ADP 2015 Annual Report Download - page 71

increase or decrease for all open tax years and jurisdictions. Based on current estimates, settlements related to various jurisdictions and tax periods could increase
earnings up to $2 million in the next twelve months. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. We continually
assess the likelihood and amount of potential adjustments and adjust the income tax provision, the current tax liability and deferred taxes in the period in which the
facts that give rise to a revision become known.
In fiscal 2016 , the IRS completed its review of the examination of the Company's tax return for the year ended June 30, 2014 , which did not have a
material impact to the consolidated financial statements of the Company.
NOTE 11 . COMMITMENTS AND CONTINGENCIES
The Company has obligations under various facilities, equipment leases and software license agreements. Minimum commitments under these obligations
with a future life of greater than one year at June 30, 2016 are as follows:
Years ending June 30,
2017 $ 106.2
2018 106.1
2019 78.9
2020 59.6
2021 39.5
Thereafter 100.8
$ 491.1
In addition to fixed rentals, certain leases require payment of maintenance and real estate taxes and contain escalation provisions based on future
adjustments in price indices.
As of June 30, 2016 , the Company has purchase commitments of approximately $625.2 million , including a reinsurance premium with Chubb for the
fiscal 2017 policy year, as well as obligations related to purchase and maintenance agreements on our software, equipment, and other assets, of which $331.1
million relates to fiscal 2017 , $111.3 million relates to the fiscal year ending June 30, 2018 , and the remaining $182.8 million relates to fiscal years ending June
30, 2019 through fiscal 2021 .
In July 2016, Uniloc USA, Inc. and Uniloc Luxembourg, S.A. (“Uniloc”) filed a lawsuit against the Company in the United States District Court for the
Eastern District of Texas alleging that Company products and services infringe four patents. Uniloc alleges infringement of its patents concerning centralized
management of application programs on a network, distribution of application programs to a target station on a network, management of configurable application
programs on a network, and license use management on a network. The complaint seeks unspecified monetary damages, costs, and injunctive relief. This
litigation is still in its earliest stages and the Company is unable to estimate any reasonably possible loss, or range of loss, with respect to this matter. The Company
intends to vigorously defend against this lawsuit.
During the second quarter of fiscal 2016, in the course of a compliance review of its clients and vendors globally, the Company determined that
subsidiaries of the Company had previously entered into service arrangements outside the United States of America ("U.S.") with several entities that are
designated as Specially Designated Nationals (“SDNs”) by the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of Treasury. Under these
service arrangements, the Company provided managed service solutions to the SDNs. Immediately following the discovery of such service arrangements, the
Company terminated the service arrangements with each SDN. The Company has voluntarily notified OFAC of the service arrangements and is cooperating fully
with OFAC. The Company may be subject to fines and penalties, which amounts would be based on such factors OFAC may consider relevant. At this time, the
Company is unable to estimate any reasonably possible loss, or range of reasonably possible loss, with respect to this matter. This is primarily because this matter
involves a complex issue subject to inherent uncertainty. There can be no assurance that this matter will be resolved in a manner that is not adverse to the
Company. For more information regarding this matter, see below in Part II Item 9B, OtherInformationof this Annual Report on Form 10-K.
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