ADP 2010 Annual Report Download - page 56

There is a financial statement recognition threshold and measurement attribute for tax positions taken or expected to be taken in a tax
return. Specifically, it clarifies that an entity
’ s tax benefits must be “more likely than not” of being sustained, assuming that these
positions will be examined by taxing authorities with full knowledge of all relevant information prior to recording the related tax
benefit in the financial statements. If a tax position drops below the “more likely than not” standard, the benefit can no longer be
recognized. Assumptions, judgment and the use of estimates are required in determining if the “more likely than not” standard has
been met when developing the provision for income taxes. As of June 30, 2010 and 2009, the Company
’ s liabilities for unrecognized
tax benefits, which include interest and penalties, were $107.2 million and $92.8 million, respectively.
If certain pending tax matters settle within the next twelve months, the total amount of unrecognized tax benefits may 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 $10.0 million. 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.
Q. Recently Issued Accounting Pronouncements. In October 2009, the Financial Accounting Standards Board (“FASB”
) issued
ASU 2009 - 13, “Multiple Deliverable Revenue Arrangements.” ASU 2009 - 13 modifies the guidance related to accounting for
arrangements with multiple deliverables by providing an alternative when vendor specific objective evidence (“
VSOE ” ) or third - party
evidence (“
TPE ” ) does not exist to determine the selling price of a deliverable. The alternative when VSOE or TPE does not exist is
the best estimate of the selling price of the deliverable. Consideration for multiple deliverables is then allocated based upon the
relative selling price of the deliverables and revenue is recognized as earned for each deliverable. ASU 2009 - 13 is effective
prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, unless
the election is made to adopt ASU 2009
- 13 retrospectively. In either case, early adoption is permitted. The adoption of ASU 2009 - 13
will not have a material impact on the Company ’ s consolidated results of operations, financial condition or cash flows.
In October 2009, the FASB issued ASU No. 2009
- 14, “Certain Revenue Arrangements that Include Software Elements” ( “ ASU 2009 -
14 ” ). ASU 2009 - 14 modifies the scope of the software revenue recognition guidance to exclude (a) non - software components of
tangible products and (b) software components of tangible products that are sold, licensed, or leased with tangible products when
the software components and non
- software components of the tangible product function together to deliver the tangible product ’ s
functionality. ASU 2009
- 14 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010, unless the election is made to adopt ASU 2009
- 14 retrospectively. In either case, early adoption
is permitted. The adoption of ASU 2009
- 14 will not have a material impact on the Company ’ s consolidated results of operations,
financial condition or cash flows.
NOTE 2. OTHER INCOME, NET
Other income, net consists of the following:
Proceeds from sales and maturities of available
- for - sale securities were $3,406.9 million, $3,320.4 million and $5,140.6 million for fiscal
2010, 2009 and 2008, respectively.
In fiscal 2010, the Company recorded a $15.2 million gain to other income, net on the Statements of Consolidated Earnings related to
the Primary Fund of the Reserve Fund (the “Reserve Fund”
). In fiscal 2009, the Company recorded an $18.3 million loss to other
income, net on the Statements of Consolidated Earnings related to the Reserve Fund. Refer to Note 5 for additional information
related to the Reserve Fund.
Years ended June 30,
2010
2009
2008
Interest income on corporate funds
$
(98.8
)
$
(134.2
)
$
(149.5
)
Realized gains on available - for - sale securities
(15.0
)
(11.4
)
(10.1
)
Realized losses on available - for - sale securities
13.4
23.8
11.4
Realized (gain) loss on investment in Reserve Fund
(15.2
)
18.3
-
Impairment losses on available - for - sale securities
14.4
-
-
Net loss (gain) on sales of buildings
2.3
(2.2
)
(16.0
)
Other, net
(2.3
)
(2.3
)
(2.3
)
Other income, net
$
(101.2
)
$
(108.0
)
$
(166.5
)