ADP 2010 Annual Report Download - page 70

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The Company
’
s U.S. and Canadian short
-
term funding requirements related to client funds obligations are sometimes obtained on a
secured basis through the use of reverse repurchase agreements. These agreements are collateralized principally by government and
government agency securities. These agreements generally have terms ranging from overnight to up to five business days. The
Company has $2 billion available to it on a committed basis under these reverse repurchase agreements. At June 30, 2010 and 2009,
there were no outstanding obligations under reverse repurchase agreements. In fiscal 2010 and 2009, the Company had average
outstanding balances under reverse repurchase agreements of $425.0 million and $425.9 million, respectively, at weighted average
interest rates of 0.2% and 1.3%, respectively.
NOTE 12. DEBT
Components of long
-
term debt are as follows:
During fiscal 2008, the Company entered into a secured financing agreement, whereby the Company borrowed $21.1 million from a
third party in exchange for a security interest in a single client
’
s unbilled accounts receivable, which is billable over a ten
-
year period.
The Company will continue to collect amounts due from the client as they are billed. The security interest in the receivables retained
by the third party is without recourse against the Company in the event that the client does not make the appropriate payments to
the Company. As of June 30, 2010, the Company has recorded approximately $2.8 million within accrued expenses and other current
liabilities and approximately $14.4 million within long
-
term debt on the Company
’
s Consolidated Balance Sheets related to the
secured financing arrangement.
The fair value of the industrial revenue bonds and other debt, included above, approximates carrying value.
Long
-
term debt repayments at June 30, 2010 are due as follows:
Cash payments relating to interest on long
-
term debt and the short
-
term financing arrangements described in Note 11 were
approximately $8.9 million, $40.1 million, and $82.1 million in fiscal 2010, 2009 and 2008, respectively.
NOTE 13. FOREIGN CURRENCY RISK MANAGEMENT PROGRAMS
The Company is exposed to market risk from changes in foreign currency exchange rates that could impact its consolidated results of
operations, financial position or cash flows. The Company manages its exposure to these market risks through its regular operating
and financing activities and, when deemed appropriate, through the use of derivative financial instruments. The Company uses
derivative financial instruments as risk management tools and not for trading purposes.
June 30,
2010
2009
Industrial revenue bonds
(with variable interest rates from 0.4% to 1.1%)
$
25.4
$
26.5
Secured financing
17.2
19.0
Other
-
-
42.6
45.5
Less: current portion
(2.8
)
(2.8
)
$
39.8
$
42.7
2012
$
1.7
2013
17.1
2014
1.8
2015
1.8
2016
1.8
Thereafter
15.6
$
39.8