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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 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: 001-39299

Alight, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	86-1849232
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4 Overlook Point Lincolnshire, IL	60069
(Address of principal executive offices)	(Zip Code)

(224) 737-7000

(Registrant’s telephone number, including area code)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share	ALIT	New York Stock Exchange
Warrants to purchase one share of Class A Common Stock	ALIT.WS	New York Stock Exchange

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, a 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.

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 ☒

As of November 9, 2021, the registrant had 446,802,741 shares of Class A Common Stock, par value $0.0001 per share, 4,990,453 shares of Class B-1 Common Stock, par value $0.0001 per share, 4,990,453 shares of Class B-2 Common Stock, par value $0.0001 per share, 77,459,687 shares of Class V Common Stock, par value $0.0001 per share, 5,046,819 shares of Class Z-A Common Stock, par value $0.0001 per share, 274,379 shares of Class Z-B-1 Common Stock, par value $0.0001 per share, and 274,379 shares of Class Z-B-2 Common Stock, par value $0.0001 per share, outstanding.

Table of Contents

		Page
	Explanatory Note	1
	Disclaimer Regarding Forward-Looking Statements	1
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Comprehensive Income (Loss)	3
	Condensed Consolidated Statements of Stockholders’ and Members’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	50
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53
Signatures		55

Explanatory Note

This Quarterly Report on Form 10-Q includes information pertaining to periods prior to the closing of the Alight Business Combination. Refer to Note 1 “Basis of Presentation and Nature of Business”, for further information regarding the basis of presentation.

Disclaimer Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements. These forward-looking statements include, but are not limited to, statements that relate to expectations regarding future financial performance, and business strategies or expectations for our business. Forward-looking statements can often be identified by the use of words such as “anticipate,” “appear,” “approximate,” “believe,” “continue,” “could,” “estimate,” “expect,” “foresee,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “would” or similar expressions or the negative thereof. These forward-looking statements are based on information available as of the date of this report and the Company’s management’s current expectations, forecasts and assumptions, and involve a number of judgments, known and unknown risks and uncertainties and other factors, many of which are outside the control of the Company and its directors, officers and affiliates. Accordingly, forward-looking statements should not be relied upon as representing the Company’s views as of any subsequent date. The Company does not undertake any obligation to update, add or otherwise correct any forward-looking statements contained herein to reflect events or circumstances after the date they were made, whether as a result of new information, future events, inaccuracies that become apparent after the date hereof or otherwise, except as may be required under applicable securities laws.

As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

•

the outcome of any known or unknown litigation or regulatory proceedings;

•

the risk that the Business Combination and subsequently becoming a public reporting company disrupts the plans and operations of the Company;

•

changes in applicable laws or regulations;

•

costs related to the Business Combination;

•

the inability of the Company to develop and maintain effective internal controls;

•

the COVID-19 pandemic and future outbreaks of any other highly infectious or contagious disease, including the global economic uncertainty and measures taken in response;

•

the possibility that the Company may be adversely affected by other economic, business or competitive factors;

•

risks associated with the Company’s international operations;

•

risks associated with competition with the Company’s competitors;

•

risks associated with changes in regulations that could have an adverse effect on the Company’s business;

•

the inability to adequately protect key intellectual property rights or proprietary technology;

•

the diversion of management’s attention and consumption of resources as a result of the Business Combination or any potential acquisitions of other companies;

•

risks associated with past and prospective acquisitions, including the failure to successfully integrate operations, personnel, systems, technologies and products of the acquired companies, adverse tax consequences of acquisitions, greater than expected liabilities of the acquired companies and charges to earnings from acquisitions;

•

failure to maintain adequate operational and financial resources or raise additional capital or generate sufficient cash flows;

•

cyber-attacks and security vulnerabilities and other significant disruptions in the Company’s information technology systems and networks that could expose the Company to legal liability, impair its reputation or negative effect on the Company’s results of operations;

•

the potential for conflicts of interest arising out of any of the Company’s directors allocating their time to other businesses and not exclusively to the Company, and that the Company’s amended and restated certificate of incorporation will contain a corporate opportunities waiver so directors will not be required to present potential business opportunities to the Company;

•

the possibility of a decline in economic activity that could impact the Company’s results of operations;

•

failure to compete successfully with the Company’s competitors;

•

risks associated with the Company’s failure to apply and develop new technologies as quick as the Company’s competitors; the possibility of a decline in continued interest in outsourced services; and other risks and uncertainties indicated in this report and our other public filings, including those set forth under the section entitled “Risk Factors” in our filings with the SEC.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Alight, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

	Successor			Predecessor
	September 30,			December 31,
(in millions)	2021			2020
Assets
Current Assets
Cash and cash equivalents	$	769		$	506
Receivables, net		505			532
Other current assets		172			163
Total Current Assets Before Fiduciary Assets		1,446			1,201
Fiduciary assets		1,468			1,030
Total Current Assets		2,914			2,231
Goodwill		3,356			2,245
Intangible assets, net		4,004			1,733
Fixed assets, net		219			334
Deferred tax assets, net		8			5
Other assets		456			408
Total Assets	$	10,957		$	6,956

Liabilities and Stockholders' Equity
Liabilities
Current Liabilities
Accounts payable and accrued liabilities	$	348		$	394
Current portion of long term debt		43			37
Other current liabilities		289			324
Total Current Liabilities Before Fiduciary Liabilities		680			755
Fiduciary liabilities		1,468			1,030
Total Current Liabilities		2,148			1,785
Deferred tax liabilities		3			—
Long term debt		2,839			4,041
Tax receivable agreement		605			—
Financial instruments		326			—
Other liabilities		358			447
Total Liabilities	$	6,279		$	6,273
Commitments and Contingencies (Note 18)
Stockholders' Equity
Class A Common Stock (Successor); $0.0001 par value, 1,000,000,000 shares authorized; 446,802,741 issued and outstanding as of September 30, 2021	$	—		$	—
Class B Common Stock (Successor); $0.0001 par value, 20,000,000 shares authorized; 9,980,906 issued and outstanding as of September 30, 2021		—			—
Class V Common Stock (Successor); $0.0001 par value, 175,000,000 shares authorized; 77,459,687 issued and outstanding as of September 30, 2021		—			—
Class Z Common Stock (Successor); $0.0001 par value, 12,900,000 shares authorized; 5,595,577 issued and outstanding as of September 30, 2021		—			—
Additional paid-in-capital		4,024			—
Retained deficit		(168	)		(127	)
Members' equity		—			852
Accumulated other comprehensive loss		(3	)		(42	)
Total Alight, Inc. Equity	$	3,853		$	683
Noncontrolling Interest		825			—
Total Stockholders' Equity	$	4,678		$	683
Total Liabilities and Stockholders' Equity	$	10,957		$	6,956

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

Alight, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

	Successor			Predecessor
	Three Months Ended			Six Months Ended			Three Months Ended			Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
(in millions, except per share amounts)	2021			2021			2020			2020
Revenue	$	690		$	1,361		$	668		$	2,008
Cost of services, exclusive of depreciation and amortization		442			888			423			1,329
Depreciation and amortization		10			38			18			47
Gross Profit		238			435			227			632

Operating Expenses
Selling, general and administrative		135			222			128			364
Depreciation and intangible amortization		78			111			57			170
Total operating expenses		213			333			185			534
Operating Income		25			102			42			98
Other Expense
Loss from change in fair value of financial instruments		90			—			—			—
Loss from change in fair value of tax receivable agreement		27			—			—			—
Interest expense		28			123			61			172
Other expense (income), net		—			9			3			(1	)
Total other expense, net		145			132			64			171
Loss Before Income Tax (Benefit) Expense		(120	)		(30	)		(22	)		(73	)
Income tax (benefit) expense		—			(5	)		17			12
Net Loss		(120	)		(25	)		(39	)		(85	)
Net loss attributable to noncontrolling interests		(13	)		—			—			—
Net Loss Attributable to Alight, Inc.	$	(107	)	$	(25	)	$	(39	)	$	(85	)

Earnings Per Share
Basic net loss per share	$	(0.24	)
Diluted net loss per share	$	(0.24	)

Net Loss	$	(120	)	$	(25	)	$	(39	)	$	(85	)
Other comprehensive (loss) income, net of tax:
Change in fair value of derivatives		(1	)		23			4			(32	)
Foreign currency translation adjustments		(2	)		8			14			(7	)
Total other comprehensive (loss) income, net of tax:		(3	)		31			18			(39	)
Comprehensive (Loss) Income Before Non-controlling Interests		(123	)		6			(21	)		(124	)
Comprehensive loss attributable to noncontrolling interests		(13	)		—			—			—
Comprehensive (Loss) Income Attributable to Alight, Inc.	$	(110	)	$	6		$	(21	)	$	(124	)

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

Alight, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

	Successor
								Accumulated
			Additional					Other			Total						Total
	Common		Paid-in		Retained			Comprehensive			Alight, Inc.			Noncontrolling			Stockholders'
(in millions)	Stock		Capital		Deficit			Loss			Equity			Interest			Equity
Balance at July 1, 2021	$	—	$	4,009	$	(61	)	$	—		$	3,948		$	838		$	4,786
Net loss		—		—		(107	)		—			(107	)		(13	)		(120	)
Other comprehensive loss, net		—		—		—			(3	)		(3	)		—			(3	)
Share-based compensation expense		—		15		—			—			15			—			15
Balance at September 30, 2021	$	—	$	4,024	$	(168	)	$	(3	)	$	3,853		$	825		$	4,678

	Condensed Consolidated Statements of Members’ Equity (Unaudited) Predecessor
																		Accumulated
	Members' Equity																	Other
	Class A Units					Class A-1 Units						Class B Units						Comprehensive
(in millions, except unit amounts)	Units		Amount			Units			Amount			Units			Amount			(Loss) Income			Total
Balance at December 31, 2020		123,700	$	699			1,800		$	12			1,736		$	14		$	(42	)	$	683
Comprehensive (loss) income, net of tax		—		(21	)		—			—			—			—			21			—
Restricted share units vested, net of units withheld in lieu of taxes		—		—			1			—			50			—			—			—
Unit repurchases		—		—			(75	)		(1	)		(89	)		(1	)		—			(2	)
Share-based compensation expense		—		—			—			—			—			2			—			2
Balance at March 31, 2021		123,700	$	678			1,726		$	11			1,697		$	15		$	(21	)	$	683
Comprehensive (loss) income, net of tax		—		(4	)		—			—			—			—			10			6
Restricted share units vested, net of units withheld in lieu of taxes		—		—			91			(1	)		391			—			—			(1	)
Share-based compensation expense		—		—			—			1			—			2			—			3
Balance at June 30, 2021		123,700	$	674			1,817		$	11			2,088		$	17		$	(11	)	$	691
	Predecessor
																		Accumulated
	Members' Equity																	Other
	Class A Units					Class A-1 Units						Class B Units						Comprehensive
(in millions, except unit amounts)	Units		Amount			Units			Amount			Units			Amount			Loss			Total
Balance at December 31, 2019		123,700	$	804			1,683		$	15			1,107		$	11		$	(25	)	$	805
Comprehensive loss, net of tax		—		(21	)		—			—			—			—			(51	)		(72	)
Restricted share units vested, net of units withheld in lieu of taxes		—		—			11			—			15			—			—			—
Share-based compensation expense		—		—			—			—			—			2			—			2
Balance at March 31, 2020		123,700	$	783			1,694		$	15			1,122		$	13		$	(76	)	$	735
Comprehensive loss, net of tax		—		(25	)		—			—			—			—			(6	)		(31	)
Distribution of members' equity		—		(1	)		—			—			—			—			—			(1	)
Restricted share units vested, net of units withheld in lieu of taxes		—		—			157			(1	)		209			—			—			(1	)
Unit repurchases		—		—			(55	)		(2	)		(88	)		(1	)		—			(3	)
Share-based compensation expense		—		—			—			1			—			1			—			2
Balance at June 30, 2020		123,700	$	757			1,796		$	13			1,243		$	13		$	(82	)	$	701
Comprehensive income (loss), net of tax		—		(39	)		—			—			—			—			18			(21	)
Distribution of members' equity		—		(2	)		—			—			—			—			—			(2	)
Restricted share units vested, net of units withheld in lieu of taxes		—		—			2			—			476			—			—			—
Share-based compensation expense		—		—			—			—			—			1			—			1
Balance at September 30, 2020		123,700	$	716			1,798		$	13			1,719		$	14		$	(64	)	$	679

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

Alight, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Successor			Predecessor
	Three Months Ended			Six Months Ended			Nine Months Ended
	September 30,			June 30,			September 30,
(in millions)	2021			2021			2020
Cash flows from operating activities
Net loss	$	(120	)	$	(25	)	$	(85	)
Adjustments to reconcile net loss to net cash (used for) provided by operations:
Depreciation		14			49			66
Intangible amortization expense		74			100			151
Noncash lease expense		6			10			17
Financing fee and premium amortization		(1	)		9			15
Share-based compensation expense		15			5			5
Loss from change in fair value of financial instruments		90			—			—
Loss from change in fair value of tax receivable agreement		27			—			—
Other		—			1			1
Change in assets and liabilities:
Receivables		(22	)		51			81
Accounts payable and accrued liabilities		14			(45	)		35
Other assets and liabilities		(104	)		(97	)		(155	)
Cash (used for) provided by operating activities	$	(7	)	$	58		$	131
Cash flows from investing activities
Acquisition of businesses, net of cash acquired		(1,394	)		—			(52	)
Capital expenditures		(27	)		(55	)		(71	)
Cash used for investing activities	$	(1,421	)	$	(55	)	$	(123	)
Cash flows from financing activities
Net increase (decrease) in fiduciary liabilities		453			(15	)		210
Members' equity unit repurchase		—			(2	)		(3	)
Distributions of members' equity		—			—			(3	)
Borrowings from banks		576			110			726
Financing fees		(7	)		—			(23	)
Repayments to banks		(57	)		(124	)		(435	)
Principal payments on finance lease obligations		(7	)		(17	)		(18	)
Settlements of interest rate swaps		(4	)		(14	)		(14	)
Tax payment for units withheld in lieu of taxes		—			(1	)		—
Contingent consideration payments		—			(1	)		—
FTAC share redemptions		(142	)		—			—
Proceeds related to FTAC investors

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Alight, Inc. /DE 10-Q