Paychex 2014 Annual Report Download - page 72

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PAYCHEX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Realized gains and losses from the sale of available-for-sale securities were as follows:
Year ended May 31,
In millions 2014 2013 2012
Gross realized gains ................................................ $0.6 $0.9 $1.0
Gross realized losses ............................................... — — —
Net realized gains ................................................. $0.6 $0.9 $1.0
The amortized cost and fair value of available-for-sale securities that had stated maturities as of May 31,
2014 are shown below by contractual maturity. Expected maturities can differ from contractual maturities
because borrowers may have the right to prepay obligations without prepayment penalties.
May 31, 2014
In millions
Amortized
cost
Fair
value
Maturity date:
Due in one year or less ........................................... $ 392.0 $ 394.3
Due after one year through three years ............................... 759.8 776.0
Due after three years through five years .............................. 764.1 774.3
Due after five years .............................................. 1,441.0 1,446.8
Total ......................................................... $3,356.9 $3,391.4
Variable rate demand notes are primarily categorized as due after five years in the table above as the
contractual maturities on these securities are typically 20 to 30 years. Although these securities are issued as
long-term securities, they are priced and traded as short-term instruments because of the liquidity provided
through the tender feature.
Note F — Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit
price) in an orderly transaction between market participants at the measurement date. The accounting standards
related to fair value measurements include a hierarchy for information and valuations used in measuring fair
value that is broken down into three levels based on reliability, as follows:
• Level 1 valuations are based on quoted prices in active markets for identical instruments that the Company
can access at the measurement date.
• Level 2 valuations are based on inputs other than quoted prices included in Level 1 that are observable for
the instrument, either directly or indirectly, for substantially the full term of the asset or liability including
the following:
— quoted prices for similar, but not identical, instruments in active markets;
— quoted prices for identical or similar instruments in markets that are not active;
— inputs other than quoted prices that are observable for the instrument; or
— inputs that are derived principally from or corroborated by observable market data by correlation
or other means.
• Level 3 valuations are based on information that is unobservable and significant to the overall fair value
measurement.
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