Paychex 2015 Annual Report Download - page 46

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Financing Cash Flow Activities
Year ended May 31,
In millions, except per share amounts 2015 2014 2013
Net change in client fund obligations ........................... $ 93.0 $ 127.4 $(454.6)
Dividends paid ............................................ (551.8) (510.6) (476.7)
Repurchases of common shares ............................... (182.4) (249.7) —
Equity activity related to stock-based awards .................... 48.5 113.3 72.8
Net cash used in financing activities ........................... $(592.7) $(519.6) $(858.5)
Cash dividends per common share ............................. $ 1.52 $ 1.40 $ 1.31
Net change in client fund obligations: The client fund obligations liability will vary based on the timing
of collecting client funds, and the related required remittance of funds to applicable tax or regulatory agencies for
payroll tax administration services and to employees of clients utilizing employee payment services. Collections
from clients are typically remitted from one to 30 days after receipt, with some items extending to 90 days.
Fluctuations in net change in client fund obligations for the years presented are primarily the result of timing
of collections and remittances and overall trends in client fund balances. May 31, 2015 fell on a Sunday, May 31,
2014 fell on a Saturday, and May 31, 2013 fell on a Friday. Friday is a large cash outflow day for direct deposit
funds, partially offset by tax payment funds collected on that day. This impact was consistent and did not impact
the net cash flow position for client funds obligations reflected in fiscal 2015 or fiscal 2014. The net cash inflow
position in those years is the result of growth in average client funds held. The slight decrease in net cash inflows
for fiscal 2015 was the result of lower cash collections for state unemployment insurance with many states
lowering their rates early in calendar 2015.
Timing did have an impact for fiscal 2013, resulting in a net cash outflow position. May 31, 2012 was a
Thursday, a large cash collection day for direct deposit funds, so we had higher client funds on hand at that date.
As May 31, 2013 was a Friday and a cash outflow day for direct deposit, client funds on hand were lower. As a
result, there was a net cash outflow over the period in fiscal 2013.
Dividends paid: In July 2014, the Board increased our quarterly dividend to stockholders by 9% to $0.38
per share from $0.35 per share. In July 2013, the Board increased our quarterly dividend to stockholders by 6%
to $0.35 per share from $0.33 per share. The dividends paid as a percentage of net income totaled 82%, 81%, and
84% for fiscal years 2015, 2014, and 2013, respectively. The payment of future dividends is dependent on our
future earnings and cash flow, and is subject to the discretion of our Board.
Repurchases of common shares: In May 2014, the Board approved a program to repurchase up to $350
million of Paychex common stock, with authorization expiring in May 2017. During fiscal 2015, we repurchased
3.9 million shares for a total of $182.4 million. In fiscal 2014, we repurchased 6.2 million shares for a total of
$249.7 million under a previously authorized program to purchase up to $350 million of Paychex common stock,
with authorization for that program expiring in May 2014.
Equity activity related to stock-based awards: The decrease in activity related to stock-based awards for
fiscal 2015 compared to fiscal 2014 was largely driven by a decrease in proceeds from the exercise of stock
options. The increase in activity for stock-based awards for fiscal 2014 compared to fiscal 2013 was driven by an
increase in proceeds from the exercise of stock options. Common shares acquired through the exercise of stock
options were 1.6 million shares, 3.4 million shares, and 2.4 million shares for fiscal years 2015, 2014, and 2013,
respectively. Refer to Note D of the Notes to Consolidated Financial Statements, contained in Item 8 of this
Form 10-K, for additional disclosures on our stock-based compensation plans.
Other
Recently adopted accounting pronouncements: Refer to Note A of the Notes to Consolidated Financial
Statements, contained in Item 8 of this Form 10-K, for a discussion of recently adopted accounting
pronouncements.
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