Paychex 2014 Annual Report Download - page 45

Financing Cash Flow Activities
Year ended May 31,
In millions, except per share amounts 2014 2013 2012
Net change in client fund obligations ........................... $127.4 $(454.6) $ 980.5
Dividends paid ............................................ (510.6) (476.7) (460.5)
Repurchases of common shares ............................... (249.7) — —
Equity activity related to stock-based awards .................... 113.3 72.8 7.5
Net cash (used in)/provided by financing activities ................ $(519.6) $(858.5) $ 527.5
Cash dividends per common share ............................. $ 1.40 $ 1.31 $ 1.27
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.
The fluctuations in net change in client fund obligations for the years presented is primarily the result of
timing of collections and remittances. May 31, 2014 fell on a Saturday and May 31, 2013 fell on a Friday. Friday
is a large cash outflow day for direct deposit funds, partially offset by tax payment funds collected on that day.
Therefore, timing did not impact the net change in client obligations for fiscal 2014. May 31, 2012 fell on a
Thursday, which is a large collection day for direct pay funds. These funds were then paid out on Friday, June 1,
2012. Therefore, timing is the primary reason for the fluctuation in these amounts for fiscal 2013 and fiscal 2012.
In addition, the fluctuations were impacted by overall trends in client fund balances, which were 4% higher on
average for fiscal 2014 than fiscal 2013 and 4% higher on average for fiscal 2013 than for fiscal 2012.
Dividends paid: In July 2013, the Board increased our quarterly dividend to stockholders by 6% to $0.35
per share from $0.33 per share. In October 2012, the Board increased our quarterly dividend to stockholders by
3% to $0.33 per share from $0.32 per share. In October 2011, the Board increased our quarterly dividend by 3%
to $0.32 per share from $0.31 per share. The dividends paid as a percentage of net income totaled 81%, 84%, and
84% for fiscal years 2014, 2013, and 2012, respectively. The payment of future dividends is dependent on our
future earnings and cash flow, and is subject to the discretion of our Board.
Repurchases of common shares: In October 2012, the Board approved a stock repurchase program to
purchase up to $350 million of Paychex common stock, with authorization for this program expiring in May
2014. During fiscal 2014, we repurchased 6.2 million shares for a total of $249.7 million. In May 2014, the
Board approved a new program to repurchase up to $350 million of Paychex common stock, with authorization
expiring in May 2017.
Equity activity related to stock-based awards: The increase in activity related to stock-based awards for
fiscal 2014 compared to fiscal 2013 was largely driven by an increase in proceeds from exercise of stock options.
Common shares acquired through exercise of stock options were 3.4 million shares, 2.4 million shares, and
0.2 million shares for fiscal years 2014, 2013, and 2012, respectively. Refer to Note D of the Notes to
Consolidated Financial Statements, contained in Item 8 of this Form 10-K, for additional disclosures on our
stock-based compensation plans.
Other
Recently adopted accounting pronouncements: Refer to Note A of the Notes to Consolidated Financial
Statements, contained in Item 8 of this Form 10-K, for a discussion of recently adopted accounting
pronouncements.
Recently issued accounting pronouncements: Refer to Note A of the Notes to Consolidated Financial
Statements, contained in Item 8 of this Form 10-K, for a discussion of recently issued accounting
pronouncements.
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