Statement of Consolidated Earnings



	Year Ended
	June 30, 2018
	As reported		Adjustments ASC 606			Adjustments ASU 2017-07			As adjusted
Revenues, other than interest on funds held for clients and PEO revenues	$	8,985.2	$	(1.8	)	$	—		$	8,983.4
Interest on funds held for clients	466.5		—			—			466.5
PEO revenues	3,874.1		3.7			—			3,877.8
TOTAL REVENUES	13,325.8		1.9			—			13,327.7
Operating expenses	6,937.9		(74.0		)	37.1			6,901.0
Systems development and programming costs	630.2		—			5.2			635.4
Depreciation and amortization	274.5		—			—			274.5
Selling, general, and administrative expenses	2,971.5		(35.6		)	23.5			2,959.4
Interest expense	102.7		—			—			102.7
Total Expenses	10,916.8		(109.6		)	65.8			10,873.0
Other expense/(income), net	237.9		—			(65.8		)	172.1
EARNINGS BEFORE INCOME TAXES	2,171.1		111.5			—			2,282.6
Provision for income taxes	550.3		(152.6		)	—			397.7
NET EARNINGS	$	1,620.8	$	264.1		$	—		$	1,884.9



	Year Ended
	June 30, 2017
	As reported			Adjustments ASC 606			Adjustments ASU 2017-07			As adjusted
Revenues, other than interest on funds held for clients and PEO revenues	$	8,518.1		$	(8.0	)	$	—		$	8,510.1
Interest on funds held for clients	397.4			—			—			397.4
PEO revenues	3,464.3			0.2			—			3,464.5
TOTAL REVENUES	12,379.8			(7.8		)	—			12,372.0
Operating expenses	6,416.1			(63.6		)	33.7			6,386.2
Systems development and programming costs	627.5			—			4.6			632.1
Depreciation and amortization	226.2			—			—			226.2
Selling, general, and administrative expenses	2,783.2			(30.0		)	20.6			2,773.8
Interest expense	80.0			—			—			80.0
Total Expenses	10,133.0			(93.6		)	58.9			10,098.3
Other (income), net	(284.3		)	—			(58.9		)	(343.2		)
EARNINGS BEFORE INCOME TAXES	2,531.1			85.8			—			2,616.9
Provision for income taxes	797.7			31.4			—			829.1
NET EARNINGS	$	1,733.4		$	54.4		$	—		$	1,787.8

Consolidated Balance Sheets



	June 30,					June 30,
	2018		Adjustments ASC 606			2018
	As reported		Adjustments ASC 606			As restated
Assets
Current assets:
Other current assets	$	758.0	$	(226.7	)	$	531.3
Total current assets	32,050.0		(226.7		)	31,823.3
Deferred contract costs	—		2,377.4			2,377.4
Other assets	1,089.6		(390.3		)	699.3
Total assets	$	37,088.7	$	1,760.4		$	38,849.1

Liabilities and Stockholders' Equity
Current liabilities:
Short-term deferred revenues	226.5		(0.8		)	225.7
Total current liabilities	30,413.6		(0.8		)	30,412.7
Deferred income taxes	107.3		414.7			522.0
Long-term deferred revenues	377.8		70.2			448.1
Total liabilities	33,629.1		484.1			34,113.2

Stockholders' equity:
Retained earnings	15,271.3		1,275.3			16,546.6
Total stockholders’ equity	3,459.6		1,276.3			4,735.9
Total liabilities and stockholders’ equity	$	37,088.7	$	1,760.4		$	38,849.1

Statements of Consolidated Cash Flows



	Year Ended
	June 30,
	2018		Adjustments ASC 606			2018
	As reported		Adjustments ASC 606			As restated
Cash Flows from Operating Activities:
Net earnings	$	1,620.8	$	264.1		$	1,884.9
Adjustments to reconcile net earnings to cash flows provided by operating activities:
Amortization of deferred contract costs	—		837.4			837.4
Deferred income taxes	0.5		(152.5		)	(152.0		)
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease/(increase) in other assets	93.5		(951.8		)	(858.3		)
Increase in accrued expenses and other liabilities	107.7		2.8			110.5
Net cash flows provided by operating activities	$	2,515.2	$	—		$	2,515.2



	Year Ended
	June 30,
	2017			Adjustments ASC 606			2017
	As reported			Adjustments ASC 606			As restated
Cash Flows from Operating Activities:
Net earnings	$	1,733.4		$	54.4		$	1,787.8
Adjustments to reconcile net earnings to cash flows provided by operating activities:
Amortization of deferred contract costs	—			787.9			787.9
Deferred income taxes	10.0			31.3			41.3
Changes in operating assets and liabilities, net of effects from acquisitions:
Increase in other assets	(269.1		)	(870.3		)	(1,139.4		)
Increase in accrued expenses and other liabilities	159.0			(3.3		)	155.7
Net cash flows provided by operating activities	$	2,125.9		$	—		$	2,125.9

Effective October 1, 2018, the Company prospectively adopted ASU 2018-15, “Intangibles - Goodwill and Other-Internal-Use Software.” ASU 2018-15 clarifies and aligns the accounting and capitalization of implementation costs in cloud computing arrangements that are service arrangements with the accounting for implementation costs incurred to develop or obtain internal-use software under ASC 350-40. The adoption of ASU 2018-15 did not have an impact on the Company’s consolidated results of operations, financial condition, or cash flows.

In March 2018, the Company adopted ASU 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." ASU 2018-02 allows companies to reclassify stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Act”) from accumulated other comprehensive (loss)/income to retained earnings. The June 30, 2018 Consolidated Balance Sheets reflect the reclassification out of accumulated other comprehensive income and into retained earnings of $42.3 million. The Company's policy for releasing disproportionate income tax effects from AOCI utilizes the aggregate approach. Refer to Note 15 for additional detail regarding the components of the reclassification. The adoption of ASU 2018-02 did not have an impact on the Company's consolidated results of operations or cash flows.

Recently Issued Accounting Pronouncements

The following table summarizes recent ASU's issued by the Financial Accounting Standards Board ("FASB"):



Standard	Description	Effective Date	Effect on Financial Statements or Other Significant Matters
ASU 2018-14 Compensation-Retirement Benefits-Defined Benefit Plans	This update modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans by removing and adding certain disclosures for these plans. The eliminated disclosures include (a) the amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit costs over the next fiscal year, and (b) the effects of a one percentage point change in assumed health care cost trend rates on the net periodic benefit costs and the benefit obligation for post-retirement health care benefits. Additional disclosures include descriptions of significant gains and losses affecting the benefit obligation for the period. The amendments in ASU 2018-14 would need to be applied on a retrospective basis.	July 1, 2021 (“Fiscal 2022”)	The adoption of this guidance will modify disclosures but will not have an impact on the Company's consolidated results of operations, financial condition, or cash flows.
ASU 2018-13 Fair Value Measurement	This update modifies the disclosure requirements on fair value measurements. Certain disclosures in ASU 2018-13 would need to be applied on a retrospective basis and others on a prospective basis.	July 1, 2020 (“Fiscal 2021”)	The adoption of this guidance will modify disclosures but will not have an impact on the Company's consolidated results of operations, financial condition, or cash flows.
ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments	This update introduces the current expected credit loss (CECL) model, which will require an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. In addition, this update modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.	July 1, 2020 (“Fiscal 2021”)	The adoption of this guidance will not have a material impact on its consolidated results of operations, financial condition, or cash flows.



Standard	Description	Effective Date	Effect on Financial Statements or Other Significant Matters
ASU 2016-02 Leases (Topic 842)	This update amends the existing accounting standards for lease accounting and requires lessees to recognize most lease assets and lease liabilities on the balance sheet and to disclose key information about leasing arrangements. In July 2018, the FASB issued Accounting Standards Update 2018-10-Codification Improvements to Topic 842 (Leases), and Accounting Standards Update 2018-11-Leases (Topic 842)-Targeted Improvements, which (i) narrow amendments to clarify how to apply certain aspects of the new lease standard, (ii) provide entities with an additional transition method to adopt the new standard, and (iii) provide lessors with a practical expedient for separating components of a contract. In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842) to be more general and/or to correct unintended application of guidance.	July 1, 2019 (“Fiscal 2020”)	The Company has finalized the assessment of the impacts of the new standard. The Company will use the optional transition method with a cumulative adjustment to retained earnings. There is no adjustment to retained earnings. The Company has reached a decision as to the systems it will use to manage the accounting for leases, determined the contracts that are considered leases under the new guidance and is currently in the process of implementing the systems and establishing the appropriate controls and procedures. The Company will utilize the transition package of practical expedients permitted within the new guidance which, among other things, will allow the Company to carry forward the historical lease classification. Upon adoption, the Company anticipates a material impact to its Consolidated Balance Sheets but expects no impact to the Statements of Consolidated Earnings or Statements of Consolidated Cash Flows. The most significant impact will be the recognition of the right-of-use (“ROU”) assets and lease liabilities for operating leases. We estimate the adoption of the guidance will result in the recognition and presentation of total operating lease ROU assets to be approximately $600 million to $700 million and total operating lease liabilities to be approximately $500 million to $600 million, upon the adoption date.