ADP 2015 Annual Report Download - page 32

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Other
The primary components of the “Other” segment are the results of operations of ADP Indemnity, non-recurring gains and losses, miscellaneous
processing services, the elimination of intercompany transactions, interest expense, certain charges and expenses that have not been allocated to the reportable
segments, such as stock-based compensation expense, and beginning in the first quarter of fiscal 2016, the historical results of the AMD business, which was
previously reported in the Employer Services segment. This change, which is adjusted for both the current period and the prior period in the table above, did not
significantly affect reportable segment results and is consistent with the way the chief operating decision maker assesses the performance of the reportable
segments.
ADP Indemnity provides workers' compensation and employer's liability deductible reimbursement insurance protection for PEO Services' worksite
employees up to $1 million per occurrence. PEO Services has secured a workers’ compensation and employer’s liability insurance policy that has a $1 million per
occurrence retention and, in fiscal years 2012 and prior, aggregate stop loss insurance that covers any aggregate losses within the $1 million retention that
collectively exceed a certain level, from an admitted and licensed insurance company of AIG. We utilize historical loss experience and actuarial judgment to
determine the estimated claim liability for the PEO Services business. Premiums are charged by ADP Indemnity to PEO Services to cover the claims expected to
be incurred by the PEO Services' worksite employees. Changes in estimated ultimate incurred losses are recognized by ADP Indemnity. For the fiscal years 2013
to 2017, ADP Indemnity paid premiums to enter into reinsurance arrangements with ACE American Insurance Company, a wholly-owned subsidiary of Chubb
Limited ("Chubb"), to cover substantially all losses incurred by ADP Indemnity during these policy years. Each of these reinsurance arrangements limits our
overall exposure incurred up to a certain limit. We believe the likelihood of ultimate losses exceeding this limit is remote. During fiscal 2016 , ADP Indemnity paid
a premium of $202.0 million to cover substantially all losses incurred by ADP Indemnity for the fiscal 2016 policy year up to $1 million per occurrence related to
the workers' compensation and employer's liability deductible reimbursement insurance protection for PEO Services' worksite employees. ADP Indemnity paid a
premium of $221.0 million in July 2016 to enter into a reinsurance agreement with Chubb to cover substantially all losses incurred by ADP Indemnity for the year
ended June 30, 2017 ("fiscal 2017 ") policy year on terms substantially similar to the fiscal 2016 reinsurance policy.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
For corporate liquidity, we expect existing cash, cash equivalents, short-term marketable securities, long-term marketable securities, and cash flow from
operations together with our $9.25 billion of committed credit facilities and our ability to access both long-term and short-term debt financing from the capital
markets will be adequate to meet our operating, investing, and financing activities such as regular quarterly dividend, share repurchases, and capital expenditures.
For client funds liquidity, we have the ability to borrow through our financing arrangements under our U.S. short-term commercial paper program and our
U.S. and Canadian short-term reverse repurchase agreements together with our $9.25 billion of committed credit facilities and our ability to use corporate liquidity
when necessary to meet short-term funding requirements related to client funds obligations. Please see Quantitative and Qualitative Disclosures about Market Risk
for a further discussion of the risks of our client funds investment strategy. See Note 7 of our consolidated financial statements for a description of our short-term
financing including commercial paper.
As of June 30, 2016 , cash and short-term marketable securities were $ 3,214.6 million , which were primarily invested in time deposits, money market
funds and asset-backed commercial paper.
Operating, Investing and Financing Cash Flows
Our cash flows from operating, investing, and financing activities, as reflected in the Statements of Consolidated Cash Flows for the years ended 2016 ,
2015 , and 2014 , are summarized as follows:
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