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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

 

FORM 10-Q 

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2021

 

 

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 001-34675

 

SS&C TECHNOLOGIES HOLDINGS, INC.

(Exact name of Registrant as specified in its charter) 

 

 

Delaware

 

71-0987913

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

80 Lamberton Road

Windsor, CT 06095

(Address of principal executive offices, including zip code)

860-298-4500

(Registrant’s telephone number, including area code)

 

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  (Do not check if a smaller reporting company)

  

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

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

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, par value $0.01 per share

SSNC

The Nasdaq Global Select Market

There were 255,772,587 shares of the registrant’s common stock outstanding as of April 28, 2021.

 

 

 


 

SS&C TECHNOLOGIES HOLDINGS, INC.

INDEX

 

 

 

Page
Number

 

 

 

PART 1. FINANCIAL INFORMATION

 

 

 

 

 

Item 1. Financial Statements (unaudited)

 

3

 

 

 

Condensed Consolidated Balance Sheets at March 31, 2021 and December 31, 2020

 

3

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2021 and 2020

 

4

 

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020

 

5

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2021 and 2020

 

6

 

 

 

Notes to Condensed Consolidated Financial Statements

 

7

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

16

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

24

 

 

 

Item 4. Controls and Procedures

 

25

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1. Legal Proceedings

 

25

 

 

 

Item 1A. Risk Factors

 

26

 

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

26

 

 

 

Item 6. Exhibits

 

27

 

 

 

EXHIBIT INDEX

 

27

 

 

 

SIGNATURE

 

28

 

 

 

SS&C Technologies Holdings, Inc., or “SS&C Holdings,” is our top-level holding company. SS&C Technologies, Inc., or “SS&C,” is our primary operating company and a wholly-owned subsidiary of SS&C Technologies Holdings, Inc. “We,” “us,” “our” and the “Company” mean SS&C Technologies Holdings, Inc. and its consolidated subsidiaries, including SS&C.

This Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes”, “anticipates”, “plans”, “expects”, “estimates”, “projects”, “forecasts”, “may”, “assume”, “intend”, “will”, “continue”, “opportunity”, “predict”, “potential”, “future”, “guarantee”, “likely”, “target”, “indicate”, “would”, “could” and “should” and similar expressions are intended to identify forward-looking statements. The important factors discussed under the caption “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on February 25, 2021, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. We do not undertake an obligation to update its forward-looking statements to reflect future events or circumstances.

 

 

 

2


 

PART I

Item 1.

Financial Statements

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share data) (Unaudited)

 

 

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

253.7

 

 

$

209.3

 

Funds receivable and funds held on behalf of clients

 

 

2,030.0

 

 

 

1,227.4

 

Accounts receivable, net of allowance for doubtful accounts of $16.9 and $16.8, respectively

 

 

674.5

 

 

 

648.0

 

Contract asset

 

 

27.2

 

 

 

20.4

 

Prepaid expenses and other current assets

 

 

209.4

 

 

 

187.5

 

Restricted cash and cash equivalents

 

 

4.4

 

 

 

5.9

 

Total current assets

 

 

3,199.2

 

 

 

2,298.5

 

Property, plant and equipment, net (Note 2)

 

 

402.7

 

 

 

412.8

 

Operating lease right-of-use assets

 

 

339.2

 

 

 

350.8

 

Investments (Note 3)

 

 

193.6

 

 

 

183.5

 

Unconsolidated affiliates (Note 4)

 

 

228.5

 

 

 

225.6

 

Contract asset

 

 

81.7

 

 

 

82.0

 

Goodwill (Note 6)

 

 

8,078.1

 

 

 

8,078.7

 

Intangible and other assets, net of accumulated amortization of $2,802.4 and $2,655.6, respectively

 

 

4,166.1

 

 

 

4,291.7

 

Total assets

 

$

16,689.1

 

 

$

15,923.6

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of long-term debt (Note 7)

 

$

178.2

 

 

$

53.9

 

Client funds obligations

 

 

2,030.0

 

 

 

1,227.4

 

Accounts payable

 

 

27.9

 

 

 

28.1

 

Income taxes payable

 

 

46.8

 

 

 

9.3

 

Accrued employee compensation and benefits

 

 

177.5

 

 

 

311.5

 

Interest payable

 

 

 

 

 

27.5

 

Other accrued expenses

 

 

323.0

 

 

 

293.1

 

Deferred revenues

 

 

349.9

 

 

 

332.5

 

Total current liabilities

 

 

3,133.3

 

 

 

2,283.3

 

Long-term debt, net of current portion (Note 7)

 

 

6,338.1

 

 

 

6,388.5

 

Operating lease liabilities

 

 

311.8

 

 

 

323.6

 

Other long-term liabilities

 

 

280.9

 

 

 

287.9

 

Deferred income taxes

 

 

890.8

 

 

 

923.8

 

Total liabilities

 

 

10,954.9

 

 

 

10,207.1

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

 

 

Stockholders’ equity (Note 8):

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value per share, 5.0 million shares authorized; no shares issued

 

 

 

 

 

 

Class A non-voting common stock, $0.01 par value per share, 5.0 million shares authorized;

   no shares issued

 

 

 

 

 

 

Common stock, $0.01 par value per share, 400.0 million shares authorized; 264.7 million shares

   and 263.9 million shares issued, respectively, and 255.7 million shares and 257.6 million shares

   outstanding, respectively

 

 

2.6

 

 

 

2.6

 

Additional paid-in capital

 

 

4,600.5

 

 

 

4,544.0

 

Accumulated other comprehensive loss

 

 

(192.1

)

 

 

(201.0

)

Retained earnings

 

 

1,800.7

 

 

 

1,667.0

 

 

 

 

6,211.7

 

 

 

6,012.6

 

Less: cost of common stock in treasury, 9.0 and 6.3 million shares, respectively

 

 

(477.5

)

 

 

(296.1

)

Total stockholders’ equity

 

 

5,734.2

 

 

 

5,716.5

 

Total liabilities and stockholders’ equity

 

$

16,689.1

 

 

$

15,923.6

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3


 

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions, except per share data) (Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Revenues:

 

 

 

 

 

 

 

 

Software-enabled services

 

$

1,043.4

 

 

$

989.5

 

License, maintenance and related

 

 

190.0

 

 

 

184.1

 

Total revenues

 

 

1,233.4

 

 

 

1,173.6

 

Cost of revenues:

 

 

 

 

 

 

 

 

Software-enabled services

 

 

595.5

 

 

 

583.5

 

License, maintenance and related

 

 

78.8

 

 

 

82.1

 

Total cost of revenues

 

 

674.3

 

 

 

665.6

 

Gross profit

 

 

559.1

 

 

 

508.0

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling and marketing

 

 

92.0

 

 

 

91.4

 

Research and development

 

 

107.9

 

 

 

104.9

 

General and administrative

 

 

90.1

 

 

 

92.9

 

Total operating expenses

 

 

290.0

 

 

 

289.2

 

Operating income

 

 

269.1

 

 

 

218.8

 

Interest expense, net

 

 

(51.4

)

 

 

(77.4

)

Other income (expense), net

 

 

18.0

 

 

 

(15.3

)

Equity in earnings of unconsolidated affiliates, net

 

 

0.3

 

 

 

0.7

 

Loss on extinguishment of debt

 

 

(0.3

)

 

 

(2.8

)

Income before income taxes

 

 

235.7

 

 

 

124.0

 

Provision for income taxes

 

 

60.8

 

 

 

24.8

 

Net income

 

$

174.9

 

 

$

99.2

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.68

 

 

$

0.39

 

Diluted earnings per share

 

$

0.65

 

 

$

0.37

 

 

 

 

 

 

 

 

 

 

Basic weighted-average number of common shares outstanding

 

 

257.0

 

 

 

255.3

 

Diluted weighted-average number of common and common equivalent shares outstanding

 

 

268.1

 

 

 

265.6

 

 

 

 

 

 

 

 

 

 

Net income

 

$

174.9

 

 

$

99.2

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

Change in unrealized gain (loss) on interest rate swaps

 

 

0.5

 

 

 

(2.4

)

Foreign currency exchange translation adjustment

 

 

8.4

 

 

 

(150.7

)

Total other comprehensive income (loss), net of tax

 

 

8.9

 

 

 

(153.1

)

Comprehensive income (loss)

 

$

183.8

 

 

$

(53.9

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

4


 

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions) (Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Cash flow from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

174.9

 

 

$

99.2

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

169.5

 

 

 

184.7

 

Equity in earnings of unconsolidated affiliates, net

 

 

(0.3

)

 

 

(0.7

)

Cash distributions received from unconsolidated affiliates

 

 

 

 

 

2.0

 

Gain on bargain purchase

 

 

(2.9

)

 

 

 

Stock-based compensation expense

 

 

27.8

 

 

 

22.5

 

Net (gains) losses on investments

 

 

(13.6

)

 

 

11.3

 

Amortization and write-offs of loan origination costs and original issue discounts

 

 

3.3

 

 

 

3.5

 

Loss on extinguishment of debt, net

 

 

0.3

 

 

 

0.4

 

Loss on sale or disposition of property and equipment

 

 

 

 

 

3.7

 

Deferred income taxes

 

 

(33.5

)

 

 

(32.3

)

Provision for doubtful accounts

 

 

2.1

 

 

 

2.3

 

Changes in operating assets and liabilities, excluding effects from acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(24.9

)

 

 

(27.2

)

Prepaid expenses and other assets

 

 

(13.9

)

 

 

13.2

 

Contract assets

 

 

(6.5

)

 

 

(10.5

)

Accounts payable

 

 

(2.6

)

 

 

6.4

 

Accrued expenses and other liabilities

 

 

(147.7

)

 

 

(171.0

)

Income taxes prepaid and payable

 

 

47.2

 

 

 

38.1

 

Deferred revenue

 

 

6.5

 

 

 

2.1

 

Net cash provided by operating activities

 

 

185.7

 

 

 

147.7

 

Cash flow from investing activities:

 

 

 

 

 

 

 

 

Cash paid for business acquisitions, net of cash acquired

 

 

7.3

 

 

 

(16.3

)

Additions to property and equipment

 

 

(9.1

)

 

 

(8.5

)

Additions to capitalized software

 

 

(22.3

)

 

 

(18.0

)

Investments in securities

 

 

(10.0

)

 

 

(40.0

)

Proceeds from sales / maturities of investments

 

 

13.4

 

 

 

6.9

 

Collection of other non-current receivables

 

 

2.8

 

 

 

2.6

 

Net cash used in investing activities

 

 

(17.9

)

 

 

(73.3

)

Cash flow from financing activities:

 

 

 

 

 

 

 

 

Cash received from debt borrowings

 

 

170.0

 

 

 

246.0

 

Repayments of debt

 

 

(99.4

)

 

 

(95.9

)

Net increase (decrease) in client funds obligations

 

 

777.0

 

 

 

(670.7

)

Proceeds from exercise of stock options

 

 

30.6

 

 

 

38.1

 

Withholding taxes paid related to equity award net share settlement

 

 

(1.9

)

 

 

(3.3

)

Purchases of common stock for treasury

 

 

(181.4

)

 

 

 

Dividends paid on common stock

 

 

(41.2

)

 

 

(31.9

)

Net cash provided by (used in) financing activities

 

 

653.7

 

 

 

(517.7

)

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

 

 

(1.7

)

 

 

(7.1

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

819.8

 

 

 

(450.4

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

1,337.9

 

 

 

1,789.4

 

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

 

$

2,157.7

 

 

$

1,339.0

 

 

 

 

 

 

 

 

 

 

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

 

Cash and cash equivalents

 

$

253.7

 

 

$

373.7

 

Restricted cash and cash equivalents

 

 

4.4

 

 

 

8.3

 

Restricted cash and cash equivalents included in funds receivable and funds held on behalf of clients

 

 

1,899.6

 

 

 

957.0

 

 

 

$

2,157.7

 

 

$

1,339.0

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

5


 

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In millions) (Unaudited)

 

 

 

Three Months Ended March 31, 2021

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

of

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Issued

 

 

 

 

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

Treasury

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

(Loss) Income

 

 

Stock

 

 

Equity

 

Balance, at December 31, 2020

 

 

263.9

 

 

$

2.6

 

 

$

4,544.0

 

 

$

1,667.0

 

 

$

(201.0

)

 

$

(296.1

)

 

$

5,716.5

 

Net income

 

 

 

 

 

 

 

 

 

 

 

174.9

 

 

 

 

 

 

 

 

 

174.9

 

Foreign exchange translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8.4

 

 

 

 

 

 

8.4

 

Net change in interest rate swaps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.5

 

 

 

 

 

 

0.5

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

27.8

 

 

 

 

 

 

 

 

 

 

 

 

27.8

 

Exercise of options, net of withholding taxes

 

 

0.8

 

 

 

 

 

 

28.7

 

 

 

 

 

 

 

 

 

 

 

 

28.7

 

Cash dividends declared - $0.16 per share

 

 

 

 

 

 

 

 

 

 

 

(41.2

)

 

 

 

 

 

 

 

 

(41.2

)

Purchase of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(181.4

)

 

 

(181.4

)

Balance, at March 31, 2021

 

 

264.7

 

 

$

2.6

 

 

$

4,600.5

 

 

$

1,800.7

 

 

$

(192.1

)

 

$

(477.5

)

 

$

5,734.2

 

 

 

 

 

Three Months Ended March 31, 2020

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

of

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Issued

 

 

 

 

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

Treasury

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Stock

 

 

Equity

 

Balance, at December 31, 2019

 

 

257.6

 

 

$

2.6

 

 

$

4,266.9

 

 

$

1,177.9

 

 

$

(253.0

)

 

$

(78.3

)

 

$

5,116.1

 

Net income

 

 

 

 

 

 

 

 

 

 

 

99.2

 

 

 

 

 

 

 

 

 

99.2

 

Foreign exchange translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(150.7

)

 

 

 

 

 

(150.7

)

Net change in interest rate swaps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2.4

)

 

 

 

 

 

(2.4

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

22.5

 

 

 

 

 

 

 

 

 

 

 

 

22.5

 

Exercise of options, net of withholding taxes

 

 

1.4

 

 

 

 

 

 

34.8

 

 

 

 

 

 

 

 

 

 

 

 

34.8

 

Cash dividends declared - $0.125 per share

 

 

 

 

 

 

 

 

0.1

 

 

 

(32.0

)

 

 

 

 

 

 

 

 

(31.9

)

Balance, at March 31, 2020

 

 

259.0

 

 

$

2.6

 

 

$

4,324.3

 

 

$

1,245.1

 

 

$

(406.1

)

 

$

(78.3

)

 

$

5,087.6

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

6


 

 

SS&C TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

Note 1—Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These accounting principles were applied on a basis consistent with those of the audited Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2021 (the “2020 Form 10-K”). The inputs into our judgments and estimates consider the economic implications of COVID-19 on our critical and significant accounting estimates. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting of only normal recurring adjustments, except as noted elsewhere in the notes to the Condensed Consolidated Financial Statements) necessary for a fair statement of our financial position as of March 31, 2021, the results of our operations for the three months ended March 31, 2021 and 2020, and our cash flows for the three months ended March 31, 2021 and 2020. These statements do not include all of the information and footnotes required by GAAP for annual financial statements. The Condensed Consolidated Financial Statements contained herein should be read in conjunction with the audited Consolidated Financial Statements and footnotes as of and for the year ended December 31, 2020, which were included in the 2020 Form 10-K. The December 31, 2020 Consolidated Balance Sheet data were derived from audited financial statements but do not include all disclosures required by GAAP for annual financial statements. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the expected results for any subsequent quarters or the full year.  

Recently Adopted Accounting Pronouncement

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. Certain amendments in this update must be applied on a prospective basis, certain amendments must be applied on a retrospective basis and certain amendments must be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the effective date. We adopted ASU 2019-12 effective January 1, 2021. The adoption of this standard did not have a material impact on our financial position, results of operations or cash flows.

Recent Accounting Pronouncement Not Yet Effective

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP if certain criteria are met to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued. In January 2021, the FASB issued Update 2021-01, Reference Rate Reform (Topic 848): Scope. The update provides additional optional guidance on the transition from LIBOR to include derivative instruments that use an interest rate for margining, discounting or contract price alignment. The standard will ease, if warranted, the requirements for accounting for the future effects of the rate reform. An entity may elect to apply the amendments prospectively through December 31, 2022. A substantial portion of our indebtedness bears interest at variable interest rates, primarily based on USD-LIBOR. We continue to monitor the impact the discontinuance of LIBOR or another reference rate will have on our contracts, hedging relationships and other transactions. We are currently assessing the impact of this standard on our financial condition and results of operations.

Note 2—Property, Plant and Equipment, net

Property, plant and equipment and the related accumulated depreciation are as follows (in millions):

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Land

 

$

54.2

 

 

$

48.0

 

Building and improvements

 

 

311.2