Company: PAYC
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0000950170-25-024136
Chunk: 193

Company: Paycom Software, Inc.
Filing Date: 2025-02-20
Form: 10-K
Item: Item 8
Chunk 193
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 in progress. For the years ended December 31, 2024, 2023 and 2022, we incurred interest costs of $3.4 million, $5.3 million and $3.4 million, respectively. For the year ended December 31, 2024 no interest costs were capitalized. For the years ended December 31, 2023 and 2022, interest costs of $3.4 million and $0.9 million, respectively, were capitalized. See Note 6 “Long-Term Debt” for discussion of repayment of our indebtedness.LeasesOur leases primarily consist of noncancellable operating leases for office space. We recognize a right-of-use asset and operating lease liability on the lease commencement date based on the present value of the lease payments over the lease term. Operating lease 

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Paycom Software, Inc.Notes to the Consolidated Financial Statements(tabular dollars and shares in millions, except per share and per unit amounts) 

liabilities are measured by discounting future lease payments at an estimated incremental borrowing rate. Right-of-use assets are amortized over the lease term and include adjustments related to prepaid rent.Internal Use SoftwareCapitalized costs include costs for services associated with developing or obtaining internal use software and certain payroll and payroll-related costs for employees who are directly associated with internal use software projects. The amount of payroll costs that are capitalized with respect to these employees is limited to the time directly spent on such projects. Expenditures for software purchases and software developed or obtained for internal use are capitalized and amortized over a three-year period on a straight-line basis. Costs associated with preliminary project stage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred. We also expense internal costs related to minor upgrades and enhancements, as it is impractical to separate these costs from normal maintenance activities.The total capitalized software development costs were $125.7 million and $96.7 million during the years ended December 31, 2024 and 2023, respectively, and are included in property and equipment. Amortization expense of capitalized software development costs was $83.1 million, $61.9 million and $47.3 million for the years ended December 31, 2024, 2023 and 2022, respectively.DerivativesIn December 2017, we entered into a floating-to-fixed interest rate swap agreement to limit the exposure to floating interest rate risk related to the then-outstanding term loans. We do not hold