Corporate Investments And Funds Held For Clients

12 Months Ended

Jun. 30, 2012

Corporate Investments And Funds Held For Clients [Abstract]

Corporate Investments And Funds Held For Clients

NOTE 5. CORPORATE INVESTMENTS AND FUNDS HELD FOR CLIENTS

Corporate investments and funds held for clients at June 30, 2012 and 2011 are as follows:

	June 30, 2012
				Gross		Gross
		Amortized		Unrealized		Unrealized
		Cost		Gains		Losses			Fair Value
Type of issue:
Money market securities and other cash
equivalents	$	5,111.1	$	-	$	-		$	5,111.1
Available-for-sale securities:
U.S. Treasury and direct obligations of
U.S. government agencies		6,413.8		260.9		(0.1	)		6,674.6
Corporate bonds		7,097.2		272.3		(1.5	)		7,368.0
Canadian provincial bonds		620.8		35.4		(0.3	)		655.9
Asset-backed securities		533.9		14.5		-			548.4
Municipal bonds		522.0		31.0		(0.1	)		552.9
Canadian government obligations and
Canadian government agency obligations		994.2		23.4		(0.6	)		1,017.0
Other securities		1,201.0		75.7		(0.1	)		1,276.6
Total available-for-sale securities		17,382.9		713.2		(2.7	)		18,093.4
Total corporate investments and funds
held for clients	$	22,494.0	$	713.2	$	(2.7	)	$	23,204.5
	June 30, 2011
				Gross		Gross
		Amortized		Unrealized		Unrealized
		Cost		Gains		Losses			Fair Value
Type of issue:
Money market securities and other cash
equivalents	$	9,731.8	$	-	$	-		$	9,731.8
Available-for-sale securities:
U.S. Treasury and direct obligations of
U.S. government agencies		6,558.2		213.0		(12.1	)		6,759.1
Corporate bonds		5,908.6		234.9		(16.9	)		6,126.6
Canadian provincial bonds		480.0		15.1		(0.8	)		494.3
Asset-backed securities		422.4		25.4		-			447.8
Municipal bonds		493.7		23.1		(0.6	)		516.2
Canadian government obligations and
Canadian government agency obligations		1,082.0		20.8		(1.3	)		1,101.5
Other securities		1,411.7		73.2		(2.9	)		1,482.0
Total available-for-sale securities		16,356.6		605.5		(34.6	)		16,927.5
Total corporate investments and funds
held for clients	$	26,088.4	$	605.5	$	(34.6	)	$	26,659.3

At June 30, 2012, U.S. Treasury and direct obligations of U.S. government agencies primarily include debt directly issued by Federal Home Loan Banks, Federal Farm Credit Banks, Federal National Mortgage Association ("Fannie Mae"), and Federal Home Loan Mortgage Corporation ("Freddie Mac") with fair values of $4,189.1 million, $1,134.1 million, $428.6 million and $384.6 million, respectively. At June 30, 2011, U.S. Treasury and direct obligations of U.S. government agencies primarily include debt directly issued by Federal Home Loan Banks, Federal Farm Credit Banks, Fannie Mae, and Freddie Mac with fair values of $3,886.5 million, $914.0 million, $702.4 million, and $759.1 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 August 2012 through June 2022. Corporate bonds include investment-grade debt securities, which include a wide variety of issuers and industries, primarily carry credit ratings of A and above, and have maturities ranging from July 2012 to June 2022.

At June 30, 2012, asset-backed securities include AAA rated senior tranches of securities with predominately prime collateral of fixed rate credit card, rate reduction and auto loan receivables with fair values of $323.0 million, $140.0 million and $85.1 million, respectively. At June 30, 2011, asset-backed securities include AAA rated senior tranches of securities with predominately prime collateral of fixed rate credit card, rate reduction, and auto loan receivables with fair values of $220.5 million, $196.9 million and $30.0 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 June 30, 2012.

At June 30, 2012, other securities and their fair value primarily represent AAA rated supranational bonds of $427.7 million, AA and AAA rated sovereign bonds of $405.0 million, AAA rated commercial mortgage-backed securities of $282.3 million, and AA rated mortgage-backed securities of $135.3 million that are guaranteed by Fannie Mae and Freddie Mac. At June 30, 2011, other securities and their fair value primarily represent supranational bonds of $360.1 million, sovereign bonds of $328.8 million, commercial mortgage-backed securities of $492.5 million, mortgage-backed securities of $146.5 million that are guaranteed by Fannie Mae and Freddie Mac and corporate bonds backed by the Federal Deposit Insurance Corporation's Temporary Liquidity Guarantee Program of $129.1 million. 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 and Freddie Mac as to the timely payment of principal and interest.

Classification of corporate investments on the Consolidated Balance Sheets is as follows:

June 30,		2012		2011
Corporate investments:
Cash and cash equivalents	$	1,548.1	$	1,389.4
Short-term marketable securities		30.4		36.3
Long-term marketable securities		86.9		98.0
Total corporate investments	$	1,665.4	$	1,523.7

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 our 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:

June 30,		2012		2011
Funds held for clients:
Restricted cash and cash equivalents held to
satisfy client funds obligations	$	3,563.0	$	8,342.4
Restricted short-term marketable securities held
to satisfy client funds obligations		2,954.1		3,059.9
Restricted long-term marketable securities held
to satisfy client funds obligations		15,022.0		13,733.3
Total funds held for clients	$	21,539.1	$	25,135.6

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 $20,856.2 million and $24,591.1 million as of June 30, 2012 and 2011, 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 those 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 change 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 change in client funds obligations in the financing section of the Statements of Consolidated Cash Flows.

Approximately 84% of the available-for-sale securities held an AAA or AA rating at June 30, 2012, 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 June 30, 2012.

The amount of collected but not yet remitted funds for the Company's payroll and payroll tax filing and other services varies significantly during the fiscal year, and averaged approximately $17,898.2 million, $16,865.4 million, and $15,194.5 million in fiscal 2012, 2011, and 2010, respectively.

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, 2012 are as follows:

		Unrealized					Unrealized
		losses			Fair market		losses			Fair market		Total gross
		less than			value less than		greater than			value greater		unrealized			Total fair
		12 months			12 months		12 months			than 12 months		losses			market value
U.S. Treasury and direct obligations of
U.S. government agencies	$	(0.1	)	$	43.6	$			$	-	$	(0.1	)	$	43.6
Corporate bonds		(1.1	)		234.8		(0.4	)		20.2		(1.5	)		255.0
Canadian provincial bonds		(0.3	)		58.5		-			-		(0.3	)		58.5
Asset-backed securities		-			13.6		-			-		-			13.6
Municipal bonds		(0.1	)		22.8		-			-		(0.1	)		22.8
Canadian government obligations and
Canadian government agency obligations		(0.6	)		209.4		-			-		(0.6	)		209.4
Other securities		(0.1	)		26.3		-			-		(0.1	)		26.3
	$	(2.3	)	$	609.0	$	(0.4	)	$	20.2	$	(2.7	)	$	629.2

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, 2011 are as follows:

		Unrealized					Unrealized
		losses			Fair market		losses		Fair market		Total gross
		less than			value less than		greater than		value greater		unrealized			Total fair
		12 months			12 months		12 months		than 12 months		losses			market value
U.S. Treasury and direct obligations of
U.S. government agencies	$	(12.1	)	$	1,049.0	$	-	$	-	$	(12.1	)	$	1,049.0
Corporate bonds		(16.9	)		945.2		-		-		(16.9	)		945.2
Canadian provincial bonds		(0.8	)		88.5		-		-		(0.8	)		88.5
Asset-backed securities		-			0.5		-		-		-			0.5
Municipal bonds		(0.6	)		35.0		-		-		(0.6	)		35.0
Canadian government obligations and
Canadian government agency obligations		(1.3	)		227.7		-		-		(1.3	)		227.7
Other securities		(2.9	)		171.1		-		-		(2.9	)		171.1
	$	(34.6	)	$	2,517.0	$	-	$	-	$	(34.6	)	$	2,517.0

Expected maturities of available-for-sale securities at June 30, 2012 are as follows:

Maturity Dates:
Due in one year or less	$	2,984.5
Due after one year up to two years		1,617.1
Due after two years up to three years		3,435.2
Due after three years up to four years		4,054.4
Due after four years		6,002.2
Total available-for-sale securities	$	18,093.4

For the securities in an unrealized loss position of $2.7 million at June 30, 2012, the Company concluded that it did not have the intent to sell such securities and that it was not more likely than not that the Company would be required to sell such securities before recovery. The securities with unrealized losses of $2.7 million were primarily comprised of corporate bonds and Canadian government obligations and Canadian government agency obligations. In order to determine whether such losses were due to credit losses, the Company evaluated such securities utilizing a variety of quantitative and qualitative factors including whether the Company expects to collect all amounts due under the contractual terms of the security, information about current and past events of the issuer, and the length of time and the extent to which the fair value has been less than the cost basis. At June 30, 2012, the Company concluded that unrealized losses on available-for-sale securities held at June 30, 2012 were not credit losses and were attributable to changes in interest rates. As a result, the Company concluded that the $2.7 million in unrealized losses on such securities should be recorded in accumulated other comprehensive income on the Consolidated Balance Sheets at June 30, 2012.