2021 Annual Report
Dear Fellow Ceridian Stockholders,
It was another strong year for Ceridian. We achieved two remarkable milestones. First, we delivered more than
$1 billion in total revenue, which exceeded our guidance, and was driven by the 29% growth of Dayforce
recurring revenue, excluding float revenue. Second, we now have over five million active global users on the
Dayforce platform.*
In addition, our annual cloud revenue retention rate, including Dayforce and Powerpay, increased by 100 basis
points to 96.8%.* We are proud to have ended the year with customer satisfaction at record levels and more than
5,400 customers live on the Dayforce platform.*
Customer-driven innovation
We continued to invest in the Dayforce platform and as a result more than 35% of new customers have purchased
a comprehensive product suite, and more than 30% of sales were additional modules from existing customers.
In 2021, we saw increased demand for Dayforce Wallet, Ceridian’s market-leading pay solution that enables
employees to access their earned wages at any time. As of December 31, 2021, we had more than 950 customers
signed onto Dayforce Wallet with over 400 customers live on the product. In addition, we launched Dayforce
Wallet in Canada and delivered more key features such as cash back rewards and two day early direct deposit to
offer even more value to users – with many more features and updates to come.
We delivered Dayforce Hub to help our customers create empowered employee experiences, as organizations of
all sizes navigate new hybrid work environments. We also deepened our investment in talent intelligence,
following our acquisition of Ideal early last year, by delivering new talent skills matching and screening
capabilities within Dayforce to help organizations make more accurate, efficient, and fair talent decisions.
To further extend our compliance advantage, we acquired substantially all of the assets of DataFuZion. This
HCM technology includes specific features for certified payroll reporting, prevailing wage rate calculations,
incentive payments, union rate calculations, and complex general ledger reporting to support our growth in key
verticals including construction, government contracting, manufacturing, union, public sector, and non-profit
sectors.
We once again received important validation of our product investments and market leadership. For the second
consecutive year, Ceridian was named a Leader in the 2021 Gartner® Magic Quadrant™ for Cloud HCM Suites
for 1,000+ Employee Enterprises, driven by Ceridian’s Ability to Execute and Completeness of Vision.
Global expansion
We believe we have a significant opportunity for growth outside of North America as we execute against our
strategy to be a global leader in the cloud HCM market. In 2021, we accelerated Ceridian’s global growth
strategy through the acquisition of Ascender, a leading HCM provider in Asia Pacific Japan. Ceridian now
provides the most comprehensive payroll and human capital management solutions in the region. Ceridian also
acquired Adam HCM, a leading payroll and HCM company serving customers in 33 countries across Central
America, South America, and the Caribbean.
The combination of these acquisitions is a significant step forward in our strategy to make Dayforce a leading
solution in all major regions of the world.
* Excluding the 2021 acquisitions of Ascender and ADAM HCM.
Our people, culture, and purpose
Our employees uphold Ceridian’s Our Way values in the actions they take every day in service to our customers,
and each other, as we grow our business globally. Our strong culture is anchored by our promise and purpose – to
make work life better – and is reflected by our strong employee net promoter score (eNPS). We continued to
strengthen and elevate our team by bringing in new leaders while growing our existing talent to deliver
exceptional value to our customers.
As a purpose-driven company, we believe in acting responsibility, operating sustainably, and contributing to the
greater good. In 2021, we completed our first Environmental, Social, and Governance (“ESG”) report, which was
a milestone in our journey as a global HCM leader. We also developed a new ESG framework anchored by the
following pillars: governance and trust; our people; tech for good; our communities; and the environment. This
year, we are publishing our ESG goals and performance metrics based on our new framework.
Driving durable growth
In 2022, our five strategic levers will continue to guide our execution and overall growth agenda:
• Acquiring new customers in markets where we have seen success to date;
• Extending the Dayforce platform, allowing us to deliver more value to our current and prospective
customers;
• Expanding within the enterprise segment;
• Accelerating our global expansion both by serving local customers in new geographies, and by
extending our scope to service global multinational customers; and
• Driving incremental value for our customers by innovating in adjacent markets, such as Dayforce
Wallet.
Our strong customer focus, product vision, scale, and geographic reach give us great confidence in our ability to
deliver sustainable, profitable growth.
On behalf of the Ceridian Board of Directors, we want to thank our employees who continued to live our core
values and deliver against our growth agenda during another challenging year. We also want to thank you, our
fellow stockholders, for your confidence in us and for your investment in Ceridian.
David D. Ossip, Chair and Co-CEO
Leagh E. Turner, Co-CEO
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
TRANSITION PERIOD FROM
TO
Commission File Number 001-38467
Ceridian HCM Holding Inc.
(Exact name of Registrant as specified in its Charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
46-3231686
(I.R.S. Employer
Identification No.)
3311 East Old Shakopee Road
Minneapolis, Minnesota 55425
(952) 853-8100
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $.01 par value
Trading Symbol(s)
CDAY
Name of each exchange on which registered
New York Stock Exchange
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 ☒ NO ☐
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ☐ NO ☒
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES ☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). YES ☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☒
☐
Accelerated filer
Small reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☒
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the $95.92 closing price of
the shares of common stock on the New York Stock Exchange on June 30, 2021, was $13,342.1 million.
The number of shares of Registrant’s Common Stock outstanding as of February 18, 2022 was 152,049,674.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Definitive Proxy Statement relating to the 2022 Annual Meeting of Stockholders, scheduled to be held on May 3, 2022, are
incorporated by reference into Part III of this Form 10-K.
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Table of Contents
Business
PART I
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Reserved
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 6.
Item 7.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Item 8.
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
PART IV
Item 15. Exhibits, Financial Statement Schedules
Item 16. Form 10-K Summary
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2021 Form 10-K
Unless the context requires otherwise, references in this Annual Report on Form 10-K for the fiscal year ended
December 31, 2021 of Ceridian HCM Holding Inc. and subsidiaries (“Form 10-K”) to “our company,” the “Company,” “we,”
“us,” “our,” and “Ceridian” refer to Ceridian HCM Holding Inc. and its direct and indirect subsidiaries on a consolidated
basis.
We and our subsidiaries own or have the rights to various trademarks, trade names and service marks, including the
following: Ceridian®, Dayforce®, Makes Work Life Better™, Powerpay® and various logos used in association with these
terms. Solely for convenience, the trademarks, trade names and service marks and copyrights referred to herein are listed
without the ©, ®, and ™, symbols, but such references are not intended to indicate, in any way, that Ceridian, or the
applicable owner, will not assert, to the fullest extent under applicable law, Ceridian’s or their, as applicable, rights to
these trademarks, trade names, and service marks. Other trademarks, service marks, or trade names appearing in this
Form 10-K are the property of their respective owners.
FORWARD-LOOKING STATEMENTS
This Form 10-K contains, or incorporates by reference, not only historical information, but also forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section
21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”) and that are subject to the safe harbor created
by those sections. All statements other than statements of historical fact or relating to present facts or current conditions
included in this Form 10-K are forward-looking statements. Forward-looking statements give our current expectations and
projections relating to our financial condition, results of operations, plans, objectives, future performance and business.
You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These
statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “seek,” “plan,” “intend,” “believe,” “will,”
“may,” “could,” “continue,” “likely,” “should,” and other words and terms of similar meaning in connection with any
discussion of the timing or nature of future operating or financial performance or other events but not all forward-looking
statements contain these identifying words.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the
economy, and other future conditions. Because forward-looking statements relate to the future, by their nature, they are
subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. As a result, our actual
results may differ materially from those contemplated by the forward-looking statements. Important factors that could
cause actual results to differ materially from those in the forward-looking statements include regional, national, or global
political, economic, business, competitive, market, and regulatory conditions and those risks described in Part I, Item IA,
“Risk Factors” of this Form 10-K. Although we have attempted to identify important risk factors, there may be other risk
factors not presently known to us or that we presently believe are not material that could cause actual results and
developments to differ materially from those made in or suggested by the forward-looking statements contained in this
Form 10-K. If any of these risks materialize, or if any of the above assumptions underlying forward-looking statements
prove incorrect, actual results and developments may differ materially from those made in or suggested by the forward-
looking statements contained in this Form 10-K. For the reasons described above, we caution you against relying on any
forward-looking statements. Any forward-looking statement made by us in this Form 10-K speaks only as of the date on
which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is
not possible for us to predict all of them. We undertake no obligation to publicly update or to revise any forward-looking
statement, whether as a result of new information, future developments, or otherwise, except as may be required by law.
Comparisons of results for current and any prior periods are not intended to express any future trends or indications of
future performance, unless specifically expressed as such, and should be viewed as historical data.
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2021 Form 10-K
Item 1. Business.
Overview
PART I
Ceridian is a global human capital management (“HCM”) software company. Dayforce, our flagship cloud HCM
platform, provides human resources (“HR”), payroll, benefits, workforce management, and talent management
functionality. In addition to Dayforce, we sell Powerpay, a cloud HR and payroll solution for the Canadian small business
market, through both direct sales and established partner channels. We also continue to support customers using our
legacy North America Bureau solutions, which we generally stopped actively selling to new customers in 2012, following
the acquisition of Dayforce, and customers using our acquired Bureau solutions which we also intend to stop actively
selling to new customers on a stand-alone basis. We invest in maintenance and necessary updates to support our Bureau
customers and continue to migrate them to Dayforce. Revenue from our Cloud and Bureau solutions include investment
income generated from holding customer funds before funds are remitted to taxing authorities, also referred to as float
revenue or float.
Our five strategic growth levers drive our long-term perspectives, near-term decision making and stockholder
alignment:
Acquiring new customers in the markets where we have seen success to date;
Extending the Dayforce platform, thereby allowing us to deliver more value to our current and prospective
customers;
Expanding within the Enterprise segment;
Accelerating our global expansion both by serving local customers in new geographies, and by extending
our scope to service global multinational customers; and finally,
Driving incremental value for our customers by innovating in adjacent markets around our core HCM suite,
such as the Dayforce Wallet.
Products and Services
Dayforce
Dayforce, our principal cloud HCM platform, is a single application that provides continuous real-time calculations
across all modules to enable, for example, payroll administrators access to data through the entire pay period, and
managers access to real-time data to optimize work schedules. Dayforce offers a comprehensive range of functionality,
including global HR, payroll, benefits, workforce management, and talent management on web and native iOS and
Android platforms. Our Dayforce mobile app enables employees not only to request and to trade schedules, but also to
see the real-time impact of schedule changes on their pay. Our Dayforce platform is used by organizations, regardless of
industry or size, to optimize management of the entire employee lifecycle, including attracting, engaging, paying,
deploying, and developing their people. Key functionality of our Dayforce platform includes HR, payroll and tax, Dayforce
Wallet, benefits, workforce management, and talent management. In 2021, we received several accolades for our
Dayforce solution, including Leader in the 2021 Gartner Magic Quadrant for Cloud HCM Suites for the second
consecutive year, and CIPD People Management Awards: Best Human Resources/Learning & Development Supplier;
Human Resources Director Asia - 5 Star HR Software; Aite-Novarica Digital Wallet Impact Innovation Award - Dayforce
Wallet; Leader in the Nucleus Research 2021 Human Capital Management Value Matrix.
Human Resources
Dayforce Human Resources functionality provides customers with a single, complete record for all employees. Our
HR functionality is centered on a comprehensive, flexible workflow engine that streamlines and automates administrative
tasks.
Payroll and Tax
Our payroll capabilities provide customers with the tools needed to manage their payroll processes accurately and in
compliance. Through our Dayforce platform, users with localized payroll functionality are able to make updates to time
and pay in real-time. In countries where we do not currently offer localized payroll within Dayforce, Dayforce
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2021 Form 10-K
ConnectedPay provides payroll aggregation features that allow an organization to have a centralized view of their global
payroll. ConnectedPay automates the data exchange with in-country payroll providers, including our global Cloud
solutions from acquired businesses, and provides a consistent self-service experience for employees to view earnings
statements and associated payroll documentation. Dayforce calculates, withholds, and files payroll related taxes in the
United States, Canada, the United Kingdom, Ireland, Australia, New Zealand, and Mauritius as part of our localized
payroll offering. In 2021, we announced our plans to deliver Dayforce Payroll across new markets, including Germany,
Hong Kong, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan, and Thailand.
Dayforce Wallet
Dayforce Wallet is a digital wallet for customers' employees on the Dayforce platform. The Dayforce Wallet offers the
flexibility and convenience of processing and distributing customers’ different payment needs, including off-cycle pay and
on-demand pay requests. Since all employee payments are processed as a regular payroll, the appropriate deductions,
remittances, and garnishments are accounted for, which means there’s minimal impact to payroll administrators and our
customers' cash flow.
The Dayforce Wallet gives our customers’ employees greater control over their financial well-being by providing
them with instant access to their earnings. The on-demand pay feature allows employees more choice over when they get
paid by making any day payday. Dayforce Wallet enables workers to access their already-earned wages anytime during
the pay period, net of taxes, withholdings and other payroll deductions. The on-demand wages are loaded onto a pay
card, which customers’ employees can use anywhere credit or debit cards are accepted. With pay cards, the Dayforce
Wallet eliminates the need to distribute paper checks and reduces processing costs. The Dayforce Wallet mobile app
makes it easy for customers’ employees to check their pay deposits, account balance and transaction history. This
provides the convenience of a traditional bank account, but without the balance minimums and monthly service fees.
The Dayforce Wallet was launched in the U.S. in 2020 and in Canada in 2021. We continue to introduce new
features and enhancements to the Dayforce Wallet, such as two day early direct deposit, which allows users that have
direct deposit set up not only to get paid when they want, but also the option to receive the remainder of their paycheck
two days in advance of normal payroll dates. Additional features, such as Streaming Pay, Dayforce Wallet Rewards,
referrals, additional pay card functionality, buy now pay later, and saving goals will be introduced in the upcoming
quarters. Streaming Pay enables customers’ employees the ability to request automatic delivery of earned wages to their
Dayforce Wallet pay card, eliminating the need to request earnings on-demand. We believe these features will enhance
our Dayforce Wallet consumer experience and help improve financial wellness over the long term.
Benefits
Dayforce Benefits assists users from benefits enrollment to ongoing benefits administration, including eligibility, open
enrollment and Affordable Care Act (“ACA”) management. Support and comparative tools can provide information to
users about each of the available benefit plans and impact of their plan options to help employees choose the best option
for their specific needs.
Talent Management
Dayforce Talent Management enables organizations to attract, to engage, to develop, and to motivate their
workforce. Users can leverage tools for recruiting, onboarding, engagement, performance, succession planning,
compensation management, and employee learning.
Workforce Management
Dayforce Workforce Management provides functionality to help organizations manage their workforces, improve
operational efficiency, and enhance compliance by configuring the system to meet complex labor and employment rules
and policies. Through Dayforce, users are offered absence management, time and attendance, schedule, and labor
planning.
Powerpay
We offer Powerpay for Canadian organizations with fewer than 100 employees. Powerpay is a cloud platform that
provides scalable and straightforward payroll and HR solutions. Specifically designed for small businesses, Powerpay
enables clients to pay their employees accurately and on-time.
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2021 Form 10-K
Bureau
Our Bureau solutions offer payroll and payroll-related services using legacy technology and Bureau technology from
our acquired businesses. We invest in maintenance and necessary updates to support our Bureau customers. We
generally stopped selling our legacy North America Bureau payroll solutions to new customers in the United States in
2012, and in Canada in 2015, and we also intend to stop actively selling our acquired Bureau payroll solutions to new
customers on a stand-alone basis. In addition to customers who use our payroll services, certain customers use our
legacy Bureau tax filing services on a stand-alone basis; and we started to sell stand-alone legacy Bureau tax services
again in 2019.
Customers
Dayforce is designed to serve organizations with 100 to over 100,000 employees. The Dayforce customer base has
increased from 482 as of December 31, 2012 to 5,434 customers* on the platform as of December 31, 2021. For 2021,
our 5,434 Dayforce customers* represented approximately 5.1 million active global users*. We define a customer as a
single organization, such as a company, a non-profit association, an educational institution, or government entity. We also
have approximately 39,000 Powerpay customer accounts. No single customer accounted for more than 1% of our
revenues during the year ended December 31, 2021.
Sales and Marketing
We sell our Cloud solutions through a direct sales force and a variety of third party channels, organized by customer
size and geography. We market Dayforce to organizations with more than 100 employees. We market Powerpay to
organizations with fewer than 100 employees in Canada. The majority of our revenue growth comes from new Cloud
customers.
Services and Support
We offer a broad portfolio of services aimed to ensure customer success. We believe it’s important to work closely
with our customers to understand their needs and deliver technology solutions and support that address them. We
continue to increase our global reach in supporting and serving our customers. As part of our international strategy, we
work with partners to perform services in certain geographies where we do not currently have international operations or
the particular service required by our customers.
Implementation and Professional Services
Our internal implementation team leverages proprietary onboarding technology for new customer activation and
professional services work. Our internal team is supplemented by third party services partners and system integration
partners (“SI”). Our implementation services include solution configuration and activation for new customers. Professional
services include add-on implementation services for existing customers, ongoing product configuration changes when the
customer does not have the resources to do it themselves, product usage consulting and a variety of additional services,
such as report writing, usage audits, and process improvement.
Customer Support
Our global customer support organization provides 24/7 application support from locations across North America
and in the United Kingdom, Mauritius, Australia, Singapore, Philippines, and India. Our support function is organized into
teams of representatives with deep domain expertise across our platform. These teams are aligned to groups of
customers based on geography, product type, and client vertical to provide a combination of deep product and industry
knowledge, consistent relationships, and high availability.
* Excluding the 2021 acquisitions of Ascender and ADAM HCM
Technology, Hosting, and Research and Development (“R&D”)
Technology and innovation are at the core of Ceridian. Our innovation and development process is customer-driven.
We work directly with customers to understand their needs and to deliver solutions that address their challenges, taking
into consideration the entire user experience, without being constrained by individual modules or applications. We are
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2021 Form 10-K
committed to protecting our customer information, along with our employee and contractor information and other business
data.
Our R&D team is responsible for the design, development, and testing of our applications. We believe that our
modern cloud technology stack, agile design and development methodology, and efficient software deployment process
enable us to innovate quickly in response to industry trends. We host cloud-based applications and serve all of our
customers from data centers operated by third party providers, primarily Navisite, VMWare Cloud on AWS, Microsoft
Azure, and AWS. While we control and have access to our servers and all of the components of our network that are
located in our external data centers, we do not control the operation of these facilities. Additionally, we host our internal
systems through data centers that we operate and lease in the United States and Asia Pacific Japan ("APJ").
Intellectual Property
Our success depends, in part, on our ability to protect our proprietary technology and intellectual property. We rely
on a combination of patents, copyrights, trade secrets, and trademarks, as well as confidentiality and nondisclosure
agreements and other contractual protections, to establish and to safeguard our intellectual property rights.
Competition
The market for HCM technology solutions is highly competitive and subject to changing technology and shifting
client needs. We compete with firms that provide both integrated and point solutions for HCM, as well as with local
providers in each jurisdiction that we operate. Globally, we compete with legacy payroll service providers, as well as
cloud-enabled client-server HCM providers. We also face competition from modern HCM providers, whose solutions have
been specifically built as single application platforms in the cloud. In addition, we face competition from large, long-
established enterprise application software vendors.
Competition in the global HCM market is primarily based on product and service quality, including ease of use and
accessibility of technology, breadth of offerings, reputation, and price. We believe that we are competitive in each of these
areas and that our single application always-on technology and product innovations, combined with our commitment to
service and our geographic reach, distinguishes us from our competitors.
Seasonality
We have in the past and expect in the future to experience seasonal fluctuations in our revenues and new customer
contracts with the fourth quarter historically being our strongest quarter for new customer contracts, renewals, and
customer go-lives. Although the growth of our Cloud solutions and the ratable nature of our fees makes this seasonality
less apparent in our overall results of operations, we expect our revenue to fluctuate quarterly and to be higher in the
fourth and first quarters of each year. Fourth quarter revenue is driven by year-end processing fees and Dayforce
customer go-lives; and first quarter revenue is driven by revenue earned for printing of year-end tax packages.
Environmental, Social, and Governance ("ESG") and Human Capital
Our People
As of December 31, 2021, we had 7,462 employees, including 4,477 in North America, 1,846 in APJ, and 1,139 in
Europe, the Middle East, and Africa ("EMEA"). We provide a wide range of compensation and benefits to our employees
which enhance the workplace experience and drive our Makes Work Life Better™ brand. In addition to salaries, these
benefits (which vary by country/region) include annual bonuses, equity awards, a global employee stock purchase
program, retirement savings plans, healthcare and insurance benefits, health savings and flexible savings spending
accounts, unlimited time away from work, employee assistance programs, and tuition reimbursement. In addition to our
broad-based employee stock purchase program, we have targeted equity-based grants with vesting conditions to facilitate
retention of our employees. Our ability to attract and retain top talent is critical to our continued success as a business,
and we were very pleased that our employee Net Promoter Score (eNPS) in 2021 was 47.
Promoting diversity, equity and inclusion within our workforce is also a priority for Ceridian. In 2021, we established
a company-wide Global Diversity Advisory Council that is comprised of employees from around the world, and we
expanded the number of our inclusive-building YOUnity groups from 6 to 9—adding the Native and Indigenous People’s
Network, the Ceridian Parenting Network, and the Asia Pacific Network. As of December 31, 2021, women represent
approximately 49% of our global workforce, including approximately 43% of employees in manager-level roles and above,
and approximately 38% in vice president-level roles and above. Employees from recently acquired companies ADAM
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2021 Form 10-K
HCM, Ascender, and Excelity are not included in this data, but will be included next year. In the United States,
approximately 14% of our workforce is Black or African American, 11% is Asian, 6% is Hispanic or Latino, 2% is
multiracial, and less than 1% is Native Hawaiian or Pacific Islander, American Indian or Alaska Native and approximately
64% is White. In the United States, people of color represent approximately 24% of employees in manager-level roles and
above, and approximately 22% of employees in vice president-level roles and above.
As we enter the third year of the pandemic, we continue to ensure that all necessary policies and procedures are in
place at our facilities to protect employee health and safety. This includes those for vaccination, testing, masking, and
physical distancing that conform to government requirements.
We are also committed to providing meaningful leadership and learning development opportunities to our workforce.
Over 35,000 hours of in-person trainings, digital learning and webinars related to leadership and learning development
topics were completed by nearly 93% of our employees as of December 31, 2021.
Responsible Innovation
We believe that tech for good and responsible innovation can have a positive impact on all stakeholders. Dayforce
Wallet provides individuals with faster access to their earned pay, which enables them to cover both everyday expenses
as well as urgent or unplanned costs.
Our Communities
Ceridian is committed to giving back to the communities in which we live and work. Through our charity, Ceridian
Cares, we provide financial support to individuals and families struggling with basic needs and quality of life. In 2021, the
organization donated over $1.1 million to people in need in the United States and Canada. Last year, we launched a new
giving and volunteering platform for our workforce through which employees donated to over 480 non-profits in 12
countries.
We encourage you to review our 2022 annual Ceridian ESG Report for more detailed information regarding our
ESG, and Human Capital goals, programs, and initiatives, which we anticipate will be available on our website at
https://www.ceridian.com/company/corporate/corporateresponsibility by no later than March 31, 2022. Our website and
the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference
into, and is not considered part of, this Form 10-K.
Available Information
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and
information statements, Section 16 reports, and amendments to reports and any registration statements filed or furnished
pursuant to Sections 13(a), 14 and 15(d) of the Exchange Act are available, free of charge at http://investors.ceridian.com
as soon as reasonably practicable after we file such material with, or furnish it to, the Securities and Exchange
Commission (“SEC”), and are also available on the SEC’s website at http://www.sec.gov.
Our fourth amended and restated certificate of incorporation, our amended and restated bylaws, charters of our
Acquisition and Finance, Audit, Compensation, and Corporate Governance and Nominating Committees of our Board of
Directors (our “Board”), our Corporate Governance Guidelines, and our Code of Conduct, as well as any waivers from and
amendments to our Code of Conduct are available on our website at https://investors.ceridian.com/corporate-
governance/governance-documents. Our website and the information contained on, or that can be accessed through, the
website is not deemed to be incorporated by reference into, and is not considered part of, this Form 10-K.
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2021 Form 10-K
Executive Officers
Our executive officers as of February 25, 2022 are as follows:
Name
David D. Ossip
Leagh E. Turner
Christopher R. Armstrong
Noémie C. Heuland
Stephen H. Holdridge
Jeffrey S. Jacobs
Joseph B. Korngiebel
William E. McDonald
Rakesh Subramanian
David D. Ossip
Age
55
50
53
44
61
46
51
57
49
Position
Chair and Co-Chief Executive Officer
Co-Chief Executive Officer
Executive Vice President and Chief Operating Officer
Executive Vice President and Chief Financial Officer
Executive Vice President and Chief Customer Officer
Head of Accounting and Financial Reporting
Executive Vice President, Chief Product and Technology Officer
Executive Vice President, General Counsel and Corporate Secretary
Executive Vice President and Chief Revenue Officer
Mr. Ossip is our Chair and Co-Chief Executive Officer. Mr. Ossip has held the position of Chair since August 2015
and Co-Chief Executive Officer since February 2022. Mr. Ossip has served as Chief Executive Officer from July 2013 until
February 2022. Mr. Ossip joined the Company following the Company’s acquisition of Dayforce Corporation in 2012,
where he held the position of chief executive officer. Mr. Ossip serves as a director of Dragoneer Growth Opportunities
Corp. III, a NASDAQ listed special acquisition company. Mr. Ossip previously served as a director for Dragoneer Growth
Opportunities Corp, a NYSE listed company, and Dragoneer Growth Opportunities Corp II, a NASDAQ listed company.
Leagh E. Turner
Ms. Turner is our Co-Chief Executive Officer since February 2022 and has been a member of our Board of Directors
since February 2022. Ms. Turner joined Ceridian in 2018, serving as President from August 2018 until February 2022 and
Chief Operating Officer from February 2020 until February 2022. Prior to joining Ceridian, Ms. Turner held the position of
global chief operating officer, strategic customer program of SAP, an enterprise software and programming company,
from October 2016 to August 2018. Ms. Turner is a member of the board of directors for Manulife Financial Corporation, a
NYSE listed company.
Noémie C. Heuland
Ms. Heuland is our Executive Vice President and Chief Financial Officer, positions she has held since October 2020.
Prior to joining the Company, Ms. Heuland held the position of Senior Vice President, Chief Financial Officer of SAP Latin
America and Caribbean region since April 2018. In addition, Ms. Heuland held the positions of Vice President, Chief
Financial Officer of SAP Latin America and Caribbean North and South from April 2015 to March 2018. Ms. Heuland is a
certified public accountant (inactive).
Stephen H. Holdridge
Mr. Holdridge is our Executive Vice President, Chief Customer Officer since February 2022. Mr. Holdridge joined
Ceridian in January 2020, serving as Global Head of Services until February 2022. Prior to joining the Company, Mr.
Holdridge held the position of Senior Executive Vice President, Worldwide Services at MicroStrategy, Inc. from November
2017 until July 2019. In addition, Mr. Holdridge held the position of Senior Vice President, Global Consulting Services at
Infor (US), Inc., from June 2012 until October 2017.
Christopher R. Armstrong
Mr. Armstrong is our Executive Vice President, Chief Customer Officer, a position he has held since February 2020.
Mr. Armstrong joined Ceridian in 2004, and since then has held several commercial and operational leadership roles,
including Executive Vice President, Chief Operating Officer from May 2019 until February 2020, Executive Vice President,
Operations from March 2018 until May 2019, and Executive Vice President, Customer Support from April 2016 until March
2018.
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2021 Form 10-K
Jeffrey S. Jacobs
Mr. Jacobs is our Head of Accounting and Financial Reporting and serves as the principal accounting officer,
positions he has held since May 2020. Mr. Jacobs has served as our Vice President, Finance since December 2016. Mr.
Jacobs is a certified public accountant (inactive).
Joseph B. Korngiebel
Mr. Korngiebel is our Executive Vice President, Chief Product and Technology Officer, positions he has held since
August 2020. Prior to joining the Company, Mr. Korngiebel held various positions at Workday, Inc. since March 2006,
including Chief Technology Officer from May 2017 until July 2020 and Senior Vice President, Technology and Innovation
from January 2014 until May 2017.
William E. McDonald
Mr. McDonald is our Executive Vice President and General Counsel, positions he has held since July 2021, and
Corporate Secretary, a position he has held since February 2016. Mr. McDonald served as Deputy General Counsel from
February 2016 until July 2021.
Rakesh Subramanian
Mr. Subramanian is our Executive Vice President and Chief Revenue Officer, a position he has held since April
2021. Prior to joining the Company, Mr. Subramanian held various positions at SAP America, Inc., beginning in 2005,
most recently as Senior Vice President and Managing Director from July 2017 until April 2021, and Regional Vice
President from January 2014 until June 2017.
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2021 Form 10-K
Item 1A. Risk Factors.
Risks Related to Our Business and Industry
Our business ordinarily encounters and addresses risks, some of which can cause our future results to be different
than we currently anticipate. The risk factors described below represent our current view of some of the most important
risks facing our business and are important to its understanding. The following information should be read in conjunction
with Management’s Discussion and Analysis of Financial Condition and Results of Operations, Quantitative and
Qualitative Disclosures About Market Risk and the consolidated financial statements and related notes included in this
Annual Report on Form 10-K. This discussion includes a number of forward-looking statements. In addressing these risks,
you should also refer to the information contained in this Annual Report on Form 10-K, including the consolidated financial
statements and related notes.
Our quarterly results of operations have and may continue to fluctuate significantly and may not fully reflect the
underlying performance of our business.
Our quarterly results of operations, including the levels of our revenues, gross margin, profitability, cash flow, and
deferred revenue, has varied and may vary significantly in the future, and period-to-period comparisons of our results of
operations may not be meaningful. Accordingly, the results of any one quarter should not be relied upon as an indication
of future performance. Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are
outside of our control, and as a result, may not fully reflect the underlying performance of our business. These factors
include: our ability to attract and retain new and current Cloud customers, as well as Dayforce Wallet customers; changes
on services or pricing impacting our customer contracts; seasonal variations in sales of and revenue from our
applications, changes on our operating expenses related to the maintenance and expansion of our business including
new acquired businesses, operations, and infrastructure; and general economic, industry, and market conditions,
including the addition or loss of employees by our Cloud customers who generally pay on a “per employee per month”
basis, interest rates and accounting rules.
Our business plan is focused on an aggressive growth strategy. If we fail to manage our growth effectively or if
our strategy is not successful, we may be unable to execute our business plan, to maintain high levels of service,
or to adequately address competitive challenges.
We have and we believe we will continue to experience a period of rapid growth in our operations and Cloud
solutions. The growth of our operations and Cloud solutions has and may continue to place a strain on our management,
administrative, operational, technological and financial infrastructure. In order to manage our growth effectively, we will
need to continuously improve our operational, financial, technological and management systems, and our internal
controls, reporting systems and procedures to scaled global capabilities which may require investment as we grow and
could result in disruption as we transform. Failure to effectively manage growth or to achieve our growth strategy could
result in problems or delays in implementing customers, declines in quality or customer satisfaction, increases in costs,
complications in introducing new features, or other operational challenges; and any of these difficulties could have a
material adverse effect on our business, financial condition, and results of operations.
Revenues from our Cloud solutions have grown substantially over the last few years. Our efforts to continue
increasing use of our Cloud solutions and our other applications, including the Dayforce Wallet, may not
succeed and may reduce our revenue growth rate.
Our ability to continue to grow the revenues from our Cloud solutions through execution against our growth levers
depends on the quality of our platform and solutions, and our ability to design our Cloud solutions to meet consumer
demand; and our ability to increase sales from existing customers depends on our customers’ satisfaction with our
product and need for additional solutions. Our participation in new markets for native payroll, and application expansion in
various modules and features, including the Dayforce Wallet, is relatively new, and it is uncertain whether these areas will
ever result in significant revenues for us. Further, the entry into new markets or the introduction of new features,
functionality, or applications beyond our current markets and functionality may not be successful. If we are unable to sell
our Cloud solutions, including the Dayforce Wallet, into new markets or to further penetrate existing markets, or to
increase sales from existing customers, our revenue may not grow as expected, which could have a material adverse
effect on our business, financial condition, and results of operations. Any factor adversely affecting sales of our Cloud
solutions, including application release cycles, delays, or failures in new product functionality, market acceptance, product
competition, performance and reliability, reputation, price competition, and economic and market conditions, could have a
material adverse effect on our business, financial condition, and results of operations.
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2021 Form 10-K
If we are not able to provide new or enhanced functionality and features or keep pace with rapid technological
changes and evolving industry standards, we may not be able to satisfy our aggressive growth strategy and the
demand for our services may decline.
Our ability to increase revenue will depend, in large part, on our ability to develop our existing Cloud solutions to
drive sales into new markets around the world, to further penetrate our existing markets, and to increase sales from
existing customers who do not utilize the full Dayforce suite. Our future success, and the success of our growth strategy,
will depend upon our ability to anticipate and to adapt to changes in technology and industry standards, and to effectively
develop, to introduce, to market, and to gain broad acceptance of new service offerings and enhancements incorporating
the latest technological advancements. We may not be able to successfully provide new or enhanced functionality and
features for our existing solutions that achieve market acceptance or that keep pace with rapid technological
developments. Our attempts to develop new or enhanced functionality may be expensive and impact our profitability.
Failure in this regard may a material adverse effect on our business, growth strategy, financial condition, and results of
operations.
Our international growth strategy has and will expose us to risks inherent in international sales and operations.
One of our growth levers is international sales growth into new markets and we anticipate that customers and
potential customers may increasingly require and demand that a single vendor provide HCM solutions and services for
their employees in a number of countries. Our global recent expansion, and any future expansion into new markets, has
and will require commensurate ongoing expansion of our monitoring of local laws and regulations, which increases our
costs as well as the risk of the product not incorporating in a timely fashion or at all the necessary changes to enable a
customer to be compliant with such laws. Additionally, our international operations are subject to risks that could
adversely affect those operations or our business as a whole, including but not limited to the costs of establishing a
market presence, localizing product and service offerings for foreign customers, difficulties in managing and staffing
international operations, and increased expenses related to introducing corporate policies and controls in our international
operations and increased reliance on partners to provide services in additional geographies. As part of our international
strategy, we work with partners to perform services in certain geographies where we do not currently have international
operations or the particular service required by our customers, as a result we may experience business impact if our
partners do not carry out the services as committed, including potential for reduced margin from additional expense or
impact to customer relationships.
Our international growth strategy has and may continue to include growth via acquisition, in which case our growth
may also be dependent on our ability to transition acquired customers from current products to Dayforce or to increase
sales by addressing broader HCM needs with additional modules of Dayforce.
If we are unable to provide the required services on a multinational basis, or if we are unable to effectively manage
our international expansion, we could be subject to negative customer experiences, harm to our reputation or loss of
customers, claims for any fines, penalties or other damages suffered by our customer, and other financial harm, including
fines, penalties, or other damages suffered by us directly, which would negatively impact revenue and earnings. Although
we have a multinational strategy, additional investment and efforts may be necessary to implement such strategy. Some
of our business partners also have international operations and are subject to the risks described above.
The markets in which we participate are highly competitive, and if we do not compete effectively, it could have a
material adverse effect on our business, financial condition, and results of operations.
The markets in which we participate are highly competitive, and competition could intensify in the future. We believe
the principal competitive factors in our market include: breadth and depth of product functionality, scalability and reliability
of applications, robust workforce management, comprehensive tax services, modern and innovative cloud technology
platforms combined with an intuitive user experience, multi-country and jurisdiction domain expertise in payroll and HCM,
quality of implementation and customer service, integration with a wide variety of third party applications and systems,
total cost of ownership and return on investment, brand awareness, and reputation, pricing and distribution.
We face a variety of competitors, some of which are long-established providers of HCM solutions. Many of our
current and potential competitors are larger, have greater name recognition, longer operating histories, larger marketing
budgets, and significantly greater resources than we do, and are able to devote greater resources to the development,
promotion, and sale of their products and services. Some of our competitors do or could offer HCM solutions bundled as
part of a larger product offering. Furthermore, our current or potential competitors may be acquired by third parties with
greater available resources and the ability to initiate or to withstand substantial price competition. In addition, many of our
competitors have established marketing relationships, access to larger customer bases, and major distribution
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2021 Form 10-K
agreements with consultants, system integrators, and resellers. Our competitors may also establish cooperative
relationships among themselves or with third parties that may further enhance their product offerings or resources.
Although we have a global partnership strategy, additional investment and efforts will be necessary to implement such a
strategy.
If our competitors’ products, services, or technologies become more accepted than our applications are today, if they
are successful in bringing their products or services to market earlier than ours, or if their products or services are more
technologically capable than ours, it could have a material adverse effect on our business, financial condition, and results
of operations. In addition, some of our competitors may offer their products and services at a lower price compared to our
products or their current pricing impacting our ability to achieve our target pricing. If we are unable to achieve our target
pricing levels or if we experience significant pricing pressures, it could have a material adverse effect on our business,
financial condition, and results of operations.
Our aging software infrastructure, technology, and sophistication of these systems may lead to increased costs,
vulnerability to cyber-attack, or disruptions in operations that could have a material adverse effect on our
business, market brand, financial condition, and results of operations.
Our business continues to demand the use of sophisticated systems and technology, including technology
infrastructure assets. These systems and technologies must be refined, updated and/or replaced with more advanced
systems on a regular basis in order for us to meet both our customers’ and employees’ demands and expectations. Some
of the crucial platforms on which we host our back office and bureau systems are aged and need to be replaced or are in
the process of being replaced. If we are unable to replace our aged, crucial platforms, if some or all these platforms fail to
operate due to a software error or infrastructure failure, if we fail to continue to refine and update our systems and
technologies on a timely basis or within reasonable cost parameters, if we do not appropriately and timely train our
employees to operate any of these new systems, or we are unable to appropriately protect any of these systems, we
could suffer the loss of data, vulnerabilities to cyber-attack, system outages or other performance problems, which could
have a material adverse effect on our business, financial condition and results of operations.
An information security breach of our systems or the loss of, or unauthorized access to, customer information or
sensitive company information; the failure to comply with the U.S. Federal Trade Commission’s (“FTC”) ongoing
consent order regarding data protection; or a system disruption could have a material adverse effect on our
business, market brand, financial condition, and results of operations.
Our business is dependent on our payroll, transaction, financial, accounting, and other data processing systems. We
rely on these systems, which are maintained both internally and externally at third parties, to process, on a daily and time
sensitive basis, a large number of complicated transactions. We, both through our internal systems and systems
maintained by third parties, electronically receive, process, store, and transmit data and personal information about our
customers and their employees, as well as our vendors and other business partners. We keep this information
confidential. However, both our internal and third party partners’ websites, networks, applications and technologies, and
other information systems may be targeted for sabotage, disruption, or data misappropriation. Further, as we grow by
acquisition, these risks become acute in the period following the acquisition, as we set about integrating the acquisition
target’s systems into ours. Additionally, as we retire our legacy products like our bureau payroll services, we are
decreasing investments in maintaining those systems which creates the potential for a potential security breach of one of
those systems. The uninterrupted operation of our information systems and our ability to maintain the confidentiality of
personal information and other customer and individual and company information that resides on our systems are critical
to the successful operation of our business. We, and our third party providers, maintain systems and processes designed
to protect this data and maintain business continuity, but notwithstanding such protective measures, there is a risk of
intrusion, cyber-attacks or tampering that could compromise the integrity and privacy of this data. Any information security
breach in our business processes or of our processing systems (whether they are maintained internally or externally at
third parties) has the potential to impact our customer information and sensitive company information, including our
financial reporting capabilities, which could result in the potential loss of business and our ability to accurately report
financial results. If any of these systems fail to operate properly or become disabled even for a brief period of time, we
could potentially miss a critical filing period, resulting in potential fees and penalties, or lose control of customer data, all of
which could result in financial loss, a disruption of our business, liability to customers, regulatory intervention, or damage
to our reputation.
We are subject to a twenty-year consent order with the FTC that became final in June 2011 stemming from a
December 2009 criminal hack into our discontinued U.S. payroll application. We conceded no wrongdoing in the order
and we were not subject to any monetary fines or penalties. However, in connection with the order, we are required to,
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2021 Form 10-K
among other things, maintain a comprehensive information security program that is reasonable and appropriate for our
size and complexity, and for the type of personal information we collect. We are also required to have portions of our
security program, which apply to certain segments of our U.S. business, reviewed by an independent third party on a
biennial basis. Maintaining, updating, monitoring, and revising an information security program in an effort to ensure that it
remains reasonable and appropriate in light of changes in security threats, changes in technology, and security
vulnerabilities that arise from legacy systems is time-consuming and complex, and is an ongoing effort.
While we have taken and continue to take steps to ensure compliance with the consent order, if we are determined
not to be in compliance with the consent order, or if any new breaches of security occur, the FTC may take enforcement
actions or other parties may initiate a lawsuit. Any such resulting fines and penalties could have a material adverse effect
on our liquidity and financial results, and any reputational damage therefrom could adversely affect our relationships with
our existing customers and our ability to attain new customers. Insurance may be inadequate or may not be available in
the future on acceptable terms, or at all. In addition, our insurance policies may not cover all claims made against us, and
defending a lawsuit, regardless of its merit, could be costly, divert management’s attention, or damage our reputation.
Our solutions and our business are subject to a variety of U.S. and other countries’ laws and regulations,
including those regarding privacy, data protection, and information security. Any failure by us or our third party
service providers, as well as the failure of our services, to comply with these laws could have a material adverse
effect on our business, financial condition, and results of operations.
Failure to comply with privacy, data protection and information security laws and regulations could have a material
adverse effect on our business, results of operations or financial condition, or have other adverse consequences. These
laws, which are not uniform, govern the collection, storage, hosting, transfer (including in some cases, the transfer outside
the country of collection), use, disclosure, security, retention and destruction of personal information; they require us to
give notice to individuals of privacy practices; give individuals certain access and correction rights with respect to their
personal information; and regulate the use or disclosure of personal information for secondary purposes such as
marketing. Under certain circumstances, some of these laws require us to provide notification to affected individuals,
clients, data protection authorities and/or other regulators in the event of a data breach. In many cases, these laws apply
not only to third-party transactions, but also to transfers of information among the Company and its subsidiaries. The
European Union (the “EU”) General Data Protection Regulation (the “GDPR”), and the California Consumer Protection Act
(the “CCPA”), are among the most comprehensive of these laws. The number of related laws and regulations we are
subject to continue to increase as we enter new markets in Europe, Asia Pacific, and Latin America, and as we continue
our entry into the consumer space through our Wallet offering. Restrictions on transfers of personal information from one
geography to another continue to consolidate. Complying with these laws and requirements, including the enhanced
obligations imposed by the GDPR and the CCPA, has resulted in significant costs to our business and may continue to
require us to amend certain of our business practices. Further, enforcement actions and investigations by regulatory
authorities related to data security incidents and privacy violations continue to increase. The future enactment of more
restrictive laws, rules or regulations and/or future enforcement actions or investigations could have a material adverse
impact on us through increased costs or restrictions on our businesses and noncompliance could result in significant
regulatory penalties and legal liability and damage our reputation. Restrictions on cross border data flows and data
residency requirements may negatively impact our clients’ and our own ability to transfer personal information to the
United States and other countries as part of our provision of services, and in support of our own operations, potentially
impacting revenues. In addition, data security events and concerns about privacy abuses by other companies are
changing consumer and social expectations for enhanced privacy and data protection. As a result, even the perception of
noncompliance, whether or not valid, may damage our reputation.
Customers depend on our solutions to assist them to comply with applicable laws, which requires us and our
third party providers to constantly monitor applicable laws and to make applicable changes to our solutions. If
our solutions have not been updated to enable the customer to comply with applicable laws or we fail to update
our solutions on a timely basis, it could have a material adverse effect on our business, financial condition, and
results of operations.
Customers use on our solutions to assist them to comply with payroll, HR, and other applicable laws for which the
solutions are intended for use. We and our third party providers must monitor all applicable laws and as such laws
expand, evolve, or are amended in any way, and when new regulations or laws are implemented, we may be required to
modify our solutions to assist our customers to comply with such new regulations or laws, which requires an investment of
our time and resources. We are also reliant on our third party providers to modify the solutions that they provide to our
customers as part of our solutions to comply with changes to such laws and regulations. The number of laws and
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2021 Form 10-K
regulations that we are required to monitor has and will continue to increase as we expand both the geographic regions in
which the solutions are offered and the types of products we offer to customers. These risks have become exacerbated as
we expand by acquisition and are most acute in the period following the acquisition as we integrate the acquired business
and its systems. In the event our solutions fail to enable a customer to comply with applicable laws, we are subject to
negative customer experiences, harm to our reputation or loss of customers, claims for any fines, penalties or other
damages suffered by our customer, and other financial harm, including fines, penalties or other damages suffered by us
directly.
If our current or future applications fail to perform properly, our reputation could be adversely affected, our
market share could decline, and we could be subject to liability claims, which could have a material adverse
effect on our business, financial condition, and results of operations.
Our applications are inherently complex and may contain material defects or errors that we are not yet aware of.
Because of the large amount of data that we collect and manage, it is possible that failures or errors in our systems could
result in data loss or corruption or cause the information that we collect to be incomplete or to contain inaccuracies that
our customers regard as significant. Any defects in functionality or that cause interruptions in the availability of our
applications could result in reputational, competitive, operational or other business harm as well as financial costs and
regulatory action, any of which could have a material adverse effect on our business, financial condition, and results of
operations. In addition, the costs incurred in correcting any material defects or errors might be substantial. While we
conduct standard due diligence during our acquisition process, these risks are heightened as we grow by acquisition and
dedicate resources to integrating the acquisition target’s systems into ours and take on the vulnerabilities that may exist at
the acquisition target.
Regulatory requirements placed on our software and services could impose increased costs on us, delay or
prevent our introduction of new products and services, and impair the function or value of our existing products
and services.
Our products and services are subject to increasing regulatory requirements, and as these requirements proliferate,
we are required to change or adapt to comply. Changing regulatory requirements might render our services obsolete or
might block us from developing new products and services. This might in turn impose additional costs upon us to comply
or to further develop our products and services. Changing regulatory requirements can make introduction of new services
more costly or more time-consuming than we currently anticipate and could even prevent introduction by us of new
services or cause the continuation of our existing services to become more costly.
Federal, state or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws
or regulations affecting the use of the Internet as a commercial medium. Future changes in these laws or regulations
could require us to modify our applications in order to comply with these changes. In addition, government agencies or
private organizations may begin to impose taxes, fees, or other charges for accessing the Internet or commerce
conducted via the Internet. These laws or charges could limit the growth of Internet-related commerce or communications
generally, resulting in reductions in the demand for Internet-based applications such as ours, any of which could have a
material adverse effect on our business, financial condition, and results of operations.
If we fail to manage our technical operations infrastructure, our existing customers may experience service
outages, and our new customers may experience delays in the implementation of our applications, which could
have a material adverse effect on our business, financial condition, and results of operations.
We have experienced and will continue to experience significant growth in the number of users, transactions, and
data that our operations infrastructure supports, including the acquisition of new systems via strategic transactions. We
seek to maintain sufficient excess capacity in our operations infrastructure to meet the needs of all of our customers and
to facilitate the rapid provision of new customer activations and the expansion of existing customer activations. In addition,
we need to continue to properly manage our technological operations infrastructure to support version control, changes in
hardware and software parameters, and the evolution of our applications. We have experienced, and may in the future
experience, website disruptions, outages, and other performance problems. These problems may be caused by a variety
of factors, including infrastructure changes, human or software errors, viruses, security attacks, fraud, increased resource
consumption from expansion or modification to our Dayforce code, spikes in customer usage, and denial of service
issues. The risks of these problems occurring may be exacerbated by our strategic acquisitions, especially in the period
following the acquisition as we integrate the acquisition target’s systems into ours, as well as our aging technology
infrastructure which in some cases is supported by older platforms. In some instances, we may not be able to identify the
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2021 Form 10-K
cause or causes of these performance problems within an acceptable period of time. If we do not accurately predict our
infrastructure requirements, our existing customers may experience service outages that may subject them to financial
penalties, causing us to incur financial liabilities and customer losses; and our operations infrastructure may fail to keep
pace with increased sales, causing new customers to experience delays as we seek to obtain additional capacity, which
could have a material adverse effect on our business, financial condition, and results of operations.
Our growth depends in part on the success of our strategic relationships with third parties who provide us with
services and license us software for use in or with both our applications and our internal operations.
In order to maintain and grow our business, we do, and we anticipate that we will continue to, depend on the
continuation and expansion of relationships with third parties who provide us with services. These service provider
partners include connected payroll partners, implementation partners, systems integrators, third party sales channel
partners, the operators of data centers, and the providers who execute wire transfers and other money movement
services to support our customer payroll and tax services. Our agreements with these third party service providers are
typically non-exclusive and do not prohibit them from working with our competitors. If any third-party service providers on
which we rely to provide us with services experience a disruption, go out of business, are acquired by our competitors,
experience a decline in quality, or terminate their relationship with us, we could experience a material adverse effect on
our business, financial condition, and results of operation.
In addition, we license software from third parties for use in or with both our applications and our internal operations,
and the inability to maintain these licenses could result in increased costs, or reduced service levels, which could have a
material adverse effect on our business, financial condition, and results of operations. To the extent that our applications
depend upon the successful operation of third party software in conjunction with our software, any undetected errors or
defects in this third party software could prevent the deployment or impair the functionality of our applications, delay new
application introductions, and result in a failure of our applications, which could have a material adverse effect on our
business, financial condition, and results of operations.
Any failure to offer high-quality technical support services may adversely affect our relationships with our
customers and could have a material adverse effect on our business, financial condition, and results of
operations.
Once our applications are deployed, our customers depend on our support organization and the support capabilities
of our partners to resolve technical issues relating to our applications, as well as our partner’s applications. We or our
partners may be unable to respond quickly enough to accommodate short-term increases in customer demand for support
services, and we may be limited in our ability to resolve the technical issues our customers have with our technology, or
our partner’s technology. We or our partners also may be unable to modify the format of our or our partners’ support
services to compete with changes in support services provided by our competitors. Increased customer demand for these
services, without corresponding revenues, could increase costs and have an adverse effect on our results of operations.
Ultimately, a client could elect to terminate their agreement due to dissatisfaction with support, resulting in lost recurring
revenue. In addition, our sales process is highly dependent on our applications and business reputation and on positive
recommendations from our existing customers. Any failure to maintain high-quality technical support, or a market
perception that we do not maintain high-quality support, could adversely affect our reputation and our ability to sell our
applications to existing and prospective customers, which could have a material adverse effect on our business, financial
condition, and results of operations.
If our customers are not satisfied with the implementation and professional services provided by us or our
partners, it could have a material adverse effect on our business, financial condition, and results of operations.
Our business depends on the ability to implement our solutions on a timely, accurate, and cost-efficient basis and to
provide professional services at the high level demanded by our customers. Implementation and other professional
services may be performed by our own staff, by a third party, or by a combination of the two. If a customer is not satisfied
with the quality of work performed, or there are inaccuracies or errors in the work delivered, then we could incur additional
costs to address the situation, the customer’s dissatisfaction with such services could damage our ability to expand the
number of applications subscribed to by that customer or we could be liable for loss or damage suffered as a result, any of
which could have a material adverse effect on our business, financial condition, and results of operations. If a new
customer is dissatisfied with implementation, the customer could refuse to go-live, which could result in a delay in our
collection of revenue or could result in a customer seeking repayment of its implementation fees or suing us for damages,
or could force us to enforce the termination provisions in our customer contracts in order to collect revenue. In addition,
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2021 Form 10-K
negative publicity related to our customer relationships, regardless of its accuracy, may affect our ability to compete for
new business with current and prospective customers, which could also have a material adverse effect on our business,
financial condition, and results of operations.
We depend on our senior management team, and the loss of one or more key employees or an inability to attract
and to retain highly skilled employees could have a material adverse effect on our business, financial condition,
and results of operations.
Our success depends largely upon the continued services of our senior management team. Our executive officers,
senior management or other key personnel have limited or no notice period applicable to their employment. Therefore,
they could terminate their employment with us at any time. Additionally, we do not maintain key employee insurance on
any of our executive officers, senior management or key employees. The loss of one or more of our executive officers,
senior management or key employees could have a material adverse effect on our business, financial condition, and
results of operations.
To execute our growth plan, we must attract and retain highly qualified personnel. Competition for talent is intense,
and has become more intense following the onset of the coronavirus disease 2019 ("COVID-19") pandemic, including
without limitation for individuals with high levels of experience in designing and developing software and Internet-related
services and senior sales executives. We have, from time to time, experienced, and we expect to continue to experience,
difficulty in hiring and retaining employees with appropriate qualifications.
If our vendors or affiliates initiate payroll-related transactions on behalf of our customers and do not receive
funds from the customer sufficient to cover the amounts paid on their behalf, we may suffer significant losses
which could have a material adverse effect on our business, financial condition, and results of operations.
Our payroll and tax processing services involve the movement of significant funds from the account of a customer to
its employees and to relevant taxing authorities. Typically, we rely upon third party vendors to initiate payments on behalf
of our customers. In certain jurisdictions, where permitted, our affiliates may also initiate payments on behalf of our
customers. Under certain circumstances, funds may not be received to cover the transactions that our affiliates and third
party vendors have initiated on our customers’ behalf. Additionally, there is a risk that an erroneous payment instruction
may trigger inaccurate payments. There is, therefore, a risk that the customer’s funds will be insufficient to cover the
amounts already paid on its behalf. Should customers default on their payment obligations in the future, should our
affiliates or vendors make erroneous payments on behalf of a customer, should erroneous or defaulted payment recovery
be unsuccessful, or should our affiliates or vendors suffer losses from similar issues, we may be required to advance
substantial amounts of funds to cover such obligations, or to make our partners whole for any losses they suffer. In such
an event, we may be required to seek additional sources of short-term liquidity, which may not be available on reasonable
terms, which could have a material adverse effect on our business, financial condition, and results of operations. Further,
should a customer on whose behalf our affiliate or vendor has initiated a transaction subsequently have financial difficulty
or refuse to pay, collection of any funds advanced on its behalf may be difficult and we may suffer losses that could have
a material adverse effect on our business, financial condition and results of operation.
For our Dayforce Wallet service, we advance earned net wages and associated tax amounts on behalf of
customers in connection with the “on demand pay” payroll feature of the service in order to provide their
employees access to earned wages in advance of their standard payroll cycles. A customer may fail to satisfy its
obligation to repay us for those advanced monies which could have a material adverse effect on our business,
financial condition, and results of operations.
In the case of our “on demand pay” service (a service that is offered as part of the Dayforce Wallet), credit is
provided to our customers and funds are advanced on the customers’ behalf in order to fund the customers’ employees’
interim earned net wage payroll demands (including associated source and other deductions) with the requirement that
the customers will repay the advance on the date of their next ordinary payroll run. These advances may or may not have
priority over other creditors of our customers, and our security interest and/or other credit protection measures, if
implemented, may be inadequate to make us whole. There is, therefore, a risk that our customers do not pay back the
amounts we have already paid on their behalf, and in that event, we may possess limited legal recourse to recoup those
funds from our customers. In the event of a customer’s failure to repay us, we may be required to seek additional sources
of short-term liquidity, which may not be available on reasonable terms, or suffer credit losses, which could have a
material adverse effect on our business, financial condition, and results of operations.
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Customer funds and wage funds of their employees that our trustees and third-party financial institution partners
hold are subject to market, interest rate, credit, and liquidity risks. The loss of these funds could have a material
adverse effect on our business, financial condition, and results of operations.
Our trustees (in the case of customer funds held in our U.S. Ceridian Clients’ Funds Trust and our Ceridian Canada
Payroll Trust) and our third party financial institution partners (in the case of employee wage funds held on their behalf as
part of the U.S. Dayforce Wallet program and certain of our non-U.S. operations) may invest funds in one or more high-
quality bank deposits, money market mutual funds, commercial paper, collateralized short-term investments, government
securities, as well as highly rated asset-backed, mortgage-backed, municipal, corporate, and bank securities. These
assets are subject to varying degrees of general market, interest rate, credit, and liquidity risks. These risks may be
exacerbated, individually or in unison, during periods of unusual financial market volatility. We are required to fund the
payroll and wage funds of our customers and their employees regardless of any loss realized on those investments
affecting the principal funds held. In the event of a global financial crisis, such as that experienced in 2008, we could be
faced with a severe constriction of the availability of liquidity, which could impact our ability to fund payrolls. Any loss of
principal, or inability to access customer funds could have an adverse impact on our cash position and results of
operations and could require us to obtain additional sources of liquidity, and could have a material adverse effect on our
business, financial condition, and results of operations.
We may acquire other companies or technologies, which could divert our management’s attention, result in
additional indebtedness or dilution to our stockholders, and otherwise disrupt our operations, which could have
a material adverse effect on our business, financial condition, and results of operations.
We have, and we may in the future seek to acquire or to invest in businesses, applications or technologies that we
believe could complement or expand our applications, enhance our technical capabilities, or otherwise offer growth
opportunities. The pursuit of potential acquisitions may divert the attention of management and cause us to incur various
expenses in identifying, investigating, and pursuing suitable acquisitions, whether or not they are consummated. In
addition, we have limited experience in acquiring other businesses. If we acquire additional businesses, we may incur
significant costs to integrate such businesses. Further, we may not be able to integrate the acquired personnel,
operations, and technologies successfully or profitably, or to effectively manage the combined business following the
acquisition. If an acquired business fails to meet our expectations, it could have a material adverse effect on our business,
financial condition, and results of operations. In order to fund acquisitions, we may issue dilutive equity securities or incur
additional debt, resulting in an increase our interest payments.
A significant portion of the purchase price of companies we acquire may be allocated to goodwill and other
intangible assets, which must be assessed for impairment at least annually. In the future, if our acquisitions do not yield
expected returns, we may be required to record charges based on this impairment assessment, which could have a
material adverse effect on our financial condition and results of operations.
Failure to comply with anti-corruption laws and regulations, economic and trade sanctions, anti-money
laundering laws and regulations, and similar laws could have a materially adverse effect on our reputation,
results of operations or financial condition, or have other adverse consequences.
Regulators worldwide are exercising heightened scrutiny with respect to anti-corruption, economic and trade
sanctions, and anti-money laundering laws and regulations. Such heightened scrutiny has resulted in more aggressive
investigations and enforcement of such laws and more burdensome regulations, any of which could have a material
adverse impact on our business. We are growing our business throughout the world, including in numerous developing
economies where companies and government officials are more likely to engage in business practices that are prohibited
by domestic and foreign laws and regulations, including the United States Foreign Corrupt Practices Act, the Canadian
Corruption of Foreign Public Officials Act, the anti-corruption provisions of the Australian criminal code, and the U.K.
Bribery Act. Such laws generally prohibit improper payments or offers of payments to foreign government officials and
leaders of political parties, and in some cases, to other persons, for the purpose of obtaining or retaining business. We are
also subject to economic and trade sanctions programs, including those administered by the U.S. Treasury Department’s
Office of Foreign Assets Control, which prohibit or restrict transactions or dealings with specified countries, their
governments and, in certain circumstances, their nationals, and with individuals and entities that are specially designated,
including narcotics traffickers and terrorists or terrorist organizations, among others. In addition, some of our businesses
and entities in the U.S. and a number of other countries in which we operate are and will continue to be subject to anti-
money laundering laws and regulations. These laws require us to develop and implement risk-based anti-money
laundering programs, report large cash transactions and suspicious activity, and maintain transaction records.
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We have implemented policies and procedures to monitor and address compliance with applicable anti-corruption,
economic and trade sanctions and anti-money laundering laws and regulations, and we are continuously in the process of
reviewing, upgrading and enhancing certain of our policies and procedures. However, there can be no assurance that our
employees, consultants or agents will not take actions in violation of our policies for which we may be ultimately
responsible, or that our policies and procedures will be adequate or will be determined to be adequate by regulators. Any
violations of applicable anti-corruption, economic and trade sanctions or anti-money laundering laws or regulations could
limit certain of our business activities until they are satisfactorily remediated and could result in civil and criminal penalties,
including fines, which could damage our reputation and have a material adverse effect on our results of operation or
financial condition. Further, banks are increasingly viewing money services businesses, as a class, to be higher risk
customers for money laundering. As a result, our banking partners that assist in processing our money movement
transactions may limit the scope of services they provide to us or may impose additional material requirements on us.
These regulatory restrictions on banks and changes to banks’ internal risk-based policies and procedures may result in a
decrease in the number of banks that may do business with us, may require us to materially change the manner in which
we conduct some aspects of our business, may decrease our revenues and earnings and could have a material adverse
effect on our results or financial condition.
We may not be able to utilize a significant portion of our net operating loss, which could have a material adverse
effect on our financial condition and results of operations.
As of December 31, 2021, we had federal and state net operating loss carryforwards due to prior period losses,
which, if not utilized, will begin to expire in 2034 and 2022 for federal and state purposes, respectively. These net
operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could
have a material adverse effect on our financial condition and results of operations.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), our ability to utilize
net operating loss carryforwards or other tax attributes in any taxable year may be limited if we experience an “ownership
change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who
own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership
percentage within a rolling three-year period. Similar rules may apply under state tax laws. Future issuances of our stock
could cause an “ownership change.” It is possible that an ownership change could have a material effect on our ability to
utilize our net operating loss carryforwards, which could have a material adverse effect on our financial condition and
results of operations.
Our failure to maintain effective internal control over financial reporting in accordance with Section 404 of the
Sarbanes-Oxley Act could have a material adverse effect on our business, financial condition, and results of
operations.
As a public company, we are required to design and maintain proper and effective internal controls over financial
reporting and to report any material weaknesses in such internal controls. Section 404 of the Sarbanes-Oxley Act of 2002
requires that we evaluate and determine the effectiveness of our internal controls over financial reporting and provide a
management report on the internal controls over financial reporting, which must be attested to by our independent
registered public accounting firm. We have previously identified and reported material weaknesses, and we may identify
additional material weaknesses in internal controls in future periods. If we were to have another material weakness in our
internal controls over financial reporting, we may not detect errors on a timely basis and our financial statements may be
materially misstated. There could also be a negative reaction in the financial markets due to a loss of investor confidence
in us and the reliability of our consolidated financial statements, which could have a material adverse effect on our
business, financial condition, and results of operations.
Litigation and regulatory investigations aimed at us or resulting from actions of our predecessor may result in
significant financial losses and harm to our reputation.
We face risk of litigation, regulatory investigations, and similar actions in the ordinary course of our business,
including the risk of lawsuits and other legal actions relating to breaches of contractual obligations, tortious claims,
employment and labor law matters, securities law claims, or claims related to erroneous transactions or breach of data
privacy laws from customers, stockholders, employees or other third parties which could result in fines, penalties, interest,
or other damages. Litigation might result in substantial costs and may divert management’s attention and resources,
which might materially harm our business, overall financial condition, and operating results. We may also be subject to
various regulatory inquiries, such as information requests, subpoenas and book and records examinations, from
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2021 Form 10-K
regulators and other authorities in the geographic markets in which we operate. A substantial liability arising from a lawsuit
judgment or settlement or a significant regulatory action against us or a disruption in our business arising from adverse
adjudications in proceedings against our directors, officers, or employees could have a material adverse effect on our
business, financial condition, and results or operations. Insurance might not cover such claims, might not provide
sufficient payments to cover all the costs to resolve one or more such claims and might not continue to be available on
terms acceptable to us. A claim brought against us that is uninsured or underinsured could result in unanticipated costs,
thereby harming our operating results and leading analysts or potential investors to lower their expectations of our
performance, which could reduce the trading price of our stock or potentially result in a lawsuit related to the reduced
trading price of our stock.
Additionally, we are subject to claims and investigations as a result of our predecessor, Control Data Corporation
(“CDC”), Ceridian Corporation, and other former entities for whom we are successor-in-interest with respect to assumed
liabilities. For example, in September 1989, CDC became party to an environmental matters agreement with Seagate
Technology plc (“Seagate”) related to groundwater contamination on a parcel of real estate in Omaha, Nebraska sold by
CDC to Seagate. In February 1988, CDC entered into an arrangement with Northern Engraving Corporation and the
Minnesota Pollution Control Agency in relation to groundwater contamination at a site in Spring Grove, Minnesota.
Although we are fully reserved for these groundwater contamination liabilities, we cannot be certain if additional claims,
investigations or liabilities related to such predecessor companies will surface.
Any failure to protect our intellectual property rights could impair our ability to protect our proprietary
technology and our brand.
Our success and ability to compete depend in part upon our intellectual property. We primarily rely on copyright,
trade secret, and trademark laws; trade secret protection; and confidentiality or license agreements with our employees,
customers, partners and others to protect our intellectual property rights. However, the steps we take to protect our
intellectual property rights may be ineffective or inadequate.
In order to protect our intellectual property rights, we have and will likely be required to continue to spend significant
resources to monitor and to protect these rights. Litigation brought to protect and to enforce our intellectual property rights
could be costly, time-consuming, and distracting to management, with no guarantee of success, and could result in the
impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property
rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our
intellectual property rights. Our failure to secure, to protect, and to enforce our intellectual property rights could have a
material adverse effect on our business, financial condition, and results of operations.
We may be sued by third parties for alleged infringement of their proprietary rights which could have a material
adverse effect on our business.
There is considerable intellectual property development activity in our industry. Third parties, including our
competitors, may own or claim to own intellectual property relating to our service offerings and may claim that we are
infringing their intellectual property rights. We may be found to be infringing upon such rights, even if we are unaware of
their intellectual property rights. Any claims or litigation could cause us to incur significant expenses and, if successfully
asserted against us or if we decide to settle, could require that we pay substantial damages or ongoing royalty payments,
obtain licenses, modify applications, prevent us from offering our services, or require that we comply with other
unfavorable terms. We may also be obligated to indemnify our customers, vendors or partners in connection with any
such claim or litigation. Even if we were to prevail in such a dispute, any litigation regarding our intellectual property could
be costly and time consuming.
The use of open source software in our applications may expose us to additional risks and harm our intellectual
property rights.
Some of our applications include software covered by open source licenses. From time to time, there have been
claims challenging the ownership of open source software against companies that incorporate such software into their
products or applications. The terms of various open source licenses have not been interpreted by U.S. courts, and there is
a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our
ability to market our applications. By the terms of certain open source licenses, we could be required to release the source
code of our proprietary software and to make our proprietary software available under open source licenses if we combine
our proprietary software with open source software in a certain manner. In the event that portions of our proprietary
software are determined to be subject to an open source license, we could be required to publicly release the affected
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2021 Form 10-K
portions of our source code, to re-engineer all or a portion of our technologies, or otherwise to be limited in the licensing of
our technologies, each of which could reduce or eliminate the value of our technologies and services. In addition to risks
related to license requirements, usage of open source software can lead to greater risks than use of third party
commercial software, as open source licensors generally do not provide warranties or controls on the origin of the
software. Many of the risks associated with usage of open source software cannot be eliminated and could have a
material adverse effect on our business, financial condition, and results of operations.
The implementation of new accounting systems or applications could interfere with our business and operations.
The implementation of new systems and enhancements may be disruptive to our business and can be time-
consuming and divert management’s attention. Any disruptions relating to our systems or any problems with
implementation, particularly any disruptions impacting our operations or our ability to accurately report our financial
performance on a timely basis, could materially and adversely affect our business and operations.
Risks Related to Our Indebtedness
Our outstanding indebtedness under our Senior Secured Credit Facility could have a material adverse effect on
our financial condition and our ability to operate our business, and we may not be able to generate sufficient
cash flows to meet our debt service obligations.
Pursuant to our credit agreement, we are a borrower of (i) a $680.0 million term loan debt facility (the "Term Debt")
and (ii) a $300.0 million revolving credit facility (the "Revolving Credit Facility") (collectively, the "Senior Secured Credit
Facility"). Our Senior Secured Credit Facility is secured substantially by all of our assets. Our outstanding indebtedness
and any additional indebtedness we incur may have important consequences for us, including, without limitation, that:
we may be required to use a substantial portion of our cash flow to pay the principal of and interest on our
indebtedness;
our indebtedness and leverage may increase our vulnerability to adverse changes in general economic and
industry conditions, as well as to competitive pressures;
our ability to obtain additional financing for working capital, capital expenditures, acquisitions and for general
corporate and other purposes may be limited;
our indebtedness may expose us to the risk of increased interest rates because certain of our borrowings,
including and most significantly our borrowings under our Senior Secured Credit Facility, are at variable rates
of interest; and
our indebtedness may prevent us from taking advantage of business opportunities as they arise or successfully
carrying out our plans to expand our business.
Under the terms of the agreements governing our debt facilities, we are required to comply with specified operating
covenants and, under certain circumstances, a financial covenant applicable to the Revolving Credit Facility, which may
limit our ability to operate our business as we otherwise might operate it. If not cured, an event of default under our Senior
Secured Credit Facility could result in any amounts outstanding, including any accrued interest and unpaid fees,
becoming immediately due and payable, which would require us, among other things, to seek additional financing in the
debt or equity markets, to refinance or restructure all or a portion of our indebtedness, to sell selected assets, and/or to
reduce or to delay planned capital or operating expenditures. Such measures might not be sufficient to enable us to
service our debt, and any such financing or refinancing might not be available on economically favorable terms or at all. If
we are not able to generate sufficient cash flows to meet our debt service obligations or are forced to take additional
measures to be able to service our indebtedness, it could have a material adverse effect on our business, financial
condition, and results of operations.
Aspects of the Capped Calls may not operate as planned and may affect the value of the Convertible Senior
Notes and our common stock, and we are subject to counterparty credit risk with respect to the Capped Calls.
In March 2021, we issued $575.0 million in aggregate principal amount of 0.25% Convertible Senior Notes due 2026
("Convertible Senior Notes"). In connection with the pricing of the Convertible Senior Notes, we entered into capped call
transactions with the option counterparties ("the Capped Calls"). Please refer to Note 9, "Debt," for additional information.
The Capped Calls are expected generally to reduce the potential dilution to our common stock upon any conversion of the
Convertible Senior Notes and/or offset any potential cash payments we are required to make in excess of the principal
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2021 Form 10-K
amount of converted Convertible Senior Notes, as the case may be, with such reduction and/or offset subject to a cap.
The Capped Calls are complex transactions that are not part of the terms of the Convertible Senior Notes, and may not
operate as planned. If the Capped Calls do not operate as we intend, it may have an effect on the price of the Convertible
Senior Notes or our common stock.
The option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding
various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of
ours in secondary market transactions following any conversion of the Convertible Senior Notes, any repurchase of the
Convertible Senior Notes by us on any fundamental change repurchase date, any redemption date, or any other date on
which the Convertible Senior Notes are retired by us, in each case if we exercise our option to terminate the relevant
portion of the Capped Calls. This activity could cause or avoid an increase or a decrease in the market price of our
common stock or the Convertible Senior Notes, which could affect the ability of a noteholder to convert the Convertible
Senior Notes and, to the extent the activity occurs during any observation period related to a conversion of Convertible
Senior Notes, could affect the number of shares of common stock, if any, and value of the consideration that a noteholder
will receive upon conversion of the Convertible Senior Notes. If any such Capped Call fails to become effective, the option
counterparties or their respective affiliates may unwind their hedge positions with respect to our common stock, which
could adversely affect the value of our common stock and the value of the Convertible Senior Notes. The option
counterparties are financial institutions, and we are subject to the risk that they might default under the Capped Calls. Our
exposure to the credit risk of the option counterparties is not secured by any collateral. If an option counterparty becomes
subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our
exposure at that time under our transactions with that option counterparty. Our exposure will depend on many factors, but,
generally, the increase in our exposure will be correlated with increases in the market price or the volatility of our common
stock. In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and more dilution
than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability
or viability of any option counterparty.
Risks associated with the conversion of our Convertible Senior Notes may adversely affect our financial
condition and results of operations.
Under certain circumstances, noteholders may convert their Convertible Senior Notes at their option prior to the
scheduled maturities. Upon conversion of the Convertible Senior Notes, we will be obligated to make cash payments in an
amount no less than the principal amount being converted, and any excess of the conversion value over the principal
amount will be settled, at the Company’s election, in cash or shares of the Company’s common stock. In addition,
noteholders will have the right to require us to repurchase their Convertible Senior Notes upon the occurrence of a
fundamental change at a repurchase price equal to 100% of the principal amount of the Convertible Senior Notes to be
repurchased, plus accrued and unpaid interest, if any, to, but not including, the fundamental change repurchase date (as
defined in the Indenture under which the Convertible Senior Notes were issued ("Indenture")). There is a risk that we may
not have enough available cash or be able to obtain financing at the time we are required to make repurchases of
Convertible Senior Notes surrendered therefor or Convertible Senior Notes being converted. Our failure to repurchase
Convertible Senior Notes when the Indenture requires the repurchase or to pay any cash payable on future conversions of
the Convertible Senior Notes as required by the Indenture would constitute a default under the Indenture. A default under
the Indenture or the fundamental change itself could also lead to a default under agreements governing our future
indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace
periods, we may not have sufficient funds to repay the indebtedness and repurchase the Convertible Senior Notes or
make cash payments upon conversions thereof. In addition, even if noteholders do not elect to convert their Convertible
Senior Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding
principal of the Convertible Senior Notes as a current, rather than long-term, liability, which would result in a material
reduction of our net working capital.
Risks Related to Ownership of Our Common Stock
The price of our common stock may be volatile and investors may lose all or part of their investment.
The market price and volume of our common stock trading has experienced, and may continue to experience, wide
fluctuations and volatility. Factors that may impact our performance and market price include those discussed elsewhere
in this “Risk Factors” section of this Annual Report on Form 10-K and others such as: announcements, including filing with
the SEC by us or our competitors of acquisitions, business plans or commercial relationships as well as new services; any
major change in our senior management or board of director; sales, or anticipated sales, of our stock, including sales by
our officers, directors, and significant stockholders; issuance of new, negative, or changed securities analysts’ reports or
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2021 Form 10-K
recommendations or estimates; investor perceptions of us and the industries in which we or our customers operate; and
threatened or actual litigation and governmental investigations.
These and other factors may cause the market price and demand for shares of our common stock to fluctuate
substantially, which may limit or prevent investors from readily selling their shares of common stock and may otherwise
negatively affect the liquidity of our common stock. In addition, securities class action litigation has often been instituted
against companies following periods of volatility in the overall market and in the market price of a company’s securities.
Securities litigation against us, regardless of the merits or outcome, could result in substantial costs, damage to our
reputation, and divert the time and attention of our management from our business, which could have a material adverse
effect on our business, financial condition, and results of operations.
The issuance of additional stock, including common stock issued upon conversion of our Convertible Senior
Notes, will dilute all other stockholders.
The issuance of additional stock in connection with acquisitions, financings, our equity incentive plans, our
Convertible Senior Notes or otherwise will dilute all other stockholders. Our fourth amended and restated certificate of
incorporation authorizes us to issue up to five hundred million shares of common stock and up to ten million shares of
preferred stock with such rights and preferences as may be determined by our board of directors. Subject to compliance
with applicable rules and regulations, we may issue all of these shares that are not already outstanding without any action
or approval by our stockholders. We intend to continue to evaluate strategic acquisitions or opportunities in the future. We
may pay for such acquisitions or opportunities, in part or in full, through the issuance of additional equity securities.
Further, the conversion of some or all of the Convertible Senior Notes will dilute the ownership interests of existing
stockholders to the extent we deliver shares of our common stock upon conversion of any of the Convertible Senior
Notes.
Because we do not intend to pay cash dividends in the foreseeable future, investors may not receive any return
on investment unless they are able to sell common stock for a price greater than the purchase price.
We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future
earnings to finance the operation and expansion of our business, and we do not expect to declare or to pay any dividends
in the foreseeable future. Consequently, stockholders must rely on sales of their common stock after price appreciation,
which may never occur, as the only way to realize any future gains on their investment. There is no guarantee that shares
of our common stock will appreciate in value or even maintain the price at which investors have purchased their shares.
Anti-takeover protections in our fourth amended and restated certificate of incorporation, our amended and
restated bylaws or our contractual obligations may discourage or prevent a takeover of our company, even if an
acquisition would be beneficial to our stockholders.
Provisions contained in our fourth amended and restated certificate of incorporation and amended and restated
bylaws as well as provisions of Delaware law could delay or make it more difficult to remove incumbent directors or could
impede a merger, takeover or other business combination involving us or the replacement of our management, or
discourage a potential investor from making a tender offer for our common stock, which, under certain circumstances,
could reduce the market value of our common stock, even if it would benefit our stockholders.
In addition, under the agreements governing our credit facilities, a change of control would cause us to be in default
or could trigger dilutive or additional expenses. For example, in the event of a change of control default, the administrative
agent under our credit facilities would have the right (or, at the direction of lenders holding a majority of the loans and
commitments under our credit facilities, the obligation) to accelerate the outstanding loans and to terminate the
commitments under our credit facilities, and if so accelerated, we would be required to repay all of our outstanding
obligations under our credit facilities.
Further, certain provisions in the Convertible Senior Notes and the Indenture could increase the cost of acquiring us
or otherwise discourage a third party from acquiring us or removing incumbent management, including in a transaction
that noteholders or holders of our common stock may view as favorable.
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General Risk Factors
Our business has been adversely affected and will likely continue to be adversely affected by the COVID-19
pandemic
The global spread of the COVID-19 pandemic has created significant global volatility, uncertainty, and economic
disruption. The extent to which the COVID-19 pandemic will continue to adversely affect our business, operations, and
financial results will depend on numerous evolving factors. During 2021, COVID-19 outbreak continued to create
significant volatility and uncertainty and economic and financial market disruption. The extent of any impact to our
business depends on developments which are highly uncertain and cannot be predicted, including the COVID-19
pandemic’s, our ability to sell and to provide our services to our current and future customers, and the ability of our
customers to pay for our services or to make us whole for advances of earned net wages and associated tax amounts
made on their behalf by us.
As we cannot predict the duration or scope of the COVID-19 pandemic, the anticipated negative financial impact to
our business, financial condition, results of operations and/or stock price cannot be reasonably estimated, but could be
material and could last for an extended period of time. Nevertheless, given the global nature of our business we may
experience variation in the impact of COVID-19 across geographies in terms of the degree, timing or duration of impact.
Catastrophic events may disrupt our business which could have a material adverse effect on our business,
financial condition, and results of operations.
Our business, financial condition, results of operations, access to capital markets and borrowing costs may be
adversely affected by a major natural disaster or catastrophic event, including civil unrest, geopolitical instability, war,
terrorist attack, the effects of climate change, or pandemics or other public health emergencies such as the recent
COVID-19 outbreak, and measures taken in response thereto. In the event of a major disaster or event impacting any of
our locations, we may be unable to continue our operations and may endure system interruptions, reputational harm,
delays in our application development, lengthy interruptions in our services, breaches of data security and loss of critical
data, all of which could have a material adverse effect on our business, financial condition, and results of operations.
We operate and are subject to tax in multiple jurisdictions. Audits, investigations, and tax proceedings could
have a material adverse effect on our business, results of operations, and financial condition.
We are subject to income and non-income taxes in multiple jurisdictions. Income tax accounting often involves
complex issues, and significant judgment is often required in determining our worldwide provision for income taxes. We
are regularly subject to tax examinations in these jurisdictions during which the tax authorities may challenge our tax
positions. We regularly assess the likely outcomes of these examinations to determine the appropriateness of our tax
reserves as well as our future tax liabilities. In addition, the application of withholding tax, value added tax, goods and
services tax, sales tax, and other non-income taxes is not always certain and we may be subject to examinations relating
to such withholding or non-income taxes. We believe that our tax positions are reasonable and our tax reserves are
adequate to cover any potential liability. However, if any of these tax authorities successfully challenge our positions, we
may be liable for additional tax, penalties, and interest in excess of any reserves established, which may have a
significant impact on our results and operations and future cash flow.
Changes in generally accepted accounting principles in the United States could have a material adverse effect on
our previously reported results of operations.
Generally accepted accounting principles in the United States are subject to interpretation by the Financial
Accounting Standards Board (the “FASB”), the SEC, and various bodies formed to promulgate and to interpret appropriate
accounting principles. A change in these principles or interpretations could have a significant effect on our previously
reported results of operations and could affect the reporting of transactions completed before the announcement of a
change. Please refer to Part II, Item 8, Note 2, “Summary of Significant Accounting Policies”, of this report for our
assessment of recently issued and adopted accounting pronouncements.
23 |
2021 Form 10-K
Our debt may be downgraded, which could have a material adverse effect on our business, financial condition,
and results of operations.
A reduction in the ratings that rating agencies assign to our debt may negatively impact our access to the debt
capital markets and increase our cost of borrowing, which could have a material adverse effect on our business, financial
condition, and results of operations.
Volatility and weakness in bank and capital markets may adversely affect credit availability and related financing
costs for us.
Disruptions in the financial markets can also adversely affect our lenders, insurers, customers, and other
counterparties. During periods of volatile credit markets, there is risk that lenders, even those with strong balance sheets
and sound lending practices, could fail, no longer participate in credit offerings, or refuse to honor their existing legal
commitments and obligations to us, including but not limited to, extending credit up to the maximum amount permitted by
the Revolving Credit Facility. If our lenders are unable to fund borrowings under their revolving credit commitments or we
are unable to borrow or refinance our debt in the financial markets, it could be difficult to obtain sufficient funding to
execute our business strategy or to meet our liquidity needs, which could have a material adverse effect on our business,
financial condition, and results of operations.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Our corporate headquarters is located in Minneapolis, Minnesota and we also have a major office location in
Toronto, Ontario, Canada, both in leased facilities. In addition, as of December 31, 2021, we lease office space in various
other locations across North America, APJ, and EMEA. During the year ended December 31, 2021, we sold our St.
Petersburg, Florida facility, and continue to lease office space at that location. We believe that our current facilities meet
our needs, and we are confident that we will be able to obtain additional space on commercially reasonable terms to
accommodate future growth.
Item 3. Legal Proceedings.
From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We
are not presently a party to any legal proceedings that, if determined adversely to us, we believe would individually or
taken together have a material adverse effect on our business, financial condition or liquidity. Discussion of Legal Matters
is incorporated by reference from Part II, Item 8, Note 17, “Commitments and Contingencies,” of this Form 10-K and
should be considered an integral part of Part I, Item 3, “Legal Proceedings”.
On October 21, 2021, a claim was issued by purported stockholder, Bluemoon Capital Ltd., in the Superior Court of
Justice of Ontario, Canada. The claim is against the Company, together with David Ossip, Chair and Co-Chief Executive
Officer of the Company, Arthur Gitajn, former EVP and Chief Financial Officer of the Company, Gnaneshwar Rao, director
of the Company and Brent Bickett, director of the Company, as well as certain third parties. The action, which is a
proposed class action, alleges misrepresentations and negligence in connection with the disclosure made by the
Company in its April 25, 2018 Prospectuses (which were later incorporated by reference into the Company’s May 24,
2018 Interim Financial Statements and MD&A) regarding matters surrounding the Company’s distribution to its pre-IPO
stockholders of its 50% interest in LifeWorks Corporation Ltd. On January 19, 2022, the Ontario court rejected the
Norwich Application for discovery by plaintiff (equitable or discretionary remedy in Canada for disclosure of documentation
to form an action), which had been filed prior to filing the class action on the basis that it did not meet the key criteria for
pre-action discovery. Plaintiff has appealed this decision.
The action seeks unspecified monetary damages under the Ontario Securities Act and at common law.
At this early stage of the proceeding, the ultimate disposition is not yet determinable, but the Company believes that
the likelihood of a material loss arising out of this claim is remote.
Item 4. Mine Safety Disclosures.
Not applicable.
24 |
2021 Form 10-K
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Market Information for Common Stock
Our common stock has traded on the New York Stock Exchange (“NYSE”) and the Toronto Stock Exchange under
the symbol “CDAY” since April 26, 2018, the date of our initial public offering.
Dividend Policy
We do not currently intend to pay cash dividends on our common stock in the foreseeable future. However, in the
future, subject to factors described below and our future liquidity and capitalization, we may change this policy and choose
to pay dividends.
Stockholders
As of December 31, 2021, there were 64 stockholders of record of our common stock. The actual number of
stockholders is considerably greater than this number of record holders, and includes stockholders who are beneficial
owners but whose shares are held in street name by brokers and other nominees.
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
None.
Stock Performance Graph
The following shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or incorporated by
reference into any of our other filings under the Exchange Act or the Securities Act, except to the extent we specifically
incorporate it by reference into such filing.
25 |
2021 Form 10-K
The following graph compares the cumulative total shareholder returns on our common stock with the cumulative
total return on the S&P 500 Index and the S&P 1500 Application Software Index. The graph assumes $100 was invested
in each, based on closing prices, from our initial public offering to the last trading day of each quarter for the period April
26, 2018 (the date our common stock began trading on the NYSE) through December 31, 2021. Stock price performance
shown in the Stock Performance Graph for our common stock is historical and not necessarily indicative of future
performance.
Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2022.
Item 6. [Reserved]
26 |
2021 Form 10-K
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together
with our consolidated financial statements and the related notes thereto included elsewhere in this report. This discussion
and analysis contains forward-looking statements, including statements regarding industry outlook, our expectations for
the future of our business, and our liquidity and capital resources as well as other non-historical statements. These
statements are based on current expectations and are subject to numerous risks and uncertainties, including but not
limited to the risks and uncertainties described in “Risk Factors” and “Forward-Looking Statements.” Our actual results
may differ materially from those contained in or implied by these forward-looking statements.
The following discussion and analysis of our financial condition and results of operations covers fiscal 2021 and
fiscal 2020 items and year-over-year comparisons between fiscal 2021 and fiscal 2020. Discussions of fiscal 2019 items
and year-over-year comparisons between fiscal 2020 and 2019 that are not included in this Form 10-K can be found in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual
Report on Form 10-K for the fiscal year ended December 31, 2020, that was filed with the SEC on February 26, 2021.
Overview
Ceridian is a global HCM software company. We categorize our solutions into two categories: Cloud and Bureau
solutions. Cloud revenue is generated from HCM solutions that are delivered via two cloud offerings: Dayforce, our
flagship cloud HCM platform, and Powerpay, a cloud HR and payroll solution for the Canadian small business market. We
also continue to support customers using our legacy North America Bureau solutions, which we generally stopped actively
selling to new customers following the acquisition of Dayforce, and customers using our acquired Bureau solutions which
we also intend to stop actively selling to new customers on a stand-alone basis. We invest in maintenance and necessary
updates to support our Bureau customers and continue to migrate them to Dayforce.
Dayforce provides HR, payroll, benefits, workforce management, and talent management functionality. Our platform
is used by organizations, regardless of industry or size, to optimize management of the entire employee lifecycle,
including attracting, engaging, paying, deploying, and developing their people. Dayforce was built as a single application
from the ground up that combines a modern, consumer-grade user experience with proprietary application architecture,
including a single employee record and a rules engine spanning all areas of HCM. Dayforce provides continuous real-time
calculations across all modules to enable, for example, payroll administrators access to data through the entire pay
period, and managers access to real-time data to optimize work schedules. Our platform is designed to make work life
better for our customers and their employees by improving HCM decision-making processes, streamlining workflows,
revealing strategic organizational insights, and simplifying legislative compliance. The platform is designed to ease
administrative work for both employees and managers, creating opportunities for companies to increase employee
engagement. We are a founder-led organization, and our culture combines the agility and innovation of a start-up with a
history of deep domain and operational expertise.
Dayforce Wallet is a digital wallet for customers' employees on the Dayforce platform, which was launched in the
U.S. in 2020 and Canada in 2021. The Dayforce Wallet gives our customers’ employees greater control over their
financial well-being by providing them with instant access to their earnings. This on-demand pay feature allows employees
more choice over when they get paid by making any day payday. Dayforce Wallet enables workers to access their
already-earned wages anytime during the pay period, net of taxes, withholdings and other payroll deductions. Leveraging
Dayforce’s continuous pay calculations, Dayforce Wallet processes a same-day payroll each time a worker requests their
pay. The solution is compliant with federal, state, and local remittances and requires no changes to payroll processing
including the funding, timing, and close-out of pay. The on-demand wages are loaded onto a paycard, which customers’
employees can use anywhere credit or debit cards are accepted, generating interchange fee revenue. The Dayforce
Wallet mobile app makes it easy for customers’ employees to check their pay deposits, account balance and transaction
history.
As of December 31, 2021, we had more than 950 customers signed onto Dayforce Wallet with over 400 customers
live on the product. As of December 31, 2021, the average registration rate increased to 33% of all eligible employees.
27 |
2021 Form 10-K
We sell Dayforce through our direct sales force on a subscription per-employee, per-month (“PEPM”) basis. Our
subscriptions are typically structured with an initial fixed term of between three and five years, with evergreen renewal
thereafter. Dayforce can serve customers of all sizes, ranging from 100 to over 100,000 employees. We have rapidly
grown the Dayforce platform to 5,434 live Dayforce customers*, representing approximately 5.1 million active global
users* as of December 31, 2021. In 2021, we added 528 net new live Dayforce customers. Our customers vary across
industries, and no single customer constituted more than 1% of our revenues for the year ended December 31, 2021. Our
annual Cloud revenue retention rate continues to exceed 95% due to our focus on solving complex problems and our
superior customer experience. Please see below under "How We Assess Our Performance" for further explanation of our
Cloud retention rate.
Our Business Model
Our business model focuses on supporting the rapid growth of Dayforce and maximizing the lifetime value of our
Dayforce customer relationships. Due to our subscription model, where we recognize subscription revenues ratably over
the term of the subscription period, and our high customer retention rates, we have a high level of visibility into our future
revenues. The profitability of a customer to our business depends, in large part, on how long they have been a customer.
We estimate that it takes approximately two years before we are able to recover our implementation, customer
acquisition, and other direct costs on a new Dayforce customer contract.
Over the lifetime of the customer relationship, we have the opportunity to realize additional PEPM revenue, both as
the customer grows or rolls out the Dayforce solution to additional employees, and also by selling additional functionality
to existing customers that do not currently utilize our full platform. We also incur costs to manage the account, to retain
customers, and to sell additional functionality. These costs, however, are significantly less than the costs initially incurred
to acquire and to take customers live.
Revenues
We generate recurring revenues primarily from recurring fees charged for the use of our Cloud solutions, Dayforce
and Powerpay, as well as from our Bureau solutions. We also generate professional services and other revenue
associated primarily with the work performed to assist customers with the planning, design, and implementation of their
cloud-based solution. Our solutions are typically provided through long-term customer relationships that result in a high
level of recurring revenue. We also generate recurring revenue from investment income on our Cloud and Bureau
customer funds before such funds are remitted to taxing authorities, customer employees, or other third parties. We refer
to this investment income as float revenue.
For Dayforce, we primarily charge monthly recurring fees on a PEPM basis, generally one-month in advance of
service, based on the number and type of solutions provided to the customer and the number of employees and other
users at the customer. Our standard Dayforce contracts are generally for a three to five-year period. The average time it
takes to implement Dayforce typically ranges from three months for smaller customers to twelve months for larger
customers. We begin to generate recurring revenue when we provide a production instance to the customer, generally
when they are ready to go live. We also provide outsourced human resource solutions to certain of our Dayforce
customers, which are tailored to meet their individual needs, and entail performing the duties of a customer’s human
resources department, including payroll processing, time and labor management, performance management, and
recruiting, as needed.
The Powerpay offering serves our small market Canadian customers. The typical Powerpay customer has fewer
than 20 employees, and the majority of the revenue is generated from recurring fees charged on a per-employee, per-
process basis. Typical processes include the customer’s payroll runs, year-end tax packages, and delivery of customers’
remittance advices or checks. Powerpay can typically be implemented on a remote basis within one to three days, at
which point we start receiving recurring fees.
For our Bureau solutions, we typically charge recurring fees on a per-process basis. Typical processes include the
customer’s payroll runs, year-end tax packages, and delivery of customers’ remittance advices or checks. In addition to
customers who use our payroll services, certain customers use our tax filing services on a stand-alone basis. Our
outsourced human resource solutions are tailored to meet the needs of individual customers, and entail our contracting to
perform many of the duties of a customer’s human resources department, including payroll processing, time and labor
management, performance management, and recruiting. We also perform individual services for customers, such as
check printing, wage attachment and disbursement, and ACA management.
*Excluding the 2021 acquisitions of Ascender and ADAM HCM
28 |
2021 Form 10-K
COVID-19 Pandemic
In March 2020, the World Health Organization declared the outbreak of COVID-19 to be a pandemic. The global
spread of the COVID-19 pandemic has continued to create significant global volatility, uncertainty, and economic
disruption. We have experienced and may continue to experience curtailed customer demand, primarily as a result of
declining employment levels at our customers in certain sectors, such as retail and hospitality, as well as lower customer
utilization of professional services, due to the effects of the COVID-19 pandemic. Additionally, the federal funds rate cuts
by the U.S. Federal Reserve and the overnight rate target by the Bank of Canada have had negative effects on our float
revenue. The broader implications of the pandemic on our results of operations and overall financial performance
continue to generate uncertainty. Please refer to the “Results of Operations” section below for further discussion of the
financial impacts of the COVID-19 pandemic during the years ended December 31, 2021 and 2020, and to Part II, Item 1A
“Risk Factors” for further discussion of the potential impact of the pandemic on our business.
How We Assess Our Performance
In assessing our performance, we consider a variety of performance indicators in addition to revenue and net
income (loss). Set forth below is a description of our key performance measures.
Live Dayforce customers (a)
Cloud annualized recurring revenue (ARR) (a,b,d) (in millions)
Annual Cloud revenue retention rate (a,b,d)
Dayforce recurring revenue per customer (c,d)
Adjusted EBITDA (d) (in millions)
Adjusted EBITDA margin (d)
2021
Year Ended December 31,
2020
2019
$
$
$
5,434
779.8
96.8%
108,631
162.5
15.9%
$
$
$
4,906
617.9
95.8%
98,655
159.0
18.9%
$
$
$
4,363
582.0
96.3%
86,615
184.6
22.4%
(a) Excluding the 2021 acquisitions of Ascender and ADAM HCM.
(b) Annual Cloud revenue retention rate and Cloud ARR are calculated on an annual basis, and the disclosure reflects
data as of the most recent fiscal year end. Please see below for further explanation.
(c) Excluding float revenue, the impact of lower employment levels due to the COVID-19 pandemic, Ascender and
(d)
ADAM HCM revenue, and on a constant currency basis.
This is a Non-GAAP financial measure. For Non-GAAP financial measures with a directly comparable financial
measure, a reconciliation of the GAAP to non-GAAP financial measure has been provided in the “Non-GAAP
Measures” section. An explanation of these measures is included below.
29 |
2021 Form 10-K
Live Dayforce Customers
We use the number of live Dayforce customers as an indicator of future revenue and the overall performance of the
business and to assess the performance of our implementation services. As shown in the table below, the number of
customers live on Dayforce has increased from 482 as of December 31, 2012 to 5,434 as of December 31, 2021*. For
2021, our 5,434 live Dayforce customers represented approximately 5.1 million active global users*.
We market Dayforce to customers of all sizes, including small (under 500 employees), major (500 to 5,999
employees), and enterprise (6,000 or more employees). For 2021, small businesses accounted for 10% of the total
number of active global users, major businesses accounted for 49% of the total number of active global users, and
enterprise businesses accounted for 41% of the total number of active global users*. In 2021, we continued to grow our
global customer base, particularly in the Enterprise market, which aligns with our strategic growth lever to expand within
this segment. In addition to the increase in the number of Enterprise customers, we are successfully selling the broader
HCM suite.
The following table sets forth the number of live Dayforce customers* at the end of the years presented:
Cloud Annualized Recurring Revenue (“ARR”)
We derive the majority of our Cloud revenues from recurring fees, primarily PEPM subscription charges. We also
derive recurring revenue from fees related to the rental and maintenance of clocks, charges for once-a-year services,
such as year-end tax statements, and investment income on our customer funds before such funds are remitted to taxing
authorities, customer employees, or other third parties (often referred to as “float revenue”). To calculate Cloud ARR, we
start with recurring revenue at year end, excluding revenue from Ascender and ADAM HCM, subtract the once-a-year
charges, annualize the revenue for customers live for less than a full year to reflect the revenue that would have been
realized if the customer had been live for a full year, and add back the once-a-year charges. We set annual targets for
Cloud ARR and monitor progress toward those targets on a quarterly basis.
*Excluding the 2021 acquisitions of Ascender and ADAM HCM.
30 |
2021 Form 10-K
Annual Cloud Revenue Retention Rate
Our annual Cloud revenue retention rate measures the percentage of revenues that we retain from our existing
Cloud customers. We use this retention rate as an indicator of customer satisfaction and future revenues. We calculate
the annual Cloud revenue retention rate as a percentage, excluding Ascender and ADAM HCM, where the numerator is
the Cloud ARR for the prior year, less the Cloud ARR from lost Cloud customers during that year; and the denominator is
the Cloud ARR for the prior year. Our annual Cloud revenue retention rate has been 95% or above for the years ended
December 31, 2021, 2020, and 2019. We set annual targets for Cloud revenue retention rate and monitor progress toward
those targets on a quarterly basis by reviewing known and anticipated customer losses. Our Cloud revenue retention rate
may fluctuate as a result of a number of factors, including the mix of Cloud solutions used by customers, the level of
customer satisfaction, and changes in the number of users live on our Cloud solutions.
Dayforce Recurring Revenue Per Customer
Our Dayforce recurring revenue per customer is an indicator of the average size of our Dayforce recurring customer.
To calculate Dayforce recurring revenue per customer, we start with Dayforce recurring revenue on a constant currency
basis by applying the same exchange rate to all comparable periods for the trailing twelve months and exclude float
revenue, the impact of lower employment levels due to the COVID-19 pandemic, and Ascender and ADAM HCM revenue.
This amount is divided by the number of live Dayforce customers at the end of the trailing twelve month period, excluding
Ascender and ADAM HCM. We set quarterly targets for Dayforce recurring revenue per customer and monitor progress
toward those targets on a quarterly basis. Our Dayforce recurring revenue per customer may fluctuate as a result of a
number of factors, including the number of live Dayforce customers and the number of customers purchasing the full HCM
suite. We have not reconciled the Dayforce recurring revenue per customer because there is no directly comparable
GAAP financial measure.
Constant Currency Revenue
We present revenue on a constant currency basis to assess how our underlying business performed, excluding the
effect of foreign currency rate fluctuations. We believe this non-GAAP financial measure is useful to management and
investors. We have calculated revenue on a constant currency basis by applying the average foreign exchange rate in
effect during the comparable prior period. Please refer to the “Non-GAAP Measures” section for a reconciliation of this
Non-GAAP financial measure.
The average U.S. dollar to Canadian dollar foreign exchange rate was $1.25, with a daily range of $1.20 to $1.29 for
the twelve months ended December 31, 2021, compared to $1.34, with a daily range of $1.27 to $1.45 for the twelve
months ended December 31, 2020. As of December 31, 2021, the U.S. dollar to Canadian dollar foreign exchange rate
was $1.27.
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin
We believe that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin, non-GAAP financial measures, are useful
to management and investors as supplemental measures to evaluate our overall operating performance. EBITDA,
Adjusted EBITDA and Adjusted EBITDA margin are components of our management incentive plan and are used by
management to assess performance and to compare our operating performance to our competitors. We define EBITDA
as net income or loss before interest, taxes, depreciation, and amortization, and Adjusted EBITDA as net income or loss
before interest, taxes, depreciation, and amortization, as adjusted to exclude foreign exchange gain (loss), share-based
compensation expense and related employer taxes, severance charges, restructuring consulting fees, and certain other
non-recurring items. Adjusted EBITDA margin is determined by calculating the percentage that Adjusted EBITDA is of
total revenue. Management believes that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are helpful in
highlighting management performance trends because EBITDA, Adjusted EBITDA and Adjusted EBITDA margin exclude
the results of decisions that are outside the normal course of our business operations. Please refer to the “Results of
Operations” section below for a discussion of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin.
31 |
2021 Form 10-K
Recent Events
Acquisitions
On September 13, 2019, we completed the purchase of 100% of the issued and outstanding shares of Lusworth
Holding Pty Ltd. (“RITEQ”) for $20.1 million. RITEQ is an Australian-based workforce management solutions provider,
with operations within Australia, New Zealand, and the United Kingdom.
On May 29, 2020, we completed the purchase of 100% of the outstanding shares of Excelity Global Solutions Pte.
Ltd. (“Excelity”) for $77.2 million. Excelity is a human capital management service provider in the APJ region.
On March 1, 2021, we completed the purchase of 100% of the outstanding shares of Ascender HCM Pty Limited
(“Ascender”) for $359.6 million. Ascender is a payroll and HR solutions provider in the APJ region.
On April 30, 2021, we acquired 100% of the outstanding shares of O5 Systems, Inc. dba Ideal (“Ideal”) for $41.4
million. Ideal is a talent intelligence software provider based in Toronto, Ontario, Canada.
On October 4, 2021, we completed the acquisition of certain assets and liabilities of DataFuzion HCM, Inc.
(“DataFuzion”), for $12.5 million in cash consideration and future contingent consideration payments. DataFuzion designs,
implements, and supports customer specific data solutions that integrate HCM and ERP systems on their FUZE platform.
On December 3, 2021, we completed the acquisition of 100% of the outstanding interests in ATI ROW, LLC and
ADAM HCM MEXICO, S. de R.L. de C.V. (collectively, "ADAM HCM") for $34.3 million. ADAM HCM is a payroll and HCM
company in Latin America.
Financing and Other
In March 2021, we issued $575.0 million in aggregate principal amount of 0.25% Convertible Senior Notes due
2026. In connection with the pricing of the Convertible Senior Notes, we entered into capped call transactions with the
option counterparties.
On December 15, 2021, we sold our St. Petersburg, Florida facility for $40 million, resulting in a gain on the sale of
$19.1 million, which was recognized in the consolidated statements of operations within selling, general, and
administrative expense.
32 |
2021 Form 10-K
Results of Operations
Year Ended December 31, 2021 Compared with Year Ended December 31, 2020
The following table sets forth our results of operations for the periods presented:
Revenue:
Recurring
Cloud
Bureau
Total recurring
Professional services and
other
Total revenue
Cost of revenue:
Recurring
Cloud
Bureau
Total recurring
Professional services and
other
Product development and
management
Depreciation and amortization
Total cost of revenue
Gross profit
Selling, general, and
administrative
Operating profit
Interest expense, net
Other expense, net
Loss before income taxes
Income tax benefit
Net loss
Net profit margin (a)
Adjusted EBITDA (b)
Adjusted EBITDA margin (b)
Year Ended
December 31,
2021
2020
(Dollars in millions)
Increase/
(Decrease)
Amount
%
% of Revenue
2021
2020
$
$
712.9
137.8
850.7
173.5
1,024.2
197.7
64.7
262.4
194.6
134.0
50.9
641.9
382.3
417.8
(35.5)
35.9
18.9
(90.3)
(14.9)
(75.4)
(7.4)%
$
579.7
110.5
690.2
152.3
842.5
166.9
46.4
213.3
163.7
83.7
40.5
501.2
341.3
333.5
7.8
25.1
2.7
(20.0)
(16.0)
(4.0)
(0.5)%
$
162.5
$
159.0
$
15.9%
18.9%
133.2
27.3
160.5
21.2
181.7
30.8
18.3
49.1
30.9
50.3
10.4
140.7
41.0
84.3
(43.3)
10.8
16.2
(70.3)
1.1
(71.4)
(6.9)%
3.5
(3.0)%
23.0%
24.7%
23.3%
13.9%
69.6%
13.5%
83.1%
16.9%
68.8%
13.1%
81.9%
18.1%
21.6%
100.0%
100.0%
18.5%
39.4%
23.0%
18.9%
19.3%
6.3%
25.6%
19.0%
19.8%
5.5%
25.3%
19.4%
60.1%
13.1%
9.9%
25.7%
28.1%
12.0%
25.3%
(555.1)%
43.0%
600.0%
(351.5)%
6.9%
(1785.0)%
(1450.6)%
2.2%
(15.9)%
5.0%
62.7%
37.3%
40.8%
(3.5)%
3.5%
1.8%
(8.8)%
(1.4)%
(7.4)%
4.8%
59.5%
40.5%
39.6%
0.9%
3.0%
0.3%
(2.4)%
(1.9)%
(0.5)%
15.9%
18.9%
(a) Net profit margin is determined by calculating the percentage that net (loss) income is of total revenue.
(b)
For a reconciliation of Adjusted EBITDA to net income, please refer to the “Non-GAAP Measures” section.
33 |
2021 Form 10-K
Revenue. The following table sets forth certain information regarding our consolidated revenues for periods
presented:
Percentage
change in
revenue as
reported
2021 vs. 2020
Impact of
changes in
foreign
currency (a)
Percentage
change in
revenue on a
constant
currency
basis (a)
2021 vs. 2020
Year Ended
December 31,
2021
2020
(Dollars in millions)
Revenue:
Dayforce recurring, excluding float
Dayforce float
Total Dayforce recurring
Powerpay recurring, excluding float
Powerpay float
Total Powerpay recurring
Total Cloud recurring
Dayforce professional services and
other
Powerpay professional services and
other
Total Cloud professional services
and other
Total Cloud revenue
Bureau recurring, excluding float
Bureau float
Total Bureau recurring
Bureau professional services and other
Total Bureau revenue
Total revenue
Dayforce
Powerpay
Total Cloud revenue
Dayforce, excluding float
Powerpay, excluding float
Cloud float
Total Cloud revenue
Cloud recurring, excluding float
Bureau recurring, excluding float
Total recurring, excluding float
Total revenue, excluding float
$
$
$
$
$
$
$
$
596.9 $
29.7
626.6
78.2
8.1
86.3
712.9
159.3
0.9
160.2
873.1
134.5
3.3
137.8
13.3
151.1
1,024.2 $
785.9 $
87.2
873.1 $
756.2 $
79.1
37.8
873.1
675.1 $
134.5
809.6
983.1 $
463.1
37.1
500.2
70.8
8.7
79.5
579.7
148.6
28.9%
(19.9)%
25.3%
10.5%
(6.9)%
8.6%
23.0%
7.2%
1.8%
1.7%
1.8%
7.0%
6.9%
7.0%
2.5%
2.1%
27.1%
(21.6)%
23.5%
3.5%
(13.8)%
1.6%
20.5%
5.1%
1.1
(18.2)%
(—)%
(18.2)%
149.7
729.4
104.0
6.5
110.5
2.6
113.1
842.5
648.8
80.6
729.4
611.7
71.9
45.8
729.4
533.9
104.0
637.9
790.2
7.0%
2.1%
4.9%
19.7%
29.3%
(49.2)%
24.7%
411.5%
33.6%
21.6%
21.1%
8.2%
19.7%
23.6%
10.0%
(17.5)%
19.7%
26.4%
29.3%
26.9%
24.4%
2.4%
1.4%
(—)%
1.4%
(11.6)%
1.1%
2.2%
1.8%
6.8%
2.4%
1.8%
6.8%
2.6%
2.4%
2.4%
1.4%
2.3%
2.2%
17.3%
27.9%
(49.2)%
23.3%
423.1%
32.5%
19.4%
19.3%
1.4%
17.3%
21.8%
3.2%
(20.1)%
17.3%
24.0%
27.9%
24.6%
22.2%
(a) Please refer to “Non-GAAP Measures” section for additional information on our constant currency revenue, a non-
GAAP financial measure.
34 |
2021 Form 10-K
The COVID-19 pandemic has had an adverse impact on our revenue streams during the year ended December 31,
2021, primarily in the form of lower employment levels at our customers, lower float revenue resulting from reductions in
the U.S. Federal Reserve federal funds rate and the Bank of Canada overnight rate target, lower average float balances
for our customer funds, and lower demand for professional services, among other effects. For the year ended December
31, 2021, we estimate the impact of lower employment levels at our customers was an approximately $21 million
reduction in our revenue, of which approximately $17 million was related to Dayforce and approximately $4 million was
related to Powerpay.
Total revenue increased $181.7 million, or 21.6%, to $1,024.2 million for the year ended December 31, 2021,
compared to $842.5 million for the year ended December 31, 2020. This increase was primarily driven by an increase in
Cloud revenue of $143.7 million, or 19.7%, from $729.4 million for the year ended December 31, 2020, to $873.1 million
for the year ended December 31, 2021. The Cloud revenue increase was primarily due to an increase of $133.2 million, or
23.0%, in Cloud recurring revenue, and $10.5 million, or 7.0%, in Cloud professional services and other revenue. Cloud
revenue growth was driven by both an increase in customers live on the Dayforce platform and an increase in recurring
revenue per customer, as well as the Cloud revenue generated from acquired businesses during 2021.
Excluding float revenue and on a constant currency basis, total revenue grew 22.2% reflecting a 19.8% increase in
Cloud revenue and a 37.5% increase in Bureau revenue. Excluding float revenue and on a constant currency basis, Cloud
revenue growth reflected a 24.0% increase in Cloud recurring revenue and a 4.9% increase in Cloud professional
services and other revenue. Excluding float revenue and on a constant currency basis, Dayforce revenue increased
21.8%, reflecting a 27.1% increase in Dayforce recurring revenue and a 5.1% increase in Dayforce professional services
and other revenue. Excluding float revenue and on a constant currency basis, Powerpay revenue increased 3.2%.
Dayforce revenue grew 21.1%, and Powerpay revenue increased 8.2% in 2021 as compared to 2020. On a constant
currency basis, Dayforce revenue increased 19.3%, and Powerpay revenue increased 1.4% for the year-ended
December 31, 2021, compared to the year ended December 31, 2020. Powerpay is designed primarily for small market
Canadian customers, which typically have fewer than 20 employees, and we believe those customers have been more
adversely affected by the COVID-19 pandemic than larger Dayforce customers.
In addition to the increase in Cloud revenue, Bureau revenue increased by $38.0 million, or 33.6%. The increase is
primarily due to Bureau revenue associated with our recent Ascender and Excelity acquisitions. The increase was partially
offset by a reduction in Bureau revenue associated with our legacy technology of the North American platforms as we
continue to sunset the technology. For the year ended December 31, 2021, recurring revenue from Bureau payroll
customers accounted for $103.4 million, including $70.3 million from our two recent acquisitions in APJ, and Bureau
stand-alone tax recurring revenue accounted for $34.4 million, compared to $73.0 million and $37.5 million in the prior
year for payroll and stand-alone tax customers, respectively.
Float revenue included in recurring revenue was $41.1 million and $52.3 million for the years ended December 31,
2021 and 2020, respectively. Float revenue allocated to Cloud revenue was $37.8 million and $45.8 million for the years
ended December 31, 2021 and 2020, respectively. The average float balance for our customer funds for the year ended
December 31, 2021, was $3,889.5 million, compared to $3,240.8 million for the year ended December 31, 2020. On a
constant currency basis, the average float balance for our customer funds increased 17.4% for the year ended
December 31, 2021, compared to year ended December 31, 2020. The average yield was 1.07% during the year ended
December 31, 2021, a decline of 54 basis points compared to the average yield for the year ended December 31, 2020.
For the years ended December 31, 2021 and 2020, approximately 35% of our average float balance consisted of
customer funds outside of the US., primarily our Canadian customers.
Cost of revenue. Total cost of revenue for the year ended December 31, 2021, was $641.9 million, an increase of
$140.7 million, or 28.1%, compared to the year ended December 31, 2020. Recurring cost of revenue increased by $49.1
million for the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to
additional costs related to global expansion, including Ascender and Excelity costs, which are primarily classified as
Bureau. Additionally, the increase is due to costs to support the growing Dayforce customer base. The increase in cost of
revenue for professional services and other of $30.9 million for the year ended December 31, 2021, compared to the year
ended December 31, 2020, was primarily due to costs incurred to take new customers live.
Product development and management expense increased $50.3 million for the year ended December 31, 2021,
compared to the year ended December 31, 2020. The increase reflects increases in personnel costs as well as share-
based compensation. Excluding the impact of share-based compensation and related employer taxes, and severance
expense, product development and management expense would have increased by $41.9 million. This increase reflects
additional personnel costs as we work to build out the Dayforce Wallet and our international offerings. For the years
ended December 31, 2021, and 2020, our investment in software development was $131.7 million and $78.3 million,
35 |
2021 Form 10-K
respectively, consisting of $81.1 million and $39.6 million of research and development expense, which is included within
product development and management expense, and $50.6 million and $38.7 million of capitalized software development,
respectively. Please refer to Note 2, “Summary of Significant Accounting Policies,” for further discussion of our accounting
policy for capitalizing internally developed software costs.
Depreciation and amortization expense associated with cost of revenue increased by $10.4 million for the year
ended December 31, 2021, compared to the year ended December 31, 2020, as we continue to capitalize Dayforce
related and other development costs and subsequently amortize those costs.
Gross profit and gross margin. Total gross profit for the year ended December 31, 2021, increased by $41.0 million,
or 12.0%, compared to the year ended December 31, 2020. The $41.0 million increase in gross profit was primarily
attributable to the $133.2 million increase in Cloud recurring revenue for the year ended December 31, 2021, compared to
the year ended December 31, 2020.
The following table presents total gross margin and solution gross margins for the periods presented:
Total gross margin
Gross margin by solution:
Cloud recurring
Bureau recurring
Professional services and other
Year Ended
December 31,
2021
2020
37.3%
72.3%
53.0%
)
%
(12.2
40.5%
71.2%
58.0%
(7.5)%
Total gross margin is defined as total gross profit as a percentage of total revenue, inclusive of product development
and management costs as well as depreciation and amortization associated with cost of revenue. Gross margin for each
solution in the table above is defined as total revenue less cost of revenue for the applicable solution as a percentage of
total revenue for that related solution, exclusive of any product development and management or depreciation and
amortization cost allocations.
Cloud recurring gross margin was 72.3% for the year ended December 31, 2021, compared to 71.2% for the year
ended December 31, 2020. Excluding float revenue, Cloud recurring gross margin was 70.7% for the year ended
December 31, 2021, compared to 68.7% for the year ended December 31, 2020. The increase in Cloud recurring gross
margin reflects an increase in the proportion of Dayforce customers live for more than two years, which increased from
76% as of December 31, 2020 to 80% as of December 31, 2021, and was also attributable to consistent configuration that
has enabled us to realize economies of scale in hosting and customer support. Bureau recurring gross margin declined
from 58.0% for the year ended December 31, 2020, to 53.0% for the year ended December 31, 2021 reflecting lower
associated float revenue and a higher proportion of customer support costs to support the end-of-life process of our
legacy Bureau payroll services, as well as lower margins on acquired Bureau services for Excelity and Ascender.
Professional services and other gross margin was (12.2)% for the year ended December 31, 2021, declining from (7.5)%
for the year ended December 31, 2020, reflecting additional costs incurred to take new customers live as well as
expansion of our capabilities to serve international customers.
Selling, general, and administrative expense. Selling, general, and administrative expense increased $84.3 million
for the year ended December 31, 2021, compared to the year ended December 31, 2020. Excluding the impact of share-
based compensation and related employer taxes, severance expense, and certain other non-recurring items, selling,
general, and administrative expenses would have increased $85.6 million. This adjusted increase of $85.6 million was due
to a $48.5 million increase in sales and marketing expenses and a $37.1 million increase in general and administrative
expense, both of which are primarily driven by employee-related costs. The increase in sales and marketing expense
aligns with our growth initiatives. The increase in general and administrative expense is also driven by an increase in
amortization expense associated with the intangible assets recognized in relation to our recent acquisitions, partially offset
by the gain on sale of our office facility in St. Peterburg, Florida. Please refer to the "Non-GAAP Measures" section for
additional information on the excluded items.
Interest expense, net. Interest expense, net for the year ended December 31, 2021, was $35.9 million, compared to
$25.1 million for the year ended December 31, 2020. This $10.8 million increase in interest expense, net was primarily
due to interest on our Convertible Senior Notes that were issued in March 2021.
36 |
2021 Form 10-K
Other expense, net. For the years ended December 31, 2021 and 2020, other expense, net of $18.9 million and $2.7
million, respectively, was comprised of net periodic pension expense, as well as foreign currency translation expense in
2021 compared to foreign currency translation income in 2020.
Income tax benefit. For the years ended December 31, 2021 and 2020, we had income tax benefit of $14.9 million
and $16.0 million, respectively. The $1.1 million reduction in tax benefit was primarily due to a tax increase of $8.2 million
attributed to the base erosion anti-abuse tax (BEAT) in the U.S., a $4.0 million increase attributed to share-based
compensation, a $4.0 million increase attributed to international tax rate differences, and other increases of $4.6 million,
partially offset by a $14.8 million tax benefit from current operations, and a $4.9 million tax benefit attributable to U.S.
state tax. We record a valuation allowance to reduce our deferred tax assets to reflect the net deferred tax assets that we
believe will be realized. As of December 31, 2021, we will continue to record a valuation allowance against certain
deferred tax assets including some state net operating loss carryovers and tax basis intangibles.
Net loss. Net loss was $75.4 million for the year ended December 31, 2021, compared to $4.0 million for the year
ended December 31, 2020. The increase in net loss is primarily due to higher share-based compensation, lower
employment levels at our customers and lower float revenue income due to the COVID-19 pandemic, investments in
product development, selling capabilities, and business acquisitions to support our growth initiatives in 2021, partially
offset by the gain of $19.1 million on the sale of our St. Petersburg, Florida facility. For the years ended December 31,
2021 and 2020, net profit margin was (7.4)% and (0.5)%, respectively.
Adjusted EBITDA. Adjusted EBITDA increased by $3.5 million to $162.5 million, for the year ended December 31,
2021, compared to the year ended December 31, 2020, primarily due to the increase in cloud recurring margin, partially
offset by the increase in sales and marketing and product development and management expense as well as the
reduction in float revenue. Adjusted EBITDA margin declined to 15.9% in 2021 from 18.9% in 2020. Adjusted EBITDA,
excluding float revenue, increased $14.7 million to $121.4 million, for the year ended December 31, 2021, compared to
the year ended December 31, 2020. Please refer to the "Non-GAAP Measures" section for a discussion and reconciliation
of Adjusted EBITDA and Adjusted EBITDA margin and additional information on the excluded items.
Liquidity and Capital Resources
Our primary sources of liquidity are our existing cash and equivalents, cash provided by operating activities,
availability under our Revolving Credit Facility, and proceeds from debt issuance and equity offerings. As of December 31,
2021, we had cash and equivalents of $367.5 million and there was no amount drawn on our Revolving Credit Facility of
$300 million.
Our primary liquidity needs are related to funding of general business requirements, including the payment of
interest and principal on our debt, capital expenditures, product development, and funding Dayforce Wallet on demand
pay requests. We have made investments in businesses or acquisitions of companies, which are also liquidity needs. Our
total debt balance was $1,242.5 million as of December 31, 2021. Please refer to Note 9, “Debt,” to our consolidated
financial statements and “Our Indebtedness” section below for further information on our debt.
On February 26, 2021, we elected to borrow $295.0 million under the Revolving Credit Facility to fund our
acquisition of Ascender on March 1, 2021. We repaid the $295.0 million draw on March 5, 2021 with proceeds from the
issuance of our Convertible Senior Notes. On April 2, 2020, we elected to borrow $295.0 million under the Revolving
Credit Facility as a precautionary measure to increase our cash position and to preserve financial flexibility, given the
uncertainty in the global capital markets resulting from the initial onset of the COVID-19 pandemic. We repaid the $295.0
million draw on December 8, 2020.
In March 2021, we issued $575.0 million in aggregate principal amount of 0.25% Convertible Senior Notes due
2026. The total net proceeds from the offering, after deducting initial purchase discounts and issuance costs, were $561.8
million. In connection with the Convertible Senior Notes, we entered into capped call transactions which are expected to
reduce the potential dilution of our common stock upon any conversion of the Convertible Senior Notes and/or offset any
cash payments we could be required to make in excess of the principal amount of converted Convertible Senior Notes.
We used an aggregate amount of $45.0 million of the net proceeds of the Convertible Senior Notes to purchase the
Capped Calls. We used the remainder of the net proceeds from the offering (i) to repay $295.0 million principal amount
under the Revolving Credit Facility and pay related accrued interest and (ii) for general corporate purposes.
On February 19, 2020, we completed the first amendment to the Senior Secured Credit Facility, in which the Term
Debt interest rate was reduced from LIBOR plus 3.00% to LIBOR plus 2.50%. Further, the interest rate trigger under the
applicable rating by Moody’s Investor Service was removed by the first amendment.
37 |
2021 Form 10-K
On December 15, 2021, we completed the second amendment to the Senior Secured Credit Facility, in which the
maturity date of the Revolving Credit Facility was extended from April 30, 2023 to January 29, 2025.
We believe that our cash flow from operations, availability under our Revolving Credit Facility, and available cash
and equivalents will be sufficient to meet our liquidity needs for the foreseeable future. Dayforce Wallet on demand pay
requests are currently funded from our operating cash balances, until it is reimbursed by the customers through their
normal payroll funding cycles. We evaluate the creditworthiness of each customer for the Dayforce Wallet feature. We
anticipate that to the extent that we require additional liquidity, it will be funded through the issuance of equity, the
incurrence of additional indebtedness, or a combination thereof. We cannot provide assurance that we will be able to
obtain this additional liquidity on reasonable terms, or at all. Additionally, our liquidity and our ability to meet our
obligations and to fund our capital requirements and Dayforce Wallet on demand pay requests are also dependent on our
future financial performance, which is subject to general economic, financial, and other factors that are beyond our
control. Accordingly, we cannot provide assurance that our business will generate sufficient cash flow from operations or
that future borrowings will be available from additional indebtedness or otherwise to meet our liquidity needs. If we decide
to pursue one or more significant acquisitions, we may incur additional debt or sell additional equity to finance such
acquisitions, which would result in additional expenses or dilution.
Our customer funds are held and invested with the primary objectives being to protect the principal balance and to
ensure adequate liquidity to meet cash flow requirements. Please refer to Note 5, "Customer Funds," for further
discussion of these funds.
Statements of Cash Flows
Changes in cash flows due to purchases of customer fund marketable securities and proceeds from the sale or
maturity of customer fund marketable securities, as well as the carrying value of customer fund accounts as of period end
dates can vary significantly due to several factors, including the specific day of the week the period ends, which impacts
the timing of funds collected from customers and payments made to satisfy customer obligations to employees, taxing
authorities, and others. The customer funds are fully segregated from our operating cash accounts and are evaluated and
tracked separately by management. The table below summarizes the activity within the consolidated statements of cash
flows:
Net cash provided by (used in) operating activities
Net cash (used in) provided by investing activities
Net cash provided by financing activities
Effect of exchange rate on cash and equivalents
Net (decrease) increase in cash, restricted cash, and equivalents
Cash, restricted cash, and equivalents at beginning of period
Cash, restricted cash, and equivalents at end of period
Cash and equivalents
Restricted cash and equivalents in customer funds
Total cash, restricted cash, and equivalents
Year Ended December 31,
2020
2021
(Dollars in millions)
$
48.8
(711.1)
407.5
(20.9)
(275.7)
2,228.5
1,952.8
367.5
1,585.3
1,952.8
$
$
(30.2)
38.8
565.3
(4.0)
569.9
1,658.6
2,228.5
188.2
2,040.3
2,228.5
$
$
Operating Activities
Net cash provided by operating activities was $48.8 million during the year ended December 31, 2021, primarily
attributed to a net loss of $75.4 million offset by the net impact of adjustments for certain non-cash items of $165.2 million,
including $113.4 million of non-cash share-based compensation expense, and $77.5 million of depreciation and
amortization. Additionally, there were net working capital reductions of $41.0 million. The net working capital reductions
included a $34.8 million increase in trade and other receivables, a $12.3 million increase in prepaid expenses and other
current assets, a $11.8 million decrease in working capital related to other assets and liabilities, and a $9.3 million
decrease in accounts payable and other accrued expenses.
Net cash used in operating activities was $30.2 million during the year ended December 31, 2020, primarily
attributed to net changes in working capital that resulted in a $161.1 million reduction in cash and a net loss of $4.0
million, partially offset by the net impact of adjustments for certain non-cash items of $134.9 million, including $65.8 million
38 |
2021 Form 10-K
of non-cash share-based compensation expense, $51.8 million of depreciation and amortization, and $16.8 million of
lease abandonment costs. Net changes in working capital were primarily attributable to a $104.0 million reduction in
liabilities for employee compensation and benefits, primarily due to $106.9 million in pension contributions, $32.0 million
decrease in working capital related to other assets and liabilities, a $12.0 million increase in trade and other receivables,
and a $6.8 million increase in prepaid expenses and other current assets.
Investing Activities
During the year ended December 31, 2021, net cash used in investing activities was $711.1 million, related to
acquisition costs, net of cash acquired, of $409.5 million, net purchases of customer funds marketable securities of $275.8
million, and capital expenditures of $63.7 million. Our capital expenditures included $52.2 million for software and
technology and $11.5 million for property and equipment.
During the year ended December 31, 2020, net cash provided by investing activities was $38.8 million, related to net
proceeds from customer funds marketable securities of $156.9 million, partially offset by capital expenditures of $59.8
million and acquisition costs, net of cash acquired, of $58.3 million. Our capital expenditures included $41.7 million for
software and technology and $18.1 million for property and equipment.
Financing Activities
Net cash provided by financing activities was $407.5 million during the year ended December 31, 2021. This cash
inflow was primarily attributable to proceeds from the issuance of our Convertible Senior Notes of $561.8 million, and
proceeds from the issuance of common stock under share-based compensation plans of $95.4 million, partially offset by
the net decrease in our customer funds obligations of $195.7 million, and payments on our long-term debt obligations of
$7.8 million.
Net cash provided by financing activities was $565.3 million during the year ended December 31, 2020. This cash
inflow was primarily attributable to the net increase in our customer funds obligations of $483.6 million, and proceeds from
the issuance of common stock under share-based compensation plans of $91.7 million, partially offset by payments on
our long-term debt obligations of $10.0 million.
Backlog and Seasonality
Backlog is equivalent to our remaining performance obligations, which represents contracted revenue for recurring
and fixed price professional services, primarily implementation services, that has not yet been recognized, including
deferred revenue and unbilled amounts that will be recognized as revenue in future periods. As of December 31, 2021,
approximately $1,118.5 million of revenue is expected to be recognized over the next three years from remaining
performance obligations.
For a discussion of seasonality, please refer to Part 1, Item I, “Business” of this Form 10-K.
Our Indebtedness
Our primary liquidity needs are related to funding of general business requirements, including the payment of
interest and principal on our debt, capital expenditures, product development, and funding Dayforce Wallet. From time to
time, we have made investments in businesses or acquisitions of companies, which are also liquidity needs. We believe
our current sources of liquidity will be sufficient to meet our liquidity needs for the foreseeable future. We anticipate that to
the extent that we require additional liquidity, it will be funded through the issuance of equity, the incurrence of additional
indebtedness, or a combination thereof. During 2021 and 2020, we incurred additional debt in the form of draws on our
Revolving Credit Facility, which was subsequently repaid, and issuance of our Convertible Senior Notes for purposes of
either (i) conserving our liquidity position during the uncertainty created by the COVID-19 pandemic, and (ii) general
corporate purposes, including acquisitions of companies.
Senior Secured Credit Facility
On April 30, 2018, we entered into a credit agreement pursuant to which the lenders agreed to provide Senior
Secured Credit Facility, consisting of the Term Debt in the original principal amount of $680.0 million and a $300.0 million
Revolving Credit Facility. The Revolving Credit Facility may, at our option, be made available in United States Dollars,
Canadian Dollars, Euros and/or Pounds Sterling; up to $70.0 million may, at our option, be made available for letters of
39 |
2021 Form 10-K
credit and $100.0 million may, at our option, be made available for swingline loans (denominated in Canadian Dollars
and/or United States Dollars).
The Term Debt will mature on April 30, 2025. We are required to make annual amortization payments in respect of
the Term Debt in an amount equal to 1.00% of the original principal amount thereof, payable in equal quarterly
installments of 0.25% of the original principal amount of the first lien term debt. On December 15, 2021, we completed the
second amendment to our Senior Secured Credit Facility, which extended the maturity of the Revolving Credit Facility
from April 30, 2023 to January 29, 2025. The Revolving Credit Facility does not require amortization payments.
Convertible Senior Notes
In March 2021, we issued $575.0 million in aggregate principal amount of 0.25% Convertible Senior Notes due
2026. The total net proceeds from the offering, after deducting initial purchase discounts and issuance costs, were $561.8
million. In connection with the Convertible Senior Notes, we entered into capped call transactions which are expected to
reduce the potential dilution of our common stock upon any conversion of the Convertible Senior Notes and/or offset any
cash payments we could be required to make in excess of the principal amount of converted Notes. We used an
aggregate amount of $45.0 million of the net proceeds of the Convertible Senior Notes to purchase the Capped Calls. We
used the remainder of the net proceeds from the offering (i) to repay $295.0 million principal amount under the Revolving
Credit Facility and pay related accrued interest and (ii) for general corporate purposes.
For an additional description of the Senior Secured Credit Facility and the Senior Convertible Notes, please refer to
Note 9, “Debt,” to our consolidated financial statements.
Contractual Obligations
Our future contractual obligations generally consist of long-term debt, leases, retirement plans, and vendor
payments. Our long-term debt obligations are described in Note 9, “Debt,” to our consolidated financial statements, and
the “Our Indebtedness” section above.
As of December 31, 2021, all of our facilities are leased. Most of these leases contain renewal options and require
payments for taxes, insurance, and maintenance. We also lease equipment for use in our business. We ceased use of
certain leased facilities during 2021 and 2020 and recognized lease abandonment charges within our consolidated
statements of operations; however, we are still required to make future payments under the existing lease terms. Refer to
Note 15, "Leases," to our consolidated financial statements for additional discussion of our leases.
Payments of retirement plan obligations include employer commitments to fund our defined benefit and
postretirement plans and do not include estimated future benefit payments to participants expected to be made from
liquidation of the assets in our defined benefit plan trusts. During the year ended December 31, 2020, we contributed
$105.0 million to our largest U.S. pension plan, satisfying all expected contributions for the foreseeable future for this
defined benefit plan. As of December 31, 2021, our defined benefit pension plans had a fair value of the plans’ assets that
exceeded the projected benefit obligation by $1.6 million and our postretirement benefit plan had a projected benefit
obligation that exceeded the fair value of the plans’ assets by $12.6 million. We expect to satisfy these remaining
obligations through investment income from and appreciation in the fair value of plan assets and from future employer
contributions. Refer to Note 10, "Employee Benefit Plans," to our consolidated financial statements for additional
discussion of our employee benefit plans.
The amount of our future contractual obligation to vendors as of December 31, 2021 was not material.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based upon our consolidated
financial statements and related notes, which have been prepared in accordance with GAAP. The preparation of these
financial statements and related notes requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenue, and expenses. Certain of our accounting policies require the application of significant judgment
by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these
judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience,
terms of existing contracts, our evaluation of trends in the industry, information provided by our customers, and
information available from other outside sources, as appropriate. We evaluate our estimates and judgments on an on-
going basis. Our actual results may differ from these estimates. We believe the following are our critical accounting
estimates:
40 |
2021 Form 10-K
Revenue Recognition
Description: We recognize revenue for professional services and cloud subscription services performance
obligations based on an allocation of the total transaction price to each performance obligation using the respective stand-
alone selling prices (“SSP”). This can result in revenue being recognized in an amount that exceeds the amount we are
contractually allowed to bill our customer as of a certain point in time, resulting in the recognition of a contract asset up
until the period at which billings are equal to or exceed revenue recognition. We recognized $160.2 million of cloud
professional services revenue for the year ended December 31, 2021, and the related contract assets were $62.7 million
as of December 31, 2021.
Judgments and Uncertainties: The determination of our stand-alone selling price for the performance obligations
requires us to make assumptions based on market conditions and observable inputs, as well as an estimate of the total
professional service hours expected to be incurred in connection with each customer implementation.
Sensitivity of Estimate to Change: The consideration allocated to professional services performed to activate a
new customer is recognized as professional services revenues based on the proportion of total work performed to date
compared to an estimation of total work expected to complete the implementation project for that customer account. To
the extent this consideration exceeds the customer billings, a contract asset would be recognized. An increase or
decrease in the estimation of total work expected to complete the implementation would impact the amount of
consideration allocated to each of the performance obligations as well as the timing of revenue recognition, as
professional services revenue related to implementation activities is generally recognized at the beginning of the contract.
Business Combinations
Description: We account for business combinations using the acquisition method of accounting. We allocate the
purchase price of an acquired business to the assets acquired and liabilities assumed based upon their estimated fair
values at the acquisition date with the excess recorded as goodwill.
Judgments and Uncertainties: The acquisition method of accounting requires us to make significant estimates and
assumptions regarding the fair value of the acquired assets and liabilities. Fair value of the assets and liabilities acquired
is determined through established valuation techniques, such as the income, cost or market approach. Generally, we use
third-party valuation experts to assist in certain fair value determinations. The fair value measurements of identifiable
intangibles are based on available historical information and expectations and assumptions about the future. Significant
assumptions used to value identifiable intangible assets may include projected revenue growth, discount rates, royalty
rates, customer attrition rates, and other factors.
Determining the useful life of an intangible asset also requires judgment. All acquired assets were determined to
have useful lives.
Sensitivity of Estimate to Change: In 2021, we acquired Ascender, Ideal, DataFuzion, and ADAM HCM for $359.6
million, $41.4 million, $17.9 million, and $34.3 million, respectively, which included the acquisition of $7.1 million of trade
names, $84.1 million of customer relationships, and $78.2 million in developed technology. We utilized third-party
valuation specialists to perform the valuation of certain assets and liabilities acquired for each acquisition.
Trade Names: From the Ascender, Ideal, and ADAM HCM acquisitions, we acquired trade names, which were
determined to have a total fair value of $7.1 million using the relief from royalty method. Key assumptions used to
calculate the fair value of the trade names using this method included revenue projections, royalty rates, and discount
rates.
Customer Relationships: From the Ascender, Ideal, and ADAM HCM acquisitions, we acquired customer
relationships, which were determined to have a total fair value of $84.1 million using the Multi-Period Excess Earnings
Method (“MPEEM”) a form of the income approach, or variations of the MPEEM, such as the distributor method.
Assumptions used in valuing these assets included future earnings projections, customer attrition rates, and discount
rates, among others.
Developed Technology: From the Ascender, Ideal, DataFuzion, and ADAM HCM acquisitions, we acquired
developed technology, which were determined to have a total fair value of $78.2 million using various methods, such as
the relief from royalty method and the MPEEM, including the distributor method. Assumptions used in valuing these
assets included future earnings projections, technology migration factors, royalty rates, tax rates, and discount rates,
among others.
Contingent Consideration: From the DataFuzion acquisition, we recognized contingent consideration, which was
determined to have a total fair value of $5.4 million, using two methods, a scenario-based method ("SBM") and an option
41 |
2021 Form 10-K
pricing model ("OPM"), specifically the Black Scholes Merton model. Key assumptions used in the SMB include possible
outcomes, probability of occurrence, and discount factor. Key assumptions used in the OPM include expected present
value of certain ARR, and volatility.
We believe the estimates applied to the valuations are based on reasonable assumptions, but are inherently
uncertain. As a result, actual results may differ from the assumptions and judgments used to determine the fair value of
the assets acquired, which could result in impairment losses in the future.
Please refer to Note 2, “Summary of Significant Accounting Policies,” for a description of our revenue recognition
and business combination policy and our significant accounting policies.
Recently Issued Accounting Pronouncements
Please refer to Note 2, “Summary of Significant Accounting Policies,” for a full discussion of recent accounting
pronouncements.
Non-GAAP Measures
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
We believe that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin, non-GAAP financial measures, are useful
to management and investors as supplemental measures to evaluate our overall operating performance. Adjusted
EBITDA and Adjusted EBITDA margin are components of our management incentive plan and are used by management
to assess performance and to compare our operating performance to our competitors.
We define EBITDA as net income (loss) before interest, taxes, depreciation, and amortization, and Adjusted EBITDA
as EBITDA, as adjusted to exclude foreign exchange gains (losses), share-based compensation expense and related
employer taxes, severance charges, restructuring consulting fees, and certain other non-recurring items. Adjusted
EBITDA margin is determined by calculating the percentage that Adjusted EBITDA is of total revenue. Management
believes that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are helpful in highlighting management
performance trends because EBITDA, Adjusted EBITDA and Adjusted EBITDA margin exclude the results of decisions
that are outside the control of operating management.
Our presentation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are intended as supplemental
measures of our performance that are not required by, or presented in accordance with, GAAP. EBITDA, Adjusted
EBITDA and Adjusted EBITDA margin should not be considered as alternatives to net income (loss), earnings per share,
or any other performance measures derived in accordance with GAAP, or as measures of operating cash flows or
liquidity. Our presentation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin should not be construed to imply
that our future results will be unaffected by similar items to those eliminated in this presentation. EBITDA, Adjusted
EBITDA and Adjusted EBITDA margin are included in this discussion because they are key metrics used by management
to assess our operating performance.
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not defined under GAAP, are not measures of net
income or any other performance measures derived in accordance with GAAP, and are subject to important limitations.
Our use of the terms EBITDA, Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similarly titled
measures of other companies in our industry and are not measures of performance calculated in accordance with GAAP.
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin have important limitations as analytical tools, and you
should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these
limitations are that Adjusted EBITDA and Adjusted EBITDA margin do not reflect the following:
our cash expenditures or future requirements for capital expenditures or contractual commitments;
changes in, or cash requirements for, our working capital needs;
any charges for the assets being depreciated and amortized that may need to be replaced in the future;
the impact of share-based compensation upon our results of operations;
the significant interest expense or the cash requirements necessary to service interest or principal payments
on our debt;
our income tax expense or the cash requirements to pay our income taxes; and
42 |
2021 Form 10-K
certain other non-recurring items.
In evaluating EBITDA, Adjusted EBITDA and Adjusted EBITDA margin, you should be aware that in the future we
may incur expenses similar to those eliminated in this presentation.
The following table reconciles net loss to EBITDA and Adjusted EBITDA for the periods presented:
Net loss
Interest expense, net
Income tax benefit
Depreciation and amortization
EBITDA
Foreign exchange loss (gain)
Share-based compensation (a)
Severance charges (b)
Restructuring consulting fees (c)
Other non-recurring items (d)
Adjusted EBITDA
Net profit margin (e)
Adjusted EBITDA margin
$
$
Year Ended December 31,
2021
2020
(Dollars in millions)
$
$
(75.4)
35.9
(14.9)
77.5
23.1
9.5
116.8
7.4
16.7
(11.0)
162.5
(7.4)
%
15.9%
(4.0)
25.1
(16.0)
51.8
56.9
(1.0)
68.9
9.7
8.1
16.4
159.0
(0.5)%
18.9%
(a)
(b)
(c)
(d)
(e)
Represents share-based compensation expense and related employer taxes.
Represents costs for severance compensation paid to employees whose positions have been eliminated or who have been terminated not for
cause.
Represents consulting fees and expenses incurred during the periods presented in connection with any acquisition, investment, disposition,
recapitalization, equity offering, issuance or repayment of debt, issuance of equity interests, or refinancing.
Represents (1) impacts of changes to our facilities, resulting in a net gain of $19.1 million during 2021 primarily as a result of the sale of our St.
Petersburg, Florida facility and charges of $16.8 million during 2020 related to the abandonment of certain leased facilities, (2) in 2021 the
difference between the historical five-year average pension expense and the current period actuarially determined pension expense associated
with the planned termination of the frozen U.S. pension plan and related changes in investment strategy associated with protecting the now fully
funded status, (3) the impact of the fair value adjustment for the DataFuzion contingent consideration during 2021, and (4) recovery in 2020 of
duplicate payments associated with the 2019 isolated service incident. Please refer to Note 15, “Leases”, Note 3, “Business Combinations,”, and
Note 16, “Commitments and Contingencies” for further discussion of these items.
Net profit margin is determined by calculating the percentage that net (loss) income is of total revenue.
43 |
2021 Form 10-K
The following tables present a reconciliation of our reported results to our non-GAAP EBITDA and Adjusted EBITDA
basis for all periods presented:
Year Ended December 31, 2021
As reported
Share-based
compensation
Severance
charges
(Dollars in millions)
Other
operating
expenses (a)
Adjusted (b)
Cost of revenue:
Recurring
Professional services and other
Product development and management
Depreciation and amortization
Total cost of revenue
Sales and marketing
General and administrative
Operating (loss) profit
Other expense, net
Depreciation and amortization
EBITDA
Interest expense, net
Income tax (benefit) expense (c)
Depreciation and amortization
Net (loss) income
$
$
$
262.4 $
194.6
134.0
50.9
641.9
218.5
199.3
(35.5)
18.9
77.5
23.1 $
35.9
(14.9)
77.5
(75.4) $
12.9 $
9.5
18.0
—
40.4
13.8
62.6
116.8
—
—
116.8 $
—
—
—
116.8 $
2.0 $
0.2
0.6
—
2.8
1.9
2.7
7.4
—
—
7.4 $
—
—
—
7.4 $
— $
—
—
—
—
—
(2.0)
(2.0)
17.2
—
15.2 $
—
(23.6)
—
(8.4) $
247.5
184.9
115.4
50.9
598.7
202.8
136.0
86.7
1.7
77.5
162.5
35.9
8.7
77.5
40.4
(a)
(b)
(c)
Other operating expenses includes net gain of $19.1 million during 2021 primarily as a result of the sale of our St. Petersburg, Florida facility,
intercompany foreign exchange loss, restructuring consulting fees, the difference between the historical five-year average pension expense and
the current period actuarially determined pension expense associated with the planned termination of the frozen U.S. pension plan and related
changes in investment strategy associated with protecting the now fully funded status, and the impact of the fair value adjustment for the
DataFuzion contingent consideration.
The Adjusted amount is a non-GAAP financial measure.
Income tax effects have been calculated based on the statutory tax rates in effect in the U.S. and foreign jurisdictions during the period.
44 |
2021 Form 10-K
Year Ended December 31, 2020
As reported
Share-based
compensation
Severance
charges
(Dollars in millions)
Other
operating
expenses (a)
Adjusted (b)
Cost of revenue:
Recurring
Professional services and other
Product development and management
Depreciation and amortization
Total cost of revenue
Sales and marketing
General and administrative
Operating profit
Other expense (income), net
Depreciation and amortization
EBITDA
Interest expense, net
Income tax (benefit) expense (c)
Depreciation and amortization
Net (loss) income
$
$
$
213.3 $
163.7
83.7
40.5
501.2
165.6
167.9
7.8
2.7
51.8
56.9 $
25.1
(16.0)
51.8
(4.0) $
6.1 $
3.8
8.7
—
18.6
8.0
42.3
68.9
—
—
68.9 $
—
—
—
68.9 $
1.8 $
0.9
1.5
—
4.2
3.3
2.2
9.7
—
—
9.7 $
—
—
—
9.7 $
— $
—
—
—
—
—
24.5
24.5
(1.0)
—
23.5 $
—
(25.0)
—
(1.5) $
205.4
159.0
73.5
40.5
478.4
154.3
98.9
110.9
3.7
51.8
159.0
25.1
9.0
51.8
73.1
(a)
(b)
(c)
Other operating expenses includes lease abandonment charges, intercompany foreign exchange loss, restructuring consulting fees, and recovery
of duplicate payments associated with the 2019 isolated service incident.
The Adjusted amount is a non-GAAP financial measure.
Income tax effects have been calculated based on the statutory tax rates in effect in the U.S. and foreign jurisdictions during the period.
45 |
2021 Form 10-K
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risks related to foreign currency exchange rates, interest rates, and pension
obligations. We seek to minimize or manage these market risks through normal operating and financing activities.
These market risks may be amplified by events and factors surrounding the COVID-19 pandemic. We do not
trade or use instruments with the objective of earning financial gains on the market fluctuations, nor do we use
instruments where there are not underlying exposures.
Foreign Currency Risk. Our results of operations and cash flows are subject to fluctuations due to changes
in foreign currency exchange rates, particularly changes in the Canadian Dollar. Our exposure to foreign currency
exchange rates has historically been partially hedged as our foreign currency denominated inflows create a
natural hedge against our foreign currency denominated expenses. Accordingly, our results of operations and
cash flows were not materially affected by fluctuation in foreign currency exchange rates, and we believe that a
hypothetical 10% change in foreign currency exchange rates or an inability to access foreign funds would not
materially affect our ability to meet our operational needs or result in a material foreign currency loss in the future.
Due to the relative size of our international operations to date, we have not instituted an active hedging program.
We expect our international operations to continue to grow in the near term, and we are monitoring the foreign
currency exposure to determine if we should begin a hedging program.
Interest Rate Risk. In certain jurisdictions, we collect funds for payment of payroll and taxes; temporarily
hold such funds in segregated accounts until payment is due; remit the funds to the customers’ employees and
appropriate taxing authority; file federal, state and local tax returns; and handle related regulatory correspondence
and amendments. We invest the customer funds in high-quality bank deposits, money market mutual funds,
commercial paper or collateralized short-term investments. We may also invest these funds in government
securities, as well as highly rated asset-backed, mortgage-backed, corporate, and bank securities
Based on current market conditions, portfolio composition, and investment practices, a 100 basis point
increase in market investment rates would result in approximately $23 million of increase in float revenue over the
ensuing twelve month period. In addition, we also have exposure to risks associated with changes in laws and
regulations that may affect customer fund balances. For example, a change in regulations, either reducing the
amount of taxes to be withheld or allowing less time to remit taxes to government authorities, would reduce our
average customer fund balances and float revenue. There are no incremental costs of revenue associated with
changes in float revenue.
We do not enter into investments for trading or speculative purposes. Our cash equivalents and our portfolio
of marketable securities are subject to market risk due to changes in interest rates. Fixed rate securities may have
their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less
income than expected if interest rates fall. Due in part to these factors, our future investment income may fall
short of expectation due to changes in interest rates or we may suffer losses in principal if we are forced to sell
securities that decline in market value due to changes in interest rates. However, because we classify our
securities as “available for sale,” no gains or losses are recognized due to changes in interest rates unless such
securities are sold prior to maturity or declines in fair value are determined to be unrecoverable.
We do not believe that an increase or decrease in interest rates of 100 basis points would have a material
effect on our operating results or financial condition. Fluctuations in the value of our investment securities caused
by a change in interest rates (gains or losses on the carrying value) are recorded in other comprehensive income
and are realized only if we sell the underlying securities.
A 100 basis point increase in the LIBOR rates would result in an approximately $7 million increase in our
interest expense, net over the ensuring twelve-month period. Please refer to Note 9, “Debt,” for additional
information.
46 |
2021 Form 10-K
Pension Obligation Risk. We provide a pension plan for certain current and former U.S. employees that
closed to new participants on January 2, 1995. In 2007, the U.S. pension plan was amended (1) to exclude from
further participation any participant or former participant who was not employed by the company or another
participating employer on January 1, 2008, (2) to discontinue participant contributions, and (3) to freeze the
accrual of additional benefits as of December 31, 2007. In applying relevant accounting policies, we have made
critical estimates related to actuarial assumptions, including assumptions of expected returns on plan assets,
discount rates, and health care cost trends. The cost of pension benefits in future periods will depend on actual
returns on plan assets, assumptions for future periods, contributions, and benefit experience. As of December 31,
2021, the fair value of plan assets exceeded the projected benefit obligation ("PBO") by $1.6 million and therefore
was fully funded. Please refer to Note 10, "Employee Benefit Plans," for additional information.
The effective discount rate used in accounting for pension and other benefit obligations in 2021 ranged from
2.00% to 2.36%. The expected rate of return on plan assets for qualified pension benefits in 2021 was 2.70%.
The following table reflects the estimated sensitivity associated with a change in certain significant actuarial
assumptions (each assumption change is presented mutually exclusive of other assumption changes):
Increase in discount rate
Decrease in discount rate
Increase in return on plan asset
Decrease in return on plan asset
Impact on 2022 Pension Expense
Increase (Decrease)
Change in
Assumption
Pension
Benefits
Post
Retirement
(Dollars in millions)
50 basis points $
50 basis points $
50 basis points $
50 basis points $
0.6 $
(0.6) $
(2.4)
2.4
—
—
N/A
N/A
47 |
2021 Form 10-K
Item 8. Financial Statements and Supplementary Data.
INDEX TO FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS OF CERIDIAN HCM HOLDING INC.
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021, 2020,
and 2019
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2021, 2020, and 2019
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020, and 2019
Notes to Consolidated Financial Statements
Page
52
53
54
55
56
57
48 |
2021 Form 10-K
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Ceridian HCM Holding Inc.:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Ceridian HCM Holding Inc. and subsidiaries
(the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations,
comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period
ended December 31, 2021, and the related notes (collectively, the consolidated financial statements). We also
have audited the Company’s internal control over financial reporting as of December 31, 2021, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S.
generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2021 based on criteria established in Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
The Company acquired Ascender HCM Pty Limited during 2021, and management excluded from its assessment
of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, Ascender
HCM Pty Limited’s internal control over financial reporting associated with consolidated total assets of 5% and
consolidated total revenue of 7% included in the consolidated financial statements of the Company as of and for
the year ended December 31, 2021. Our audit of internal control over financial reporting of the Company also
excluded an evaluation of the internal control over financial reporting of Ascender HCM Pty Limited.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying Management's Report on Internal Control over Financial
Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an
opinion on the Company’s internal control over financial reporting based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and
are required to be independent with respect to the Company in 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 audits to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement, whether due to error or fraud, and whether effective internal control over financial
reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated 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 consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. Our audit of internal control over financial reporting included
obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
49 |
2021 Form 10-K
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely 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 of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the
consolidated financial statements that were communicated or required to be communicated to the audit
committee and that: (1) relate to accounts or disclosures that are material to the consolidated 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 on the consolidated financial statements, taken as a whole, and we
are not, by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
Stand-alone selling price of cloud professional services
The Company recognized $160.2 million of cloud professional services revenue for the year ended December 31,
2021, and the related contract assets were $62.7 million as of December 31, 2021. As discussed in Note 2 to the
consolidated financial statements, the Company’s cloud service arrangements include professional services
revenue for the implementation of new customers or customer migrations, followed by access to the Company’s
hosted payroll processing solution. Revenue recognized for the professional services and payroll processing
performance obligations is based on an allocation of the total transaction price to each performance obligation
using their respective stand-alone selling prices. This results in revenue being recognized in an amount that
exceeds the amount the Company is contractually allowed to bill their customer, resulting in the recognition of a
contract asset. The determination of the stand-alone selling price for the performance obligations requires the
Company to make assumptions based on market conditions and observable inputs, as well as an estimate of the
total professional service hours expected to be incurred in connection with the implementation.
We identified the assessment of the Company’s total estimated professional services hours expected to be
incurred when determining the stand-alone selling price of the cloud professional services performance obligation
for implementation as a critical audit matter. The testing of the professional services hours assumption required a
higher degree of auditor subjectivity as the assumption is internally-developed and there is no observable market
information.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the
design and tested the operating effectiveness of certain internal controls related to the critical audit matter. This
included a control related to the Company’s process for estimating the total professional services hours expected
to be incurred in determining the estimated selling price of the cloud professional services performance obligation,
as well as internal controls related to the ongoing monitoring and accounting for changes to the total estimated
professional services hours during the implementation phase. For a sample of contracts, we evaluated the
Company’s ability to accurately estimate the total hours expected to be incurred for the professional services
performance obligation by comparing the estimated hours to the actual hours incurred. For a sample of contracts,
we inquired of the project manager regarding the estimation of the total hours to be incurred and compared the
project manager’s estimate to the Company’s revenue model used to determine the estimated selling price of the
cloud professional services performance obligation for implementation.
Acquisition-date fair value of customer relationships intangible asset
As discussed in Note 3 to the consolidated financial statements, on March 1, 2021, the Company completed the
purchase of 100% of the outstanding shares of Ascender HCM Pty Limited for a purchase price of $359.6 million
(the “Transaction”). The Company records all assets and liabilities, including intangible assets, acquired in a
50 |
2021 Form 10-K
business combination at fair value. The Company acquired various intangible assets in the Transaction, including
a customer relationships intangible asset associated with the generation of future income from existing
customers. The acquisition-date fair value for this asset was $76.5 million.
We identified the evaluation of the acquisition-date fair value of the customer relationships intangible asset as a
critical audit matter. There was a higher degree of subjective auditor judgment in evaluating forecasted EBITDA
margins used in the fair value measurement of the customer relationships intangible asset.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the
design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-
date valuation process, including a control related to management’s assessment of the forecasted EBITDA
margins. To assess the forecasted EBITDA margins used in the valuation, we compared the forecasted EBITDA
margins to Ascender HCM Pty Limited’s historical results and EBITDA margins of comparable companies. In
addition, we performed sensitivity analyses over the acquisition-date fair value of the customer relationships
intangible asset by considering reasonably possible changes to forecasted EBITDA margins and comparing the
results to the Company’s fair value estimate.
/s/ KPMG LLP
We have served as the Company’s auditor since 1958.e Company’s auditor since 1958.
Minneapolis, Minnesota
February 25, 2022
51 |
2021 Form 10-K
Ceridian HCM Holding Inc.
Consolidated Balance Sheets
ASSETS
Current assets:
Cash and equivalents
Restricted cash
Trade and other receivables, net
Prepaid expenses and other current assets
Total current assets before customer funds
Customer funds
Total current assets
Right of use lease asset
Property, plant, and equipment, net
Goodwill
Other intangible assets, net
Other assets
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
Current portion of long-term lease liabilities
Accounts payable
Deferred revenue
Employee compensation and benefits
Other accrued expenses
Total current liabilities before customer funds obligations
Customer funds obligations
Total current liabilities
Long-term debt, less current portion
Employee benefit plans
Long-term lease liabilities, less current portion
Other liabilities
Total liabilities
Commitments and contingencies (Note 16)
Stockholders’ equity:
Common stock, $0.01 par, 500,000,000 shares authorized, 151,995,031 and
148,571,412 shares issued and outstanding, respectively
Additional paid in capital
Accumulated deficit
Accumulated other comprehensive loss
Total stockholders’ equity
Total liabilities and equity
December 31,
2021
2020
(Dollars in millions, except share data)
$
$
$
$
$
$
$
367.5
1.9
146.3
92.6
608.3
3,535.8
4,144.1
29.4
128.2
2,323.6
332.5
208.4
7,166.2
8.3
11.3
51.7
48.7
77.3
24.7
222.0
3,519.9
3,741.9
1,124.4
20.7
32.7
19.0
4,938.7
188.2
—
101.1
73.9
363.2
3,759.4
4,122.6
27.9
136.4
2,031.8
195.0
187.6
6,701.3
7.2
10.5
38.9
24.4
64.6
20.5
166.1
3,697.8
3,863.9
660.6
24.4
33.6
20.6
4,603.1
1.5
2,860.0
(309.2)
(324.8)
2,227.5
7,166.2
$
1.5
2,606.5
(233.8)
(276.0)
2,098.2
6,701.3
See accompanying notes to consolidated financial statements.
52 |
2021 Form 10-K
Ceridian HCM Holding Inc.
Consolidated Statements of Operations
Year Ended December 31,
2020
(Dollars in millions, except share and per share data)
2019
2021
Revenue:
Recurring
Professional services and other
Total revenue
Cost of revenue:
Recurring
Professional services and other
Product development and management
Depreciation and amortization
Total cost of revenue
Gross profit
Selling, general and administrative
Operating (loss) profit
Interest expense, net
Other expense, net
(Loss) income before income taxes
Income tax benefit
Net (loss) income
Net (loss) income per share:
Basic
Diluted
Weighted-average shares outstanding:
Basic
Diluted
$
$
$
$
850.7 $
173.5
1,024.2
690.2 $
152.3
842.5
262.4
194.6
134.0
50.9
641.9
382.3
417.8
(35.5)
35.9
18.9
(90.3)
(14.9)
(75.4) $
(0.50) $
(0.50) $
213.3
163.7
83.7
40.5
501.2
341.3
333.5
7.8
25.1
2.7
(20.0)
(16.0)
(4.0) $
(0.03) $
(0.03) $
680.1
144.0
824.1
201.8
149.8
67.9
36.4
455.9
368.2
295.9
72.3
32.4
5.6
34.3
(44.4)
78.7
0.55
0.53
150,402,321
150,402,321
146,774,471
146,774,471
142,049,112
148,756,592
See accompanying notes to consolidated financial statements.
53 |
2021 Form 10-K
Ceridian HCM Holding Inc.
Consolidated Statements of Comprehensive Income (Loss)
Net (loss) income
Items of other comprehensive (loss) income before income
taxes:
Change in foreign currency translation adjustment
Change in unrealized (loss) gain from invested customer funds
Change in pension liability adjustment (1)
Other comprehensive (loss) income before income taxes
Income tax (benefit) expense, net
Other comprehensive (loss) income after income taxes
Comprehensive (loss) income
2021
Year Ended December 31,
2020
(Dollars in millions)
2019
$
(75.4) $
(4.0) $
78.7
(17.6)
(48.4)
6.0
(60.0)
(11.2)
(48.8)
(124.2) $
$
18.7
38.4
21.2
78.3
15.9
62.4
58.4
$
29.1
37.7
9.8
76.6
12.0
64.6
143.3
(1)
The amount of the pension liability adjustment recognized in the consolidated statements of operations within other expense, net was
$15.1 million, $13.2 million, and $10.1 million during the years ended December 31, 2021, 2020, and 2019, respectively.
See accompanying notes to consolidated financial statements.
54 |
2021 Form 10-K
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5
5
Ceridian HCM Holding Inc.
Consolidated Statements of Cash Flows
2021
Year Ended December 31,
2020
(Dollars in millions)
2019
$
(75.4) $
(4.0)
$
78.7
Net (loss) income
Adjustments to reconcile net (loss) income to net cash provided by (used in)
operating activities:
Deferred income tax benefit
Depreciation and amortization
Amortization of debt issuance costs and debt discount
Lease abandonment costs
Net periodic pension and postretirement cost
Provision for doubtful accounts
Share-based compensation
Gain on sale of assets
Change in fair value of contingent consideration
Other
Changes in operating assets and liabilities excluding effects of acquisitions and
divestitures:
Trade and other receivables
Prepaid expenses and other current assets
Accounts payable and other accrued expenses
Deferred revenue
Employee compensation and benefits
Accrued interest
Accrued taxes
Other assets and liabilities
Net cash provided by (used in) operating activities
Cash Flows from Investing Activities
Purchase of customer funds marketable securities
Proceeds from sale and maturity of customer funds marketable securities
Expenditures for property, plant, and equipment
Expenditures for software and technology
Net proceeds from sale of assets
Acquisition costs, net of cash and restricted cash acquired
Net cash (used in) provided by investing activities
Cash Flows from Financing Activities
(Decrease) increase in customer funds obligations, net
Repayment of long-term debt obligations
Proceeds from revolving credit facility
Repayment of revolving credit facility
Proceeds from issuance of common stock under share-based compensation
plans
Proceeds from issuance of convertible senior notes, net of issuance costs
Purchases of capped calls related to convertible senior notes
Payment of debt refinancing costs
Net cash provided by financing activities
Effect of exchange rate changes on cash, restricted cash, and equivalents
Net (decrease) increase in cash and equivalents
Cash, restricted cash, and equivalents at beginning of year
Cash, restricted cash, and equivalents at end of year
Reconciliation of cash, restricted cash, and equivalents to the
consolidated balance sheets
Cash and equivalents
Restricted cash
Restricted cash and equivalents included in customer funds
Total cash, restricted cash, and equivalents
Supplemental Cash Flow Information:
Cash paid for interest
Cash paid for income taxes
Cash received from income tax refunds
$
$
$
$
(38.5)
77.5
16.9
2.9
8.8
1.8
113.4
(19.1)
0.6
0.9
(34.8)
(12.3)
9.3
5.5
2.3
0.4
0.4
(11.8)
48.8
(763.8)
488.0
(11.5)
(52.2)
37.9
(409.5)
(711.1)
(195.7)
(7.8)
295.0
(295.0)
95.4
561.8
(45.0)
(1.2)
407.5
(20.9)
(275.7)
2,228.5
1,952.8
367.5
1.9
1,583.4
1,952.8
19.1
33.4
3.3
$
$
$
$
(7.0)
51.8
1.2
16.8
3.3
2.0
65.8
—
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(12.0)
(6.8)
(1.4)
(1.2)
(104.0)
—
(3.7)
(32.0)
(30.2)
(212.4)
369.3
(18.1)
(41.7)
—
(58.3)
38.8
483.6
(10.0)
295.0
(295.0)
91.7
—
—
—
565.3
(4.0)
569.9
1,658.6
2,228.5
188.2
—
2,040.3
2,228.5
26.7
4.2
9.6
$
$
$
$
(69.4)
57.1
1.2
—
5.2
3.2
36.5
—
—
(0.4)
(16.4)
(8.0)
3.8
0.8
(11.1)
—
(11.1)
(19.5)
50.6
(408.4)
374.5
(16.3)
(38.9)
—
(30.2)
(119.3)
529.9
(7.2)
—
—
87.0
—
—
—
609.7
11.3
552.3
1,106.3
1,658.6
281.3
—
1,377.3
1,658.6
37.4
36.2
0.3
See accompanying notes to consolidated financial statements.
56 |
2021 Form 10-K
Ceridian HCM Holding Inc.
Notes to Consolidated Financial Statements
1. Organization
Ceridian HCM Holding Inc. and its subsidiaries (also referred to in this report as “Ceridian,” “we,” “our,” and
“us”) offer a broad range of services and software designed to help employers more effectively manage
employment processes, such as payroll, payroll-related tax filing, human resource information systems, employee
self-service, time and labor management, and recruitment and applicant screening. Our technology-based
services are typically provided through long-term customer relationships that result in a high level of recurring
revenue. While we operate in 18 countries globally, our operations are primarily located in the United States and
Canada.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States (“GAAP”). The accompanying consolidated financial statements
include the operations and accounts of Ceridian and all subsidiaries, as well as any variable interest entity (“VIE”)
in which we have controlling financial interest. All intercompany balances and transactions have been eliminated
from our consolidated financial statements.
We consolidate the grantor trusts that hold funds provided by our payroll and tax filing customers pending
remittance to employees of those customers or tax authorities in the United States and Canada, although
Ceridian does not own the grantor trusts. Under consolidation accounting, the enterprise with a controlling
financial interest consolidates a VIE. A controlling financial interest in an entity is determined through analysis that
identifies the primary beneficiary which has (1) the power to direct the activities of a VIE that most significantly
impact the entity’s economic performance and (2) the obligation to absorb losses of the entity that could
potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be
significant to the VIE. In addition, ongoing reassessments must be performed to confirm whether an enterprise is
the primary beneficiary of a VIE. The grantor trusts are VIEs, and we are deemed to have a controlling financial
interest as the primary beneficiary. Please refer to Note 5, “Customer Funds,” for further information on our
accounting for these funds.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of our financial statements and our reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Estimates that could significantly affect our
results of operations or financial condition include the assignment of fair values to goodwill and other intangible
assets and testing for impairment; the testing of impairment of long-lived assets; the determination of our liability
for pensions and postretirement benefits; the determination of fair value of equity awards granted; and the
resolution of tax matters and legal contingencies. Further discussion on these estimates can be found in related
disclosures elsewhere in our notes to the consolidated financial statements.
Cash and Equivalents
As of December 31, 2021 and 2020, cash and equivalents were comprised of cash held in bank accounts
and investments with an original maturity of three months or less.
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2021 Form 10-K
Concentrations
Cash deposits of client and corporate funds are maintained primarily in large credit-worthy financial
institutions in the countries in which we operate. These deposits may exceed the amount of any deposit insurance
that may be available through government agencies. All deliverable securities are held in custody with large
credit-worthy financial institutions, which bear the risk of custodial loss. Non-deliverable securities, primarily
money market securities, are held in custody by large, credit-worthy broker-dealers and financial institutions.
Trade and Other Receivables, Net
Trade and other receivables balances are presented on the consolidated balance sheets net of the
allowance for doubtful accounts of $3.9 million and $3.1 million and the reserve for sales adjustments of $4.0
million and $4.4 million as of December 31, 2021, and 2020, respectively. We experience credit losses on
accounts receivable and, accordingly, must make estimates related to the ultimate collection of the receivables.
Specifically, management analyzes accounts receivable, historical bad debt experience, customer concentrations,
customer creditworthiness, and current economic trends when evaluating the adequacy of the allowance for
doubtful accounts. We estimate the reserve for sales adjustment based on historical sales adjustment experience.
We write off accounts receivable when we determine that the accounts are uncollectible, generally upon customer
bankruptcy or the customer’s nonresponse to continued collection efforts.
Property, Plant, and Equipment, Net
Our property, plant, and equipment assets are stated at cost less accumulated depreciation. Depreciation is
calculated on a straight-line basis over the shorter of the remaining lease term or estimated useful life of the
related assets, which are generally as follows:
Buildings
Building improvements
Machinery and equipment
Computer equipment
40 years
5 years
4-6 years
3-4 years
Repairs and maintenance costs are expensed as incurred. We capitalized interest of $0.4 million and $0.5
million in property, plant, and equipment, net during the years ended December 31, 2021 and 2020, respectively.
Property, plant, and equipment assets are assessed for impairment as described under the heading “Impairment
of Long-Lived Assets” below.
Business Combinations
In accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, we use
the acquisition method of accounting and allocate the fair value of purchase consideration to the assets acquired
and liabilities assumed based on their respective estimated fair values as of the acquisition date. Goodwill
represents the excess of purchase consideration transferred over the estimated fair value of the identifiable net
assets acquired in a business combination.
Assigning estimated fair values to the net assets acquired requires the use of significant estimates,
judgments, inputs, and assumptions regarding the fair value of the assets acquired and liabilities assumed.
Estimated fair values of assets acquired and liabilities assumed are generally based on available historical
information, independent valuations or appraisals, future expectations, and assumptions determined to be
reasonable but are inherently uncertain with respect to future events, including economic conditions, competition,
the useful life of the acquired assets, and other factors. We may refine the estimated fair values of assets
acquired and liabilities assumed, if necessary, over a period not to exceed one year from the date of acquisition.
The judgments made in determining the estimated fair value assigned to assets acquired and liabilities assumed,
as well as the estimated useful life and depreciation or amortization method of each asset, can materially impact
the net earnings of the periods subsequent to the acquisition through depreciation and amortization, and in certain
instances through impairment charges, if the asset becomes impaired in the future. During the measurement
period, any purchase price allocation changes that impact the carrying value of goodwill affects any measurement
of goodwill impairment taken during the measurement period, if applicable. If necessary, purchase price allocation
revisions that occur outside of the measurement period are recorded within our consolidated statement of
operations depending on the nature of the adjustment.
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2021 Form 10-K
Refer to Note 3, “Business Combinations”, for additional information regarding our accounting for recent
business combinations.
Goodwill and Intangible Assets
Goodwill, which represents the excess purchase price over the fair value of net assets of businesses
acquired, is assigned to reporting units based on the benefits derived from the acquisition. Goodwill and
indefinite-lived intangibles are not amortized against earnings, but instead are subject to impairment review on at
least an annual basis. We perform our annual assessment of goodwill and indefinite-lived intangible balances as
of October 1 of each year.
We assess goodwill impairment risk by comparing the fair value of the net assets with the carrying amount
of the reporting unit. We determine the fair value of the reporting unit based on our market capitalization at the
testing date. If the carrying amount of the goodwill exceeds the fair value of the reporting unit, goodwill may be
impaired. To the extent that the carrying amount of the reporting unit exceeds the fair value of the reporting unit,
an impairment loss is recognized.
Intangible assets represent amounts assigned to specifically identifiable intangible assets at the time of an
acquisition. Definite-lived assets are amortized on a straight-line basis generally over the following periods:
Customer lists and relationships
Trade name
Technology
4-12 years
3-5 years
3-5 years
Indefinite-lived intangible assets, which consist of trade names, are tested for impairment on an annual
basis, or more frequently if certain events or circumstances occur that could indicate impairment. When
evaluating whether the indefinite-lived intangible assets are impaired, we first perform a qualitative review. If the
qualitative assessment indicates it is more likely than not the fair value of an indefinite-lived intangible asset is
less than the carrying amount, a quantitative test is applied and, the carrying amount is compared to its estimated
fair value. The estimate of fair value is based on a relief from royalty method which calculates the cost savings
associated with owning rather than licensing the trade name. An estimated royalty rate is applied to forecasted
revenue and the resulting cash flows are discounted. Definite-lived assets are assessed for impairment as
described under the heading “Impairment of Long-Lived Assets” below.
Internally Developed Software Costs
In accordance with ASC Topic 350, we capitalize costs associated with software developed or obtained for
internal use when both the preliminary project stage is completed and our management has authorized further
funding for the project, which it deems probable of completion. Capitalized software costs include only: (1)
external direct costs of materials and services consumed in developing or obtaining the software; (2) payroll and
payroll-related costs for employees who are directly associated with and who devote time to the project; and (3)
interest costs incurred while developing the software. Capitalization of these costs ceases no later than the point
at which the project is substantially complete and ready for its intended purpose. We do not include general and
administrative costs and overhead costs in capitalizable costs. Research and development costs, product
management, and other software maintenance costs related to software development are expensed as incurred.
We had capitalized software costs, net of accumulated amortization, of $92.8 million and $78.7 million as of
December 31, 2021, and 2020, respectively, included in property, plant, and equipment, net in the accompanying
consolidated balance sheets. We amortize software costs on a straight-line basis over the expected life of the
software, generally a range of two to seven years. Amortization of software costs totaled $37.0 million, $30.6
million, and $28.3 million for the years ended December 31, 2021, 2020, and 2019, respectively.
Impairment of Long-Lived Assets
Long-lived assets, such as property, plant, and equipment, capitalized software, and definite-lived intangible
assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset group may not be recoverable. Recoverability of asset groups to be held and used is
measured by a comparison of the carrying amount of an asset group to the estimated undiscounted future cash
flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its
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2021 Form 10-K
estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of
the asset group exceeds the fair value of the asset group.
Deferred Costs
Deferred costs primarily consist of deferred sales commissions. Sales commissions paid based on the
annual contract value of a signed customer contract are considered incremental and recoverable costs of
obtaining a contract with a customer. Sales commissions paid based on the annual contract value are deferred
and then amortized on a straight-line basis over a period of benefit that we have determined to be five years.
Deferred costs included within Other assets on our consolidated balance sheets were $144.5 million and
$132.9 million as of December 31, 2021 and 2020, respectively. Amortization expense for the deferred costs was
$46.4 million, $38.8 million, and $32.2 million for the years ended December 31, 2021, 2020, and 2019,
respectively.
Revenue Recognition
The core principle of ASC Topic 606 is that revenue is recognized upon transfer of control of promised
products or services to customers in an amount that reflects the consideration we expect to receive in exchange
for those products or services. In accordance with ASC Topic 606, we perform the following steps to determine
revenue to be recognized:
1)
2)
Identify the contract(s) with a customer;
Identify the performance obligations in the contract;
3) Determine the transaction price;
4) Allocate the transaction price to the performance obligations in the contract; and
5) Recognize revenue when (or as) we satisfy a performance obligation.
The significant majority of our two major revenue sources (recurring and professional services and other)
are derived from contracts with customers. Recurring revenues are primarily related to our cloud subscription
performance obligations. Professional services and other revenues are primarily related to professional services
for our cloud customers (including implementation services to activate new accounts, as well as post go-live
professional services typically billed on a time and materials basis) and, to a much lesser extent, fees for other
non-recurring services, including sales of time clocks and certain client reimbursable out-of-pocket expenses.
Fees charged to cloud subscription performance obligations are generally priced either on a per-employee, per-
month (“PEPM”) basis for a given month or on a per-employee, per-process basis for a given process; and fees
charged for professional services are typically priced on a fixed fee basis for activating new accounts and on a
time and materials basis for post go-live professional services. There is typically no variable consideration related
to our recurring cloud subscriptions or our activation services, nor do they include a significant financing
component, non-cash consideration, or consideration payable to a customer. Our recurring cloud subscriptions
are typically billed one month in advance while our professional services are billed over the implementation period
for activation of new accounts and as work is performed for post go-live professional services.
Our cloud services arrangements include multiple performance obligations, and transaction price allocations
are based on the stand-alone selling price ("SSP") for each performance obligation. Our contract renewal rates
serve as an observable input to establish SSP for our recurring cloud subscription performance obligations. The
SSP for professional services performance obligations is estimated based on market conditions and observable
inputs, including rates charged by third parties to perform implementation services.
For our performance obligations, the consideration allocated to cloud subscription revenues is recognized as
recurring revenues, typically commencing when an instance is provisioned to the customer. The consideration
allocated to professional services to activate a new account is recognized as professional services revenues
based on the proportion of total work performed, using reasonably dependable estimates (in relation to
progression through the implementation phase), by solution.
Recurring Revenues
For our Dayforce solutions, we primarily charge monthly recurring fees on a per employee, per month
(“PEPM”) basis, generally one-month in advance of service, based on the number and type of solutions provided
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2021 Form 10-K
to the customer and the number of employees at the customer. We charge Powerpay customers monthly
recurring fees on a per-employee, per-process basis. For our Bureau solutions, we typically charge monthly
recurring fees on a per-process basis. The typical recurring customer contract has an initial term between three
and five years. Any credits related to service level commitments are recognized as incurred, as service level
failures are not anticipated at contract signing. Should a customer cancel the initial contract, an early termination
fee may be applicable, and revenue is recognized upon collection. We also generate recurring revenue from
investment income on our Cloud and Bureau customer funds before such funds are remitted to taxing authorities,
customer employees, or other third parties. We refer to this investment income as float revenue. Please refer to
Note 12, “Revenue,” for a full description of our sources of revenue.
Professional Services and Other Revenues
Professional services and other revenues consist primarily of charges relating to the work performed to
assist customers with the planning, design, and implementation of their solutions. Also included in professional
services are any related training services, post-implementation professional services, and shipment of time clocks
purchased by customers. We also generate professional services and other revenues from custom professional
services and consulting services that we provide and for certain third-party services that we arrange for our
Bureau customers. Professional services revenue is primarily recognized as hours are incurred.
Costs and Expenses
Cost of Revenue
Cost of revenue consists of costs to deliver our revenue-producing services. Most of these costs are
recognized as incurred, that is, as we become obligated to pay for them. Some costs of revenue are recognized in
the period that a service is sold and delivered. Other costs of revenue are recognized over the period of use or in
proportion to the related revenue.
The costs recognized as incurred consist primarily of customer service staff costs, customer technical
support costs, implementation personnel costs, costs of hosting applications, consulting and purchased services,
delivery services, and royalties. The costs of revenue recognized over the period of use are depreciation and
amortization, rentals of facilities and equipment, and direct and incremental costs associated with deferred
implementation service revenue.
Cost of recurring revenues primarily consists of costs to provide maintenance and technical support to our
customers, and the costs of hosting our applications. The cost of recurring revenues includes compensation and
other employee-related expenses for data center staff, payments to outside service providers, data center, and
networking expenses.
Cost of professional services and other revenues primarily consists of costs to provide implementation
consulting services and training to our customers, as well as the cost of time clocks. Costs to provide
implementation consulting services include compensation and other employee-related expenses for professional
services staff, costs of subcontractors, and travel.
Product development and management expense includes costs related to software development activities
that do not qualify for capitalization, such as development, quality assurance, testing of new technologies, and
enhancements to our existing solutions that do not result in additional functionality. Product development and
management expense also includes costs related to the management of our solutions. Research and
development expense, which is included within product development and management expense, was $81.1
million, $39.6 million, and $34.1 million for the years ended December 31, 2021, 2020, and 2019, respectively.
Depreciation and amortization related to cost of revenue primarily consists of amortization of capitalized
software.
Selling, General, and Administrative Expense
Selling expense includes costs related to maintaining a direct marketing infrastructure and sales force and
other direct marketing efforts, such as marketing events, advertising, telemarketing, direct mail, and trade shows.
Advertising costs are expensed as incurred. Advertising expense was $7.5 million, $5.5 million, and $5.4 million
for the years ended December 31, 2021, 2020, and 2019, respectively.
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2021 Form 10-K
General and administrative expense includes costs that are not directly related to delivery of services,
selling efforts, or product development, primarily consisting of corporate-level costs, such as administration,
finance, legal, and human resources. Also included in this category are depreciation, and amortization of other
intangible assets not reflected in cost of revenue, and the provision for doubtful accounts receivable.
Other Expense (Income), Net
Other expense (income), net includes the results of transactions that are not appropriately classified in
another category. These items are primarily foreign currency translation gains and losses resulting from
transactions denominated in foreign currencies and net periodic pension costs.
Income Taxes
Income taxes have been provided for using the asset and liability method. Deferred tax assets and liabilities
are recorded for temporary differences between the financial reporting basis and the tax basis of assets and
liabilities as adjusted for the expected benefits of utilizing net operating loss carryforwards. The impact on
deferred taxes of changes in tax rates and laws, if any, applied to the years during which temporary differences
are expected to be settled, is reflected in the consolidated financial statements in the period of enactment.
We classify interest and penalties related to income taxes as a component of income tax expense (benefit).
Fair Value of Financial Instruments
The carrying amounts of cash and equivalents, trade and other receivables, net, customer funds obligations,
customer advance payments, and accounts payable approximate fair value because of the short-term nature of
these items.
Share-Based Compensation
Our employees participate in share-based compensation plans. Under the fair value recognition provisions
of share-based compensation accounting, we measure share-based compensation cost at the grant date based
on the fair value of the award and recognize the compensation expense over the requisite service period, which is
the period during which an employee is required to provide services in exchange for the award.
We use the Black-Scholes standard option pricing model (“Black-Scholes model”) to determine the fair value
of stock awards with term-based vesting conditions. The determination of the fair value of the awards on the date
of grant using the Black-Scholes model is affected by the value of our common stock as well as other inputs and
assumptions described below.
If factors change and we employ different assumptions for estimating share-based compensation expense in
future periods or if we adopt a different valuation model, future periods may differ significantly from what we have
recorded in the current period and could materially affect our operating results.
To determine the fair value of both term- and certain performance-based stock awards, the risk-free interest
rate used was based on the implied yield currently available on U.S. Treasury zero coupon issues with remaining
term equal to the contractual term of the performance-based options and the expected term of the term-based
awards. Given our limited history as a public company, the estimated volatility of our common stock is based on
volatility data for selected comparable public companies over the expected term of our stock awards. Because we
do not anticipate paying any cash dividends in the foreseeable future, we use an expected dividend yield of zero.
The amount of share-based compensation expense we recognize during a period is based on the portion of the
awards that are ultimately expected to vest.
For performance-based stock options with a market condition, a Monte Carlo simulation model is used to
determine the fair value. The Monte Carlo model utilizes multiple input variables that determine the probability of
satisfying the market conditions stipulated in the award.
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2021 Form 10-K
We estimate option forfeitures at the time of grant and revise those estimates in subsequent periods if actual
forfeitures differ from those estimates. We analyze historical data to estimate pre-vesting forfeitures and record
share-based compensation expense for those awards expected to vest. We recognize term-based stock
compensation expense using the straight-line method.
Pension and Other Postretirement Benefits Liability
We present information about our pension and postretirement benefit plans in Note 10, “Employee Benefit
Plans” to our consolidated financial statements. Liabilities and expenses for pensions and other postretirement
benefits are determined with the assistance of third-party actuaries, using actuarial methodologies and
incorporating significant assumptions, including the rate used to discount the future estimated liability, the long-
term rate of return on plan assets, and several assumptions relating to the employee workforce (medical costs,
retirement age, and mortality). The discount rate assumption utilizes a full yield curve approach by applying the
specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant
projected cash flows. The impact of a change in the discount rate of 25 basis points would be approximately $11
million on the liabilities and $0.2 million on pre-tax earnings in the following year. The long-term rate of return is
estimated by considering historical returns and expected returns on current and projected asset allocations and is
generally applied to a five-year average market value of assets. A change in the assumption for the long-term rate
of return on plan assets of 25 basis points would impact pre-tax earnings by approximately $1 million.
Foreign Currency Translation
We have international operations whereby the local currencies serve as functional currencies. We translate
foreign currency denominated assets and liabilities at the end-of-period exchange rates and foreign currency
denominated statements of operations at the average exchange rates for each period. We report the effect of
changes in the U.S. dollar carrying values of assets and liabilities of our international subsidiaries that are due to
changes in exchange rates between the U.S. dollar and the subsidiaries’ functional currency as foreign currency
translation within accumulated other comprehensive income (loss) in the accompanying consolidated statements
of stockholders’ equity and comprehensive income (loss). Gains and losses from transactions and translation of
assets and liabilities denominated in currencies other than the functional currency of the subsidiaries are recorded
in the consolidated statements of operations within other expense (income), net.
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2021 Form 10-K
Recently Issued and Adopted Accounting Pronouncements
Issuance
Date
December
2019
October
2021
Standard
Accounting Standards
Update ("ASU") 2019-12,
Income Taxes (Topic 740)
ASU 2021-08, Business
Combinations (Topic 805):
Accounting for Contract
Assets and Contract
Liabilities from Contracts
with Customers
Description
These amendments simplify the accounting for
income taxes, eliminates certain exceptions to
the general principles in Topic 740 and clarifies
certain aspects of the current guidance to
improve consistent application among reporting
entities.
This amendment requires an acquirer to
account for revenue contracts acquired in a
business combination in accordance with Topic
606, Revenue From Contracts with Customers,
as if it had originated the contracts.
ASU 2018-14,
Compensation -
Retirement Benefits -
Defined Benefit Plans -
General (Subtopic 715-
20), Disclosure Framework
- Changes to the
Disclosure Requirements
for Defined Benefit Plans
ASU 2016-13, Financial
Instruments - Credit
Losses (Topic 326),
Measurement of Credit
Losses on Financial
Statements
ASU 2020-06, Debt - Debt
with Conversion and Other
Options (Subtopic 470-20)
and Derivatives and
Hedging - Contracts in
Entity's Own Equity
(Subtopic 815-40)
August
2018
This amendment modifies the disclosure
requirements for employers that sponsor
defined benefit pension or other postretirement
plans. Additionally, it removes disclosures that
are no longer considered cost beneficial, adds
disclosures identified as relevant, and clarifies
certain specific requirements of disclosures to
improve the effectiveness of disclosures in the
notes to the financial statements.
June 2016 This amendment replaces the incurred loss
August
2020
impairment methodology in current GAAP with a
methodology that reflects expected credit losses
on instruments within its scope, including trade
receivables. This is intended to provide financial
statement users with more decision-useful
information about the expected credit losses.
This amendment simplifies the accounting for
convertible instruments by removing certain
separation models required under current GAAP
for (1) convertible debt with a cash conversion
feature and (2) convertible instruments with a
beneficial conversion feature. As a result, a
convertible debt instrument will be accounted for
as a single liability measured at its amortized
cost.
ASU 2020-04, Reference
Rate Reform (Topic 848):
Facilitation of the Effects
of Reference Rate Reform
on Financial Reporting
March
2020
Not yet
adopted
This amendment provides optional expedients
and exceptions for applying GAAP to contracts,
hedging relationships, and other transactions
affected by reference rate reform if certain
criteria are met. The amendments apply only to
contracts, hedging relationships, and other
transactions that reference LIBOR or another
reference rate expected to be discontinued
because of reference rate reform.
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2021 Form 10-K
Adoption
Date
January
2021
October
2021
January
2020
Effect on the Financial Statements
The adoption of this standard did not
have a significant impact on our
financial statements.
The adoption of this standard resulted
in an increase to deferred revenue on
Ascender's opening balance sheet of
$2.7 million and Ideal's opening
balance sheet of $0.2 million.
Additionally, the adoption resulted in
the recognition of $2.8 million of
revenue in the consolidated
statements of operations for the
twelve months ended December 31,
2021.
The adoption of this standard did not
have a significant impact on our
annual defined benefit plan and other
postretirement plan disclosures.
January
2020
The adoption of this standard did not
have a significant impact on our
financial statements.
January
2022
We plan to adopt the guidance as of
January 1, 2022, using the modified
retrospective method of transition.
The adoption will result in the
elimination of the debt discount (and
related deferred tax liability) that was
recorded within equity related to our
Convertible Senior Notes. The net
impact of the adjustments will be
recorded to the opening balance of
retained earnings and additional paid
in capital. Preliminarily, we expect the
impact to the consolidated balance
sheet as follows: (1) increase of $92.9
million to long-term debt, (2) decrease
of $77.7 million to additional paid-in
capital, net of allocated issuance
costs of $2.7 million and deferred tax
impact of $28.2 million, and (3)
increase to retained earnings of $13.6
million.
This amendment may be elected over
time through December 31, 2022 as
reference rate reform activities occur.
We do not expect the adoption of this
guidance to have a significant impact
on our financial statements.
3. Business Combinations
Ascender
On March 1, 2021, we completed the purchase of 100% of the outstanding shares of Ascender HCM Pty
Limited (“Ascender”) for $359.6 million. Ascender is a payroll and human resources solutions provider in the Asia
Pacific Japan ("APJ") region. We entered into a forward foreign currency contract to hedge the purchase price for
the Ascender acquisition which was denominated in Australian dollars, resulting in the recognition of a realized
gain of $4.2 million included as a component of other expense, net in our consolidated statement of operations.
The financial results of Ascender have been included within our consolidated financial statements from the
acquisition date forward and are classified among both Cloud and Bureau solutions. For the twelve months ended
December 31, 2021, Ascender revenue included within our consolidated statement of operations was $73.3
million. The purchase accounting was considered complete as of December 31, 2021. The intangible assets
consist of $76.5 million of customer relationships, $55.0 million of developed technology, and $6.5 million of trade
name. Of the goodwill associated with this acquisition, no amount is deductible for income tax purposes. The
goodwill of $242.8 million arising from the Ascender acquisition is primarily attributable to the synergies to enable
both multi-national customers and customers within the APJ region to leverage one global HCM platform,
Dayforce, as well as the assembled workforce of Ascender.
The major classes of assets and liabilities to which we have allocated the purchase price were as follows:
Cash and equivalents
Restricted cash
Trade receivables, prepaid expenses, and other current assets
Customer funds
Property, plant, and equipment
Goodwill
Other intangible assets
Other assets
Accounts payable and other current liabilities
Customer funds obligations
Other non-current liabilities
Total purchase price
(Dollars in millions)
5.1
2.0
16.0
18.9
13.1
242.8
138.0
18.8
(33.4)
(18.8)
(42.9)
359.6
$
$
Ideal
On April 30, 2021, we completed the purchase of 100% of the outstanding shares of O5 Systems, Inc. dba
Ideal (“Ideal”) for $41.4 million. Ideal is a talent intelligence software provider based in Toronto, Ontario, Canada.
The financial results of Ideal have been included within our consolidated financial statements from the
acquisition date forward and are classified as a Cloud solution. For the twelve months ended December 31, 2021,
Ideal revenue included within our consolidated statement of operations was $2.9 million. The purchase
accounting was considered complete as of December 31, 2021. The intangible assets consist of $18.0 million of
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2021 Form 10-K
developed technology, $0.2 million of trade name, and $0.1 million of customer relationships. Of the goodwill
associated with this acquisition, no amount is deductible for income tax purposes.
The major classes of assets and liabilities to which we have allocated the purchase price were as follows:
Cash and equivalents
Trade receivables, prepaid expenses, and other current assets
Property, plant, and equipment
Goodwill
Other intangible assets
Accounts payable and other current liabilities
Other non-current liabilities
Total purchase price
(Dollars in millions)
2.6
1.0
0.1
26.3
18.3
(3.8)
(3.1)
41.4
$
$
DataFuzion
On October 4, 2021, we completed the acquisition of certain assets and liabilities of DataFuzion HCM, Inc.
(“DataFuzion”) for $12.5 million in cash consideration and future contingent consideration payments. The asset
purchase agreement allows the sellers to receive additional payments based on 1) the go live of DataFuzion’s
payroll processing solution for a certain customer (“Milestone Payment”) and 2) qualifying annualized recurring
revenue ("ARR") performance generated from DataFuzion's solution at each measurement date (“Earn-out
Payments”, collectively with the Milestone Payment, the “Contingent Consideration Payments”). The Milestone
Payment will not exceed a payout of $2.5 million whereas the Earn-out Payments are performance based and do
not have an established maximum payout. The earn-out will be measured and subsequently paid annually as of
June 30, with the first measurement in 2023 and the final measurement in 2026. The fair value of the Contingent
Consideration Payments was $5.4 million at the date of acquisition and $6.0 million at December 31, 2021. Due to
the remeasurement of the Contingent Consideration Payments, we recognized $0.6 million of expense for the
three months ended December 31, 2021 within selling, general, and administrative expense in our consolidated
statements of operations.
The purchase accounting has been finalized as of December 31, 2021 and we have allocated the purchase
price of $17.9 million as follows: $15.6 million to goodwill and $2.3 million to developed technology. Of the
goodwill associated with this acquisition, $10.2 million is deductible for income tax purposes.
ADAM HCM
On December 3, 2021, we completed the acquisition of 100% of the outstanding interests in ATI ROW, LLC
and ADAM HCM MEXICO, S. de R.L. de C.V. (collectively, "ADAM HCM") for $34.3 million. ADAM HCM is a
payroll and HCM company in Latin America.
The purchase accounting has not been finalized as of December 31, 2021. Provisional amounts relate to
final purchase price adjustments, specifically the net working capital, and tax positions. We expect to finalize the
allocation of the purchase price within the one-year measurement period following the acquisition. Intangible
assets recorded for this acquisition consist of $7.5 million of customer relationships, $2.9 million of developed
technology, and $0.4 million of trade name. Of the goodwill associated with this acquisition, $23.5 million is
deductible for income tax purposes.
The major classes of assets and liabilities to which we have preliminarily allocated the purchase price were
as follows:
Cash and equivalents
Trade receivables, prepaid expenses, and other current assets
Goodwill
Other intangible assets
Other assets
Accounts payable and other current liabilities
Total purchase price
66 |
2021 Form 10-K
(Dollars in millions)
0.2
1.1
23.5
10.8
0.2
(1.5)
34.3
$
$
Excelity
On May 29, 2020, we completed the purchase of 100% of the outstanding shares of Excelity Global
Solutions Pte. Ltd. (“Excelity”) for $77.2 million in cash consideration. Excelity is a human capital management
service provider in the APJ region.
The financial results of Excelity have been included within our consolidated financial statements from the
acquisition date forward and are classified as a Bureau solution. Intangible assets recorded for this acquisition
consist of $14.8 million of customer relationships, $3.5 million of trade name, and $2.4 million of developed
technology. The purchase accounting was complete as of December 31, 2020. Of the goodwill associated with
this acquisition, $5.1 million is deductible for income tax purposes.
The major classes of assets and liabilities to which we allocated the purchase price were as follows:
Cash and equivalents
Trade receivables, prepaid expenses, and other current assets
Customer trust funds
Property, plant, and equipment and other assets
Goodwill
Other intangible assets, net
Accounts payable and other current liabilities
Customer trust funds obligations
Other non-current liabilities
Total purchase price
(Dollars in millions)
6.6
13.0
12.3
4.2
42.7
20.7
(2.2)
(13.1)
(7.0)
77.2
$
$
The acquisition of Ascender, Ideal, DataFuzion, ADAM HCM, and Excelity were recorded using the
acquisition method of accounting, in which the assets and liabilities assumed are recognized at their fair value.
Additionally, after consideration of these acquisitions, management has concluded that we continue to have one
operating and reportable segment. This conclusion aligns with how management monitors operating performance,
allocates resources, and deploys capital. Pro forma financial information is not presented as none of the
acquisitions qualified as a significant business combination individually or in aggregate.
4. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date (an exit price). GAAP outlines a
valuation framework and creates a fair value hierarchy intended to increase the consistency and comparability of
fair value measurements and the related disclosures. Certain assets and liabilities must be measured at fair
value, and disclosures are required for items measured at fair value.
We measure our financial instruments using inputs from the following three levels of the fair value hierarchy.
The three levels are as follows:
Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices
for identical or similar assets or liabilities in markets that are not active, inputs other than quoted
prices that are observable for the asset or liability (that is, interest rates, yield curves, etc.), and inputs
that are derived principally from or corroborated by observable market data by correlation or other
means (market corroborated inputs).
Level 3 inputs include unobservable inputs that reflect our assumptions about the assumptions that
market participants would use in pricing the asset or liability. These inputs are developed based on
the best information available, including internal data.
67 |
2021 Form 10-K
For the contingent consideration related to the DataFuzion acquisition, we utilized an option pricing model,
specifically a Black-Scholes-Merton model, to estimate the fair value of the contingent liability as of the reporting
dates. This model uses certain assumptions related to risk-free rates and volatility as well as certain judgments in
forecasting ARR. The contingent consideration has been measured as Level 3 given the unobservable inputs that
are significant to the measurement of the liability.
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
Our financial assets and liabilities measured at fair value on a recurring basis were categorized as follows:
Assets
Available for sale customer funds assets
Total assets measured at fair value
Liabilities
DataFuzion contingent consideration
Total liabilities measured at fair value
Assets
Available for sale customer funds assets
Total assets measured at fair value
December 31, 2021
Level 1
Level 2
Level 3
Total
(Dollars in millions)
$
$
$
$
— $ 1,952.4(a)
— $ 1,952.4
— $
— $
—
—
$
$
$
$
— $
— $
1,952.4
1,952.4
6.0
6.0
$
$
6.0
6.0
December 31, 2020
Level 1
Level 2
Level 3
Total
(Dollars in millions)
$
$
— $
— $
1,719.1(a) $
$
1,719.1
— $
— $
1,719.1
1,719.1
(a)
Fair value is based on inputs that are observable for the asset or liability, other than quoted prices.
68 |
2021 Form 10-K
The contingent consideration is included within other liabilities in our consolidated balance sheets. During
the twelve months ended December 31, 2021, we recognized expense of $0.6 million within selling, general, and
administrative expense in our consolidated statements of operations due to the remeasurement of the DataFuzion
contingent consideration.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Assets acquired and liabilities assumed as part of a business combination are measured at fair value.
Please refer to Note 3, “Business Combinations,” for additional information on our business combinations. During
the years ended December 31, 2021 and 2020, we did not re-measure any financial assets or liabilities at fair
value on a nonrecurring basis.
5. Customer Funds
Overview
In connection with our U.S., Canada, India, Singapore, China, and Malaysia payroll and tax filing services,
we collect funds for payment of payroll and taxes; temporarily hold such funds, in trust for the U.S. and Canadian
funds, until payment is due; remit the funds to the clients’ employees and appropriate taxing authorities; file
federal, state, and local tax returns; and handle related regulatory correspondence and amendments. The assets
held are intended for the specific purpose of satisfying client fund obligations and therefore are not freely available
for our general business use.
Our customer funds are held and invested with the primary objectives being to protect the principal balance
and to ensure adequate liquidity to meet cash flow requirements. Accordingly, we maintain on average
approximately 56% of customer funds in liquidity portfolios with maturities ranging from one to 120 days,
consisting of high-quality bank deposits, money market mutual funds, commercial paper, or collateralized short-
term investments; and we maintain on average approximately 44% of customer funds in fixed income portfolios
with maturities ranging from 120 days to 10 years, consisting of U.S. Treasury and agency securities, Canada
government and provincial securities, as well as highly rated asset-backed, mortgage-backed, municipal,
corporate, and bank securities. To maintain sufficient liquidity to meet payment obligations, we also have
financing arrangements and may pledge fixed income securities for short-term financing.
Financial Statement Presentation
Investment income from invested customer funds, also referred to as float revenue or float, is a component
of our compensation for providing services under agreements with our customers. Investment income from
invested customer funds included in revenue amounted to $41.1 million, $52.3 million, and $80.2 million for the
years ended December 31, 2021, 2020, and 2019, respectively. Investment income includes interest income,
realized gains and losses from sales of customer funds’ investments, and unrealized credit losses determined to
be unrecoverable.
69 |
2021 Form 10-K
The amortized cost of customer funds as of December 31, 2021, and 2020, is comprised of the original cost
of assets acquired. The amortized cost and fair values of investments of customer funds available for sale were
as follows:
Money market securities, investments carried at cost and
other cash equivalents
Available for sale investments:
U.S. government and agency securities
Canadian and provincial government securities
Corporate debt securities
Asset-backed securities
Mortgage-backed securities
Other short-term investments
Other securities
Total available for sale investments
Invested customer funds
Receivables
Total customer funds
Money market securities, investments carried at cost and
other cash equivalents
Available for sale investments:
U.S. government and agency securities
Canadian and provincial government securities
Corporate debt securities
Asset-backed securities
Mortgage-backed securities
Other securities
Total available for sale investments
Invested customer funds
Receivables
Total customer funds
Amortized
Cost
December 31, 2021
Gross Unrealized
Gain
Loss
(Dollars in millions)
Fair
Value
$
1,562.4 $
— $
— $
1,562.4
697.8
399.9
551.4
174.2
2.7
41.4
71.7
1,939.1
3,501.5 $
18.4
3,519.9
$
9.5
5.3
8.3
1.5
—
—
—
24.6
24.6 $
(5.8)
(1.3)
(3.1)
(0.3)
—
—
(0.8)
(11.3)
(11.3)
$
701.5
403.9
556.6
175.4
2.7
41.4
70.9
1,952.4
3,514.8
21.0
3,535.8
Amortized
Cost
December 31, 2020
Gross Unrealized
Gain
Loss
(Dollars in millions)
Fair
Value
$
2,027.1 $
— $
— $
2,027.1
494.0
396.4
548.5
192.2
9.9
16.5
1,657.5
3,684.6 $
13.2
3,697.8
$
21.6
15.5
19.4
4.9
0.2
0.1
61.7
61.7 $
(0.1)
—
—
—
—
—
(0.1)
(0.1)
$
515.5
411.9
567.9
197.1
10.1
16.6
1,719.1
3,746.2
13.2
3,759.4
The following represents the gross unrealized losses and the related fair value of the investments of
customer funds available for sale, aggregated by investment category and length of time that individual securities
have been in a continuous unrealized loss position.
Less than 12 months
Unrealized
Losses
Fair
Value
December 31, 2021
Unrealized
Losses
12 months or more
Fair
Value
(Dollars in millions)
Total
Unrealized
Losses
Fair
Value
$
(4.9) $ 316.8 $
(0.9) $
40.8 $
(5.8) $
357.6
(1.3)
(3.1)
(0.3)
(0.8)
75.4
209.7
47.7
69.3
$
(10.4) $ 718.9 $
—
—
—
—
(0.9) $
—
—
—
—
40.8 $
(1.3)
(3.1)
(0.3)
(0.8)
(11.3) $
75.4
209.7
47.7
69.3
759.7
U.S. government and agency securities
Canadian and provincial government
securities
Corporate debt securities
Asset-backed securities
Other securities
Total available for sale investments
70 |
2021 Form 10-K
Management does not believe that any individual unrealized loss was unrecoverable as of December 31,
2021. The unrealized losses are primarily attributable to changes in interest rates and not to credit deterioration.
We currently do not intend to sell or expect to be required to sell the securities before the time required to recover
the amortized cost.
The amortized cost and fair value of investment securities available for sale at December 31, 2021, by
contractual maturity are shown below. Expected maturities will differ from contractual maturities because
borrowers may have the right to call or to prepay obligations with or without call or prepayment penalties.
Due in one year or less
Due in one to three years
Due in three to five years
Due after five years
Invested customer funds
December 31, 2021
Cost
(Dollars in millions)
Fair Value
$ 1,946.6 $
697.7
651.5
205.7
$ 3,501.5 $
1,949.6
710.2
645.8
209.2
3,514.8
6. Trade and Other Receivables, Net
Trade and other receivables, net, consist of the following:
Trade receivables from customers
Interest receivable from invested customer funds
Other
Total gross receivables
Less: reserve for sales adjustments
Less: allowance for doubtful accounts
Trade and other receivables, net
December 31,
2021
2020
(Dollars in millions)
130.3
3.2
20.7
154.2
(4.0)
(3.9)
146.3
$
$
95.1
1.8
11.7
108.6
(4.4)
(3.1)
101.1
$
$
The activity related to the allowance for doubtful accounts was as follows:
Balance at beginning of year
Provision for doubtful accounts
Charge-offs, net of recoveries
Balance at end of year
2021
Year Ended December 31,
2020
(Dollars in millions)
2019
$
$
3.1 $
1.8
(1.0)
3.9 $
2.4
2.0
(1.3)
3.1
$
$
1.3
3.2
(2.1)
2.4
7. Property, Plant, and Equipment, Net
Property, plant, and equipment, net consist of the following:
December 31,
Land
Software
Machinery and equipment
Buildings and improvements
Total property, plant, and equipment
Accumulated depreciation
Property, plant, and equipment, net
$
$
71 |
2021 Form 10-K
2020
2021
(Dollars in millions)
— $
357.2
121.7
31.9
510.8
(382.6)
128.2 $
7.5
306.3
120.2
48.9
482.9
(346.5)
136.4
Depreciation expense related to property, plant, and equipment, net was $53.6 million, $48.0 million, and
$40.9 million for the years ended December 31, 2021, 2020, and 2019, respectively.
8. Goodwill and Intangible Assets
Goodwill
Goodwill and changes therein were as follows:
Balance at December 31, 2019
Acquisitions
Translation
Balance at December 31, 2020
Acquisitions
Translation
Balance at December 31, 2021
Tax-deductible goodwill at December 31, 2021
(Dollars in millions)
1,973.5
42.7
15.6
2,031.8
308.2
(16.4)
2,323.6
53.9
$
$
$
Please refer to Note 3, “Business Combinations,” for further discussion of our acquisitions.
We perform an impairment assessment of our goodwill balances as of October 1 of each year. Goodwill
impairment testing is performed at the reporting unit level, which is the operating segment level or one level
below. We performed a qualitative assessment as of October 1, 2021 and concluded that it is more likely than not
that the fair value of our reporting unit is more than its carrying amount.
Intangible Assets
Other intangible assets, net consist of the following:
Customer lists and relationships
Trade name
Technology
Total other intangible assets
Customer lists and relationships
Trade name
Technology
Total other intangible assets
December 31, 2021
Gross Carryin
g
Amount
Accumulated
Amortization
(Dollars in millions)
Net
$
$
308.4 $
184.4
233.9
726.7 $
(220.4) $
(3.2)
(170.6)
(394.2) $
88.0
181.2
63.3
332.5
December 31, 2020
Gross Carryin
g
Amount
Accumulated
Amortization
(Dollars in millions)
Net
$
$
229.0 $
177.7
159.5
566.2 $
(212.1) $
(2.5)
(156.6)
(371.2) $
16.9
175.2
2.9
195.0
Estimated Life
Range (Years)
4-12
3-5 and Indefinite
3-5
Estimated Life
Range (Years)
5-15
3-5 and Indefinite
3-4
72 |
2021 Form 10-K
As of October 1 each year, we perform an impairment assessment of our indefinite-lived intangible assets,
which includes our Ceridian and Dayforce trade names, which have a carrying value of $167.2 million and $4.7
million, respectively as of December 31, 2021. We performed a qualitative assessment as of October 1, 2021 and
concluded that it is more likely than not that the fair value of our Ceridian and Dayforce trade names exceeded
their respective carrying amounts. We continue to evaluate the use of our trade names and branding in our sales
and marketing efforts. If there is a fundamental shift in the method of our branding in the future, we will assess the
impact on the carrying amount of our trade name intangible assets to determine whether an impairment exists. If it
is determined that an impairment has occurred, it would be recognized during the period in which the decision
was made to make the fundamental shift.
Amortization expense related to definite-lived intangible assets was $23.9 million, $3.8 million, and $16.2
million for the years ended December 31, 2021, 2020, and 2019, respectively. We estimate the future
amortization of other intangible assets is as follows:
Years Ending December 31,
Amount
(Dollars in millions)
2022
2023
2024
2025
2026
Thereafter
$
30.0
29.6
28.8
26.4
12.0
33.8
Long-Lived Assets by Geographic Area
Long-lived assets consist of right of use lease asset, property, plant and equipment, net, goodwill, and other
intangible assets, net. Long-lived assets by country consist of the following:
December 31,
2021
2020
$
(Dollars in millions)
1,795.6
530.9
370.0
117.2
2,813.7
$
1,796.9
488.6
23.2
82.4
2,391.1
United States
Canada
Australia
Other
Total long-lived assets
$
$
73 |
2021 Form 10-K
9. Debt
Overview
Our debt obligations consist of the following:
Term Debt, interest rate of 2.6%, respectively
Revolving Credit Facility ($300.0 million available capacity less amounts reserved
for letters of credit, which were $2.1 million and $0.4 million, respectively)
Convertible Senior Notes, interest rate of 0.25%
Australia Line of Credit (AUD $2.9 million letter of credit capacity as of December
31, 2021, which was fully utilized; USD $2.1 million as of December 31, 2021)
Canada Line of Credit (CDN $7.0 million letter of credit capacity as of December 31,
2020, which was fully utilized; USD $5.4 million as of December 31, 2020)
Financing lease liabilities (Please refer to Note 15)
Total debt
Less unamortized discount on Term Debt and Convertible Senior Notes
Less unamortized debt issuance costs on Term Debt and Convertible Senior Notes
Less current portion of long-term debt
Long-term debt, less current portion
December 31,
2021
2020
(Dollars in millions)
$
657.9 $
664.7
—
575.0
—
—
9.6
1,242.5
95.5
14.3
8.3
1,124.4 $
$
—
—
—
—
8.8
673.5
1.2
4.5
7.2
660.6
Accrued interest and fees related to our debt obligations was $0.5 million and $0.1 million as of December
31, 2021, and December 31, 2020, respectively, and is included within Other accrued expenses in our
consolidated balance sheets.
Senior Secured Credit Facility
Principal Amounts and Maturity Dates
On April 30, 2018, we completed the refinancing of our debt by entering into a new credit agreement.
Pursuant to the new credit agreement, we became borrower of (i) a $680.0 million term loan debt facility (the
“Term Debt”) and (ii) a $300.0 million revolving credit facility (the “Revolving Credit Facility”) (collectively, the
“Senior Secured Credit Facility”). Our obligations under the Senior Secured Credit Facility are secured by first
priority security interests in substantially all of our assets and the domestic subsidiary guarantors, subject to
permitted liens and certain exceptions.
The Term Debt will mature on April 30, 2025. We are required to make annual amortization payments in
respect of the Term Debt in an amount equal to 1.00% of the original principal amount thereof, payable in equal
quarterly installments of 0.25% of the original principal amount of the first lien term debt. On December 15, 2021,
we completed the second amendment to our Senior Secured Credit Facility, which extended the maturity date of
the Revolving Credit Facility from April 30, 2023 to January 29, 2025. The Revolving Credit Facility does not
require amortization payments.
Interest
The effective interest rate on the Term Debt at December 31, 2021, and 2020, was 2.6%. The Term Debt
was initially subject to an interest rate of LIBOR plus 3.25%. As a result of a ratings upgrade on March 26, 2019,
of our Senior Secured Credit Facility by Moody’s Investor Service, from B3 to B2, the Company’s floating rate
Term Debt interest rate was reduced from LIBOR plus 3.25% to LIBOR plus 3.00%, so long as the rating is
maintained. On February 19, 2020, we completed the first amendment to the Senior Secured Credit Facility in
which the interest rate was reduced from LIBOR plus 3.00% to LIBOR plus 2.5%. Further, the interest rate trigger
under the applicable rating by Moody’s Investor Service was removed by the first amendment.
Financing Costs and Issuance Discounts
In connection with our debt refinancing in 2018, we capitalized $3.6 million of additional financing costs and
wrote off $0.5 million of existing unamortized deferred financing costs, which was included in the loss on
74 |
2021 Form 10-K
extinguishment of debt. The Term Debt had associated unamortized deferred financing costs of $5.2 million and
$5.7 million at December 31, 2021, and 2020, respectively, which are being amortized at an effective interest rate
of 5.3%. In connection with the second amendment in 2021, we capitalized $0.8 million of additional financing
costs.
Collateral and Guarantees
The Senior Secured Credit Facility names us as the sole borrower and is unconditionally guaranteed by our
domestic, wholly-owned financially material restricted subsidiaries, subject to certain customary exceptions. The
Senior Secured Credit Facility is secured by a perfected first priority security interest, subject to certain exceptions
(including customer funds), in substantially all of our and the subsidiary guarantors’ tangible and intangible assets.
The security interest includes a pledge of the capital stock of certain of our direct and indirect material restricted
subsidiaries.
Representations, Warranties and Covenants
The documents governing the Senior Secured Credit Facility contain certain customary representations and
warranties. In addition, those documents contain customary covenants restricting our ability and certain of our
subsidiaries’ ability to, among other things: incur additional indebtedness, issue disqualified stock and preferred
stock; create liens; declare dividends; redeem capital stock; make investments; engage in a materially different
line of business; engage in certain mergers, consolidations, acquisitions, asset sales, or other fundamental
changes; engage in certain transactions with affiliates; enter into certain restrictive agreements; make
prepayments on any subordinated indebtedness; modify junior financing documentation; and make changes to
our fiscal year.
The Senior Secured Credit Facility documents contain a requirement that we maintain a ratio of adjusted
first lien debt to Credit Facility EBITDA below specified levels on a quarterly basis; however, such requirement is
applicable only if more than 35% of the Revolving Credit Facility is drawn. As of December 31, 2021, no portion of
the Revolving Credit Facility was drawn.
Events of Default
Events of default under the Senior Secured Credit Facility documents include, but are not limited to: failure
to pay interest, principal and fees, or other amounts when due; material breach of any representation or warranty;
covenant defaults; cross defaults to other material indebtedness; events of bankruptcy, invalidity of security
interests; a change of control; material judgments for payment of money; involuntary acceleration of any debt; and
other customary events of default. There were no events of default as of December 31, 2021.
Convertible Senior Notes
In March 2021, we issued $575.0 million in aggregate principal amount of 0.25% Convertible Senior Notes
due 2026 in a private offering to qualified institutional buyers pursuant to Rule 144A promulgated under the
Securities Act of 1933, as amended, and pursuant to exemptions from the prospectus requirements of applicable
Canadian securities laws, including the exercise in full by the initial purchasers of their option to purchase an
additional $75.0 million in aggregate principal amount of 0.25% Convertible Senior Notes due 2026 (collectively,
the “Convertible Senior Notes”). The Convertible Senior Notes bear interest at a rate of 0.25% per year and
interest is payable semiannually in arrears on March 15 and September 15 of each year, beginning on September
15, 2021. The Convertible Senior Notes mature on March 15, 2026, unless earlier converted, redeemed or
repurchased. The total net proceeds from the offering, after deducting initial purchase discounts and other debt
issuance costs, were $561.8 million.
The Convertible Senior Notes are unsecured obligations and do not contain any financial covenants or
restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of
securities by us or any of our subsidiaries.
The following table presents details of the Convertible Senior Notes:
75 |
2021 Form 10-K
Initial Conversion Rate per
$1,000 Principal
Initial Conversion
Price per Share
Convertible Senior Notes
7.5641 shares $
132.20
The Convertible Senior Notes will be convertible at the option of the holders at any time only under the
following circumstances:
During any calendar quarter commencing after the calendar quarter ending on June 30, 2021, if the last
reported sale price per share of our common stock exceeds 130% of the conversion price for each of at
least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day
of the immediately preceding calendar quarter;
During the five consecutive business days immediately after any 10 consecutive trading day period (such
10 consecutive trading day period, the “measurement period”) in which the trading price per $1,000
principal amount of Convertible Senior Notes for each trading day of the measurement period was less
than 98% of the product of the last reported sale price per share of our common stock on such trading
day and the conversion rate on such trading day;
Upon the occurrence of certain corporate events or distributions on our common stock, as described in
the Indenture under which the Convertible Senior Notes were issued;
If we call such Convertible Senior Notes for redemption; or
At any time from, and including, September 15, 2025 until the close of business on the second scheduled
trading day immediately before the maturity date.
Upon conversion, we may satisfy the conversion obligation by paying or delivering, as applicable, cash,
shares of our common stock or a combination of cash and shares of our common stock, at our election, in the
manner and subject to the terms and conditions provided in the Indenture under which the Convertible Senior
Notes were issued. On December 30, 2021, we notified the holders of the Convertible Senior Notes of our
irrevocable election to settle the conversion obligations in connection with the Convertible Senior Notes submitted
for conversion on or after January 1, 2022, or at maturity with a combination of cash and shares of our common
stock. Generally, under this settlement method, the conversion value will be settled in cash in an amount no less
than the principal amount being converted, and any excess of the conversion value over the principal amount will
be settled, at the Company's election, in cash or shares of our common stock. During the quarter ended
December 31, 2021, the conditions allowing holders of the Convertible Senior Notes to convert have not been
met. The Convertible Senior Notes were therefore not convertible during the fourth quarter of 2021 and are
classified as a noncurrent liability in our consolidated balance sheet as of December 31, 2021.
We may not redeem the Convertible Senior Notes prior to March 20, 2024. On or after March 20, 2024, and
on or before the 30th scheduled trading day immediately preceding the maturity date, we may redeem the
Convertible Senior Notes at a cash purchase price equal to the principal amount of the Convertible Senior Notes
to be redeemed, plus accrued and unpaid interest, if any, but only if the last reported sale price per share of our
common stock exceeds 130% of the conversion price on (1) each of at least 20 trading days, whether or not
consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before
the date we send the related redemption notice; and (2) the trading day immediately before the date we send
such notice. In addition, calling any Convertible Senior Note for redemption will constitute a make-whole
fundamental change with respect to that Convertible Senior Note, in which case the conversion rate applicable to
the conversion of that Convertible Senior Note will be increased in certain circumstances if it is converted after it
is called for redemption.
If a “fundamental change” (as defined in the Indenture under which the Convertible Senior Notes were
issued) occurs, then noteholders may require us to repurchase their Convertible Senior Notes at a cash
repurchase price equal to the principal amount of the Convertible Senior Notes to be repurchased, plus accrued
and unpaid interest, if any.
In accounting for the issuance of the Convertible Senior Notes and the related transaction costs, we
separated the Convertible Senior Notes into liability and equity components. The carrying amount of the liability
component was initially calculated by measuring the fair value of similar liabilities that do not have associated
convertible features utilizing an interest rate of 4.5%. The carrying amount of the equity component representing
the conversion option was $108.6 million and was determined by deducting the fair value of the liability
component from the par value of the Convertible Senior Notes. This difference represents a debt discount that is
76 |
2021 Form 10-K
amortized to interest expense over the term of the Convertible Senior Notes using the effective interest rate
method. The equity component was recorded in additional paid-in capital and is not remeasured as long as it
continues to meet the conditions for equity classification.
Total issuance costs of $14.4 million related to the Convertible Senior Notes were allocated between liability,
totaling $11.7 million, and equity, totaling $2.7 million, in the same proportion as the allocation of the total
proceeds to the liability and equity components. Issuance costs attributable to the liability component are being
amortized to interest expense over the term of the Convertible Senior Notes. The excess of the principal amount
of the liability component over its carrying amount is amortized to interest expense over the contractual term of
the Convertible Senior Notes at an effective interest rate of 5.1%. The issuance costs attributable to the equity
component were netted against additional paid-in capital. The amount recorded for the equity component of the
Convertible Senior Notes was $77.7 million, net of allocated issuance costs of $2.7 million and deferred tax
impact of $28.2 million.
The following table sets forth total interest expense recognized related to the Convertible Senior Notes for
the period:
Contractual interest expense
Amortization of debt discount
Amortization of debt issuance costs
Total
$
$
1.2
14.0
1.7
16.9
Twelve Months Ended
December 31, 2021
(Dollars in millions)
Capped Calls
In March 2021, in connection with the pricing of the Convertible Senior Notes, we entered into capped call
transactions with the option counterparties (the “Capped Calls”). The Capped Calls each have an initial strike
price of $132.20 per share, and an initial cap price of $179.26 per share, both subject to certain adjustments. The
capped call transactions are generally expected to reduce potential dilution to our common stock upon any
conversion of the Convertible Senior Notes and/or offset any potential cash payments we would be required to
make in excess of the principal amount of converted Convertible Senior Notes, as the case may be, with such
reduction and/or offset subject to a cap based on the cap price. For accounting purposes, the Capped Calls are
separate transactions, and not part of the terms of the Convertible Senior Notes. As the Capped Calls qualify for a
scope exception from derivative accounting for instruments that are both indexed to the issuer's own stock and
classified in stockholder’s equity in our consolidated balance sheet, we have recorded an amount of $33.0 million
as a reduction to additional paid-in capital, which will not be remeasured. This represents the premium of $45.0
million paid for the purchase of the Capped Calls, net of the deferred tax impact of $12.0 million.
Other Information Relating to Indebtedness
Future Payments and Maturities of Debt
The future principal payments and maturities of our indebtedness, excluding financing lease obligations, are
as follows:
Years Ending December 31,
2022
2023
2024
2025
2026
Amount
(Dollars in millions)
6.8
$
6.8
6.8
637.5
575.0
1,232.9
$
77 |
2021 Form 10-K
We may be required to make additional payments on the Term Debt from various sources, including
proceeds of certain indebtedness which may be incurred from time to time, certain asset sales, and a certain
percentage of cash flow. There is an excess cash flow calculation associated with the Term Debt, and based on
this calculation, we are not required to make a prepayment on the Term Debt in 2022.
Fair Value of Debt
Our debt does not trade in active markets. Based on the borrowing rates currently available to us for bank
loans with similar terms and average maturities and the limited trades of our debt, the fair value of our
indebtedness was estimated to be $1,248.9 million and $657.6 million as of December 31, 2021, and 2020,
respectively. The fair value of the Convertible Senior Notes was determined based on the closing trading price per
$1,000 of the Convertible Senior Notes as of the last day of trading for the period. We consider the fair value of
the Convertible Senior Notes at December 31, 2021 to be Level 2 measurements as they are not actively traded.
The fair value of the Convertible Senior Notes is primarily affected by the trading price of our common stock and
market interest rates.
Other Debt Financing
Ceridian Australia had available a committed bank credit facility that provides up to AUD $2.9 million, for
issuance of letters of credit as of December 31, 2021. The credit facility is a discretionary line at the option of the
bank. The amount of letters of credit outstanding under this facility were AUD $2.9 million (USD $2.1 million) at
December 31, 2021.
Ceridian Canada had available a committed bank credit facility that provides up to CDN $7.0 million, for
issuance of letters of credit as of December 31, 2020. The credit facility is a discretionary line at the option of the
bank. The amount of letters of credit outstanding under this facility were CDN $7.0 million (USD $5.4 million) at
December 31, 2020.
10. Employee Benefit Plans
Ceridian maintain numerous benefit plans for current and former employees. As of December 31, 2021, our
current active benefit plans include defined contribution plans for the majority of our employees. All of our defined
benefit plans have been frozen.
Defined Contribution Plans
We maintain defined contribution plans that provide retirement benefits to the majority of our employees.
Contributions are based upon the contractual obligations of each respective plan. We recognized expense of
$15.4 million, $11.1 million, and $9.8 million for the years ended December 31, 2021, 2020, and 2019,
respectively, related to employer contributions to these plans.
Defined Benefit Plans
We maintain defined benefit pension plans covering certain of our current and former U.S. employees (the
U.S. pension plan and nonqualified defined benefit plan, collectively referred to as our “defined benefit plans”), as
well as other postretirement benefit plans for certain U.S. retired employees that include heath care and life
insurance benefits.
78 |
2021 Form 10-K
Pension Benefits
The largest defined benefit pension plan (the “U.S. pension plan”) is a defined benefit plan for certain current
and former U.S. employees that closed to new participants on January 2, 1995. In 2007, the U.S. pension plan
was amended (1) to exclude from further participation any participant or former participant who was not employed
by Ceridian or another participating employer on January 1, 2008, (2) to discontinue participant contributions, and
(3) to freeze the accrual of additional benefits as of December 31, 2007. The measurement date for pension
benefit plans is December 31.
Assets of the U.S. pension plan are held in an irrevocable trust and do not include any Ceridian securities.
Benefits under this plan are generally calculated on final or career average earnings and years of participation in
the plan. Most participating employees were required to permit salary reduction contributions to the plan on their
behalf by the employer as a condition of active participation. Retirees and other former employees are inactive
participants in this plan and constitute approximately 99% of the plan participants. This plan is funded in
accordance with funding requirements under the Employee Retirement Income Security Act of 1974, based on
determinations of a third-party consulting actuary. Investment of the U.S. pension plan assets in Ceridian
securities is prohibited by the investment policy. As of December 31, 2021, the U.S. defined benefit plan is fully
funded.
We also sponsor a nonqualified supplemental defined benefit plan (the “nonqualified defined benefit plan”),
which is unfunded and provides benefits to selected U.S. employees in addition to the U.S. defined benefit plan.
We made contributions to the nonqualified defined benefit plan amounting to $1.6 million in 2021 and expect to
make contributions of $1.4 million during 2022.
We account for our defined benefit plans using actuarial models. These models use an attribution approach
that generally spreads the effect of individual events over the estimated life expectancy of the employees in such
plans. These events include plan amendments and changes in actuarial assumptions such as the expected long-
term rate of return on plan assets, discount rate related to the benefit obligation, and mortality rates.
One of the principal components of the net periodic pension calculation is the expected long-term rate of
return on plan assets. The required use of expected long-term rate of return on plan assets may result in
recognized pension income that is greater or less than the actual returns of those plan assets in any given year.
Over time, however, the expected long-term returns are designed to approximate the actual long-term returns that
contribute to the settlement of the liability. Differences between actual and expected returns are recognized in the
net periodic pension calculation over three years. We use long-term historical actual return information, the mix of
investments that comprise plan assets, and future estimates of long-term investment returns by reference to
external sources to develop our expected return on plan assets.
The discount rate assumption is used to determine the benefit obligation and the interest portion of the net
periodic pension cost (credit) for the following year. We utilize a full yield curve approach for our discount rate
assumption by applying the specific spot rates along the yield curve used in the determination of the benefit
obligation to the relevant projected cash flows. As of December 31, 2021, a 25 basis point decrease in the
discount rate would result in a $0.2 million decrease to expense for all pension plans.
At December 31, 2021, we updated our mortality assumptions utilizing a new improvement scale issued by
the Society of Actuaries in October 2021, which resulted in a $2 million increase in the projected benefit
obligation. At December 31, 2020, we updated our mortality assumptions utilizing an improvement scale issued
by the Society of Actuaries in October 2020, which resulted in a $6.0 million reduction in the projected benefit
obligation.
The funded status of defined benefit plans represents the difference between the projected benefit obligation
(“PBO”) and the plan assets at fair value. The fair value of plan assets exceeded the PBO of defined benefit plans
by $1.6 million and $3.5 million at December 31, 2021 and 2020, respectively. We are required to record the
funded status as an asset or liability in our consolidated balance sheets and recognize the change in the funded
status in comprehensive income, net of deferred income taxes.
79 |
2021 Form 10-K
The projected future payments to participants from defined benefit plans are as follows:
Years Ending December 31,
Amount
(Dollars in millions)
2022
2023
2024
2025
2026
Next five years
$
$
44.6
43.1
41.6
39.2
37.1
159.1
The accompanying tables reflect the combined funded status and net periodic pension cost and combined
supporting assumptions for the defined benefit elements of our defined benefit plans.
Funded Status of Defined Benefit Retirement
Plans at Measurement Date
Change in Projected Benefit Obligation During the
Year:
Projected benefit obligation at beginning of
year
Interest cost
Actuarial (gain) loss
Benefits paid and plan expenses
Projected benefit obligation at end of year
Change in Fair Value of Plan Assets During the
Year:
Plan assets at fair value at beginning of year
Actual return on plan assets
Employer contributions
Benefits paid and plan expenses
Plan assets at fair value at end of year
Funded status of plans
Amounts recognized in Consolidated Balance
Sheets
Noncurrent asset
Current liability
Noncurrent liability
Amounts recognized in Accumulated Other
Comprehensive Loss
Accumulated other comprehensive loss, net of
tax of $49.4 million and $51.4 million,
respectively
Year Ended December 31,
2021
2020
(Dollars in millions)
$
$
555.2 $
6.7
(10.5)
(48.0)
503.4 $
558.7
(7.2)
1.6
(48.1)
505.0
$
1.6 $
547.2
12.7
42.4
(47.1)
555.2
425.6
73.3
106.9
(47.1)
558.7
3.5
December 31,
2021
2020
(Dollars in millions)
$
12.1 $
1.4
9.1
15.8
1.5
10.8
$
157.9 $
163.3
The overall decrease in our benefit obligation for the year ended December 31, 2021 was primarily driven by
benefit payments paid, plan expenses, and actuarial gains.
80 |
2021 Form 10-K
The other comprehensive (income) loss related to pension benefit plans was as follows:
Net actuarial loss (gain)
Amortization of net actuarial loss
Tax expense
Other comprehensive income, net of tax
Assumptions Used in Calculations
Discount rate used to determine net benefit cost
Expected return on plan assets
Discount rate used to determine benefit obligations
Net Periodic Pension Cost
Interest cost
Actuarial loss amortization
Less: Expected return on plan assets
Net periodic pension cost
$
$
$
$
2021
Year Ended December 31,
2020
(Dollars in millions)
(8.0) $
9.9 $
2019
(17.3)
2.0
(5.4) $
(15.7)
6.4
(17.3) $
1.0
(12.7)
2.9
(8.8)
Year Ended December 31,
2020
2019
2021
1.87%
2.70%
2.36%
2.81%
5.70%
1.87%
3.92%
6.00%
2.81%
2021
Year Ended December 31,
2020
(Dollars in millions)
2019
6.7 $
17.3
(13.1)
10.9 $
12.7 $
15.7
(22.9)
5.5 $
18.2
12.7
(23.6)
7.3
The accumulated benefit obligation of defined benefit plans was $503.4 million and $555.2 million as of
December 31, 2021, and 2020, respectively.
Our overall investment strategy for the U.S. pension plan is to achieve a mix of approximately 83% for
liability hedging purposes, 15% of investments for long term growth, and 2% for near-term benefit payments.
Target asset allocations are based upon actuarial and capital market studies performed by experienced outside
consultants. The target allocations for the long term growth assets are 62.4% public equity, 24.9% fixed income,
and 12.7% alternative investments. Specifically, the target allocation is managed through investments in fixed
income securities, equity funds, collective investment funds, partnerships and other investment types. The
underlying equity securities include exposure to large/mid-cap companies and small-cap companies. Fixed
income securities include emerging market debt and high yield debt securities. The alternative investment
strategy is allocated to investments in hedge funds. The liability hedging portfolio fair value is intended to move in
a direction that substantially offsets the increase or decrease in the liabilities resulting from changes in interest
rates. To achieve this objective, the portfolio will invest in corporate debt securities, U.S. Treasury strips and
various interest rate derivatives contracts. We hire outside managers to manage all assets of the U.S. defined
benefit plan.
In determining the fair values of the defined benefit plan’s assets, we calculate the fair value of certain
investments using net asset value ("NAV") per share. Collective investment funds are valued at the NAV, which is
based on the readily determinable fair value of the underlying securities owned by the fund. The NAV unit price is
quoted on a private market or one that is not active. Partnerships consist primarily of a bond fund partnership
valued at the NAV as reported by the fund manager and an investment in a venture capital fund valued by an
independent appraisal. The NAV represents the value at which the defined benefit plan initiates a transaction.
These investments do not have any significant unfunded commitments, conditions or restrictions on redemption,
or any other significant restriction on their sale. The hedge fund of funds investment has a quarterly redemption
restriction with a 65 day notice period.
81 |
2021 Form 10-K
The fair values of our defined benefit plan’s assets by asset category were as follows:
Investments, at fair value:
Short-term investments
Government securities
Corporate debt securities
Collective investment funds
Total investments, at fair value
Investments, at fair value:
Short-term investments
Government securities
Corporate debt securities
Collective investment funds
Total investments, at fair value
Postretirement Benefits
Level 1
Level 2
December 31, 2021
Level 3
(Dollars in millions)
Total
26.7 $
—
—
—
26.7 $
— $
16.7
384.2
77.4
478.3 $
— $
—
—
—
— $
26.7
16.7
384.2
77.4
505.0
Level 1
Level 2
December 31, 2020
Level 3
(Dollars in millions)
Total
83.5 $
—
—
—
83.5 $
— $
46.7
322.4
106.1
475.2 $
— $
—
—
—
— $
83.5
46.7
322.4
106.1
558.7
$
$
$
$
We provide health care and life insurance benefits for eligible retired employees, including individuals who
retired from operations we subsequently sold or discontinued. We sponsor several health care plans in the United
States for both pre- and post-age 65 retirees. The contributions to these plans differ for various groups of retirees
and future retirees. Most retirees outside of the United States are covered by governmental health care programs,
and our cost is not significant. The measurement date for postretirement benefit plans is December 31.
The discount rate assumption is used to determine the benefit obligation and the interest portion of the net
periodic postretirement cost (credit) for the following year. We utilize a full yield curve approach for our discount
rate assumption by applying the specific spot rates along the yield curve used in the determination of the benefit
obligation to the relevant projected cash flows. As of December 31, 2021, a 25 basis point decrease in the
discount rate would result in an immaterial impact on expense for the postretirement plan.
The accompanying tables present the amounts and changes in the aggregate benefit obligation and the
components of net periodic postretirement benefit cost for U.S. plans. We fund these costs as they become due.
Funded Status of Postretirement Health Care
and Life Insurance Plans
Change in Benefit Obligation:
At beginning of year
Interest cost
Participant contributions
Actuarial gain
Benefits paid
At end of year
Change in Plan Assets:
At beginning of year
Company contributions
Participant contributions
Benefits paid
At end of year
Funded Status
Year Ended
December 31,
2020
2021
(Dollars in millions)
$
$
$
$
14.1 $
0.1
0.3
(0.8)
(1.1)
12.6 $
— $
0.8
0.3
(1.1)
—
(12.6) $
15.4
0.3
0.3
—
(1.9)
14.1
—
1.6
0.3
(1.9)
—
(14.1)
82 |
2021 Form 10-K
December 31,
2021
2020
(Dollars in millions)
Amounts recognized in Consolidated Balance
Sheets
Current liability
Noncurrent liability
$
1.8 $
10.8
1.9
12.2
Amounts recognized in Accumulated Other
Comprehensive Loss
Accumulated other comprehensive loss (income),
net of tax of $(5.0) million and $(5.4) million,
respectively
$
(7.6) $
(8.6)
The other comprehensive (income) loss related to postretirement benefits was as follows:
Net actuarial gain
Amortization of net actuarial gain
Tax benefit
Other comprehensive loss, net of tax
Net Periodic Postretirement Benefit
Interest cost
Actuarial gain amortization
Prior service credit amortization
Net periodic postretirement benefit gain
$
$
$
$
2021
2019
Year Ended December 31,
2020
(Dollars in millions)
— $
2.5
(0.7)
1.8 $
(0.8) $
2.2
(0.4)
1.0 $
(0.7)
2.6
(0.5)
1.4
2021
Year Ended December 31,
2020
(Dollars in millions)
2019
0.1 $
(2.0)
(0.2)
(2.1) $
0.3 $
(2.2)
(0.3)
(2.2) $
0.5
(2.3)
(0.3)
(2.1)
The assumed health care cost trend rate represents the rate at which health care costs are assumed to
increase. The assumed health care cost trend rate used in measuring the benefit obligation in 2021 is 5.9% for
pre-age 65 retirees and 6.7% for post-age 65 retirees. These rates are assumed to decrease gradually to the
ultimate health care cost trend rate of 4.5% in 2029 for both groups.
Year Ended December 31,
2020
2021
2019
Assumptions Used in Calculations
Weighted average discount rate used to determine
net periodic postretirement cost (credit)
1.42%
2.52%
3.70%
Weighted average discount rate used to determine
benefit obligation at measurement date
2.00%
1.42%
2.52%
The projected future postretirement benefit payments and future receipts from the federal subsidy for each
of the next five years and the five-year period following are as follows:
Years Ending December 31,
Payments
Receipts
2022
2023
2024
2025
2026
Next five years
(Dollars in millions)
1.9 $
1.6
1.5
1.3
1.2
4.0 $
—
—
—
—
—
0.1
$
$
83 |
2021 Form 10-K
11. Share-Based Compensation
Our share-based compensation consists of performance-based stock options, term-based stock options,
restricted stock units (“RSU”), and performance-based stock units (“PSU”). We also offer an employee stock
purchase plan.
Prior to November 1, 2013, our employees participated in a share-based compensation plan of the former
ultimate parent of Ceridian, the 2007 Stock Incentive Plan (“2007 SIP”). Effective November 1, 2013, although
most participants who held stock options under the 2007 SIP converted their options to a newly created option
plan, the 2013 Ceridian HCM Holding Inc. Stock Incentive Plan, as amended (“2013 SIP”), a small number of
participants maintained their stock options in the 2007 SIP. Concurrent with the IPO and legal reorganization, all
outstanding stock options under the 2007 SIP were converted into options to purchase common stock of Ceridian.
During the twelve months ended December 31, 2021, all remaining outstanding awards under the 2007 SIP were
exercised and as of December 31, 2021, there were no stock options outstanding under the 2007 SIP.
Stock options awarded under the 2013 SIP vest either annually on a pro rata basis over a four- or five-year
period or on a specific date if certain performance criteria are satisfied and certain equity values are attained. In
addition, upon termination of service, all vested options must be exercised generally within 90 days after
termination, or these awards will be forfeited. The stock option awards have a 10-year contractual term and have
an exercise price that is not less than the fair market value of the underlying stock on the date of grant. As of
December 31, 2021, there were 1,001,245 stock options and RSUs outstanding under the 2013 SIP. We do not
intend to grant any additional awards under the 2007 SIP or the 2013 SIP.
On April 24, 2018, in connection with the IPO, the Board of Directors approved the Ceridian HCM Holding
Inc. 2018 Equity Incentive Plan (“2018 EIP”), which authorized the issuance of up to 13,500,000 shares of
common stock to eligible participants through equity awards (the “Share Reserve”). The Share Reserve may be
increased on March 31 of each of the first ten calendar years during the term of the 2018 EIP, by the lesser of (i)
three percent of the number of shares of our common stock outstanding on each January 31 immediately prior to
the date of increase or (ii) such number of shares of our common stock determined by the Board of Directors. In
addition to prior year increases, as of March 31, 2021, the Share Reserve was increased by 4,397,296 shares,
pursuant to the terms of the 2018 EIP.
Equity awards under the 2018 EIP vest either annually or quarterly on a pro rata basis, generally over a one-
, three-, or four-year period. In addition, upon termination of service, all vested awards must be exercised within
90 days after termination, or these awards will be forfeited. The equity awards have a 10-year contractual term
and an exercise price that is not less than the fair market value of the underlying stock on the date of the grant. As
of December 31, 2021, there were 11,546,358 stock options, RSUs, and PSUs outstanding and 10,953,924
shares available for future grants of equity awards under the 2018 EIP.
Share-based compensation expense was $113.4 million, $65.8 million, and $36.5 million for the years
ended December 31, 2021, 2020, and 2019, respectively.
84 |
2021 Form 10-K
Performance-Based Stock Options
Performance-based option activity under the 2007 SIP, the 2013 SIP, and the 2018 EIP was as follows:
Performance-based options outstanding at
December 31, 2018
Exercised
Performance-based options outstanding at
December 31, 2019
Granted
Exercised
Performance-based options outstanding at
December 31, 2020
Exercised
Forfeited or expired
Performance-based options outstanding at
December 31, 2021
Performance-based options exercisable at
December 31, 2021
Weighted
Average
Exercise
Price
(per share)
Weighted
Average
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic
Value
(in millions)
$
$
$
$
$
13.50
(13.48)
13.58
65.27
(13.46)
64.55
(47.23)
—
64.72
58.65
3.1 $
—
2.6 $
—
—
9.2 $
—
—
7.7
—
3.7
—
—
77.5
—
—
8.3 $
70.6
7.4 $
6.6
Shares
366,377
(298,096)
68,281
1,818,728
(42,730)
1,844,279
(65,882)
(1,347)
1,777,050
144,808
In 2020, 1,500,000 performance-based stock options (“Performance Option Award”) were granted under the
2018 EIP with an exercise price of $65.26. The vesting conditions for the Performance Option Award are based
on the Company’s performance on the New York Stock Exchange (“NYSE”) with (i) 750,000 shares available to
vest when the Company’s per share closing price on the NYSE meets or exceeds $110.94, or 1.7 times the
exercise price, for ten consecutive trading days (“Performance Metric #1”) and (ii) the remaining 750,000 shares
are available to vest when the Company’s per share closing price on the NYSE meets or exceeds $130.52, or 2.0
times the exercise price, for ten consecutive trading days (“Performance Metric #2”, collectively with Performance
Metric #1, the “Performance Metrics”). The vesting conditions of the Performance Metrics must be achieved prior
to May 8, 2025, or any unvested portion of the Performance Option Award will terminate. Further, no portion of
the Performance Option Award will vest and become exercisable until May 8, 2023, the third anniversary of the
Grant Date (the “Time-Based Metric”). The shares underlying Performance Metric #1, which was achieved on
October 6, 2021, will vest and become exercisable on May 8, 2023 provided that continuous employment is
maintained through that date. If Performance Metric #2 is met prior to satisfying the Time-Based Metric, the
shares underlying Performance Metric #2 will vest and become exercisable on May 8, 2023 provided that
continuous employment is maintained through that date. If the Time-Based Metric is met and Performance Metric
#2 has not been met on or prior to May 8, 2025, the Performance Option Award will be terminated. A Monte Carlo
simulation model was used to determine the fair value of these performance-based stock options. The Monte
Carlo model utilizes multiple input variables that determine the probability of satisfying the market conditions
stipulated in the award. We have estimated an expected term of 5.3 years, based on the vesting period and
contractual term.
The remaining performance-based stock options granted during the twelve months ended December 31,
2020, under the 2018 EIP primarily include vesting conditions based on migrations of customers to Dayforce.
There are two tranches of stock options, in which the vesting conditions must be met either prior to September 13,
2021, or September 13, 2022. The weighted average grant date fair value of these performance-based stock
options granted in 2020 was $16.03 per share.
As of December 31, 2021, there was $7.5 million of share-based compensation expense related to unvested
performance-based stock option awards not yet recognized, which is expected to be recognized over a weighted
average period of 2.3 years.
85 |
2021 Form 10-K
Term-Based Stock Options
Term-based stock option activity under the 2007 SIP, the 2013 SIP, and the 2018 EIP, was as follows:
Term-based options outstanding at December 31, 2018
Granted
Exercised
Forfeited or expired
Term-based options outstanding at December 31, 2019
Granted
Exercised
Forfeited or expired
Term-based options outstanding at December 31, 2020
Granted
Exercised
Forfeited or expired
Term-based options outstanding at December 31, 2021
Term-based options exercisable at December 31, 2021
Weighted
Average
Exercise
Price
(per share)
19.28
49.74
(17.37)
(24.14)
29.74
66.06
(20.42)
(32.09)
40.47
84.07
(26.71)
(48.62)
48.87
40.48
Shares
13,549,769 $
4,297,472
(4,358,867)
(343,437)
13,144,937 $
2,282,334
(3,889,096)
(555,101)
10,983,074 $
759,126
(2,942,465)
(283,866)
8,515,869 $
3,236,026 $
Weighted
Average
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic
Value
(in millions)
206.8
—
—
—
501.3
—
—
—
725.9
—
—
—
473.4
207.0
7.5 $
—
—
—
7.8 $
—
—
—
7.8 $
—
—
—
7.3 $
6.7 $
Other information pertaining to term-based options was as follows:
Weighted average grant date fair value per share
$
33.09 $
21.15 $
16.12
The fair value of the term-based stock options was estimated at the date of grant using the Black-Scholes
option pricing model with the following weighted-average assumptions:
Year Ended December 31,
2020
2019
2021
Year Ended December 31,
2020
2021
2019
Expected volatility
Expected dividend rate
Risk-free interest rate
35.8%
—
1.3%
29.8%
—
0.6%
24.9%
—
2.5%
For stock options granted under the 2013 SIP and 2018 EIP, we estimated an expected term of 7.0 years,
based on the vesting period and contractual life. As of December 31, 2021, there was $66.4 million of share-
based compensation expense related to unvested term-based awards not yet recognized, which is expected to be
recognized over a weighted average period of 1.4 years. As of December 31, 2021, there were 3,236,026 vested
term-based stock options.
86 |
2021 Form 10-K
Restricted Stock Units
RSU activity under the 2013 SIP and the 2018 EIP, was as follows:
RSUs outstanding at December 31, 2018
Granted
Shares issued upon vesting of RSUs
Forfeited or canceled
RSUs outstanding at December 31, 2019
Granted
Shares issued upon vesting of RSUs
Forfeited or canceled
RSUs outstanding at December 31, 2020
Granted
Shares issued upon vesting of RSUs
Forfeited or canceled
RSUs outstanding at December 31, 2021
RSUs releasable at December 31, 2021
Shares
664,073
193,033
(17,288)
(20,000)
819,818
685,997
(73,475)
(42,955)
1,389,385
890,852
(262,239)
(82,059)
1,935,939
597,936
Other information pertaining to RSUs was as follows:
Year Ended December 31,
2020
2019
2021
Weighted average grant date fair value per share
$
85.08 $
69.57 $
50.00
During the year ended December 31, 2021, 436,696 RSUs vested, of which 262,239 shares of common
stock were issued. As of December 31, 2021, there were 597,936 RSUs vested and releasable. RSUs generally
vest quarterly or annually over a one-, three-, or four-year period. As of December 31, 2021, there was $76.3
million of share-based compensation expense related to unvested RSUs not yet recognized, which is expected to
be recognized over a weighted average period of 1.3 years.
Performance Stock Units
PSU activity under the 2018 EIP was as follows:
PSUs outstanding at December 31, 2019
Granted
Forfeited or canceled
PSUs outstanding at December 31, 2020
Granted
Shares issued upon vesting of PSUs
Forfeited or canceled
PSUs outstanding at December 31, 2021
PSUs releasable at December 31, 2021
Shares
—
145,017
(9,797)
135,220
348,483
(2,050)
(162,908)
318,745
—
The vesting conditions for the PSUs granted in 2020 were based on the Company’s performance against
Cloud revenue and adjusted EBITDA margin goals under Ceridian HCM Holding Inc. 2020 Management Incentive
Plan (the “2020 MIP”) for the incentive period of January 1, 2020 through December 31, 2020. The vesting
conditions for the PSUs were not met for the 2020 incentive period and as a result, the PSUs did not vest and no
share-based compensation expense was recognized for these awards during the year ended December 31, 2020.
The vesting conditions for the PSUs granted in 2021 are based on the Company’s performance criteria,
including Cloud revenue and adjusted EBITDA margin goals under the Ceridian HCM Holding Inc. 2021
Management Incentive Plan (the "2021 MIP”) for the incentive period of January 1, 2021 through December 31,
2021. The maximum incentive vesting of PSUs may not exceed 150% under the 2021 MIP. Both the Cloud
revenue and adjusted EBITDA margin goals are calculated based on the Company’s operating results, adjusted
for foreign currency and interest rate impacts plus other unique impacts as approved by the Compensation
87 |
2021 Form 10-K
Committee of the Board of Directors. Upon vesting of a PSU, a participant will receive shares of common stock of
the Company. Based on the performance criteria achieved, most of the PSUs are expected to vest in March 2022
and share-based compensation was recognized in accordance with the achievement level. As of December 31,
2021, there was $7.6 million of share-based compensation expense related to unvested PSUs not recognized
related to certain executives with PSUs that have a three-year vesting period.
Global Employee Stock Purchase Plan
On November 9, 2018, the Compensation Committee of the Board of Directors approved the Ceridian HCM
Holding Inc. Global Employee Stock Purchase Plan (the “GESPP”), which authorizes the issuance of up to
2,500,000 shares of common stock to eligible participants through purchases via payroll deductions. The
purchase price is the lower of (i) 85% of the fair market value of a share of common stock on the offering date (the
first trading day of the offering period commencing on January 1 and concluding on December 31) or (ii) 85% of
the fair market value of a share of common stock on the purchase date. The GESPP shall continue for ten years,
unless terminated sooner as provided under the GESPP. In 2021, quarterly purchase periods commenced on
January 1, April 1, July 1, and October 1. Shares were purchased on the last trading day of the respective
purchase periods. During 2021, shares were purchased on March 31, June 30, September 30, and December 31.
Our GESPP activity was as follows:
Shares issued
Weighted average purchase price (per share)
Year Ended December 31,
2021
153,235
81.69
$
2020
182,899
54.90
$
The fair value of the stock purchase rights granted under the GESPP was estimated using the following
weighted-average assumptions:
Expected volatility
Expected dividend rate
Risk-free interest rate
Expected term (in years)
Grant date fair value per share
Year Ended December 31,
2021
2020
33.7%
—
0.1%
0.3
22.07
$
46.4%
—
1.1%
0.3
17.11
$
88 |
2021 Form 10-K
12. Revenue
Our Solutions
We categorize our solutions into two categories: Cloud and Bureau offerings.
Cloud revenue is generated from solutions that are delivered via two cloud offerings, Dayforce and
Powerpay. The Dayforce offering is a single application with continuous calculation that offers a
comprehensive range of functionality, including global HR, payroll, benefits, workforce management, and
talent management on web and native iOS and Android platforms. Dayforce recurring revenue is primarily
generated from monthly recurring fees charged on a per-employee, per-month (“PEPM”) basis and the
allocation of investment income generated from holding Dayforce customer funds before funds are
remitted to taxing authorities, Dayforce customer employees, or other third parties. Dayforce professional
services and other revenue is primarily generated from implementation and post go-live professional
services revenue. Other sources of Dayforce revenues include revenue from the sale, rental and
maintenance of time clocks; revenue from the sale of third-party services; billable travel expenses for
Dayforce customers, and Dayforce Wallet interchange fee revenue. The Powerpay offering is our solution
designed primarily for small market Canadian customers, which typically have fewer than 20 employees.
Powerpay recurring revenue is primarily generated from recurring fees charged on a per-employee, per-
process basis and the allocation of investment income generated from holding Powerpay customer funds
before funds are remitted to taxing authorities, Powerpay customer employees, or other third parties.
Typical processes include the customer’s payroll runs, year-end tax packages, and delivery of customers’
remittance advices or checks. Powerpay professional services revenue is primarily generated from the
setup of the Powerpay customer on their platform.
Bureau revenue is generated primarily from solutions delivered via a service-bureau model. These
solutions are delivered via three primary service lines: payroll, payroll-related tax filing services, and
outsourced human resource solutions. Revenue from payroll services is generated from recurring fees
charged on a per-process basis. Typical processes include the customer’s payroll runs, year-end tax
packages, and delivery of customers’ remittance advices or checks. In addition to customers who use our
payroll services, certain customers use our tax filing services on a stand-alone basis. Our outsourced
human resource solutions are tailored to meet the needs of individual customers, and entail our
contracting to perform many of the duties of a customer’s human resources department, including payroll
processing, time and labor management, performance management, and recruiting. We also perform
individual services for customers, such as check printing, wage attachment and disbursement, and
Affordable Care Act (“ACA”) management. Additional items included in Bureau revenue are fees for
custom professional services to Bureau customers; the allocation of investment income generated from
holding Bureau customer funds before funds are remitted to taxing authorities, Bureau customer
employees, or other third parties; consulting services related to Bureau offerings; revenue from the sale of
third party services to Bureau customers; and Excelity revenue.
Customer Information
No single customer accounts for 1% or more of our consolidated revenue for any of the periods presented.
89 |
2021 Form 10-K
Disaggregation of Revenue
Revenue by solution and category was as follows:
Revenue:
Cloud
Dayforce
Recurring
Professional services and other
Total Dayforce revenue
Powerpay
Recurring
Professional services and other
Total Powerpay revenue
Total Cloud revenue
Bureau
Recurring
Professional services and other
Total Bureau revenue
Total revenue
2021
Year Ended December 31,
2020
(Dollars in millions)
2019
$
$
626.6 $
159.3
785.9
86.3
0.9
87.2
873.1
137.8
13.3
151.1
1,024.2 $
500.2
148.6
648.8
79.5
1.1
80.6
729.4
110.5
2.6
113.1
842.5
$
$
429.0
140.7
569.7
89.0
1.3
90.3
660.0
162.1
2.0
164.1
824.1
Recurring revenue includes float revenue of $41.1 million, $52.3 million, and $80.2 million for the year ended
December 31, 2021, 2020, and 2019, respectively.
Revenue by Geographic Area
The country in which the revenue is recorded is determined by the legal entity with which the customer has
contracted. Revenue by country was as follows:
United States
Canada
Other
Total revenue
Contract Balances
2021
Year Ended December 31,
2020
(Dollars in millions)
2019
$
$
624.4 $
254.2
145.6
1,024.2 $
579.3
223.5
39.7
842.5
$
$
578.1
237.0
9.0
824.1
The Company records a contract asset when revenue recognized for professional services performance
obligations exceed the contractual amount of billings for implementation related professional services. Contract
assets were $62.7 million and $55.2 million as of December 31, 2021, and 2020, respectively. Contract assets
expected to be recognized in revenue within twelve months are included within Prepaid expenses and other
current assets, with the remaining contract assets included within Other assets on our consolidated balance
sheets.
90 |
2021 Form 10-K
Deferred Revenue
Deferred revenue primarily consists of payments received in advance of revenue recognition. The changes
in deferred revenue were as follows:
Deferred revenue, beginning of period
New billings
Acquired billings
Revenue recognized
Effect of exchange rate
Deferred revenue, end of period
December 31,
2021
2020
(Dollars in millions)
24.4
565.0
16.6
(556.5)
(0.8)
48.7
$
$
25.5
432.6
—
(433.9)
0.2
24.4
$
$
Transaction Price for Remaining Performance Obligations
In accordance with ASC Topic 606, the following represents the aggregate amount of transaction price
allocated to the remaining performance obligations that are unsatisfied as of the end of the reporting period. As of
December 31, 2021, approximately $1,118.5 million of revenue is expected to be recognized over the next three
years from remaining performance obligations, which represents contracted revenue for recurring services and
fixed price professional services, primarily implementation services, that has not yet been recognized, including
deferred revenue and unbilled amounts that will be recognized as revenue in future periods. In accordance with
the practical expedient provided in ASC Topic 606, performance obligations that are billed and recognized as they
are delivered, primarily professional services contracts that are on a time and materials basis, are excluded from
the transaction price for remaining performance obligations disclosed above.
13. Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income (loss) were as follows:
Balance as of December 31, 2019
Other comprehensive income before income
taxes and reclassifications
Income tax expense
Reclassifications to earnings
Other comprehensive income
Balance as of December 31, 2020
Other comprehensive (loss) income before
income taxes and reclassifications
Income tax benefit (expense)
Reclassifications to earnings
Other comprehensive (loss) income
Balance as of December 31, 2021
Foreign
Currency
Translation
Adjustment
Unrealized Gain
(Loss) from
Invested
Customer Funds
Pension
Liability
Adjustment
(Dollars in millions)
Total
$
(178.4) $
10.2 $
(170.2) $ (338.4)
18.7
—
—
18.7
(159.7)
(17.6)
—
—
(17.6)
(177.3) $
$
38.4
(10.2)
—
28.2
38.4
(48.4)
12.8
—
(35.6)
2.8 $
8.0
(5.7)
13.2
15.5
(154.7)
65.1
(15.9)
13.2
62.4
(276.0)
(9.1)
(1.6)
15.1
4.4
(75.1)
11.2
15.1
(48.8)
(150.3) $ (324.8)
91 |
2021 Form 10-K
14. Income Taxes
Components of Earnings and Taxes from
Operations
(Loss) income before income taxes:
U.S.
International
Total
Income tax expense (benefit):
Current:
U.S.
State and local
International
Total current income tax expense (benefit)
Deferred:
U.S.
State and local
International
Total deferred income tax benefit
Total income tax benefit
Effective Rate Reconciliation
U.S. statutory rate%
Change in valuation allowance
State income taxes, net of federal benefit
Share-based compensation
International tax rate differential
Foreign capital gain income
Unremitted foreign earnings
Acquisition costs
Base erosion tax
Reserve for tax contingencies
Change in tax rate
Unutilized tax benefits
Other
Income tax provision%
2021
Year Ended December 31,
2020
(Dollars in millions)
2019
$
$
$
$
(73.6) $
(16.7)
(90.3) $
41.5 $
(61.6)
(20.0) $
0.9 $
0.4
22.3
23.6
(22.3)
(5.0)
(11.2)
(38.5)
(14.9) $
(6.5) $
0.1
(2.6)
(9.0)
(1.1)
0.1
(6.0)
(7.0)
(16.0) $
25.9
8.4
34.3
7.1
0.4
17.5
25.0
(42.6)
(19.3)
(7.5)
(69.4)
(44.4)
Year Ended December 31,
2021
2020
2019
21.0%
(0.7)
5.9
(3.5)
(2.4)
(1.3)
2.9
(2.3)
(1.6)
2.1
—
(3.4)
(0.2)
16.5%
21.0%
(0.3)
2.2
3.9
8.9
(7.5)
14.5
—
33.9
1.2
—
—
2.2
80.0%
21.0%
(176.1)
3.9
(5.8)
3.8
3.2
(2.0)
—
19.9
(0.3)
(1.0)
—
4.0
(129.4)%
Our income tax provision represents federal, state, and international taxes on our income recognized for
financial statement purposes and includes the effects of temporary differences between financial statement
income and income recognized for tax return purposes. Deferred tax assets and liabilities are recorded for
temporary differences between the financial reporting basis and the tax basis of assets and liabilities. We record a
valuation allowance to reduce our deferred tax assets to reflect the net deferred tax assets that we believe will be
realized. In assessing the likelihood that we will be able to recover our deferred tax assets and the need for a
valuation allowance, we consider all available evidence, both positive and negative, including historical levels of
pre-tax book income, expiration of net operating losses, changes in our debt and equity structure, expectations
and risks associated with estimates of future taxable income, ongoing prudent and feasible tax planning
strategies, as well as current tax laws. As of December 31, 2021, we have a valuation allowance of $46.8 million
against certain deferred tax assets consisting primarily of $14.0 million attributable to state net operating loss
carryovers, and $31.0 million attributable to deferred tax assets recorded as part of the Ascender acquisition.
92 |
2021 Form 10-K
Tax Effect of Items That Comprise a Significant
Portion of the Net Deferred Tax Asset and
Deferred Tax Liability
Deferred tax asset:
Employment related accruals
Other
Foreign tax credit carryover and other credit
carryovers
Net operating loss carryforwards
Total gross deferred tax asset
Valuation allowance
Total deferred tax asset
Deferred tax liability:
Intangibles
Deferred contract costs
Other
Total deferred tax liability
Net deferred tax asset
Net Deferred Tax by Geography
U.S.
International
Total
December 31,
2021
2020
(Dollars in millions)
$
$
$
$
$
$
16.9 $
19.2
0.6
161.5
198.2
(46.8)
151.4 $
(64.8) $
(29.4)
(24.6)
(118.8)
32.6 $
9.8
7.5
0.2
125.9
143.4
(16.3)
127.1
(61.7)
(27.7)
(27.5)
(116.9)
10.2
December 31,
2021
2020
(Dollars in millions)
38.9 $
(6.3)
32.6 $
22.0
(11.8)
10.2
As of December 31, 2021, we had federal, state, and foreign net operating loss carryovers, which will
reduce future taxable income when utilized. Approximately $105.1 million in net federal tax benefit is available
from the loss carryovers and an additional $0.6 million is available in tax credit carryovers. $53.6 million of the
federal net operating loss tax benefit will expire from 2031 to 2037. The remaining $51.5 million has an indefinite
carryover period. The state loss carryovers and foreign loss carryovers will result in a tax benefit of approximately
$38.7 million and $17.8 million, respectively, when utilized. The state net operating loss carryovers will begin to
expire in 2022. The majority of the foreign operating loss carryovers have an indefinite carryover period. The $0.6
million tax credit carryover is composed of a variety of credits most of which expire between 2027 and 2038.
We file income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With a
few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by
tax authorities for years before 2017.
The following table summarizes the activity for unrecognized tax benefits:
Federal, State and Foreign Tax
Beginning unrecognized tax balance
Increase prior period positions
Increase current period positions
Decrease prior period positions
Ending unrecognized tax benefits
Year Ended
December 31,
2021
2020
(Dollars in millions)
$
$
1.8 $
—
—
(1.8)
— $
1.5
0.1
0.2
—
1.8
There were no unrecognized tax benefits as of December 31, 2021. The total amount of unrecognized tax
benefits as of December 31, 2020, were $1.8 million, including $0.3 million of accrued interest. For the twelve
93 |
2021 Form 10-K
months ended December 31, 2021, we released $1.8 million of our reserve primarily attributable to the conclusion
of foreign tax audits. We make adjustments to these reserves when facts and circumstances change, such as the
closing of tax audits or the refinement of an estimate. To the extent that the final tax outcome of these matters is
different than the amounts recorded, such differences will affect the provision for income taxes in the period in
which such determination is made and could have a material impact on our financial condition and operating
results.
As of December 31, 2021, we have $322.9 million of unremitted foreign earnings. We consider all the
unremitted earnings to be indefinitely reinvested. Because all unremitted earnings are considered to be
indefinitely reinvested, no deferred tax liability has been recorded. In the event the unremitted earnings
considered to be indefinitely reinvested were repatriated, we would incur a withholding tax expense of
approximately $15.0 million.
15. Leases
Our leases primarily consist of office space. Leases with an initial term of 12 months or less are not
recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the
lease term. For leases beginning 2019 and later, we account for lease components separately from the non-lease
components.
Most leases include options to renew, and the lease renewal is at our sole discretion. Therefore, the
depreciable life of assets and leasehold improvements is limited by the expected lease term unless there is a
transfer of title or purchase option reasonably certain of exercise. Our lease agreements do not contain any
material residual value guarantees or material restrictive covenants.
We rent or sublease certain real estate to third parties. Our sublease portfolio mainly consists of operating
leases for space within our office facilities.
As a result of the coronavirus disease 2019 ("COVID-19") and our pivot to a virtual working environment, we
evaluated our lease portfolio resulting in the decision to close certain office locations and transition the impacted
employees to fully virtual work. During the year ended December 31, 2021, we recognized $1.8 million of charges
related to lease abandonment costs, and during the year end December 31, 2020, we recognized $16.8 million of
charges, which was comprised of $14.7 million of accelerated amortization of the right of use assets and $2.1
million of accelerated depreciation of leasehold improvements, related to the abandonment of the leases
associated with these office locations. These charges were recognized within selling, general and administrative
expense in the consolidated statements of operations.
On December 15, 2021, we sold the office building, land, and fixed assets of our St. Petersburg, Florida
facility for $40 million, less fees and expenses, resulting in a gain on the sale of $19.1 million, which was
recognized in the consolidated statements of operations within selling, general, and administrative expense. Upon
the sale of the building, we entered into a two year agreement to lease a portion of the building as of the sale
date.
94 |
2021 Form 10-K
Supplemental balance sheet information related to leases was as follows:
Lease Type
ASSETS
Balance Sheet Classification
December 31, 2021
December 31, 2020
(Dollars in millions)
Operating lease assets
Operating lease assets
Operating lease assets
Financing lease assets
Trade and other receivables, net
Prepaid expenses and other current assets
Right of use lease asset
Property, plant, and equipment, net
Total lease assets
LIABILITIES
Current
Financing lease liabilities Current portion of long-term debt
Operating lease
liabilities
Noncurrent
Current portion of long-term lease liabilities
Financing lease liabilities Long-term debt, less current portion
Operating lease
liabilities
Long-term lease liabilities, less current
portion
Total lease liabilities
The components of lease expense were as follows:
$
$
$
$
$
$
$
0.2
3.4
29.4
8.3
41.3
1.5
11.3
8.1
32.7
53.6
$
5.4
2.2
27.9
8.0
43.5
0.4
10.5
8.4
33.6
52.9
Lease Cost
Operating lease cost
Financing lease cost:
Depreciation of lease assets
Interest on lease liabilities (a)
Sublease income
Net lease cost
2021
Year Ended December 31,
2020
(Dollars in millions)
2019
6.1 $
9.1 $
12.8
1.3
0.3
(2.2)
5.5 $
0.8
0.4
(4.1)
6.2 $
0.1
—
(4.4)
8.5
$
$
(a)
Interest on lease liabilities was less than $0.1 million for the year ended December 31, 2019.
95 |
2021 Form 10-K
Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of lease
liabilities:
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
Lease assets obtained in exchange for new lease liabilities:
Operating leases
$
Year Ended December 31,
2020
2021
(Dollars in millions)
11.6 $
1.9
1.0
2.2
1.5
0.4
3.3
4.4
The future minimum lease payments under our operating and financing leases were as follows:
Years Ending December 31,
2022
2023
2024
2025
2026
Thereafter
Total lease payments (a)
Less: Interest
Total
Amount
(Dollars in millions)
17.0
13.6
9.8
7.0
3.8
7.6
58.8
5.2
53.6
$
$
$
(a)
Future minimum lease payments have not been reduced by minimum sublease rentals of $0.5 million due in
the future under noncancellable subleases.
96 |
2021 Form 10-K
Weighted average remaining lease term and weighted average discount rate were as follows:
Weighted average remaining lease term (in years)
Operating leases
Financing leases
Weighted average discount rate
Operating leases
Financing leases
16. Commitments and Contingencies
Legal Matters
December 31,
2021
2020
5.8
8.9
4.07%
3.81%
9.0
10.6
10.18%
3.91%
We are subject to claims and a number of judicial and administrative proceedings considered normal in the
course of our current and past operations, including employment-related disputes, contract disputes, disputes with
our competitors, intellectual property disputes, government audits and proceedings, customer disputes, and tort
claims. In some proceedings, the claimant seeks damages as well as other relief, which, if granted, would require
substantial expenditures on our part.
Our general terms and conditions in customer contracts frequently include a provision indicating we will
indemnify and hold our customers harmless from and against any and all claims alleging that the services and
materials furnished by us violate any third party’s patent, trade secret, copyright or other intellectual property right.
We are not aware of any material pending litigation concerning these indemnifications.
Some of these matters raise difficult and complex factual and legal issues and are subject to many
uncertainties, including the facts and circumstances of each particular action, and the jurisdiction, forum, and law
under which each action is proceeding. Because of these complexities, final disposition of some of these
proceedings may not occur for several years. As such, we are not always able to estimate the amount of our
possible future liabilities, if any.
There can be no certainty that we may not ultimately incur charges in excess of presently established or
future financial accruals or insurance coverage. Although occasional adverse decisions or settlements may occur,
it is management’s opinion that the final disposition of these proceedings will not, considering the merits of the
claims and available resources or reserves and insurance, and based upon the facts and circumstances currently
known, have a material adverse effect on our financial position or results of operations.
2019 Unrecovered Duplicate Payments
We identified an isolated service incident on September 26, 2019, that resulted in duplicate payments for
certain of our U.S. payroll customers totaling $18.8 million. Through December 31, 2019, $11.2 million remained
unrecovered, and we recorded a loss for the amount unrecovered within selling, general, and administrative
expense in our consolidated statement of operations for the period ended December 31, 2019. Our recovery
efforts continued through the second quarter of 2020, resulting in collections of $0.4 million during the year ended
December 31, 2020, which was recognized as a reduction to selling, general, and administrative expense. As of
December 31, 2020, we no longer pursued collection efforts of the remaining amount unrecovered.
Environmental Matters
We accrue for losses associated with environmental remediation obligations when such losses are probable
and reasonably estimable. Accruals for estimated losses from environmental remediation obligations generally
are recognized no later than completion of the remedial feasibility study. Such accruals are adjusted as further
information develops or circumstances change. Costs of future expenditures for environmental remediation
obligations are not discounted to their present value.
In February 1988, our predecessor entered into an arrangement with Northern Engraving Corporation
(“NEC”) and the Minnesota Pollution Control Agency (“MPCA”) in relation to groundwater contamination on a
parcel of real estate sold by our predecessor to NEC. Ceridian is now responsible for the arrangement with NEC
97 |
2021 Form 10-K
and the MPCA. The arrangement requires expense sharing between Ceridian and NEC for the remediation of
groundwater contamination.
In September 1989, our predecessor entered into an EMA with Seagate related to groundwater
contamination on a parcel of real estate sold by our predecessor to Seagate. Ceridian is now responsible for the
EMA. The EMA requires expense sharing between Ceridian and Seagate for the remediation of groundwater
contamination up to a certain limit. We have recognized an environmental reserve liability equal to the EMA limit.
We have recognized an undiscounted liability of approximately $4.5 million and $4.8 million as of
December 31, 2021 and 2020, respectively, in our consolidated balance sheets to comply with the NEC
arrangement and EMA described above. The ultimate cost, however, will depend on the extent of continued
monitoring activities as these projects progress.
98 |
2021 Form 10-K
17. Related Party Transactions
We provide Dayforce and related services to certain companies that are considered related parties. The
revenue from these related parties was as follows:
Counter-Party
Related Persons Interest
FleetCor
Technologies, Inc.
The Stronach Group
Verve Senior Living
Fidelity National
Financial, Inc.
Black Knight Sports
and Entertainment,
LLC
Essex Technology
Group, LLC
Guaranteed Rate,
Inc.
HighTower Advisors,
LLC
Ten-X, LLC
Shared board members. One board
member is also the chief executive
officer and the chairman of the
counter-party's board
The brother of David D. Ossip, our
Chair and Co-Chief Executive Officer,
was formerly the chief executive
officer, and is currently a minority
shareholder
David D. Ossip, our Chair and Co-
Chief Executive Officer, and his
brother are currently minority
shareholders
Shared board members
Portfolio company of Thomas H. Lee
Partners, L.P. ("THL"), of which
certain members of our board are
managing directors
Portfolio company of THL, of which
certain members of our board are
managing directors
Portfolio company of THL, of which
certain members of our board are
managing directors
Portfolio company of THL, of which
certain members of our board are
managing directors. One board
member also serves on the board of
the counter-party
Portfolio company of THL, of which
certain members of our board are
managing directors
Philips Feed Services Portfolio company of THL, of which
The Dun and
Bradstreet
Corporation
certain members of our board are
managing directors
Shared board members with Dun &
Bradstreet Holdings, Inc., which owns
the counter-party
2021
Year Ended December 31,
2020
2019
$
(Dollars in millions)
$
0.9
$
0.6
0.1
0.1
0.4
0.4
—
0.5
1.7
0.3
0.2
0.3
*
0.5
0.4
—
0.5
0.9
0.2
0.2
0.3
—
0.8
0.2
—
0.4
0.2
0.5
0.8
0.2
0.4
0.3
—
*We have entered into a contract to provide Dayforce and related services to the Dun and Bradstreet
Corporation.
99 |
2021 Form 10-K
We are party to service agreements with certain companies that are considered related parties. Payments
made to related parties were as follows:
Counter-Party
Related Persons Interest
The Dun and
Bradstreet
Corporation
Manulife Financial
Shared board members with Dun &
Bradstreet Holdings, Inc., which owns
the counter-party
Shared board members. Leagh E.
Turner, our Co-Chief Executive
Officer, also serves as a director
18. Capital Stock and Net (Loss) Income per Share
2021
Year Ended December 31,
2020
2019
$
(Dollars in millions)
$
0.4
$
0.4
8.1
7.3
—
7.1
As of December 31, 2021 and 2020, there were 151,995,031 and 148,571,412 shares of common stock
issued and outstanding, respectively.
Holders of our common stock are entitled to the rights set forth as follows. Directors are elected by a
plurality of the votes entitled to be cast except as set forth below with respect to directors to be elected by the
holders of common stock. Our stockholders do not have cumulative voting rights. Except as otherwise provided in
our fourth amended and restated certificate of incorporation or as required by law, all matters to be voted on by
our stockholders other than matters relating to the elections and removal of directors must be approved by a
majority of the shares present in person or by proxy at the meeting and entitled to vote on the subject matter or by
a written resolution of the stockholders representing the number of affirmative votes required for such matter at a
meeting.
Our stockholders have no preemptive or other rights to subscribe for additional shares. All holders of our
common stock are entitled to share equally on a share-for-share basis in any assets available for distribution to
common stockholders upon our liquidation, dissolution or winding up. All outstanding shares are validly issued,
fully paid and nonassessable.
Basic net (loss) income per share is computed by dividing net (loss) income available to common
stockholders by the weighted-average number of shares of common stock outstanding during the period.
For the calculation of diluted net (loss) income per share, net (loss) income per share is adjusted by the
effect of dilutive securities, including awards under our share-based compensation plans. Diluted net (loss)
income per share is computed by dividing the resulting net (loss) income by the weighted-average number of fully
diluted common shares outstanding. In the years ended December 31, 2021 and 2020, our potential dilutive
shares, such as term-based stock options, RSUs, and PSUs were not included in the computation of diluted net
loss per share as the effect of including these shares in the calculation would have been anti-dilutive.
The basic and diluted net (loss) income per share computations were calculated as follows:
Year Ended December 31,
2020
(Dollars in millions, except share and per share data)
2019
2021
Numerator:
Net (loss) income
Denominator:
Weighted-average shares outstanding - basic
Effect of dilutive equity instruments
Weighted-average shares outstanding - diluted
Net (loss) income per share - basic
Net (loss) income per share - diluted
$
$
$
(75.4) $
(4.0) $
78.7
150,402,321
—
150,402,321
146,774,471
—
146,774,471
142,049,112
6,707,480
148,756,592
(0.50) $
(0.50) $
(0.03) $
(0.03) $
0.55
0.53
100 |
2021 Form 10-K
The following potentially dilutive shares were excluded from the calculation of diluted net (loss) income per
share because their effect would have been anti-dilutive:
Stock options
Restricted stock units
Performance stock units
Year Ended December 31,
2021
5,874,818
604,770
549,583
2020
7,135,159
745,955
229,433
2019
3,307,719
18,980
—
The shares underlying the conversion option in the Convertible Senior Notes were not considered in the
calculation of diluted net income (loss) per share as the effect would have been anti-dilutive. Based on the initial
conversion price, the entire outstanding principal amount of the Convertible Senior Notes as of December 31,
2021, would have been convertible into approximately 4.3 million shares of our common stock. Since we expect
to settle the principle amount of the Convertible Senior Notes in cash, we use the treasury stock method for
calculating any potential dilutive effect on diluted net income per share, if applicable. As a result, only the amount
by which the conversion value exceeds the aggregate principal amount of the Convertible Senior Notes (the
“conversion spread”) is considered in the diluted earnings per share computation. The conversion spread has a
dilutive impact on diluted net income per share when the average market price of our common stock for a given
period exceeds the initial conversion price of $132.20 per share for the Convertible Senior Notes. We excluded
the potentially dilutive effect of the conversion spread of the Convertible Senior Notes as the average market price
of our common stock during the twelve months ended December 31, 2021, was less than the conversion price of
the Convertible Senior Notes. In connection with the issuance of the Convertible Senior Notes, we entered into
Capped Calls, which were not included for purposes of calculating the number of diluted shares outstanding, as
their effect would have been anti-dilutive.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange
Act, are designed to ensure that information required to be disclosed by a company in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed by a company in the reports that it
files or submits under the Exchange Act is accumulated and communicated to our management, including our
principal executive and principal financial officers, as appropriate to allow timely decisions regarding required
disclosure.
Our management, with the participation of our Co-Chief Executive Officers and our Chief Financial Officer,
evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2021. Based on the
evaluation of our disclosure controls and procedures as of December 31, 2021, our Co-Chief Executive Officers
and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective
at the reasonable assurance level.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management conducted an assessment of the
effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control—
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework). Based on the assessment, management has concluded that its internal control over financial
reporting was effective as of December 31, 2021, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements in accordance with GAAP. Our independent
101 |
2021 Form 10-K
registered public accounting firm, KPMG LLP, has issued an audit report with respect to our internal control over
financial reporting, which appears in Part II, Item 8 of this Annual Report on Form 10-K.
On March 1, 2021, we completed the acquisition of Ascender. Prior to this acquisition, Ascender was a
privately-held company not subject to the Sarbanes-Oxley Act of 2002, the rules and regulations of the SEC, or
other corporate governance requirements to which public companies may be subject. As of and for the fiscal year
ended December 31, 2021, Ascender accounted for approximately 5% of our consolidated total assets and 7% of
our consolidated total revenue.
As part of our ongoing integration activities, we are in the process of incorporating internal controls over
significant processes specific to Ascender that we believe are appropriate and necessary to account for the
acquisition and to consolidate and report our financial results. In accordance with guidance issued by the SEC,
companies are permitted to exclude acquisitions from their final assessment of internal control over financial
reporting during the year of acquisition. Accordingly, we have excluded Ascender from our assessment of internal
control over financial reporting as of December 31, 2021 as our integration activities are ongoing and incomplete.
Changes in Internal Control Over Financial Reporting
With the exception of internal control-related integration activities related to our acquisition of Ascender,
there were no changes in our internal control over financial reporting identified in connection with the evaluation
required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the fiscal quarter ended
December 31, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Co-Chief Executive Officers and Chief Financial Officer, believes that our
disclosure controls and procedures and internal control over financial reporting are designed to provide
reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However,
our management does not expect that our disclosure controls and procedures or our internal control over financial
reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the
design of a control system must reflect the fact that there are resource constraints, and the benefits of controls
must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been
detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that
breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people or by management override of the controls.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions; over time, controls may become inadequate because of changes in conditions, or the
degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-
effective control system, misstatements due to error or fraud may occur and not be detected.
Item 9B. Other Information.
None.
102 |
2021 Form 10-K
Item 10. Directors, Executive Officers and Corporate Governance.
Directors
PART III
The information provided under the headings “Election of Directors” under Proposal One and “Board of
Directors” in the Proxy Statement for Ceridian’s 2022 Annual Meeting of Stockholders (“Proxy Statement”), is
incorporated herein by reference.
Executive Officers
Information regarding our executive officers is set forth in Item 1 in Part I of this Form 10-K captioned
“Executive Officers”.
Certain Relationships and Related Party Transactions
The nature of certain relationships and related party transactions between any director, executive officer or
person nominated to become a director is stated under the headings “Election of Directors” under Proposal One,
“Board of Directors”, and “Certain Relationships and Related Party Transactions” in the Proxy Statement and is
incorporated herein by reference.
Code of Ethics
We have adopted a code of ethics known as the “Code of Conduct” that applies to all employees,
contractors, officers and directors of Ceridian. The Code of Conduct may be viewed online on Ceridian’s website
https://www.ceridian.com/Ceridian/media/Files/ceridian-code-of-conduct-2018.pdf. We intend to satisfy the
disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of
our Code of Conduct that applies to our principal executive officer, principal financial officer or principal
accounting officer by posting such information on our website within four business days following the date of such
amendment or waiver.
Director Nomination Process
The information provided under the headings “Election of Directors” under Proposal One, “Committees of
the Board of Directors” under the Board of Directors heading, and “Corporate Governance Guidelines” under the
Corporate Governance heading in the Proxy Statement is incorporated herein by reference. There have been no
material changes to the procedures by which shareholders may recommend nominees to our Board.
Audit Committee; Audit Committee Financial Expert
The information provided under the subheadings “Committees of the Board of Directors” under the Board of
Directors heading and “Report of the Audit Committee of the Board of Directors” under Proposal Three in the
Proxy Statement is incorporated herein by reference.
Item 11. Executive Compensation.
The information required by this item is incorporated herein by reference to the information set forth in
Ceridian’s Proxy Statement under the headings “Director Compensation”, Executive Compensation”, “Equity
Compensation Plan Information”, and “Corporate Governance”.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
Securities Authorized for Issuance Under Equity Compensation Plans
The information required by this item is incorporated herein by reference to the information set forth in the
Proxy Statement under the heading “Equity Compensation Plan Information”.
103 |
2021 Form 10-K
Security Ownership of Certain Beneficial Owners and Management
The information required by this item is incorporated herein by reference to the information set forth in the
Proxy Statement under the heading “Security Ownership of Certain Beneficial Owners and Management”.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item is incorporated herein by reference to the information set forth in the
Proxy Statement under the headings “Certain Relationships and Related Party Transactions”, “Election of
Directors”, under Proposal One, “Board of Directors” and “Corporate Governance”.
Item 14. Principal Accounting Fees and Services.
Our independent registered public accounting firm is KPMG LLP, Minneapolis, MN, Auditor Firm ID: 185.
The information required by this item is incorporated herein by reference to the information set forth in the
Proxy Statement under the heading “Ratification of the Appointment of KPMG LLP as our Independent Registered
Public Accounting Firm for Fiscal Year 2022” under Proposal Three.
104 |
2021 Form 10-K
Item 15. Exhibits, Financial Statement Schedules.
(1) Consolidated Financial Statements
See Index to Consolidated Financial Statements at Item 8 herein.
PART IV
(2)
Financial Statement Schedules
All schedules are omitted because they are not applicable or the required information is shown in the
consolidated financial statements or notes thereto.
(3) Exhibits
The following is a list of exhibits filed as part of this Annual Report on Form 10-K.
Exhibit
Number
3.1
3.2
4.1
4.2
4.3**
4.4
4.5
10.1
10.2
10.3
10.4
10.5*
10.6*
10.7*
Description
Fourth Amended and Restated Certificate of Incorporation of Ceridian HCM Holding Inc.
(incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q filed by the Company
on May 5, 2021).
Second Amended and Restated Bylaws of Ceridian HCM Holding Inc. (incorporated by reference to
Exhibit 3.1 to the Current Report on Form 8-K filed by the Company on February 9, 2022).
Certificate of Common Stock (incorporated by reference to Exhibit 4.1 to the Quarterly Report on
Form 10-Q filed by the Company on May 24, 2018).
Registration Rights Agreement, dated April 30, 2018, by and among Ceridian HCM Holding Inc. and
the other parties thereto (incorporated by reference to Exhibit 4.4 to the Quarterly Report on Form
10-Q filed by the Company on May 24, 2018).
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities
Exchange Act of 1934.
Indenture, dated as of March 5, 2021, between Ceridian HCM Holding Inc. and Wells Fargo Bank,
National Association (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed
by the Company on March 5, 2021).
Form of 0.25% Convertible Senior Notes due 2026 (incorporated by reference to Exhibit 4.1 to the
Current Report on Form 8-K filed by the Company on March 5, 2021).
Credit Agreement, dated April 30, 2018, between Ceridian HCM Holding Inc., as borrowers, the
lenders party thereto, and Deutsche Bank AG New York Branch (as administrative agent and
collateral agent) (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q
filed by the Company on August 9, 2018).
First Amendment to Credit Agreement, dated February 19, 2020, between Ceridian HCM Holding
Inc., as borrowers, the lenders party thereto, Deutsche Bank AG New York Branch (as administrative
agent and collateral agent) (incorporated by reference to Exhibit 10.4 to the Quarterly Report on
Form 10-Q filed by the Company on May 6, 2020).
Second Amendment to Credit Agreement, dated as of December 15, 2021, between Ceridian HCM
Holding, Inc., as borrowers, the lenders party thereto, Deutsche Bank AG New York Branch (as
administrative agent and collateral agent) (incorporated by reference to Exhibit 10.1 to the Current
Report on Form 8-K filed by the Company on December 16, 2021).
Form of Capped Call Transaction Confirmation (incorporated by reference to Exhibit 10.1 to the
Current Report on Form 8-K filed by the Company on March 5, 2021).
Employment Agreement, dated April 2, 2012, by and between Dayforce Corporation and David D.
Ossip (incorporated by reference to Exhibit 10.2 to the Registration on Form S-1 filed by the
Company on March 26, 2018).
Performance-Based Stock Option Award Agreement dated May 8, 2020 by and between Ceridian
HCM Holding Inc. and David Ossip (incorporated by reference to Exhibit 10.2 to the Quarterly Report
on Form 10-Q filed by the Company on August 5, 2020).
Amended and Restated Restrictive Covenant Agreement, effective as of March 20, 2017, by and
among Ceridian Holding LLC, Ceridian LLC, Ceridian Canada Ltd., Ceridian Dayforce Corporation
and David D. Ossip (incorporated by reference to Exhibit 10.3 to the Registration on Form S-1 filed
by the Company on March 26, 2018).
105 |
2021 Form 10-K
10.8*
10.9*
10.10*
10.11*
10.12*
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
10.23*
10.24*
10.25*
10.26*
10.27*
Amended and Restated Employment Agreement, effective February 9, 2022, between Leagh E.
Turner and Ceridian Canada Ltd. (incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K filed by the Company on February 9, 2022).
Employment Agreement, dated May 1, 2019, by and between Chris R. Armstrong and Ceridian HCM,
Inc. (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed by the
Company on July 30, 2019).
Amendment to Employment Agreement, dated November 5, 2019, by and between Christopher R.
Armstrong and Ceridian HCM, Inc. (incorporated by reference to Exhibit 10.6 to the Annual Report on
Form 10-K filed by the Company on February 26, 2020).
Second Amendment to Employment Agreement, effective February 3, 2020, between Christopher R.
Armstrong and Ceridian HCM, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report
on Form 8-K filed by the Company on February 5, 2020).
Employment Agreement, dated December 7, 2017, by and between Ceridian Canada Ltd. and Scott
A. Kitching (incorporated by reference to Exhibit 10.6 to the Registration on Form S-1 filed by the
Company on March 26, 2018).
Separation Agreement, Release, and Consulting Agreement, effective February 16, 2021, between
Scott A. Kitching, Ceridian HCM Holding Inc., and Ceridian Canada Ltd. (incorporated by reference
to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed by the Company on May 5, 2021).
Employment Agreement, dated September 15, 2020, by and between Noémie C. Heuland and
Ceridian HCM, Inc. (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q
filed by the Company on November 5, 2020).
Employment Agreement, effective July 30, 2020, between Joseph B. Korngiebel and Ceridian HCM,
Inc. (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed by the
Company on May 5, 2021).
Employment Agreement, effective February 26, 2021, between Rakesh Subramanian and Ceridian
HCM, Inc., (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q filed by
the Company on May 5, 2021).
Amendment to Employment Agreement, effective March 15, 2021, between Rakesh Subramanian
and Ceridian HCM, Inc. (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form
10-Q filed by the Company on May 5, 2021).
Employment Agreement, effective June 7, 2021, between William McDonald and Ceridian HCM, Inc.
(incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed by the
Company on August 4, 2021).
Ceridian Holding Corp. 2007 Stock Incentive Plan, dated November 9, 2007 (incorporated by
reference to Exhibit 4.3 to the Registration on Form S-8 filed by the Company on April 25, 2018).
2013 Ceridian HCM Holding Inc. Stock Incentive Plan, dated October 1, 2013, and as amended on
March 30, 2016, August 11, 2016, December 30, 2016, and March 20, 2017 (incorporated by
reference to Exhibit 10.10 to the Registration on Form S-1 filed by the Company on March 26, 2018).
Form of Director Indemnification Agreement for Ceridian HCM Holding Inc. (incorporated by
reference to Exhibit 10.11 to the Registration on Form S-1 filed by the Company on April 12, 2018).
Ceridian HCM Holding Inc. 2018 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to
the Registration Statement on Form S-8 filed by the Company on April 25, 2018).
Form of Director Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.13
to the Registration on Form S-1 filed by the Company on April 12, 2018).
Form of Director Restricted Stock Unit Award Agreement (for awards made after May 1, 2019)
(incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed by the
Company on July 30, 2019).
Form of Director Restricted Stock Unit Award Agreement (for annual compensation awards made
after May 1, 2020) (incorporated by reference to Exhibit 10.3 to the Quarterly Reported on Form 10-
Q filed by the Company on August 5, 2020).
Form of Restricted Stock Unit Award Agreement (for Canadian executive awards made after
February 25, 2021) (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed
by the Company on February 26, 2021).
Form of Director Stock Option Award Agreement (for annual compensation awards made after May
1, 2020) (incorporated by reference to Exhibit 10.4 to the Quarterly Reported on Form 10-Q filed by
the Company on August 5, 2020).
106 |
2021 Form 10-K
10.28*
10.29*
10.30*
10.31*
10.32*
10.33*
10.34*
10.35*
10.36*
10.37*
10.38*
21.1**
23.1**
24.1
31.1**
31.2**
31.3**
32.1**
32.2**
32.3**
101.INS**
Form of Performance Stock Unit Award Agreement (for Canadian executive awards made after
February 25, 2021) (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed
by the Company on February 26, 2021).
Form of Employee Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit
10.14 to the Registration on Form S-1 filed by the Company on April 12, 2018).
Form of Option to Purchase Common Stock of Ceridian HCM Holding Inc. (incorporated by reference
to Exhibit 10.15 to the Registration on Form S-1 filed by the Company on April 12, 2018).
Form of Stock Option Award Agreement (for awards made after February 25, 2021) (incorporated by
reference to Exhibit 10.3 to the Current Report on Form 8-K filed by the Company on February 26,
2021.
Form of Employee Performance-Based Stock Option Award Agreement (incorporated by reference to
Exhibit 10.1 to the Quarterly Reported on Form 10-Q filed by the Company on August 5, 2020).
Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.1 to the
Current Report on Form 8-K filed by the Company on February 10, 2020).
Form of Restricted Stock Unit Award Agreement (for awards made after February 25, 2021
(incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed by the Company
on February 26, 2021).
Form of Performance Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 to the
Current Report on Form 8-K filed by the Company on March 2, 2020).
Form of Performance Stock Unit Award Agreement (for awards made after February 25, 2021)
(incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Company
on February 26, 2021).
Ceridian HCM Holding Inc. Global Employee Stock Purchase Plan (incorporated by reference to
Exhibit 99.1 to the Registration Statement on Form S-8 filed by the Company on November 28,
2018).
Ceridian HCM Holding Inc. 2021 Management Incentive Plan (incorporated by reference to Exhibit
10.1 to the Current Report on Form 8-K filed by the Company on February 26, 2021).
List of subsidiaries of Ceridian HCM Holding Inc.
Consent of KPMG LLP, Independent Registered Public Accounting Firm.
Power of Attorney (included on signature page).
Certification of Co-Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the
Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Certification of Co-Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the
Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the
Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Certification of Co-Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Co-Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document)
101.SCH** Inline XBRL Taxonomy Extension Schema Document
101.CAL**
101.DEF**
101.LAB**
101.PRE** Inline XBRL Taxonomy Extension Presentation Linkbase Document
104**
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Management compensatory plan or arrangement.
** Filed herewith.
107 |
2021 Form 10-K
Item 16. Form 10-K Summary.
Not applicable.
108 |
2021 Form 10-K
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SIGNATURES
Date: February 25, 2022
Date: February 25, 2022
CERIDIAN HCM HOLDING INC.
By:
/s/ David D. Ossip
Name: David D. Ossip
Title: Co-Chief Executive Officer
By:
/s/ Leagh E. Turner
Name: Leagh E. Turner
Title: Co-Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned constitutes and appoints each of
Noémie C. Heuland and William E. McDonald, or any of them, each acting alone, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution, for such person and in his or her
name, place and stead, in any and all capacities, to sign this Annual Report on Form 10-K, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that any such
attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
109 |
2021 Form 10-K
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been
signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
Name
Title
Date
/s/ David D. Ossip
David D. Ossip
/s/ Leagh E. Turner
Leagh E. Turner
/s/ Noémie C. Heuland
Noémie C. Heuland
/s/ Jeffrey S. Jacobs
Jeffrey S. Jacobs
/s/ Brent B. Bickett
Brent B. Bickett
/s/ Ronald F. Clarke
Ronald F. Clarke
/s/ Deborah A. Farrington
Deborah A. Farrington
/s/ Thomas M. Hagerty
Thomas M. Hagerty
/s/ Linda P. Mantia
Linda P. Mantia
/s/ Ganesh B. Rao
Ganesh B. Rao
/s/ Andrea S. Rosen
Andrea S. Rosen
/s/ Gerald C. Throop
Gerald C. Throop
Chair and Co-Chief Executive Officer
(Co-Principal Executive Officer)
February 25, 2022
Co-Chief Executive Officer and Director
(Co-Principal Executive Officer)
February 25, 2022
Executive Vice President and Chief Financial
Officer (Principal Financial Officer)
February 25, 2022
Head of Accounting and Financial Reporting
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Director
February 25, 2022
February 25, 2022
February 25, 2022
February 25, 2022
February 25, 2022
February 25, 2022
February 25, 2022
February 25, 2022
February 25, 2022
110 |
2021 Form 10-K
EXECUTIVE OFFICERS
BOARD OF DIRECTORS
David D. Ossip
Chair of the Board
Co-Chief Executive Officer
Leagh E. Turner
Co-Chief Executive Officer
Christopher R. Armstrong
Executive Vice President
Chief Operating Officer
Noémie C. Heuland
Executive Vice President
Chief Financial Officer
Stephen H. Holdridge
Executive Vice President
Chief Customer Officer
Jeffrey S. Jacobs
Head of Accounting and Financial Reporting
Joseph B. Korngiebel
Executive Vice President
Chief Product and Technology Officer
William E. McDonald
Executive Vice President
General Counsel and Corporate Secretary
Rakesh Subramanian
Executive Vice President
Chief Revenue Officer
David D. Ossip
Chair of the Board
Brent B. Bickett
Ronald F. Clarke
Deborah A. Farrington
Thomas M. Hagerty
Linda P. Mantia
Ganesh B. Rao
Andrea S. Rosen
Gerald C. Throop
Lead Director
Leagh E. Turner
CERIDIAN GLOBAL HEADQUARTERS
3311 East Old Shakopee Road
Minneapolis, MN 55425-1640
WEBSITE
www.ceridian.com
INVESTOR RELATIONS
investors@ceridian.com
STOCKHOLDER QUESTIONS
stockholders@ceridian.com
TRANSFER AGENT
American Stock Transfer & Trust Company, LLC
Operations Center
6201 15th Avenue
Brooklyn, NY 11219
(800) 937-5449 or (718) 921-8124
www.astfinancial.com
Ceridian HCM Holding Inc.
3311 East Old Shakopee Road
Minneapolis, Minnesota 55425