Paychex 2014 Annual Report Download - page 44

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Investing Cash Flow Activities
Year ended May 31,
In millions 2014 2013 2012
Net change in funds held for clients and corporate investment
activities .............................................. $(211.4) $306.8 $(1,147.4)
Purchases of property and equipment .......................... (84.1) (98.7) (89.6)
Acquisition of businesses, net of cash acquired .................. (9.3) (21.3) (6.0)
Purchases of other assets ................................... (11.3) (5.1) (1.3)
Net cash (used in)/provided by investing activities ............... $(316.1) $181.7 $(1,244.3)
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 E of the Notes to Consolidated
Financial Statements, contained in Item 8 of this Form 10-K.
The fluctuation in the net change in funds held for clients and corporate investment activities is largely due
to timing within the client funds portfolio. For fiscal 2014, there was not a significant fluctuation due to timing of
fiscal year-ends. The net cash outflow for fiscal 2014 is related to more purchases of short-term and available-
for-sale securities resulting from higher average collections from clients. For fiscal 2013 and fiscal 2012, there
was a significant timing impact. There was a large cash outflow on Friday, May 31, 2013 that required the
liquidation of funds held in the funds held for clients short-term cash equivalents portion of the portfolio,
resulting in positive cash flow from investing activities for fiscal 2013. There was a large inflow of collections on
Thursday, May 31, 2012 that was invested primarily in short-term investments on that date reflecting a large cash
outflow from investing activities for fiscal 2012. See further discussion of this timing in the financing cash flows
discussion of net change in client fund obligations. Our net cash inflow from funds held for clients and corporate
investment activities for fiscal 2013 was partially offset by higher purchases than sales of VRDN securities
during the year.
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.
Purchases of long-lived assets: 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 2014, 2013, and 2012, we purchased approximately
$4.7 million, $6.5 million, and $2.6 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 years 2014, 2013, and 2012, we paid, net of cash acquired, $9.3 million, $21.3 million, and
$6.0 million, respectively, for immaterial business acquisitions.
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