to make any sale of covered informationcollected about the consumer. The “covered information” regulated by the Amendment Bill is defined to include an enumerated list of items of personallyidentifiable information (including names, addresses, email addresses, phone numbers, social security numbers and identifiers that allow a specific person tobe contacted).To comply with CCPA and the Amendment Bill and assist many of our customers who are subject to CCPA and the Amendment Bill to comply withCCPA and the Amendment Bill, we may need to modify or adjust the design, development, and delivery of our products and services in a significant way.Such modifications and adjustments may result in significant costs and expenses, and any delay or failure to make such changes may negatively affect ourcustomers’ confidence in or perception of our product and services, result in their ceasing to use our products or services or even lawsuits and significantliabilities.The costs and other burdens of compliance with privacy and data security laws and regulations could negatively impact the use and adoption of oursolutions and reduce overall demand for them. Additionally, evolving concerns regarding data privacy may cause our customers, or their customers andpotential customers, to resist providing the data necessary to allow us to deliver our solutions effectively. Even the perception that personal information isnot satisfactorily protected or does not meet regulatory requirements could inhibit sales of our solutions and any failure to comply with such laws andregulations could lead to significant fines, penalties, or other liabilities. Any such decrease in demand or incurred fines, penalties, or other liabilities couldhave a material adverse effect on our business, results of operations, and financial condition.Our business operations may be harmed by events beyond our control.Our business operations are vulnerable to damage or interruption from natural disasters, such as fires, floods and hurricanes, or from power outages,telecommunications failures, terrorist attacks, computer network service outages and disruptions, “denial of service” attacks, computer malware andransomware, break-ins, sabotage, employee error or malfeasance, and other similar events beyond our control. For example, the majority of our NorthAmerican research and development activities are located near significant seismic faults in the Portland, Oregon area. The occurrence of any such event atany of our facilities or at any third-party facility utilized by us or our third-party providers could cause interruptions or delays in our business, loss of data, orcould render us unable to provide our solution portfolio. In addition, any failure of a third-party to provide the data, products, services, or facilities requiredby us, as a result of human error, bankruptcy, natural disaster, or12other operational disruption, could cause interruptions to our computer systems and operations. The occurrence of any of these events could have a materialadverse effect on our business, results of operations, and financial condition.We utilize certain key technologies, data, and services from, and integrate certain of our solutions with, third parties and may be unable to replace thosetechnologies, data, and services if they become obsolete, unavailable, or incompatible with our solutions.We utilize certain key technologies and data from, and/or integrate certain of our solutions with, hardware, software, services, and data of thirdparties, including Chrome Systems, TrueCar, Microsoft, Google, Yahoo, EMC, Cisco Systems, Kyocera, Experian, Equifax, TransUnion and others. Some ofthese vendors are also our competitors in various respects. These third-party vendors could, in the future, seek to charge us cost-prohibitive fees for such useor integration or may design or utilize their solutions in a manner that makes it more difficult for us to continue to utilize their solutions, or integrate theirtechnologies with our solutions, in the same manner or at all. Any significant interruption in the supply or maintenance of such third-party hardware,software, services, or data could negatively impact our ability to offer our solutions unless and until we replace the functionality provided by this third-partyhardware, software, and/or data. In addition, we are dependent upon these third parties’ ability to enhance their current products, develop new products on atimely and cost-effective basis, and respond to emerging industry standards and other technological changes. There can be no assurance that we would beable to replace the functionality or data provided by third-party vendors in the event that such technologies or data becomes obsolete or incompatible withfuture versions of our solutions or are otherwise not adequately maintained or updated. Any delay in or inability to replace any such functionality could havea material adverse effect on our business, results of operations, and financial condition. Furthermore, delays in the release of new and upgraded versions ofthird-party software applications could have a material adverse effect on our business, results of operations, and financial condition.We have customers in over 100 countries, where we are subject to country-specific risks that could negatively impact our business, results of operations,and financial condition.During the twelve months ended June 30, 2019, we generated 22% of our revenues from continuing operations outside of the U.S., and we expectrevenues from other countries to continue to represent a significant part of our total revenues in the future, and such revenues are likely to increase as a resultof our efforts to expand our business in non-U.S. markets. Business and operations in individual countries are subject to changes in local governmentregulations and policies, including those related to tariffs and trade barriers, investments, taxation, currency exchange controls, repatriation of earnings (asdescribed below), environmental, and employment laws. For example, the referendum vote held in the United Kingdom ("U.K.") on June 23, 2016 resulted inthe decision to leave the European Union ("Brexit"). Our results are subject to the uncertainties and instability in economic and market conditions caused bysuch vote, including uncertainty regarding the U.K.’s access to the EU Single Market and the wider trading, legal, regulatory, and labor environments,especially in the U.K. and EU. Depending on the final terms of Brexit, we could face new regulatory costs and challenges and greater volatility in the PoundSterling and the Euro. Disruptions and uncertainty caused by Brexit may also cause our clients to closely monitor their costs and reduce their spendingbudget on our solutions and services. Changes in immigration laws and policies in connection with Brexit could make it more difficult for us to recruit orrelocate skilled employees within, or to, our U.K. office. A weaker British pound versus the U.S. dollar also causes local currency results of our U.K.operations to be translated into fewer U.S. dollars. Our results are also subject to the difficulties of coordinating our activities across the countries in which weare active. In addition, our operations in each country are vulnerable to changes in local socio-economic conditions and monetary and fiscal policies,currency exchange rates, intellectual property protection disputes, the settlement of legal disputes through foreign legal systems, the collection of receivablesthrough foreign legal systems, exposure to possible expropriation or other governmental actions, product preference and product requirements, difficulty toeffectively establish and expand our business and operations in such markets, unsettled political conditions, possible terrorist attacks, acts of war, naturaldisasters, and pandemic disease. These and other factors relating to our international operations may have a material adverse effect on our business, results ofoperations, and financial condition.Our business, results of operations, and financial condition could be harmed by negative rating actions by credit rating agencies.Nationally recognized credit rating organizations have issued credit ratings relating to the Company and our senior notes. In November 2016, ourcredit ratings were downgraded to non-investment grade. If our ratings are downgraded further or if ratings agencies indicate that a downgrade may occur, itcould limit our access to new financing, reduce our flexibility with respect to working capital needs, adversely affect the market price of our senior notes,result in an increase in financing costs, including interest expense under certain of our debt instruments, and result in less favorable covenants and financialterms in our future financing arrangements. Any of these outcomes could also negatively impact our relationships with our customers or13otherwise have a material adverse effect on our business, results of operations, and financial condition. Additional details about the terms of our debt iscontained in Item 8 of Part II, "Financial Statements and Supplementary Data - Note 15 - "Debt."We are currently, and expect to be in the future, involved in litigation that is expensive and time consuming and, if resolved adversely, that may materiallyadversely affect us.From time to time, we may become involved in various legal proceedings, including patent, copyright, commercial, product liability, employment,class action, whistleblower, antitrust and other litigation and claims, in addition to governmental and other regulatory investigations and proceedings. Suchmatters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liability and/or require us to changeour business practices. Because of the potential risks, expenses and uncertainties of litigation, we may, from time to time, settle disputes, even where we havemeritorious claims or defenses, by agreeing to settlement agreements.The Company is currently involved in several lawsuits that set forth allegations of anti-competitive conduct by the Company and anti-competitiveagreements between the Company and Reynolds and Reynolds relating to the manner in which the defendants control access to, and allow integration with,their respective DMSs. Any negative outcome from any such lawsuits could result in payments of substantial monetary damages or fines, or undesirablechanges to our products or business practices, and accordingly our business, financial condition, or results of operations could be materially and adverselyaffected. Although the results of such lawsuits and claims cannot be predicted with certainty, we do not believe that the final outcome of these mattersrelating to the manner in which we control access to, and allow integration with, our DMS, that we currently face will have a material adverse effect on ourbusiness, financial condition, or results of operations. We believe these cases are without merit and intend to continue to contest the claims in these casesvigorously.Because litigation is inherently unpredictable, there can be no assurances that a favorable final outcome will be obtained in all our cases, and wecannot assure you that the results of any of these actions will not have a material adverse effect on our business, financial condition, results of operations andprospects. For more information regarding the litigation in which we are currently involved, see the information set forth under “Legal Proceedings” in Item 3of Part I of this Annual Report on Form 10-K.We may be unable to adequately protect, and we may incur significant costs in defending, our intellectual property and other proprietary rights.Our success depends, in large part, on our ability to protect our intellectual property and other proprietary rights. We rely upon a combination oftrademark, trade secret, copyright, patent and unfair competition laws, as well as license agreements and other contractual provisions, to protect ourintellectual property and other proprietary rights. In addition, we attempt to protect our intellectual property and proprietary information by requiring certainof our team members and consultants to enter into confidentiality, non-competition and assignment of inventions agreements. To the extent that ourintellectual property and other proprietary rights are not adequately protected, third parties might gain access to our proprietary information, develop andmarket products and services similar to ours or use trademarks similar to ours. Existing U.S. federal and state intellectual property laws offer only limitedprotection. Moreover, the laws of some foreign countries in which we market our products and services afford little or no effective protection of ourintellectual property. If we resort to legal proceedings to enforce our intellectual property rights or to determine the validity and scope of the intellectualproperty or other proprietary rights of others, the proceedings could be burdensome and expensive, and we may not prevail. The failure to adequately protectour intellectual property and other proprietary rights, or manage costs associated with enforcing those rights, could have a material adverse effect on ourbusiness, results of operations, and financial condition.Claims that we or our technologies infringe upon the intellectual property or other proprietary rights of a third party may require us to incur significantcosts, enter into royalty or licensing agreements, or develop or license substitute technology.We have in the past and may in the future be subject to claims that our technologies in our products and services infringe upon the intellectualproperty or other proprietary rights of a third party. In addition, the vendors providing us with technology that we use in our own technology could becomesubject to similar infringement claims. Although we believe that our products and services do not infringe any intellectual property or other proprietaryrights, we cannot assure you that our products and services do not, or that they will not in the future, infringe intellectual property or other proprietary rightsheld by others. Any claims of infringement could cause us to incur substantial costs defending against the claim, even if the claim is without merit, and coulddistract our management from our business. Moreover, any settlement or adverse judgment resulting from the claim could require us to pay substantialamounts, obtain a license to continue to use the products and services that are the subject of the claim, and/or otherwise restrict or prohibit our use of thetechnology. There can be no assurance that we would be able to obtain a license on commercially reasonable terms, or at all, from the third party assertingany particular14claim, that we would be able to successfully develop alternative technology on a timely basis, if at all, or that we would be able to obtain a license fromanother provider of suitable alternative technology to permit us to continue offering, and our customers to continue using, the products and services. Inaddition, we generally provide in our customer agreements for certain products and services that we will indemnify our customers against third-partyinfringement claims relating to technology that we provide to those customers, which could obligate us to pay damages if the products and services were everfound to be infringing. Infringement claims asserted against us, our vendors, or our customers could have a material adverse effect on our business, results ofoperations, and financial condition.We have made strategic acquisitions and formed strategic alliances in the past and expect to do so in the future. If we are unable to find suitableacquisitions or alliance partners that strengthen our value proposition to customers or to achieve the expected benefits from such acquisitions or alliances,there could be a material adverse effect on our business, results of operations, and financial condition.We have historically pursued growth through acquisitions, ranging from acquisitions of small start-up companies that provide a discrete applicationto a handful of customers, to acquisitions of substantial companies with more mature solutions and a larger customer base, such as our acquisition of Kerridgein 2005, which facilitated our international expansion, and our acquisition of ELEAD1ONE ("ELEAD") in 2018, which supports our CRM business. As partof our ongoing business strategy to expand solutions offerings, acquire new technologies, and strengthen our value proposition to customers, we frequentlyengage in discussions with third parties regarding, and enter into agreements relating to, possible acquisitions, strategic alliances, and joint ventures.However, there may be significant competition for acquisition, alliance, and joint venture targets in our industry, or we may not be able to identify suitablecandidates, negotiate attractive terms, or obtain necessary regulatory approvals for such transactions in the future. Acquisitions, strategic alliances, and jointventures also involve numerous other risks, including potential exposure to assumed litigation and unknown environmental and other liabilities, as well asundetected internal control, regulatory or other issues, or additional costs not anticipated at the time the transaction was approved or completed.Even if we are able to complete acquisitions or enter into alliances and joint ventures that we believe will provide attractive growth opportunities,such transactions are inherently risky. Significant risks from these transactions include risks relating to:•integration and restructuring costs, both one-time and ongoing;•developing and maintaining sufficient controls, policies, and procedures;•diversion of management’s attention from ongoing business operations;•establishing new informational, operational, and financial systems to meet the needs of our business;•losing key employees, customers, and vendors;•failing to achieve anticipated synergies, including with respect to complementary solutions; and•unanticipated or unknown liabilities.If we are not successful in completing acquisitions in the future, we may be required to reevaluate our acquisition strategy. We also may incursubstantial expenses and devote significant management time and resources in seeking to complete acquisitions. In addition, we could use substantialportions of our available cash to pay all or a portion of the purchase prices of future acquisitions. If we do not achieve the anticipated benefits of ouracquisitions as rapidly or to the extent anticipated by our management and financial or industry analysts, others may not perceive the same benefits of theacquisition as we do. If these risks materialize, there could be a material adverse effect on our business, results of operations, and financial condition.Our future acquisitions may involve the issuance of our equity securities as payment, in part or in full, for the business or assets acquired, whichwould dilute our existing stockholders' ownership interests. Future acquisitions may also decrease our earnings and the benefits derived by us from anacquisition might not outweigh or exceed the dilutive effect of the acquisition. We also may incur additional indebtedness, issue equity, have futureimpairment of assets or suffer adverse tax and accounting consequences in connection with any future acquisitions.15We could be liable for contract or product liability claims, and disputes over such claims may disrupt our business, divert management’s attention, or havea negative impact on our financial results.We provide limited warranties to purchasers of our products and services. In addition, errors, defects or other performance problems in our productsand services, including with respect to data that we store, process and provide in connection with our products and services, could result in financial or otherdamages to our customers or consumers. There can be no assurance that any limitations of liability set forth in our contracts would be enforceable or wouldotherwise protect us from liability for damages. We maintain general liability insurance coverage, including coverage for errors and omissions in excess ofthe applicable deductible amount; however, there can be no assurance that this coverage will continue to be available on acceptable terms, in sufficientamounts to cover one or more large claims or at all, or that the insurer will not deny coverage for any future claim. The successful assertion of one or morelarge claims against us that exceeds available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or theimposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, results of operations, and financialcondition. Furthermore, any litigation, regardless of its outcome, could result in substantial cost to us and divert management’s attention from our operationsand could have a material adverse effect on our business, results of operations, and financial condition. In addition, some of our products and services arebusiness-critical for our customers, and a failure or inability to meet a customer’s expectations could seriously damage our reputation and negatively impactour ability to retain existing business or attract new business.Because we recognize a majority of our revenue from our subscription-based products and services over the term of the subscription, downturns or upturnsin new business may not be immediately reflected in our operating results.We generally recognize a majority of our revenue from sales of our subscription-based products and services ratably over the term of the subscriptioncontract. As a result, the majority of our quarterly revenue is attributable to service contracts entered into during previous quarters. A decline in new orrenewed service agreements in any one quarter will not be fully reflected in our revenue in that quarter but will harm our revenue in future quarters.Consequently, the effect of significant downturns in sales and market acceptance of our subscription services in a particular quarter may not be fully reflectedin our operating results until future periods. Our subscription model also makes it difficult for us to rapidly increase our revenue through additional sales inany period, because revenue from new subscription contracts, and from additional orders under existing subscription contracts, must be recognized over theapplicable subscription term. In addition, delays or failures in deployment of our subscription services may prevent us from recognizing subscription revenuefor indeterminate periods of time. Further, we may experience unanticipated increases in costs associated with providing our subscription services tocustomers over the term of our subscription contracts as a result of inaccurate internal cost projections or other factors, which may harm our operating results.Changes in, or interpretations of, accounting principles may negatively impact our financial position and results of operations.We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States ("GAAP"). Theseprinciples are subject to interpretation by the SEC and other organizations that develop and interpret accounting principles. New accounting principles ariseregularly, implementation of which can have a significant effect on and may increase the volatility of our reported operating results and may evenretroactively affect previously reported operating results. In addition, the implementation of new accounting principles may require significant changes toour customer and vendor contracts, business processes, accounting systems, and internal controls over financial reporting. The costs and effects of thesechanges could adversely impact our operating results, and difficulties in implementing new accounting principles could cause us to fail to meet our financialreporting obligations.For example, in May 2014, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2014-09, Revenuefrom Contracts with Customers (Topic 606), which supersedes nearly all existing GAAP revenue recognition guidance, changes how and when revenue isrecognized, and provides guidance on how to account for costs related to contracts with customers. This new guidance became effective for us on July 1,2018. We have implemented changes to our accounting systems and processes, internal controls, and disclosures to comply with the requirements of the newguidance. Our assessment of this new revenue recognition guidance and its impact is further discussed in Note 6, "Revenue" to our audited consolidatedfinancial statements included under Item 8 of Part II of this Annual Report on Form 10-K.We may experience foreign currency gains and losses.We conduct transactions and hold cash in currencies other than the U.S. dollar. Changes in the value of major foreign currencies, particularly theCanadian dollar, Euro, Pound Sterling, and Renminbi relative to the U.S. dollar, can significantly16affect our assets, revenues, and operating results. Generally, our revenues are adversely affected when the dollar strengthens relative to other currencies andare positively affected when the dollar weakens. Similarly, cash, other bank deposits, and other assets held in foreign currency are adversely affected when thedollar strengthens relative to other currencies and are positively affected when the dollar weakens.We may have exposure to unanticipated tax liabilities, which could harm our business, results of operations, financial condition, and prospects.Our global business operations subject us to income taxes and non-income based taxes, in both the U.S. and various foreign jurisdictions. Thecomputation of the provision for income taxes and other tax liabilities is complex, as it is based on the laws of numerous taxing jurisdictions and requiressignificant judgment regarding the application of complicated rules governing accounting for tax provisions under GAAP. The provision for income taxesmay require forecasts of effective tax rates for the year, which include assumptions and forward looking financial projections, including the expectations ofprofit and loss by jurisdiction. Various items cannot be accurately forecasted and future events may materially differ from our forecasts. Our provision forincome tax could be materially impacted by a number of factors, including changes in the geographical mix of our profits and losses, changes in our business,such as internal restructuring and acquisitions, changes in tax laws and accounting guidance and other regulatory, legislative or judicial developments, taxaudit determinations, changes in our uncertain tax positions, changes in our intent and ability to indefinitely reinvest foreign earnings, changes in our abilityto utilize foreign tax credits, changes to our transfer pricing practices, tax deductions associated with stock-based compensation, and changes in our need fordeferred tax valuation allowances. Any changes in corporate income tax laws or any implementation of tax laws relating to corporate tax reform, couldsignificantly impact our overall tax liability. For these reasons, our actual tax liabilities in a future period may be materially different than our income taxprovision.In addition, changes in tax laws or tax rulings may have a significant adverse impact on our effective tax rate.In the event that changes in tax laws negatively impact our effective tax rates, our provision for taxes, or generate unanticipated tax liabilities, ourbusiness, results of operations, and financial condition could suffer a material adverse effect.Changes in tax laws or tax rulings could materially affect our financial position, results of operations, and cash flows.The income and non-income tax regimes we are subject to or operate under are unsettled and may be subject to significant change. Changes in taxlaws or tax rulings, or changes in interpretations of existing laws, could materially affect our financial position, results of operations, and cash flows. Forexample, changes to U.S. tax laws enacted in December 2017 had a significant impact on our tax obligations and effective tax rate for fiscal 2018 andbeyond. In addition, many countries in Europe, as well as a number of other countries and organizations, have recently proposed or recommended changes toexisting tax laws or have enacted new laws that could significantly increase our tax obligations in many countries where we do business or require us tochange the manner in which we operate our business. The Organization for Economic Cooperation and Development has been working on a Base Erosionand Profit Shifting Project and is expected to continue to issue guidelines and proposals that may change various aspects of the existing framework underwhich our tax obligations are determined in many of the countries in which we do business. Due to our international business activities, these types ofchanges to the taxation of our activities could increase our worldwide effective tax rate and harm our financial position, results of operations, and cash flows.Uncertainties in the interpretation and application of the 2017 Tax Cuts and Jobs Act could materially affect our tax obligations and effective tax rate.The 2017 Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted on December 22, 2017, and significantly affected U.S. federal tax law bychanging how the U.S. imposes income tax on multinational corporations along with other changes. The U.S. Department of Treasury may issue regulationsand interpretative guidance. In addition, the Tax Reform Act has U.S. state and local implications and additional guidance and interpretations are anticipatedfrom state taxing authorities. The issuance of additional regulations and interpretations may significantly impact how we will apply the law and impact ourresults of operations in the period issued.There can be no assurance that we will have access to the capital markets on terms acceptable to us.From time to time we may need to access the long-term and short-term capital markets to obtain financing. Although we believe that the sources ofcapital currently in place will permit us to finance our operations for the foreseeable future on acceptable terms and conditions, our access to, and theavailability of, financing on acceptable terms and conditions in the future or at all will be impacted by many factors, including, but not limited to:17•our financial performance;•our credit ratings;•the liquidity of the overall capital markets; and•the state of the economy.There can be no assurance that we will have access to the capital markets on terms acceptable to us.Our current level of indebtedness could negatively impact our ability to raise additional capital to fund our operations and limit our ability to react tochanges in the economy or our industry.We have significant debt obligations. On August 17, 2018, we entered into a $750.0 million revolving credit facility (which was undrawn as of June30, 2019) and borrowed $300.0 million under a three-year term loan facility that will mature on August 17, 2021 and $300.0 million under a five year termloan facility that will mature on August 17, 2023. In addition, we have approximately $2.35 billion of existing senior notes outstanding. See Note 15, "Debt"to our consolidated financial statements under Item 8 of Part II of this Annual Report on Form 10-K for details about the terms of our debt.Our current indebtedness could have important consequences, including, but not limited to:•increasing our vulnerability to, and reducing our flexibility to plan for and respond to, general adverse economic and industry conditions andchanges in our business and the competitive environment;•an increasingly substantial portion of our cash flow from operations will be dedicated to making payments of principal of, and interest on, ourindebtedness, thereby reducing the availability of funds that would otherwise be available to fund working capital, capital expenditures,acquisitions, dividends, share repurchases or other corporate purposes;•increasing our vulnerability to further downgrades of our credit rating, which could adversely affect our interest rates on existing indebtedness, costof additional indebtedness, liquidity and access to capital markets;•restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;•the introduction of secured debt to our capital structure;•making it more difficult for us to repay, refinance or satisfy our obligations with respect to our debt;•limiting or eliminating our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions, or otherpurposes; and•any failure to comply with the obligations of any of our debt instruments could result in an event of default under the agreements governing suchindebtedness, which in turn, if not cured or waived, could result in the acceleration of the applicable debt, and may result in the acceleration of anyother debt to which a cross-acceleration or cross-default provision applies.Our ability to service our current and future levels of indebtedness will depend upon, among other things, our future financial and operatingperformance, which will be affected by prevailing economic conditions, including the interest rate environment, and financial, business, regulatory and otherfactors, some of which are beyond our control.There is no assurance that we will generate cash flow from operations or that future debt or equity financings will be available to us to enable us topay our indebtedness or to fund other needs and we may be forced to take actions such as reducing or delaying business activities, acquisitions, investmentsor capital expenditures, selling assets, restructuring or refinancing debt, reducing or discontinuing dividends we may pay in the future, or seeking additionalequity capital. These actions may not be effected on satisfactory terms, or at all. Any inability to generate sufficient cash flow or refinance our indebtednesson favorable terms could have a material adverse effect on our business, results of operations, and financial condition.18Higher levels of indebtedness and increased debt service obligations will effectively reduce the amount of funds available for other business purposes andmay adversely affect us.Interest costs related to the notes will be substantial, and our increased level of indebtedness, including any future borrowings, could reduce fundsavailable for acquisitions, capital expenditures or other business purposes, impact our credit ratings, restrict our financial and operating flexibility or createcompetitive disadvantages compared to other companies with lower debt levels. Further, increased indebtedness could make it more difficult for us to satisfyour obligations with respect to our debt, increase our vulnerability to adverse economic or industry conditions and limit our ability to obtain additionalfinancing.Our ability to make payments of principal and interest on our indebtedness, including the notes, depends upon our future performance, which will besubject to general economic conditions and financial, business and other factors affecting our consolidated operations, many of which are beyond ourcontrol. If we are unable to generate sufficient cash flow from operations in the future to service our debt and meet our other cash requirements, we may berequired, among other things:•to seek additional financing in the debt or equity markets;•to refinance or restructure all or a portion of our indebtedness, including the notes;•to sell selected assets or businesses; or•to reduce or delay planned capital or operating expenditures.Such measures might not be sufficient to enable us to service our debt, including the notes, and meet our other cash requirements. In addition, anysuch financing, refinancing or sale of assets might not be available on economically favorable terms or at all.Risks Relating to Our Common StockThe market price of our shares may fluctuate widely.The market price of our common stock may fluctuate widely, depending upon many factors, some of which may be beyond our control, including:•our business profile and market capitalization may not fit the investment objectives of our stockholders, and our common stock may not be includedin some indices, causing certain holders to sell their shares;•a shift in our investor base;•the actions of significant stockholders;•our quarterly or annual earnings, or those of other companies in our industry;•actual or anticipated fluctuations in our operating results;•announcements of acquisitions or dispositions and strategic moves, such as acquisitions or restructurings, by us or our competitors;•the failure of securities analysts to cover our common stock;•the operating and stock price performance of other comparable companies;•changes in expectations concerning our future financial performance and the future performance of our industry in general, including financialestimates and recommendations by securities analysts;•differences between our actual financial and operating results and those expected by investors and analysts;•changes in the regulatory framework of our industry and regulatory action;19•changes in general economic or market conditions; and•the other factors described in these “Risk Factors” and elsewhere in this Annual Report on Form 10-K.Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. Thesebroad market fluctuations may adversely affect the trading price of our common stock.Our revenue, operating results, and profitability vary from quarter to quarter, which may result in volatility in our stock price.Our revenue, operating results, and profitability have varied in the past and are likely to continue to vary significantly from quarter to quarter, whichmay lead to volatility in our stock price. These variations are due to several factors, including:•the timing, size, and nature of our customer revenues and any losses with respect thereto;•product and price competition regarding our products and services;•the timing of introduction and market acceptance of new products, services or product enhancements by us, or our competitors;•changes in our operating expenses;•foreign currency fluctuations;•the timing of acquisitions or divestitures of businesses, products, and services;•the seasonality of car sales;•personnel changes; and•fluctuations in economic and financial market conditions.There is substantial volatility in the domestic and international stock markets that could negatively impact our stock regardless of our actual operatingperformance.The stock market in general and the market for technology companies in particular have experienced extreme price and volume fluctuations. Thesefluctuations have often been unrelated or disproportionate to operating performance. These broad market and industry factors could materially and adverselyaffect the market price of our stock, regardless of our actual operating performance.In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been broughtagainst that company. Due to the potential volatility of our stock price, we may therefore be the target of securities litigation in the future. Securitieslitigation could result in substantial costs and divert management’s attention and resources from our business.Holders of our common stock may be adversely affected through the issuance of more senior securities or through dilution.We may need to incur additional debt or issue equity in order to fund working capital, capital expenditures and product development requirements,maintain debt capacity levels, or to make acquisitions and other investments. If we raise funds through the issuance of debt or equity, any debt securities orpreferred stock issued will have liquidation rights, preferences, and privileges senior to those of holders of our common stock. If we raise funds through theissuance of common equity, the issuance will dilute the ownership interests of our stockholders. We cannot assure our investors or potential investors thatdebt or equity financing will be available to us on acceptable terms, if at all. If we are not able to obtain sufficient financing, we may be unable to maintain orgrow our business.Provisions in our certificate of incorporation and by-laws and of Delaware law may prevent or delay an acquisition of our Company.Our certificate of incorporation and by-laws and Delaware law contain provisions that are intended to deter coercive takeover practices andinadequate takeover bids by making them more burdensome to the bidder and to encourage prospective acquirers to negotiate with our Board of Directorsrather than to attempt a hostile takeover. These provisions include, among others:20•the inability of our stockholders to act by written consent; and•the right of our Board of Directors to issue preferred stock without stockholder approval.We have not opted out of the protections afforded by Section 203 of the Delaware General Corporation Law, which provides that a stockholderacquiring more than 15% of our outstanding voting shares (an “Interested Stockholder”) but less than 85% of such shares may not engage in certain businesscombinations with us for a period of three years subsequent to the date on which the stockholder became an Interested Stockholder unless, prior to such date,our Board of Directors approves either the business combination or the transaction which resulted in the stockholder becoming an Interested Stockholder orthe business combination is approved by our Board of Directors and by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is notowned by the Interested Stockholder.We believe these provisions protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiatewith our Board of Directors and by providing our Board of Directors with more time to assess any acquisition proposal, and are not intended to make ourCompany immune from takeovers. However, these provisions apply even if the offer may be considered beneficial by some stockholders and could delay orprevent an acquisition that our Board of Directors determines is not in the best interests of our Company and our stockholders.We cannot assure you that we will continue to pay dividends or repurchase shares of our common stock at the times or in the amounts we currentlyanticipate.Our Board of Directors has declared, and we have paid, regular quarterly cash dividends on our common stock. The payment of such quarterlydividends and any other future dividends will be at the discretion of our Board of Directors. There can be no assurance that we will continue to paydividends, as to what the amount of any future dividends will be, or that we will have sufficient surplus under Delaware law to be able to pay any futuredividends. This may result from extraordinary cash expenses, actual expenses exceeding contemplated costs, funding of capital expenditures, or increases inreserves. If we do not pay future dividends, the price of our common stock must appreciate for you to receive a gain on your investment in us. Thisappreciation may not occur and our stock may in fact depreciate in value.In January 2017, the Board of Directors authorized us to repurchase up to $2.0 billion of our common stock. We have funded this return of capitalplan through a combination of free cash flow and incremental borrowings that as intended brought leverage, measured as financial debt, net of cash, dividedby adjusted EBITDA, to 3.4x as of June 30, 2019. We have repurchased a total of approximately $1.5 billion of shares of our common stock under theauthorization. For fiscal 2020, we expect that the aggregate value of our quarterly cash dividend payments and repurchases of shares of our common stockwill be between $75 million and $150 million. There can be no assurance that we will be able to repurchase shares of our common stock at the times or in theamounts we currently anticipate due to market conditions, our cash position, our ability to access new financing, applicable laws and other factors, or that theresults of the share repurchase program will be as beneficial as we currently anticipate.The interests of significant stockholders may conflict with our interests or those of other stockholders, and their actions could disrupt our business andaffect the market price and volatility of our securities.Since we began operating as an independent public company, three of our stockholders have, at various times, made filings on Schedule 13D withthe SEC indicating that they may take positions or make proposals with respect to, or with respect to potential changes in, among other things, ouroperations, management, management and employee incentives, our certificate of incorporation and bylaws, the composition of our Board of Directors,ownership, capital allocation policies, capital or corporate structure, dividend policy, potential acquisitions involving us or certain of our businesses orassets, strategy, and plans. Any such positions or proposals may not in all cases be aligned with the interests of our other stockholders. Significantstockholders may be proponents of pursuing acquisitions, divestitures, and other transactions that, in their judgment, could enhance their investment, eventhough such transactions involve risks to our other stockholders.Responding to actions by significant stockholders can be costly, time-consuming, and disrupting to our operations and can divert the attention ofmanagement and our employees. Such activities could interfere with our ability to execute our business strategy, including plans relating to, growthstrategies, business process improvement, or the return of capital to our stockholders. In addition, a proxy contest for the election of directors at our annualmeeting would require us to incur significant legal fees and proxy solicitation expenses and require significant time and attention by management and ourBoard of Directors. The perceived uncertainties as to our future direction also could affect the market price and volatility of our securities.21Item 1B. Unresolved Staff CommentsNone.Item 2. PropertiesWe own or lease approximately 1.2 million square feet of real estate, consisting of office and other commercial facilities around the world. We ownand maintain our global headquarters, totaling approximately 155,000 square feet, in Hoffman Estates, Illinois. We also own or lease approximately 24locations in North America and 37 locations internationally.We regularly add or reduce facilities as necessary to accommodate changes in our business operations. We believe that our facilities are adequate tomeet our immediate needs, and that, if and when needed, we will be able to secure adequate additional space to accommodate future expansion.Item 3. Legal ProceedingsFor a description of our legal proceedings, see Item 8 of Part II, "Financial Statements and Supplementary Data - Note 16 - Commitments andContingencies" included in this Annual Report of Form 10-K.Item 4. Mine Safety DisclosuresNot applicable.22Part IIItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket for Registrant's Common EquityOur common stock began trading "regular way" on the NASDAQ Global Select Market under the symbol "CDK" on October 1, 2014. As of June 30,2019, there were 14,500 holders of record of our common stock. As of such date, approximately 172,451 additional holders held their common stock in"street name."DividendsWe expect to continue to pay dividends on our common stock. However, the declaration and payment of future dividends to holders of our commonstock will be at the discretion of our Board of Directors and will depend upon many factors, including our financial condition, earnings, capital requirementsof our businesses, legal requirements, regulatory constraints, industry practice and other factors that our Board of Directors deems relevant. There can be noassurance that we will continue to pay dividends or guarantee of the amounts of such dividends.Stock Performance GraphThe following graph compares the cumulative total stockholder return on our common stock from October 1, 2014 to June 30, 2019 with thecomparable cumulative return of the: (i) Standard & Poor's (S&P) 500 Index, (ii) S&P MidCap 400 Index, and (iii) S&P 400 Information Technology Index.23The graph assumes $100 was invested on October 1, 2014 in our common stock and in each of the indices and assumes that all cash dividends arereinvested. The comparisons in the graph are required by the Securities Exchange Commission (“SEC”) and are not intended to forecast or be indicative offuture performance of our common stock. The graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shallsuch information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 (the “ExchangeAct”), each as amended, except to the extent that we specifically incorporate it by reference into such filing.Issuer Purchases of Equity Securities The following table presents a summary of common stock repurchases made during the three months ended June 30, 2019.Period Total Number ofShares Purchased(1) Average PricePaid per Share Total Number ofShares as Part ofPubliclyAnnouncedPrograms (2) Maximum Number (orApproximate Dollar Value)that May Yet Be PurchasedUnder the Program (2)April 1 - 30, 2019 914,942 $59.73 914,468 $527,507,939May 1 - 31, 2019 450,543 $55.96 450,469 $502,297,495June 1 - 30, 2019 137 $48.59 — $502,297,495Total 1,365,622 $58.48 1,364,937 (1) Pursuant to the Company's 2014 Omnibus Award Plan, shares of our common stock may be withheld upon exercise of stock options or vesting ofrestricted stock to satisfy tax withholdings. Shares withheld for such purposes have been included within the total number of shares purchased.(2) In January 2017, the Board of Directors authorized us to repurchase up to $2.0 billion of our common stock under a return of capital program. Thisauthorization will expire when it is exhausted or at such time as it is revoked by the Board of Directors.Item 6. Selected Financial DataOur spin-off from Automatic Data Processing, Inc. ("ADP") was completed on September 30, 2014. Selected financial data is presented on acombined basis for periods preceding the spin-off and on a consolidated basis for subsequent periods. The following table sets forth selected consolidatedfinancial data from our audited consolidated financial statements as of June 30, 2019 and 2018 and for the years ended June 30, 2019, 2018, and 2017. Theselected consolidated and combined financial data as of June 30, 2017, 2016, and 2015 and for the years ended June 30, 2016 and 2015 have been derivedfrom consolidated and combined financial statements which are not included in this Form 10-K.Our combined financial statements for periods preceding the spin-off present the combined financial condition and results of operations of theCompany, which was under common control and common management by ADP until September 30, 2014. Our combined financial data may not beindicative of our future performance and does not necessarily reflect what our financial condition and results of operations would have been had we operatedas a separate, stand-alone entity during the periods presented, including many changes that have occurred in operations and capitalization of our Company asa result of our spin-off from ADP. The selected financial data presented below should be read in conjunction with our consolidated financial statements andthe accompanying notes included elsewhere in this Annual Report on Form 10-K and Item 7 of Part II "Management's Discussion and Analysis of FinancialCondition and Results of Operations."During the fourth quarter of fiscal year 2019, we committed to a plan to divest: (a) all of the assets of ANA; and (b) certain assets of CDKNA relatedto mobile advertising solutions and website services (collectively, the "Digital Marketing Business"). The operating results of the Digital Marketing businessis being presented as discontinued operations for all periods presented.24 Years Ended June 30,(In millions, except per share amounts) 2019 (1) 2018 2017 2016 2015Income Statement Data Revenues $1,914.8 $1,798.0 $1,730.7 $1,658.9 $1,650.6Earnings before income taxes 303.9 399.2 327.7283.3 252.7Provision for income taxes 62.2 88.1 92.8 90.1 91.4Net earnings from continuing operations 241.7 311.1 234.9 193.2 161.3(Loss) Earnings from discontinued operations, net of taxes (109.8) 77.6 67.6 53.6 29.2Net earnings 131.9 388.7 302.5 246.8 190.5Net earnings attributable to noncontrolling interest 7.9 7.9 6.9 7.5 7.9Net earnings attributable to CDK/Dealer Services 124.0 380.8 295.6 239.3 182.6 Net earnings (loss) attributable to CDK/Dealer Services per share - basic: Continuing operations $1.86 $2.23 $1.55 $1.18 $0.96Discontinued operations $(0.87) $0.57 $0.46 $0.34 $0.18Total net earnings attributable to CDK/Dealer Services per share - basic $0.99 $2.80 $2.01 $1.52 $1.14 Net earnings (loss) attributable to CDK/Dealer Services per share - diluted: Continuing operations $1.85 $2.21 $1.53 $1.17 $0.95Discontinued operations $(0.87) $0.57 $0.46 $0.34 $0.18Total net earnings attributable to CDK/Dealer Services per share - diluted $0.98 $2.78 $1.99 $1.51 $1.13 Weighted-average basic shares outstanding (2) 125.5 135.8 146.7 157.0 160.6Weighted-average diluted shares outstanding (2) 126.4 136.8 148.2 158.0 161.6Cash dividends declared per share $0.600 $0.590 $0.555 $0.525 $0.360 Balance Sheet Data Cash and cash equivalents $311.4 $804.4 $726.1 $219.1 $408.2Total current assets 987.1 1,367.3 1,278.8 738.7 885.2Property, plant and equipment, net 144.8 127.6 129.6 111.0 90.7Total assets 2,999.0 3,008.4 2,883.1 2,365.0 2,518.5Total current liabilities 837.9 548.4 552.6 523.4 498.4Long-term debt 2,659.4 2,575.5 2,125.2 1,190.3 971.1Total liabilities 3,713.5 3,355.7 2,939.9 1,988.8 1,734.4Total stockholders' (deficit) equity (714.5) (347.3) (56.8) 376.2 784.1(1) Effective July 1, 2018, the Company adopted the Financial Accounting Standard Board Accounting Standards Update ("ASU") 2014-09, "Revenue fromContracts with Customers," and related ASUs using the modified retrospective approach. The comparative information has not been restated and continues tobe reported under the accounting standards in effect for the periods presented. For further information, see Item 8 of Part II, "Financial Statements andSupplementary Data - Note 6 - Revenue."(2) On September 30, 2014, ADP stockholders of record as of the close of business on September 24, 2014 received one share of our common stock for everythree shares of ADP common stock held as of the record date. For all periods prior to the spin-off, basic and diluted earnings per share were computed usingthe number of shares of our stock outstanding on September 30, 2014, the date on which our common stock was distributed to the stockholders of ADP.25Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsForward-Looking StatementsThe following discussion should be read in conjunction with our consolidated financial statements and accompanying notes thereto includedelsewhere in this Annual Report on Form 10-K.This Annual Report on Form 10-K contains, and other written or oral statements made from time to time by CDK Global, Inc. ("CDK," or the"Company") may contain, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, otherthan statements of historical fact, including: the Company's business outlook, generally accepted accounting principles in the United States ("GAAP") andadjusted EBITDA targets for the Company's fiscal year ending June 30, 2020 ("fiscal 2020"); the Company's plan to divest its Digital Marketing Business(defined below); other plans; objectives; forecasts; goals; beliefs; business strategies; future events; business conditions; results of operations; financialposition business outlook trends; and other information, may be forward-looking statements. Words such as "might," "will," "may," "could," "should,""estimates," "expects," "continues," "contemplates," "anticipates," "projects," "plans," "potential," "predicts," "intends," "believes," "forecasts," "future,""assumes," and variations of such words or similar expressions are intended to identify forward-looking statements. In particular, information appearing under“Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes forward-looking statements. Thesestatements are based on management's expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differmaterially from those expressed, or implied by, these forward-looking statements. Factors that could cause actual results to differ materially from thosecontemplated by the forward-looking statements include:•the Company's success in obtaining, retaining, and selling additional services to customers;•the pricing of our products and services;•overall market and economic conditions, including interest rate and foreign currency trends, and technology trends;•adverse global economic conditions and credit markets and volatility in the countries in which we do business (such as the adverse economic impactand related uncertainty caused by the United Kingdom's ("U.K.") decision to leave the European Union ("Brexit"));•auto sales and related industry changes;•competitive conditions;•changes in regulation (including new regulations that restrict the manner and extent to which we can control access to our DMS and other softwareapplications and limit what, if anything, we may charge for integration with those applications);•changes in technology, security breaches, interruptions, failures, and other errors involving our systems;•availability of skilled technical employees/labor/personnel;•the impact of new acquisitions and divestitures;•employment and wage levels;•availability of capital for the payment of debt service obligations or dividends or the repurchase of shares;•any changes to our credit rating and the impact of such changes on our financing costs, rates, terms, debt service obligations, and access to capitalmarket and working capital needs;•the impact of our indebtedness, our access to cash and financing, and our ability to secure financing or financing at attractive rates;•the onset of or developments in litigation involving contract, intellectual property, competition, stockholder, and other matters, and governmentalinvestigations;•our ability to complete the divestiture of the Digital Marketing Business; and•the ability of our significant stockholders and their affiliates to significantly influence our decisions, or cause us to incur significant costs.26There may be other factors that may cause our actual results, performance or achievements to differ materially from those expressed in, or implied by,the forward-looking statements. We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of themdo, what impact they will have on our results of operations and financial condition. You should carefully read the factors described elsewhere in thisdocument under "Risk Factors" in Part I, Item 1A in this Annual Report on Form 10-K for a description of certain risks that could, among other things, causeour actual results to differ from these forward-looking statements.All forward-looking statements speak only as of the date of this Annual Report on Form 10-K, even if subsequently made available by us on ourwebsite or otherwise, and are expressly qualified in their entirety by the cautionary statements included in this Annual Report on Form 10-K. We disclaimany obligation to update or revise forward-looking statements that may be made to reflect new information or future events or circumstances that arise afterthe date made or to reflect the occurrence of unanticipated events, other than as required by law.The following discussion should be read in conjunction with our consolidated financial statements and accompanying notes thereto includedelsewhere herein. In this Annual Report on Form 10-K, all references to "we," "our," and "us" refer collectively to CDK and its consolidated subsidiaries.27(Tabular amounts in millions, except per share amounts)Executive OverviewCDK Global enables end-to-end automotive commerce across the globe. For over 40 years, we have served automotive retailers and originalequipment manufacturers ("OEMs") by providing innovative solutions that allow them to better connect, manage, analyze, and grow their businesses. Oursolutions automate and integrate all parts of the buying process, including the, acquisition, sale, financing, insuring, parts supply, repair, and maintenance ofvehicles, in more than 100 countries around the world, for approximately 30,000 retail locations and most OEMs.We generate revenue primarily by providing a broad suite of subscription-based software and technology solutions for automotive retailers throughour CDK North America and CDK International segments. We are focused on the use of software-as-a-service ("SaaS") and mobile-centric solutions that arehighly functional, flexible and fast. Our flagship Dealer Management System ("DMS") software solutions are hosted enterprise resource planning applicationstailored to the unique requirements of the retail automotive industry. Our DMS products facilitate the sale of new and used vehicles, consumer financing,repair and maintenance services, and vehicle and parts inventory management. Additionally, these solutions enable company-wide accounting, financialreporting, cash flow management, and payroll services. Our DMSs are typically integrated with OEM data processing systems that enable automotive retailersto order vehicles and parts, receive vehicle records, process warranties, and check recall campaigns and service bulletins while helping them to fulfill theirfranchisee responsibilities to their OEM franchisors.The Company is organized into two main operating groups, CDK North America ("CDKNA") and CDK International ("CDKI"), which are alsoreportable segments. A brief description of each of these two segments' operations is provided below. We previously reported the results of Advertising NorthAmerica ("ANA") as a reportable segment. During the fourth quarter of fiscal year 2019, we committed to a plan to divest: (a) all of the assets of ANA; and (b)certain assets of CDKNA related to mobile advertising solutions and website services (collectively, the “Digital Marketing Business”). The Digital MarketingBusiness is presented as discontinued operations. Additional information on discontinued operations is contained in Item 8 of Part II, "Financial Statementsand Supplementary Data, Note 4 - Discontinued Operation."CDK North AmericaThrough our CDKNA segment, we provide technology-based solutions, including our DMS products, a broad portfolio of layered software applicationsand services, a robust and secure interface to the DMS through our Partner Program, data management and business intelligence solutions, a variety ofprofessional services, and a full range of customer support solutions. These solutions help automotive retailers, OEMs, consumers and other industryparticipants manage the acquisition, sale, financing, insuring, parts supply, and repair and maintenance of vehicles. Our solutions help our customersstreamline their operations, better target and serve their customers, and enhance the financial performance of their retail operations. In addition to providingsolutions to automotive retailers and OEMs, we also provide solutions to retailers and manufacturers of heavy trucks, construction equipment, agriculturalequipment, motorcycles, boats, and other marine and recreational vehicles.CDK InternationalThrough our CDKI segment, we provide automotive retailers with core DMS solutions and we offer automotive retailers and OEMs a variety ofprofessional services, custom programming, consulting, implementation and training solutions, as well as a full range of customer support solutions inapproximately 100 countries outside of the United States ("U.S.") and Canada. The solutions that we provide within this segment allow our customers tostreamline their business operations and enhance their financial performance within their local marketplace, and in some cases where we deal directly withOEMs, across international borders. Customers of this segment include automotive retail dealers and OEMs across Europe, the Middle East, Asia, Africa, andLatin America.Business Process Modernization ProgramAs of July 1, 2019, we initiated a three-year program designed to improve the way we do business for our customers through best-in-class productofferings, process, governance and systems. The Business Process Modernization Program will include a comprehensive redesign in the way we go to market,including the quoting, contracting, fulfilling, and invoicing processes, and systems and tools used by the Company. We estimate the investment toimplement this holistic business reform, including the design and implementation of a new enterprise resource planning ("ERP") system, will requireinvestment of approximately $30 million over a three-year time horizon. 28Business Transformation PlanDuring fiscal year ended June 30, 2015 ("fiscal 2015"), we initiated a three-year business transformation plan designed to increase operatingefficiency and improve the cost structure of our global operations. As we executed the business transformation plan, we continually monitored, evaluated andrefined its structure, including its design, goals, term, and our estimate and allocation of total restructuring expenses. As part of this ongoing review process,in fiscal year ended June 30, 2017 ("fiscal 2017") we extended the business transformation plan by one year through the fiscal year ended June 30, 2019("fiscal 2019"). Additional information on the business transformation plan is contained in Item 8 of Part II, "Financial Statements and Supplementary Data,Note 7 - Restructuring."In December 2015, we announced our intent to return $1.0 billion to our stockholders in the form of dividends and share repurchases. In December2016, we completed the $1.0 billion return of capital plan. In February 2017, we announced our intent to return $750.0 million to $1.0 billion of capital tostockholders per calendar year through 2019 through a combination of dividends and share repurchases. Since this announcement, we have returned $1.7billion to our stockholders through June 30, 2019. For fiscal 2020 we expect shareholder returns, including dividends and share repurchases, of $75.0 millionto $150.0 million.Sources of Revenues and ExpensesRevenues. We generally receive fee-based revenue by providing services to customers. We generate revenues from four categories: subscription, on-site licenses and installation, transaction services, and other.In our CDKNA segment, we have the following sources of revenue:Subscription: for software and technology solutions provided to automotive retailers and OEMs, which includes:•DMSs and layered applications, which may be installed on-site at the customer’s location, or hosted and provided on a SaaS basis, includingongoing maintenance and support;•Interrelated services such as installation, initial training, and data updates; and•Hardware on a service basis, meaning no specific assets are identified or a substantive right of substitution exists.On-site licenses and installation: DMSs applications where the software is installed on-site at the customer's location and interrelated services such asinstallation.Transaction: fees per transaction to process credit reports, vehicle registrations, and automotive equity mining.Other: consulting and professional services, sales of hardware, and other miscellaneous revenues.CDKI revenues are generated primarily from Subscription revenue, aside from the absence of layered applications, and On-site licenses andinstallation revenue, as described above.Expenses. Expenses generally relate to the cost of providing services to customers in our two reportable segments. In the CDKNA and CDKIsegments, significant expenses include employee payroll and other labor-related costs, the cost of hosting customer systems, third-party costs for transaction-based solutions and licensed software utilized in our solution offerings, telecommunications, transportation and distribution costs, computer hardware,software, and other general overhead items. We also have some company-wide expenses attributable to management compensation and corporate overhead.Potential Material Trends and Uncertainties in our MarketplaceA number of material trends and/or uncertainties in our marketplace could have either a positive or negative impact on our ability to conductbusiness, our results of operations, and/or our financial condition. The following is a summary of trends or uncertainties that have the potential to affect ourliquidity, capital resources, or results of operations:•Our revenues, operating earnings, and profitability have varied in the past as a result of these trends and uncertainties and are likely to continue tovary from quarter to quarter, which may lead to volatility in our stock price. These trends or uncertainties could occur in a variety of different areasof our business and the marketplace.•Changing market trends, including changes in the automotive marketplace, both in North America and internationally, could have a material impacton our business. From time to time, the economic trends of a region could have an impact on the volume of automobiles sold at retail within one ormore of the geographic markets in which we operate. To29some extent, our business is impacted by these trends, either directly through a shift in the number of transactions processed by customers of ourtransactional business, or indirectly through changes in our customers’ spending habits based on their own changes in profitability.•Our presence in multiple markets internationally could pose challenges that would impact our business or results of operations. We currently operatein over 100 countries and derive a significant amount of our overall revenues from markets outside of North America. The geographic breadth of ourpresence exposes us to potential economic, social, regulatory, and political shifts.•Our ability to bring new solutions to market, research and develop, or acquire the data and technology that enables those solutions is important toour continued success. In addition, our strategy includes the selective pursuit of acquisitions that support or complement our existing technologyand solution set. An inability to invest in the continued development of new solutions for the automotive marketplace, or an inability to acquirenew technology or solutions due to a lack of liquidity or resources, could impair our strategic position.•Our success depends on our ability to maintain the security of our data and intellectual property, as well as our customers’ data. Although wemaintain a clear focus on data and system security, and we incur significant costs securing our infrastructure annually in support of that focus, wemay experience interruptions of service or potential security issues that may be beyond our control.Factors Affecting Comparability of Financial ResultsDebt FinancingOn June 18, 2018, we completed an offering of 5.875% senior notes with a $500.0 million aggregate principal amount due in 2026 (the "2026notes"). The net proceeds from the sale of the 2026 notes were used for general corporate purposes, which included share repurchases, dividends, acquisitions(including our September 2018 acquisition of ELEAD1ONE ("ELEAD")), repayments of debt, working capital and capital expenditures.On August 17, 2018, we entered into a five-year senior unsecured revolving credit facility, which was undrawn as of June 30, 2019. The creditfacility replaced the previous unsecured revolving credit facility agreement, which was undrawn as of June 30, 2018. The revolving credit facility providesup to $750.0 million of borrowing capacity and includes a sub-limit of up to $100.0 million for loans in Euro, Pound Sterling, and, if approved by therevolving lenders, other currencies. In addition, the revolving credit facility contains an accordion feature that allows for an increase in the availableborrowing capacity of up to $100.0 million, subject to the agreement of lenders under the revolving credit facility or other financial institutions that becomelenders to extend commitments as part of the increased revolving credit facility. Borrowings under the revolving credit facility are available for generalcorporate purposes. The revolving credit facility will mature on August 17, 2023, subject to no more than two one-year extensions if lenders holding amajority of the revolving commitments approve such extensions.On August 17, 2018, we borrowed an aggregate of $600.0 million under term loan facilities comprising a $300.0 million term loan facility that willmature on August 17, 2021 (our "three year term loan facility"), and a $300.0 million term loan facility that will mature on August 17, 2023 (our "five yearterm loan facility"). Borrowings under the three year term loan facility and the five year term loan facility were used to pay off all of the outstandingprincipal, interest and related fees with respect to each of the two $250.0 million senior unsecured term loan facilities, and the $400.0 million seniorunsecured term loan facility.On May 2, 2019, we completed an offering of 5.250% senior notes with a $500.0 million aggregate principal amount due in 2029 (the "2029 notes").The net proceeds from the sale of the 2029 notes was primarily used to repay borrowings under the Company's revolving credit facility and for generalcorporate purposes, which included share repurchases, dividends, acquisitions, working capital and capital expenditures.AcquisitionsOn October 20, 2017, the Company acquired the outstanding stock of Dashboard Dealership Enterprises, a provider of executive reporting solutionsfor auto dealers.On April 3, 2018, the Company acquired the membership interests of Progressus Media LLC, a provider of mobile advertising solutions fordealerships, agencies, and automotive marketing companies.30On September 14, 2018, the Company acquired the equity interests of ELEAD. ELEAD’s automotive customer relationship management ("CRM")software and call center solutions enable interaction between sales, service and marketing operations to provide dealers with an integrated customeracquisition and retention platform.Adoption of Accounting Standard Updates related to Revenue from Contracts with Customers and related ASUsOn July 1, 2018, we adopted Accounting Standard Update ("ASU") 2014-09, "Revenue from Contracts with Customers," and related ASUs ("ASC606") which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes mostcurrent revenue recognition guidance, including industry-specific guidance using the modified retrospective approach. Results for reporting periodsbeginning after July 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the accountingstandards in effect for the prior period. For additional information, refer to Item 8 of Part II, "Financial Statements and Supplementary Data - Note 6 -Revenue" of this Annual Report on Form 10-K.Tax Cuts and Jobs Act of 2017On December 22, 2017, the Tax Cuts and Jobs Act ("Tax Reform Act") was enacted into law. The Tax Reform Act significantly revises the U.S.corporate income tax laws by, among other things, reducing the corporate income tax rate from 35.0% to 21.0%. For additional information, refer to Item 8 ofPart II, "Financial Statements and Supplementary Data - Note 10 - Income Taxes" of this Annual Report on Form 10-K. Key Performance MeasuresWe regularly review the following key performance measures in evaluating our business results, identifying trends affecting our business, andmaking operating and strategic decisions:Dealer Management System Customer Sites. We track the number of retail customer sites with an active DMS that sell vehicles in automotive andadjacent markets as an indicator of our opportunity set for generating subscription revenue. We consider a DMS to be active if we have billed a subscriptionfee for that solution during the most recently ended calendar month. Adjacent markets include heavy truck dealerships that provide vehicles to the over-the-road trucking industry, recreation dealerships in the motorcycle, marine, and recreational vehicle industries, and heavy equipment dealerships in theagriculture and construction equipment industries.Average Revenue Per DMS Customer Site. Average revenue per DMS customer site is an indicator of the scope of adoption of our solutions by DMScustomers, and we monitor changes in this metric to measure the effectiveness of our strategy to deepen our relationships with our current customer basethrough upgrading and expanding solutions. We calculate average revenue per DMS customer site by dividing the revenue generated from our solutions, inan applicable period by the average number of DMS customer sites in the same period. The metric excludes subscription revenue generated by customers notincluded in our DMS customer site count as well as subscription revenue related to certain installation and training activities that is deferred then recognizedas revenue over the life of the contract. Revenue underlying this metric is based on budgeted foreign exchange rates. When we discuss growth in averagerevenue per DMS customer site, revenue for the comparable prior period has been adjusted to reflect budgeted foreign exchange rates for the current period.Non-GAAP MeasuresThroughout the following results of operations discussions, we disclose certain financial measures for our consolidated and operating segmentresults on both a GAAP and a non-GAAP (adjusted) basis. The non-GAAP financial measures disclosed should be viewed in addition to, and not as analternative to, results prepared in accordance with GAAP. Our use of each of the following non-GAAP financial measures may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures, or reconcile them to thecomparable GAAP financial measures, in the same way.31Non-GAAP Financial MeasureComparable GAAP Financial MeasureAdjusted earnings before income taxesEarnings before income taxesAdjusted provision for income taxesProvision for income taxesAdjusted net earnings attributable to CDKNet earnings attributable to CDKAdjusted diluted earnings attributable to CDK per shareDiluted earnings attributable to CDK per shareAdjusted EBITDANet earnings attributable to CDKAdjusted EBITDA marginNet earnings attributable to CDK marginConstant currency adjusted revenuesRevenuesConstant currency adjusted earnings before income taxesEarnings before income taxesWe use adjusted earnings before income taxes, adjusted provision for income taxes, adjusted net earnings attributable to CDK, adjusted dilutedearnings attributable to CDK per share, adjusted EBITDA and adjusted EBITDA margin internally to evaluate our performance on a consistent basis, becausethe measures adjust for the impact of certain items that we believe do not directly reflect our underlying operations. By adjusting for these items we believewe have more precise inputs for use as factors in (i) our budgeting process, (ii) making financial and operational decisions, (iii) evaluating ongoing segmentand overall operating performance on a consistent period-to-period basis and relative to our competitors, (iv) target leverage calculations, (v) debt covenantcalculations, and (vi) determining incentive-based compensation.We believe our non-GAAP financial measures are helpful to users of the financial statements because they (i) provide investors with meaningfulsupplemental information regarding financial performance by excluding certain items, (ii) permit investors to view performance using the same tools thatmanagement uses, and (iii) otherwise provide supplemental information that may be useful to investors in evaluating our ongoing operating results on aconsistent basis. We believe that the presentation of these non-GAAP financial measures, when considered in addition to the corresponding GAAP financialmeasures and the reconciliations to those measures disclosed below, provides investors with a better understanding of the factors and trends affecting ourbusiness than could be obtained absent these disclosures.We review revenues and adjusted earnings before income taxes on a constant currency basis to understand underlying business trends. To presentthese results on a constant currency basis, current period results for entities reporting in currencies other than the U.S. dollar were translated into U.S. dollarsusing the average monthly exchange rates for the comparable prior period. As a result, constant currency results neutralize the effects of foreign currency.We incorporated additional adjustments within our calculations of non-GAAP financial measures where management has deemed it appropriate tobetter reflect our underlying operations. These adjustments are inconsistent in amount and frequency and do not directly reflect our underlying operations.Therefore, management believes that excluding such information provides us with a better understanding of our ongoing operating performance acrossperiods. Prior period information has been revised to conform to the new presentation.Fiscal 2019 Modifications:•Effective July 1, 2018, we modified our presentation of adjusted earnings before income taxes, adjusted provision for income taxes, adjusted netearnings attributable to CDK, and adjusted diluted net earnings attributable to CDK per share to include adjustments for amortization of acquiredintangible assets. Although we exclude amortization of acquired intangible assets from our non-GAAP measure, we believe that it is important forthe users of the financial statements to understand that the associated intangible assets contribute to revenue generation.•Effective October 1, 2018, we modified our presentation of adjusted earnings before income taxes, adjusted provision for income taxes, adjusted netearnings attributable to CDK, adjusted diluted earnings attributable to CDK per share, and adjusted EBITDA to include adjustments for impairmentof intangible assets.•During the fourth quarter of fiscal 2019, we modified our presentation of:i.adjusted earnings before income taxes, adjusted provision for income taxes, adjusted net earnings attributable to CDK, adjusted diluted netearnings attributable to CDK per share, and adjusted EBITDA to include adjustments for loss from equity method investment;ii.adjusted provision for income taxes, adjusted net earnings attributable to CDK, adjusted diluted net earnings attributable to CDK per share toinclude adjustments for a decrease in valuation allowance; and32iii.adjusted net earnings attributable to CDK, adjusted diluted net earnings attributable to CDK per share, and adjusted EBITDA to includeadjustments for loss (earnings) from discontinued operations, net of taxes.Results of OperationsWe review results on a constant currency basis to understand underlying business trends. To present these results on a constant currency basis,current period results for entities reporting in currencies other than the U.S. dollar were translated into U.S. dollars using the average monthly exchange ratefor the comparable prior period. As a result, constant currency results neutralize the effects of foreign currency.Fiscal 2019 Compared to Fiscal 2018The following is a discussion of the results of our consolidated results of operations for fiscal 2019 and 2018, respectively. For a discussion of ouroperations by segment, see "Analysis of Reportable Segments" below.The table below presents consolidated statements of operations for the periods indicated and the dollar change and percentage change betweenperiods. Years Ended June 30, Change 2019 2018 $ %Revenues$1,914.8 $1,798.0 $116.8 6 %Costs of revenues899.8 854.5 45.3 5 %Selling, general and administrative expenses444.7 441.2 3.5 1 %Restructuring expenses28.0 20.6 7.4 36 %Litigation provision90.0 — 90.0 n/mTotal expenses1,462.5 1,316.3 146.2 11 %Operating earnings452.3 481.7 (29.4) (6)%Interest expense(139.1) (95.9) (43.2) (45)%Loss from equity method investment(17.0) — (17.0) n/mOther income, net7.7 13.4 (5.7) (43)%Earnings before income taxes303.9 399.2 (95.3) (24)%Margin %15.9% 22.2% Provision for income taxes(62.2) (88.1) 25.9 29 %Effective tax rate20.5% 22.1% Net earnings from continuing operations241.7 311.1 (69.4) (22)%(Loss) Earnings from discontinued operations, net of taxes(109.8) 77.6 (187.4) n/mNet earnings131.9 388.7 (256.8) (66)%Less: net earnings attributable to noncontrolling interest7.9 7.9 — — %Net earnings attributable to CDK$124.0 $380.8 $(256.8) (67)%Revenues. Revenues for fiscal 2019 increased by $116.8 million as compared to fiscal 2018. The CDKNA segment contributed $151.3 million,partially offset by declines in the CDKI segment of $34.5 million. The impact of foreign exchange rates on revenues was a decrease of $18.5 million. Theforeign exchange rate impact was primarily due to the strength of the Euro, Canadian dollar, British pound, and South African rand against the U.S. dollar.Cost of Revenues. Cost of revenues for fiscal 2019 increased by $45.3 million as compared to fiscal 2018 which includes a $24.7 million decreasefor costs to fulfill that were deferred and costs related to revenue that was recognized prior to July 1, 2018 upon adoption of ASC 606. The constant currencyimpact of foreign exchange rates on cost of revenues was a decrease of $8.6 million. Cost of revenues increased due to the ELEAD acquisition, a $12.0million impairment charge related to write-off of certain intangible assets within the CDKNA segment, higher costs relating to investments in strategic growthinitiatives, higher transaction and integration-related costs and incentive compensation; and a $2.6 million impairment charge related to write-off of certainlong-lived assets associated with exiting a facility within the Other segment. These increases were partially offset by operating efficiencies obtained from thebusiness transformation plan, and lower other business transformation expenses. Cost of revenues include expenses to research, develop, and deploy new andenhanced solutions for33our customers of $79.5 million and $115.0 million for fiscal 2019 and 2018, respectively, representing 4.2% and 6.4% of revenues, respectively.Selling, General and Administrative Expenses. Selling, general and administrative expenses for fiscal 2019 increased $3.5 million as compared tofiscal 2018. ASC 606 did not have a significant impact on selling, general and administrative expenses in fiscal 2019. The constant currency impact offoreign exchange rates on selling, general and administrative expenses was a decrease of $4.1 million. Selling, general and administrative expenses increaseddue to the ELEAD acquisition, higher legal and other expenses related to regulatory and competition matters, higher officer transitions related expense, and a$2.9 million impairment charge related to write-off of certain intangible assets within the CDKNA segment. These increases were partially offset by operatingefficiencies obtained from the business transformation plan, costs to implement the new revenue recognition standard in the prior year, lower transaction andintegration related expenses and other business transformation expenses, and a net benefit to true-up contingent consideration liabilities related to prioracquisitions.Restructuring Expenses. Restructuring expenses related to the business transformation plan for fiscal 2019 increased $7.4 million as compared tofiscal 2018 and relate to the business transformation plan we initiated in fiscal 2015.Litigation Provision. During fiscal 2019, the Company recorded a $90.0 million litigation provision related to antitrust lawsuits. Additionalinformation on litigation provision is contained in Item 8 of Part II, "Financial Statements and Supplementary Data - Note 16 - Commitments andContingencies."Interest Expense. Interest expense for fiscal 2019 increased $43.2 million as compared to fiscal 2018 largely due to higher average debt levels andinterest rate in fiscal 2019 compared to fiscal 2018.Loss from Equity Method Investment. During fiscal 2019, the Company recorded a $17.0 million loss from equity method investment related totermination of a joint-venture contract.Other Income, Net. Other income, net for fiscal 2019 decreased by $5.7 million as compared to fiscal 2018 primarily due to lower interest income infiscal 2019 and a recovery of an impaired non-operating receivable in fiscal 2018.Provision for Income Taxes. The effective tax rate for fiscal 2019 was 20.5% as compared to 22.1% for fiscal 2018. The effective tax rate wasimpacted by $2.8 million of net expense in fiscal 2019 and $18.5 million of net benefit in fiscal 2018 for one-time adjustments related to the Tax Reform Act.In fiscal 2019, the adjustments to the valuation allowance for the capital loss carryforwards including a $14.8 million decrease related to the capital gain thatwe expect to recognize in conjunction with the sale of the assets of the Digital Marketing Business which were classified as held for sale in the fourth quarterof fiscal 2019, and a $4.3 million increase related to a new capital loss generated in the fourth quarter of fiscal 2019 resulting from the termination of a jointventure agreement resulted in a net favorable impact to the effective tax rate. In addition, the effective tax rate for fiscal 2019 and 2018 was favorablyimpacted by $1.4 million and $5.1 million of excess tax benefits, respectively. The federal statutory income tax rate was 21.0% in fiscal 2019 compared to28.1% in fiscal 2018.Loss (Earnings) from Discontinued Operations, Net of Taxes. During the fourth quarter of fiscal year 2019, the Company committed to a plan todivest Digital Marketing business which is comprising: (a) all of the assets of ANA; and (b) certain assets of our CDKNA segment related to mobileadvertising solutions and website services. Loss (Earnings) from discontinued operations, net of taxes reflects the results of the Digital Marketing Business.During fiscal 2019, the Digital Marketing Business was impacted by a $168.7 million goodwill impairment charge. In addition, the DigitalMarketing Business generated lower earnings due to a decline in our advertising business revenues which were impacted by a reduction in OEM-fundedadvertising placements, local marketing association internet advertising placements, and dealer spend; and decline in our website business revenues.Net Earnings Attributable to CDK. Net earnings attributable to CDK for fiscal 2019 decreased $256.8 million as compared to fiscal 2018. Thedecrease in net earnings attributable to CDK was primarily due to the factors previously discussed.Consolidated Non-GAAP ResultsThe tables below present the reconciliation of the most directly comparable GAAP measures on both an ASC 606 and an ASC 605 basis to constantcurrency revenues, constant currency adjusted earnings before income taxes, adjusted provision for income taxes, adjusted net earnings attributable to CDK,and adjusted diluted earnings attributable to CDK per share.34 Years Ended June 30, 2019 2018 ASC 605 Change ASC 606 ASC 605 $ %Revenues (1)$1,914.8 $1,945.8 $1,798.0 $147.8 8 %Impact of exchange rates18.5 19.4 — 19.4 Constant currency revenues$1,933.3 $1,965.2 $1,798.0 $167.2 9 % Earnings before income taxes (1)$303.9 $309.7 $399.2 $(89.5) (22)%Margin %15.9% 15.9% 22.2% Impairment of intangible assets (2)14.9 14.9 — 14.9 Restructuring expenses (1) (3)28.0 28.0 20.6 7.4 Other business transformation expenses (1) (3)20.9 20.9 45.0 (24.1) Total stock-based compensation (1) (4)30.5 30.5 33.4 (2.9) Amortization of acquired intangible assets (1) (5)15.3 15.3 11.1 4.2 Transaction and integration-related costs (1) (6)13.2 13.2 15.6 (2.4) Officer transition expense (7)6.4 6.4 0.6 5.8 Legal and other expenses related to regulatory and competition matters (8)111.2 111.2 7.4 103.8 Loss from equity method investment (9)17.0 17.0 — 17.0 Tax matters indemnification gain (10)— — (0.4) 0.4 Adjusted earnings before income taxes (1)$561.3 $567.1 $532.5 $34.6 6 %Adjusted margin %29.3% 29.1% 29.6% Impact of exchange rates6.0 6.5 — 6.5 Constant currency adjusted earnings before income taxes$567.3 $573.6 $532.5 $41.1 8 % Years Ended June 30, 2019 2018 ASC 605 Change ASC 606 ASC 605 $ %Provision for income taxes (1)$62.2 $64.2 $88.1 $(23.9) (27)%Effective tax rate20.5% 20.7% 22.1% Income tax effect of pre-tax adjustments (11)57.4 57.4 40.4 17.0 Decrease in valuation allowance (12)14.8 14.8 — 14.8 Excess tax benefit from stock-based compensation (13)1.4 1.4 5.1 (3.7) Pre spin-off filed return adjustment (14)— — 0.4 (0.4) Impact of U.S. tax reform (15)(2.8) (2.8) 18.5 (21.3) Adjusted provision for income taxes (1)$133.0 $135.0 $152.5 $(17.5) (11)%Adjusted effective tax rate23.7% 23.8% 28.6% 35 Years Ended June 30, 2019 2018 ASC 605 Change ASC 606 ASC 605 $ %Net earnings$131.9 $136.2 $388.7 $(252.5) (65)%Less: net earnings attributable to noncontrolling interest7.9 7.9 7.9 Net earnings attributable to CDK124.0 128.3 380.8 (252.5) (66)%Loss (Earnings) from discontinued operations, net of taxes (16)109.8 109.3 (77.6) 186.9 Impairment of intangible assets (2)14.9 14.9 — 14.9 Restructuring expenses (1) (3) (17)27.9 27.9 20.4 7.5 Other business transformation expenses (1) (3) (17)20.9 20.9 44.8 (23.9) Total stock-based compensation (1) (4) (17)30.5 30.5 33.3 (2.8) Amortization of acquired intangible assets (1) (5) (17)15.0 15.0 10.8 4.2 Transaction and integration-related costs (1) (6)13.2 13.2 15.6 (2.4) Officer transition expense (7)6.4 6.4 0.6 5.8 Legal and other expenses related to regulatory and competition matters (8) (17)111.0 111.0 7.3 103.7 Loss from equity method investment (9)17.0 17.0 — 17.0 Tax matters indemnification gain (10)— — (0.4) 0.4 Income tax effect of pre-tax adjustments (11)(57.4) (57.4) (40.4) (17.0) Decrease in valuation allowance (12)(14.8) (14.8) — (14.8) Excess tax benefit from stock-based compensation (13)(1.4) (1.4) (5.1) 3.7 Pre spin-off filed return adjustment (14)— — (0.4) 0.4 Impact of U.S. tax reform (15)2.8 2.8 (18.5) 21.3 Adjusted net earnings attributable to CDK (1)$419.8 $423.6 $371.2 $52.4 14 % Years Ended June 30, 2019 2018 ASC 605 Change ASC 606 ASC 605 $ %Diluted earnings attributable to CDK per share$0.98 $1.02 $2.78 $(1.76) (63)%Loss (Earnings) from discontinued operations, net of taxes (16)0.87 0.86 (0.57) Impairment of intangible assets (2)0.12 0.12 — Restructuring expenses (1) (3) (17)0.22 0.22 0.15 Other business transformation expenses (1) (3) (17)0.17 0.17 0.33 Total stock-based compensation (1) (4) (17)0.24 0.24 0.25 Amortization of acquired intangible assets (1) (5) (17)0.12 0.12 0.08 Transaction and integration-related costs (1) (6)0.10 0.10 0.12 Officer transition expense (7)0.05 0.05 — Legal and other expenses related to regulatory and competition matters (8) (17)0.88 0.88 0.05 Loss from equity method investment (9)0.13 0.13 — Tax matters indemnification gain (10)— — — Income tax effect of pre-tax adjustments (11)(0.45) (0.45) (0.30) Decrease in valuation allowance (12)(0.12) (0.12) — Excess tax benefit from stock-based compensation (13)(0.01) (0.01) (0.04) Pre spin-off filed return adjustment (14)— — — Impact of U.S. tax reform (15)0.02 0.02 (0.14) Adjusted diluted earnings attributable to CDK per share$3.32 $3.35 $2.71 $0.64 24 % Weighted-average common shares outstanding: Diluted126.4 126.4 136.8 36(1) Excludes amounts attributable to discontinued operations.(2) Impairment of intangible assets consists of the write-off of certain intangible assets within the CDKNA segment and is reported within cost of revenuesand selling, general and administrative expenses.(3) Restructuring expense recognized in connection with our business transformation plan. Other business transformation expenses incurred in connectionwith our business transformation plan and included within cost of revenues and selling, general and administrative expenses.(4) Total stock-based compensation expense included within cost of revenues and selling, general and administrative expenses.(5) Amortization of acquired intangible assets consists of amortization of intangible assets such as customer lists, purchased software, and trademarksacquired in connection with business combinations. Although we exclude amortization of acquired intangible assets from our non-GAAP measure, webelieve that it is important for the users of the financial statements to understand that the associated intangible assets contribute to revenue generation.(6) Transaction and integration-related expenses include: (i) legal, accounting, outside service fees, and other costs incurred in connection with assessmentand integration of acquisitions and other strategic business opportunities; and (ii) post-close adjustments to acquisition-related contingent consideration,reported within cost of revenues and selling, general and administrative expenses.(7) Officer transition expense includes severance expense in connection with officer departures included within selling, general and administrative expenses.(8) Legal and other expenses, including litigation provision, related to regulatory and competition matters included within selling, general andadministrative expenses and litigation provision.(9) Loss from equity method investment in connection with termination of a joint-venture contract.(10) Net gain recorded within other income, net associated with an indemnification receivable from ADP for pre spin-off tax periods in accordance with taxmatters agreement.(11) Income tax effect of pre-tax adjustments calculated at applicable statutory rates.(12) Decrease in valuation allowance associated with a deferred tax asset for a capital loss carryforward which the Company expects to utilize in connectionwith the plan to divest the Digital Marketing Business.(13) Excess tax benefit from stock-based compensation.(14) Net income tax benefit to adjust the liability for pre spin-off tax returns related to the gain.(15) As a result of the Tax Reform Act, a $3.4 million deferred tax charge associated with executive compensation limitations partially offset by $0.6 millionbenefit due to a true-up to the one-time transition tax impacted fiscal 2019. An estimated one-time tax benefit of $26.2 million from the revaluation of the netdeferred tax liability partially offset by an estimated one-time expense of $7.7 million associated with undistributed foreign earnings impacted fiscal 2018.(16) Loss (Earnings) from discontinued operations, net of taxes associated with the Company's plan to divest the Digital Marketing Business.(17) The portion of expense related to noncontrolling interest of $0.1 million, $0.3 million and $0.2 million has been removed from restructuring expenses,amortization of acquired intangible assets, and legal and other expenses related to regulatory and competition matters, respectively, in fiscal 2019. Theportion of expense related to noncontrolling interest of $0.2 million, $0.2 million, $0.3 million, $0.1 million, and $0.1 million has been excluded fromrestructuring expenses, other business transformation expenses, amortization of acquired intangible assets, stock-based compensation expenses, and legal andother expenses related to regulatory and competition matters, respectively, in fiscal 2018.Adjusted Earnings Before Income Taxes. Adjusted earnings before income taxes for fiscal 2019 increased $34.6 million as compared to fiscal 2018.ASC 605 adjusted margin decreased from 29.6% to 29.1%. ASC 605 constant currency impact of foreign exchange rates on adjusted earnings before incometaxes was a decrease of $6.5 million. ASC 605 adjusted earnings before income taxes were favorably impacted by operating efficiencies obtained from ourbusiness transformation plan, primarily related to lower-headcount and geographic mix, contribution from the ELEAD acquisition, and costs to implementthe new revenue recognition standard in prior year; partially offset by higher interest expense, investments in strategic growth initiatives, and incentivecompensation.Adjusted Provision for Income Taxes. ASC 605 adjusted effective tax rate for fiscal 2019 was 23.8% impacted by a lower federal statutory tax rate ascompared to 28.6% for fiscal 2018.37Adjusted Net Earnings Attributable to CDK. ASC 605 adjusted net earnings attributable to CDK for fiscal 2019 increased $52.4 million as comparedto fiscal 2018. The increase in adjusted net earnings attributable to CDK was primarily due to the items discussed above in adjusted earnings before incometaxes, partially offset by the associated tax effect.The table below presents the reconciliation of net earnings attributable to CDK to adjusted EBITDA. Years Ended June 30, Change 2019 2018 ASC 605 ASC 606 ASC 605 $ %Net earnings attributable to CDK$124.0 $128.3 $380.8 $(252.5) (66)%Margin %6.5% 6.6% 21.2% Net earnings attributable to noncontrolling interest (2)7.9 7.9 7.9 — Loss (Earnings) from discontinued operations, net of taxes (3)109.8 109.3 (77.6) 186.9 Provision for income taxes (1) (4)62.2 64.2 88.1 (23.9) Interest expense (5)139.1 139.1 95.9 43.2 Depreciation and amortization (1) (6)89.8 89.8 70.8 19.0 Impairment of intangible assets (7)14.9 14.9 — 14.9 Total stock-based compensation (1) (8)30.5 30.5 33.4 (2.9) Restructuring expenses (1) (9)28.0 28.0 20.6 7.4 Other business transformation expenses (1) (9)20.9 20.9 44.8 (23.9) Transaction and integration-related costs (1) (10)13.2 13.2 15.6 (2.4) Officer transition expense (11)6.4 6.4 0.6 5.8 Legal and other expenses related to regulatory and competition matters (12)111.2 111.2 7.4 103.8 Loss from equity method investment (13)17.0 17.0 — 17.0 Tax matters indemnification gain (14)— — (0.4) 0.4 Adjusted EBITDA$774.9 $780.7 $687.9 $92.8 13 %Adjusted margin %40.5% 40.1% 38.3% (1) Excludes amounts attributable to discontinued operations.(2) Net earnings attributable to noncontrolling interest included within the financial statements.(3) Loss (Earnings) from discontinued operations, net of taxes associated with the Company's plan to divest the Digital Marketing Business.(4) Provision for income taxes included within the financial statements.(5) Interest expense included within the financial statements.(6) Depreciation and amortization included within the financial statements.(7) Impairment of intangible assets consists of the write-off of certain intangible assets within the CDKNA segment and is reported within cost of revenuesand selling, general and administrative expenses.(8) Total stock-based compensation expense recognized.(9) Restructuring expense recognized in connection with our business transformation plan in fiscal 2019 and 2018. Other business transformation expensesincurred in connection with our business transformation plan and included within cost of revenues and selling, general and administrative expenses. Otherbusiness transformation expenses exclude $0.2 million of accelerated depreciation expense for fiscal 2018.(10) Transaction and integration-related expenses include: (i) legal, accounting, outside service fees, and other costs incurred in connection with assessmentand integration of acquisitions and other strategic business opportunities; and (ii) post-close adjustments to acquisition-related contingent consideration,reported within cost of revenues and selling, general and administrative expenses.(11) Officer transition expense includes severance expense in connection with officer departures is included within selling, general and administrativeexpenses.(12) Legal and other expenses, including litigation provision, related to regulatory and competition matters included within selling, general andadministrative expenses and litigation provision.38(13) Loss from equity method investment recognized in connection with termination of a joint-venture contract.(14) Net gain recorded within other income, net associated with an indemnification receivable from ADP for pre spin-off tax periods in accordance with taxmatters agreement.Adjusted EBITDA. ASC 605 adjusted EBITDA for fiscal 2019 increased $92.8 million as compared to fiscal 2018. ASC 605 adjusted marginincreased from 38.3% to 40.1%. Adjusted EBITDA was favorably impacted by operating efficiencies obtained from initiatives under our businesstransformation plan, primarily related to lower-headcount and geographic mix, contribution from the ELEAD acquisition, and costs to implement the newrevenue recognition standard in the prior year; partially offset by higher investments in strategic growth initiatives, and incentive compensation.Analysis of Reportable SegmentsDuring the fourth quarter of fiscal year 2019, we committed to a plan to divest: (a) all of the assets of ANA which we previously reported as areportable segment; and (b) certain assets of CDKNA related to mobile advertising solutions and website services (collectively, the "Digital MarketingBusiness"). The Digital Marketing Business is presented as discontinued operations. Additional information on discontinued operations is contained in the"Consolidated Results of Operations" of this section and Item 8 of Part II, "Financial Statements and Supplementary Data - Note 4 - Discontinued Operations."The following is a discussion of the results of our continuing operations by reportable segment for fiscal 2019 and 2018. Certain expenses arecharged to the reportable segments at a standard rate for management reporting purposes. Other costs are charged to the reportable segments based onmanagement’s responsibility for the applicable costs.CDK North AmericaThe table below presents the reconciliation of revenues to constant currency revenues, and earnings before income taxes to constant currencyadjusted earnings before income taxes for the CDKNA segment. Refer to the footnotes in "Consolidated Non-GAAP Results" for additional information onthe adjustments presented below. Years Ended June 30, Change 2019 2018 ASC 605 ASC 606 ASC 605 $ %Revenues$1,593.0 $1,598.2 $1,441.7 $156.5 11 %Impact of exchange rates4.0 4.0 — 4.0 Constant currency revenues$1,597.0 $1,602.2 $1,441.7 $160.5 11 % Earnings before income taxes$517.5 $505.0 $576.4 $(71.4) (12)%Margin %32.5% 31.6% 40.0% Transaction and integration-related costs11.2 11.2 15.6 (4.4) Amortization of acquired intangible assets14.6 14.6 7.6 7.0 Impairment of intangible assets14.9 14.9 — 14.9 Legal and other expenses related to regulatory and competition matters111.2 111.2 7.4 103.8 Loss from equity method investment17.0 17.0 — 17.0 Adjusted earnings before income taxes$686.4 $673.9 $607.0 $66.9 11 %Adjusted margin %43.1% 42.2% 42.1% Impact of exchange rates2.5 2.3 — 2.3 Constant currency adjusted earnings before income taxes$688.9 $676.2 $607.0 $69.2 11 %39The table below presents revenue disaggregation for the CDKNA segment for ASC 606 and ASC 605 for fiscal 2019 and ASC 605 for fiscal 2018. Inconnection with the adoption of ASC 606, we revised the presentation of certain sources of revenue as on-site license and installation and other. Prior perioddata has not been restated to reflect this new presentation. Years Ended June 30, Change 2019 2018 ASC 605 ASC 606 ASC 605 $ %Revenues: Subscription$1,283.3 $1,291.8 $1,176.4 $115.4 10 %On-site license and installation7.9 — — — — %Transaction162.5 162.9 164.0 (1.1) (1)%Other139.3 143.5 101.3 42.2 42 %Total revenues$1,593.0 $1,598.2 $1,441.7 $156.5 11 %Revenues. CDKNA ASC 606 revenues were $5.2 million less than ASC 605 revenues for fiscal 2019 related to the change in timing of recognitionunder ASC 606 where on-site license and installation revenues are being recorded up-front upon installation instead of ratably over time.CDKNA ASC 605 revenues for fiscal 2019 increased $156.5 million as compared to fiscal 2018 and includes an unfavorable currency impact of $4.0million.Subscription revenues grew due to the ELEAD acquisition, an increase in average revenue per DMS customer site primarily due to pricing andhigher layered application sales, and a net increase in DMS customer site count which increased from 14,557 sites as of June 30, 2018 to 14,681 sites as ofJune 30, 2019. Other revenues increased $42.2 million primarily due to the ELEAD acquisition. Transaction revenues decreased due to a decline in revenuesgenerated from automotive equity mining.Earnings before Income Taxes. CDKNA ASC 606 earnings before income taxes were $12.5 million higher compared to ASC 605 earnings beforeincome taxes for fiscal 2019 primarily due to timing of revenues discussed above and additional costs to fulfill that are now deferred.CDKNA ASC 605 earnings before income taxes decreased by $71.4 million for fiscal 2019 as compared to fiscal 2018 and includes an unfavorablecurrency impact of $2.3 million. Margin decreased from 40.0% to 31.6%.CDKNA ASC 605 earnings before income taxes for fiscal 2019 decreased compared to fiscal 2018 primarily due to higher legal and other expensesrelated to regulatory and competition matters which includes a $90.0 million litigation provision related to anti-trust lawsuits, a $17.0 million loss fromequity method investment related to termination of a joint-venture contract, a $14.9 million impairment charge related to the write-off of certain intangibleassets, investments related to strategic growth initiatives, higher incentive compensation and amortization of acquired intangibles, and a net benefit fromrecovery of a non-operating receivable in prior year. These decreases were partially offset by operating efficiencies driven by our business transformationplan, contribution from the ELEAD acquisition and other subscription revenue growth noted above, lower transition and integration related expenses, and anet benefit to true-up the contingent consideration liabilities related to prior acquisitions.40CDK InternationalThe table below presents the reconciliation of revenues to constant currency revenues, and earnings before income taxes to constant currencyadjusted earnings before income taxes for the CDKI segment. Refer to the footnotes in "Consolidated Non-GAAP Results" for additional information on theadjustments presented below. Years Ended June 30, Change 2019 2018 ASC 605 ASC 606 ASC 605 $ %Revenues$321.8 347.6 $356.3 $(8.7) (2)%Impact of exchange rates14.5 15.4 — 15.4 Constant currency revenues$336.3 $363.0 $356.3 $6.7 2 % Earnings before income taxes$77.1 $95.4 $97.7 $(2.3) (2)%Margin %24.0% 27.4% 27.4% Amortization of acquired intangible assets0.7 0.7 3.5 (2.8) Adjusted earnings before income taxes77.8 96.1 101.2 (5.1) (5)%Adjusted Margin %24.2% 27.6% 28.4% Impact of exchange rates3.6 4.3 — 4.3 Constant currency adjusted earnings before income taxes$81.4 $100.4 $101.2 $(0.8) (1)%The table below presents revenue disaggregation for the CDKI segment for ASC 606 and ASC 605 for fiscal 2019 and ASC 605 for fiscal 2018. Inconnection with the adoption of ASC 606, we revised the presentation of certain sources of revenue as on-site license and installation and other. Prior perioddata has not been restated to reflect this new presentation. Years Ended June 30, Change 2019 2018 ASC 605 ASC 606 ASC 605 $ %Revenues: Subscription$257.3 $347.6 $356.3 $(8.7) (2)%On-site license and installation47.1 — — — — %Other17.4 — — — — %Total revenues$321.8 $347.6 $356.3 $(8.7) (2)%Revenues. CDKI ASC 606 revenues were $25.8 million less than ASC 605 revenues for fiscal 2019 primarily related to changes in the timing ofrevenue recognition under ASC 606 where on-site license and installation revenues are being recorded up-front upon installation instead of ratably over time.CDKI ASC 605 revenues decreased by $8.7 million for fiscal 2019 as compared to fiscal 2018. CDKI ASC 605 revenues were impacted by thestrength of the Euro, the British pound, and South African rand against the U.S. dollar, which contributed to a decrease of $15.4 million.CDKI's growth in ASC 605 revenues on a constant currency basis was primarily due to increased average revenue per customer site despite adecrease in DMS customer site count from 13,274 sites for fiscal 2018 to 13,098 sites for fiscal 2019, partially offset by acceleration of deferred revenue dueto an early contract termination during fiscal 2018 and timing of certain other revenues.Earnings before Income Taxes. CDKI ASC 606 earnings before income taxes were $18.3 million less than ASC 605 due to timing of revenuesdiscussed above and additional costs to fulfill that are now deferred.41CDKI ASC 605 earnings before income taxes decreased by $2.3 million for fiscal 2019 as compared to fiscal 2018. Margin remained stable at 27.4%for both years. The constant currency impact of foreign exchange rates on earnings before income taxes, due to the strength of the Euro, British pound, andSouth African rand against U.S. dollar, was a decrease of $4.3 million.CDKI ASC 605 earnings before income taxes on a constant currency basis increased primarily due to increase in revenues noted above and loweramortization of acquired intangible assets, partially offset by investments related to strategic growth initiatives.Other SegmentThe table below presents the reconciliation of loss before income taxes to constant currency adjusted loss before income taxes for the Other segment.There was no impact of adopting ASC 606 on the Other segment. Refer to the footnotes in "Consolidated Non-GAAP Results" for additional information onthe adjustments presented below. Years Ended June 30, Change 2019 2018 $ %Loss before income taxes$(290.7) $(274.9) $(15.8) (6)%Restructuring expenses28.0 20.6 7.4 Other business transformation expenses20.9 45.0 (24.1) Total stock-based compensation30.5 33.4 (2.9) Transaction and integration-related costs2.0 — 2.0 Officer transition expense6.4 0.6 5.8 Tax matters indemnification gain, net— (0.4) 0.4 Adjusted loss before income taxes$(202.9) $(175.7) $(27.2) (15)%Impact of exchange rates(0.1) — (0.1) Constant currency adjusted loss before income taxes$(203.0) $(175.7) $(27.3) (16)%The primary components of the Other loss before income taxes are certain costs that are not allocated to our reportable segments, such as interestexpense, stock-based compensation expense, costs attributable to the business transformation plan, and certain unallocated expenses.Loss before Income Taxes. The Other loss before income taxes increased by $15.8 million for fiscal 2019 as compared to fiscal 2018. The Other lossbefore income taxes was unfavorably impacted by increased interest expense largely due to higher average debt levels and interest rate during fiscal 2019,higher restructuring and officer transition expenses, and a $3.3 million impairment charge for certain long-lived assets associated with exiting certainfacilities. These increases were partially offset by lower other business transformation expenses, stock-based compensation expenses, and costs to implementthe new revenue recognition standard in prior year.42Fiscal 2018 Compared to Fiscal 2017The following is a discussion of the results of our consolidated results of operations for fiscal 2018 and 2017. For a discussion of our operations bysegment, see "Analysis of Reportable Segments" below.The table below presents consolidated statements of operations data for the periods indicated and the dollar change and percentage change betweenperiods. Years Ended June 30, Change 2018 2017 $ %Revenues$1,798.0 $1,730.7 $67.3 4 %Costs of revenues854.5 898.2 (43.7) (5)%Selling, general and administrative expenses441.2 433.2 8.0 2 %Restructuring expenses20.6 17.7 2.9 16 %Total expenses1,316.3 1,349.1 (32.8) (2)%Operating earnings481.7 381.6 100.1 26 %Interest expense(95.9) (57.2) (38.7) 68 %Other income, net13.4 3.3 10.1 n/mEarnings before income taxes399.2 327.7 71.5 22 %Margin %22.2% 18.9% Provision for income taxes(88.1) (92.8) 4.7 (5)%Effective tax rate22.1% 28.3% Net earnings from continuing operations311.1 234.9 76.2 32 %Earnings from discontinued operations, net of taxes77.6 67.6 10.0 15 %Net earnings388.7 302.5 86.2 Less: net earnings attributable to noncontrolling interest7.9 6.9 1.0 14 %Net earnings attributable to CDK$380.8 $295.6 $85.2 29 %Revenues. Revenues for fiscal 2018 increased $67.3 million as compared to fiscal 2017. The CDKI segment contributed $44.4 million, the CDKNAsegment contributed $22.9 million. The impact of foreign exchange rates on revenues was an increase of $26.7 million. The foreign exchange rate impact wasprimarily due to the strength of the U.S. dollar against the Euro, British pound, and Canadian dollar.Cost of Revenues. Cost of revenues for fiscal 2018 decreased $43.7 million as compared to fiscal 2017. The impact of foreign exchange rates on costof revenues was an increase of $12.7 million. Cost of revenues was favorably impacted by lower labor-related costs attributable to our business transformationplan primarily related to lower headcount and geographic labor mix, lower incentive compensation, and lower business transformation expenses partiallyoffset by an increase in depreciation and amortization. Cost of revenues include expenses to research, develop, and deploy new and enhanced solutions forour customers of $115.0 million and $125.1 million for fiscal 2018 and 2017, respectively, representing 6.4% and 7.2% of revenues.Selling, General and Administrative Expenses. Selling, general and administrative expenses for fiscal 2018 increased $8.0 million as compared tofiscal 2017. The impact of foreign exchange rates on selling, general and administrative expenses was an increase of $7.2 million. Selling, general andadministrative expenses were favorably impacted by lower labor-related costs attributable to initiatives under our business transformation plan, stock-basedcompensation, lower business transformation expenses, and incentive compensation partially offset by increased expenses due to acquisition transaction andintegration-related expenses, costs to implement the new revenue recognition standard and other outside services, and legal and other expenses related toregulatory and competition matters.Restructuring Expenses. Restructuring expenses related to the business transformation plan for fiscal 2018 increased $2.9 million as compared tofiscal 2017.Interest Expense. Interest expense for fiscal 2018 increased $38.7 million as compared to fiscal 2017 due to the full year impact of borrowings underour 2027 notes issued in May 2017, and the partial year impact of issuing our 2026 notes entered into in June 2018.43Other Income, Net. Other income, net for fiscal 2018 increased by $10.1 million as compared to fiscal 2017 due primarily to a recovery in fiscal 2018of a non-operating receivable that had been impaired in fiscal 2017 upon execution of a licensing and service agreement, higher interest income in fiscal2018, and fluctuations in foreign exchange gains and losses.Provision for Income Taxes. The effective tax rate for fiscal 2018 was 22.1% as compared to 28.3% for fiscal 2017. The effective tax rate for fiscal2018 was favorably impacted by $4.7 million for the current year effect of the reduced corporate income tax rate and $18.5 million for the estimated net one-time Tax Reform Act adjustments. In addition, the effective tax rate for fiscal 2018 and 2017 was favorably impacted by $5.1 million and $13.1 million ofexcess tax benefits, respectively.Earnings from discontinued operations, net of taxes. Earnings from discontinued operations, net of taxes for fiscal 2018 increased by 10.0 million ascompared to fiscal 2017 as our Digital Marketing Business benefited from operating efficiencies obtained from our business transformation plan which werepartially offset by decline in our website business revenues.Net Earnings Attributable to CDK. Net earnings attributable to CDK for fiscal 2018 increased $85.2 million as compared to fiscal 2017. Theincrease in net earnings attributable to CDK was primarily due to the factors previously discussed.Consolidated Non-GAAP ResultsThe tables below present the reconciliation of the most directly comparable GAAP measure on an ASC 605 basis to constant currency revenues,adjusted earnings before income taxes, constant currency adjusted earnings before income taxes, adjusted provision for income taxes, adjusted net earningsattributable to CDK, and adjusted diluted earnings attributable to CDK per share. Years Ended June 30, Change 2018 2017 $ %Revenues (1)$1,798.0 $1,730.7 $67.3 4%Impact of exchange rates(26.7) — (26.7) Constant currency revenues$1,771.3 $1,730.7 $40.6 2% Earnings before income taxes (1)$399.2 $327.7 $71.5 22%Margin %22.2% 18.9% Restructuring expenses (1) (2)20.6 17.7 2.9 Other business transformation expenses (1) (2)45.0 72.2 (27.2) Total stock-based compensation (1) (3)33.4 52.7 (19.3) Amortization of acquired intangible assets (1) (4)11.1 11.5 (0.4) Transaction and integration-related costs (5)15.6 0.7 14.9 Officer transition expense (6)0.6 0.7 (0.1) Legal and other expenses related to regulatory and competition matters (7)7.4 — 7.4 Tax matters indemnification gain (8)(0.4) — (0.4) Adjusted earnings before income taxes (1)$532.5 $483.2 $49.3 10%Adjusted margin %29.6% 27.9% Impact of exchange rates(8.1) — (8.1) Constant currency adjusted earnings before income taxes$524.4 $483.2 $41.2 9%44 Years Ended June 30, Change 2018 2017 $ %Provision for income taxes (1)$88.1 $92.8 $(4.7) (5)%Effective tax rate22.1% 28.3% Income tax effect of pre-tax adjustments (9)40.4 56.4 (16.0) Excess tax benefit from stock-based compensation (10)5.1 13.1 (8.0) Pre spin-off filed tax return adjustment (11)0.4 — 0.4 Impact of U.S. tax reform (12)18.5 — 18.5 Adjusted provision for income taxes (1)$152.5 $162.3 $(9.8) (6)%Adjusted effective tax rate28.6% 33.6% Years Ended June 30, Change 2018 2017 $ %Net earnings$388.7 $302.5 $86.2 28%Less: net earnings attributable to noncontrolling interest$7.9 $6.9 Net earnings attributable to CDK$380.8 $295.6 $85.2 29%Earnings from discontinued operations, net of taxes (13)(77.6) (67.6) (10.0) Restructuring expenses (1) (2) (14)20.4 17.7 2.7 Other business transformation expenses (1) (2) (14)44.8 72.2 (27.4) Total stock-based compensation (1) (3) (14)33.3 52.7 (19.4) Amortization of acquired intangible assets (1) (4) (14)10.8 11.5 (0.7) Transaction and integration-related costs (5)15.6 0.7 14.9 Officer transition expense (6)0.6 0.7 (0.1) Legal and other expenses related to regulatory and competition matters (7)7.3 — 7.3 Tax matters indemnification gain (8)(0.4) — (0.4) Income tax effect of pre-tax adjustments (9)(40.4) (56.4) 16.0 Excess tax benefit from stock-based compensation (10)(5.1) (13.1) 8.0 Pre spin-off filed tax return adjustment (11)(0.4) — (0.4) Impact of U.S. tax reform (12)(18.5) — (18.5) Adjusted net earnings attributable to CDK$371.2 $314.0 $57.2 18%45 Years Ended June 30, Change 2018 2017 $ %Diluted earnings attributable to CDK per share$2.78 $1.99 $0.79 40%Earnings from discontinued operations, net of taxes (13)(0.57) (0.46) Restructuring expenses (1) (2)0.15 0.12 Other business transformation expenses (1) (2)0.33 0.50 Total stock-based compensation (1) (3)0.25 0.35 Amortization of acquired intangible assets (1) (4) (14)0.08 0.08 Transaction and integration-related costs (5)0.12 — Officer transition expense (6)— — Legal and other expenses related to regulatory and competition matters (7)0.05 — Tax matters indemnification gain (8)— — Income tax effect of pre-tax adjustments (9)(0.30) (0.38) Excess tax benefit from stock-based compensation (10)(0.04) (0.08) Pre spin-off filed tax return adjustment (11)— — Impact of U.S. tax reform (12)(0.14) — Adjusted diluted earnings attributable to CDK per share$2.71 $2.12 $0.59 28% Weighted-average common shares outstanding: Diluted136.8 148.2 (1) Excludes amounts attributable to discontinued operations.(2) Restructuring expense recognized in connection with our business transformation plan. Other business transformation expenses incurred in connectionwith our business transformation plan and included within cost of revenues and selling, general and administrative expenses.(3) Total stock-based compensation expense included within cost of revenues and selling, general and administrative expenses.(4) Amortization of acquired intangible assets consists of amortization of intangible assets such as customer lists, purchased software, and trademarksacquired in connection with business combinations. Although we exclude amortization of acquired intangible assets from our non-GAAP measure, webelieve that it is important for the users of the financial statements to understand that the associated intangible assets contribute to revenue generation.(5) Transaction and integration-related expenses include: (i) legal, accounting, outside service fees, and other costs incurred in connection with assessmentand integration of acquisitions and other strategic business opportunities; and (ii) post-close adjustments to acquisition-related contingent consideration,reported within cost of revenues and selling, general and administrative expenses.(6) Officer transition expense includes severance expense in connection with officer departures included within selling, general and administrative expenses.(7) Legal and other expenses related to regulatory and competition matters included within selling, general and administrative expenses.(8) Net gain recorded within other income, net associated with an indemnification receivable from ADP for pre spin-off tax periods in accordance with taxmatters agreement.(9) Income tax effect of pre-tax adjustments calculated at applicable statutory rates.(10) Excess tax benefit from stock-based compensation.(11) Net income tax benefit to adjust the liability for pre spin-off tax returns related to the gain.(12) As a result of the Tax Reform Act, an estimated one-time tax benefit of $26.2 million from the revaluation of the net deferred tax liability partially offsetby an estimated one-time expense of $7.7 million associated with undistributed foreign earnings in fiscal 2018.46(13) Earnings from discontinued operations, net of taxes associated with the Company's plan to divest the Digital Marketing Business.(14) The portion of expense related to noncontrolling interest of $0.2 million, $0.2 million, $0.1 million, and $0.1 million has been excluded fromrestructuring expenses, other business transformation expenses, stock-based compensation expenses, and legal and other expenses related to regulatory andcompetition matters, respectively, in fiscal 2018.Adjusted Earnings before Income Taxes. Adjusted earnings before income taxes for fiscal 2018 increased $49.3 million as compared to fiscal 2017.Adjusted margin increased from 27.9% to 29.6%. The impact of foreign exchange rates on adjusted earnings before income taxes was an increase of $8.1million. Adjusted earnings before income taxes was favorably impacted by benefits obtained from our business transformation plan, primarily related to lowerheadcount and geographic mix, and operating efficiencies inclusive of revenue growth, lower incentive compensation and a recovery in fiscal 2018 on a non-operating receivable that had been impaired in fiscal 2017 upon execution of a licensing and service agreement. The favorable effects of these items werepartially offset by increased interest expense, costs to implement the new revenue recognition standard and other outside services, and depreciation andamortization.Adjusted Provision for Income Taxes. The adjusted effective tax rate for fiscal 2018 was 28.6% as compared to 33.6% for fiscal 2017. The adjustedeffective tax rate for fiscal 2018 was favorably impacted by the reduced corporate income tax rate.Adjusted Net Earnings Attributable to CDK. Adjusted net earnings attributable to CDK for fiscal 2018 increased $57.2 million as compared to fiscal2017. The increase in adjusted net earnings attributable to CDK was primarily due to the items discussed above in adjusted earnings before income taxespartially offset by the associated tax effect.The table below presents the reconciliation of net earnings attributable to CDK to adjusted EBITDA. Years Ended June 30, Change 2018 2017 $ %Net earnings attributable to CDK$380.8 $295.6 $85.2 29%Margin %21.2% 17.1% Net earnings attributable to noncontrolling interest (2)7.9 6.9 1.0 Earnings from discontinued operations, net of taxes (3)(77.6) (67.6) (10.0) Provision for income taxes (1) (4)88.1 92.8 (4.7) Interest expense (5)95.9 57.2 38.7 Depreciation and amortization (1) (6)70.8 63.4 7.4 Total stock-based compensation (1) (7)33.4 52.7 (19.3) Restructuring expenses (1) (8)20.6 17.7 2.9 Other business transformation expenses (1) (8)44.8 69.7 (24.9) Transaction and integration-related costs (9)15.6 0.7 14.9 Officer transition expense (10)0.6 0.7 (0.1) Legal and other expenses related to regulatory and competition matters (11)7.4 — 7.4 Tax matters indemnification gain (12)(0.4) — (0.4) Adjusted EBITDA$687.9 $589.8 $98.1 17%Adjusted margin %38.3% 34.1% (1) Excludes amounts attributable to discontinued operations.(2) Net earnings attributable to noncontrolling interest included within the financial statements.(3) Earnings from discontinued operations, net of taxes associated with the Company's plan to divest the Digital Marketing Business.(4) Provision for income taxes included within the financial statements.(5) Interest expense included within the financial statements.(6) Depreciation and amortization included within the financial statements.47(7) Total stock-based compensation expense recognized.(8) Restructuring expense recognized in connection with our business transformation plan in fiscal 2018 and 2017. Other business transformation expensesincurred in connection with our business transformation plan and included within cost of revenues and selling, general and administrative expenses. Otherbusiness transformation expenses excluded $0.2 million and $2.5 million of accelerated depreciation expense for fiscal 2018 and 2017.(9) Transaction and integration-related expenses include: (i) legal, accounting, outside service fees, and other costs incurred in connection with assessmentand integration of acquisitions and other strategic business opportunities; and (ii) post-close adjustments to acquisition-related contingent consideration,reported within cost of revenues and selling, general and administrative expenses.(10) Officer transition expense includes severance expense in connection with officer departures included within selling, general and administrativeexpenses.(11) Legal and other expenses related to regulatory and competition matters included within selling, general and administrative expenses.(12) Net gain recorded within other income, net associated with an indemnification receivable from ADP for pre spin-off tax periods in accordance with taxmatters agreement.Adjusted EBITDA. Adjusted EBITDA for fiscal 2018 increased $98.1 million as compared to fiscal 2017. Adjusted margin increased from 34.1% to38.3%. Adjusted EBITDA was favorably impacted by benefits obtained from our business transformation plan, primarily related to lower headcount andgeographic mix, and operating efficiencies inclusive of revenue growth, lower incentive compensation, a recovery in fiscal 2018 of a non-operatingreceivable that had been impaired in fiscal 2017 upon execution of a licensing and service agreement, and the impact of foreign exchange rates. Thefavorable effects of these items were partially offset by costs to implement the new revenue recognition standard and other outside services.Analysis of Reportable SegmentsThe following is a discussion of the results of our continuing operations by reportable segment for fiscal 2018 and 2017. Certain expenses arecharged to the reportable segments at a standard rate for management reporting purposes. Other costs are charged to the reportable segments based onmanagement’s responsibility for the applicable costs.CDK North AmericaThe table below presents the reconciliation of revenues to constant currency revenues, and earnings before income taxes to constant currencyadjusted earnings before income taxes for the CDKNA segment. Refer to the footnotes in "Consolidated Non-GAAP Results" for additional information onthe adjustments presented below. Years Ended June 30, Change 2018 2017 $ %Revenues$1,441.7 $1,418.8 $22.9 2%Impact of exchange rates(4.1) — (4.1) Constant currency revenues$1,437.6 $1,418.8 $18.8 1% Earnings before income taxes$576.4 $534.2 $42.2 8%Margin %40.0% 37.7% Amortization of acquired intangible assets7.6 7.7 (0.1) Transaction and integration-related costs15.6 0.7 14.9 Legal and other expenses related to regulatory and competition matters7.4 — 7.4 Adjusted earnings before income taxes$607.0 $542.6 $64.4 12%Adjusted margin %42.1% 38.2% Impact of exchange rates(2.0) — (2.0) Constant currency adjusted earnings before income taxes$605.0 $542.6 $62.4 12%48The table below presents revenue disaggregation for the CDKNA segment: Years Ended June 30, Change 2018 2017 $ %Revenues: Subscription$1,176.4 $1,127.3 $49.1 4 %Transaction164.0 179.6 (15.6) (9)%Other101.3 111.9 (10.6) (9)%Total Revenues$1,441.7 $1,418.8 $22.9 2 %Revenues. CDKNA revenues for fiscal 2018 increased $22.9 million as compared to fiscal 2017. CDKNA revenues were favorably impacted by thestrength of the U.S. dollar against the Canadian dollar on a constant currency basis, which contributed to an increase of $4.1 million.Subscription revenues grew due to an increase in average revenue per DMS customer site of 5.5%, which resulted from a combination of increasedsales of new or expanded solutions to our customer base and pricing. This was partially offset by a decrease in DMS customer site count from 14,611 sites asof June 30, 2017 to 14,557 sites as of June 30, 2018. The increase in average revenue per DMS customer site contributed $49.1 million of revenue growth, orapproximately 4%, and includes a favorable currency impact of $3.7 million. Transaction revenues generated from vehicle registrations, credit checks, andautomotive equity mining, decreased $15.6 million, primarily due to dropped point solutions. Other revenues decreased $10.6 million primarily due to lowerhardware sales; partially offset by favorable currency impact of $0.4 million.Earnings before Income Taxes. CDKNA earnings before income taxes for fiscal 2018 increased $42.2 million as compared to fiscal 2017. Marginincreased from 37.7% to 40.0%.CDKNA earnings before income taxes were favorably impacted by operating efficiencies inclusive of benefits obtained from our businesstransformation plan, primarily related to lower headcount and geographic mix, lower incentive compensation, and a recovery in fiscal 2018 of a non-operating receivable that had been impaired in fiscal 2017 upon execution of a licensing and service agreement partially offset by an increase in acquisitionand integration costs, legal and regulatory expenses related to competition matters, depreciation and amortization, and outside services.49CDK InternationalThe table below presents the reconciliation of revenues to constant currency revenues, and earnings before income taxes to constant currencyadjusted earnings before income taxes for the CDKI segment. Refer to the footnotes in "Consolidated Non-GAAP Results" for additional information on theadjustments presented below. Years Ended June 30, Change 2018 2017 $ %Revenues$356.3 $311.9 $44.4 14%Impact of exchange rates(22.6) — (22.6) Constant currency revenues$333.7 $311.9 $21.8 7% Earnings before income taxes$97.7 $75.0 $22.7 30%Margin %27.4% 24.0% Amortization of acquired intangible assets3.5 3.8 (0.3) Adjusted earnings before income taxes101.2 78.8 22.4 28%Adjusted Margin %28.4% 25.3% Impact of exchange rates(5.3) — (5.3) Constant currency adjusted earnings before income taxes$95.9 $78.8 $17.1 22%Revenues. CDKI revenues for fiscal 2018 increased $44.4 million as compared to fiscal 2017. CDKI revenues were impacted by the strength of theEuro, the Pound Sterling, and the Renminbi against the U.S. dollar, which contributed to an increase of $22.6 million, or 7 percentage points. CDKIexperienced growth in revenues on a constant currency basis primarily due to increased average revenue per customer site and accelerated deferred revenuedue to an early contract termination despite a decrease in DMS customer site count.Earnings before Income Taxes. CDKI earnings before income taxes for fiscal 2018 increased $22.7 million as compared to fiscal 2017. Marginincreased from 24.0% to 27.4%. The constant currency impact of foreign exchange rates on CDKI earnings before income taxes was an increase of $5.3million. CDKI earnings before income taxes were favorably impacted by increased average revenue per customer site and operating efficiencies, whichresulted from benefits obtained from our business transformation plan and lower incentive compensation.Other SegmentThe table below presents the reconciliation of loss before income taxes to adjusted loss before income taxes for the Other segment. Refer to thefootnotes in "Consolidated Non-GAAP Results" for additional information on the adjustments presented below. Years Ended June 30, Change 2018 2017 $ %Loss before income taxes$(274.9) $(281.5) $6.6 2 %Restructuring expenses20.6 17.7 2.9 Other business transformation expenses45.0 72.2 (27.2) Total stock-based compensation 33.4 52.7 (19.3) Officer transition expense0.6 0.7 (0.1) Tax matters indemnification gain, net(0.4) — (0.4) Adjusted loss before income taxes$(175.7) $(138.2) $(37.5) (27)%Impact of exchange rates(0.8) — (0.8) Constant currency loss before income taxes$(176.5) $(138.2) $(38.3) (28)%50The primary components of the Other loss before income taxes are certain costs that are not allocated to our reportable segments, such as interestexpense, stock-based compensation expense, costs attributable to the business transformation plan, and certain unallocated expenses.Loss before Income Taxes. The Other loss before income taxes for fiscal 2018 decreased by $6.6 million as compared to fiscal 2017. The Other lossbefore income taxes was favorably impacted by lower business transformation expenses, lower stock-based compensation, and higher interest income. TheOther loss before income taxes was unfavorably impacted by increased interest expense due to the full year impact of the 2027 notes issued in May 2017 andthe partial year impact of our 2026 notes issued in June 2018, and costs to implement the new revenue recognition standard and other outside services.FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCESCapital Structure OverviewOur principal source of liquidity is derived from cash generated through operations. At present, and in future periods, we expect cash generated byour operations, together with cash and cash equivalents and borrowings from the capital markets, including our revolving credit facility, to be sufficient tocover our cash needs for working capital, capital expenditures, strategic acquisitions, and anticipated quarterly dividends and stock repurchases under ourreturn of capital plan.As of June 30, 2019, cash and cash equivalents were $311.4 million, total CDK stockholders' deficit was $729.6 million, and total debt was $2,930.2million, which is net of unamortized financing costs of $28.5 million. Working capital as of June 30, 2019 was $323.3 million as compared to $866.0 millionas of June 30, 2018. Working capital as used herein excludes current maturities of long-term debt and capital lease obligation, and current assets andliabilities held for sale.Our borrowings consist of two term loan facilities with initial principal amounts of $600.0 million, 3.30% senior notes with a $250.0 millionaggregate principal amount due in 2019, 4.50% senior notes with a $500.0 million aggregate principal amount due in 2024, 5.875% senior notes with a$500.0 million aggregate principal amount due in 2026, 4.875% senior notes with a $600.0 million aggregate principal amount due in 2027, and 5.250%senior notes with a $500.0 million aggregate principal amount due in 2029. Interest rates for the 2019 notes and 2024 notes increased to 3.80% from 3.30%and to 5.00% from 4.50%, respectively. Additionally, we have a $750.0 million revolving credit facility, which was undrawn as of June 30, 2019.Our long-term credit ratings and senior unsecured debt ratings are Ba1 (Stable Outlook) with Moody's, and BB+ (Stable Outlook) with S&P, whichare non-investment grade.Of the $311.4 million of cash and cash equivalents held as of June 30, 2019, $248.1 million was held by our foreign subsidiaries. As of June 30,2019, the Company intends to indefinitely reinvest the aggregate of approximately $329.0 million of undistributed foreign earnings. Amounts held byforeign subsidiaries, if repatriated to the U.S., would generally be subject to foreign withholding taxes. Foreign earnings after December 31, 2017 areconsidered indefinitely reinvested since our intent is to use the earnings outside of the U.S. to fund local working capital needs and future foreigninvestments, including potential acquisitions. Our current plans do not demonstrate a need to repatriate the earnings to fund our U.S. operations. Indetermining whether the undistributed earnings of our foreign subsidiaries are indefinitely reinvested, we consider the following: (i) cash flow forecasts andcash requirements of our U.S. business and our foreign subsidiaries, both for the short and long term; (ii) costs associated with permanent reinvestment plans,including cost of capital and tax consequences; and (iii) local country legal restrictions.If circumstances change, and it becomes apparent that earnings currently considered indefinitely reinvested will be remitted to the U.S. in theforeseeable future, the Company does not expect to incur significant additional tax.Return of Capital PlanStock Repurchase ProgramIn January 2017, the Board of Directors authorized us to repurchase up to $2.0 billion of our common stock as part of a return of capital plan,whereby we have repurchased approximately $1.5 billion of common stock through June 30, 2019. Our top priorities for capital allocation will continue tobe a thoughtful balance between: (i) organic investments that will continue to accelerate the growth and performance of the business; (ii) inorganicopportunities that are synergistic with our portfolio and would meaningfully provide additional profitable revenue and increased long-term value; and (iii)return of capital to shareholders, while targeting a leverage ratio, measured as financial debt, net of cash, divided by adjusted EBITDA, at a range51of 2.5x to 3.0x net debt to adjusted EBITDA. Our leverage was 3.4x net debt to adjusted EBITDA as of June 30, 2019, due to the loss of earnings attributableto the Digital Marketing Business. For fiscal 2020, we expect shareholder returns, including dividends and share repurchase, of $75.0 million to $150.0million.Under the authorization, we may continue to purchase our common stock in the open market or in privately negotiated transactions from time totime as permitted by federal securities laws and other legal requirements. The actual timing, number, and price of any shares repurchased will be determinedat management's discretion and will depend on a number of factors, which may include the market price of the shares, general market and economicconditions, the availability and cost of additional indebtedness, and other potential uses for free cash flow including, but not limited to, potentialacquisitions.Dividends to Common StockholdersThe Company declared and paid cash dividends during fiscal 2019 as follows:Three Months Ended Record Date Payment Date Dividend Per Share AmountSeptember 30, 2018 9/4/2018 9/28/2018 $0.150 $19.3December 31, 2018 12/3/2018 12/28/2018 0.150 18.7March 31, 2019 3/1/2019 3/29/2019 0.150 18.6June 30, 2019 6/3/2019 6/27/2019 0.150 18.2Total $0.600 $74.8Cash FlowsOur cash flows from operating, investing, and financing activities, as reflected in the consolidated statements of cash flows for fiscal 2019, 2018, and2017, are summarized as follows: Years Ended June 30, $ Change 20192018 2017 2019 2018Cash provided by (used in): Operating activities, continuing operations$438.5 $373.9 $362.7 $64.6 $11.2Operating activities, discontinued operations44.692.5 73.0 (47.9)19.5Investing activities, continuing operations(614.5) (86.9) (84.2) (527.6) (2.7)Investing activities, discontinued operations(8.7) (26.6) (3.7) 17.9 (22.9)Financing activities, continuing operations(349.0) (271.2) 159.9 (77.8) (431.1)Effect of exchange rate changes on cash and cash equivalents(6.9) 1.4 4.0 (8.3) (2.6)Net change in cash and cash equivalents$(496.0) $83.1 $511.7 $(579.1) $(428.6)Fiscal 2019 Compared to Fiscal 2018Net cash flows provided by operating activities from continuing operations were $438.5 million for fiscal 2019 as compared to $373.9 million infiscal 2018. This $64.6 million increase was primarily due to a $90.0 million litigation provision, partially offset by timing of cash payments made to taxauthorities.Net cash flows provided by operating activities from discontinued operations were $44.6 million for fiscal 2019 as compared to $92.5 million infiscal 2018. This $47.9 million decrease was due to lower earnings and decrease in cash used for working capital associated with the Digital MarketingBusiness.Net cash flows used in investing activities for continuing operations were $614.5 million for fiscal 2019 as compared to $86.9 million in fiscal 2018.This $527.6 million increase in cash used in investing activities was primarily due to the acquisition of ELEAD in fiscal 2019.52Net cash flows used in investing activities for discontinued operations were $8.7 million for fiscal 2019 as compared to $26.6 million in fiscal 2018.This $17.9 million decrease in cash used in investing activities was primarily due to the acquisition of Progressus Media LLC, in fiscal 2018.Net cash flows used in financing activities for continuing operations were $349.0 million for fiscal 2019 as compared to $271.2 million in fiscal2018. This $77.8 million increase in cash used in financing activities was mainly due to increased borrowings, net of repayments, primarily to fund theELEAD acquisition; partially offset by higher cash outflows associated with repurchases of common stock in fiscal 2018.Fiscal 2018 Compared to Fiscal 2017Net cash flows provided by operating activities from continuing operations were $373.9 million for fiscal 2018 as compared to $362.7 million infiscal 2017. This $11.2 million increase was primarily due to an increase in cash provided by net earnings adjusted for non-cash items of $33.3 millionprimarily due to earnings growth in our business. This increase was partially offset by an increase in cash used for working capital of $22.1 million, whichwas due to timing of cash payments made to our vendors and employees partially offset by the timing of cash payments received from our customers in thenormal course of business.Net cash flows provided by operating activities from discontinued operations for fiscal 2018 were $92.5 million as compared to $73.0 million infiscal 2017 primarily due to higher net earnings and decrease in cash used for working capital associated with our Digital Marketing Business in fiscal 2018.Net cash flows used in investing activities for continuing operations were $86.9 million for fiscal 2018 as compared to $84.2 million in fiscal 2017.Net cash flows used in investing activities for discontinued operations were $26.6 million for fiscal 2018 as compared to $3.7 million in fiscal 2017.The increase in cash used in fiscal 2018 was primarily for the acquisition of Progressus Media LLC.Net cash flows used in financing activities from continuing operations for fiscal 2018 were $271.2 million compared to net cash flows provided byfinancing activities of $159.9 million in fiscal 2017. This $431.1 million increase in cash used was primarily due to proceeds from long-term debt in fiscal2017 of $1.0 billion compared to the fiscal 2018 additional borrowing of $500.0 million. During fiscal 2018, our primary cash outflows were repurchases ofcommon stock of $623.6 million, dividend payments to our stockholders of $80.1 million, and the repayments of debt and capital lease obligations of $46.4million. During fiscal 2017, our primary cash outflows consisted of common stock repurchases of $700.0 million, dividend payments to our stockholders of$80.7 million, and repayments of debt and capital lease obligation of $36.9 million.53Contractual ObligationsThe following table provides a summary of our contractual obligations as of June 30, 2019. Payments Due by PeriodContractual Obligations Less than 1year1-3 years3-5 yearsMore than 5yearsTotalTerm loan facilities (1) $15.0 $330.0 $243.8 $— $588.8Senior notes (2) 250.0 — — 2,100.0 2,350.0Interest on senior notes (2) 115.9 219.8 219.8 278.0 833.5Capital lease obligations 19.9 — — — 19.9Operating lease obligations (3) 16.7 26.4 15.8 15.8 74.7Purchase obligations (4) 6.2 14.7 10.8 — 31.7Other long-term liabilities reflected within other liabilities on the consolidated balance sheet (5) 0.4 19.5 4.3 — 24.2Total $424.1 $610.4 $494.5 $2,393.8 $3,922.8(1) These amounts represent the principal repayments of the term loan facilities included within our consolidated balance sheet as of June 30, 2019. Intereston our term loan facilities is based on variable rates, and interest payments will fluctuate as our interest rates fluctuate each period. Accordingly, futureinterest payments related to these instruments have been excluded from the table above. The interest rate per annum on the two $300.0 million term loanfacilities with three year term was 3.94% and with five year term was 4.07% as of June 30, 2019. Additional information is contained in Item 8 of Part II,"Financial Statements and Supplementary Data - Note 15 - Debt" in this Annual Report on Form 10-K for further information.(2) These amounts represent the principal repayments of the senior notes included within our consolidated balance sheet as of June 30, 2019 and expectedfuture interest payments over the term of the senior notes based on the stated interest rates in effect as of June 30, 2019. Our 2019 notes bear interest at a rateof 3.80%, our 2024 notes bear interest at a rate of 5.00%, our 2026 notes bear interest at a rate of 5.875%, our 2027 notes bear interest at a rate of 4.875%, andour 2029 notes bear interest at a rate of 5.250%. Interest is payable semi-annually on April 15 and October 15 of each year for the 2019 and 2024 notes, June15 and December 15 of each year for the 2026 notes, June 1 and December 1 of each year for the 2027 notes, and March 15 and September 15 of each year forthe 2029 notes. Additional information is contained in Item 8 of Part II, "Financial Statements and Supplementary Data - Note 15 - Debt" in this AnnualReport on Form 10-K for further information.(3) These amounts represent various operating leases for facilities and equipment entered into in the normal course of business. The majority of our leaseagreements have fixed payment terms based on the passage of time. Certain facility and equipment leases require payment of maintenance and real estatetaxes and contain escalation provisions based on future adjustments in price indices. Our future operating lease obligations could change if we exit certaincontracts or if we enter into additional operating lease agreements.(4) These amounts represent payments related to the Company's purchase and maintenance agreements for software, equipment, and other assets.(5) Other long-term liabilities for which a payment date is readily available include a contingent consideration payable in installments through March 31,2021 for the acquisition of Progressus Media LLC, software license fees, and cash settlements expected for restricted stock units accounted for as liabilityawards based on the closing price of our common stock on June 30, 2019.In the normal course of business, we also enter into contracts in which we make representations and warranties that relate to the performance of ourservices and products. We do not expect any material losses related to such representations and warranties.Off-Balance Sheet ArrangementsAs of June 30, 2019, we did not have any off-balance sheet arrangements consisting of transactions, agreements, or other contractual arrangements towhich an entity not consolidated in our financial statements was a party. However, in the54normal course of operations, we may enter into contractual obligations consisting of operating lease obligations and purchase commitments. Suchobligations have been presented under the caption "Contractual Obligations."Related Party AgreementsRefer to Item 8 of Part II, Financial Statement and Supplementary Data, "Note 10 - Income Taxes" and "Note 18 - Transactions with ADP" of thisAnnual Report on Form 10-K for financial information regarding agreements entered into with ADP as part of the spin-off.CRITICAL ACCOUNTING POLICIESOur consolidated financial statements and accompanying notes have been prepared in accordance with GAAP. The preparation of these financialstatements requires management to make estimates, judgments, and assumptions that affect reported amounts of assets, liabilities, revenues, and expenses. Wecontinually evaluate the accounting policies and estimates used to prepare the consolidated financial statements. Estimates are based on historicalexperience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from estimates made bymanagement. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financialcondition are discussed below.Revenue RecognitionWe recognize revenues in accordance with Accounting Standards Codification ("ASC") 606 "Revenue from Contracts with Customers." We adoptedASC 606 effective July 1, 2018 using the modified retrospective approach. The comparative information has not been restated and continues to be reportedunder ASC 985-605 "Software - Revenue Recognition," and non-software related revenue, including Software-as-a-Service ("SaaS"), in accordance with ASC605, "Revenue Recognition".The Company determines the amount of revenue to be recognized through the following steps:•Identification of the contract, or contracts, with a customer;•Identification of the performance obligations in the contract;•Determination of the transaction price;•Allocation of the transaction price to the performance obligations in the contract; and•Recognition of revenue when, or as, the Company satisfies the performance obligations.The majority of the Company’s revenue is generated from contracts with multiple performance obligations. A performance obligation is a promise ina contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. A contract’s transaction price is allocated to eachdistinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company is required to estimate the totalconsideration expected to be received from contracts with customers. In limited circumstances, the consideration expected to be received may be variablebased on the specific terms of the contract.The Company rarely licenses or sells products or services on a standalone basis. As such, the Company is required to develop its best estimate ofstandalone selling price of each distinct good or service as the basis for allocating the total transaction price. The primary method used to estimate standaloneselling price is the adjusted market assessment approach, with some product categories using the expected cost plus a margin approach. When establishingstandalone selling price, the Company considers various factors which may include geographic region, current market trends, customer class, its market shareand position, its general pricing practices for bundled products and services, and recent contract sales data.The Company applies significant judgment in order to identify and determine the number of performance obligations, estimate the total transactionprice, determine the allocation of the transaction price to each identified performance obligation, and determine the appropriate method and timing ofrevenue recognition.The Company generates revenues from the following four categories: subscription, on-site licenses and installation, transaction, and other. Taxescollected from customers and remitted to governmental authorities are presented on a net basis; that is, such taxes are excluded from revenues.Subscription. In the CDKNA and CDKI segments, CDK provides software and technology solutions for automotive retailers and OEMs, whichincludes:55•Dealer Management Systems (“DMSs”) and layered applications, where the software is hosted and provided on a software-as-a-service (“SaaS”)basis;•Interrelated services such as installation, initial training, and data updates;•Ongoing maintenance and support related to on-site software; and•Hardware on a service basis, meaning no specific assets are identified or a substantive right of substitution exists, that provides the customercontinuous access to hardware owned by the Company. Revenues for SaaS and other hosted service arrangements, are recognized ratably over the duration of the contract. The Company has determined itsobligation under these arrangements is to stand ready to perform the underlying services as required by the customer. The customer receives the benefit of theservices and the Company has the right to payment as the services are performed. A time-elapsed output method is used to measure progress as the Companytransfers control evenly over the duration of the contract.On-site licenses and installation. In the CDKNA and CDKI segments, on-site software arrangements include a license of intellectual property as thecustomer has the contractual right to take possession of the software and the customer can either run the software on its own hardware or contract with anotherparty unrelated to the Company to host the software. The customer receives the right to use the software license upon its installation for the term of thearrangement. As such, the Company has concluded that the software license is a distinct performance obligation and recognizes the transaction priceallocated to on-site software upon installation. The Company also provides maintenance and support of the software applications. Such maintenance andsupport services may include server and desktop support, bug fixes, and support resolving other issues a customer may encounter in utilizing the software.Revenue allocated to support and maintenance is generally recognized ratably over the contract period as customers simultaneously consume and receivebenefits, given the support and maintenance comprise distinct performance obligations that are satisfied ratably over time. A time-elapsed output method isused to measure progress as the Company transfers control evenly over the duration of the contract.Transaction. The Company receives fees per transaction for providing auto retailers interfaces with third parties to process credit reports, vehicleregistrations, and automotive equity mining. Transaction revenues are variable based on the volume of transactions processed. For these transaction revenues,the Company has a right to payment as the transactions are performed in an amount that corresponds directly with the value to the customer. As such, theCompany recognizes transaction revenues as the services are rendered and in the amount to which it has the right to invoice. Transaction revenues for creditreport processing and automotive equity mining are recorded in revenues gross of costs incurred when the Company is substantively and contractuallyresponsible for providing the service, software, and/or connectivity to the customer, and controls the specified good or service before it is transferred to thecustomer. The Company recognizes vehicle registration revenues net of the state registration fee when it is acting as an agent and does not control the relatedgoods and services before they are transferred to the customer.Other. The Company provides consulting and professional services, including marketing campaign solutions, and sells hardware such as laser printers,networking and telephony equipment, and related items. Consulting and professional services are either billed on a time and materials basis or on a fixedmonthly, quarterly or semi-annual basis based on the amount of services contracted.Stock-Based CompensationCertain of our employees (a) have been granted stock options to purchase shares of our common stock and (b) have been granted restricted stock orrestricted stock units under which shares of our common stock vest based on the passage of time or achievement of performance and market conditions.We recognize stock-based compensation expense in net earnings based on the fair value of the award on the date of the grant. We determine the fairvalue of stock options issued using a binomial option-pricing model. The binomial option-pricing model considers a range of assumptions related tovolatility, dividend yield, risk-free interest rate, and employee exercise behavior. Expected volatilities utilized in the binomial option pricing model arebased on a combination of implied market volatilities and historical volatilities of our stock and a peer group of companies due to the limited trading historyassociated with our common stock. Inclusion of our stock volatility in the valuation of future stock option grants may impact stock-based compensationexpense recognized. Similarly, the dividend yield is based on historical experience and expected future dividend payments. The risk-free rate is derived fromthe U.S. Treasury yield curve in effect at the time of grant. The binomial option pricing model also incorporates exercise and forfeiture assumptions based onan analysis of historical data. The expected life of a stock option grant is derived from the output of the binomial model and represents the period of time thatoptions granted are expected to be outstanding.56The grant date fair value of restricted stock and restricted stock units that vest upon achievement of service conditions is based on the closing priceof our common stock on the date of grant. We also grant performance-based awards that vest over a performance period. Under these programs, wecommunicate “target awards” at the beginning of the performance period with possible payouts at the end of the performance period ranging from 0% to260% of the target awards. The fair value of performance-based awards subject to a market condition is determined using a Monte Carlo simulation model.The principal variable assumptions utilized in determining the grant date fair value of performance-based awards subject to a market condition include therisk-free rate, stock volatility, dividend yield, and correlations between our stock price and the stock prices of the peer group of companies. The probabilityassociated with the achievement of performance conditions affects the vesting of our performance-based awards. Expense is only recognized for those sharesexpected to vest. We adjust stock-based compensation expense (increase or decrease) when it becomes probable that actual performance will differ from ourestimate.Income TaxesIncome tax expense is recognized for the amount of taxes payable or refundable for the current year. Deferred tax assets and liabilities are recognizedfor the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operatinglosses and tax credit carryforwards. Management must make assumptions, judgments, and estimates to determine the provision for income taxes, taxespayable or refundable, and deferred tax assets and liabilities. Our assumptions, judgments, and estimates take into consideration the realization of deferredtax assets and changes in tax laws or interpretations thereof. Our income tax returns are subject to examination by various tax authorities. A change in theassessment of the outcomes of such matters could materially impact our consolidated financial statements.We record a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. In determining the need for avaluation allowance, we consider future market growth, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies. In theevent we determine that it is more likely than not that an entity will be unable to realize all or a portion of its deferred tax assets in the future, we wouldincrease the valuation allowance and recognize a corresponding charge to earnings in the period in which such a determination is made. Likewise, if we laterdetermine that it is more likely than not that the deferred tax assets will be realized, we would reverse the applicable portion of the previously recognizedvaluation allowance. In order to realize deferred tax assets, we must be able to generate sufficient taxable income of the appropriate character in thejurisdictions in which the deferred tax assets are located.We recognize tax benefits for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amountrecognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized taxbenefits are tax benefits claimed in our income tax returns that do not meet these recognition and measurement standards. Assumptions, judgments, and theuse of estimates are required in determining whether the "more likely than not" standard has been met when developing the provision for income taxes.If certain pending tax matters settle within the next twelve months, the total amount of unrecognized tax benefits may increase or decrease for allopen tax years and jurisdictions. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. We continually assess thelikelihood and amount of potential adjustments and adjust the income tax provision, the current taxes payable and deferred taxes in the period in which thefacts that give rise to a revision become known.We account for the global intangible low taxed income ("GILTI") tax as a period cost when incurred. The GILTI provision is effective beginning infiscal year 2019.We account for goodwill impairment as a permanent tax difference and as a period cost when incurred effective beginning in fiscal year 2019.GoodwillWe test goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value may not be recoverable. Wetest goodwill for impairment at the reporting unit level. A reporting unit is an operating segment or a component of an operating segment. Based on how thechief operating decision maker regularly reviews information for purposes of allocating resources and assessing performance, we have five reporting units.57We test impairment by first comparing the fair value of each reporting unit to its carrying amount. If the carrying value of the reporting unit exceedsits fair value, the difference, up to the amount of goodwill recorded for the reporting unit, is recognized as an impairment.We estimate the fair value of our reporting units by weighting the results from the income approach, which is the present value of expected cashflows discounted at a risk-adjusted weighted-average cost of capital, and the market approach, which uses market multiples of companies in similar lines ofbusiness. These valuation approaches require significant judgment and consider a number of factors including assumptions about the future growth andprofitability of our reporting units, the determination of appropriate comparable publicly traded companies in our industry, discount rates, and terminalgrowth rates.During fiscal 2018, the ANA reporting unit, which was previously a reportable segment, was at risk of failing step one of the goodwill impairmenttest. The impairment test indicated that the fair value of the reporting unit exceeded the carrying value by less than 10%. Declines in advertising revenuefrom certain OEM contracts and changes in revenue mix were the primary drivers of the decline in fair value.In the first quarter of fiscal 2019, ANA updated its estimates regarding operating results and growth rate due to continued changes to the businessprimarily related to certain OEM contracts. Therefore, the Company determined that the carrying amount of goodwill should be evaluated for impairment atSeptember 30, 2018. The impairment test indicated that the fair value of ANA exceeded its carrying value by approximately 7% which was lower than thefourth quarter of fiscal 2018. No goodwill impairment was recorded.During the second and third quarters of fiscal 2019, there were no events or changes in circumstances that would indicate a potential decline inANA's fair value. Therefore, the Company did not evaluate ANA's goodwill for impairment at December 31, 2018 and March 31, 2019.During the fourth quarter of fiscal 2019, the Company committed to a plan to divest the Digital Marketing Business which includes all of the assetsof ANA resulting in an evaluation of ANA's goodwill for impairment. The impairment test indicated that the carrying value of ANA was higher than its fairvalue. The decline in ANA's fair value was driven by a decrease in estimated future earnings and an unfavorable change in the discount rate representingmanagement’s assessment of increased risk with respect to the business forecasts primarily due to business uncertainty after the public announcement of theplanned sale of business and management's shift in focus to customer retention instead of growth. As a result, the Company recorded a goodwill impairmentcharge of $168.7 million in the Loss (Earnings) from discontinued operations, net of taxes line in its Consolidated Statements of Operations. The remaininggoodwill of ANA of $45.6 million as of June 30, 2019 is recorded in current assets held for sale in our Consolidated Balance Sheets. Further adverse changein ANA's forecasts, or other underlying assumptions, could negatively impact the estimated fair value and result in additional impairment charges whichcould be material to our consolidated earnings.The valuation of a reporting unit requires significant judgment and is highly sensitive to underlying assumptions including forecasted revenuegrowth, profitability and discount rates. An adverse change to the fair value of reporting units could result in an impairment charge which could be materialto consolidated earnings.Long-Lived AssetsWe review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may notbe recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying value of the asset to its undiscounted future cashflows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated undiscounted future cash flow, an impairment charge isrecognized for the amount by which the carrying amount exceeds the fair value. Given the significance of our long-lived assets, an adverse change to the fairvalue of our long-lived assets could result in an impairment charge which could be material to our consolidated earnings.58Assets Held for SaleWe consider assets to be held for sale when management, with appropriate authority, approves and commits to a formal plan to actively market theassets for sale at a price reasonable in relation to their estimated fair value, the assets are available for immediate sale in their present condition, an activeprogram to locate a buyer has been initiated, the sale of the assets is probable and expected to be completed within one year, and it is unlikely that significantchanges will be made to the plan. Upon designation as held for sale, we record the assets at the lower of their carrying value or their estimated fair value,reduced for the cost to dispose the assets. Depending on the net realized value from the sale, the potential charge could be material to our consolidatedearnings.Legal and Other ContingenciesFrom time to time, the Company is subject to various claims and is involved in various legal, regulatory, and arbitration proceedings concerningmatters arising in connection with the conduct of its business activities. including those noted in Item 8 of Part II, "Financial Statements and SupplementaryData - Note 16 - Commitments and Contingencies." We routinely assess the likelihood of any adverse judgments or outcomes related to these matters, as wellas ranges of probable losses, by consulting with internal personnel involved with such matters as well as with outside legal counsel handling such matters.We accrue for estimated losses for those matters where we believe that the likelihood of a loss has occurred, is probable and the amount of the loss isreasonably estimable. The determination of the amount of such reserves is made after careful analysis of each matter. The amount of such reserves may changein the future due to new developments or changes in approach such as a change in settlement strategy in dealing with these matters. The inherent uncertaintyrelated to the outcome of these matters can result in amounts materially different from any provisions made with respect to their resolution.The Company is involved in several antitrust lawsuits that set forth allegations of anti-competitive agreements between the Company and TheReynolds and Reynolds Company ("Reynolds and Reynolds") relating to the manner in which the defendants control access to, and allow integration with,their respective DMSs, and that seek, among other things, treble damages and injunctive relief. These lawsuits have been transferred to, or filed in, the U.S.District Court for the Northern District of Illinois for consolidated and coordinated pretrial proceedings as part of a multi-district litigation proceeding(“MDL”).During the fourth quarter of fiscal 2019, the Company established a litigation provision of $90 million related to the anti-trust lawsuits. Thisestimated loss is based upon currently available information and represents the Company’s best estimate of such loss. Estimating the value of this estimatedloss involved significant judgment given the uncertainty that still exists with respect to the unsettled cases due to a variety of factors typical of complex,large scale litigation, including, among others: (i) formative issues, including: (a) the causes of action the plaintiffs can pursue; (b) the definition of theclass(es) of plaintiffs; (c) the types of damages that can be recovered; and (d) whether plaintiffs can establish loss causation as a matter of law, all of whichhave yet to be determined pending the outcome of dispositive motions (e.g., motions for class certification and motions for summary judgment); (ii)discovery is ongoing and significant factual issues remain to be resolved; (iii) expert discovery with respect to, among other things, alleged antitrust injuryand damages is not sufficiently advanced; (iv) the absence of productive settlement discussions to date with plaintiffs other than Cox; and (v) the novel oruncertain nature of the legal issues presented. For these same reasons, the Company cannot reasonably estimate a maximum potential loss exposure at thistime. In addition, the Company’s estimate does not incorporate or reflect the potential value of the Company’s counterclaims against certain of the plaintiffsin the ongoing cases. The legal proceedings underlying the estimated litigation liability will change from time to time and actual results may varysignificantly from the estimate. As noted above, an adverse result in any of the remaining cases could have a material adverse effect on the Company'sbusiness, results of operations, financial condition, or liquidity.RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTSRefer to Item 8 of Part II, "Financial Statements and Supplementary Data - Note 3 - New Accounting Pronouncements" of this Annual Report on Form10-K for financial information regarding recently issued and adopted accounting pronouncements including the effects on our results of operations, financialcondition, and cash flows.59Item 7A. Quantitative and Qualitative Disclosures About Market RiskWe are subject to interest rate risk related to our revolving credit facility and term loan facilities as those arrangements contain interest rates that arenot fixed. As of June 30, 2019, our revolving credit facility was undrawn. The interest rate per annum on the two $300.0 million term loan facilities with threeyear term was 3.94% and with five year term was 4.07% as of June 30, 2019. A hypothetical increase in the interest rate of 10% would have resulted inapproximately $0.7 million impact on earnings before income taxes for the year ended June 30, 2019.We operate and transact business in various foreign jurisdictions and are therefore exposed to market risk from changes in foreign currency exchangerates that could impact our financial condition, results of operations, and cash flows. We have not been materially impacted by fluctuations in foreigncurrency exchange rates as a significant portion of our business is transacted in U.S. dollars, and is expected to continue to be transacted in U.S. dollars orU.S. dollar-based currencies. As of June 30, 2019, operations in foreign jurisdictions were principally transacted in Canadian dollars, Euros, Pound Sterling,and Renminbi. A hypothetical change in all foreign currency exchange rates of 10% would have resulted in an increase or decrease in consolidated operatingearnings of approximately $12.0 million for the year ended June 30, 2019.We primarily manage our exposure to these market risks through our regular operating and financing activities. We also use derivatives notdesignated as hedges which consisted of foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposureon intercompany loans.60Item 8. Financial Statements and Supplementary DataINDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULEConsolidated Financial Statements Reports of Independent Registered Public Accounting Firm62Consolidated Statements of Operations for the Years Ended June 30, 2019, 2018, and 201767Consolidated Statements of Comprehensive Income for the Years Ended June 30, 2019, 2018, and 201768Consolidated Balance Sheets as of June 30, 2019 and 201869Consolidated Statements of Cash Flows for the Years Ended June 30, 2019, 2018, and 201770Consolidated Statements of Stockholders' (Deficit) Equity for the Years Ended June 30, 2019, 2018, and 201772Notes to the Consolidated Financial Statements73 Financial Statement Schedule Schedule II—Valuation and Qualifying Accounts11361REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the stockholders and the Board of Directors ofCDK Global, Inc.Hoffman Estates, IllinoisOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of CDK Global, Inc. and subsidiaries (the "Company") as of June 30, 2019 and 2018, therelated consolidated statements of operations, comprehensive income, stockholders' (deficit) equity, and cash flows for each of the three years in the periodended June 30, 2019, and the related notes and the schedule listed in the Index at Item 8 (collectively referred to as the "financial statements"). In ouropinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2019 and 2018, and the results ofits operations and its cash flows for each of the three years in the period ended June 30, 2019, in conformity with accounting principles generally accepted inthe United States of America.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’sinternal control over financial reporting as of June 30, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission and our report dated August 13, 2019 expressed an unqualified opinion on theCompany’s internal control over financial reporting.Change in Accounting PrincipleAs discussed in Note 6 to the financial statements, effective July 1, 2018, the Company adopted the Financial Accounting Standards Board AccountingStandards Codification 606, Revenue from Contracts with Customers, using the modified retrospective approach.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Companyin accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing proceduresto assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financialstatements. We believe that our audits provide a reasonable basis for our opinion.Critical Audit MattersThe critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated orrequired to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2)involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion onthe financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the criticalaudit matters or on the accounts or disclosures to which they relate.62•••–––••––Goodwill - Advertising North America Reporting Unit - Refer to Notes 2 and 14 to the financial statementsCritical Audit Matter DescriptionThe Company tests goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value may not be recoverable,by comparing the fair value of each reporting unit to its carrying amount. During the fourth quarter of fiscal 2019, the Company determined the fair value ofthe Advertising North America (“ANA”) reporting unit was lower than its carrying value, resulting in a goodwill impairment charge of $168.7 million for theyear ended June 30, 2019. Additionally, in June 2019, the Company committed to a plan to divest all of the assets of the ANA reporting unit. This actionresulted in the reclassification of the assets and liabilities comprising the ANA reporting unit to assets and liabilities held for sale in the consolidatedbalance sheets.The Company estimates the fair value of the ANA reporting unit by using a weighted average of the fair values indicated by the income approach, which isthe present value of expected cash flows discounted at a risk-adjusted weighted-average cost of capital, and the market approach, which uses marketmultiples of companies in similar lines of business. The income approach requires management to make significant estimates and assumptions related toforecasts of future growth and profitability, and the selection of discount rates. Changes in these assumptions could have a significant impact on the fairvalue of the ANA reporting unit, the amount of any goodwill impairment charge, or the fair value of the net assets held for sale.Given declines in advertising revenue, the inherent subjectivity in the selection of inputs to the income approach, sensitivity of both indicated fair valueand related goodwill impairment charge to changes in those inputs, and the plan to divest the ANA reporting unit, performing audit procedures to evaluatethe reasonableness of management’s estimates and assumptions related to forecasts of future growth and profitability and the selection of the discount ratefor the ANA reporting unit required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair valuespecialists.How the Critical Audit Matter Was Addressed in the AuditOur audit procedures related to forecasts of future growth and profitability and the discount rate used by management to estimate the fair value of the ANAreporting unit included the following, among others:We tested the effectiveness of controls over goodwill, including those over the forecasts of future growth and profitability, and the selection of thediscount rate.We evaluated management’s ability to accurately forecast future growth and profitability by comparing actual results to management’s historicalforecasts.We evaluated the reasonableness of management’s revenue and operating margin forecasts by comparing the forecasts to:Historical revenues and operating margins.Internal communications to management and the Board of Directors.Forecasted information included in Company press releases as well as in analyst and industry reports for the Company and certain of its peercompanies.We evaluated the impact of changes in management’s forecasts throughout the current year by evaluating trends and changes on a quarterly basis,considering changes in significant customer contracts, and evaluating the impact of other changes in the economy and business environment that wouldimpact the forecasts through June 30, 2019.With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) discount rate by:Testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation.Developing a range of independent estimates and comparing those to the discount rate selected by management.63••••Revenue - Refer to Notes 2 and 6 to the financial statementsCritical Audit Matter DescriptionThe Company generates revenue from the following four categories: subscription, on-site licenses and installation, transaction, and other. The majority ofthe Company’s revenue is generated from contracts with multiple performance obligations, and the Company’s products and services are rarely licensed orsold on a standalone basis. Revenue recognized for the year ended June 30, 2019, was $1,914.8 million.Due to the multiple element nature of the Company’s contracts, appropriate revenue recognition requires the Company to exercise significant judgment inthe following areas:Determination of whether products and services are considered distinct performance obligations that should be accounted for separately versus together,such as software licenses and related services that are sold in hosted service arrangements.Determination of stand-alone selling prices for products and services.Estimation of contract transaction price and allocation of the transaction price to identified performance obligations.The pattern of delivery (i.e., timing of when revenue is recognized) for each distinct performance obligation.In addition, the Company’s subscription and on-site license and installation revenue consists of a significant volume of transactions, sourced from multiplesystems, databases, and other tools across different business entities. The processing and recording of revenue is highly automated and involves migrating,formatting, and combining significant volumes of data across multiple systems and interfaces, partially facilitated by custom-built algorithms.Given the complexity of certain of the Company’s contracts and judgments necessary to evaluate the revenue recognition considerations as noted above,the volume of contracts, and the complex automated systems to process and record revenue, performing procedures to audit revenue required a high degreeof auditor judgment and extensive audit effort, including involvement of professionals with expertise in information technology (IT).64••––•–––––––•––How the Critical Audit Matter Was Addressed in the AuditOur audit procedures related to the Company’s accounting for contracts with customers included the following, among others:We tested the effectiveness of the controls over the review of customer contracts, including, among others the identification of performance obligations,determination of stand-alone selling prices, estimating transaction price, and determination of pattern of delivery of performance obligations.With the assistance of our IT specialists, we:Identified the significant systems used to process revenue transactions and tested the general IT controls over each of these systems, includingtesting of user access controls, change management controls, and IT operations controls.Performed testing of system interface controls and automated controls within the relevant revenue streams, as well as the controls designed todetermine the accuracy and completeness of revenue.We selected a sample of customer contracts and performed the following, among others:Obtained contract documents for each selection, including master agreements, and other documents that were part of the agreement.Analyzed the contract to determine if arrangement terms that may have an impact on revenue recognition were identified and properly consideredin the evaluation of the accounting for the contract.Confirmed the contract terms with the counterparty and performed alternative procedures in the event of nonreplies.Tested management’s identification of distinct performance obligations by evaluating whether the underlying goods, services, or both were highlyinterdependent and interrelated.Evaluated the total transaction price determined by management based on the terms of the contract, including any variable consideration, andrecalculated the allocation of the total transaction price to each distinct performance obligation based on respective standalone selling prices.Evaluated the appropriateness of the selected pattern of revenue recognition for each performance obligation and tested delivery/installation of thegoods and services.For a sample of revenue transactions, we performed detail transaction testing by agreeing the amounts recognized to source documents and testingthe mathematical accuracy of the recorded revenue.We evaluated the reasonableness of the Company’s methodology for estimating standalone selling prices by:Holding discussions with sales department personnel to understand the Company’s pricing strategy.Comparing a sample of standalone selling price estimates to historical selling prices and investigating estimates with low correlation to historicalpricing.65••••••••Contingencies - Refer to Note 16 to the financial statementsCritical Audit Matter DescriptionThe Company is involved in several antitrust lawsuits that set forth allegations of anti-competitive agreements. Legal loss contingencies are evaluatedbased on the likelihood of the Company incurring a liability and whether a loss or range of losses is reasonably estimable. The likelihood and amount of aloss or range of losses are estimated based on the progression of settlement discussions, legal and expert fees, and the Company’s historical litigationexperience. In July 2019, the Company entered into a settlement agreement for one antitrust lawsuit. Following this settlement, the Company determinedthat:A loss on the remaining unsettled antitrust lawsuits was probable and could be reasonably estimated.The maximum potential loss exposure was not reasonably estimable.Accordingly, in the fourth quarter of 2019, the Company recorded a litigation provision of $90 million. Estimating the value of the loss involved significantjudgment given the uncertainty that exists with respect to the remaining unsettled cases.Given the subjectivity of estimating the likelihood and amount of a loss and range of potential loss, performing audit procedures to evaluate whether legalloss contingencies were appropriately recorded and disclosed as of June 30, 2019, required a high degree of auditor judgment and an increased extent ofeffort.How the Critical Audit Matter Was Addressed in the AuditOur audit procedures related to the legal loss contingencies included the following, among others:We tested the effectiveness of controls related to legal loss contingencies, including those over the review of outstanding legal matters.We inquired of internal and external legal counsel to understand developments in legal matters and progression in potential settlement discussions.We requested and received a written response from external legal counsel as it relates to the antitrust lawsuits.We read Board of Directors meeting minutes for evidence of unrecorded contingencies.We evaluated the assumptions used by the Company to estimate the litigation provision, including corroborating the assumptions with internal legalcounsel.We evaluated the Company’s legal contingencies disclosures for consistency with our knowledge of the Company’s legal matters./s/ DELOITTE & TOUCHE LLPChicago, IllinoisAugust 13, 2019We have served as the Company's auditor since 2014.66CDK Global, Inc.Consolidated Statements of Operations(In millions, except per share amounts) Years Ended June 30, 2019 2018 2017Revenues$1,914.8 $1,798.0 $1,730.7 Expenses: Cost of revenues899.8 854.5 898.2Selling, general and administrative expenses444.7 441.2 433.2Restructuring expenses28.0 20.6 17.7Litigation provision90.0 — —Total expenses1,462.5 1,316.3 1,349.1Operating earnings452.3 481.7 381.6 Interest expense(139.1) (95.9) (57.2)Loss from equity method investment(17.0) — —Other income, net7.7 13.4 3.3 Earnings before income taxes303.9 399.2 327.7 Provision for income taxes(62.2) (88.1) (92.8) Net earnings from continuing operations241.7 311.1 234.9(Loss) Earnings from discontinued operations, net of taxes(109.8) 77.6 67.6Net earnings131.9 388.7 302.5Less: net earnings attributable to noncontrolling interest7.9 7.9 6.9Net earnings attributable to CDK$124.0 $380.8 $295.6 Net earnings (loss) attributable to CDK per share - basic: Continuing operations$1.86 $2.23 $1.55Discontinued operations$(0.87) $0.57 $0.46Total net earnings attributable to CDK per share - basic$0.99 $2.80 $2.01 Net earnings (loss) attributable to CDK per share - diluted: Continuing operations$1.85 $2.21 $1.53Discontinued operations$(0.87) $0.57 $0.46Total net earnings attributable to CDK per share - diluted$0.98 $2.78 $1.99 Weighted-average common shares outstanding: Basic125.5 135.8 146.7Diluted126.4 136.8 148.2See notes to the consolidated financial statements.67CDK Global, Inc.Consolidated Statements of Comprehensive Income(In millions) Years Ended June 30, 2019 2018 2017Net earnings$131.9 $388.7 $302.5Other comprehensive (loss) income: Currency translation adjustments(17.8) 3.5 2.2Other comprehensive (loss) income(17.8) 3.5 2.2Comprehensive income114.1 392.2 304.7Less: comprehensive income attributable to noncontrolling interest7.9 7.9 6.9Comprehensive income attributable to CDK$106.2 $384.3 $297.8See notes to the consolidated financial statements.68CDK Global, Inc.Consolidated Balance Sheets(In millions, except per share par value) June 30, 2019 2018Assets Current assets: Cash and cash equivalents$311.4 $804.4Accounts receivable, net of allowances of $9.5 and $7.4, respectively412.3 374.6Current assets held for sale98.6 1.8Other current assets164.8 186.5Total current assets987.1 1,367.3Property, plant and equipment, net144.8 127.6Long-term assets held for sale— 267.6Other assets284.9 164.3Goodwill1,356.3 989.2Intangible assets, net225.9 92.4Total assets$2,999.0 $3,008.4 Liabilities and Stockholders' Deficit Current liabilities: Current maturities of long-term debt and capital lease obligations$270.8 $45.2Accounts payable57.4 50.5Accrued expenses and other current liabilities203.8 197.9Litigation liability90.0 —Accrued payroll and payroll-related expenses89.2 85.6Current liabilities held for sale1.9 3.7Short-term deferred revenues124.8 165.5Total current liabilities837.9 548.4Long-term debt and capital lease obligations2,659.4 2,575.5Long-term deferred revenues68.4 110.2Deferred income taxes80.5 56.7Long-term liabilities held for sale— 0.8Other liabilities67.3 64.1Total liabilities3,713.5 3,355.7 Commitments and Contingencies (Note 16) Stockholders' Deficit: Preferred stock, $0.01 par value: Authorized, 50.0 shares; issued and outstanding, none— —Common stock, $0.01 par value: Authorized, 650.0 shares; issued, 160.3 and 160.3 shares, respectively; outstanding, 121.1 and 130.1shares, respectively1.6 1.6Additional paid-in-capital688.5 679.8Retained earnings911.6 753.0Treasury stock, at cost: 39.2 and 30.2 shares, respectively(2,324.6) (1,810.7)Accumulated other comprehensive income(6.7) 11.5Total CDK stockholders’ deficit(729.6) (364.8)Noncontrolling interest15.1 17.5Total stockholder's deficit(714.5) (347.3)Total liabilities and stockholders' deficit$2,999.0 $3,008.4See notes to the consolidated financial statements.69CDK Global, Inc.Consolidated Statements of Cash Flows(In millions) Years Ended June 30, 2019 2018 2017Cash Flows from Operating Activities: Net earnings$131.9 $388.7 $302.5Less: (loss) earnings from discontinued operations, net of taxes(109.8) 77.6 67.6Net earnings from continuing operations241.7 311.1 234.9Adjustments to reconcile net earnings from continuing operations to cash flows provided by operating activities: Depreciation and amortization89.8 70.8 63.4Asset impairment19.3 — —Loss from equity method investment17.0 — —Deferred income taxes(5.1) (10.1) 20.9Stock-based compensation expense30.5 33.4 52.7Other11.1 4.6 4.6Changes in operating assets and liabilities, net of effects of acquisitions: Increase in accounts receivable(20.1) (10.6) (5.6)(Increase) Decrease in other assets(49.2) 14.0 1.5(Decrease) Increase in accounts payable(1.6) 10.5 5.1Increase (Decrease) in accrued expenses and other liabilities105.1 (49.8) (14.8)Net cash flows provided by operating activities, continuing operations438.5 373.9 362.7Net cash flows provided by operating activities, discontinued operations44.6 92.5 73.0Net cash flows provided by operating activities483.1 466.4 435.7 Cash Flows from Investing Activities: Capital expenditures(54.4) (45.9) (62.4)Proceeds from sale of property, plant and equipment7.4 1.8 0.5Capitalized software(37.9) (30.8) (28.1)Acquisitions of businesses, net of cash acquired(513.0) (12.8) —Contributions to investments(17.0) — (2.1)Proceeds from investments0.4 0.8 7.9Net cash flows used in investing activities, continuing operations(614.5) (86.9) (84.2)Net cash flows used in investing activities, discontinued operations(8.7) (26.6) (3.7)Net cash flows used in investing activities(623.2) (113.5) (87.9) Cash Flows from Financing Activities: Proceeds from long-term debt1,100.0 500.0 1,000.0Repayments of long-term debt and capital lease obligations(806.5) (46.4) (36.9)Dividends paid to stockholders(74.8) (80.1) (80.7)Repurchases of common stock(524.1) (623.6) (700.0)Proceeds from exercise of stock options5.0 8.9 14.7Withholding tax payments for stock-based compensation awards(15.8) (10.6) (12.2)Dividend payments to noncontrolling owners(10.3) (7.4) (6.3)Payments of deferred financing costs(11.7) (7.9) (10.6)Acquisition-related payments(10.8) (4.1) (8.1)Net cash flows (used in) provided by financing activities, continuing operations(349.0) (271.2) 159.9 Effect of exchange rate changes on cash, cash equivalents, and restricted cash(6.9) 1.4 4.0 Net change in cash, cash equivalents, and restricted cash(496.0) 83.1 511.7 Cash, cash equivalents, and restricted cash, beginning of period817.1 734.0 222.3 Cash, cash equivalents, and restricted cash, end of period$321.1 $817.1 $734.0 70Reconciliation of cash, cash equivalents, and restricted cash to the Consolidated Balance Sheets: Cash and cash equivalents$311.4 $804.4 $726.1Restricted cash in funds held for clients included in other current assets9.7 12.7 7.9Total cash, cash equivalents, and restricted cash$321.1 $817.1 $734.0 Years Ended June 30, 2019 2018 2017Supplemental Disclosure: Cash paid for: Income taxes and foreign withholding taxes, net of refunds$124.2 $118.9 $120.3Interest130.0 92.8 49.6Non-cash transactions: Non-cash consideration issued for acquisitions (Note 5)— 14.5 —See notes to the consolidated financial statements.71CDK Global, Inc.Consolidated Statements of Stockholders' (Deficit) Equity(In millions) Common Stock AdditionalPaid-in-Capital RetainedEarnings TreasuryStock Accumulated OtherComprehensive Income Total CDKStockholders'(Deficit) Equity Non-controllingInterest TotalStockholders'(Deficit) Equity SharesIssued Amount Balance as of June 30, 2016160.3 $1.6 $640.7 $238.3 $(526.6) $5.8 $359.8 $16.4 $376.2Net earnings— — — 295.6 — — 295.6 6.9 302.5Foreign currency translation adjustments— — — — — 2.2 2.2 — 2.2Stock-based compensation expense and related dividendequivalents— — 47.3 (0.5) — — 46.8 — 46.8Common stock issued for the exercise and vesting ofstock-based compensation awards, net— — (45.1) — 47.6 — 2.5 — 2.5Cash dividends paid to stockholders ($.555 per share)— — — (80.7) — — (80.7) — (80.7)Repurchases of common stock— — (34.3) — (665.7) — (700.0) — (700.0)Dividend payments to noncontrolling owners— — — — — — — (6.3) (6.3)Balance as of June 30, 2017160.3 1.6 608.6 452.7 (1,144.7) 8.0 (73.8) 17.0 (56.8)Net earnings— — — 380.8 — — 380.8 7.9 388.7Foreign currency translation adjustments— — — — — 3.5 3.5 — 3.5Stock-based compensation expense and related dividendequivalents— — 30.5 (0.4) — — 30.1 — 30.1Common stock issued for the exercise and vesting ofstock-based compensation awards, net— — (26.2) — 24.5 — (1.7) — (1.7)Cash dividends paid to stockholders ($0.59 per share)— — — (80.1) — — (80.1) — (80.1)Repurchases of common stock— — 66.9 — (690.5) — (623.6) — (623.6)Dividend payments to noncontrolling owners— — — — — — — (7.4) (7.4)Balance as of June 30, 2018160.3 1.6 679.8 753.0 (1,810.7) 11.5 (364.8) 17.5 (347.3)Net earnings— — — 124.0 — — 124.0 7.9 131.9Foreign currency translation adjustments— — — — — (17.8) (17.8) — (17.8)Stock-based compensation expense and related dividendequivalents— — 29.7 (0.3) — — 29.4 — 29.4Common stock issued for the exercise and vesting ofstock-based compensation awards, net— — (34.0) — 23.2 — (10.8) — (10.8)Cash dividends paid to stockholders ($0.60 per share)— — — (74.8) — — (74.8) — (74.8)Repurchases of common stock— — 13.0 — (537.1) — (524.1) — (524.1)Dividend payments to noncontrolling owners— — — — — — — (10.3) (10.3)Cumulative impact of ASC 606— — — 109.7 — (0.4) 109.3 — 109.3Balance as of June 30, 2019160.3 $1.6 $688.5 $911.6 $(2,324.6) $(6.7) $(729.6) $15.1 $(714.5)See notes to the consolidated financial statements.72CDK Global, Inc.Notes to the Consolidated Financial Statements(Tabular amounts in millions, except per share amounts)Note 1. Basis of PresentationA. Description of BusinessCDK Global, Inc. (the "Company" or "CDK") enables end-to-end automotive commerce across the globe. For over 40 years, the Company has servedautomotive retailers and original equipment manufacturers ("OEMs") by providing innovative solutions that allow them to better connect, manage, analyze,and grow their businesses. The Company's solutions automate and integrate all parts of the buying process, including the acquisition, sale, financing,insuring, parts supply, repair, and maintenance of vehicles, in more than 100 countries around the world, for approximately 30,000 retail locations and mostOEMs.The Company is organized into two main operating groups, CDK North America ("CDKNA") and CDK International ("CDKI"), which are alsoreportable segments. In addition, the Company has an Other segment, the primary components of which are corporate allocations and other expenses notrecorded in the segment results. Refer to Note 19 - Financial Data by Segment for further information.The Company previously reported the results of Advertising North America ("ANA") as a reportable segment. During the fourth quarter of fiscal year2019, the Company committed to a plan to divest: (a) all of the assets of ANA; and (b) certain assets of CDKNA related to mobile advertising solutions andwebsite services (collectively, the “Digital Marketing Business”). The Digital Marketing Business is presented as discontinued operations. Additionalinformation on discontinued operations is contained in Note 4 - Discontinued Operations.B. Basis of PreparationThe accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States(“GAAP”). The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect assets,liabilities, revenues, and expenses that are reported in the accompanying financial statements and footnotes thereto. Actual results may differ from thoseestimates.Certain prior year amounts have been reclassified to conform to current year presentation. Refer to Note 3 - New Accounting Pronouncements fordiscussion relating to the impact of adopting Accounting Standards Update ("ASU") 2016-18 on the presentation of changes in restricted cash in theconsolidated statement of cash flows, and Note 4 - Discontinued Operations for the impact of presenting Digital Marketing Business as held for sale anddiscontinued operations.C. Spin-offOn April 9, 2014, the board of directors of Automatic Data Processing, Inc. (“ADP”) approved the spin-off of the Dealer Services business of ADP. OnSeptember 30, 2014, the spin-off became effective and ADP distributed 100% of the common stock of CDK to the holders of record of ADP's common stockas of September 24, 2014 (the "spin-off").Concurrent with the spin-off, the Company and ADP entered into several agreements providing for transition services and governing relationshipsbetween the Company and ADP. Refer to Note 10 - Income Taxes and Note 18 - Transactions with ADP for further information.Note 2. Summary of Significant Accounting PoliciesA. ConsolidationThe financial statements include the accounts of the Company and its wholly owned subsidiaries. In addition, the financial statements include theaccounts of Computerized Vehicle Registration ("CVR") in which CDK holds a controlling financial or management interest. Intercompany transactions andbalances between consolidated CDK businesses have been eliminated.The Company's share of earnings or losses of non-controlled affiliates, over which the Company exercises significant influence (generally a 20% to50% ownership interest), are included in the consolidated operating results using the equity method of accounting. The carrying value of these equitymethod investments was not significant as of June 30, 2019 and 2018.73B. Business CombinationsThe purchase price allocations for acquisitions are based on estimates of the fair value of tangible and intangible assets acquired and liabilitiesassumed. The Company engages independent valuation specialists, when necessary, to assist with purchase price allocations and uses recognized valuationtechniques, including the income and market approaches, to determine fair value. Management makes estimates and assumptions in determining purchaseprice allocations and valuation analysis, which may involve significant unobservable inputs. The excess of the purchase price over the estimated fair valuesof the underlying assets acquired and liabilities assumed is allocated to goodwill. In certain circumstances, the determination of the purchase price andallocation to assets acquired and liabilities assumed are based upon preliminary estimates and assumptions. Accordingly, the allocation may be subject torevision during the measurement period, which may be up to one year from the acquisition date, when the Company receives final information, includingappraisals and other analyses. Measurement period adjustments are recorded to goodwill in the reporting period in which the adjustments to the provisionalamounts are determined.Assets acquired and liabilities assumed in business combinations are recorded on the Company’s consolidated balance sheets as of the respectiveacquisition dates based upon their estimated fair values at such dates. The results of operations of businesses acquired by the Company are included in theCompany’s consolidated statements of operations since their respective acquisition dates.C. RestructuringRestructuring expenses consist of employee-related costs, including severance and other termination benefits calculated based on long-standingbenefit practices and local statutory requirements, and contract termination costs. Restructuring liabilities are recognized at fair value in the period theliability is incurred. In some jurisdictions, the Company has ongoing benefit arrangements under which the Company records the estimated severance andother termination benefits when such costs are deemed probable and estimable, approved by the appropriate corporate management, and if actions required tocomplete the termination plan indicate that it is unlikely that significant changes to the plan will be made or the plan will be withdrawn. In jurisdictionswhere there is not an ongoing benefit arrangement, the Company records estimated severance and other termination benefits when appropriate corporatemanagement has committed to the plan and the benefit arrangement is communicated to the affected employees. A liability for costs to terminate a contractbefore the end of its term is recognized at fair value when the Company terminates the contract in accordance with its terms. Estimates are evaluatedperiodically to determine whether an adjustment is required.D. Revenue Recognition and Deferred CostsEffective July 1, 2018, the Company adopted the Financial Accounting Standard Board (“FASB”) Accounting Standards Update ("ASU") 2014-09,“Revenue from Contracts with Customers,” and related ASUs ("ASC 606") using the modified retrospective approach. The comparative information has notbeen restated and continues to be reported under the accounting standards in effect for the period presented. Refer to Note 6 - Revenue for the requireddisclosures related to the impact of adopting ASC 606 and a discussion of the Company's updated policy related to revenue recognition and deferred costs.Refer to Note 2 - Summary of Significant Accounting Policies in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2018 for theCompany's revenue recognition and deferred costs policies prior to adoption of ASC 606.E. Income TaxesIncome tax expense is recognized for the amount of taxes payable or refundable for the current year. Deferred tax assets and liabilities are recognizedfor the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operatinglosses and tax credit carryforwards. Management must make assumptions, judgments, and estimates to determine the provision for income taxes, taxespayable or refundable, and deferred tax assets and liabilities. The Company's assumptions, judgments, and estimates take into consideration the realization ofdeferred tax assets and changes in tax laws or interpretations thereof. The Company's income tax returns are subject to examination by various tax authorities.A change in the assessment of the outcomes of such matters could materially impact the Company's consolidated financial statements.The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. In determiningthe need for a valuation allowance, the Company considers future market growth, forecasted74earnings, future taxable income, and prudent and feasible tax planning strategies. In the event the Company determines that it is more likely than not that anentity will be unable to realize all or a portion of its deferred tax assets in the future, the Company would increase the valuation allowance and recognize acorresponding charge to earnings in the period in which such a determination is made. Likewise, if the Company later determines that it is more likely thannot that the deferred tax assets will be realized, the Company would reverse the applicable portion of the previously recognized valuation allowance. In orderto realize deferred tax assets, the Company must be able to generate sufficient taxable income of the appropriate character in the jurisdictions in which thedeferred tax assets are located.The Company recognizes tax benefits for tax positions that are more likely than not to be sustained upon examination by tax authorities. Theamount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognizedtax benefits are tax benefits claimed in the Company's income tax returns that do not meet these recognition and measurement standards. Assumptions,judgments, and the use of estimates are required in determining whether the "more likely than not" standard has been met when developing the provision forincome taxes.If certain pending tax matters settle within the next twelve months, the total amount of unrecognized tax benefits may increase or decrease for allopen tax years and jurisdictions. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. The Company continuallyassesses the likelihood and amount of potential adjustments and adjusts the income tax provision, the current taxes payable and deferred taxes in the periodin which the facts that give rise to a revision become known.The Company accounts for the Global Intangible Low Taxed Income (GILTI) tax as a period cost when incurred. The GILTI provision is effectivebeginning in fiscal year 2019.The Company accounts for goodwill impairment as a permanent tax difference and as a period cost when incurred effective beginning in fiscal year2019.F. Stock-Based CompensationCertain of the Company's employees (a) have been granted stock options to purchase shares of the Company’s common stock and (b) have beengranted restricted stock or restricted stock units under which shares of the Company's common stock vest based on the passage of time or achievement ofperformance and market conditions. The Company recognizes stock-based compensation expense in net earnings based on the fair value of the award on thedate of the grant. The Company records the impact of forfeitures on stock compensation expense in the period the forfeitures occur. The Company determinesthe fair value of stock options issued using a binomial option-pricing model. The binomial option-pricing model considers a range of assumptions related tovolatility, dividend yield, risk-free interest rate, and employee exercise behavior. Expected volatilities utilized in the binomial option pricing model arebased on a combination of implied market volatilities and historical volatilities of peer companies. Similarly, the dividend yield is based on historicalexperience and expected future dividend payments. The risk-free rate is derived from the U.S. Treasury yield curve in effect at the time of grant. The binomialoption pricing model also incorporates exercises based on an analysis of historical data. The expected life of a stock option grant is derived from the outputof the binomial model and represents the period of time that options granted are expected to be outstanding.The grant date fair value of restricted stock and restricted stock units that vest upon achievement of service conditions is based on the closing priceof the Company's common stock on the date of grant. The Company also grants performance-based awards that vest over a performance period. Certainperformance-based awards are further subject to adjustment (increase or decrease) based on a market condition defined as total stockholder return of theCompany’s common stock compared to a peer group of companies. The fair value of performance-based awards subject to a market condition is determinedusing a Monte Carlo simulation model. The principal variable assumptions utilized in determining the grant date fair value of performance-based awardssubject to a market condition include the risk-free rate, stock volatility, dividend yield, and correlations between the Company's stock price and the stockprices of the peer group of companies. The probability associated with the achievement of performance conditions affects the vesting of the Company'sperformance-based awards. Expense is only recognized for those shares expected to vest. The Company adjusts stock-based compensation expense (increaseor decrease) when it becomes probable that actual performance will differ from the estimate.G. Cash and Cash EquivalentsInvestment securities with an original maturity of three months or less at the time of purchase are considered cash equivalents.75H. Accounts Receivable, NetAccounts receivable, net comprises trade receivables and lease receivables, net of allowances. Trade receivables consist of amounts due to theCompany in the normal course of business, which are not collateralized and do not bear interest. Lease receivables primarily relate to sales-type leases arisingfrom the sale of hardware elements in bundled DMS or other integrated solutions. Lease receivables represent the current portion of the present value of theminimum lease payments at the beginning of the lease term. The long-term portion of the present value of the minimum lease payments is included withinother assets on the consolidated balance sheets. The Company considers lease receivables to be a single portfolio segment.The accounts receivable allowances for both trade receivables and lease receivables are estimated based on historical collection experience, ananalysis of the age of outstanding accounts receivable, and credit issuance experience. Receivables are considered past due if payment is not received by thedate agreed upon with the customer. Write-offs are made when management believes it is probable a receivable will not be recovered.I. Funds Receivable and Funds Held for Clients and Client Fund ObligationsFunds receivable and funds held for clients represent amounts received or expected to be received from clients in advance of performing titling andregistration services on behalf of those clients. These amounts are classified within other current assets on the consolidated balance sheets. The total amountdue to remit for titling and registration obligations with the department of motor vehicles is recorded to client fund obligations which is classified as accruedexpenses and other current liabilities on the consolidated balance sheets. Funds receivable was $32.3 million and $33.1 million, and funds held for clientswas $9.7 million and $12.7 million as of June 30, 2019 and 2018, respectively. Client fund obligation was $42.0 million and $45.8 million as of June 30,2019 and 2018, respectively.J. Property, Plant and Equipment, NetProperty, plant and equipment, net is stated at cost and depreciated over the estimated useful lives of the assets using the straight-line method.Leasehold improvements are amortized over the shorter of the term of the lease or the estimated useful lives of the improvements. The estimated useful livesof assets are primarily as follows:Buildings20 to 40 yearsFurniture and fixtures4 to 7 yearsData processing equipment2 to 5 yearsK. GoodwillThe Company tests goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value may not berecoverable. The Company tests goodwill for impairment at the reporting unit level. A reporting unit is an operating segment or a component of an operatingsegment.The Company tests impairment by first comparing the fair value of each reporting unit to its carrying amount. If the carrying value of the reportingunit exceeds its fair value, the difference, up to the amount of goodwill recorded for the reporting unit, is recognized as an impairment.The Company estimates the fair value of the Company's reporting units by weighting the results from the income approach, which is the presentvalue of expected cash flows discounted at a risk-adjusted weighted-average cost of capital, and the market approach, which uses market multiples ofcompanies in similar lines of business. These valuation approaches require significant judgment and consider a number of factors including assumptionsabout the future growth and profitability of the Company's reporting units, the determination of appropriate comparable publicly traded companies in theCompany's industry, discount rates, and terminal growth rates. An adverse change to the fair value of the Company's reporting units could result in animpairment charge which could be material to its consolidated earnings.L. Impairment of Long-Lived AssetsLong-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not berecoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscountedfuture cash flows expected to be generated by the asset group. If76the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amountexceeds the fair value.M. Internal Use Software and Computer Software to be Sold, Leased, or Otherwise MarketedThe Company’s policy provides for the capitalization of external direct costs of materials and services associated with developing or obtaininginternal use computer software. In addition, the Company’s policy also provides for the capitalization of certain payroll and payroll-related costs foremployees who are directly associated with the internal use computer software projects. The amount of capitalizable payroll costs with respect to theseemployees is limited to the time directly spent on such projects. Costs associated with preliminary project stage activities, training, maintenance, and allother post-implementation stage activities are expensed as incurred. The Company also expenses internal costs related to minor upgrades and enhancements,as it is impracticable to separate these costs from normal maintenance activities. The Company amortizes internal use software typically over a three to fiveyear life.The Company’s policy provides for the capitalization of certain costs of computer software to be sold, leased, or otherwise marketed. TheCompany’s policy provides for the capitalization of all software production costs upon reaching technological feasibility for a specific product.Technological feasibility is attained when software products have a completed working model whose consistency with the overall product design has beenconfirmed by testing. Costs incurred prior to the establishment of technological feasibility are expensed as incurred. The establishment of technologicalfeasibility requires judgment by management and in many instances is only attained a short time prior to the general release of the software. Maintenance-related costs are expensed as incurred.Pursuant to these policies, the Company incurred expenses to research, develop, and deploy new and enhanced solutions of $79.5 million, $115.0million, and $125.1 million for fiscal 2019, 2018, and 2017, respectively. These expenses were classified within cost of revenues on the consolidatedstatements of operations.N. Assets Held for SaleThe Company considers assets to be held for sale when management, with appropriate authority, approves and commits to a formal plan to activelymarket the assets for sale at a price reasonable in relation to their estimated fair value, the assets are available for immediate sale in their present condition, anactive program to locate a buyer has been initiated, the sale of the assets is probable and expected to be completed within one year and it is unlikely thatsignificant changes will be made to the plan. Upon designation as held for sale, the Company records the assets at the lower of their carrying value or theirestimated fair value, reduced for the cost to dispose the assets, and ceases to record depreciation and amortization expenses on the assets.Assets and liabilities of a discontinued operation are reclassified for all comparative periods presented in the consolidated balance sheet. For assetsand liabilities that meet the held for sale criteria but do not meet the definition of a discontinued operation, the Company reclassifies the assets and liabilitiesin the period in which the held for sale criteria are met, but does not reclassify prior period amounts. Refer to Note 4 - Discontinued Operations for furtherinformation regarding Company's assets and liabilities held for sale.O. Discontinued OperationsThe Company reports financial results for discontinued operations separately from continuing operations to distinguish the financial impact ofdisposal transactions from ongoing operations. Discontinued operations reporting occurs only when the disposal of a component or a group of components ofthe Company (i) meets the held-for-sale classification criteria, is disposed of by sale, or other than by sale, and (ii) represents a strategic shift that will have amajor effect on the Company's operations and financial results. The results of operations and cash flows of a discontinued operation are restated for allcomparative periods presented. Unless otherwise noted, discussion in the Notes to Consolidated Financial Statements refers to the Company's continuingoperations. Refer to Note 4 - Discontinued Operations for further information regarding the Company's discontinued operations.77P. Foreign CurrencyFor foreign subsidiaries where the local currency is the functional currency, net assets are translated into U.S. dollars based on exchange rates ineffect for each period, and revenues and expenses are translated at average exchange rates in the periods. Gains or losses from balance sheet translation ofsuch entities are included in accumulated other comprehensive income on the consolidated balance sheets. Currency transaction gains or losses relate tointercompany loans denominated in a currency other than that of the loan counterparty, which do not eliminate upon consolidation. Currency transactiongains or losses are included within other income, net on the consolidated statements of operations.Q. Fair Value MeasurementsFair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or mostadvantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used tomeasure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy has been establishedbased on three levels of inputs, of which the first two are considered observable and the last unobservable.•Level 1: Inputs that are based upon quoted prices in active markets for identical assets or liabilities.•Level 2: Inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly.•Level 3: Unobservable inputs where there is little or no market activity for the asset or liability. These inputs reflect management's best estimate ofwhat market participants would use to price the assets or liabilities at the measurement date.The Company determines the fair value of financial instruments in accordance with ASC 820, "Fair Value Measurements." This standard defines fairvalue and establishes a framework for measuring fair value in accordance with GAAP. Cash and cash equivalents, accounts receivable, other current assets,accounts payable, and other current liabilities are reflected in the consolidated balance sheets at cost, which approximates fair value due to the short-termnature of these instruments. The carrying value of the Company's term loan facilities (as described in Note 15 - Debt), including accrued interest,approximates fair value based on the Company's current estimated incremental borrowing rate for similar types of arrangements. The approximate aggregatefair value of the Company's senior notes as of June 30, 2019, and 2018, was $2,441.6 million and $1,849.3 million, respectively, based on quoted marketprices for the same or similar instruments compared to a carrying value of $2,350.0 million and $1,850.0 million as of June 30, 2019, and 2018. The term loanfacilities and the senior notes are considered Level 2 fair value measurements in the fair value hierarchy.The Company has derivatives not designated as hedges which consisted of foreign currency forward contracts to offset the risks associated with theeffects of certain foreign currency exposure on intercompany loans. The Company recognized changes in fair value of the derivative instruments in Otherincome, net in the consolidated statements of operations.R. ConcentrationsThe Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company maintains deposits ina diversified group of financial institutions, has not experienced any losses to date, and monitors the credit ratings of the primary depository institutionswhere deposits reside.For fiscal 2019, 2018, and 2017, none of the CDKNA and CDKI segment customers accounted for 10% or more of the Company's consolidatedrevenues. As of June 30, 2019, and 2018, accounts receivable from one customer represented approximately 9% and 11%, respectively, of the Company'saccounts receivable. Revenues from this customer were generated by the Digital Marketing Business and are reported in discontinued operations.Note 3. New Accounting PronouncementsRecently Adopted Accounting PronouncementsIn January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other.” ASU 2017-04 simplifies the accounting for goodwillimpairment by eliminating Step 2 of the current goodwill impairment test, which required a hypothetical purchase price allocation. Goodwill impairment willnow be the amount by which the reporting unit’s carrying78value exceeds its fair value, limited to the carrying value of the goodwill. ASU 2017-04 is effective for financial statements issued for fiscal years, and interimperiods beginning after December 15, 2019. The Company adopted this standard on July 1, 2018, and eliminated Step 2 of the goodwill impairment test incalculating goodwill impairment for ANA. Additional information on goodwill impairment for ANA is contained in Note 4 - Discontinued Operations.In November 2016, the FASB issued ASU 2016-18, “Restricted Cash.” ASU 2016-18 requires that a statement of cash flows explain the changeduring the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. ASU 2016-18 iseffective for financial statements issued for fiscal years, and interim periods beginning after December 15, 2017. The Company adopted ASU 2016-18retrospectively on July 1, 2018, and as a result included restricted cash with cash and cash equivalents when reconciling the beginning of the period and endof the period total amounts presented on the consolidated statements of cash flows. Accordingly, the consolidated statement of cash flows has been revised toinclude restricted cash associated with funds held for clients as a component of cash, cash equivalents, and restricted cash.As a result of the adoption, the Company adjusted the consolidated statements of cash flows from previously reported amounts as follows: Year ended June 30, 2018 Year ended June 30, 2017 OriginallyReported Adjustments dueto ASU 2016-18 As Adjusted OriginallyReported Adjustments due toASU 2016-18 As AdjustedCash, cash equivalents, andrestricted cash, beginning ofperiod $726.1 $7.9 $734.0 $219.1 $3.2 $222.3Net cash flows provided byoperating activities 461.6 4.8 466.4 431.0 4.7 435.7Cash, cash equivalents, andrestricted cash end of period 804.4 12.7 817.1 726.1 7.9 734.0In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments (Topic 230).” ASU 2016-15 addresseseight specific cash flow issues where there is diversity in practice in how these certain cash receipts and cash payments are presented and classified in thestatements of cash flows. ASU 2016-15 is effective for financial statements issued for fiscal years, and interim periods beginning after December 15, 2017.The adoption of ASU 2016-15 did not have a material impact on the Company's consolidated statements of cash flows.In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” Refer to Note 6, Revenue, for the required disclosures relatedto the impact of adopting ASC 606.Recently Issued Accounting Pronouncements In November 2018, the FASB issued ASU 2018-18, "Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 andTopic 606" to resolve the diversity in practice concerning the manner in which entities account for transactions based on their assessment of the economics ofa collaborative arrangement. ASU 2018-18 is effective for fiscal years, and interim periods beginning after December 15, 2019. Early adoption is permitted.The Company is currently in the process of evaluating the potential impact of the adoption of ASU 2018-18 on its consolidated financial statements.In August 2018, the FASB issued ASU 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing ArrangementThat Is a Service Contract," which aligns the accounting for implementation cost incurred in a hosting arrangement that is a service contract with theaccounting for implementation costs incurred to develop or obtain internal-use software under ASC 350-40, in order to determine which costs to capitalizeand recognize as an asset. ASU 2018-15 is effective for fiscal years, and interim periods beginning after December 15, 2019, and can be applied eitherprospectively to implementation costs incurred after the date of adoption or retrospectively to all arrangements. Early adoption is permitted. The Companyplans to early adopt ASU 2018-15 on July 1, 2019 using the prospective approach and will apply this guidance to all implementation costs incurred after thedate of adoption.In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments," which amends the impairment model byrequiring entities to use a forward-looking approach based on expected losses to estimate79credit losses on certain types of financial instruments, including trade receivables. ASU 2016-13 is effective for fiscal years beginning after December 15,2019. The Company is currently in the process of evaluating the potential impact of the adoption of ASU 2016-13 on its consolidated financial statements.In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)" and subsequent amendments to the initial guidance: ASU 2017-13, ASU2018-11 and ASU 2018-20 (collectively, "ASC 842"). ASC 842 requires that lessees recognize right-of-use assets and lease liabilities for any lease classifiedas either a finance or an operating lease that is not considered short-term. The accounting applied by lessors is largely consistent with the existing leasestandard but updated to align with certain changes to the lessee model (e.g., certain definitions, such as substantive substitution rights, have been updated)and the new revenue recognition guidance issued in 2014. The new standard is effective for fiscal years, and interim periods within those fiscal years,beginning after December 15, 2018, and early adoption is permitted. Entities are required to adopt this standard using a modified retrospective transitionapproach. Under this approach, the standard is implemented either (1) as of the earliest period presented and through the comparative periods in the entity'sfinancial statements or (2) as of the effective date of ASC 842, with a cumulative-effect adjustment to equity.The Company plans to adopt ASC 842 on July 1, 2019 using the transition method whereby prior comparative periods will not be restated. Inaddition, the Company plans to elect the package of practical expedients permitted under the transition guidance for all leases (where the Company is alessee or a lessor), which does not require reassessment of prior conclusions related to contracts containing a lease, lease classification, and initial direct leasecosts.CDK as a Lessee:The Company has obligations under lease arrangements mainly for facilities, vehicles and equipment, which are classified as operating leases underthe existing lease standard. In preparation of adopting this new standard, the Company has implemented a third-party lease management software to captureleases and support the required disclosures, and updated its accounting policies, internal controls, and processes related to this new guidance.The Company has made the following policy elections:–The Company will elect to not recognize right-of-use assets and lease liabilities for leases with a term of 12 months or less for all asset classes.–The Company will elect the practical expedient that allows entities to combine lease components with related non-lease components.The Company is in the process of finalizing the impact of adopting this standard and currently anticipates recognizing a right-of-use asset, net ofprepaids, incentives and impairments, of approximately $65.0 million to $70.0 million, and a lease liability of approximately $70.0 million to $75.0 millionin the Company's consolidated balance sheets. The Company’s assessment of the full impact of adoption of the standard is subject to finalization, such thatthe actual impact of the adoption may differ from the estimated range described above.CDK as a Lessor:The Company evaluated its hardware-as-a-service arrangements and concluded that such arrangements will be accounted for as a sales-type leaseunder the new standard, primarily because they do not contain substantive substitution rights. Since the Company has elected to not reassess priorconclusions related to contracts containing a lease, lease classification, and initial direct costs, only hardware leases that commence or are modifiedsubsequent to our July 1, 2019 adoption will be accounted for under ASC 842. These arrangements provide customers continuous access to CDK ownedhardware, such as networking and telephony equipment and laser printers. Historically, the Company has accounted for these arrangements as a distinctperformance obligation under the revenue recognition guidance and recognized revenue over the term of the arrangement. Note 4. Discontinued OperationsIn June 2019, the Company committed to a plan to divest Digital Marketing Business which comprises: (a) all of the assets of ANA; and (b) certainassets of CDKNA related to mobile advertising solutions and website services in order to focus on its core suite of SaaS software and technology solutions forthe markets it serves through the CDKNA and CDKI segments.The Company's decision to divest the Digital Marketing Business was the result of a comprehensive strategic review of the Company’s business,undertaken during the fiscal quarter ending June 30, 2019 (the “fourth quarter”). The Company intends to complete its divestiture of the Digital MarketingBusiness during the next 12 months. This action resulted in the reclassification of the assets and liabilities comprising that business to assets and liabilitiesheld for sale in the accompanying80consolidated balance sheets, and a corresponding adjustment to consolidated statements of operations and cash flows to reflect discontinued operations, forall periods presented. The net of assets and liabilities held-for-sale related to discontinued operations are required to be recorded at the lower of carryingvalue or fair value less costs to sell.As a result of the Company's decision to sell the business, the Company evaluated ANA reporting unit's goodwill for impairment, which is includedin its entirety within the Digital Marketing Business. The impairment test indicated that the carrying value of ANA was higher than its fair value. The declinein ANA's fair value was driven by a decrease in estimated future earnings and an unfavorable change in the discount rate representing management’sassessment of increased risk with respect to the business forecasts primarily due to business uncertainty after the public announcement of the planned sale ofbusiness and management's shift in focus to customer retention instead of growth. As a result, the Company recorded a goodwill impairment charge of $168.7million which is included as a component of discontinued operations for the year ended June 30, 2019.The Company determined the fair value of the Digital Marketing Business and ANA primarily based on third-party valuation analysis, data fromsales of comparable businesses, and analysis of current market conditions. The Company did not record any valuation allowance for the Digital MarketingBusiness as the fair value, less cost to sell, was in excess of its carrying value.The following table summarizes the comparative financial results of discontinued operations which are presented as (Loss)/Earnings fromdiscontinued operations, net of taxes on the Consolidated Statements of Operations: Years Ended June 30, 2019 2018 2017Revenues $418.1 $475.2 $489.5 Expenses: Cost of revenues 307.4 327.5 336.6Selling, general and administrative expenses 30.5 34.6 44.6Goodwill impairment 168.7 — —Restructuring expenses 1.5 0.3 0.7Total expenses 508.1 362.4 381.9(Loss) Earnings before income taxes (90.0) 112.8 107.6 Provision from income taxes 19.8 35.2 40.0 (Loss) Earnings from discontinued operations, net of taxes $(109.8) $77.6 $67.6The total assets and liabilities held for sale related to discontinued operations are stated separately as of June 30, 2019 and 2018, respectively, in theConsolidated Balance Sheets comprised the following items:81 June 30, 2019 June 30, 2018Assets: Prepaid and other current assets $1.1 $1.8Total current assets held for sale* 1.8Property, plant and equipment, net 2.3 4.3Goodwill 59.4 228.0Intangible assets, net 35.6 34.1Other assets 0.2 1.2Total long-term assets held for sale* 267.6Total assets held for sale $98.6 $269.4 Liabilities: Deferred revenues $0.8 $3.5Accrued expenses and other current liabilities 0.7 0.2Total current liabilities held for sale* 3.7Deferred revenues — 0.2Other liabilities 0.4 0.6Total long-term liabilities held for sale* 0.8Total liabilities held for sale $1.9 $4.5* The assets and liabilities of Digital Marketing Business classified as held for sale are classified as current on the June 30, 2019 balance sheet as it isprobable that the sale will occur within one year.Note 5. AcquisitionsFor the year ended June 30, 2019, the Company incurred $13.2 million of costs related to the assessment and integration-related activities of which$6.6 million was recorded within cost of revenue and $6.6 million was recorded within selling, general and administrative expenses. For the year endedJune 30, 2018, the Company incurred $15.6 million of costs related to the assessment and integration-related activities of which $0.3 million was recordedwithin cost of revenue and $15.3 million was recorded within selling, general and administrative expenses.Fiscal 2019 AcquisitionsELEAD1ONEOn September 14, 2018, the Company acquired the equity interests of ELEAD1ONE ("ELEAD"). ELEAD’s automotive customer relationshipmanagement ("CRM") software and call center solutions enable interaction between sales, service and marketing operations to provide dealers with anintegrated customer acquisition and retention platform. The acquisition was made pursuant to an equity purchase agreement, which contains customaryrepresentations, warranties, covenants, and indemnities by the sellers and the Company. The Company acquired all of the outstanding equity of ELEAD foran initial cash purchase price of $513.0 million, net of cash acquired of $7.0 million.The acquisition of ELEAD has been accounted for using the acquisition method of accounting, which requires, among other things, the assetsacquired and liabilities assumed be recognized at their respective fair values as of the acquisition date. As of June 30, 2019, the Company has finalized thepurchase price allocation. The following table summarizes the final amounts recognized for assets acquired and liabilities assumed as of the acquisition date.82 Cash and cash equivalents $7.0Accounts receivable 18.9Other current assets 3.4Property, plant and equipment 14.8Intangible assets 132.0Accrued expenses and other current liabilities (21.6)Short-term deferred revenues (6.6)Capital lease obligations (7.3)Total identifiable net assets 140.6Goodwill 379.4Net assets acquired $520.0The amounts in the table above are reflective of measurement period adjustments made during fiscal year 2019, which mainly included an increaseof $2.9 million to accrued expenses and other liabilities, $1.7 million to intangible assets, $1.4 million to property, plant and equipment, $1.2 million tocapital leases, $1.1 million to goodwill, and $0.1 million to deferred revenue; and a decrease of $0.2 million to accounts receivable. The measurement periodadjustments did not have a significant impact on the consolidated statement of operations, balance sheet or cash flows.The intangible assets acquired primarily relate to customer lists, software, and trademarks, which will be amortized over a weighted-average usefullife of 12 years. The goodwill resulting from this acquisition reflects expected synergies resulting from adding ELEAD products and processes to theCompany's products and processes. The acquired goodwill is allocated to the CDKNA reportable segment and is deductible for tax purposes.In December 2018, the Company sold the airplane acquired as part of the ELEAD acquisition for cash less costs to sell of $6.7 million. Given theshort time between the ELEAD acquisition and the sale of the acquired airplane, the final purchase price allocated to the airplane was adjusted to equal thecash less costs to sell in accordance with ASC 805, "Business Combinations" and ASC 360, "Property, Plant and Equipment." As such, there was no gain orloss recognized on the sale of the airplane.The results of operations for ELEAD have been included in the consolidated statements of operations from the date of acquisition. The pro formaeffects of this acquisition are not significant to the Company's reported results for any period presented. Accordingly, no pro forma financial statements havebeen presented herein.In addition to the acquisition, the Company entered into a joint venture agreement with the sellers. Under the terms of the joint venture agreement,the Company contributed $10.0 million to the venture at the ELEAD acquisition closing, committed to an additional $10.0 million in contributions overtime, and acquired 50% ownership in the joint venture. The Company's contributions were expected to fund the initial operations of the joint venture. UnderASC 810 "Consolidation," the joint venture was determined to be a variable interest entity ("VIE"); however, the Company was not considered the primarybeneficiary. As such, the joint venture was accounted for as an equity method investment and the initial $10.0 million contribution was recorded as aninvestment on the consolidated balance sheets. During the fourth quarter of fiscal 2019, the Company entered into a joint venture termination agreement withthe former owners of ELEAD in exchange for a termination payment of $7.0 million. The initial $10.0 million contribution and the $7.0 million terminationpayment were recorded as a loss from equity method investment within the consolidated statements of operations.For fiscal 2019, the Company incurred $11.9 million of costs in connection with the ELEAD acquisition and integration-related activities of which$6.1 million was recorded within cost of revenues and $5.8 million was recorded within selling, general and administrative expenses.83Fiscal 2018 AcquisitionsProgressus Media LLCOn April 3, 2018, the Company acquired the membership interests of Progressus Media LLC ("Progressus"), a specialty provider of mobileadvertising solutions for dealerships, agencies, and automotive marketing companies. The acquisition was made pursuant to a membership interest purchaseagreement, which contains customary representations, warranties, covenants, and indemnities by the sellers and the Company. The acquisition date fair valueof the total consideration transferred was $22.2 million which consists primarily of an initial cash price of $16.2 million, net of cash acquired, the fair value ofthe holdback provision of $0.3 million and the fair value of contingent consideration of $5.7 million, which is payable upon achievement of certainmilestones and metrics over a three year period ending on March 31, 2021. Prior to the acquisition, a CDK officer had an existing advisory relationship withProgressus which entitled the individual to a portion of the proceeds from a sale of Progressus under a unit appreciation rights agreement. At the time ofclosing, $0.5 million of the total consideration transferred by CDK was paid to the officer to settle Progressus’ obligation under the terms of the officer’s unitappreciation rights agreement.The fair value of acquired intangible assets and other net assets was $8.7 million and $2.2 million, respectively. The excess of the acquisitionconsideration over the estimated fair value of the acquired net assets of $11.3 million was allocated to goodwill. The goodwill recognized from thisacquisition reflects expected synergies resulting from direct ownership of the products and processes, allowing greater flexibility for future productdevelopment. The acquired goodwill is deductible for tax purposes. For the holdback provision and contingent consideration as of June 30, 2019 andJune 30, 2018, the Company recorded $2.4 million and $1.6 million of accrued expenses and other current liabilities, respectively; and $2.3 million and $4.4million of other liabilities, respectively.During the fourth quarter of fiscal year 2019, the Company committed to a plan to divest the Digital Marketing Business, which includes theProgressus business. The Progressus business is presented as discontinued operations. Additional information on discontinued operations is contained inNote 4 - Discontinued Operations.Dashboard Dealership Enterprises On October 20, 2017, the Company acquired the outstanding stock of Dashboard Dealership Enterprises, a provider of executive reporting solutionsfor auto dealers. The acquisition was made pursuant to a stock purchase agreement, which contains customary representations, warranties, covenants, andindemnities by the sellers and the Company. The acquisition date fair value of total consideration to be transferred was $21.3 million, which consistsprimarily of an initial cash price of $12.8 million, the fair value of the holdback provision of $1.9 million, and the fair value of contingent consideration of$6.6 million, which is payable upon achievement of certain milestones and metrics if achieved by December 31, 2019. For the holdback provision andcontingent consideration as of June 30, 2019 and June 30, 2018, the Company recorded $2.7 million and $7.6 million of accrued expenses and other currentliabilities, respectively; and other liabilities of $0.9 million as of June 30, 2018.The fair value of acquired intangibles assets and liabilities assumed, including deferred tax liabilities, was $3.9 million and $1.6 million,respectively. The excess of the acquisition consideration over the estimated fair value of the acquired assets of $19.0 million was allocated to goodwill. Theacquired assets and goodwill are included in the CDKNA segment. The intangible assets will be amortized over a weighted-average useful life ofapproximately 8 years. The goodwill recognized from this acquisition reflects expected synergies resulting from direct ownership of the products andprocesses, allowing greater flexibility for future product development. The acquired goodwill is not deductible for tax purposes.The pro forma effects of these acquisitions are not significant to the Company's reported results for any period presented. Accordingly, no pro formafinancial statements have been presented herein.Fiscal 2017 AcquisitionsAuto/Mate Dealership SystemsIn May 2017, the Company entered into a definitive agreement to acquire Auto/Mate Dealership Systems, a privately held company that provides asuite of DMS products and solutions. In the third quarter of fiscal 2018, the Company and Auto/Mate Dealership Systems terminated the agreement. Thisoutcome followed the decision of the Federal Trade Commission to oppose the proposed acquisition. There was no termination fee.84Note 6. RevenueA. Adoption of ASC 606, "Revenue from Contracts with Customers"On July 1, 2018, the Company adopted ASC 606 applying the modified retrospective method to all contracts that were not completed as of July 1,2018. For contracts that were modified before the effective date, the Company reflected the aggregate effect of all modifications when identifyingperformance obligations and allocating transaction price in accordance with the available practical expedient, which did not have a material effect on theadjustment to accumulated deficit. Results for reporting periods beginning after July 1, 2018 are presented under ASC 606, while prior period amounts arenot adjusted and continue to be reported under the accounting standards in effect for the prior period.Upon adoption, recognition of revenue and costs for on-site licenses and installation was changed from recognition ratably over the software licenseterm to recognition upon installation of the software. Additionally, the Company began deferring costs to obtain and costs to fulfill the contract which for theCompany consists primarily of direct sales commissions and implementation costs for service arrangements. The cumulative effects of the changes made tothe consolidated July 1, 2018 balance sheet for the adoption of ASC 606 were as follows: Balance at June 30,2018 Adjustments due to ASC606 Balance at July 1, 2018Assets Accounts receivable$374.6 $2.4 $377.0Current assets held for sale1.8 (0.4) 1.4Other current assets186.5 (61.2) 125.3Long-term assets held for sale267.6 (0.8) 266.8Other assets164.3 113.6 277.9Liabilities Accrued expenses and other current liabilities197.9 0.3 198.2Current liabilities held for sale3.7 (0.3) 3.4Short-term deferred revenues165.5 (38.0) 127.5Long-term deferred revenues110.2 (40.8) 69.4Deferred income taxes56.7 23.2 79.9Long-term liabilities held for sale0.8 (0.2) 0.6Other liabilities64.1 0.1 64.2Stockholders' Deficit Retained earnings753.0 109.7 862.7Accumulated other comprehensive income11.5 (0.4) 11.185Impact on Consolidated Financial StatementsThe following table summarizes the effects of ASC 606 on selected line items within the consolidated statement of operations: Year ended June 30, 2019 As ReportedASC 606 Impact of ASC606 ASC 605Revenues$1,914.8 $(31.0) $1,945.8Cost of revenues899.8 (24.7) 924.5Selling, general and administrative expenses444.7 (0.5) 445.2Total expenses1,462.5 (25.2) 1,487.7Operating earnings452.3 (5.8) 458.1Earnings before income taxes303.9 (5.8) 309.7Provision for income taxes(62.2) 2.0 (64.2)Net earnings from continuing operations241.7 (3.8) 245.5Loss from discontinued operations, net of taxes(109.8) (0.5) (109.3)Net earnings131.9 (4.3) 136.2Net earnings attributable to CDK124.0 (4.3) 128.3Net earnings (loss) attributable to CDK per common share - basic: Continuing operations1.86 (0.03) 1.89Discontinued operations(0.87) — (0.87)Net earnings (loss) attributable to CDK per common share - diluted: Continuing operations1.85 (0.03) 1.88Discontinued operations(0.87) (0.01) (0.86)The following table summarizes the effects of ASC 606 on selected line items within the balance sheet: June 30, 2019 As Reported ASC606 Impact of ASC 606 ASC 605Assets Accounts receivable$412.3 $(1.8) $410.5Current assets held for sale98.6 0.4 99.0Other current assets164.8 58.2 223.0Other assets284.9 (108.1) 176.8 Liabilities Accrued expenses and other current liabilities203.8 — 203.8Current liabilities held for sale1.9 0.6 2.5Short-term deferred revenues124.8 22.9 147.7Long-term deferred revenues68.4 28.8 97.2Deferred income taxes80.5 0.8 81.3Other liabilities67.3 (0.1) 67.2Stockholders' Deficit Retained earnings911.6 (105.5) 806.1Accumulated other comprehensive loss(6.7) 1.2 (5.5)86The adoption of ASC 606 had no impact to net cash provided by or (used in) operating, financing, or investing activities on the Company’sconsolidated statements of cash flows.B. Revenue RecognitionThe Company determines the amount of revenue to be recognized through the following steps:•Identification of the contract, or contracts, with a customer;•Identification of the performance obligations in the contract;•Determination of the transaction price;•Allocation of the transaction price to the performance obligations in the contract; and•Recognition of revenue when, or as, the Company satisfies the performance obligations.The majority of the Company’s revenue is generated from contracts with multiple performance obligations. A performance obligation is a promise ina contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. A contract’s transaction price is allocated to eachdistinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company is required to estimate the totalconsideration expected to be received from contracts with customers. In limited circumstances, the consideration expected to be received may be variablebased on the specific terms of the contract.The Company rarely licenses or sells products or services on a standalone basis. As such, the Company is required to develop its best estimate ofstandalone selling price of each distinct good or service as the basis for allocating the total transaction price. The primary method used to estimate standaloneselling price is the adjusted market assessment approach, with some product categories using the expected cost plus a margin approach. When establishingstandalone selling price, the Company considers various factors which may include geographic region, current market trends, customer class, its market shareand position, its general pricing practices for bundled products and services, and recent contract sales data.The Company applies significant judgment in order to identify and determine the number of performance obligations, estimate the total transactionprice, determine the allocation of the transaction price to each identified performance obligation, and determine the appropriate method and timing ofrevenue recognition.Taxes collected from customers and remitted to governmental authorities are presented on a net basis; that is, such taxes are excluded from revenues.The Company generates revenues from the following four categories: subscription, on-site licenses and installation, transaction, and other. TheCompany does not evaluate a contract for a significant financing component if payment is expected within one year or less from the transfer of the promiseditems to the customer.Subscription. In the CDKNA and CDKI segments, CDK provides software and technology solutions for automotive retailers and OEMs, whichincludes:•Dealer Management Systems (“DMSs”) and layered applications, where the software is hosted and provided on a software-as-a-service (“SaaS”)basis;•Interrelated services such as installation, initial training, and data updates;•Ongoing maintenance and support related to on-site software; and•Hardware on a service basis, meaning no specific assets are identified or a substantive right of substitution exists, that provides the customercontinuous access to hardware owned by the Company.SaaS and other hosted service arrangements, which allow the customer continuous access to the software over the contract period without takingpossession, are provided on a subscription basis. The Company has concluded that under its SaaS and hosted service arrangements, the customer obtainsaccess to the Company’s software which resides and is maintained on its managed servers. The customer does not obtain the right to take possession of thesoftware. As such, the Company has concluded that its SaaS and hosted services arrangements do not include a software license. Furthermore, the Companyhas concluded that while the support and maintenance and hosting services are capable of being distinct performance obligations, the obligations are notdistinct within the context of the contract. In addition, as the support and maintenance and hosting services are provided over the same period and have thesame pattern of transfer of control, the support and maintenance and hosting services are combined and recognized as a single performance obligation. TheCompany may provide new customers with interrelated setup activities such as installation, initial training and data updates that the Company mustundertake to fulfill the contract. These are considered87fulfillment activities that do not transfer the service to the customer. In addition to the core DMS software application, the customer may also contract forlayered applications, which are each considered a distinct performance obligation.Revenues for SaaS and other hosted service arrangements, are recognized ratably over the duration of the contract. The Company has determined itsobligation under these arrangements is to stand ready to perform the underlying services as required by the customer. The customer receives the benefit of theservices and the Company has the right to payment as the services are performed. A time-elapsed output method is used to measure progress as the Companytransfers control evenly over the duration of the contract.On-site licenses and installation. In the CDKNA and CDKI segments, on-site software arrangements include a license of intellectual property as thecustomer has the contractual right to take possession of the software and the customer can either run the software on its own hardware or contract with anotherparty unrelated to the Company to host the software. The customer receives the right to use the software license upon its installation for the term of thearrangement. As such, the Company has concluded that the software license is a distinct performance obligation and recognizes the transaction priceallocated to on-site software upon installation. The Company also provides maintenance and support of the software applications. Such maintenance andsupport services may include server and desktop support, bug fixes, and support resolving other issues a customer may encounter in utilizing the software.Revenue allocated to support and maintenance is generally recognized ratably over the contract period as customers simultaneously consume and receivebenefits, given the support and maintenance comprise distinct performance obligations that are satisfied ratably over time. A time-elapsed output method isused to measure progress as the Company transfers control evenly over the duration of the contract.Transaction. The Company receives fees per transaction for providing auto retailers interfaces with third parties to process credit reports, vehicleregistrations, and automotive equity mining. Transaction revenues are variable based on the volume of transactions processed. For these transaction revenues,the Company has a right to payment as the transactions are performed in an amount that corresponds directly with the value to the customer. As such, theCompany recognizes transaction revenues as the services are rendered and in the amount to which it has the right to invoice. Transaction revenues for creditreport processing and automotive equity mining are recorded in revenues gross of costs incurred when the Company is substantively and contractuallyresponsible for providing the service, software, and/or connectivity to the customer, and controls the specified good or service before it is transferred to thecustomer. The Company recognizes vehicle registration revenues net of the state registration fee when it is acting as an agent and does not control the relatedgoods and services before they are transferred to the customer.Other. The Company provides consulting and professional services, including marketing campaign solutions, and sells hardware such as laserprinters, networking and telephony equipment, and related items. Consulting and professional services are either billed on a time and materials basis or on afixed monthly, quarterly or semi-annual basis based on the amount of services contracted. Revenue from these services are recorded when the Company’sobligation is satisfied. Where the Company’s obligation is to provide continuous services throughout the contract period and the customer receives thebenefit of those services as they are performed, the Company recognizes these services revenues over time using a time-elapsed output method as theCompany believes the passage of time faithfully depicts the transfer of services to its customers. Where the professional service represents a singleperformance obligation, the customer receives the benefit of the services only upon their completion, and the Company does not have the right to payment asthe services are performed, such services revenue are recognized upon completion.The Company often sells hardware bundled with maintenance services and has concluded that these bundles include two distinct performanceobligations. The first performance obligation is to transfer the hardware product and the second performance obligation is to provide maintenance on thehardware and its embedded software. As such, the transaction price allocated to the sold hardware is recognized upon delivery at which point the customer isable to direct the use of, and obtain substantially all of the remaining benefits of the hardware. Upon delivery of the hardware, the Company generally has theright to payment, the customer has legal title, physical possession of, and control of the hardware. The transaction price allocated to the maintenance ofhardware and its embedded software is recognized ratably over the duration of the contract as the customer simultaneously consumes and receives the benefitof this maintenance. The Company has determined its obligation under these arrangements is to stand ready to perform the underlying services as required bythe customer. A time-elapsed output method is used to measure progress as the Company transfers control evenly over the duration of the contract. Hardwaremaintenance is included in subscription revenues.88C. Disaggregation of RevenueThe following table presents segment revenues by revenue category: Year ended June 30, 2019 CDKNA CDKI TotalRevenues: Subscription$1,283.3 $257.3 $1,540.6On-site licenses and installation7.9 47.1 55.0Transaction162.5 — 162.5Other139.3 17.4 156.7Total revenues$1,593.0 $321.8 $1,914.8D. Contract BalancesThe Company receives payments from customers based upon contractual billing schedules. Payment terms can vary by contract but the periodbetween invoicing and when payments are due is not significant. The timing of revenue recognition may differ from the timing of invoicing to customers andthese timing differences result in unbilled receivables, contract assets, or contract liabilities, on the Company’s consolidated balance sheet. Unbilledreceivables are recorded when the right to consideration becomes unconditional based only on the passage of time. Contract assets include amounts relatedto the contractual right to consideration for completed performance when the right to consideration is conditional. The Company records contract liabilitieswhen cash payments are received or due in advance of performance. Contract assets and contract liabilities are recognized at the contract level.The following table provides information about accounts receivables, contract assets, and contract liabilities from contracts with customers: June 30, 2019 July 1, 2018Accounts receivable (including unbilled receivables)$412.3 $377.0 Short-term contract assets (included in other current assets)29.9 28.0Long-term contract assets (included in other assets)20.2 26.0Short-term contract liabilities (included in short-term deferred revenue)(124.8) (127.5)Long-term contract liabilities (included in long-term deferred revenue)(68.4) (69.4)Net contract assets/(liabilities)$(143.1) $(142.9)During fiscal year ended June 30, 2019, the Company recognized $172.8 million of revenue upon satisfaction of performance obligations andinvoiced $26.0 million to accounts receivable. These amounts were included in the net contract assets or (liabilities) balance as of July 1, 2018. TheCompany had no asset impairment charges related to contract assets in the period.The Company may occasionally recognize an adjustment in revenue in the current period for performance obligations partially or fully satisfied inthe previous periods resulting from changes in estimates for the transaction price, including any changes to the Company's assessment of whether an estimateof variable consideration is constrained. For the fiscal year ended June 30, 2019, the impact on revenue recognized in the current period, from performanceobligations partially or fully satisfied in the previous period, was not significant.E. Remaining Performance ObligationsAs of June 30, 2019, the Company had $3.0 billion of remaining performance obligations which represent contracted revenue that has not yet beenrecognized, including contracted revenue where the contracts original expected duration is one year or less. The Company expects to recognizeapproximately $1.1 billion of the remaining performance obligation as revenue for fiscal year ended June 30, 2020, $790.0 million for the fiscal year endedJune 30, 2021, $570.0 million for the fiscal year89ended June 30, 2022, and $340.0 million for the fiscal year ended June 30, 2023. The Company expects to recognize the remaining $210.0 million asrevenue thereafter. The remaining performance obligations exclude future transaction revenue where revenue is recognized as the services are rendered and inthe amount to which the Company has the right to invoice.F. Costs to Obtain and Fulfill a ContractIn connection with the adoption of ASC 606, the Company capitalizes certain contract acquisition costs consisting primarily of commissionsincurred when contracts are signed. The Company does not capitalize commissions related to contracts with a duration of less than one year; suchcommissions are expensed within selling, general and administrative expenses when incurred. Costs to fulfill contracts are capitalized when such costs aredirect, incremental, and related to transition or installation activities for hosted software solutions. Capitalized costs to fulfill primarily include travel andemployee compensation and benefit related costs for the Company's implementation and training teams. Capitalized costs to obtain a contract and most coststo fulfill a contract are amortized over a period of five years which represents the expected period of benefit of these costs. In instances where the contractterm is significantly less than five years, costs to fulfill are amortized over the contract term which the Company believes best reflects the period of benefit ofthese costs.As of July 1, 2018 and June 30, 2019, the Company capitalized contract acquisition and fulfillment costs from continuing operations of $192.7million and $200.4 million, respectively. The Company expects that incremental commission fees incurred as a result of obtaining contracts and fulfillmentcosts are recoverable. During the fiscal 2019, the Company recognized cost amortization of $78.7 million, and there were no significant impairment losses.Note 7. RestructuringDuring fiscal year ended June 30, 2015, the Company initiated a three-year business transformation plan designed to increase operating efficiencyand improve the Company's cost structure within its global operations. The business transformation plan produced significant benefits in the Company'slong-term business performance. As the Company executed the business transformation plan, the Company continually monitored, evaluated and refined itsstructure, including its design, goals, term and estimate and allocation of total restructuring expenses. As part of this ongoing review process, during fiscal2017, the Company extended the business transformation plan by one year through the fiscal year ending June 30, 2019 ("fiscal 2019"). The Companyincurred $182.5 million of cost from continuing operations and $11.9 million of cost from discontinued operations to execute the plan through itscompletion at the end of fiscal 2019.Restructuring expenses associated with the business transformation plan included employee-related costs, which represent severance and othertermination-related benefits calculated based on long-standing benefit practices and local statutory requirements, and contract termination costs, whichinclude costs to terminate facility leases. The Company recognized $28.0 million, $20.6 million, and $17.7 million of restructuring expenses fromcontinuing operations for fiscal 2019, 2018 and 2017, respectively. Restructuring expenses from continuing operations are presented separately on theconsolidated statements of operations and are recorded in the Other segment, as these initiatives are predominantly centrally directed and are not included ininternal measures of segment operating performance. The Company also recorded $1.5 million, $0.3 million, and $0.7 million of restructuring expenses fromdiscontinued operations for fiscal 2019, 2018 and 2017, respectively, which are presented within Loss (Earnings) from discontinued operations, net of taxesline on the consolidated statements of operations. Since the inception of the business transformation plan in fiscal 2015 through its completion at the end offiscal 2019, the Company has recognized cumulative restructuring expenses of $87.8 million from continuing operations and $3.6 million from discontinuedoperations.90Accruals for restructuring expenses were included within accrued expenses and other current liabilities on the consolidated balance sheets as ofJune 30, 2019 and 2018. The following table summarizes the fiscal 2019 and 2018 activity for the restructuring accrual: Employee-Related Costs Contract Termination Costs TotalBalance as of June 30, 2017$6.4 $2.4 $8.8Charges20.8 1.8 22.6Cash payments(21.5) (3.0) (24.5)Adjustments(1.3) (0.4) (1.7)Balance as of June 30, 20184.4 0.8 5.2Charges31.1 0.7 31.8Cash payments(25.1) (1.7) (26.8)Adjustments(0.9) (1.4) (2.3)Foreign exchange(0.1) — (0.1)Non-cash items— 1.7 1.7Balance as of June 30, 2019$9.4 $0.1 $9.5Note 8. Stock-Based CompensationIncentive Equity Awards Granted by the CompanyThe Company's 2014 Omnibus Award Plan ("2014 Plan") provides for the granting of incentive stock options, nonqualified stock options, stockappreciation rights, restricted stock, restricted stock units, other stock-based awards, and performance compensation awards to employees, directors, officers,consultants, advisors, and those of the Company's affiliates. The 2014 Plan provides for an aggregate of 12.0 million shares of the Company's common stockto be reserved for issuance and is effective for a period of ten years. As of June 30, 2019, there were 6.1 million shares available for issuance under the 2014Plan after considering awards granted by the Company and converted as a result of the spin-off from ADP. The Company reissues treasury stock to satisfyissuances of common stock upon option exercise, equity vesting, or grants of restricted stock.On October 1, 2014, Automatic Data Processing, Inc. (“ADP”) distributed 100% of the common stock of the Company to the holders of record ofADP common stock as of September 24, 2014 (the "spin-off"). Prior to the spin-off, all employee equity awards (stock options and restricted stock) weregranted by ADP. All subsequent awards, including all incentive equity awards converted from ADP awards, were granted under the 2014 Plan. The Companyrecognizes stock-based compensation expense associated with employee equity awards in net earnings based on the fair value of the awards on the date ofgrant. Effective July 1, 2016, the Company adopted ASU 2016-09 "Compensation—Stock Compensation (Topic 718): Improvement to Employee Share-Based Payment Accounting." Upon adoption, the Company made an accounting policy election to account for forfeitures as they occur rather than apply anestimated forfeiture rate. Stock-based compensation primarily consisted of the following:Time-Based Stock Options and Performance-Based Stock Options. Time-based stock options and performance-based stock options have a term often years. Upon termination of employment, unvested stock options are evaluated for forfeiture or modification, subject to the terms of the awards andCompany policies.Time-based stock options are granted to employees at an exercise prices equal to the fair market value of the Company's common stock on the dateof grant and are generally issued under a three or four-year graded vesting schedule.Performance-based stock options are granted to the CEO at an exercise price equal to the fair market value of the Company's stock on the date ofgrant. These awards vest, subject to the Company's stock price performance and the CEO's continued employment with the Company, over a three-yearperformance period.Time-Based Restricted Stock and Time-Based Restricted Stock Units. Time-based restricted stock and restricted stock units generally vest over a twoto five-year period. Upon termination of employment, unvested time-based awards are evaluated for forfeiture or modification, subject to the terms of theawards and Company policies.91Time-based restricted stock cannot be transferred during the vesting period. Compensation expense related to the issuance of time-based restrictedstock is measured based on the fair value of the award on the grant date and recognized on a straight-line basis over the vesting period. Employees areeligible to receive cash dividends on the CDK shares awarded under the time-based restricted stock program during the restricted period.Time-based restricted stock units are primarily settled in cash for non-U.S. recipients and may be settled in stock or cash for U.S. recipients at thediscretion of the Company and cannot be transferred during the restriction period. Compensation expense related to the issuance of time-based restrictedstock units is recorded over the vesting period and is initially based on the fair value of the award on the grant date. Cash-settled, time-based restricted stockunits are subsequently remeasured at each reporting date during the vesting period to the current stock value. For grants made prior to September 6, 2018, nodividend equivalents are paid on units awarded during the restricted period. For grants made on or subsequent to September 6, 2018, U.S. recipients arecredited with dividend equivalents on units awarded during the restricted period, and no dividend equivalents are paid or credited on units awarded to non-U.S. recipients during the restricted period.Performance-Based Restricted Stock Units. Performance-based restricted stock units generally vest over a three-year performance period. Underthese programs, the Company communicates "target awards" at the beginning of the performance period with possible payouts at the end of the performanceperiod ranging from 0% to 260% of the "target awards." Certain performance-based awards are further subject to adjustment (increase or decrease) based on amarket condition, defined as total stockholder return of the Company's common stock compared to a peer group of companies. The probability associatedwith the achievement of performance conditions affects the vesting of the Company's performance-based awards. Expense is only recognized for those sharesexpected to vest. Upon termination of employment, unvested awards are evaluated for forfeiture or modification, subject to the terms of the awards andCompany policies.Performance-based restricted stock units are settled in either cash or stock for employees whose home country is the U.S. at the discretion of theCompany, and are settled in cash for all other employees and cannot be transferred during the vesting period. Compensation expense related to the issuanceof performance-based restricted stock units settled in cash is recorded over the vesting period, is initially based on the fair value of the award on the grantdate and is subsequently remeasured at each reporting date to the current stock value during the performance period, based upon the probability that theperformance target will be met. Compensation expense related to the issuance of performance-based restricted stock units settled in stock is recorded over thevesting period based on the fair value of the award on the grant date. Prior to settlement, dividend equivalents are earned on "target awards" under theperformance-based restricted stock unit program.The following table represents stock-based compensation expense and the related income tax benefits for fiscal 2019, 2018, and 2017, respectively: June 30, 2019 2018 2017Cost of revenues$3.5 $4.0 $5.5Selling, general and administrative expenses27.0 29.4 47.2Total pre-tax stock-based compensation expense$30.5 $33.4 $52.7 Income tax benefit$5.9 $10.5 $19.4Stock-based compensation expense for fiscal 2019 consisted of $28.2 million of expense related to equity-classified awards and $2.3 million ofexpense related to liability-classified awards. Total stock-based compensation expense for fiscal 2019 includes $11.2 million of additional expense for acumulative adjustment in the fourth quarter related to the achievement of financial performance metrics for performance based restricted stock, and a net $2.9million benefit for awards that were forfeited or expense recognition that was accelerated related to certain officer transitions during fiscal 2019. Stock-based compensation expense for fiscal 2018 consisted of $27.9 million of expense related to equity-classified awards and $5.5 million ofexpense related to liability-classified awards. This includes $1.5 million of incremental stock-based compensation expense for awards that were modified orexpense recognition that was accelerated relating to an officer transition in fiscal 2018.Stock-based compensation expense for fiscal 2017 consisted of $44.2 million of expense related to equity-classified awards and $8.5 million ofexpense related to liability-classified awards. Stock-based compensation expense for fiscal 2017 includes $11.7 million of expense due to a cumulativeadjustment in the fourth quarter based on management's assessment that92it is probable CDK's performance metrics for fiscal 2018 associated with performance-based restricted stock units will exceed the target. Additionally, therewas $3.1 million of incremental stock-based compensation expense for awards that were modified or expense recognition that was accelerated relating to anofficer transition in fiscal 2017.As of June 30, 2019, the total unrecognized compensation cost related to non-vested stock options, restricted stock units, and restricted stock awardswas $3.2 million, $24.9 million, and $1.2 million, respectively, which will be amortized over the weighted-average remaining requisite service periods of 2.5years, 1.7 years, and 0.8 years, respectively.The activity related to the Company's incentive equity awards for fiscal 2019, including amounts attributable to the Company's discontinuedoperations, consisted of the following:Time-Based Stock Options Numberof Options(in thousands) Weighted-AverageExercise Price(in dollars) Weighted-AverageRemaining ContractualLife (in years) Aggregate IntrinsicValue (in millions)Options outstanding as of June 30, 2018957 $44.25 Options granted170 51.37 Options exercised(179) 28.85 Options canceled(154) 58.35 Options outstanding as of June 30, 2019794 $46.47 6.6 $2.4 Exercisable as of June 30, 2019510 $42.13 5.5 $3.7The Company received proceeds from the exercise of stock options of $5.0 million, $8.9 million, and $14.7 million during fiscal 2019, 2018, and2017, respectively. The aggregate intrinsic value of stock options exercised during fiscal 2019, 2018, and 2017 was approximately $5.0 million, $14.0million, and $26.0 million, respectively.Performance-Based Stock Options Numberof Options(in thousands) WeightedAverage ExercisePrice(in dollars)Options outstanding as of June 30, 2018— $—Options granted152 50.77Options outstanding as of June 30, 2019152 $50.77The Monte Carlo simulation model used to determine the grant date fair value of the three-year performance-based stock options granted in thesecond quarter of fiscal 2019 used an expected volatility based on the average of implied volatility and historical stock price volatility for the Company, theaverage of which was 23.21%, a risk-free interest rate of 3.09%, an expected dividend yield of 1.18%, and weighted average expected life of 6.5 years.93Time-Based Restricted Stock and Time-Based Restricted Stock Units Restricted Stock Restricted Stock Units Number of Shares(in thousands) Weighted-AverageGrant Date Fair Value(in dollars) Number of Units(in thousands) Weighted-AverageGrant Date Fair Value(in dollars)Non-vested restricted shares/units as of June 30, 2018379 $60.14 142 $58.55Restricted shares/units granted2 60.59 423 57.71Restricted shares/units vested(179) 58.46 (95) 53.97Restricted shares/units forfeited(57) 61.59 (62) 57.51Non-vested restricted shares/units as of June 30, 2019145 $62.68 408 $58.52Performance-Based Restricted Stock Units Restricted Stock Units Number of Units(in thousands) Weighted-AverageGrant Date Fair Value(in dollars)Non-vested restricted units as of June 30, 2018411 $63.26Restricted units granted503 56.19Restricted units vested(389) 58.86Restricted units forfeited(111) 59.07Non-vested restricted units as of June 30, 2019414 $56.05The Monte Carlo simulation model used to determine the grant date fair value of the 106 thousand units of the three-year performance-basedrestricted stock units granted in the first quarter of fiscal 2019 used an expected volatility based on historical stock price volatility for the Company and thepeer companies, the average of which was 20.40% and a risk-free interest rate of 2.68%. Because these awards earn dividend equivalents, the model did notassume an expected dividend yield.The Monte Carlo simulation model used to determine the grant date fair value of the 196 thousand units of the three-year performance-basedrestricted stock units granted in the second quarter of fiscal 2019 used an expected volatility based on historical stock price volatility for the Company andthe peer companies, the average of which was 20.53% and a risk-free interest rate of 2.96%. Because these awards earn dividend equivalents, the model didnot assume an expected dividend yield. The following table presents the assumptions used to determine the fair value of the stock options granted by the Company: Fiscal 2019 Fiscal 2018 Fiscal 2017Risk-free interest rate3.1% 2.0% 1.4%Dividend yield1.2% 0.9% 0.9%Weighted-average volatility factor23.2% 24.5% 24.5%Weighted-average expected life (in years)6.0 6.3 6.3Weighted-average fair value (in dollars)$12.72 $15.65 $13.9094Note 9. Employee Benefit PlansDefined Contribution Savings Plan. The Company's Board of Directors approved a CDK-sponsored defined contribution plan covering eligible full-time domestic employees of the Company after the spin-off date. This plan provides company matching contributions on a portion of employeecontributions. In addition, this plan includes a transitional contribution for certain employees who were previously eligible to participate under ADP'sdomestic defined benefit plan since the Company did not adopt a similar plan. The costs recorded by the Company for this plan were $15.4 million, $16.9million, and $18.7 million for fiscal 2019, 2018, and 2017, respectively.International Benefit Plans. The Company’s foreign subsidiaries have benefit plans that cover certain international employees. To the extentrequired by local statutory laws, the Company funds these benefit plans through periodic contributions under statutorily prescribed formulas. The Company’sexpense for these plans was approximately $14.5 million, $15.8 million, and $14.8 million for fiscal 2019, 2018, and 2017, respectively.Note 10. Income TaxesProvision for Income TaxesEarnings before income taxes presented below is based on the geographic location to which such earnings were attributable. June 30, 2019 2018 2017 Earnings before income taxes: U.S.$182.7 $265.5 $228.0 Foreign121.2 133.7 99.7 $303.9 $399.2 $327.7The provision (benefit) for income taxes consisted of the following components: June 30, 2019 2018 2017 Current: Federal$25.2 $49.8 $37.6 Foreign31.6 32.8 24.7 State10.5 15.6 9.6 Total current67.3 98.2 71.9 Deferred: Federal(1.3) (14.7) 17.0 Foreign(1.8) 2.9 2.0 State(2.0) 1.7 1.9 Total deferred(5.1) (10.1) 20.9 Total provision for income taxes$62.2 $88.1 $92.895A reconciliation between the Company’s effective tax rate from continuing operations and the U.S. federal statutory rate is as follows: June 30, 2019 % 2018 % 2017 %Provision for taxes at U.S. statutory rate$63.8 21.0 % $112.2 28.1 % $114.7 35.0 %Increase (decrease) in provision from: State taxes, net of federal benefit8.6 2.8 % 13.4 3.4 % 7.5 2.3 %Stock compensation - excess tax benefits(1.6) (0.5)% (4.9) (1.2)% (12.0) (3.7)%Noncontrolling interest(1.4) (0.5)% (1.8) (0.5)% (2.0) (0.6)%Foreign tax rate differential2.9 1.0 % (2.0) (0.5)% (11.5) (3.4)%U.S. tax on foreign earnings13.4 4.4 % 19.0 4.8 % 1.1 0.3 %Foreign tax credits(15.5) (5.1)% (18.3) (4.6)% (1.9) (0.6)%Foreign withholding taxes— — % 4.5 1.1 % — — %U.S. tax reform deferred tax re-measurement— — % (27.3) (6.8)% — — %Valuation allowances(10.9) (3.6)% (3.6) (0.9)% 0.8 0.2 %Domestic production activities deduction— — % (4.0) (1.0)% (4.2) (1.3)%Pre spin-off tax return adjustments— — % 0.1 — % — — %Other2.9 1.0 % 0.8 0.2 % 0.3 0.1 %Provision for income taxes$62.2 20.5 % $88.1 22.1 % $92.8 28.3 %Tax Cuts and Jobs Act of 2017On December 22, 2017, the Tax Cuts and Jobs Act ("Tax Reform Act") was enacted into law. The Tax Reform Act significantly revises the U.S.corporate income tax laws by, among other things, reducing the corporate income tax rate from 35.0% to 21.0% and implementing a modified territorial taxsystem.The modified territorial tax system includes a new anti-deferral provision, referred to as global intangible low taxed income (“GILTI”), whichsubjects certain foreign income to current U.S. tax. The Company accounts for the GILTI tax as a period cost when incurred. The GILTI provision is effectivebeginning in fiscal year 2019 and therefore, will have an impact on future period annual effective tax rates. In fiscal 2019, the Company recorded $2.9million of GILTI tax expense net of foreign tax credits. The Company also recorded $1.5 million tax benefit from foreign derived intangible income ("FDII").The ultimate impact of the Tax Reform Act may differ from the Company's estimates due to the issuance of additional regulatory guidance, theinterpretation of the Tax Reform Act evolving over time and actions taken by the Company as a result of the Tax Reform Act.The effective tax rate was impacted by $2.8 million of net expenses in fiscal 2019 and $18.5 million of net benefit in fiscal 2018 for one-timeadjustments related to the Tax Reform Act. The fiscal 2019 amount is comprising a $0.6 million benefit due to a true-up to the one-time transition taxinitially recorded in fiscal 2018 associated with the Tax Reform Act, and a $3.4 million deferred tax charge associated with executive compensationlimitations. The fiscal 2018 amount is comprising a $26.2 million for the re-measurement of the Company’s net deferred tax liability, partially offset by taxexpense of $3.4 million from the one-time transition tax and $4.3 million for foreign withholding taxes. The impact of the Tax Reform Act is reflected withinthe following lines in the effective tax rate reconciliation above: U.S. tax reform deferred tax re-measurement, U.S. tax on foreign earnings, foreign tax credits,foreign withholding taxes and state taxes, net of federal benefit.96The balance sheet classification and significant components of deferred income tax assets and liabilities are as follows: June 30, 2019 2018 Classification: Long term deferred tax assets (included in other assets)$14.6 $21.9Long term deferred tax liabilities (included in deferred income taxes)(80.5) (56.7) Net deferred tax liabilities$(65.9) $(34.8) Components: Deferred tax assets: Accrued expenses$24.5 $8.3Compensation and benefits24.9 32.7Deferred revenue25.0 44.4Net operating losses4.2 5.5Capital losses22.7 18.8 101.3 109.7 Less: valuation allowances(10.3) (21.6) Net deferred tax assets91.0 88.1 Deferred tax liabilities: Deferred expenses58.5 46.7Property, plant and equipment and intangible assets95.1 70.1Prepaid expenses0.8 2.0Undistributed foreign earnings1.6 2.8Other0.9 1.3 Deferred tax liabilities156.9 122.9 Net deferred tax liabilities$(65.9) $(34.8)In the second quarter of fiscal 2018, the Company concluded that $244.0 million of unremitted foreign earnings as of December 31, 2017 were nolonger indefinitely reinvested. In response to recently issued guidance from the Internal Revenue Service (IRS) related to the Tax Reform Act, the Companychanged its assertion with respect to certain unremitted foreign earning. As of June 30, 2019, the Company plans to distribute approximately $32.0 million ofunremitted foreign earnings. As of June 30, 2019, the Company intends to indefinitely reinvest the aggregate of approximately $329.0 million ofundistributed foreign earnings to cover local working capital needs and restrictions and to fund future investments, including potential acquisitions. Ifcircumstances change, and it becomes apparent that earnings currently considered indefinitely reinvested will be distributed, the Company does not expectto incur significant additional tax.As of June 30, 2019, the Company had federal capital losses of $92.3 million which expire in 2020 through 2024 and state capital losses of $92.3million which expire in 2020 through 2034. The Company had foreign net operating loss carryforwards of approximately $15.1 million as of June 30, 2019,of which $0.9 million expires in 2020 through 2023 and $14.2 million has an indefinite carryforward period.Valuation AllowanceThe Company recorded valuation allowances of $10.3 million and $21.6 million as of June 30, 2019 and 2018, respectively, because the Companyhas concluded it is more likely than not that it will be unable to utilize net operating and capital loss carryforwards of certain subsidiaries to offset futuretaxable earnings. As of each reporting date, the Company’s management considers all available evidence, both positive and negative, which could impactmanagement’s determination with regard to future realization of deferred tax assets.During fiscal 2019, the valuation allowance balance decreased by $10.9 million, including a $14.8 million decrease related to the capital gain theCompany expects to recognize in conjunction with the sale of the of the assets of the Digital Marketing Business which were classified as held for sale in thefourth quarter of fiscal 2019, a $4.3 million increase related to97a new capital loss generated in the fourth quarter of 2019 resulting from the termination of a joint venture agreement and $0.4 million net decrease due tocertain non-U.S. tax loss carryforwards. In addition, there was a $0.4 million decrease in the valuation allowance due to the adoption of ASC 606.During fiscal 2018, the valuation allowance balance decreased by $13.5 million, including a $10.0 million reduction for the tax rate impact on acapital loss carryforward and $3.5 million for the expiration of certain non-U.S. tax loss carryforwards.Income tax payments, net of refunds were $124.2 million, $118.9 million, and $120.3 million for fiscal 2019, 2018, and 2017, respectively.Unrecognized Income Tax BenefitsAs of June 30, 2019, 2018, and 2017, the Company had unrecognized income tax benefits of $7.8 million, $6.2 million, and $6.4 million,respectively, of which $7.0 million, $5.3 million, and $4.8 million, respectively, would impact the effective tax rate, if recognized. The remainder, ifrecognized, would principally affect deferred taxes.A roll-forward of unrecognized tax benefits is as follows: June 30, 2019 2018 2017 Beginning of the year balance$6.2 $6.4 $4.7 Additions for current year tax positions1.6 1.3 1.0 Additions for tax positions of prior years0.8 0.7 1.2 Reductions for tax positions of prior years— (0.8) — Settlement with tax authorities(0.1) (0.6) (0.2) Expiration of the statute of limitations(0.7) (0.8) (0.2) Impact of foreign exchange rate fluctuations— — (0.1) End of year balance$7.8 $6.2 $6.4The Company's net unrecognized income tax benefits were impacted by an increase of $1.6 million, decrease of $0.2 million, and an increase of $1.7million during fiscal 2019, 2018, and 2017, respectively. For all fiscal years, changes were based on information which indicated the extent to which certaintax positions were more likely than not to be sustained. Penalties and interest expense associated with uncertain income tax positions have been recorded inthe provision for income taxes on the consolidated statements of operations. Penalties and interest incurred during fiscal 2019, 2018, and 2017 were notsignificant. As of June 30, 2019 and 2018, the Company had an insignificant amount of accrued penalty and interest associated with uncertain tax positions,which was included within other liabilities on the consolidated balance sheets.The Company conducts business globally and, as a result, files income tax returns in the U.S. federal jurisdiction and various state, local, and foreignjurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities. The tax years currently under examination varyby jurisdiction. The Company regularly considers the likelihood of assessments in each of the jurisdictions resulting from examinations. The Company hasestablished a liability for unrecognized income tax benefits, which it believes to be adequate in relation to the potential assessments. Once established, theliability for unrecognized tax benefits is adjusted when there is more information available, when an event occurs necessitating a change, or the statute oflimitations for the relevant taxing authority to examine the tax position has expired.98Income tax-related examinations currently in progress in which the Company has significant business operations are as follows:Tax Jurisdictions Fiscal Years EndedUnited States (IRS) 6/30/2016New Jersey 6/30/2008 thru 6/30/2011Oregon 6/30/2015 thru 6/30/2018Michigan 6/30/2015 thru 6/30/2017Massachuetts 6/30/2015 thru 6/30/2017New York 6/30/2015 thru 6/30/2017Belgium 6/30/2016 thru 6/30/2017Kuwait 6/30/2017 thru 6/30/2018India 6/30/2015 thru 6/30/2016Italy 6/30/2018Malaysia 06/30/2016 thru 6/30/2017Spain 6/30/2011UK 6/30/2017 thru 6/30/2018Canada 6/30/2012 & 6/30/2014Based on the possible outcomes of the Company's tax audits and expiration of the statute of limitations, it is reasonably possible that the liability foruncertain tax positions will change within the next twelve months. The associated net tax impact on the effective tax rate is estimated to be a $2.4 million taxbenefit, with minimal cash payments.Although the final resolution of the Company's tax disputes is uncertain, based on current information, the resolution of tax matters is not expectedto have a material effect on the Company's consolidated financial condition, liquidity, or results of operations. However, an unfavorable resolution couldhave a material impact on the Company’s consolidated financial condition, liquidity, or results of operations in the periods in which the matters areultimately resolved.Tax Matters Agreement The Company and ADP entered into a tax matters agreement as part of the spin-off that governs the rights and obligations of both partiesafter the spin-off with respect to taxes for both pre and post spin-off periods. Under this agreement, ADP is generally required to indemnify the Company forany income taxes attributable to ADP's operations or the Company's operations and for any non-income taxes attributable to ADP's operations, in each casefor all pre spin-off periods as well as any taxes arising from transactions effected to consummate the spin-off, and the Company generally is required toindemnify ADP for any non-income taxes attributable to the Company's operations for all pre spin-off periods and for any income taxes attributable to theCompany's operations for post spin-off periods.The Company is generally required to indemnify ADP against any tax resulting from the spin-off (and against any claims made against ADP inrespect of any tax imposed on its stockholders), in each case if that tax results from (i) an issuance of a significant amount of the Company's equity securities,a redemption of a significant amount of the Company's equity securities or the Company's involvement in other significant acquisitions of the Company'sequity securities (excluding the spin-off), (ii) other actions or failures to act by the Company, or (iii) any of the Company's representations or undertakingsreferred to in the tax matters agreement being incorrect or violated. ADP will generally be required to indemnify the Company for any tax resulting from thespin-off if that tax results from (a) ADP's issuance of its equity securities, redemption of its equity securities, or involvement in other acquisitions of its equitysecurities, (b) other actions or failures to act by ADP, or (c) any of ADP's representations or undertakings referred to in the tax matters agreement beingincorrect or violated.The Company recognized receivables from ADP of $0.5 million and $0.5 million as of June 30, 2019 and 2018, respectively, and payables to ADPof $0.8 million and $0.9 million as of June 30, 2019 and 2018, respectively, under the tax matters agreement.Note 11. Earnings per Share99The numerator for both basic and diluted earnings per share is net earnings attributable to CDK. The denominator for basic and diluted earnings pershare is based upon the number of weighted-average shares of the Company's common stock outstanding during the reporting periods. Diluted earnings pershare also reflects the dilutive effect of unexercised in-the-money stock options and unvested restricted stock.Holders of certain stock-based compensation awards are eligible to receive dividends as described in Note 8. Net earnings allocated to participatingsecurities were not significant for fiscal 2019, 2018, and 2017.The following table summarizes the components of basic and diluted earnings per share. June 30, 2019 2018 2017Net earnings from continuing operations attributable to CDK$233.8 $303.2 $228.0(Loss) Earnings from discontinued operations, net of taxes(109.8) 77.6 67.6Net earnings attributable to CDK$124.0 $380.8 $295.6 Weighted-average shares outstanding: Basic125.5 135.8 146.7Effect of employee stock options0.2 0.3 0.7Effect of employee restricted stock0.7 0.7 0.8Diluted126.4 136.8 148.2 Net earnings (loss) attributable to CDK per share - basic: Continuing operations$1.86 $2.23 $1.55Discontinued operations(0.87) 0.57 0.46Total net earnings attributable to CDK per share - basic$0.99 $2.80 $2.01 Net earnings (loss) attributable to CDK per share - diluted: Continuing operations$1.85 $2.21 $1.53Discontinued operations(0.87) 0.57 0.46Total net earnings attributable to CDK per share - diluted$0.98 $2.78 $1.99The weighted-average number of shares outstanding used in the calculation of diluted earnings per share does not include the effect of the followinganti-dilutive securities. June 30, 2019 2018 2017Stock-based awards0.5 0.2 0.3Note 12. Accounts Receivable, NetAccounts receivable, net from continuing operations comprised the following: June 30, 2019 2018Trade receivables$414.3 $373.1Unbilled receivables4.0 1.4Lease receivables3.5 7.5Accounts receivable, gross421.8 382.0Less: allowances9.5 7.4Account receivable, net$412.3 $374.6100The investment in lease receivables consisted of the following: June 30, 2019 2018Lease receivables, gross: Minimum lease payments$4.0 $11.9Unearned income(0.1) (0.6) 3.9 11.3Less: lease receivables, current (included in accounts receivable, net)3.5 7.5Lease receivables, long-term (included in other assets)$0.4 $3.8Scheduled minimum payments on lease receivables as of June 30, 2019 were as follows: AmountFiscal year ending 2020$3.6Fiscal year ending 20210.3Fiscal year ending 20220.1Fiscal year ending 2023—Fiscal year ending 2024— $4.0The Company recognized interest income on sales-type leases of $0.5 million, $1.0 million, and $1.8 million, in fiscal 2019, 2018, and 2017,respectively, within other income, net on the consolidated statements of operations.Note 13. Property, Plant and Equipment, NetDepreciation expense for property, plant and equipment was $56.7 million, $45.6 million, and $38.6 million for fiscal 2019, 2018, and 2017,respectively. Property, plant and equipment at cost and accumulated depreciation consisted of the following: June 30, 2019 2018Property, plant and equipment: Land and buildings$38.9 $38.7Data processing equipment278.7 235.1Furniture and fixtures, leasehold improvements and other78.0 63.4Total property, plant and equipment395.6 337.2Less: accumulated depreciation250.8 209.6Property, plant and equipment, net$144.8 $127.6During the third quarter of fiscal 2019, the Company assessed the recoverability of certain long-lived assets upon exiting certain facilities andconcluded that that the carrying amount of these assets were not recoverable. As a result, the Company recorded an impairment charge of $3.3 million withinthe Other segment, of which $2.6 million was included in cost of revenues and $0.7 million was recorded in selling, general and administrative expensewithin the consolidated statement of operations.101Note 14. Goodwill and Intangible Assets, NetChanges in goodwill were as follows: CDK North America CDK International TotalBalance as of June 30, 2017$602.2 $362.3 $964.5Additions (Note 5)19.0 — 19.0Currency translation adjustments(0.3) 6.0 5.7Balance as of June 30, 2018620.9 368.3 989.2Additions (Note 5)379.3 — 379.3Currency translation adjustments0.1 (12.3) (12.2)Balance as of June 30, 2019$1,000.3 $356.0 $1,356.3Components of intangible assets, net from continuing operations were as follows: June 30, 2019 2018 Original Cost AccumulatedAmortization Intangible Assets,net Original Cost AccumulatedAmortization Intangible Assets,netCustomer lists$196.6 $(100.2) $96.4 $115.1 $(92.5) $22.6Software250.8 (126.7) 124.1 176.9 (110.3) 66.6Trademarks7.5 (3.1) 4.4 2.6 (2.2) 0.4Other intangibles3.2 (2.2) 1.0 6.8 (4.0) 2.8 $458.1 $(232.2) $225.9 $301.4 $(209.0) $92.4Other intangibles consist primarily of purchased rights, covenants, and patents (acquired directly or through acquisitions). All of the intangibleassets have finite lives and, as such, are subject to amortization. The weighted-average remaining useful life of intangible assets is 8 years (13 years forcustomer lists, 3 years for software and software licenses, and 6 years for trademarks). Amortization of intangible assets from continuing operations was $33.1million, $25.2 million, and $24.8 million for fiscal 2019, 2018, and 2017, respectively.During the second quarter of fiscal 2019, the Company identified indicators requiring assessment of certain intangible assets within the CDKNAsegment. The identified indicators primarily consisted of abandonment of a project relating to the Company's inventory solutions intended to addressevolving market conditions. As a result, the Company analyzed these intangible assets and recorded impairment charges of $13.2 million for software and$1.7 million for customer lists. Of the total$14.9 million impairment charge, the Company recorded $12.0 million in cost of revenues and $2.9 million inselling, general and administrative expenses within its consolidated statements of operations.Estimated amortization expenses of the Company's existing intangible assets from continuing operations as of June 30, 2019 were as follows: AmountFiscal year ending 2020$43.7Fiscal year ending 202140.6Fiscal year ending 202235.7Fiscal year ending 202321.2Fiscal year ending 202415.5Thereafter69.2 $225.9102Note 15. DebtDebt comprised the following: June 30, 2019 2018Revolving credit facility$— $—Three year term loan facility, due 2021300.0 —Five year term loan facility, due 2023288.8 —2019 term loan facility— 203.12020 term loan facility— 218.82021 term loan facility— 370.03.30% senior notes, due 2019250.0 250.04.50% senior notes, due 2024500.0 500.05.875% senior notes due 2026500.0 500.04.875% senior notes, due 2027600.0 600.05.250% senior notes, due 2029500.0 —Capital lease obligations19.9 0.2Unamortized debt financing costs(28.5) (21.4)Total debt and capital lease obligations2,930.2 2,620.7Current maturities of long-term debt and capital lease obligations270.8 45.2Total long-term debt and capital lease obligations$2,659.4 $2,575.5Revolving Credit FacilityOn August 17, 2018, the Company entered into a five-year senior unsecured revolving credit facility (the "revolving credit facility") which wasundrawn as of June 30, 2019. The revolving credit facility replaced the previous unsecured revolving credit facility agreement, which was undrawn as of June30, 2018. The revolving credit facility provides up to $750.0 million of borrowing capacity and includes a sub-limit of up to $100.0 million for loans inEuro, Pound Sterling, and, if approved by the revolving lenders, other currencies. In addition, the revolving credit facility contains an accordion feature thatallows for an increase in the available borrowing capacity of up to $100.0 million, subject to the agreement of lenders under the revolving credit facility orother financial institutions that become lenders to extend commitments as part of the increased revolving credit facility. Borrowings under the revolvingcredit facility are available for general corporate purposes. The revolving credit facility will mature on August 17, 2023, subject to no more than two one-yearextensions if lenders holding a majority of the revolving commitments approve such extensions.The revolving credit facility is unsecured and loans thereunder bear interest, at the Company's option, at (a) the rate at which deposits in theapplicable currency are offered in the London interbank market (or, in the case of borrowings in Euro, the European interbank market) plus margins varyingfrom 1.250% to 2.375% per annum based on the Company's senior, unsecured non-credit-enhanced, long-term debt ratings from Standard & Poor's RatingsGroup and Moody's Investors Services Inc. (the "Ratings") or (b) solely in the case of U.S. dollar loans, (i) the highest of (A) the prime rate of Bank of America,N.A., (B) a rate equal to the average of the overnight federal funds rate with a maturity of one day plus a margin of 0.500% per annum, and (C) the rate atwhich dollar deposits are offered in the London interbank market for a one-month interest period plus 1.000% plus (ii) margins varying from 0.250% to1.375% per annum based on the Ratings. The unused portion of the revolving credit facility is subject to commitment fees ranging from 0.150% to 0.350%per annum based on the Ratings.Term Loan FacilitiesOn August 17, 2018, the Company entered into a term loan agreement which provided the Company an aggregate of $600.0 million under termloans comprising a $300.0 million term loan that will mature on August 17, 2021 (the "three year term loan facility"), and a $300.0 million term loan that willmature on August 17, 2023 (the "five year term loan facility"). The aggregate principal amount of the three year term loan facility will be repayable in full onthe maturity date. The five year term loan facility is subject to amortization in equal quarterly installments of 1.25% of the aggregate principal amount of theterm103loan made on the closing date, with any unpaid principal amount due and payable on the maturity date. The interest rate per annum on the three year termloan facility and the five year term loan facility was 3.91% and 4.04%, respectively, as of June 30, 2019.The three year term loan facility and the five year term loan facility are unsecured and bear interest (a) with respect to the three year term loanfacility, (i) at the rate at which deposits in the applicable currency are offered in the London interbank market plus margins varying from 1.125% to 2.250%per annum based on the Company’s senior, unsecured, non-credit-enhanced, long-term debt ratings from the Ratings or (ii) the highest of (X) a rate equal tothe average of the overnight federal funds rate with a maturity of one day plus a margin of 0.50% per annum, (Y) the prime rate of Bank of America, N.A. and(Z) the rate at which dollar deposits are offered in the London interbank market for a one-month interest period plus 1.00%, plus margins varying from0.125% to 1.250% per annum based on the Ratings, and (b) with respect to the five year term loan facility (i) at the rate at which deposits in the applicablecurrency are offered in the London interbank market plus margins varying from 1.250% to 2.375% per annum based on the Company’s Ratings or (ii) thehighest of (X) a rate equal to the average of the overnight federal funds rate with a maturity of one day plus a margin of 0.50% per annum, (Y) the prime rateof Bank of America, N.A. and (Z) the rate at which dollar deposits are offered in the London interbank market for a one-month interest period, plus 1.00%,plus margins varying from 0.250% to 1.375% per annum based on the Ratings. As of June 30, 2018, the Company had two $250.0 million senior unsecured term loan facilities (the "2019 term loan facility" and the "2020 term loanfacility") and a five-year $400.0 million senior unsecured term loan facility (the "2021 term loan facility") outstanding. The interest rate per annum on boththe 2019 term loan facility, the 2020 term loan facility, and the 2021 term loan facility was 3.85% as of June 30, 2018. The Company utilized the borrowingsunder the three year term loan facility and the five year term loan facility to pay-off all of the outstanding principal, interest and related fees with respect toeach of the 2019 term loan facility, the 2020 term loan facility, and the 2021 term loan facility.London Interbank Market (“LIBOR”) TransitionLIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform. These reforms and other pressure maycause LIBOR to disappear entirely or to perform differently than in the past. It is expected that certain banks will stop reporting information used to setLIBOR at the end of 2021 when their reporting obligations cease. This will effectively end the usefulness of LIBOR and may end its publication. Theconsequences of these developments cannot be entirely predicted but, as noted above, could impact the interest rates of the revolving credit facility and thefive year term loan. If LIBOR is no longer widely available, the Company will pursue alternative interest rate calculations in its revolving credit facility andfive year term loan agreements. However, if no alternative rate can be determined, the LIBOR rate component will no longer be utilized in determining therates. As of June 30, 2019 and 2018, the hypothetical impact to the Company’s interest rates without utilizing the LIBOR rate component would not havehad a material effect on either rate, thus we do not believe the discontinuation of LIBOR will have a material impact on the Company's financial position andresults of operations.Restrictive Covenants and Other MattersThe revolving credit facility, the three year term loan facility, and the five year term loan facility are together referred to as the "credit facilities." Thecredit facilities contain various covenants and restrictive provisions that limit the Company's subsidiaries' ability to incur additional indebtedness, theCompany's ability to consolidate or merge with other entities, and the Company's subsidiaries' ability to incur liens, enter into sale and leasebacktransactions, and enter into agreements restricting the ability of the Company's subsidiaries to pay dividends. If the Company fails to perform the obligationsunder these and other covenants, the revolving credit facility could be terminated and any outstanding borrowings, together with accrued interest, under thecredit facilities could be declared immediately due and payable. The credit facilities also have, in addition to customary events of default, an event of defaulttriggered by the acceleration of the maturity of any other indebtedness the Company may have in an aggregate principal amount in excess of $75.0 million.The credit facilities also contain financial covenants that will provide that (i) the ratio of total consolidated indebtedness to consolidated EBITDAshall not exceed 3.75 to 1.00 and (ii) the ratio of consolidated EBITDA to consolidated interest expense shall be a minimum of 3.00 to 1.00. Senior NotesOn October 14, 2014, the Company completed an offering of 3.30% unsecured senior notes with a $250.0 million aggregate principal amount due in2019 (the "2019 notes") and 4.50% unsecured senior notes with a $500.0 million aggregate principal amount due in 2024 (the "2024 notes"). The issuanceprice of the 2019 and 2024 notes was equal to the stated value. Interest is payable semi-annually on April 15 and October 15 of each year, and paymentcommenced on April 15, 2015. The104interest rate payable on each applicable series of 2019 and 2024 notes is subject to adjustment from time to time if the credit ratings assigned to any series of2019 and 2024 notes by the rating agencies is downgraded (or subsequently upgraded). The 2019 notes will mature on October 15, 2019, and the 2024 noteswill mature on October 15, 2024. The 2019 and 2024 notes are redeemable at the Company's option prior to September 15, 2019 for the 2019 notes and priorto July 15, 2024 for the 2024 notes at a redemption price equal to the greater of (i) 100% of the aggregate principal amount of the 2019 or 2024 notes to beredeemed, and (ii) the sum of the present value of the remaining scheduled payments (as defined in the agreement), plus in each case, accrued and unpaidinterest thereon. Subsequent to September 15, 2019 and July 15, 2024, the redemption price for the 2019 notes and the 2024 notes, respectively, will equal100% of the aggregate principal amount of the notes redeemed, plus accrued and unpaid interest thereon.On June 18, 2018, the Company completed an offering of 5.875% unsecured senior notes with a $500.0 million aggregate principal amount due in2026 (the "2026 notes"). The issuance price of the 2026 notes was equal to the stated value. Interest is payable semi-annually on June 15 and December 15 ofeach year, and payment will commence on December 15, 2018. The 2026 notes will mature on June 15, 2026. The 2026 notes are redeemable at theCompany's option prior to June 15, 2021 in whole or in part at a redemption price equal to 100% of the aggregate principal amount thereof plus accrued andunpaid interest, if any, plus the applicable "make-whole" premium. Subsequent to June 15, 2021, the Company may redeem the 2026 notes at a price equalto: (i) 102.938% of the aggregate principal amount of the 2026 notes redeemed prior to June 15, 2022; (ii) 101.958% of the aggregate principal amount ofthe notes redeemed on or after June 15, 2022 but prior to June 15, 2023; (iii) 100.979% of the aggregate principal amount of the 2026 notes redeemed on orafter June 15, 2023 but prior to June 15, 2024; and (iv) 100.000% of the aggregate principal amount of the 2026 notes redeemed thereafter.On May 15, 2017, the Company completed an offering of 4.875% unsecured senior notes with a $600.0 million aggregate principal amount due in2027 (the "2027 notes"). The issuance price of the 2027 notes was equal to the stated value. Interest is payable semi-annually on June 1 and December 1 ofeach year, and payment commenced on December 1, 2017. The 2027 notes will mature on June 1, 2027. The 2027 notes are redeemable at the Company'soption prior to June 1, 2022 in whole or in part at a redemption price equal to 100% of the aggregate principal amount thereof plus accrued and unpaidinterest, if any, plus the applicable "make-whole" premium. Subsequent to June 1, 2022, the Company may redeem the 2027 notes at a price equal to: (i)102.438% of the aggregate principal amount of the 2027 notes redeemed prior to June 1, 2023; (ii) 101.625% of the aggregate principal amount of the notesredeemed on or after June 1, 2023 but prior to June 1, 2024; (iii) 100.813% of the aggregate principal amount of the 2027 notes redeemed on or after June 1,2024 but prior to June 1, 2025; and (iv) 100.000% of the aggregate principal amount of the 2027 notes redeemed thereafter.On May 2, 2019, the Company completed an offering of 5.250% unsecured senior notes with a $500.0 million aggregate principal amount due in2029 (the "2029 notes," together with the "2027 notes," "2026 notes," "2024 notes," and "2019 notes" are the "senior notes"). The issuance price of the 2029notes was equal to the stated value. Interest is payable semi-annually on March 15 and September 15 of each year, and payment will commence onSeptember 15, 2019. The 2029 notes will mature on May 15, 2029. The 2029 notes are redeemable at the Company's option prior to May 15, 2024 in wholeor in part at a redemption price equal to 100% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, plus the applicable "make-whole" premium. Subsequent to May 15, 2024, the Company may redeem the 2029 notes at a price equal to: (i) 102.625% of the aggregate principal amountof the 2029 notes redeemed prior to May 15, 2025; (ii) 101.750% of the aggregate principal amount of the notes redeemed on or after May 15, 2025 but priorto May 15, 2026; (iii) 100.875% of the aggregate principal amount of the 2029 notes redeemed on or after May 15, 2026 but prior to May 15, 2027; and (iv)100.000% of the aggregate principal amount of the 2029 notes redeemed thereafter.The senior notes are general unsecured obligations of the Company and are not guaranteed by any of the Company's subsidiaries. The senior notesrank equally in right of payment with the Company's existing and future unsecured unsubordinated obligations, including the credit facilities. The seniornotes contain covenants restricting the Company's ability to incur additional indebtedness secured by liens, engage in sale/leaseback transactions, andmerge, consolidate, or transfer all or substantially all of the Company's assets.The senior notes are also subject to a change of control provision whereby each holder of the senior notes has the right to require the Company topurchase all or a portion of such holder's senior notes at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interestupon the occurrence of both a change of control and a decline in the rating of the senior notes.In November 2016, Moody's and S&P lowered their credit ratings on the senior notes to Ba1 (Stable Outlook) from Baa3 (Negative Outlook) and toBB+ (Stable Outlook) from BBB- (Negative Outlook), respectively. The downgrades triggered interest rate adjustments for the 2019 and 2024 notes. Interestrates for the 2019 notes and 2024 notes increased to 3.80% from 3.30% and to 5.00% from 4.50%, respectively, effective October 15, 2016.105Capital Lease ObligationsThe Company has lease agreements for equipment, which are classified as capital lease obligations. The Company recognized the capital leaseobligations and related leased equipment assets based on the present value of the minimum lease payments at lease inception.Unamortized Debt Financing CostsAs of June 30, 2019 and 2018, gross debt issuance costs related to debt instruments were $41.3 million and $29.6 million, respectively.Accumulated amortization was $12.8 million and $8.2 million as of June 30, 2019 and 2018, respectively. Additional debt issuance costs of $11.7 millionwere capitalized in fiscal 2019. Debt financing costs are amortized over the terms of the related debt instruments to interest expense on the consolidatedstatement of operations.The Company's aggregate scheduled maturities of the long-term debt and capital lease obligations as of June 30, 2019 were as follows: AmountFiscal year ending 2020$270.8Fiscal year ending 202120.9Fiscal year ending 2022320.1Fiscal year ending 202317.9Fiscal year ending 2024229.0Thereafter2,100.0Total debt and capital lease obligations2,958.7Unamortized deferred financing costs(28.5)Total debt and capital lease obligations, net of unamortized deferred financing costs$2,930.2Note 16. Commitments and ContingenciesThe Company has obligations under various operating lease agreements for facilities and equipment. Total expense from continuing operationsunder these agreements was approximately $25.4 million, $36.6 million, and $43.7 million in fiscal 2019, 2018, and 2017, respectively, with minimumcommitments as of June 30, 2019 as follows: AmountFiscal year ending 2020$16.7Fiscal year ending 202113.9Fiscal year ending 202212.5Fiscal year ending 20238.9Fiscal year ending 20246.9Thereafter15.8 $74.7In addition to fixed rentals, certain leases require payment of maintenance and real estate taxes and contain escalation provisions based on futureadjustments in price indices.As of June 30, 2019, the Company had purchase commitments and obligations related to the Company's software, equipment, and other assets. AmountFiscal year ending 2020$6.2Fiscal year ending 20217Fiscal year ending 20227.7Fiscal year ending 20238.1Fiscal year ending 20242.7 $31.7106In the normal course of business, the Company may enter into contracts in which it makes representations and warranties that relate to theperformance of the Company’s services and products. The Company does not expect any material losses related to such representations and warranties.Legal ProceedingsFrom time to time, the Company is subject to various claims and is involved in various legal, regulatory, and arbitration proceedings concerningmatters arising in connection with the conduct of its business activities, including those noted in this section. Although management at present has no basisto conclude that the ultimate outcome of these proceedings, individually and in the aggregate, will materially harm the Company's financial position, resultsof operations, cash flows, or overall trends, legal proceedings and related government investigations are subject to inherent uncertainties, and unfavorablerulings or other events could occur. Unfavorable resolutions could include substantial monetary damages. In addition, in matters for which injunctive reliefor other conduct remedies are sought, unfavorable resolutions could include an injunction or other order prohibiting us from selling one or more products atall or in particular ways, precluding particular business practices, or requiring other remedies. An unfavorable outcome may result in a material adverseimpact on the Company's business, results of operations, financial position, and overall trends. The Company might also conclude that settling one or moresuch matters is in the best interests of its stockholders, employees, and customers, and any such settlement could include substantial payments.Competition MattersThe Company is involved in the following antitrust lawsuits that set forth allegations of anti-competitive agreements between the Company and TheReynolds and Reynolds Company ("Reynolds and Reynolds") relating to the manner in which the defendants control access to, and allow integration with,their respective DMS, and that seek, among other things, treble damages and injunctive relief. These lawsuits have been transferred to, or filed in, the U.S.District Court for the Northern District of Illinois for consolidated and coordinated pretrial proceedings as part of a multi-district litigation proceeding(“MDL”).•Motor Vehicle Software Corporation (“MVSC”) brought a suit against the CDK Global, LLC (after initially naming the Company),Reynolds and Reynolds, and Computerized Vehicle Registration (“CVR”), a majority owned joint venture of the Company. MVSC’s suitwas originally filed on February 3, 2017, in the U.S. District Court for the Central District of California. Defendants’ motions to dismissMVSC’s second amended complaint were denied, and Defendants answered MVSC’s complaint on November 7, 2018.•Authenticom, Inc. brought a suit against CDK Global, LLC and Reynolds and Reynolds. Authenticom’s suit was originally filed on May 1,2017, in the U.S. District Court for the Western District of Wisconsin. Defendants’ motions to dismiss were granted in part, and denied inpart. Defendants filed answers to Authenticom’s complaint and asserted counterclaims against Authenticom on June 30, 2018; Authenticomfiled motions to dismiss those Counterclaims. Authenticom Inc.’s motion to dismiss CDK Global, LLC’s counterclaims were granted in partand denied in part; its motion to dismiss one of Reynolds and Reynolds’s Counterclaims was granted. On February 15, 2019, Authenticomfiled an answer to both Defendants’ Counterclaims.•Teterboro Automall, Inc. d/b/a Teterboro Chrysler Dodge Jeep Ram (“Teterboro”) brought a putative class action suit on behalf of itself andall similarly situated automobile dealerships against CDK Global, LLC and Reynolds and Reynolds. Teterboro’s suit was originally filedon October 19, 2017, in the U.S. District Court for the District of New Jersey. Since that time, several more putative class actions were filedin a number of Federal District Courts, with substantively similar allegations; all of them have been consolidated with the MDL proceeding.On June 4, 2018, a Consolidated Class Action Complaint was filed on behalf of a putative class made up of all dealerships in the UnitedStates that directly purchased DMS and/or allegedly indirectly purchased DMS or data integration services from CDK Global, LLC orReynolds and Reynolds (“Putative Dealership Class Plaintiffs”). CDK Global, LLC moved to dismiss the complaint, or in the alternative,compel arbitration of certain of the cases while staying the remainder pending the outcome of those arbitration proceedings; its motion todismiss was granted in part and denied in part, while its motion to compel arbitration was denied. On February 22, 2019, CDK Global, LLCfiled an answer to the remaining claims in Putative Dealership Class Plaintiffs’ complaint and asserted counterclaims against the PutativeDealership Class Plaintiffs. The Putative Dealership Class Plaintiffs filed a motion to dismiss CDK Global, LLC’s counterclaims; thatmotion has been fully briefed and remains pending before the Court. On October 23, 2018, the Putative Dealership Class Plaintiffs andReynolds and Reynolds filed a Motion for Preliminary107Approval of Settlement and for Conditional Certification of the Proposed Settlement Class. The Court approved that settlement on January22, 2019.•Cox Automotive, along with multiple subsidiaries (“Cox”), brought suit against CDK Global, LLC. Cox’s suit was originally filed onDecember 11, 2017, in the U.S. District Court for the Western District of Wisconsin. CDK Global, LLC’s motion to dismiss was granted inpart and denied in part on January 25, 2019. CDK Global, LLC filed an Answer to the remainder of Cox’s complaint and assertedcounterclaims against Cox on February 15, 2019. Cox filed an Answer to CDK Global, LLC’s counterclaims on March 8, 2019. On July 10,2019, CDK Global, LLC and Cox entered into a settlement agreement that resulted in a dismissal of all claims brought by the affiliatedparties in the MDL, and CDK Global, LLC making a one-time cash payment to Cox.•Loop LLC d/b/a AutoLoop (“AutoLoop”) brought suit against CDK Global, LLC on April 9, 2018, in the U.S. District Court for theNorthern District of Illinois, but reserved its rights with respect to remand to the U.S. District Court for the Western District of Wisconsin atthe conclusion of the MDL proceedings. On June 5, 2018, AutoLoop amended its complaint to sue on behalf of itself and a putative classaction of all other automotive software vendors in the United States that purchased data integration services from CDK Global, LLC orReynolds and Reynolds. CDK Global, LLC moved to compel arbitration of AutoLoop’s claims, or in the alternative, to dismiss thoseclaims; that motion was denied on January 25, 2019. CDK Global, LLC filed an answer to AutoLoop’s complaint and assertedcounterclaims against AutoLoop on February 15, 2019. AutoLoop filed an Answer to CDK Global, LLC’s counterclaims on March 8, 2019.•i3 Brands, Inc. and PartProtection LLC (“i3 Brands”) brought suit against CDK Global, LLC and Reynolds and Reynolds. i3 Brand’s suitwas originally filed on February 4, 2019, in the U.S. District Court for the Southern District of California; it was subsequently transferred tothe N.D. Illinois and consolidated as part of the MDL. On April 1, 2019, Reynolds and Reynolds filed a motion to dismiss i3 Brands’ suit infavor of arbitration, or in the alternative, for failure to state a claim, and CDK Global, LLC filed a motion to stay this case pending theoutcome of the proposed arbitration proceedings between Reynolds and Reynolds with i3 Brands, or in the alternative, to dismiss certain ofits claims for failure to state a claim. These motions are fully briefed and remain pending before the Court.The Company believes that the remaining unsettled cases are without merit and will continue to vigorously contest all asserted claims. Nonetheless,in light of the Company’s settlement with Cox and its continued expenditure of legal costs to contest the claims, the Company has determined that a loss ofsome measure is probable and can be reasonably estimated. Accordingly, the Company has established a litigation provision of $90 million in the fourthquarter of fiscal 2019 for both the settlement and the remaining unsettled cases. This estimated loss is based upon currently available information andrepresents the Company’s best estimate of such loss. Estimating the value of this estimated loss involved significant judgment given the uncertainty that stillexists with respect to the remaining unsettled cases due to a variety of factors typical of complex, large scale litigation, including, among others: (i) formativeissues, including: (a) the causes of action the plaintiffs can pursue; (b) the definition of the class(es) of plaintiffs; (c) the types of damages that can berecovered; and (d) whether plaintiffs can establish loss causation as a matter of law, all of which have yet to be determined pending the outcome ofdispositive motions (e.g., motions for class certification and motions for summary judgment); (ii) discovery is ongoing and significant factual issues remainto be resolved; (iii) expert discovery with respect to, among other things, alleged antitrust injury and damages is not sufficiently advanced; (iv) the absenceof productive settlement discussions to date with plaintiffs other than Cox; and (v) the novel or uncertain nature of the legal issues presented. For these samereasons, the Company cannot reasonably estimate a maximum potential loss exposure at this time. In addition, the Company’s estimate does not incorporateor reflect the potential value of the Company’s counterclaims against certain of the plaintiffs in the ongoing cases. The legal proceedings underlying theestimated litigation liability will change from time to time and actual results may vary significantly from the estimate. As noted above, an adverse result inany of the remaining cases could have a material adverse effect on the Company's business, results of operations, financial condition, or liquidity.On June 22, 2017, the Company received from the FTC a Civil Investigative Demand consisting of specifications calling for the production ofdocuments relating to any agreements between the Company and Reynolds and Reynolds. Parallel document requests have been received from certain states'Attorneys General. Since 2017, the Company has engaged in continuing communication with and received subsequent requests from the FTC related to itsinvestigation. The Company is responding to the requests and no proceedings have been instituted. The Company believes there has not been any conductby the Company or its current or former employees that would be actionable under the antitrust laws in connection with the agreements between theCompany and Reynolds and Reynolds or otherwise. At this time, the Company does not have sufficient information to predict the outcome of, or the cost ofresponding to or resolving, these investigations.108Other Commitments and ContingenciesIn the normal course of business, the Company may enter into contracts in which the Company makes representations and warranties that relate tothe performance of the Company’s services and products. The Company does not expect any material losses related to such representations and warranties.The Company has provided approximately $27.6 million of guarantees as of June 30, 2019 in the form of surety bonds issued to support certainlicenses and contracts which require a surety bond as a guarantee of performance of contractual obligations. In general, the Company would only be liable forthe amount of these guarantees in the event the Company defaulted in performing the obligations under each contract, of which, the probability is remote.The Company had a total of $2.2 million in letters of credit outstanding as of June 30, 2019 primarily in connection with insurance programs and itsforeign subsidiaries.Note 17. Share Repurchase TransactionsIn December 2015, the Board of Directors authorized the Company to repurchase up to $1.0 billion of its common stock as part of its $1.0 billionreturn of capital plan. In December 2016, the company completed its $1.0 billion return of capital plan. In January 2017, the Board of Directors terminatedthis authorization and replaced it with an authorization for the Company to repurchase up to $2.0 billion of its common stock as part of a new return ofcapital plan. Under the authorization, the Company may purchase its common stock in the open market or in privately negotiated transactions from time totime as permitted by federal securities laws and other legal requirements. The actual timing, number, and price of any shares to be repurchased is determinedat management's discretion and depends on a number of factors, including the market price of the shares, general market and economic conditions, and otherpotential uses for free cash flow including, but not limited to, potential acquisitions.In December 2016, the Company entered into an accelerated share repurchase agreement ("December 2016 ASR") to purchase $330.0 million of theCompany's common stock. Under the terms of the December 2016 ASR, the Company made a $330.0 million payment in December 2016 and received aninitial delivery of approximately 4.5 million shares of the Company's common stock. In May 2017, the Company received an additional 0.7 million shares ofcommon stock in final settlement of the December 2016 ASR, for a total of 5.2 million shares. The value reflected in treasury stock upon completion of theDecember 2016 ASR represents the value of the shares received based on the closing price of the Company's stock on the respective settlement dates, whichis less than the $330.0 million cash paid by $21.2 million.In May 2017, the Company entered into an accelerated share repurchase agreement ("May 2017 ASR") to purchase $350.0 million of the Company'scommon stock. Under the terms of the May 2017 ASR, the Company made a $350.0 million payment in May 2017 and received initial delivery ofapproximately 4.5 million of the Company's common stock. In September 2017, the Company received an additional 1.1 million shares of common stock infinal settlement of the May 2017 ASR, for a total of 5.6 million shares. The value reflected in treasury stock upon completion of the May 2017 ASRrepresents the value of the shares received based on the closing price of the Company's stock on the respective settlement dates, which is less than the $350.0million cash paid by $3.1 million.In November 2018, the Company entered into an accelerated share repurchase agreement ("November 2018 ASR") to purchase $260.0 million of theCompany's common stock. Under the terms of the November 2018 ASR, the Company made a $260.0 million payment in November 2018 and receivedinitial delivery of approximately 4.1 million of the Company's common stock. In February 2019, the Company received an additional 1.1 million shares ofcommon stock in final settlement of the November 2018 ASR, for a total of 5.2 million shares. The value reflected in treasury stock upon completion of theNovember 2018 ASR represents the value of the shares received based on the closing price of the Company's stock on the respective settlement dates, whichis higher than the $260.0 million cash paid by $13.0 million.Additionally, the Company made open market repurchases of 4.4 million shares of the Company's common stock during fiscal 2019 for a total costof $264.1 million and 9.4 million shares of the Company's common stock during fiscal 2018 for a total cost of $623.6 million.109Note 18. Transactions with ADPPrior to the spin-off, the Company entered into a transition services agreement with ADP to provide for an orderly transition to being an independentcompany. The Company entered into a data services agreement with ADP prior to the spin-off under which ADP will provide the Company with certain datacenter sharing services relating to the provision of information technology, platform support, hosting and network services. The term of the agreementexpired on September 30, 2016, two years after the spin-off date.The Company entered into an intellectual property transfer agreement with ADP prior to the spin-off under which ADP assigned to the Companycertain patents, trademarks, copyrights, and other intellectual property developed or owned by ADP or certain of its subsidiaries and with respect to which theCompany is the primary or exclusive user today or the anticipated primary or exclusive user in the future. The term of the agreement is perpetual after thespin-off date.The Company recorded $3.4 million of expenses related to the data services agreement in the accompanying financial statements for fiscal 2017.Refer to Note 10 for further information on the tax matters agreement with ADP.Note 19. Financial Data by SegmentThe Company is organized into two main operating groups, CDK North America and CDK International, which are also reportable segments. TheCompany's previously reported Advertising North America segment has been classified as discontinued operations for all periods presented. Discontinuedoperations also includes the Company's mobile advertising and website services businesses, the results of which were previously reported within the CDKNAsegment. Additional information on discontinued operations is contained in Note 4 - Discontinued Operations.The primary components of the Other segment are corporate allocations and other expenses not recorded in the segment results, such as stock-basedcompensation expense, corporate costs, interest expense, costs attributable to the business transformation plan, results of the captive insurance company andcertain unallocated expenses. Certain expenses are charged to the reportable segments at a standard rate for management reasons. Other costs are recordedbased on management responsibility.110 CDK NorthAmerica CDKInternational Other* TotalYear ended June 30, 2019 Revenues$1,593.0 $321.8 $— $1,914.8Earnings before income taxes517.5 77.1 (290.7) 303.9Loss from equity method investment(17.0) — — (17.0)Assets1,881.4 497.7 619.9 2,999.0Capital expenditures49.3 5.1 — 54.4Depreciation and amortization73.9 9.3 6.6 89.8 Year ended June 30, 2018 Revenues$1,441.7 $356.3 $— $1,798.0Earnings before income taxes576.4 97.7 (274.9) 399.2Assets1,203.2 509.6 1,295.6 3,008.4Capital expenditures40.1 5.8 — 45.9Depreciation and amortization54.0 11.7 5.1 70.8 Year ended June 30, 2017 Revenues$1,418.8 $311.9 $— $1,730.7Earnings before income taxes534.2 75.0 (281.5) 327.7Assets1,174.9 538.9 1,169.3 2,883.1Capital expenditures54.6 7.8 — 62.4Depreciation and amortization44.3 11.4 7.7 63.4* Includes assets held for sale of $98.6 million, $269.4 million, and $245.1 million as of June 30, 2019, 2018, and 2017, respectively.Revenues and property, plant and equipment, net by geographic area were as follows: United States Europe Canada Other TotalYear ended June 30, 2019 Revenues$1,500.3 $235.4 $92.7 $86.4 $1,914.8Property, plant and equipment, net122.7 11.2 4.3 6.6 144.8 Year ended June 30, 2018 Revenues$1,347.9 $253.3 $93.8 $103.0 $1,798.0Property, plant and equipment, net101.6 14.1 3.9 8.0 127.6 Year ended June 30, 2017 Revenues$1,330.2 $221.0 $88.6 $90.9 $1,730.7Property, plant and equipment, net99.1 16.3 3.7 10.5 129.6111Note 20. Quarterly Financial Results (Unaudited)Summarized quarterly results of operations for the fiscal 2019 and 2018 were as follows: First Quarter Second Quarter Third Quarter Fourth QuarterYear ended June 30, 2019 Revenues (1)$446.3 $478.7 $501.2 $488.6Gross profit (1) (2)243.0 248.1 271.9 252.0Earnings before income taxes (1)106.5 96.6 120.7 (19.9)Net earnings from continuing operations76.5 72.6 89.3 3.3(Loss) Earnings from discontinued operations, net of taxes15.8 18.3 12.3 (156.2)Net earnings92.3 90.9 101.6 (152.9)Net earnings attributable to noncontrolling interest2.0 1.9 1.9 2.1Net earnings attributable to CDK90.3 89.0 99.7 (155.0) Net earnings (loss) attributable to CDK per share - basic: Continuing operations$0.58 $0.56 $0.70 $0.01Discontinued operations0.12 0.14 0.10 (1.28)Total net earnings attributable to CDK per share - basic$0.70 $0.70 $0.80 $(1.27) Net earnings (loss) attributable to CDK per share - diluted: Continuing operations$0.57 $0.56 $0.70 $0.01Discontinued operations0.12 0.14 0.10 (1.28)Total net earnings attributable to CDK per share - diluted$0.69 $0.70 $0.80 $(1.27) Year ended June 30, 2018 Revenues (1)$441.1 $441.7 $461.2 $454.0Gross profit (1) (2)219.7 232.3 246.3 245.2Earnings before income taxes (1)90.6 90.8 107.7 110.1Net earnings from continuing operations64.8 84.1 79.0 83.2Earnings from discontinued operations, net of taxes18.2 22.2 18.7 18.5Net earnings83.0 106.3 97.7 101.7Net earnings attributable to noncontrolling interest1.8 2.2 1.6 2.3Net earnings attributable to CDK81.2 104.1 96.1 99.4 Net earnings attributable to CDK per share - basic: Continuing operations$0.45 $0.60 $0.57 $0.67Discontinued operations0.13 0.16 0.14 0.15Total net earnings attributable to CDK per share - basic$0.58 $0.76 $0.71 $0.82 Net earnings attributable to CDK per share - diluted: Continuing operations$0.44 $0.59 $0.57 $0.66Discontinued operations0.13 0.16 0.14 0.15Total net earnings attributable to CDK per share - diluted$0.57 $0.75 $0.71 $0.81(1) Amounts differ from previously reported in the Quarterly Reports on Form 10-Q as a result of the Digital Marketing Business being classified asdiscontinued operations. See Note 15, "Discontinued Operations" for additional information.(2) Gross profit is calculated as revenues less cost of revenues.112CDK Global, Inc.Schedule II - Valuation and Qualifying Accounts(In millions)Column A Column B Column C Column D Column E Additions Balance atbeginning ofperiod Charged(credited) to costsand expenses Charged(credited) to otheraccounts Deductions Balance at end ofperiodYear ended June 30, 2019 (1) Accounts receivable allowances $4.0 $8.2 $0.7(2) $(3.4)(3) $9.5Deferred tax valuation allowance 21.2 — — (10.9)(4) 10.3Year ended June 30, 2018 Accounts receivable allowances $6.3 $3.7 $— $(2.6)(3) $7.4Deferred tax valuation allowance 35.1 — — (13.5)(5) 21.6Year ended June 30, 2017 Accounts receivable allowances $7.1 $1.7 $— $(2.5)(3) $6.3Deferred tax valuation allowance 34.3 1.9 — (1.1) 35.1(1) Effective July 1, 2018, the Company adopted ASC 606 using the modified retrospective approach. The comparative information has not been restated andcontinues to be reported under the accounting standards in effect for the period presented. (2) Represents amount for ELEAD as of the acquisition date.(3) Doubtful accounts written off, less recoveries on accounts previously written off.(4) Includes $14.8 million reduction related to the capital gain the Company expects to recognize in conjunction with the sale of the assets of the DigitalMarketing Business which were classified as held for sale in the fourth quarter of fiscal 2019, $4.3 million increase related to capital loss resulting fromtermination of a joint venture contract, and a $0.4 million net decrease due to certain non-U.S. tax loss carryforwards.(5) Includes $10.0 million reduction for the tax rate impact on a capital loss carryforward and $3.5 million for the expiration of certain non-U.S. tax losscarryforwards.113Item 9. Changes in and Disagreements With Accountants on Accounting and Financial DisclosureNone.Item 9A. Controls and ProceduresManagement's Evaluation of Disclosure Controls and ProceduresThe Company carried out an evaluation, under the supervision and with the participation of the Company's management, including its ChiefExecutive Officer and Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures, as defined in Rules 13a-15(e) and15d-15(e) of the Exchange Act (the "evaluation"). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensurethat information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated tothe Company's management, including its Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate toallow timely decisions regarding required disclosure. Based on the evaluation, the Company's Chief Executive Officer and Chief Financial Officer haveconcluded that the Company's disclosure controls and procedures were effective as of June 30, 2019 in ensuring that (i) information required to be disclosedby the Company in reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including itsChief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure, and (ii) such information is recorded, processed,summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.Internal Control Over Financial ReportingManagement's Annual Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintainingadequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with theparticipation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of ourinternal control over financial reporting as of June 30, 2019 based on the guidelines established in Internal Control - Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the results of our evaluation, our management has concludedthat our internal control over financial reporting was effective as of June 30, 2019.Deloitte & Touche LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financialreporting as of June 30, 2019. Their report is included in this Annual Report on Form 10-K.Changes in Internal Control Over Financial Reporting. In the fourth quarter of fiscal 2019, we assessed and added new controls due to the adoptionof new lease accounting standard effective July 1, 2019. There was no other change in our internal control over financial reporting identified in connectionwith the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2019 that has materiallyaffected, or is reasonably likely to materially affect, our internal control over financial reporting.114REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the stockholders and the Board of Directors ofCDK Global, Inc.Hoffman Estates, IllinoisOpinion on Internal Control over Financial ReportingWe have audited the internal control over financial reporting of CDK Global, Inc. and subsidiaries (the “Company”) as of June 30, 2019, based on criteriaestablished in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2019, based on criteriaestablished in Internal Control - Integrated Framework (2013) issued by COSO.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedfinancial statements as of and for the year ended June 30, 2019, of the Company and our report dated August 13, 2019, which expresses an unqualifiedopinion and includes an explanatory paragraph relating to the Company’s adoption of Financial Accounting Standards Board Accounting StandardsCodification 606, Revenue from Contracts with Customers.Basis for OpinionThe Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Ourresponsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining anunderstanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. Webelieve that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control over Financial ReportingA company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ DELOITTE & TOUCHE LLPChicago, IllinoisAugust 13, 2019115Item 9B. Other InformationNone.116Part IIIItem 10. Directors, Executive Officers and Corporate GovernanceThe information required by this item will be set forth under the captions "Proposal 1: Election of Directors," “Section 16(a) Beneficial OwnershipReporting Compliance,” “Code of Business Conduct and Ethics,” and “Board and Committee Governance” in the Proxy Statement to be filed with the SECno later than 120 days after the close of our fiscal year ended June 30, 2019. If the Proxy Statement is not filed with the SEC by such time, such informationwill be included in an amendment to this Annual Report by such time. Also see “Information about our Executive Officers” in Part I of this Annual Report onForm 10-K.Item 11. Executive CompensationThe information required by this item will be set forth under the captions "Compensation of Named Executive Officers" and "CompensationDiscussion and Analysis" in the Proxy Statement to be filed with the SEC no later than 120 days after the close of our fiscal year ended June 30, 2019. If theProxy Statement is not filed with the SEC by such time, such information will be included in an amendment to this Annual Report by such time.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this item will be set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" in theProxy Statement to be filed with the SEC no later than 120 days after the close of our fiscal year ended June 30, 2019. If the Proxy Statement is not filed withthe SEC by such time, such information will be included in an amendment to this Annual Report by such time.Item 13. Certain Relationships and Related Transactions, and Director IndependenceThe information required by this item will be set forth under the caption "Certain Relationships and Related Party Transactions" in the ProxyStatement to be filed with the SEC no later than 120 days after the close of our fiscal year ended June 30, 2019. If the Proxy Statement is not filed with theSEC by such time, such information will be included in an amendment to this Annual Report by such time.Item 14. Principal Accounting Fees and ServicesThe information required by this item will be set forth under the caption "Fees of Independent Accounting Firm" in the Proxy Statement to be filedwith the SEC no later than 120 days after the close of our fiscal year ended June 30, 2019. If the Proxy Statement is not filed with the SEC by such time, suchinformation will be included in an amendment to this Annual Report by such time.117Part IVItem 15. Exhibits, Financial Statement SchedulesThe following documents are included in "Financial Statements and Supplementary Data" in Part II, Item 8 of this Annual Report on Form 10-K:1.Financial StatementsReports of Independent Registered Public Accounting FirmConsolidated Statements of Operations for the years ended June 30, 2019, 2018, and 2017Consolidated Statements of Comprehensive Income for the years ended June 30, 2019, 2018, and 2017Consolidated Balance Sheets as of June 30, 2019 and 2018Consolidated Statements of Cash Flows for the years ended June 30, 2019, 2018, and 2017Consolidated Statements of Stockholders' (Deficit) Equity for the years ended June 30, 2019, 2018, and 2017Notes to the Consolidated Financial Statements2.Financial Statement ScheduleSchedule II - Valuation and Qualifying Accounts.The following exhibits are filed with this Annual Report on Form 10-K or incorporated herein by reference to the document set forth next to the exhibit in thelist below: Incorporated by Reference ExhibitNumber Exhibit Description Form File No. Exhibit Filing Date Filed Herewith3.1 Certificate of Incorporation of CDK Global, Inc. 8-K 1-36486 3.1 10/1/2014 3.2 Amended and Restated By-Laws of CDK Global, Inc., dated March 7, 2017 8-K 1-36486 3.1 3/9/2017 4.1 Indenture, dated as of October 14, 2014, among CDK Global, Inc. and U.S.Bank National Association, as trustee, pursuant to which the 3.30% SeniorNotes due 2019 were issued 8-K 1-36486 4.1 10/17/2014 4.2 Indenture, dated as of October 14, 2014, among CDK Global, Inc. and U.S.Bank National Association, as trustee, pursuant to which the 4.50% SeniorNotes due 2024 were issued 8-K 1-36486 4.2 10/17/2014 4.3 Indenture, dated as of May 15, 2017, between CDK Global, Inc. and U.S.Bank National Association, as trustee, pursuant to which the 4.875% seniornotes due 2027 were issued 8-K 1-36486 4.1 5/15/2017 4.4 Base Indenture, dated as of June 18, 2018, between CDK Global, Inc. andU.S. Bank National Association, as trustee 8-K 1-36486 4.1 6/18/2018 4.5 Officer’s Certificate, dated as of June 18, 2018 (including the form of theCompany’s 5.875% Senior Notes due 2026) 8-K 1-36486 4.2 6/18/2018 4.6 Indenture, dated as of May 15, 2019, between CDK Global, Inc. and U.S.Bank National Association, as trustee, pursuant to which the 5.25% seniornotes due 2029 were issued 8-K 1-36486 4.1 5/15/2019 10.3 Form of Indemnification Agreement 8-K 1-36486 10.1 6/7/2018 10.4 Amended and Restated Corporate Officer Severance Plan (ManagementCompensatory Plan) 8-K 1-36486 10.1 9/7/2017 10.5 Third Amended and Restated Change in Control Severance Plan forCorporate Officers (Management Compensatory Plan) 10-K 1-36486 10.11 8/8/2017 11810.6 CDK Global Inc., Amended and Restated Deferred Compensation Plan,effective November 6, 2018 10-Q 1-36486 10.7 11/7/2018 10.7 CDK Global, Inc., Amended and Restated Retirement and SavingsRestoration Plan, effective November 6, 2018 (Management CompensatoryPlan) 10-Q 1-36486 10.8 11/7/2018 10.8 CDK Global, Inc. 2014 Omnibus Award Plan (Management CompensatoryPlan) DEF 14A 1-36486 Appendix A 9/22/2015 10.9 First Amendment to the CDK Global, Inc. 2014 Omnibus Award Plan(Management Compensatory Plan) 10-K 1-36486 10.6 8/8/2017 10.10 UK Tax Advantaged Sub-Plan (Management Compensatory Plan) 8-K 1-36486 10.1 1/26/2015 10.11 Form of Deferred Unit Award Agreement under the 2014 Omnibus AwardPlan (Form for Non-Employee Director) (Management Compensatory Plan) 10-Q 1-36486 10.18 11/13/2014 10.12 Form of Restricted Stock Unit Award Agreement under the 2014 OmnibusAward Plan (Form for Non-Employee Director) (Management CompensatoryPlan) 10-Q 1-36486 10.7 11/3/2015 10.13 Form of Stock Option Grant Agreement under the 2014 Omnibus AwardPlan (Form for Non-Employee Director) (Management Compensatory Plan) 10-Q 1-36486 10.8 11/3/2015 10.14 Form of Stock Option Grant Agreement under the 2014 Omnibus AwardPlan (Form for Corporate Officers) (Management Compensatory Plan) 10-Q 1-36486 10.8 2/3/2016 10.15 Form of Performance Based Stock Option Award Agreement under the 2014Omnibus Award Plan (Form for Corporate Officers) (ManagementCompensatory Plan) 10-Q 1-36486 10.5 11/7/2018 10.16 Form of Performance Based Stock Option Award Agreement under the 2014Omnibus Award Plan (Form for Corporate Officers) (ManagementCompensatory Plan) 10-Q 1-36486 10.6 11/7/2018 10.17 UK Tax Advantaged Sub-Plan Form of Stock Option Grant Agreement underthe 2014 Omnibus Award Plan (Form for Corporate Officers) (ManagementCompensatory Plan) 10-Q 1-36486 10.9 2/3/2016 10.18 Form of Restricted Unit Award Agreement under the 2014 Omnibus AwardPlan (Form for Corporate Officers) (Management Compensatory Plan) 10-Q 1-36486 10.10 2/3/2016 10.19 Form of Restricted Stock Unit Award Agreement under the 2014 OmnibusAward Plan (Form for Corporate Officers) (Management CompensatoryPlan) 8-K 1-36486 10.1 9/6/2018 10.20 Form of Restricted Stock Award Agreement under the 2014 Omnibus AwardPlan (Form for Corporate Officers) (Management Compensatory Plan) 10-Q 1-36486 10.11 2/3/2016 10.21 Form of Performance Stock Unit Award Agreement under the 2014 OmnibusAward Plan (Form for Corporate Officers) (Management CompensatoryPlan) 10-Q 1-36486 10.12 2/3/2016 10.22 Form of Performance Stock Unit Award Agreement under the 2014 OmnibusAward Plan (Form for Corporate Officers) (Management CompensatoryPlan) 8-K 1-36486 10.2 9/6/2018 10.23 Employment Agreement, dated as of November 5, 2018, by and between theCompany and Brian Krzanich 8-K 1-36486 10.9 11/7/2018 10.24 Transition and Release Agreement, dated as of November 5, 2018, by andbetween the Company and Brian P. MacDonald 8-K 1-36486 10.10 11/7/2018 10.25 Term Loan Credit Agreement, dated as of August 17, 2018, among theCompany, the Lenders party thereto, and Bank of America, N.A., asAdministrative Agent 8-K 1-36486 10.1 8/23/2018 10.26 Revolving Credit Agreement, dated as of August 17, 2018, among theCompany, the Lenders party thereto, and Bank of America, N.A., asAdministrative Agent 8-K 1-36486 10.2 8/23/2018 21.1 Subsidiaries of the Registrant X23.1 Consent of Deloitte & Touche LLP, independent registered public accountingfirm X31.1 Certification by Brian Krzanich pursuant to Rule 13a-14(a) of the SecuritiesExchange Act of 1934 X11931.2 Certification by Joseph A. Tautges pursuant to Rule 13a-14(a) of theSecurities Exchange Act of 1934 X32.1 Certification by Brian Krzanich pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X32.2 Certification by Joseph A. Tautges pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X101.INS XBRL Instance Document - the instance document does not appear in theInteractive Data File because its XBRL tags are embedded within the InlineXBRL document. X101.SCH XBRL taxonomy extension schema document X101.CAL XBRL taxonomy extension calculation linkbase document X101.LAB XBRL taxonomy label linkbase document X101.PRE XBRL taxonomy extension presentation linkbase document X101.DEF XBRL taxonomy extension definition linkbase document X120SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. CDK GLOBAL, INC. By: /s/ Joseph A. Tautges Joseph A. Tautges Executive Vice President, Chief Financial Officer August 13, 2019Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrantand in the capacities and on the dates indicated.Signature Title Date/s/ Brian Krzanich President, Chief Executive Officer and Director (principal executive officer) August 13, 2019Brian Krzanich /s/ Joseph A. Tautges Executive Vice President, Chief Financial Officer (principal financial officer) August 13, 2019Joseph A. Tautges /s/ Jennifer A.Williams Vice President, Corporate Controller and Chief Accounting Officer (principalaccounting officer) August 13, 2019Jennifer A. Williams /s/ Leslie A. Brun Director August 13, 2019Leslie A. Brun /s/ Willie A. Deese Director August 13, 2019Willie A. Deese /s/ Amy J. Hillman Director August 13, 2019Amy J. Hillman /s/ Stephen A. Miles Director August 13, 2019Stephen A. Miles /s/ Robert E. Radway Director August 13, 2019Robert E. Radway /s/ Stephen F. Schuckenbrock Director August 13, 2019Stephen F. Schuckenbrock /s/ Frank S. Sowinski Director August 13, 2019Frank S. Sowinski /s/ Eileen J. Voynick Director August 13, 2019Eileen J. Voynick 121Exhibit 21.1Name of Subsidiary Jurisdiction ofIncorporationCDK Global Holdings, LLC DelawareCDK Global Holdings II, LLC DelawareCDK Global, LLC DelawareCDK Global International Holdings, Inc. DelawareCDK Global (UK) LP United KingdomCDK Global Holdings (UK) Limited United KingdomCDK Global (UK) Limited United KingdomCDK Global (Netherland) BV NetherlandsCDK Global (Canada) Holding Co. Nova ScotiaCDK Global (Canada) Limited CanadaCDK Data Services, Inc. TexasCDK Vehicle Registration, Inc. CaliforniaComputerized Vehicle Registration CaliforniaIn accordance with Item 601(b)(21) of Regulation S-K, the Company has omitted the names of particular subsidiaries because the unnamed subsidiarieswould not have constituted a significant subsidiary as of June 30, 2019.Exhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in Registration Statement No. 333-199078 on Form S-8 and Registration Statement No.333-224580 on Form S-3 of our reports dated August 13, 2019, relating to the consolidated financial statements and financial statementschedule of CDK Global, Inc. (the “Company”) (which report expresses an unqualified opinion and includes an explanatory paragraphrelating to the Company’s adoption of Financial Accounting Standards Board Accounting Standards Codification 606, Revenue fromContracts with Customers) and the effectiveness of CDK Global, Inc.'s internal control over financial reporting, appearing in thisAnnual Report on Form 10-K of CDK Global, Inc. for the year ended June 30, 2019./s/ DELOITTE & TOUCHE LLPChicago, IllinoisAugust 13, 2019EXHIBIT 31.1Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934I, Brian Krzanich, certify that:1.I have reviewed this Annual Report on Form 10-K of CDK Global, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.Date:August 13, 2019/s/ Brian Krzanich Brian Krzanich President, Chief Executive Officer(principal executive officer)EXHIBIT 31.2Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934I, Joseph A. Tautges, certify that:1.I have reviewed this Annual Report on Form 10-K of CDK Global, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.Date:August 13, 2019/s/ Joseph A. Tautges Joseph A. Tautges Executive Vice President, Chief Financial Officer(principal financial officer)EXHIBIT 32.1CERTIFICATION OF CHIEF EXECUTIVE OFFICERCERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of CDK Global, Inc. (the "Company") on Form 10-K for the fiscal year ended June 30, 2019 as filed with the Securitiesand Exchange Commission on the date hereof (the "Report"), I, Brian Krzanich, President, Chief Executive Officer of the Company, certify, pursuant to 18U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Date:August 13, 2019/s/ Brian Krzanich Brian Krzanich President, Chief Executive Officer(principal executive officer)EXHIBIT 32.2CERTIFICATION OF CHIEF FINANCIAL OFFICERCERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of CDK Global, Inc. (the "Company") on Form 10-K for the fiscal year ended June 30, 2019 as filed with the Securitiesand Exchange Commission on the date hereof (the "Report"), I, Joseph A. Tautges, Executive Vice President, Chief Financial Officer of the Company, certify,pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Date:August 13, 2019/s/ Joseph A. Tautges Joseph A. Tautges Executive Vice President, Chief Financial Officer(principal financial officer)

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