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Corporate Investments And Funds Held For Clients
 6 Months Ended
Dec. 31, 2013
Corporate Investments And Funds Held For Clients [Abstract]  
Corporate Investments And Funds Held For Clients
Note 7. Corporate Investments and Funds Held for Clients

Corporate investments and funds held for clients at December 31, 2013 and June 30, 2013 were as follows:

 
December 31, 2013
 
Amortized
Cost
 
Gross
Unrealized
 Gains
 
Gross
Unrealized
Losses
 
 Fair Value (A)
Type of issue:
 
 
 
 
 
 
 
Money market securities and other cash equivalents
$
10,854.6

 
$
—

 
$
—

 
$
10,854.6

Available-for-sale securities:
 

 
 

 
 

 
 

Corporate bonds
7,776.7

 
143.5

 
(54.7
)
 
7,865.5

U.S. Treasury and direct obligations of
U.S. government agencies
6,049.5

 
123.3

 
(40.8
)
 
6,132.0

Asset-backed securities
1,555.0

 
3.7

 
(15.8
)
 
1,542.9

Canadian government obligations and
Canadian government agency obligations
1,047.7

 
9.0

 
(3.4
)
 
1,053.3

Canadian provincial bonds
711.3

 
18.7

 
(7.0
)
 
723.0

Municipal bonds
529.3

 
15.4

 
(3.6
)
 
541.1

Other securities
1,027.2

 
27.8

 
(3.6
)
 
1,051.4

 
 
 
 
 
 
 
 
Total available-for-sale securities
18,696.7

 
341.4

 
(128.9
)
 
18,909.2

 
 
 
 
 
 
 
 
Total corporate investments and funds held for clients
$
29,551.3

 
$
341.4

 
$
(128.9
)
 
$
29,763.8

 
(A) Included within available-for-sale securities are corporate investments with fair values of $82.4 million and funds held for clients with fair values of $18,826.8 million. All available-for-sale securities were included in Level 2.
 
June 30, 2013
 
Amortized 
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value (B)
Type of issue:
 

 
 

 
 

 
 

Money market securities and other cash equivalents
$
5,431.2

 
$
—

 
$
—

 
$
5,431.2

Available-for-sale securities:
 

 
 

 
 

 
 

Corporate bonds
7,868.3

 
166.2

 
(56.7
)
 
7,977.8

U.S. Treasury and direct obligations of
U.S. government agencies
5,983.7

 
152.6

 
(37.4
)
 
6,098.9

Asset-backed securities
1,374.1

 
5.3

 
(19.7
)
 
1,359.7

Canadian government obligations and
Canadian government agency obligations
998.2

 
10.7

 
(4.5
)
 
1,004.4

Canadian provincial bonds
695.7

 
20.7

 
(5.6
)
 
710.8

Municipal bonds
536.9

 
16.7

 
(4.4
)
 
549.2

Other securities
1,094.4

 
46.3

 
(2.8
)
 
1,137.9

 
 
 
 
 
 
 
 
Total available-for-sale securities
18,551.3

 
418.5

 
(131.1
)
 
18,838.7

 
 
 
 
 
 
 
 
Total corporate investments and funds held for clients
$
23,982.5

 
$
418.5

 
$
(131.1
)
 
$
24,269.9


(B) Included within available-for-sale securities are corporate investments with fair values of $342.0 million and funds held for clients with fair values of $18,496.7 million. At June 30, 2013, Level 1 securities included $9.5 million of corporate investments classified within "Other securities." All remaining available-for-sale securities were included in Level 2.

For a description of the fair value hierarchy and the Company's fair value methodologies, including the use of an independent third-party pricing service, see Note 1 "Summary of Significant Accounting Policies" in the Company's Annual Report on Form 10-K for fiscal 2013. The Company did not transfer any assets between Level 1 and Level 2 during the three and six months ended December 31, 2013, or the year ended June 30, 2013. In addition, the Company did not adjust the prices obtained from the independent pricing service. The Company has no available-for-sale securities included in Level 3.

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, 2013, are as follows: 
 
December 31, 2013
 
Securities in unrealized loss position less than 12 months
 
Securities in unrealized loss position greater than 12 months
 
Total
 
Unrealized
losses
 
Fair market
value
 
Unrealized
losses
 
Fair market
value
 
Gross
unrealized
losses
 
Fair
market value
Corporate bonds
$
(52.0
)
 
$
2,465.3

 
$
(2.7
)
 
$
45.8

 
$
(54.7
)
 
$
2,511.1

U.S. Treasury and direct obligations of
U.S. government agencies
(33.0
)
 
1,464.4

 
(7.8
)
 
215.7

 
(40.8
)
 
1,680.1

Asset-backed securities
(14.6
)
 
1,146.3

 
(1.2
)
 
24.7

 
(15.8
)
 
1,171.0

Canadian government obligations and
Canadian government agency obligations
(3.4
)
 
394.9

 
—

 
—

 
(3.4
)
 
394.9

Canadian provincial bonds
(6.0
)
 
227.9

 
(1.0
)
 
9.0

 
(7.0
)
 
236.9

Municipal bonds
(3.1
)
 
151.4

 
(0.5
)
 
13.7

 
(3.6
)
 
165.1

Other securities
(3.6
)
 
138.4

 
—

 
0.3

 
(3.6
)
 
138.7

 
$
(115.7
)
 
$
5,988.6

 
$
(13.2
)
 
$
309.2

 
$
(128.9
)
 
$
6,297.8


The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of June 30, 2013 are as follows: 
 
June 30, 2013
 
Securities in unrealized loss position less than 12 months
 
Securities in unrealized loss position greater than 12 months
 
Total
 
Unrealized
losses
 
Fair market
value
 
Unrealized
losses
 
Fair market
value
 
Gross
unrealized
losses
 
Fair
market value
Corporate bonds
$
(56.7
)
 
$
2,724.9

 
$
—

 
$
—

 
$
(56.7
)
 
$
2,724.9

U.S. Treasury and direct obligations of U.S. government agencies
(37.4
)
 
1,374.6

 
—

 
—

 
(37.4
)
 
1,374.6

Asset-backed securities
(19.7
)
 
1,060.1

 
—

 
—

 
(19.7
)
 
1,060.1

Canadian government obligations and
Canadian government agency obligations
(4.5
)
 
444.7

 
—

 
—

 
(4.5
)
 
444.7

Canadian provincial bonds
(5.6
)
 
239.7

 
—

 
—

 
(5.6
)
 
239.7

Municipal bonds
(4.4
)
 
188.7

 
—

 
—

 
(4.4
)
 
188.7

Other securities
(2.8
)
 
109.3

 
—

 
—

 
(2.8
)
 
109.3

 
$
(131.1
)
 
$
6,142.0

 
$
—

 
$
—

 
$
(131.1
)
 
$
6,142.0



At December 31, 2013, Corporate bonds included within total corporate investments and funds held for clients comprised investment-grade debt securities, which include a wide variety of issuers, industries, and sectors, primarily carry credit ratings of A and above, and have maturities ranging from January 2014 to June 2023. At December 31, 2013, U.S. Treasury and direct obligations of U.S. government agencies primarily include debt directly issued by Federal Home Loan Banks and Federal Farm Credit Banks with fair values of $4,440.6 million and $1,216.2 million, respectively.  At June 30, 2013, U.S. Treasury and direct obligations of U.S. government agencies primarily include debt directly issued by Federal Home Loan Banks and Federal Farm Credit Banks with fair values of $4,325.4 million and $1,229.0 million, respectively.  U.S. Treasury and direct obligations of U.S. government agencies represent senior, unsecured, non-callable debt that primarily carries a credit rating of Aaa, as rated by Moody's, and AA+, as rated by Standard & Poor's, and has maturities ranging from March 2014 through November 2023.

At December 31, 2013, asset-backed securities include AAA rated senior tranches of securities with predominantly prime collateral of fixed rate credit card, auto loan, and rate reduction receivables with fair values of $1,014.3 million, $333.8 million, and $125.6 million, respectively.  At June 30, 2013, asset-backed securities include AAA rated senior tranches of securities with predominantly prime collateral of fixed rate credit card, auto loan, and rate reduction receivables with fair values of $904.5 million, $315.7 million, and $95.4 million, respectively.  These securities are collateralized by the cash flows of the underlying pools of receivables.  The primary risk associated with these securities is the collection risk of the underlying receivables.  All collateral on such asset-backed securities has performed as expected through December 31, 2013.

At December 31, 2013, other securities and their fair value primarily represent: AAA and AA rated supranational bonds of $469.8 million, AAA and AA rated sovereign bonds of $415.0 million, AA rated mortgage-backed securities of $93.5 million that are guaranteed by Federal National Mortgage Association ("Fannie Mae") or Federal Home Loan Mortgage Corporation ("Freddie Mac") and AAA rated commercial mortgage-backed securities of $66.2 million. At June 30, 2013, other securities and their fair value primarily represent: AAA and AA rated supranational bonds of $426.9 million, AAA and AA rated sovereign bonds of $415.4 million, AAA rated commercial mortgage-backed securities of $163.5 million, and AA rated mortgage-backed securities of $112.6 million that are guaranteed by Fannie Mae or Freddie Mac. The Company's mortgage-backed securities represent an undivided beneficial ownership interest in a group or pool of one or more residential mortgages. These securities are collateralized by the cash flows of 15-year and 30-year residential mortgages and are guaranteed by Fannie Mae or Freddie Mac as to the timely payment of principal and interest.

Classification of corporate investments on the Consolidated Balance Sheets is as follows:
 
 
December 31,
 
June 30,
 
 
2013
 
2013
Corporate investments:
 
 
 
 
Cash and cash equivalents
 
$
1,267.1

 
$
1,699.1

Short-term marketable securities
 
22.5

 
28.0

Long-term marketable securities
 
59.9

 
314.0

Total corporate investments
 
$
1,349.5

 
$
2,041.1


 
Funds held for clients represent assets that, based upon the Company's intent, are restricted for use solely for the purposes of satisfying the obligations to remit funds relating to the Company’s payroll and payroll tax filing services, which are classified as client funds obligations on our Consolidated Balance Sheets.

Funds held for clients have been invested in the following categories:
 
 
December 31,
 
June 30,
 
 
2013
 
2013
Funds held for clients:
 
 
 
 
Restricted cash and cash equivalents held to satisfy client funds obligations
 
$
9,587.5

 
$
3,732.1

Restricted short-term marketable securities held to satisfy client funds obligations
 
1,828.3

 
1,407.7

Restricted long-term marketable securities held to satisfy client funds obligations
 
16,998.5

 
17,089.0

Total funds held for clients
 
$
28,414.3

 
$
22,228.8



Client funds obligations represent the Company's contractual obligations to remit funds to satisfy clients' payroll and tax payment obligations and are recorded on the Consolidated Balance Sheets at the time that the Company impounds funds from clients.  The client funds obligations represent liabilities that will be repaid within one year of the balance sheet date.  The Company has reported client funds obligations as a current liability on the Consolidated Balance Sheets totaling $28,205.6 million and $21,956.3 million as of December 31, 2013 and June 30, 2013, respectively.  The Company has classified funds held for clients as a current asset since these funds are held solely for the purposes of satisfying the client funds obligations.  The Company has reported the cash flows related to the purchases of corporate and client funds marketable securities and related to the proceeds from the sales and maturities of corporate and client funds marketable securities on a gross basis in the investing section of the Statements of Consolidated Cash Flows.  The Company has reported the cash inflows and outflows related to client funds investments with original maturities of 90 days or less on a net basis within net increase in restricted cash and cash equivalents and other restricted assets held to satisfy client funds obligations in the investing section of the Statements of Consolidated Cash Flows.  The Company has reported the cash flows related to the cash received from and paid on behalf of clients on a net basis within net increase in client funds obligations in the financing activities section of the Statements of Consolidated Cash Flows.

Approximately 84% of the available-for-sale securities held a AAA or AA rating at December 31, 2013, as rated by Moody's, Standard & Poor's and, for Canadian securities, Dominion Bond Rating Service.  All available-for-sale securities were rated as investment grade at December 31, 2013.
 
Expected maturities of available-for-sale securities at December 31, 2013 are as follows:
One year or less
$
1,850.8

One year to two years
4,775.6

Two years to three years
3,837.1

Three years to four years
3,117.3

After four years
5,328.4

 
 

Total available-for-sale securities
$
18,909.2