ADP 2013 Annual Report Download - page 23

the average interest rate earned to 2.2% in fiscal 2013 , as compared to 2.8% in fiscal 2012 , partially offset by an increase in our average client
funds balance of 7% , to $19.2 billion , in fiscal 2013 .
Total Expenses
Our total expenses increased $643.1 million , or 7% , to $9,322.0 million in fiscal 2013 , as compared to fiscal 2012 . The increase in
our total expenses was due to an increase in operating expenses of $377.2 million , an increase in selling, general and administrative expenses of
$163.7 million , an increase in systems development and programming costs of $ 61.6 million , and the goodwill impairment charge of $42.7
million . Total expenses would have increased approximately 7% without the impact of the goodwill impairment charge and 6% without the
impact of recently completed acquisitions.
Our total costs of revenues increased $435.3 million , or 7% , to $6,649.6 million in fiscal 2013 , as compared to fiscal 2012 , due to an
increase in operating expenses of $377.2 million and an increase in systems development and programming costs of $61.6 million .
Operating expenses increased $377.2 million , or 7% in fiscal 2013 , as compared to fiscal 2012 , due to the increase in revenues
described above, including the increase s in PEO Services, which has pass-through costs that are re-
billable and which includes costs for benefits
coverage, workers’ compensation coverage and state unemployment taxes for worksite employees. These pass-through costs were $1,513.5
million for fiscal 2013 , which included costs for benefits coverage of $1,193.2 million and costs for workers’ compensation and payment of
state unemployment taxes of $320.3 million . These pass-through costs were $1,363.6 million for fiscal 2012 , which included costs for benefits
coverage of $1,060.3 million and costs for workers’ compensation and payment of state unemployment taxes of $303.3 million . The increase
in
operating expenses is also due to expenses related to businesses acquired of $84.4 million and higher labor-related expenses in Employer
Services of $69.4 million, partially offset by a decrease of $34.0 million due to changes in foreign currency exchange rates.
Systems development and programming costs increased $61.6 million , or 10% , in fiscal 2013 , as compared to fiscal 2012 , due to
increased costs to develop, support, and maintain our products and increased costs related to businesses acquired of $6.6 million , partially offset
by a decrease of $6.7 million due to changes in foreign currency exchange rates.
Selling, general and administrative expenses increased $163.7 million , or 7% , in fiscal 2013 , as compared to fiscal 2012 . The
increase in expenses was related to an increase in selling expenses of $72.9 million resulting from investments in our salesforce and an increase
in expenses of businesses acquired of $16.3 million , partially offset by a decrease of $24.6 million due to changes in foreign currency exchange
rates. Additionally, selling, general, and administrative expenses decreased $24.1 million due to lower severance expenses in fiscal 2013 , as
compared to fiscal 2012 .
Other Income, net
Other income, net, decrease d $74.6 million in fiscal 2013 , as compared to fiscal 2012 . The decrease was due to a $66.0 million gain
on the sale of assets related to rights and obligations to resell a third-party expense management platform in fiscal 2012 and a decrease
in interest
income on corporate funds of $20.7 million in fiscal 2013 , as compared to fiscal 2012 . The decrease in interest income on corporate funds
resulted from lower average interest rates from 2.1% in fiscal 2012 to 1.5% in fiscal 2013 , partially offset by increasing average daily corporate
funds, which increased from $4.0 billion in fiscal 2012 to $4.2 billion in fiscal 2013 . Such decreases were partially offset by gains of $2.2
million pertaining to the sale of two
20
Years ended June 30,
(Dollars in millions)
2013 2012 $ Change
Interest income on corporate funds
$
(64.5
)
$
(85.2
)
$
(20.7
)
Realized gains on available-for-sale securities
(32.1
)
(32.1
)
—
Realized losses on available-for-sale securities
3.5
7.7
4.2
Impairment losses on available-for-sale securities
—
5.8
5.8
Impairment losses on assets held for sale
—
2.2
2.2
Gains on sales of buildings
(2.2
)
—
2.2
Gain on sale of assets
—
(
66.0
)
(66.0
)
Other, net
(0.9
)
(3.2
)
(2.3
)
Other income, net
$
(96.2
)
$
(170.8
)
$
(74.6
)