What changed in this filing

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Item 1. Financial Statements

2020-08-06 compared with 2020-04-30 · 130 added, 94 removed, 374 unchanged (37% of the section changed)

1 unchanged sentence

Paycom Software, Inc.

Consolidated Balance Sheets

Unaudited Consolidated Balance Sheets

(in thousands, except per share amounts)

March 31, 2020

June 30, 2020

December 31, 2019

13 unchanged sentences

Accounts payable

Income tax payable

Accrued commissions and bonuses

14 unchanged sentences

Stockholders' equity:

Common stock, $ 0.01 par value ( 100,000 shares authorized, 61,352 and 61,350 shares issued at March 31, 2020 and December 31, 2019, respectively;

57,622 and 57,660 shares outstanding at March 31, 2020 and December 31, 2019, respectively)

Common stock, $ 0.01 par value ( 100,000 shares authorized, 61,613 and 61,350 shares issued at June 30, 2020 and December 31, 2019, respectively;

57,588 and 57,660 shares outstanding at June 30, 2020 and December 31, 2019, respectively)

Additional paid-in capital

Retained earnings

Treasury stock, at cost ( 3,730 and 3,689 shares at March 31, 2020 and December 31, 2019, respectively)

Treasury stock, at cost ( 4,025 and 3,689 shares at June 30, 2020 and December 31, 2019, respectively)

Total stockholders' equity

2 unchanged sentences

Paycom Software, Inc.

Consolidated Statements of Income

Unaudited Consolidated Statements of Income

(in thousands, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Implementation and other

21 unchanged sentences

Paycom Software, Inc.

Consolidated Statements of Stockholders’ Equity

Unaudited Consolidated Statements of Stockholders’ Equity

(in thousands)

7 unchanged sentences

Balances at March 31, 2019

Vesting of restricted stock

Stock-based compensation

Repurchases of common stock

Balances at June 30, 2019

Treasury Stock

6 unchanged sentences

Balances at March 31, 2020

Vesting of restricted stock

Stock-based compensation

Repurchases of common stock

Balances at June 30, 2020

See accompanying notes to the unaudited consolidated financial statements.

Paycom Software, Inc.

Consolidated Statements of Cash Flows

Unaudited Consolidated Statements of Cash Flows

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

28 unchanged sentences

Net change in client funds obligation

Payment of debt issuance costs

Net cash (used in) provided by financing activities

3 unchanged sentences

Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period

See accompanying notes to the unaudited consolidated financial statements.

Three Months Ended March 31,

Six Months Ended June 30,

Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents

6 unchanged sentences

Stock-based compensation for capitalized software

Right of use assets obtained in exchange for operating lease liabilities

See accompanying notes to the unaudited consolidated financial statements.

Paycom Software, Inc.

Notes to the Consolidated Financial Statements

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

7 unchanged sentences

Our significant accounting policies are discussed in “Note 2.

Summary of Significant Accounting Policies” in the notes to our audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2019 (the “Form 10-K”).

Basis of Presentation

The accompanying unaudited interim consolidated financial statements and notes have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S.

GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial statements that permit reduced disclosure for interim periods.

In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary for the fair presentation of our consolidated balance sheets as of March 31, 2020 and our consolidated statements of income, stockholders’ equity and cash flows for the three months ended March 31, 2020 and 2019.

Such adjustments are of a normal recurring nature.

The information in this Quarterly Report on Form 10-Q (this “Form 10-Q”) should be read in conjunction with the Form 10-K.

The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results expected for the full year.

GAAP”) and applicable rules and regulations of the SEC regarding interim financial statements that permit reduced disclosure for interim periods.

In the opinion of management, the unaudited consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented.

These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes presented in the Form 10-K.

The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results expected for the full year.

Recently Adopted Accounting Pronouncements

3 unchanged sentences

ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

The adoption of this guidance did not have a material impact on our consolidated financial statements.

The adoption of this guidance did not have a material impact on our unaudited interim consolidated financial statements.

In January 2020, we adopted ASU No.

3 unchanged sentences

Notes to Financial Statements,” including consideration of costs and benefits.

The adoption of this guidance did not have a material impact on our consolidated financial statements.

The adoption of this guidance did not have a material impact on our unaudited interim consolidated financial statements.

Use of Estimates

5 unchanged sentences

Paycom Software, Inc.

Notes to the Consolidated Financial Statements

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

14 unchanged sentences

The client funds obligation represents liabilities that will be repaid within one year of the consolidated balance sheet date.

As of March 31, 2020 and December 31, 2019, the funds held for clients were invested in money market funds, demand deposit accounts, commercial paper with a maturity duration less than three months and certificates of deposit.

As of June 30, 2020 and December 31, 2019, the funds held for clients were invested in money market funds, demand deposit accounts, commercial paper with a maturity duration less than three months and certificates of deposit.

Short-term investments in commercial paper and certificates of deposit with an original maturity duration greater than three months are classified as available-for-sale securities, and are also included within the funds held for clients line item in the consolidated balance sheets.

5 unchanged sentences

Most recently, in March 2020, our Board of Directors authorized the repurchase of up to $ 250.0 million of our common stock.

As of March 31, 2020, there was $ 242.0 million available for repurchases under our stock repurchase plan.

As of June 30, 2020, there was $ 174.8 million available for repurchases under our stock repurchase plan.

Our stock repurchase plan may be suspended or discontinued at any time.

1 unchanged sentence

The current stock repurchase plan will expire on March 12, 2022 .

During the three months ended March 31, 2020, we repurchased an aggregate of 40,032 shares of our common stock at an average cost of $ 204.04 per share, including 671 shares withheld to satisfy tax withholding obligations for certain employees upon the vesting of restricted stock.

During the six months ended June 30, 2020, we repurchased an aggregate of 295,227 shares of our common stock at an average cost of $ 227.35 per share, including 90,157 shares withheld to satisfy tax withholding obligations for certain employees upon the vesting of restricted stock.

Recently Issued Accounting Pronouncements

In March 2020, the Financial Accounting Standard Board issued ASU No.

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

ASU 2020-04 provides temporary optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships and other transactions affected by reference rate reform.

Our interest-bearing notes bear interest at our option, at either (a) a prime rate plus 1.0 % or (b) fluctuating interest rates based on LIBOR.

If LIBOR ceases to exist, we may need to renegotiate our loan documents and we cannot predict what alternative index would be negotiated with our lenders.

ASU 2020-04 is currently effective and upon adoption may be applied prospectively to contract modifications made on or before December 31, 2022.

We are currently assessing the impact that this guidance will have on our financial position and results of operations, if any.

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

In December 2019, the Financial Accounting Standards Board issued ASU No.

4 unchanged sentences

We are currently evaluating the impact that this guidance will have on our financial position and results of operations, if any.

Paycom Software, Inc.

Notes to the Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

Revenues are recognized when control of the promised goods or services is transferred to our clients in an amount that reflects the consideration we expect to be entitled to for those goods or services.

19 unchanged sentences

Although these revenues are related to our recurring revenues, they represent distinct performance obligations.

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

Implementation activities primarily represent administrative activities that allow us to fulfill future performance obligations for our clients and do not represent services transferred to the client.

8 unchanged sentences

Therefore, we do not recognize a contract asset or liability resulting from the timing of revenue recognition and invoicing.

Paycom Software, Inc.

Notes to the Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

Changes in deferred revenue related to material right performance obligations as of March 31, 2020 and 2019 were as follows:

Three Months Ended March 31,

Changes in deferred revenue related to material right performance obligations as of June 30, 2020 and 2019 were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Balance, beginning of period

15 unchanged sentences

Amortization expense related to costs to obtain and costs to fulfill a contract are included in the “sales and marketing” and “general and administrative” line items in the accompanying consolidated statements of income.

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

The following tables present the asset balances and related amortization expense for these contract costs:

As of and for the Three Months Ended March 31, 2020

As of and for the Three Months Ended June 30, 2020

Capitalization

1 unchanged sentence

Costs to fulfill a contract

As of and for the Three Months Ended March 31, 2019

As of and for the Three Months Ended June 30, 2019

Capitalization

1 unchanged sentence

Costs to fulfill a contract

Paycom Software, Inc.

Notes to the Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

As of and for the Six Months Ended June 30, 2020

Capitalization

Costs to obtain a contract

Costs to fulfill a contract

As of and for the Six Months Ended June 30, 2019

Capitalization

Costs to obtain a contract

Costs to fulfill a contract

PROPERTY AND EQUIPMENT

Property and equipment and accumulated depreciation and amortization were as follows:

March 31, 2020

June 30, 2020

December 31, 2019

8 unchanged sentences

We capitalize computer software development costs related to software developed for internal use in accordance with ASC 350-40.

For the three months ended March 31, 2020 and 2019, we capitalized $ 9.7 million and $ 8.9 million, respectively, of computer software development costs related to software developed for internal use.

For the three and six months ended June 30, 2020, we capitalized $ 11.0 million and $ 20.7 million, respectively, of computer software development costs related to software developed for internal use.

For the three and six months ended June 30, 2019, we capitalized $ 6.7 million and $ 15.6 million, respectively, of computer software development costs related to software developed for internal use.

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

Rental clocks included in property and equipment, net represent time clocks issued to clients under month-to-month operating leases.

1 unchanged sentence

We capitalize interest incurred for indebtedness related to construction in progress.

For both the three months ended March 31, 2020 and 2019, we incurred interest costs of $ 0.4 million, of which we capitalized $ 0.4 million and $ 0.1 million, respectively.

Included in the construction in progress balance at March 31, 2020 and December 31, 2019 is $ 2.5 million and $ 2.2 million in retainage, respectively.

Depreciation and amortization expense for property and equipment was $ 12.2 million and $ 9.3 million, respectively, for the three months ended March 31, 2020 and 2019.

For the three and six months ended June 30, 2020, we incurred interest costs of $ 0.4 million and $ 0.8 million, respectively, of which we capitalized $ 0.4 million and $ 0.8 million, respectively.

For the three and six months ended June 30, 2019, we incurred interest costs of $ 0.4 million and $ 0.8 million, respectively, of which we capitalized $ 0.1 million and $ 0.2 million, respectively.

Included in the construction in progress balance at June 30, 2020 and December 31, 2019 is $ 2.4 million and $ 2.2 million in retainage, respectively.

Depreciation and amortization expense for property and equipment was $ 13.0 million and $ 25.2 million, respectively, for the three and six months ended June 30, 2020.

Depreciation and amortization expense for property and equipment was $ 10.3 million and $ 19.6 million, respectively, for the three and six months ended June 30, 2019.

GOODWILL AND INTANGIBLE ASSETS, NET

As of both March 31, 2020 and December 31, 2019, goodwill was $ 51.9 million.

As of both June 30, 2020 and December 31, 2019, goodwill was $ 51.9 million.

We have selected June 30 as our annual goodwill impairment testing date.

We have elected to perform a qualitative analysis of the fair value of our goodwill and determined there was no impairment as of June 30, 2020.

As of March 31, 2020 and December 31, 2019, there were no indicators of impairment.

As of June 30, 2020 and December 31, 2019, there were no indicators of impairment.

All of our intangible assets other than goodwill are considered to have definite lives and, as such, are subject to amortization.

The following tables provide the components of intangible assets, which are included in Other assets in our consolidated balance sheets:

March 31, 2020

June 30, 2020

Weighted Average Remaining

Paycom Software, Inc.

Notes to the Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

December 31, 2019

Weighted Average Remaining

The weighted average remaining useful life of our intangible assets was 2.3 years as of March 31, 2020.

Amortization of intangible assets for both the three months ended March 31, 2020 and 2019 was $ 0.1 million.

The weighted average remaining useful life of our intangible assets was 2.0 years as of June 30, 2020.

Amortization of intangible assets for the three and six months ended June 30, 2020 was less than $ 0.1 million and $ 0.1 million, respectively.

Amortization of intangible assets for the three and six months ended June 30, 2019 was less than $ 0.1 million and $ 0.1 million, respectively.

LONG-TERM DEBT, NET

Long-term debt consisted of the following:

March 31, 2020

June 30, 2020

December 31, 2019

3 unchanged sentences

Total long-term debt, net

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

On December 7, 2017, we entered into a senior secured term credit agreement (as amended from time to time, the “Term Credit Agreement”), pursuant to which JPMorgan Chase Bank, N.A., Bank of America, N.A.

2 unchanged sentences

The Term Loans mature on September 7, 2025 and bear interest, at our option, at either (a) a prime rate plus 1.0 % or (b) an adjusted LIBOR rate for the interest period in effect for such Term Loan plus 1.5 %.

As of March 31, 2020, our indebtedness of $ 30.4 million consisted solely of Term Loans made under the Term Credit Agreement.

Unamortized debt issuance costs of $ 0.2 million as of both March 31, 2020 and December 31, 2019 are presented as a direct deduction from the carrying amount of the debt liability.

As of June 30 , 20 20 , our indebtedness of $ 30.0 million consisted solely of Term Loans made under the Term Credit Agreement.

Unamortized debt issuance costs of $ 0.2 million as of both Ju n e 30 , 20 20 and December 31, 201 9 are presented as a direct deduction from the carrying amount of the debt liability.

Under the Term Credit Agreement, we are subject to two material financial covenants, which require us to maintain a fixed charge coverage ratio of not less than 1.25 to 1.0 and a funded indebtedness to EBITDA ratio of not greater than 2.0 to 1.0.

As of March 31, 2020, we were in compliance with these covenants.

As of June 30, 2020, we were in compliance with these covenants.

On February 12, 2018 , we entered into a senior secured revolving credit agreement (the “Revolving Credit Agreement”) with JPMorgan Chase Bank, N.A.

9 unchanged sentences

Letters of credit are to be issued only to support our business operations.

As of March 31, 2020, we did no t have any borrowings outstanding under the Facility.

As of June 30, 2020, we did no t have any borrowings outstanding under the Facility.

Under the Revolving Credit Agreement, we are required to maintain a fixed charge coverage ratio of not less than 1.25 to 1.0 and a funded indebtedness to EBITDA ratio of not greater than 2.0 to 1.0 .

Additionally, the Revolving Credit Agreement contains customary affirmative and negative covenants, including covenants limiting our ability to, among other things, grant liens, incur debt, effect certain mergers, make certain investments, dispose of assets, enter into certain transactions, including swap agreements and sale and leaseback transactions, pay dividends or distributions on our capital stock, and enter into transactions with affiliates, in each case

Paycom Software, Inc.

Notes to the Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

subject to customary exceptions for a facility of the size and type of the Facility.

As of March 31 , 20 20 , we were in compliance with all covenants related to the Revolving Credit Agreement.

As of March 31, 2020 and December 31, 2019, the carrying value of our total long-term debt approximated its fair value as of such date.

As of June 30, 2020, we were in compliance with all covenants related to the Revolving Credit Agreement.

As of June 30, 2020 and December 31, 2019, the carrying value of our total long-term debt approximated its fair value as of such date.

The fair value of our long-term debt is estimated based on the borrowing rates currently available to us for bank loans with similar terms and maturities.

10 unchanged sentences

The interest rate swap agreement has a maturity date of September 7, 2025 .

For the three months ended March 31, 2020 and 2019, we recorded losses of $ 1.6 million and $ 0.5 million, respectively, for the change in fair value of the interest rate swap, which is included in Other income (expense), net in the consolidated statements of income.

For the three and six months ended June 30, 2020, we recorded losses of $ 0.1 million and $ 1.7 million, respectively, for the change in fair value of the interest rate swap, which is included in Other income (expense), net in the consolidated statements of income.

For the three and six months ended June 30, 2019, we recorded losses of $ 0.8 million and $ 1.4 million, respectively, for the change in fair value of the interest rate swap, which is included in Other income (expense), net in the consolidated statements of income.

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

FAIR VALUE OF FINANCIAL INSTRUMENTS

5 unchanged sentences

These available-for-sale securities are recognized in the consolidated balance sheets at fair value, which approximates the amortized cost of the securities.

As of March 31, 2020 and December 31, 2019, all available-for-sale securities and certificates of deposit were due in thirteen months or less.

As of June 30, 2020 and December 31, 2019, all available-for-sale securities and certificates of deposit were due in thirteen months or less.

As discussed in Note 7, during the year ended December 31, 2017, we entered into an interest rate swap.

4 unchanged sentences

Level 3 – Unobservable inputs in which there is little or no market data

Paycom Software, Inc.

Notes to the Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

Included in the following tables are the Company’s major categories of assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019:

March 31, 2020

Included in the following tables are the Company’s major categories of assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019:

June 30, 2020

Commercial paper

11 unchanged sentences

The QACA matching contributions as well as the discretionary matching and profit sharing contributions vest 100 % after two years of employment from the date of hire.

Matching contributions were $ 2.2 million and $ 1.6 million for the three months ended March 31, 2020 and 2019, respectively.

Matching contributions were $ 2.2 million and $ 4.4 million for the

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

three and six months ended June 30, 2020, respectively.

Matching contributions were $ 1.7 million and $ 3.3 million for the three and six months ended June 30 , 2019, respectively.

The ESPP has overlapping offering periods, with each offering period lasting approximately 24 months.

4 unchanged sentences

The maximum aggregate number of shares of the Company’s common stock that may be purchased by all participants under the ESPP is 2.0 million shares.

Eligible employees purchased 25,564 and 22,330 shares of the Company’s common stock under the ESPP during the three months ended March 31, 2020 and 2019, respectively.

Eligible employees purchased 32,764 and 28,475 shares of the Company’s common stock under the ESPP during the six months ended June 30, 2020 and 2019, respectively.

Compensation expense related to the ESPP is recognized on a straight-line basis over the requisite service period.

Our compensation expense related to the ESPP was $ 0.4 million and $ 0.6 million for the three months ended March 31, 2020 and 2019, respectively.

Our compensation expense related to the ESPP was $ 0.4 million and $ 0.8 million for the three and six months ended June 30, 2020, respectively.

Our compensation expense related to the ESPP was $ 0.3 million and $ 0.9 million for the three and six months ended June 30, 2019, respectively.

EARNINGS PER SHARE

4 unchanged sentences

The unvested shares of restricted stock granted in 2015 are considered participating securities, while all other unvested shares of restricted stock are not considered participating securities.

Paycom Software, Inc.

Notes to the Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

The following is a reconciliation of net income and the shares of common stock used in the computation of basic and diluted earnings per share:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

income allocable to participating securities

7 unchanged sentences

Earnings per share:

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

STOCK-BASED COMPENSATION

The following table summarizes restricted stock awards activity for the three months ended March 31, 2020:

The following table summarizes restricted stock awards activity for the six months ended June 30, 2020:

Restricted Stock Awards

5 unchanged sentences

Unvested shares of restricted stock outstanding at December 31, 2019

Unvested shares of restricted stock outstanding at March 31, 2020

During the three months ended March 31, 2020, we issued an aggregate of 446,096 restricted shares of common stock to our executive officers and certain non-executive employees under the Paycom Software, Inc.

Unvested shares of restricted stock outstanding at June 30, 2020

During the six months ended June 30, 2020, we issued an aggregate of 507,860 restricted shares of common stock to our executive officers and certain non-executive employees under the Paycom Software, Inc.

2014 Long-Term Incentive Plan (the “LTIP”), consisting of 360,948 shares subject to market-based vesting conditions (“Market-Based Shares”) and 146,912 shares subject to time-based vesting conditions (“Time-Based Shares”).

2 unchanged sentences

Time-Based Shares granted to non-executive employees will vest over periods ranging from three to four years , provided that the recipient is employed by, or providing services to, the Company on the applicable vesting date.

Paycom Software, Inc.

Notes to the Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

For the three months ended March 31, 2020 and 2019, our total compensation expense related to restricted stock was $ 15.8 million and $ 31.1 million, respectively.

There was $ 143.0 million of unrecognized compensation cost, net of estimated forfeitures, related to unvested shares of restricted stock outstanding as of March 31, 2020.

The unrecognized compensation cost for the unvested shares is expected to be recognized over a weighted average period of 1.9 years as of March 31, 2020.

We capitalized stock-based compensation costs related to software developed for internal use of $ 1.6 million and $ 3.3 million for the three months ended March 31, 2020 and 2019, respectively.

On April 27, 2020, we issued an aggregate of 5,970 restricted shares of common stock under the LTIP to the non-employee members of our Board of Directors.

Such shares of restricted stock will cliff-vest on the seventh day following the first anniversary of the date of grant, provided that such director is providing services to the Company through the applicable vesting date.

For the three and six months ended June 30, 2020, our total compensation expense related to restricted stock was $ 21.2 million and $ 37.0 million, respectively.

For the three and six months ended June 30, 2019, our total compensation expense related to restricted stock was $ 5.6 million and $ 36.7 million, respectively.

There was $ 129.4 million of unrecognized compensation cost, net of estimated forfeitures, related to unvested shares of restricted stock outstanding as of June 30, 2020.

The unrecognized compensation cost for the unvested shares is expected to be recognized over a weighted average period of 1.8 years as of June 30, 2020.

We capitalized stock-based compensation costs related to software developed for internal use of $ 2.1 million and $ 3.7 million for the three and six months ended June 30, 2020, respectively.

We capitalized stock-based compensation costs related to software developed for internal use of $ 0.7 million and $ 4.0 million for the three and six months ended June 30, 2019, respectively.

COMMITMENTS AND CONTINGENCIES

7 unchanged sentences

Although we cannot predict the outcome of these proceedings, legal matters are subject to inherent uncertainties and there exists the possibility that the ultimate resolution of these matters could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The Company’s effective income tax rate was 28.7 % and 23.9 % for the three months ended March 31, 2020 and 2019, respectively.

The higher effective tax rate for the three months ended March 31, 2020 is primarily related to a decrease in excess tax benefits from stock-based compensation related to vesting events as compared to the three months ended March 31, 2019.

SUBSEQUENT EVENTS

On April 27, 2020, we issued an aggregate of 60,348 restricted shares of common stock to certain non-executive employees under the LTIP consisting of Time-Based Shares that will vest in three equal tranches annually, beginning on the first anniversary of the grant date, provided that the recipient is employed by, or providing services to, the Company on the applicable vesting date.

On April 27, 2020, we issued an aggregate of 5,970 restricted shares of common stock under the LTIP to the non-employee members of our board of directors.

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share amounts)

The Company’s effective income tax rate was 20.4 % and 16.1 % for the six months ended June 30, 2020 and 2019, respectively.

The higher effective tax rate for the six months ended June 30, 2020 is primarily related to a decrease in excess tax benefits from stock-based compensation related to vesting events as compared to the six months ended June 30, 2019.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements