Paychex 2016 Annual Report Download - page 43

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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 F 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 2016 compared to fiscal 2015, there was a significant
fluctuation due to timing of the day of the week for fiscal year-end. There were larger cash outflows on Tuesday,
May 31, 2016 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 2016. Our net cash inflow from funds held for clients and
corporate investment activities for fiscal 2016 was partially offset by the change in mix of investments with more
invested in VRDN securities and less in cash equivalents as of May 31, 2016. 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. See further discussion of this timing in the
financing cash flows discussion of net change in client fund obligations.
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 2016, 2015, and 2014, we purchased approximately
$4.9 million, $6.9 million, and $4.7 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 2016, we paid, net of cash acquired, $296.1 million for the acquisition of Advance
Partners. During fiscal years 2015 and 2014, we paid, net of cash acquired, $27.1 million and $9.3 million,
respectively, for immaterial business acquisitions.
Financing Cash Flow Activities
Year ended May 31,
In millions, except per share amounts 2016 2015 2014
Net change in client fund obligations ........................... $(304.8) $ 93.0 $ 127.4
Dividends paid ............................................ (606.5) (551.8) (510.6)
Repurchases of common shares ............................... (107.9) (182.4) (249.7)
Equity activity related to stock-based awards .................... 25.6 48.5 113.3
Net cash used in financing activities ........................... $(993.6) $(592.7) $(519.6)
Cash dividends per common share ............................. $ 1.68 $ 1.52 $ 1.40
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. Timing for fiscal 2016 resulted in a net
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