Paychex 2015 Annual Report Download - page 45

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Investing Cash Flow Activities
Year ended May 31,
In millions 2015 2014 2013
Net change in funds held for clients and corporate investment
activities ................................................ $(151.8) $(211.4) $306.8
Purchases of property and equipment ........................... (102.8) (84.1) (98.7)
Acquisition of businesses, net of cash acquired ................... (27.1) (9.3) (21.3)
Purchases of other assets ..................................... (3.3) (11.3) (5.1)
Net cash (used in)/provided by investing activities ................. $(285.0) $(316.1) $181.7
Funds held for clients and corporate investments: Funds held for clients consist of short-term funds and
available-for-sale securities. Corporate investments are primarily comprised of available-for-sale securities. The
portfolio of funds held for clients and corporate investments is detailed in Note E of the Notes to Consolidated
Financial Statements, contained in Item 8 of this Form 10-K.
Fluctuations in the net change in funds held for clients and corporate investment activities are largely due to
timing within the client funds portfolio. For fiscal 2015 compared to fiscal 2014, there was not a significant
fluctuation due to timing of the day of the week for fiscal year-end. The net cash outflow position for both fiscal
2015 and fiscal 2014 is related to more purchases of short-term and available-for-sale securities resulting from
higher average collections from clients. For fiscal 2014 compared to fiscal 2013, there was a significant timing
impact. There was a large cash outflow on Friday, May 31, 2013 that required the liquidation of funds held in the
funds held for clients portfolio. This resulted in positive cash flow from investing activities for fiscal 2013. See
further discussion of this timing in the financing cash flows discussion of net change in client fund obligations.
Our net cash inflow from funds held for clients and corporate investment activities for fiscal 2013 was partially
offset by higher purchases than sales of VRDN securities during the year.
In general, fluctuations in net funds held for clients and corporate investment activities primarily relate to
timing of purchases, sales, or maturities of investments. The amount of funds held for clients will vary based
upon the timing of collection of client funds, and the related remittance of funds to applicable tax or regulatory
agencies for payroll tax administration services and to employees of clients utilizing employee payment services.
Additional discussion of interest rates and related risks is included in the “Market Risk Factors” section,
contained in Item 7A of this Form 10-K.
Other investing activities: To support our continued client and ancillary product growth, purchases of
property and equipment were made for data processing equipment and software, and for the expansion and
upgrade of various operating facilities. During fiscal years 2015, 2014, and 2013, we purchased approximately
$6.9 million, $4.7 million, and $6.5 million, respectively, of data processing equipment and software from EMC
Corporation. The Chairman, President, and Chief Executive Officer of EMC Corporation is a member of our
Board of Directors (the “Board.”)
During fiscal years 2015, 2014, and 2013, we paid, net of cash acquired, $27.1 million, $9.3 million, and
$21.3 million, respectively, for immaterial business acquisitions.
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