Ceridian(DAY) - 2019 Q4 - Annual Report

PART I Item 1. Business. Ceridian is a global HCM software company, offering Dayforce and Powerpay, actively migrating legacy customers to Dayforce while focusing on innovation and global expansion - Ceridian is a global HCM software company, with Dayforce as its flagship cloud platform providing HR, payroll, benefits, workforce management, and talent management functionality. Powerpay serves the Canadian small business market[18][19][25] - The company generally stopped actively selling its legacy Bureau solutions to new customers in 2012 (US) and 2015 (Canada), focusing on maintenance and migrating existing Bureau customers to Dayforce[18][26] Dayforce Customer Growth (2012-2019) | Year | Live Dayforce Customers | | :--- | :----------------------: | | 2012 | 482 | | 2019 | 4,363 | - As of December 31, 2019, Ceridian had approximately 38,000 Powerpay customer accounts and 4,363 live Dayforce customers, representing about 3.9 million active global users. No single customer accounted for more than 1% of revenues in 2019[25][28] - Ceridian employs a direct sales force and third-party channels, segmented by customer size and geography, with a dedicated team for Bureau customer migration. Implementation and professional services are provided by an internal team, supplemented by third-party partners[29][30] - The company's global customer support operates 24/7 from offices in North America, the UK, Mauritius, and Australia, organized into specialized pods for deep domain expertise[31] - Ceridian's R&D team focuses on customer-driven innovation, utilizing a modern cloud technology stack and agile development. Dayforce and Powerpay applications are hosted by third-party providers across multiple global data centers[32][33] - The HCM market is highly competitive, with Ceridian competing against legacy payroll providers (e.g., ADP), cloud-enabled client-server HCM providers (e.g., Ultimate Software), modern cloud HCM providers (e.g., Workday), large enterprise application vendors (e.g., Oracle, SAP), and point solution providers (e.g., Kronos, Cornerstone OnDemand)[34] - Key competitive factors include product functionality, scalability, workforce management, tax services, technology, multi-country expertise, service quality, third-party integration, total cost of ownership, brand, pricing, and distribution[36] - As of December 31, 2019, Ceridian had 5,011 active employees, with a significant presence in North America, Europe, Australia, and Mauritius. The company emphasizes diversity and equality, receiving over 15 workplace awards in 2019[35][36] Executive Officers (as of Feb 28, 2020) | Name | Age | Position | | :-------------- | :-- | :----------------------------- | | David D. Ossip | 53 | Chairman and Chief Executive Officer | | Leagh E. Turner | 48 | President and Chief Operating Officer | | Christopher Armstrong | 51 | Executive Vice President, Chief Customer Officer | | Arthur Gitajn | 67 | Executive Vice President and Chief Financial Officer | | Scott A. Kitching | 50 | Executive Vice President, General Counsel and Assistant Secretary | Item 1A. Risk Factors. Ceridian faces risks in operations, market competition, technology, regulation, data security, international business, and financial leverage - Ceridian has a history of losses and negative cash flows from operating activities, with net income of $78.7 million in 2019, a net loss of $60.6 million in 2018, and net income of $3.3 million in 2017. The company had an accumulated deficit of $229.8 million as of December 31, 2019[50] - The HCM market is highly competitive, with larger competitors having greater resources and brand recognition. Failure to compete effectively, manage growth of Cloud solutions, or successfully migrate Bureau customers could adversely affect the business[51][52][55][57] - The company faces risks from rapid technological changes, evolving industry standards, and the need to continuously develop new or enhanced functionality to remain competitive[63] - Information security breaches, loss of customer data, or system disruptions could severely impact the business, reputation, and financial results, especially given the company's FTC consent order regarding data protection[64][65][66][67] - Compliance with a variety of U.S. and international laws and regulations, particularly concerning privacy, data protection (e.g., GDPR, Privacy Shield), and information security, is critical. Non-compliance or perceived violations could lead to enforcement actions, fines, litigation, and reputational damage[73][74][75][76][77][78][79] - Reliance on third-party service providers for data centers, electronic funds transfers, check printing, and legal monitoring introduces risks of disruption, quality decline, or termination of services[82][83][85][86][87][88][89] - International operations (approximately 30% of revenue, primarily from Canada) expose the company to risks such as localization costs, management difficulties, compliance with foreign laws, currency exchange rate fluctuations, and political/economic conditions[105][106] - The company's substantial indebtedness ($671.5 million outstanding principal under Senior Term Loan as of Dec 31, 2019) could adversely affect its financial condition, ability to operate, and flexibility, with variable interest rates exposing it to interest rate risk[146][147][148] - The price of Ceridian's common stock may be volatile due to market conditions, operational results, industry developments, and other factors, potentially leading to investor losses[159][160][161] - The company does not intend to pay cash dividends in the foreseeable future, meaning investors must rely on stock price appreciation for returns[166] Item 1B. Unresolved Staff Comments. There are no unresolved staff comments from the SEC - The company has no unresolved staff comments[171] Item 2. Properties. Ceridian's corporate headquarters is in Minneapolis, Minnesota, with major offices globally; most facilities are leased, one is owned - Ceridian's corporate headquarters is located in Minneapolis, Minnesota, occupying approximately 195,000 square feet[172] - The company has major North American offices in Atlanta, Alpharetta, Fountain Valley, Honolulu, Minneapolis, St. Petersburg, Montreal, Ottawa, Toronto, and Winnipeg, as well as international offices in Ebene (Mauritius), Glasgow (Scotland), Sydney, and Melbourne (Australia)[173] - All facilities are leased, except for the St. Petersburg, Florida, facility, which is owned[173] Item 3. Legal Proceedings. Ceridian is involved in ordinary course legal proceedings, not anticipating material adverse effects on its financial condition or liquidity - Ceridian is subject to legal proceedings arising in the ordinary course of business, including employment, contract, intellectual property disputes, and government audits[174] - Management believes that the final disposition of current legal proceedings will not have a material adverse effect on the company's financial position or results of operations[174] Item 4. Mine Safety Disclosures. This item is not applicable to Ceridian HCM Holding Inc - Item 4. Mine Safety Disclosures is not applicable to the Registrant[175] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Ceridian's common stock trades on NYSE and TSX under 'CDAY' since April 2018; no cash dividends are planned, and no equity securities were repurchased - Ceridian's common stock began trading on the New York Stock Exchange ("NYSE") and the Toronto Stock Exchange under the symbol "CDAY" on April 26, 2018[178] - The company does not currently intend to pay cash dividends on its common stock in the foreseeable future, planning to retain future earnings for business operations and debt repayment[179][166] Common Stock Outstanding (as of Feb 25, 2020) | Metric | Value | | :--- | :--- | | Shares Outstanding | 144,710,100 | - As of December 31, 2019, there were 105 stockholders of record. The company has not made any issuer purchases of equity securities[180][182] Item 6. Selected Financial Data This section presents Ceridian's selected historical consolidated financial data for 2017-2019, reflecting retrospective adoption of FASB ASC Topic 606 Consolidated Statements of Operations Data (2017-2019, in millions USD) | Metric | 2019 | 2018 | 2017 | | :----------------------------------------- | :------ | :------ | :------ | | Total revenue | $824.1 | $740.7 | $676.2 | | Cost of revenue | $455.9 | $425.8 | $406.7 | | Selling, general, and administrative expenses | $295.9 | $258.8 | $214.1 | | Operating profit | $72.3 | $56.1 | $55.4 | | Interest expense, net | $32.4 | $83.2 | $87.1 | | Income (loss) from continuing operations before income taxes | $34.3 | $(26.9) | $(40.5) | | Income tax (benefit) expense | $(44.4) | $8.4 | $(48.5) | | Income (loss) from continuing operations | $78.7 | $(35.3) | $8.0 | | Net income (loss) attributable to Ceridian | $78.7 | $(60.6) | $3.3 | | Basic EPS | $0.55 | $(0.60) | $(0.26) | | Diluted EPS | $0.53 | $(0.60) | $(0.26) | Consolidated Balance Sheet Data (as of Dec 31, 2017-2019, in millions USD) | Metric | 2019 | 2018 | 2017 | | :------------------------ | :-------- | :-------- | :-------- | | Cash and equivalents | $281.3 | $217.8 | $94.2 | | Total assets | $6,085.7 | $5,247.8 | $6,817.9 | | Long-term debt (1) | $666.3 | $663.5 | $1,119.8 | | Total liabilities | $4,203.4 | $3,632.3 | $5,606.9 | | Working capital | $252.0 | $164.5 | $180.5 | | Total stockholders' equity | $1,882.3 | $1,615.5 | $1,173.2 | Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a detailed analysis of Ceridian's financial condition and operations, including Cloud/Bureau solutions, KPIs, comparative results, liquidity, and critical accounting policies - Ceridian's business model focuses on rapid growth of Dayforce and maximizing customer lifetime value, with high visibility into future revenues due to its subscription model and high retention rates[197] - It takes approximately 2 years to recover implementation, customer acquisition, and other direct costs for a new Dayforce customer, as PEPM subscription fees are not charged until the customer goes live[197] Key Performance Measures (2017-2019) | Metric | 2019 | 2018 | 2017 | | :----------------------------------- | :------ | :------ | :------ | | Live Dayforce customers | 4,363 | 3,718 | 3,001 | | Annual Cloud revenue retention rate | 96.3% | 96.0% | 96.7% | | Cloud annualized recurring revenue (ARR) (in millions) | $582.0 | $476.2 | $366.7 | | Adjusted EBITDA (in millions) | $184.6 | $160.6 | $131.4 | | Adjusted EBITDA margin | 22.4% | 21.7% | 19.4% | - Dayforce customer base grew from 482 in 2012 to 4,363 in 2019, with over 640 net new customers contracted but not yet live as of December 31, 2019[202] - In 2019, 72% of new live Dayforce customers were net new, and 28% were migrations from Bureau solutions. Dayforce serves small (under 500 employees), major (500-5,999), and enterprise (6,000+) businesses[204] - Cloud revenue has surpassed Bureau revenue since Q3 2016, growing from 41% of total revenue in Q4 2015 to 83% in Q4 2019[210] - Ceridian completed its IPO on April 30, 2018, issuing 24.15 million shares and raising $531.3 million gross proceeds, plus a $100 million private placement. Proceeds were used to redeem Senior Notes and refinance debt[213][214] - The company generates recurring revenue from Cloud (Dayforce, Powerpay) and Bureau solutions, and professional services revenue from implementation and other services. Float revenue from invested customer trust funds is also a recurring revenue component[215] - Dayforce primarily charges monthly PEPM fees, with contracts typically 3-5 years. Powerpay charges per-employee, per-process fees for Canadian small businesses. Bureau solutions charge per-process fees[216][217][218] - Cost of revenue includes customer service, technical support, implementation, hosting, consulting, delivery, royalties, depreciation, amortization, and product development and management expenses[219][220][222][223][224][225] - Selling, general, and administrative expenses include direct marketing, sales force costs, corporate administration, finance, legal, HR, and amortization of other intangible assets[226][227] - Other expense, net, includes foreign currency translation gains/losses and net periodic benefit plan expense[228] - Income tax provision accounts for federal, state, and international taxes, including deferred tax assets and liabilities, and the impact of the 2017 Tax Cut and Jobs Act[229][230] Revenue Growth (2019 vs. 2018, in millions USD) | Revenue Category | 2019 | 2018 | Change ($) | Change (%) | Constant Currency Change (%) | | :------------------------------- | :------ | :------ | :--------- | :--------- | :--------------------------- | | Total revenue | $824.1 | $740.7 | $83.4 | 11.3% | 12.1% | | Total Cloud revenue | $660.0 | $528.8 | $131.2 | 24.8% | 25.7% | | Dayforce recurring services, excl. float | $377.9 | $288.2 | $89.7 | 31.1% | 31.7% | | Dayforce float | $51.1 | $37.5 | $13.6 | 36.3% | 37.1% | | Total Dayforce recurring services | $429.0 | $325.7 | $103.3 | 31.7% | 32.3% | | Powerpay recurring services, excl. float | $76.9 | $78.0 | $(1.1) | (1.4)% | 0.6% | | Powerpay float | $12.1 | $12.0 | $0.1 | 0.8% | 4.2% | | Total Powerpay recurring services | $89.0 | $90.0 | $(1.0) | (1.1)% | 1.1% | | Total Bureau revenue | $164.1 | $211.9 | $(47.8) | (22.6)% | (22.1)% | - Cloud revenue growth in 2019 was driven by new customers, add-ons, and Bureau customer migrations, with an average revenue increase of 27% from migrated Bureau customers[237][240] - Bureau revenue declined by $47.8 million (22.6%) in 2019, with approximately 40% of the decline due to customer migrations to Dayforce. The annual Bureau revenue retention rate was 83.2% in 2019[238] Float Revenue and Yield (2018-2019) | Metric | 2019 | 2018 | | :----------------- | :------ | :------ | | Investment income | $80.2M | $67.0M | | Average float balance | $3,427.3M | $3,361.5M | | Average yield | 2.34% | 2.00% | - Total cost of revenue increased by $30.1 million (7.1%) in 2019, driven by increased Dayforce customer support, professional services for new implementations, and product development efforts[242][243] Gross Margin by Solution (2018-2019) | Metric | 2019 | 2018 | | :-------------------------- | :---- | :---- | | Total gross margin | 44.7% | 42.5% | | Cloud recurring services | 69.6% | 66.1% | | Bureau recurring services | 72.7% | 71.7% | | Professional services and other | (4.0)% | (14.3)% | - Cloud recurring services gross margin improved to 69.6% in 2019 due to an increased proportion of Dayforce customers live for more than two years and economies of scale in customer support and hosting[247] - Operating profit increased by $16.2 million (28.9%) to $72.3 million in 2019, primarily due to revenue growth and gross margin improvement[249] - Interest expense, net, decreased by $50.8 million (61.1%) to $32.4 million in 2019, mainly due to debt refinancing in 2018 and increased interest income[250] - Net income attributable to Ceridian was $78.7 million in 2019, a significant increase from a $60.6 million net loss in 2018, primarily due to a $62.6 million tax benefit from the release of a valuation allowance[252][254] - Adjusted EBITDA increased by $24.0 million to $184.6 million in 2019, with Adjusted EBITDA margin rising to 22.4% from 21.7% in 2018[255] Revenue Growth (2018 vs. 2017, in millions USD) | Revenue Category | 2018 | 2017 | Change ($) | Change (%) | Constant Currency Change (%) | | :------------------------------- | :------ | :------ | :--------- | :--------- | :--------------------------- | | Total revenue | $740.7 | $676.2 | $64.5 | 9.5% | 9.5% | | Total Cloud revenue | $528.8 | $409.9 | $118.9 | 29.0% | 29.1% | | Dayforce recurring services, excl. float | $288.2 | $208.9 | $79.3 | 38.0% | 38.0% | | Dayforce float | $37.5 | $19.6 | $17.9 | 91.3% | 92.3% | | Total Dayforce recurring services | $325.7 | $228.5 | $97.2 | 42.5% | 42.6% | | Powerpay recurring services, excl. float | $78.0 | $73.2 | $4.8 | 6.6% | 6.7% | | Powerpay float | $12.0 | $9.9 | $2.1 | 21.2% | 21.4% | | Total Powerpay recurring services | $90.0 | $83.1 | $6.9 | 8.3% | 8.5% | | Total Bureau revenue | $211.9 | $266.3 | $(54.4) | (20.4)% | (20.5)% | - Cloud revenue increased by $118.9 million (29.0%) in 2018, driven by new customers, add-ons, and Bureau customer migrations. Bureau revenue declined by $54.4 million (20.4%), with 42% of the decline from migrations[262][263][264] Float Revenue and Yield (2017-2018) | Metric | 2018 | 2017 | | :----------------- | :------ | :------ | | Investment income | $67.0M | $46.5M | | Average float balance | $3,361.5M | $3,228.2M | | Average yield | 2.00% | 1.45% | - Total cost of revenue increased by $19.1 million (4.7%) in 2018, primarily due to Dayforce product development efforts and IPO-related share-based compensation[266][269] Gross Margin by Solution (2017-2018) | Metric | 2018 | 2017 | | :-------------------------- | :---- | :---- | | Total gross margin | 42.5% | 39.9% | | Cloud recurring services | 66.1% | 59.9% | | Bureau recurring services | 71.7% | 72.7% | | Professional services and other | (14.3)% | (32.0)% | - Cloud recurring services gross margin improved to 66.1% in 2018 due to increased proportion of Dayforce customers live for more than two years and consistent configuration[274] - Operating profit increased slightly to $56.1 million in 2018, driven by revenue growth and gross margin improvement, despite increased selling, general, and administrative expenses[275][276] - Net loss attributable to Ceridian was $60.6 million in 2018, primarily due to $51.0 million in IPO and debt refinancing expenses, compared to a net income of $3.3 million in 2017[281] - Adjusted EBITDA increased by $29.2 million in 2018, with Adjusted EBITDA margin rising to 21.7% from 19.4% in 2017[282] - Primary liquidity sources are cash and equivalents, operating activities, credit facilities, and equity offerings. As of December 31, 2019, cash and equivalents were $281.3 million, with $300.0 million available under the revolving credit facility[285] - Customer trust funds are invested in liquid, investment-grade securities, with primary objectives of principal protection and liquidity. These funds are segregated from operating cash[288] Net Cash Flows (excluding customer trust funds, in millions USD) | Metric | 2019 | 2018 | 2017 | | :------------------------------------------- | :-------- | :-------- | :-------- | | Net cash provided by (used in) operating activities—continuing operations | $61.8 | $10.7 | $(29.4) | | Net cash used in investing activities—continuing operations | $(85.4) | $(40.2) | $(51.1) | | Net cash provided by financing activities | $79.8 | $163.5 | $50.7 | - Operating cash flow (excluding trust funds) was $61.8 million in 2019, driven by net income and non-cash adjustments, partially offset by working capital changes[293] - Net cash used in investing activities (excluding trust funds) was $85.4 million in 2019, primarily for capital expenditures ($55.2 million) and acquisition costs ($30.2 million)[296] - Net cash provided by financing activities (excluding trust funds) was $79.8 million in 2019, mainly from common stock issuance under share-based compensation plans, partially offset by debt payments[299] - The company experiences seasonal fluctuations, with the fourth quarter historically strongest for new customer contracts, renewals, and go-lives, and revenue typically higher in Q4 and Q1[304] - As of December 31, 2019, total debt was $683.9 million, consisting of a $671.5 million Senior Term Loan and a $300.0 million Revolving Facility (undrawn)[285][306] Contractual Obligations (as of Dec 31, 2019, in millions USD) | Obligation Category | Less than one year | 1-3 Years | 3-5 Years | More than 5 Years | Total | | :-------------------------------------- | :----------------- | :-------- | :-------- | :---------------- | :-------- | | Long-term debt, excluding financing lease obligations | $6.8 | $13.6 | $13.6 | $637.5 | $671.5 | | Interest payable on long-term debt | $32.9 | $64.1 | $62.0 | $10.6 | $169.6 | | Operating leases | $7.2 | $16.0 | $9.4 | $5.2 | $37.8 | | Financing leases | $2.6 | $1.4 | $2.0 | $7.5 | $13.5 | | Postretirement plan obligations | $2.2 | $3.6 | $3.0 | $5.2 | $14.0 | | Retirement plan obligations | $18.7 | $39.9 | $26.4 | $20.0 | $105.0 | | Total | $70.4 | $138.6| $116.4| $686.0 | $1,011.4| - Critical accounting policies include revenue recognition, assignment of fair values to goodwill and intangible assets, impairment testing, pension and postretirement benefit liabilities, and share-based compensation[320][321] Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Ceridian faces market risks from foreign currency, interest rates, and pension obligations, managed through normal operations without speculative instruments - Ceridian is exposed to market risks related to foreign currency exchange rates (primarily Canadian Dollar), interest rates, and pension obligations[342][343] - The company does not actively hedge foreign currency exposure due to the relative size of international operations but monitors it for future hedging consideration[343] - Customer trust funds are invested in high-quality, liquid securities (bank deposits, money market funds, government/agency securities, corporate debt) to protect principal and ensure liquidity[344] - A 100 basis point change in interest rates is not believed to have a material effect on operating results or financial condition, as investment securities are classified as 'available for sale'[346] - Pension obligations are subject to actuarial assumptions (discount rates, expected returns, mortality). A 50 basis point decrease in the discount rate would decrease pension expense by $0.2 million, while a 50 basis point decrease in return on plan assets would increase expense by $2.0 million[347][348] Item 8. Financial Statements and Supplementary Data. This section presents Ceridian's audited consolidated financial statements, including balance sheets, statements of operations, cash flows, auditor's report, critical audit matters, and detailed notes - The consolidated financial statements are prepared in accordance with U.S. GAAP and include the operations of Ceridian and its subsidiaries, as well as consolidated grantor trusts holding customer funds[394][395] - KPMG LLP issued an unqualified opinion on the consolidated financial statements and an effective opinion on internal control over financial reporting as of December 31, 2019[354] - Critical audit matters identified include the evaluation of deferred tax asset realizability, requiring subjective judgment on forecasted future taxable income, and the assessment of stand-alone selling price for cloud professional services, which relies on internally-developed estimates of service hours[364][365][367][368] Consolidated Balance Sheets (as of Dec 31, in millions USD) | ASSETS | 2019 | 2018 | | :--------------------------------------- | :-------- | :-------- | | Cash and equivalents | $281.3 | $217.8 | | Trade and other receivables, net | $80.4 | $63.9 | | Prepaid expenses and other current assets | $57.9 | $48.9 | | Total current assets before customer trust funds | $419.6 | $330.6 | | Customer trust funds | $3,204.1 | $2,603.5 | | Total current assets | $3,623.7 | $2,934.1 | | Right of use lease asset | $32.0 | — | | Property, plant, and equipment, net | $128.3 | $104.4 | | Goodwill | $1,973.5 | $1,927.4 | | Other intangible assets, net | $177.9 | $187.5 | | Other assets | $150.3 | $94.4 | | Total assets | $6,085.7| $5,247.8| | LIABILITIES AND EQUITY | | | | Current portion of long-term debt | $10.8 | $6.8 | | Current portion of long-term lease liabilities | $8.8 | — | | Accounts payable | $43.2 | $41.5 | | Deferred revenue | $25.5 | $23.2 | | Employee compensation and benefits | $75.9 | $54.5 | | Other accrued expenses | $13.9 | $23.9 | | Total current liabilities before customer trust funds obligations | $178.1 | $149.9 | | Customer trust funds obligations | $3,193.6 | $2,619.7 | | Total current liabilities | $3,371.7 | $2,769.6 | | Long-term debt, less current portion | $666.3 | $663.5 | | Employee benefit plans | $117.2 | $153.3 | | Long-term lease liabilities, less current portion | $30.1 | — | | Other liabilities | $18.1 | $45.9 | | Total liabilities | $4,203.4| $3,632.3| | Total stockholders' equity | $1,882.3 | $1,615.5 | | Total liabilities and equity | $6,085.7| $5,247.8| Consolidated Statements of Operations (Years Ended Dec 31, in millions USD) | Metric | 2019 | 2018 | 2017 | | :----------------------------------------- | :------ | :------ | :------ | | Recurring services | $680.1 | $625.0 | $573.9 | | Professional services and other | $144.0 | $115.7 | $102.3 | | Total revenue | $824.1| $740.7| $676.2| | Cost of revenue | $455.9 | $425.8 | $406.7 | | Gross profit | $368.2 | $314.9 | $269.5 | | Selling, general and administrative | $295.9 | $258.8 | $214.1 | | Operating profit | $72.3 | $56.1 | $55.4 | | Interest expense, net | $32.4 | $83.2 | $87.1 | | Other expense (income), net | $5.6 | $(0.2) | $8.8 | | Income (loss) from continuing operations before income taxes | $34.3 | $(26.9) | $(40.5) | | Income tax (benefit) expense | $(44.4) | $8.4 | $(48.5) | | Income (loss) from continuing operations | $78.7 | $(35.3) | $8.0 | | Loss from discontinued operations | — | $(25.8) | $(6.0) | | Net income (loss) | $78.7 | $(61.1) | $2.0 | | Net income (loss) attributable to Ceridian | $78.7 | $(60.6) | $3.3 | | Basic EPS | $0.55 | $(0.60) | $(0.26) | | Diluted EPS | $0.53 | $(0.60) | $(0.26) | Consolidated Statements of Cash Flows (Years Ended Dec 31, in millions USD) | Metric | 2019 | 2018 | 2017 | | :------------------------------------------- | :-------- | :-------- | :-------- | | Net cash provided by (used in) operating activities | $50.6 | $9.5 | $(39.8) | | Net cash used in investing activities | $(119.3) | $(51.1) | $(39.6) | | Net cash provided by (used in) financing activities | $609.7 | $(1,251.6)| $406.8 | | Effect of Exchange Rate Changes on Cash | $11.3 | $(12.8) | $11.0 | | Net increase (decrease) in cash and equivalents | $552.3 | $(1,306.0)| $338.4 | | Cash, restricted cash, and equivalents at end of year | $1,658.6 | $1,106.3 | $2,411.8 | - Ceridian acquired RITEQ, an Australian workforce management solutions provider, for approximately $20.1 million on September 13, 2019, expanding its international offerings[446] - As of December 31, 2019, goodwill was $1,973.5 million, and other intangible assets, net, were $177.9 million. The company performs annual impairment assessments[466][468] - Total long-term debt (excluding current portion) was $666.3 million as of December 31, 2019, with an effective interest rate of 4.8% on the 2018 Term Debt[471][475] - The company maintains defined contribution plans and frozen defined benefit pension plans. The projected benefit obligation of defined benefit plans exceeded plan assets by $121.6 million as of December 31, 2019[489][490][499] - Share-based compensation expense was $36.5 million in 2019, with $83.7 million of unrecognized expense for unvested term-based awards and $14.0 million for unvested RSUs[528][533][534] - As of December 31, 2019, approximately $838.3 million of revenue is expected to be recognized over the next three years from remaining performance obligations[544] - The company recognized an income tax benefit of $44.4 million in 2019, primarily due to a $62.6 million release of a valuation allowance against domestic deferred tax assets[551] - A material weakness in internal control over financial reporting related to duplicate payroll payments was identified in Q3 2019 but remediated by December 31, 2019[600] Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. There have been no changes in or disagreements with accountants on accounting and financial disclosure - There have been no changes in or disagreements with accountants on accounting and financial disclosure[596] Item 9A. Controls and Procedures. Management concluded disclosure controls were effective as of December 31, 2019; a material weakness in payroll payments was remediated, making internal controls effective by year-end - Management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures as of December 31, 2019, concluding they were effective at a reasonable assurance level[598] - A material weakness related to duplicate payroll payments was identified in Q3 2019, rendering internal control over financial reporting ineffective as of September 30, 2019. However, additional monitoring controls were implemented, and remediation was completed by December 31, 2019, leading to a conclusion of effective internal control over financial reporting at year-end[599][600] - Management acknowledges the inherent limitations of control systems, which can only provide reasonable, not absolute, assurance against errors or fraud[603] Item 9B. Other Information. There is no other information required to be disclosed in this section - There is no other information required to be disclosed in this section[604] PART III Item 10. Directors, Executive Officers and Corporate Governance. This section incorporates by reference information on directors, executive officers, corporate governance, related party transactions, and code of ethics from the Proxy Statement - Information on directors, executive officers, corporate governance, related party transactions, code of ethics, and director nomination process is incorporated by reference from the Proxy Statement for Ceridian's 2020 Annual Meeting of Stockholders[607][608][609][610][611][612] - The Code of Conduct applies to all employees, contractors, officers, and directors and is available on Ceridian's website[610] Item 11. Executive Compensation. This item incorporates by reference information on executive and director compensation, as well as equity compensation plan details, from Ceridian's Proxy Statement - Information regarding executive compensation, director compensation, and equity compensation plan details is incorporated by reference from Ceridian's Proxy Statement[613] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. This section incorporates by reference details on equity compensation plans and security ownership of beneficial owners and management from the Proxy Statement - Information on securities authorized for issuance under equity compensation plans and security ownership of certain beneficial owners and management is incorporated by reference from the Proxy Statement[614][615] Item 13. Certain Relationships and Related Transactions, and Director Independence. This item incorporates by reference information concerning certain relationships, related party transactions, and director independence from the Proxy Statement - Information regarding certain relationships, related party transactions, and director independence is incorporated by reference from the Proxy Statement[616] Item 14. Principal Accounting Fees and Services. This item incorporates by reference information on principal accounting fees and services from the Proxy Statement, including KPMG's ratification for 2020 - Information on principal accounting fees and services is incorporated by reference from the Proxy Statement, specifically related to the ratification of KPMG as the independent registered public accounting firm for 2020[617] PART IV Item 15. Exhibits, Financial Statement Schedules. This section includes consolidated financial statements, confirms the omission of schedules, and provides a comprehensive list of exhibits filed with the Annual Report on Form 10-K - The consolidated financial statements are included as part of Item 8 of this report[619] - All financial statement schedules are omitted because they are not applicable or the required information is presented in the consolidated financial statements or notes[620] - A detailed list of exhibits, including corporate governance documents, debt agreements, employment contracts, equity plans, and certifications, is provided[621][622][624] Item 16. Form 10-K Summary. This item indicates that a Form 10-K Summary is not applicable for this report - Form 10-K Summary is not applicable[625]