ADP 2014 Annual Report Download - page 25

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Total Expenses
Our total expenses increased $591.1 million , or 8% , to $8,417.4 million in fiscal 2014 , as compared to fiscal 2013 . The increase in our total expenses
was due to an increase in operating expenses of $407.2 million , an increase in selling, general and administrative expenses of $169.9 million , and an increase in
systems development and programming costs of $54.6 million , partially offset by the goodwill impairment charge of $42.7 million in fiscal 2013 .
Our total costs of revenues increased 8% , to $6,041.0 million in fiscal 2014 , as compared to fiscal 2013 , due to an increase in operating expenses of
$407.2 million and an increase in systems development and programming costs of $54.6 million .
Operating expenses increased $407.2 million , or 8% , in fiscal 2014 , as compared to fiscal 2013 , due to the increase in revenues described above,
including the increases in PEO Services, which has pass-through costs that are re-billable and which include costs for benefits coverage, workers’ compensation
coverage, and state unemployment taxes for worksite employees. These pass-through costs were $1,736.0 million for fiscal 2014 , which included costs for benefits
coverage of $1,383.3 million and costs for workers’ compensation and payment of state unemployment taxes of $352.7 million . 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 . The increase in operating expenses is also due to higher labor-related expenses in Employer Services of $65.9 million, as
compared to fiscal 2013.
Systems development and programming costs increased $54.6 million , or 11% , in fiscal 2014 , as compared to fiscal 2013 , due to increased costs to
develop, support, and maintain our products, partially offset by a higher proportion of capitalized costs of our strategic projects.
Selling, general and administrative expenses increased $169.9 million , or 8% , in fiscal 2014 , as compared to fiscal 2013 . The increase in expenses was
related to an increase in selling expenses of $81.8 million resulting from investments in our salesforce, an increase in stock-based compensation expense of $35.1
million , and $15.9 million higher severance expenses in fiscal 2014 , as compared to fiscal 2013 .
Other Income, net
(In millions)
Y ears ended June 30,
2014
2013
$ Change
Interest income on corporate funds
$ (53.7)
$ (62.9)
$ (9.2)
Realized gains on available-for-sale securities
(20.4)
(32.1)
(11.7)
Realized losses on available-for-sale securities
3.9
3.5
(0.4)
Gains on sales of buildings
—
(2.2)
(2.2)
Other, net
—
(0.7)
(0.7)
Other income, net
$ (70.2)
$ (94.4)
$ (24.2)
Other income, net, decrease d $24.2 million in fiscal 2014 , as compared to fiscal 2013 . The decrease was due to a decrease in realized gains on
available-for-sale securities of $11.7 million and a decrease in interest income on corporate funds of $9.2 million in fiscal 2014 , as compared to fiscal 2013 . The
decrease in interest income on corporate funds resulted from lower average interest rates of 1.5% in fiscal 2013 to 1.4% in fiscal 2014 and lower average daily
corporate funds, which decreased from $4.2 billion in fiscal 2013 to $4.1 billion in fiscal 2014 . In addition, we recognized gains of $2.2 million pertaining to the
sale of two buildings during fiscal 2013 .
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