ADP 2015 Annual Report Download - page 26

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Fiscal 2016 Compared to Fiscal 2015
Total Revenues
Our revenues, as reported, increase d 7% in fiscal 2016 , despite two percentage points of combined pressure from foreign currency translation and the
disposition of the AMD business in September 2015, primarily due to new business started during the past twelve months from new business bookings growth.
Refer to “Analysis of Reportable Segments” for additional discussion of the increases in revenue for both of our reportable segments, Employer Services and
Professional Employer Organization ("PEO") Services.
Total revenues in fiscal 2016 include interest on funds held for clients of $377.3 million , as compared to $377.7 million in fiscal 2015 . The decrease in
the consolidated interest earned on funds held for clients resulted from the decrease in the average interest rate earned in fiscal 2016 , as compared to fiscal 2015 ,
partially offset by the increase in our average client funds balances of 2.8% to $22,418.7 million in fiscal 2016 .
Total Expenses
Our total expenses, as reported, increase d 7% in fiscal 2016 , as compared to the same period in the prior year. The increase is primarily due to an
increase in PEO services pass-through costs as well as an increase in selling and implementation expenses to support our growth in new business bookings as we
experienced continued demand for additional HCM solutions, including products that assist businesses in complying with the ACA. Total expenses also increase d
due to increase d costs to service our client base in support of our growing revenue, and an increase in severance expenses, primarily related to our workforce
optimization effort. These increases were partially offset by the impact of foreign currency translation.
Operating expenses, as reported, increase d 7% in fiscal 2016 , as compared to fiscal 2015 . PEO Services pass-through costs were $2,336.3 million for
fiscal 2016 , which included costs for benefits coverage of $1,906.0 million and costs for workers’ compensation and payment of state unemployment taxes of
$430.3 million . These pass-through costs were $2,015.9 million for fiscal 2015 , which included costs for benefits coverage of $1,627.1 million and costs for
workers’ compensation and payment of state unemployment taxes of $388.8 million . Additionally, operating expenses increase d due to higher costs to implement
and service our client base in support of our growing revenue, including products that assist with ACA compliance which contributed to our strong new business
bookings over the past several quarters. These increases were partially offset by the impact of foreign currency translation.
Systems development and programming costs, as reported, increased 1% in fiscal 2016 , when compared to the same period in the prior year, due to
increased investments and costs to develop, support, and maintain our products, partially offset by a higher proportion of capitalized costs of our strategic projects
and the impact of foreign currency translation.
Selling, general and administrative expenses, as reported, increased 6% in fiscal 2016 , as compared to fiscal 2015 . The increase was primarily related to
an increase in selling expenses to support our growth in new business bookings as we experienced continued demand for our HCM products, particularly those that
are designed to assist businesses in complying with the ACA. Selling, general and administrative expenses also increased due to $57.6 million of additional
severance charges, of which $48.2 million relate to our workforce optimization effort, and a $10.7 million reversal of reserves in fiscal 2015 related to our former
Dealer Services business financing arrangements which were sold to a third party. These increases were partially offset by the impact of foreign currency
translation.
Other Income, net
(In millions)
Years ended June 30,
2016
2015
$ Change
Interest income on corporate funds
$ (62.4)
$ (56.9)
$ 5.5
Realized gains on available-for-sale securities
(5.1)
(6.8)
(1.7)
Realized losses on available-for-sale securities
10.1
1.9
(8.2)
Gain on sale of notes receivable
—
(1.4)
(1.4)
Gain on sale of AMD
(29.1)
—
29.1
Gain on sale of building
(13.9)
—
13.9
Other income, net
$ (100.4)
$ (63.2)
$ 37.2
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