Large accelerated filer | ý | Accelerated filer | ¨ |
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Common Stock, $0.01 Par Value | 360,121,054 | Shares | |
CLASS | OUTSTANDING AS OF | February 29, 2016 |
For the three months ended | For the nine months ended | ||||||||||||||
February 29, 2016 | February 28, 2015 | February 29, 2016 | February 28, 2015 | ||||||||||||
Revenue: | |||||||||||||||
Service revenue | $ | 740.7 | $ | 693.6 | $ | 2,164.2 | $ | 2,016.1 | |||||||
Interest on funds held for clients | 11.9 | 10.7 | 33.8 | 31.3 | |||||||||||
Total revenue | 752.6 | 704.3 | 2,198.0 | 2,047.4 | |||||||||||
Expenses: | |||||||||||||||
Operating expenses | 225.9 | 211.0 | 636.8 | 604.4 | |||||||||||
Selling, general and administrative expenses | 246.7 | 229.0 | 690.9 | 641.0 | |||||||||||
Total expenses | 472.6 | 440.0 | 1,327.7 | 1,245.4 | |||||||||||
Operating income | 280.0 | 264.3 | 870.3 | 802.0 | |||||||||||
Investment income, net | 1.7 | 1.6 | 4.7 | 4.4 | |||||||||||
Income before income taxes | 281.7 | 265.9 | 875.0 | 806.4 | |||||||||||
Income taxes | 101.3 | 96.5 | 296.3 | 292.7 | |||||||||||
Net income | 180.4 | 169.4 | 578.7 | 513.7 | |||||||||||
Other comprehensive income/(loss), net of tax: | |||||||||||||||
Unrealized gains/(losses) on securities, net of tax | 17.2 | (0.6 | ) | 30.0 | 0.3 | ||||||||||
Total other comprehensive income/(loss), net of tax | 17.2 | (0.6 | ) | 30.0 | 0.3 | ||||||||||
Comprehensive income | $ | 197.6 | $ | 168.8 | $ | 608.7 | $ | 514.0 | |||||||
Basic earnings per share | $ | 0.50 | $ | 0.47 | $ | 1.60 | $ | 1.41 | |||||||
Diluted earnings per share | $ | 0.50 | $ | 0.46 | $ | 1.60 | $ | 1.41 | |||||||
Weighted-average common shares outstanding | 360.5 | 363.2 | 360.8 | 363.1 | |||||||||||
Weighted-average common shares outstanding, assuming dilution | 362.2 | 365.0 | 362.4 | 364.8 | |||||||||||
Cash dividends per common share | $ | 0.42 | $ | 0.38 | $ | 1.26 | $ | 1.14 |
February 29, 2016 | May 31, 2015 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 253.1 | $ | 170.0 | |||
Corporate investments | 74.1 | 366.6 | |||||
Interest receivable | 31.6 | 37.9 | |||||
Accounts receivable, net of allowance for doubtful accounts | 353.4 | 176.6 | |||||
Deferred income taxes | 1.4 | 15.0 | |||||
Prepaid income taxes | 8.4 | 12.9 | |||||
Prepaid expenses and other current assets | 64.4 | 50.8 | |||||
Current assets before funds held for clients | 786.4 | 829.8 | |||||
Funds held for clients | 4,717.2 | 4,273.4 | |||||
Total current assets | 5,503.6 | 5,103.2 | |||||
Long-term corporate investments | 428.6 | 399.8 | |||||
Property and equipment, net of accumulated depreciation | 350.0 | 353.9 | |||||
Intangible assets, net of accumulated amortization | 73.5 | 32.4 | |||||
Goodwill | 656.2 | 561.5 | |||||
Prepaid income taxes | 24.5 | — | |||||
Other long-term assets | 31.1 | 31.7 | |||||
Total assets | $ | 7,067.5 | $ | 6,482.5 | |||
LIABILITIES | |||||||
Accounts payable | $ | 55.8 | $ | 51.7 | |||
Accrued compensation and related items | 219.5 | 210.4 | |||||
Other current liabilities | 100.0 | 50.8 | |||||
Current liabilities before client fund obligations | 375.3 | 312.9 | |||||
Client fund obligations | 4,663.9 | 4,260.1 | |||||
Total current liabilities | 5,039.2 | 4,573.0 | |||||
Accrued income taxes | 69.8 | 44.8 | |||||
Deferred income taxes | 18.3 | 16.8 | |||||
Other long-term liabilities | 66.1 | 62.4 | |||||
Total liabilities | 5,193.4 | 4,697.0 | |||||
COMMITMENTS AND CONTINGENCIES – NOTE J | |||||||
STOCKHOLDERS’ EQUITY | |||||||
Common stock, $0.01 par value; Authorized: 600.0 shares; Issued and outstanding: 360.1 shares as of February 29, 2016 and 361.2 shares as of May 31, 2015, respectively. | 3.6 | 3.6 | |||||
Additional paid-in capital | 933.4 | 880.1 | |||||
Retained earnings | 899.6 | 894.3 | |||||
Accumulated other comprehensive income | 37.5 | 7.5 | |||||
Total stockholders’ equity | 1,874.1 | 1,785.5 | |||||
Total liabilities and stockholders’ equity | $ | 7,067.5 | $ | 6,482.5 |
For the nine months ended | |||||||
February 29, 2016 | February 28, 2015 | ||||||
OPERATING ACTIVITIES | |||||||
Net income | $ | 578.7 | $ | 513.7 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization on property and equipment and intangible assets | 85.1 | 79.1 | |||||
Amortization of premiums and discounts on available-for-sale securities, net | 57.2 | 56.9 | |||||
Stock-based compensation costs | 26.1 | 24.0 | |||||
Benefit from deferred income taxes | (2.2 | ) | (12.8 | ) | |||
Provision for allowance for doubtful accounts | 1.7 | 1.0 | |||||
Net realized gains on sales of available-for-sale securities | (0.1 | ) | (0.2 | ) | |||
Changes in operating assets and liabilities: | |||||||
Interest receivable | 6.3 | 4.1 | |||||
Accounts receivable | 18.6 | 0.5 | |||||
Prepaid expenses and other current assets | (8.6 | ) | 1.2 | ||||
Accounts payable and other current liabilities | 28.4 | 28.2 | |||||
Net change in other long-term assets and liabilities | — | (2.9 | ) | ||||
Net cash provided by operating activities | 791.2 | 692.8 | |||||
INVESTING ACTIVITIES | |||||||
Purchases of available-for-sale securities | (2,700.9 | ) | (23,544.9 | ) | |||
Proceeds from sales and maturities of available-for-sale securities | 3,303.6 | 23,697.6 | |||||
Net change in funds held for clients’ money market securities and other cash equivalents | (792.9 | ) | (1,078.6 | ) | |||
Purchases of property and equipment | (70.0 | ) | (72.0 | ) | |||
Acquisition of businesses, net of cash acquired | (296.1 | ) | (27.1 | ) | |||
Purchases of other assets | (7.3 | ) | (2.2 | ) | |||
Net cash used in investing activities | (563.6 | ) | (1,027.2 | ) | |||
FINANCING ACTIVITIES | |||||||
Net change in client fund obligations | 403.8 | 891.8 | |||||
Dividends paid | (455.0 | ) | (414.4 | ) | |||
Repurchases of common shares | (107.9 | ) | (70.4 | ) | |||
Equity activity related to stock-based awards | 14.6 | 40.2 | |||||
Net cash (used in)/provided by financing activities | (144.5 | ) | 447.2 | ||||
Increase in cash and cash equivalents | 83.1 | 112.8 | |||||
Cash and cash equivalents, beginning of period | 170.0 | 152.5 | |||||
Cash and cash equivalents, end of period | $ | 253.1 | $ | 265.3 |
For the three months ended | For the nine months ended | ||||||||||||||
In millions, except per share amounts | February 29, 2016 | February 28, 2015 | February 29, 2016 | February 28, 2015 | |||||||||||
Basic earnings per share: | |||||||||||||||
Net income | $ | 180.4 | $ | 169.4 | $ | 578.7 | $ | 513.7 | |||||||
Weighted-average common shares outstanding | 360.5 | 363.2 | 360.8 | 363.1 | |||||||||||
Basic earnings per share | $ | 0.50 | $ | 0.47 | $ | 1.60 | $ | 1.41 | |||||||
Diluted earnings per share: | |||||||||||||||
Net income | $ | 180.4 | $ | 169.4 | $ | 578.7 | $ | 513.7 | |||||||
Weighted-average common shares outstanding | 360.5 | 363.2 | 360.8 | 363.1 | |||||||||||
Dilutive effect of common share equivalents | 1.7 | 1.8 | 1.6 | 1.7 | |||||||||||
Weighted-average common shares outstanding, assuming dilution | 362.2 | 365.0 | 362.4 | 364.8 | |||||||||||
Diluted earnings per share | $ | 0.50 | $ | 0.46 | $ | 1.60 | $ | 1.41 | |||||||
Weighted-average anti-dilutive common share equivalents | 0.7 | — | 0.7 | 0.4 |
For the three months ended | For the nine months ended | ||||||||||||||
In millions | February 29, 2016 | February 28, 2015 | February 29, 2016 | February 28, 2015 | |||||||||||
Interest income on corporate funds | $ | 2.1 | $ | 2.0 | $ | 6.1 | $ | 5.9 | |||||||
Interest expense | (0.2 | ) | (0.1 | ) | (0.7 | ) | (0.7 | ) | |||||||
Net loss from equity-method investments | (0.2 | ) | (0.3 | ) | (0.7 | ) | (0.8 | ) | |||||||
Investment income, net | $ | 1.7 | $ | 1.6 | $ | 4.7 | $ | 4.4 |
February 29, 2016 | |||||||||||||||
In millions | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | |||||||||||
Type of issue: | |||||||||||||||
Funds held for clients money market securities and other cash equivalents | $ | 2,222.9 | $ | — | $ | — | $ | 2,222.9 | |||||||
Available-for-sale securities: | |||||||||||||||
Corporate bonds | 108.9 | 1.7 | (0.2 | ) | 110.4 | ||||||||||
General obligation municipal bonds | 1,626.3 | 36.4 | (0.1 | ) | 1,662.6 | ||||||||||
Pre-refunded municipal bonds(1) | 67.9 | 1.8 | — | 69.7 | |||||||||||
Revenue municipal bonds | 930.6 | 20.8 | (0.1 | ) | 951.3 | ||||||||||
U.S. government agency securities | 120.5 | 0.7 | — | 121.2 | |||||||||||
Variable rate demand notes | 68.0 | — | — | 68.0 | |||||||||||
Total available-for-sale securities | 2,922.2 | 61.4 | (0.4 | ) | 2,983.2 | ||||||||||
Other | 13.9 | 0.5 | (0.6 | ) | 13.8 | ||||||||||
Total funds held for clients and corporate investments | $ | 5,159.0 | $ | 61.9 | $ | (1.0 | ) | $ | 5,219.9 | ||||||
May 31, 2015 | |||||||||||||||
In millions | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | |||||||||||
Type of issue: | |||||||||||||||
Funds held for clients money market securities and other cash equivalents | $ | 1,430.0 | $ | — | $ | — | $ | 1,430.0 | |||||||
Available-for-sale securities: | |||||||||||||||
General obligation municipal bonds | 1,694.0 | 14.0 | (4.3 | ) | 1,703.7 | ||||||||||
Pre-refunded municipal bonds(1) | 101.7 | 1.0 | — | 102.7 | |||||||||||
Revenue municipal bonds | 960.7 | 6.1 | (3.2 | ) | 963.6 | ||||||||||
Variable rate demand notes | 825.6 | — | — | 825.6 | |||||||||||
Total available-for-sale securities | 3,582.0 | 21.1 | (7.5 | ) | 3,595.6 | ||||||||||
Other | 12.7 | 1.5 | — | 14.2 | |||||||||||
Total funds held for clients and corporate investments | $ | 5,024.7 | $ | 22.6 | $ | (7.5 | ) | $ | 5,039.8 |
(1) | Pre-refunded municipal bonds are secured by an escrow fund of U.S. government obligations. |
In millions | February 29, 2016 | May 31, 2015 | |||||
Funds held for clients | $ | 4,717.2 | $ | 4,273.4 | |||
Corporate investments | 74.1 | 366.6 | |||||
Long-term corporate investments | 428.6 | 399.8 | |||||
Total funds held for clients and corporate investments | $ | 5,219.9 | $ | 5,039.8 |
February 29, 2016 | |||||||||||||||||||||||
Securities in an unrealized loss position for less than twelve months | Securities in an unrealized loss position for more than twelve months | Total | |||||||||||||||||||||
In millions | Gross unrealized losses | Fair value | Gross unrealized losses | Fair value | Gross unrealized losses | Fair value | |||||||||||||||||
Type of issue: | |||||||||||||||||||||||
Corporate bonds | $ | (0.2 | ) | $ | 13.2 | $ | — | $ | — | $ | (0.2 | ) | $ | 13.2 | |||||||||
General obligation municipal bonds | — | 6.3 | (0.1 | ) | 2.8 | (0.1 | ) | 9.1 | |||||||||||||||
Revenue municipal bonds | — | 10.4 | (0.1 | ) | 13.4 | (0.1 | ) | 23.8 | |||||||||||||||
U.S. government agency securities | — | 12.3 | — | — | — | 12.3 | |||||||||||||||||
Total | $ | (0.2 | ) | $ | 42.2 | $ | (0.2 | ) | $ | 16.2 | $ | (0.4 | ) | $ | 58.4 |
May 31, 2015 | |||||||||||||||||||||||
Securities in an unrealized loss position for less than twelve months | Securities in an unrealized loss position for more than twelve months | Total | |||||||||||||||||||||
In millions | Gross unrealized losses | Fair value | Gross unrealized losses | Fair value | Gross unrealized losses | Fair value | |||||||||||||||||
Type of issue: | |||||||||||||||||||||||
General obligation municipal bonds | $ | (3.8 | ) | $ | 535.1 | $ | (0.5 | ) | $ | 26.3 | $ | (4.3 | ) | $ | 561.4 | ||||||||
Revenue municipal bonds | (3.2 | ) | 361.6 | — | — | (3.2 | ) | 361.6 | |||||||||||||||
Total | $ | (7.0 | ) | $ | 896.7 | $ | (0.5 | ) | $ | 26.3 | $ | (7.5 | ) | $ | 923.0 |
February 29, 2016 | |||||||
In millions | Amortized cost | Fair value | |||||
Maturity date: | |||||||
Due in one year or less | $ | 368.5 | $ | 370.7 | |||
Due after one year through three years | 678.0 | 686.2 | |||||
Due after three years through five years | 888.4 | 909.7 | |||||
Due after five years | 987.3 | 1,016.6 | |||||
Total | $ | 2,922.2 | $ | 2,983.2 |
• | 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. |
February 29, 2016 | |||||||||||||||
In millions | Carrying value (Fair value) | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||
Assets: | |||||||||||||||
Cash equivalents: | |||||||||||||||
Commercial paper | $ | 965.8 | $ | — | $ | 965.8 | $ | — | |||||||
Time deposits | 150.0 | 150.0 | — | — | |||||||||||
U.S. government agency securities | 200.0 | — | 200.0 | — | |||||||||||
Money market securities | 0.1 | 0.1 | — | — | |||||||||||
Total cash equivalents | $ | 1,315.9 | $ | 150.1 | $ | 1,165.8 | $ | — | |||||||
Available-for-sale securities: | |||||||||||||||
Corporate bonds | $ | 110.4 | $ | — | $ | 110.4 | $ | — | |||||||
General obligation municipal bonds | 1,662.6 | — | 1,662.6 | — | |||||||||||
Pre-refunded municipal bonds | 69.7 | — | 69.7 | — | |||||||||||
Revenue municipal bonds | 951.3 | — | 951.3 | — | |||||||||||
U.S. government agency securities | 121.2 | — | 121.2 | — | |||||||||||
Variable rate demand notes | 68.0 | — | 68.0 | — | |||||||||||
Total available-for-sale securities | $ | 2,983.2 | $ | — | $ | 2,983.2 | $ | — | |||||||
Other | $ | 13.8 | $ | 13.8 | $ | — | $ | — | |||||||
Liabilities: | |||||||||||||||
Other long-term liabilities | $ | 13.8 | $ | 13.8 | $ | — | $ | — |
May 31, 2015 | |||||||||||||||
In millions | Carrying value (Fair value) | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||
Assets: | |||||||||||||||
Cash equivalents: | |||||||||||||||
Commercial paper | $ | 15.0 | $ | — | $ | 15.0 | $ | — | |||||||
General obligation municipal bonds | 55.1 | — | 55.1 | — | |||||||||||
Pre-refunded municipal bonds | 20.5 | — | 20.5 | — | |||||||||||
Revenue municipal bonds | 12.3 | — | 12.3 | — | |||||||||||
Money market securities | 0.2 | 0.2 | — | — | |||||||||||
Total cash equivalents | $ | 103.1 | $ | 0.2 | $ | 102.9 | $ | — | |||||||
Available-for-sale securities: | |||||||||||||||
General obligation municipal bonds | $ | 1,703.7 | $ | — | $ | 1,703.7 | $ | — | |||||||
Pre-refunded municipal bonds | 102.7 | — | 102.7 | — | |||||||||||
Revenue municipal bonds | 963.6 | — | 963.6 | — | |||||||||||
Variable rate demand notes | 825.6 | — | 825.6 | — | |||||||||||
Total available-for-sale securities | $ | 3,595.6 | $ | — | $ | 3,595.6 | $ | — | |||||||
Other | $ | 14.2 | $ | 14.2 | $ | — | $ | — | |||||||
Liabilities: | |||||||||||||||
Other long-term liabilities | $ | 14.2 | $ | 14.2 | $ | — | $ | — |
In millions | February 29, 2016 | May 31, 2015 | |||||
Land and improvements | $ | 8.3 | $ | 8.3 | |||
Buildings and improvements | 102.5 | 102.1 | |||||
Data processing equipment | 196.1 | 190.9 | |||||
Software | 438.3 | 391.8 | |||||
Furniture, fixtures, and equipment | 128.5 | 145.6 | |||||
Leasehold improvements | 106.5 | 106.2 | |||||
Construction in progress | 16.0 | 28.5 | |||||
Total property and equipment, gross | 996.2 | 973.4 | |||||
Less: Accumulated depreciation | 646.2 | 619.5 | |||||
Property and equipment, net of accumulated depreciation | $ | 350.0 | $ | 353.9 |
In millions | February 29, 2016 | May 31, 2015 | |||||
Client lists | $ | 289.1 | $ | 244.6 | |||
Other intangible assets | 5.5 | 3.2 | |||||
Total intangible assets, gross | 294.6 | 247.8 | |||||
Less: Accumulated amortization | 221.1 | 215.4 | |||||
Intangible assets, net of accumulated amortization | $ | 73.5 | $ | 32.4 |
In millions Fiscal year ending May 31, | Estimated amortization expense | ||
2016 | $ | 16.6 | |
2017 | $ | 17.5 | |
2018 | $ | 13.9 | |
2019 | $ | 10.9 | |
2020 | $ | 8.4 |
For the three months ended | For the nine months ended | |||||||||||||||
In millions | February 29, 2016 | February 28, 2015 | February 29, 2016 | February 28, 2015 | ||||||||||||
Beginning balance | $ | 20.3 | $ | 22.4 | $ | 7.5 | $ | 21.5 | ||||||||
Other comprehensive income/(loss): | ||||||||||||||||
Unrealized gains/(losses) on available-for-sale securities, net of tax | 17.2 | (0.6 | ) | 30.0 | 0.4 | |||||||||||
Reclassification adjustment for the net gain on sale of available-for-sale securities realized in net income, net of tax | — | — | — | (0.1 | ) | |||||||||||
Total other comprehensive income/(loss), net of tax | 17.2 | (0.6 | ) | 30.0 | 0.3 | |||||||||||
Ending balance | $ | 37.5 | $ | 21.8 | $ | 37.5 | $ | 21.8 | ||||||||
Total tax expense included in other comprehensive income/(loss) | $ | 9.9 | $ | — | $ | 17.3 | $ | 0.2 |
Financial institution | Amount available | Expiration date | |
JP Morgan Chase Bank, N.A. | $350 million | February 27, 2017 | |
Bank of America, N.A. | $250 million | February 28, 2017 | |
PNC Bank, National Association | $150 million | February 27, 2017 | |
Wells Fargo Bank, National Association | $150 million | February 27, 2017 |
For the nine months ended | |||||||||
$ in millions | February 29, 2016 | February 28, 2015 | |||||||
Maximum amount borrowed | $ | 350.0 | $ | 150.0 | |||||
Average amount borrowed | $ | 217.0 | $ | 125.0 | |||||
Weighted-average interest rate | 3.25 | % | 3.25 | % |
• | general market and economic conditions including, among others, changes in U.S. employment and wage levels, changes to new hiring trends, legislative changes to stimulate the economy, changes in short- and long-term interest rates, changes in the fair value and the credit rating of securities held by us, and accessibility of financing; |
• | changes in demand for our services and products, ability to develop and market new services and products effectively, pricing changes and the impact of competition; |
• | changes in the availability of skilled workers, in particular those supporting our technology and product development; |
• | changes in the laws regulating collection and payment of payroll taxes, professional employer organizations, and employee benefits, including retirement plans, workers’ compensation, health insurance (including health care reform legislation), state unemployment, and section 125 plans; |
• | changes in health insurance and workers’ compensation rates and underlying claims trends; |
• | changes in technology that adversely affect our services and products and impact our ability to provide timely enhancements to services and products; |
• | the possibility of a security breach that disrupts operations or exposes confidential client data; |
• | the possibility of failure of our operating facilities, computer systems, and communication systems during a catastrophic event; |
• | the possibility of third-party service providers failing to perform their functions; |
• | the possibility of a failure of internal controls or our inability to implement business processing improvements; |
• | the possibility that we may be subject to liability for violations of employment or discrimination laws by our clients and acts or omissions of client employees who may be deemed to be our agents, even if we do not participate in any such acts or violations; and |
• | potentially unfavorable outcomes related to pending or future (possible) legal matters. |
Service | Description | |
Payroll Services: | ||
Payroll processing | Includes the calculation, preparation, and delivery of employee payroll checks; production of internal accounting records and management reports; preparation of federal, state, and local payroll tax returns; and collection and remittance of clients’ payroll obligations. | |
Payroll tax administration services | Provides accurate preparation and timely filing of quarterly and year-end tax returns, as well as the electronic transfer of funds to the applicable federal, state, and local tax or regulatory agencies. | |
Employee payment services | Provides the employer the option of paying their employees by direct deposit, payroll debit card, a check drawn on a Paychex, Inc. account (Readychex®), or a check drawn on the employer’s account and electronically signed by us. | |
Regulatory compliance services | Includes new-hire reporting and garnishment processing, which allow employers to comply with legal requirements and reduce the risk of penalties. |
Human Resource Services: | ||
Paychex HR Services | Available through an administrative services organization (“ASO”) and a professional employer organization (“PEO”). Both options offer businesses a combined package that includes payroll, employer compliance, human resource and employee benefits administration, risk management outsourcing, and on-site availability of a professionally trained human resource representative, among other services. Our PEO differs from the ASO in that we serve as a co-employer of the clients’ employees, offer health care coverage to PEO client employees, and assume the risks and rewards of workers’ compensation insurance and certain health insurance offerings. Paychex HR Essentials is an ASO product that provides support to our clients telephonically or online to help manage employee-related topics. | |
Retirement services administration | Offers a variety of retirement plan options to clients, as well as recordkeeping services, which include plan implementation, ongoing compliance with government regulations, employee and employer reporting, participant and employer online access, electronic funds transfer, and other administrative services. | |
Insurance services | Our licensed insurance agency, Paychex Insurance Agency, Inc., provides insurance through a variety of carriers. Insurance offerings include property and casualty coverage, such as workers’ compensation; business-owner policies; commercial auto; and health and benefits coverage, including health, dental, vision, and life. Paychex also offers comprehensive solutions to help clients navigate health care reform. | |
Online HR administration services | Offers online human resource administration software products for employee benefits management and administration, expense reporting, applicant tracking, and time and attendance solutions. | |
Other human resource services and products | Includes section 125 plans, state unemployment insurance services, employee handbooks, management manuals, and personnel and required regulatory forms. | |
• | Total revenue increased 7% to $752.6 million. |
• | Total service revenue increased 7% to $740.7 million. |
◦ | Payroll service revenue increased 4% to $439.6 million. |
◦ | Human Resource Services (“HRS”) revenue increased 12% to $301.1 million. |
• | Interest on funds held for clients increased 11% to $11.9 million. |
• | Operating income increased 6% to $280.0 million and operating income, net of certain items, increased 6% to $268.1 million. Refer to the “Non-GAAP Financial Measure” section, which follows, for further information on this non-GAAP measure. |
• | Net income increased 7% to $180.4 million and diluted earnings per share increased 9% to $0.50 per share. |
Low | High | |||||
Payroll service revenue | 4 | % | — | 5 | % | |
HRS revenue | 10 | % | — | 13 | % | |
Total service revenue | 7 | % | — | 8 | % | |
Net income (1) | 8 | % | — | 9 | % |
For the three months ended | For the nine months ended | |||||||||||||||||||||
$ in millions | February 29, 2016 | February 28, 2015 | Change | February 29, 2016 | February 28, 2015 | Change | ||||||||||||||||
Revenue: | ||||||||||||||||||||||
Payroll service revenue | $ | 439.6 | $ | 423.8 | 4 | % | $ | 1,299.5 | $ | 1,247.8 | 4 | % | ||||||||||
HRS revenue | 301.1 | 269.8 | 12 | % | 864.7 | 768.3 | 13 | % | ||||||||||||||
Total service revenue | 740.7 | 693.6 | 7 | % | 2,164.2 | 2,016.1 | 7 | % | ||||||||||||||
Interest on funds held for clients | 11.9 | 10.7 | 11 | % | 33.8 | 31.3 | 8 | % | ||||||||||||||
Total revenue | 752.6 | 704.3 | 7 | % | 2,198.0 | 2,047.4 | 7 | % | ||||||||||||||
Combined operating and SG&A expenses | 472.6 | 440.0 | 7 | % | 1,327.7 | 1,245.4 | 7 | % | ||||||||||||||
Operating income | 280.0 | 264.3 | 6 | % | 870.3 | 802.0 | 9 | % | ||||||||||||||
Investment income, net | 1.7 | 1.6 | 14 | % | 4.7 | 4.4 | 8 | % | ||||||||||||||
Income before income taxes | 281.7 | 265.9 | 6 | % | 875.0 | 806.4 | 9 | % | ||||||||||||||
Income taxes | 101.3 | 96.5 | 5 | % | 296.3 | 292.7 | 1 | % | ||||||||||||||
Effective income tax rate | 36.0 | % | 36.3 | % | 33.9 | % | 36.3 | % | ||||||||||||||
Net income | $ | 180.4 | $ | 169.4 | 7 | % | $ | 578.7 | $ | 513.7 | 13 | % | ||||||||||
Diluted earnings per share | $ | 0.50 | $ | 0.46 | 9 | % | $ | 1.60 | $ | 1.41 | 13 | % |
For the three months ended | For the nine months ended | ||||||||||||||||||||
$ in millions | February 29, 2016 | February 28, 2015 | Change | February 29, 2016 | February 28, 2015 | Change | |||||||||||||||
Average investment balances: | |||||||||||||||||||||
Funds held for clients | $ | 4,518.7 | $ | 4,513.7 | — | % | $ | 4,008.6 | $ | 3,974.0 | 1 | % | |||||||||
Corporate investments | 826.6 | 1,044.9 | (21 | )% | 942.8 | 994.5 | (5 | )% | |||||||||||||
Total | $ | 5,345.3 | $ | 5,558.6 | (4 | )% | $ | 4,951.4 | $ | 4,968.5 | — | % | |||||||||
Average interest rates earned (exclusive of net realized gains): | |||||||||||||||||||||
Funds held for clients | 1.1 | % | 1.0 | % | 1.1 | % | 1.0 | % | |||||||||||||
Corporate investments | 1.0 | % | 0.7 | % | 0.8 | % | 0.7 | % | |||||||||||||
Combined funds held for clients and corporate investments | 1.0 | % | 0.9 | % | 1.1 | % | 1.0 | % | |||||||||||||
Total net realized gains | $ | 0.1 | $ | — | $ | 0.1 | $ | 0.2 |
As of: $ in millions | February 29, 2016 | May 31, 2015 | ||||||
Net unrealized gain on available-for-sale securities (1) | $ | 61.0 | $ | 13.6 | ||||
Federal Funds rate (2) | 0.50 | % | 0.25 | % | ||||
Total fair value of available-for-sale securities | $ | 2,983.2 | $ | 3,595.6 | ||||
Weighted-average duration of available-for-sale securities in years (3) | 3.2 | 3.2 | ||||||
Weighted-average yield-to-maturity of available-for-sale securities (3) | 1.7 | % | 1.6 | % |
(1) | The net unrealized gain on our investment portfolio was approximately $45.3 million as of March 25, 2016. |
(2) | The Federal Funds rate was in the range of 0.25% to 0.50% as of February 29, 2016, and was in the range of 0% to 0.25% as of May 31, 2015. |
(3) | These items exclude the impact of Variable Rate Demand Notes (“VRDNs”) as they are tied to short-term interest rates. |
For the three months ended | For the nine months ended | |||||||||||||||||||||
$ in millions | February 29, 2016 | February 28, 2015 | Change | February 29, 2016 | February 28, 2015 | Change | ||||||||||||||||
Compensation-related expenses | $ | 299.6 | $ | 285.4 | 5 | % | $ | 844.8 | $ | 800.4 | 6 | % | ||||||||||
Depreciation and amortization | 30.4 | 26.6 | 14 | % | 85.1 | 79.1 | 8 | % | ||||||||||||||
Other expenses | 142.6 | 128.0 | 11 | % | 397.8 | 365.9 | 9 | % | ||||||||||||||
Total operating and SG&A expenses | $ | 472.6 | $ | 440.0 | 7 | % | $ | 1,327.7 | $ | 1,245.4 | 7 | % |
For the three months ended | For the nine months ended | |||||||||||||||||||||
$ in millions | February 29, 2016 | February 28, 2015 | Change | February 29, 2016 | February 28, 2015 | Change | ||||||||||||||||
Operating income | $ | 280.0 | $ | 264.3 | 6 | % | $ | 870.3 | $ | 802.0 | 9 | % | ||||||||||
Excluding: Interest on funds held for clients | (11.9 | ) | (10.7 | ) | 11 | % | (33.8 | ) | (31.3 | ) | 8 | % | ||||||||||
Operating income, net of certain items | $ | 268.1 | $ | 253.6 | 6 | % | $ | 836.5 | $ | 770.7 | 9 | % | ||||||||||
Operating income, net of certain items as a percent of total service revenue | 36 | % | 37 | % | 39 | % | 38 | % |
Financial institution | Amount available | Expiration date | |
JP Morgan Chase Bank, N.A. | $350 million | February 27, 2017 | |
Bank of America, N.A. | $250 million | February 28, 2017 | |
PNC Bank, National Association | $150 million | February 27, 2017 | |
Wells Fargo Bank, National Association | $150 million | February 27, 2017 |
For the nine months ended | |||||||||
$ in millions | February 29, 2016 | February 28, 2015 | |||||||
Maximum amount outstanding | $ | 350.0 | $ | 150.0 | |||||
Average amount borrowed | $ | 217.0 | $ | 125.0 | |||||
Weighted-average interest rate | 3.25 | % | 3.25 | % |
For the nine months ended | |||||||
In millions | February 29, 2016 | February 28, 2015 | |||||
Net income | $ | 578.7 | $ | 513.7 | |||
Non-cash adjustments to net income | 167.8 | 148.0 | |||||
Cash provided by changes in operating assets and liabilities | 44.7 | 31.1 | |||||
Net cash provided by operating activities | $ | 791.2 | $ | 692.8 |
For the nine months ended | |||||||
In millions | February 29, 2016 | February 28, 2015 | |||||
Net change in funds held for clients and corporate investment activities | $ | (190.2 | ) | $ | (925.9 | ) | |
Purchases of property and equipment | (70.0 | ) | (72.0 | ) | |||
Acquisition of businesses, net of cash acquired | (296.1 | ) | (27.1 | ) | |||
Purchases of other assets | (7.3 | ) | (2.2 | ) | |||
Net cash used in investing activities | $ | (563.6 | ) | $ | (1,027.2 | ) |
For the nine months ended | |||||||
In millions, except per share amounts | February 29, 2016 | February 28, 2015 | |||||
Net change in client fund obligations | $ | 403.8 | $ | 891.8 | |||
Dividends paid | (455.0 | ) | (414.4 | ) | |||
Repurchases of common stock | (107.9 | ) | (70.4 | ) | |||
Equity activity related to stock-based awards | 14.6 | 40.2 | |||||
Net cash (used in)/provided by financing activities | $ | (144.5 | ) | $ | 447.2 | ||
Cash dividends per common share | $ | 1.26 | $ | 1.14 |
February 29, 2016 | |||||||
In millions | Amortized cost | Fair value | |||||
Maturity date: | |||||||
Due in one year or less | $ | 368.5 | $ | 370.7 | |||
Due after one year through three years | 678.0 | 686.2 | |||||
Due after three years through five years | 888.4 | 909.7 | |||||
Due after five years | 987.3 | 1,016.6 | |||||
Total | $ | 2,922.2 | $ | 2,983.2 |
• | daily interest rate changes; |
• | seasonal variations in investment balances; |
• | actual duration of short-term and available-for-sale securities; |
• | the proportion of taxable and tax-exempt investments; |
• | changes in tax-exempt municipal rates versus taxable investment rates, which are not synchronized or simultaneous; and |
• | financial market volatility and the resulting effect on benchmark and other indexing interest rates. |
• | revenue recognition; |
• | PEO insurance services; |
• | goodwill and other intangible assets; |
• | stock-based compensation costs; and |
• | income taxes. |
Period | Total number of shares purchased | Average price paid per share | Approximate dollar value of shares that may yet be purchased under the program | ||||||||
December 1, 2015 - December 30, 2015 | — | $ | — | $ | 104,716,067 | ||||||
January 1, 2016 - January 31, 2016 | 934,097 | $ | 48.15 | $ | 59,737,603 | ||||||
February 1, 2016 - February 29, 2016 | — | $ | — | $ | 59,737,603 | ||||||
Total for the period | 934,097 | $ | 48.15 | $ | 59,737,603 |
Date: | March 30, 2016 | /s/ Martin Mucci |
Martin Mucci | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) | ||
Date: | March 30, 2016 | /s/ Efrain Rivera |
Efrain Rivera | ||
Senior Vice President, Chief | ||
Financial Officer, and Treasurer | ||
(Principal Financial Officer) |
Exhibit number | Description | |
31.1 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS | XBRL instance document. | |
101.SCH | XBRL taxonomy extension schema document. | |
101.CAL | XBRL taxonomy extension calculation linkbase document. | |
101.LAB | XBRL taxonomy label linkbase document. | |
101.PRE | XBRL taxonomy extension presentation linkbase document. | |
101.DEF | XBRL taxonomy extension definition linkbase document. |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | March 30, 2016 | /s/ Martin Mucci |
President and Chief Executive Officer |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | March 30, 2016 | /s/ Efrain Rivera |
Senior Vice President, Chief Financial Officer, and Treasurer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Martin Mucci |
Martin Mucci |
President and Chief Executive Officer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Efrain Rivera |
Efrain Rivera |
Senior Vice President, Chief Financial Officer, and Treasurer |
Document and Entity Information |
9 Months Ended |
---|---|
Feb. 29, 2016
shares
| |
Document and Entity Information [Abstract] | |
Entity Registrant Name | PAYCHEX INC |
Entity Central Index Key | 0000723531 |
Current Fiscal Year End Date | --05-31 |
Entity Filer Category | Large Accelerated Filer |
Document Type | 10-Q |
Document Period End Date | Feb. 29, 2016 |
Document Fiscal Year Focus | 2016 |
Document Fiscal Period Focus | Q3 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding | 360,121,054 |
Consolidated Statements of Income and Comprehensive Income (Unaudited) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 29, 2016 |
Feb. 28, 2015 |
Feb. 29, 2016 |
Feb. 28, 2015 |
|
Revenue: | ||||
Service revenue | $ 740.7 | $ 693.6 | $ 2,164.2 | $ 2,016.1 |
Interest on funds held for clients | 11.9 | 10.7 | 33.8 | 31.3 |
Total revenue | 752.6 | 704.3 | 2,198.0 | 2,047.4 |
Expenses: | ||||
Operating expenses | 225.9 | 211.0 | 636.8 | 604.4 |
Selling, general and administrative expenses | 246.7 | 229.0 | 690.9 | 641.0 |
Total expenses | 472.6 | 440.0 | 1,327.7 | 1,245.4 |
Operating income | 280.0 | 264.3 | 870.3 | 802.0 |
Investment income, net | 1.7 | 1.6 | 4.7 | 4.4 |
Income before income taxes | 281.7 | 265.9 | 875.0 | 806.4 |
Income taxes | 101.3 | 96.5 | 296.3 | 292.7 |
Net income | 180.4 | 169.4 | 578.7 | 513.7 |
Other comprehensive income/(loss), net of tax: | ||||
Unrealized gains/(losses) on securities, net of tax | 17.2 | (0.6) | 30.0 | 0.3 |
Total other comprehensive income/(loss), net of tax | 17.2 | (0.6) | 30.0 | 0.3 |
Comprehensive income | $ 197.6 | $ 168.8 | $ 608.7 | $ 514.0 |
Basic earnings per share | $ 0.50 | $ 0.47 | $ 1.60 | $ 1.41 |
Diluted earnings per share | $ 0.50 | $ 0.46 | $ 1.60 | $ 1.41 |
Weighted-average common shares outstanding | 360.5 | 363.2 | 360.8 | 363.1 |
Weighted-average common shares outstanding, assuming dilution | 362.2 | 365.0 | 362.4 | 364.8 |
Cash dividends per common share | $ 0.42000 | $ 0.38000 | $ 1.26 | $ 1.14 |
Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares shares in Millions |
Feb. 29, 2016 |
May. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 600.0 | 600.0 |
Common stock, shares issued | 360.1 | 361.2 |
Common stock, shares outstanding | 360.1 | 361.2 |
Description of Business, Basis of Presentation, and Significant Accounting Policies |
9 Months Ended |
---|---|
Feb. 29, 2016 | |
Accounting Policies [Abstract] | |
Description of Business, Basis of Presentation, and Significant Accounting Policies | Description of Business, Basis of Presentation, and Significant Accounting Policies Description of business: Paychex, Inc. and its wholly owned subsidiaries (collectively, the “Company” or “Paychex”) is a leading provider of integrated human capital management solutions for payroll, human resource, retirement, and insurance services for small- to medium-sized businesses in the United States (“U.S.”). The Company also has operations in Germany. Paychex, a Delaware corporation formed in 1979, reports as one segment. Substantially all of the Company’s revenue is generated within the U.S. The Company also generates revenue within Germany, which represented less than one percent of the Company's total revenue for the nine months ended February 29, 2016 and February 28, 2015. Long-lived assets in Germany are insignificant in relation to total long-lived assets of the Company as of February 29, 2016 and May 31, 2015. In addition, the Company has equity method investments for a joint-venture in Brazil and a minority investment in a Canadian entity, neither of which is significant. Basis of presentation: The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statement presentation. The consolidated financial statements include the consolidated accounts of the Company with all intercompany transactions eliminated. In the opinion of management, the information furnished herein reflects all adjustments (consisting of items of a normal recurring nature), which are necessary for a fair presentation of the results for the interim period. These financial statements should be read in conjunction with the Company’s consolidated financial statements and related Notes to Consolidated Financial Statements presented in the Company’s Annual Report on Form 10-K (“Form 10-K”) as of and for the year ended May 31, 2015 (“fiscal 2015”). Operating results and cash flows for the nine months ended February 29, 2016 are not necessarily indicative of the results that may be expected for other interim periods or the full fiscal year ending May 31, 2016 (“fiscal 2016”). Accounts Receivable, net of allowance for doubtful accounts: Accounts receivable balances are shown on the Consolidated Balance Sheets net of the allowance for doubtful accounts of $4.1 million as of February 29, 2016 and $1.4 million as of May 31, 2015. Accounts receivable balances, net of allowance for doubtful accounts, include: 1) trade receivables for services provided to clients of $175.4 million as of February 29, 2016 and $176.6 million as of May 31, 2015; and 2) purchased receivables related to funding arrangements with clients, resulting from the acquisition of Advance Partners in December 2015, of $178.0 million as of February 29, 2016. PEO insurance reserves: As part of the professional employer organization (“PEO”), the Company offers workers' compensation insurance and health insurance to client companies for the benefit of client employees. For workers' compensation insurance, reserves are established to provide for the estimated costs of paying claims underwritten by the Company. The Company’s maximum individual claims liability is $1.3 million and $1.0 million under its fiscal 2016 and fiscal 2015 policies, respectively. Under the minimum premium plan health insurance offering within the PEO, the Company's health benefits insurance reserves are established to provide for the payment of claims liability charges in accordance with its service contract with the carrier. The Company's maximum individual claims liability is $0.3 million under both its calendar 2016 and 2015 policies. Estimating the ultimate cost of future claims is an uncertain and complex process based upon historical loss experience and actuarial loss projections, and is subject to change due to multiple factors, including economic trends, changes in legal liability law, and damage awards, all of which could materially impact the reserves as reported in the consolidated financial statements. Accordingly, final claim settlements may vary from the present estimates, particularly with workers' compensation insurance where those payments may not occur until well into the future. The Company regularly reviews the adequacy of its estimated insurance reserves. Adjustments to previously established reserves are reflected in the results of operations for the period in which the adjustment is identified. Such adjustments could be significant, reflecting any combination of new and adverse or favorable trends. Stock-based compensation costs: The Company has issued stock-based awards to employees and directors consisting of stock options, restricted stock awards, restricted stock units, performance shares, and performance stock options. The Company accounts for all stock-based awards to employees and directors as compensation costs in the consolidated financial statements based on the fair value measured as of the date of grant. These costs are recognized over the requisite service period. Stock-based compensation costs recognized were $8.6 million and $26.1 million for the three and nine months ended February 29, 2016 as compared with $8.6 million and $24.0 million for the three and nine months ended February 28, 2015. The methods and assumptions used in the determination of the fair value of stock-based awards are consistent with those described in the Company’s fiscal 2015 Form 10-K. Recently adopted accounting pronouncements: There were no recently adopted accounting pronouncements during the nine months ended February 29, 2016. Recently issued accounting pronouncements: In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-08 “Revenue from Contracts with Customers (Topic 606) - Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” ASU No. 2016-08 requires an entity to determine whether the nature of its promise to provide goods or services to a customer is performed in a principal or agent capacity and to recognize revenue in a gross or net manner based on its principal/agent designation. ASU No. 2016-08 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017, with early application permitted. This guidance is applicable to the Company's fiscal year beginning June 1, 2018. The Company is currently evaluating this guidance to determine the potential impact on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02 “Leases (Topic 842).” ASU No. 2016-02 improves transparency and comparability among companies by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. ASU No. 2016-02 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2018, with early application permitted. This guidance is applicable to the Company's fiscal year beginning June 1, 2019. The Company is currently evaluating this guidance to determine the potential impact on its consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01 “Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU No. 2016-01 provides updated guidance for the recognition, measurement, presentation, and disclosure of certain financial assets and liabilities. ASU No. 2016-01 is effective for public business entities for annual and interim periods beginning after December 15, 2017, with early application permitted. This guidance is applicable to the Company's fiscal year beginning June 1, 2018. The Company is currently evaluating this guidance to determine the potential impact on its consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17 “Income Taxes (Topic 740) - Balance Sheet Classification of Deferred Taxes.” ASU No. 2015-17 will require that deferred tax assets and liabilities be classified as non-current in a classified statement of financial position. ASU No. 2015-17 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2016. Early application is permitted as of the beginning of an interim or annual reporting period. This guidance is applicable to the Company's fiscal year beginning June 1, 2017. The Company is currently evaluating this guidance, including early application, but does not anticipate a material impact to its consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-12 “Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965) – (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient. Consensuses of the Emerging Issues Task Force.” ASU No. 2015-12 designates contract value as the only required measure for fully benefit-responsive investment contracts; simplifies and makes more effective the investment disclosure requirements under Accounting Standards Codification (“ASC”) topic 820 for fair value, and topics 960, 962 and 965 for employee benefit plans; and provides a similar measurement date practical expedient for employee benefit plans. ASU No. 2015-12 is effective for fiscal years beginning on or after December 15, 2015, and is applicable to the Company's financial reporting for its defined contribution employee benefit plans as of January 1, 2016. This guidance will not have a material impact on the Company's consolidated financial statements. Other recent authoritative guidance issued by the FASB (including technical corrections to the ASC), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not, or are not expected to, have a material effect on the Company’s consolidated financial statements. |
Basic and Diluted Earnings Per Share |
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Feb. 29, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Earnings Per Share | Basic and Diluted Earnings Per Share Basic and diluted earnings per share were calculated as follows:
Weighted-average common share equivalents that have an anti-dilutive impact are excluded from the computation of diluted earnings per share. For the three months ended February 29, 2016 and February 28, 2015, 0.1 million and 0.5 million shares, respectively, of the Company’s common stock were issued in connection with the exercise or vesting of stock-based awards. For the nine months ended February 29, 2016 and February 28, 2015, 1.2 million and 1.9 million shares, respectively, of the Company’s common stock were issued in connection with the exercise or vesting of stock-based awards. In May 2014, the Board of Directors approved a program to repurchase up to $350 million of the Company's common stock, with authorization expiring on May 31, 2017. During the three and nine months ended February 29, 2016, the Company repurchased 0.9 million shares for $45.0 million and 2.2 million shares for $107.9 million, respectively. During the three and nine months ended February 28, 2015, the Company repurchased 0.4 million shares for $17.9 million and 1.7 million shares for $70.4 million, respectively. Shares repurchased were retired. |
Business Combination (Notes) |
9 Months Ended |
---|---|
Feb. 29, 2016 | |
Business Combinations [Abstract] | |
Business Combination Disclosure [Text Block] | Business Combination Effective December 22, 2015, substantially all of the assets of Advance Partners, a leading provider of integrated financial, operational, and strategic services to support independent staffing firms, were acquired by a wholly owned subsidiary of the Company. Advance Partners offers customizable solutions to the temporary staffing industry, including payroll funding and outsourcing services, which include payroll, invoicing, and tax preparation. The acquisition consideration was comprised of a base purchase price of $190.5 million plus immediate settlement of debt totaling $118.4 million, net of $12.8 million in cash acquired. Accounts receivable balances acquired, net of allowance for doubtful accounts, and less amounts due to clients related to funding arrangements, totaled $164.8 million. This acquisition allows the Company access to a growing industry serving small- to medium-sized businesses. Goodwill in the amount of $94.7 million was recorded as a result of the acquisition, which is tax-deductible. The Company's purchase price allocation for the acquisition of Advance Partners is preliminary and subject to revision as additional information about fair value of assets and liabilities acquired becomes available. The financial results of Advance Partners is included in the Company’s consolidated financial statements from the date of acquisition. The Company concluded that the acquisition was not material to its results of operations or financial position. Therefore, pro-forma financial information has been excluded. |
Investment Income, Net (Notes) |
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Investment Income, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Income, Net [Text Block] | Investment Income, Net Investment income, net, consisted of the following items:
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Funds Held for Clients and Corporate Investments |
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Funds Held for Clients and Corporate Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Funds held for clients and corporate investments | Funds Held for Clients and Corporate Investments Funds held for clients and corporate investments consisted of the following:
Included in money market securities and other cash equivalents as of February 29, 2016 were bank demand deposit accounts, commercial paper, U.S. government agency securities, time deposits, and money market securities. Included in money market securities and other cash equivalents as of May 31, 2015 were bank demand deposit accounts, short-term municipal bonds, commercial paper, and money market securities. Classification of investments on the Consolidated Balance Sheets is as follows:
The Company’s available-for-sale securities reflected a net unrealized gain of $61.0 million as of February 29, 2016 compared with a net unrealized gain of $13.6 million as of May 31, 2015. Included in the net unrealized gain as of February 29, 2016 and May 31, 2015 were 27 and 280 available-for-sale securities in an unrealized loss position, respectively. The securities in an unrealized loss position were as follows:
The Company regularly reviews its investment portfolios to determine if any investment is other-than-temporarily impaired due to changes in credit risk or other potential valuation concerns. The Company believes that the investments it held as of February 29, 2016, that had unrealized losses totaling $0.4 million, were not other-than-temporarily impaired. The Company believes that it is probable that the principal and interest will be collected in accordance with the contractual terms, and that the unrealized losses on these securities were due to changes in interest rates, and were not due to increased credit risk or other valuation concerns. A majority of the securities in an unrealized loss position as of February 29, 2016 and May 31, 2015 held an A rating or better. The Company does not intend to sell these investments until the recovery of their amortized cost basis or maturity, and further believes that it is not more-likely-than-not that it will be required to sell these investments prior to that time. The Company’s assessment that an investment is not other-than-temporarily impaired could change in the future due to new developments or changes in the Company’s strategies or assumptions related to any particular investment. Realized gains and losses on the sales of securities are determined by specific identification of the amortized cost basis of each security. On the Consolidated Statements of Income and Comprehensive Income, realized gains and losses from funds held for clients are included in interest on funds held for clients and realized gains and losses from corporate investments are included in investment income, net. Realized gains were insignificant for the three and nine months ended February 29, 2016 and February 28, 2015. There were no realized losses recognized in any of the respective periods. The amortized cost and fair value of available-for-sale securities that had stated maturities as of February 29, 2016 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.
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. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 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:
The carrying values of cash and cash equivalents, accounts receivable, net of allowance for doubtful accounts, and accounts payable approximate fair value due to the short-term maturities of these instruments. Marketable securities included in funds held for clients and corporate investments consist primarily of securities classified as available-for-sale and are recorded at fair value on a recurring basis. The Company’s financial assets and liabilities measured at fair value on a recurring basis were as follows:
In determining the fair value of its assets and liabilities, the Company predominately uses the market approach. Money market securities, which are cash equivalents, are valued based on quoted market prices in active markets. Time deposits are considered Level 1 investments as they are highly liquid and have a short maturity period, usually no longer than overnight. Commercial paper is included in Level 2 because it may not trade on a daily basis. Available-for-sale securities, including municipal bonds, corporate bonds, and U.S. government agency securities, and short-term municipal bonds and short-term U.S. government agency securities with a maturity of less than 90 days included in Level 2 are valued utilizing inputs obtained from an independent pricing service. To determine the fair value of the Company’s Level 2 available-for-sale securities, a variety of inputs are utilized, including benchmark yields, reported trades, non-binding broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, new issue data, and monthly payment information. The Company has not adjusted the prices obtained from the independent pricing service because it believes that they are appropriately valued. Assets included as other are mutual fund investments, consisting of participants’ eligible deferral contributions under the Company’s non-qualified and unfunded deferred compensation plans. The related liability is reported as other long-term liabilities. The mutual funds are valued based on quoted market prices in active markets. The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. |
Property and Equipment, Net of Accumulated Depreciation |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, Net of Accumulated Depreciation | Property and Equipment, Net of Accumulated Depreciation The components of property and equipment, at cost, consisted of the following:
Depreciation expense was $25.1 million and $73.8 million for the three and nine months ended February 29, 2016, respectively, compared to $23.0 million and $68.2 million for the three and nine months ended February 28, 2015, respectively. |
Goodwill and Intangible Assets, Net of Accumulated Amortization |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets, Net of Accumulated Amortization | Goodwill and Intangible Assets, Net of Accumulated Amortization The Company had goodwill balances on its Consolidated Balance Sheets of $656.2 million as of February 29, 2016 and $561.5 million as of May 31, 2015. The increase of 94.7 million in goodwill since May 31, 2015 was the result of the acquisition of substantially all of the assets of Advance Partners by a wholly owned subsidiary of the Company in December 2015. The Company has certain intangible assets with finite lives. The components of intangible assets, at cost, consisted of the following:
Amortization expense relating to intangible assets was $5.3 million and $11.3 million for the three and nine months ended February 29, 2016, respectively, compared with $3.6 million and $10.9 million for the three and nine months ended February 28, 2015, respectively. As of February 29, 2016, the estimated amortization expense relating to intangible asset balances for the full year fiscal 2016 and the following four fiscal years is as follows:
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Accumulated Other Comprehensive Income |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income The change in unrealized gains and losses, net of applicable taxes, related to available-for-sale securities is the primary component reported in accumulated other comprehensive income in the Consolidated Balance Sheets. The changes in accumulated other comprehensive income are as follows:
Reclassification adjustments out of accumulated other comprehensive income are for realized gains on the sales of available-for-sale securities. For the three and nine months ended February 29, 2016 and February 28, 2015, these reclassification adjustments impacted interest on funds held for clients on the Consolidated Statements of Income and Comprehensive Income. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Lines of credit: As of February 29, 2016, the Company had unused borrowing capacity available under four uncommitted, secured, short-term lines of credit at market rates of interest with financial institutions as follows:
The primary uses of these lines of credit would be to meet short-term funding requirements related to deposit account overdrafts and client fund obligations arising from electronic payment transactions on behalf of clients in the ordinary course of business, if necessary. No amounts were outstanding under these lines of credit as of, or during the nine months ended February 29, 2016. Certain of the financial institutions are also parties to the Company's credit facility and irrevocable standby letters of credit, which are discussed next. Credit facility: On August 5, 2015, the Company entered into a committed, unsecured, five-year syndicated credit facility, expiring on August 5, 2020. Under the credit facility, Paychex of New York LLC (the “Borrower”) may, subject to certain restrictions, borrow up to $1 billion to meet short-term funding requirements. The obligations under this facility have been guaranteed by the Company and certain of its subsidiaries. The outstanding obligations under this credit facility will bear interest at competitive rates based on options provided to the Borrower. Upon expiration of the commitment in August 2020, any borrowings outstanding will mature and be payable on such date. This agreement supersedes the $750 million credit facility agreement set to expire on June 21, 2018, which was terminated as part of the new agreement. There were no amounts outstanding under this credit facility as of February 29, 2016 and February 28, 2015, and there were no amounts borrowed under the facility during the three months ended February 29, 2016 and February 28, 2015. During the nine months ended February 29, 2016 and February 28, 2015, the Company borrowed against this facility, and its predecessor facility, one or two times during a quarter overnight as follows:
The credit facility contains various financial and operational covenants that are usual and customary for such arrangements. The Borrower was in compliance with these covenants as of, and for the nine months ended February 29, 2016. Certain lenders under this credit facility, and their respective affiliates, have performed, and may in the future perform for the Company and its subsidiaries, various commercial banking, investment banking, underwriting, and other financial advisory services, for which they have received, and will continue to receive in the future, customary fees and expenses. Effective March 17, 2016, the Company entered into a credit facility with PNC Bank, National Association. Under this facility, Paychex Advance, a wholly owned subsidiary of the Company, will be able to borrow up to $150.0 million, subject to certain restrictions, to meet short-term funding requirements. Letters of credit: As of both February 29, 2016 and May 31, 2015, the Company had irrevocable standby letters of credit available totaling $43.0 million required to secure commitments for certain insurance policies. The letters of credit expire at various dates between April 2016 and December 2016. Upon draw down of funds, the letters of credit become collateralized by securities held in the Company’s investment portfolios. No amounts were outstanding on these letters of credit as of, or during the nine months ended February 29, 2016. Other commitments: The Company enters into various purchase commitments with vendors in the ordinary course of business. The Company had outstanding commitments to purchase approximately $5.8 million and $9.5 million of capital assets as of February 29, 2016 and May 31, 2015, respectively. In the normal course of business, the Company makes representations and warranties that guarantee the performance of services under service arrangements with clients. Historically, there have been no material losses related to such guarantees. In addition, the Company has entered into indemnification agreements with its officers and directors, which require it to defend and, if necessary, indemnify these individuals for certain pending or future legal claims as they relate to their services provided to the Company. Paychex currently self-insures the deductible portion of various insured exposures under certain employee benefit plans. The Company’s estimated loss exposure under these insurance arrangements is recorded in other current liabilities on the Consolidated Balance Sheets. Historically, the amounts accrued have not been material and are not material as of February 29, 2016. The Company also maintains insurance coverage in addition to its purchased primary insurance policies for gap coverage for employment practices liability, errors and omissions, warranty liability, theft and embezzlement, cyber threats, and acts of terrorism; and capacity for deductibles and self-insured retentions through its captive insurance company. Contingencies: The Company is subject to various claims and legal matters that arise in the normal course of its business. These include disputes or potential disputes related to breach of contract, tort, breach of fiduciary duty, employment-related claims, tax claims, and other matters. The Company’s management currently believes that resolution of any outstanding legal matters will not have a material adverse effect on the Company’s financial position or results of operations. However, legal matters are subject to inherent uncertainties and there exists the possibility that the ultimate resolution of these matters could have a material adverse impact on the Company’s financial position and results of operations in the period in which any such effect is recorded. |
Income Taxes (Notes) |
9 Months Ended |
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Feb. 29, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes [Text Block] | Income Taxes The Company’s effective income tax rate was 36.0% for the three months ended February 29, 2016 and 33.9% for the nine months ended February 29, 2016, compared to 36.3% for the three and nine months ended February 28, 2015. The decrease in the effective income tax rate for the nine months of fiscal 2016 related primarily to a net tax benefit that was recorded for income derived in prior tax years from customer-facing software the Company produced. During the three months ended August 31, 2015, the Company engaged tax specialists to assess the qualification of such software for the federal “Qualified Production Activities Deduction.” Based on this assessment, the Company concluded that certain of our software offerings qualified for this tax deduction in prior tax years and, therefore, recognized the tax benefits and related tax reserves as a discrete item during this period. Excluding this net tax benefit, the effective income tax rate would have been approximately 36.0% for the nine months ended February 29, 2016. Consistent with the disclosure in our fiscal 2015 Form 10-K, the difference between the 36.0% effective tax rate and the federal statutory rate of 35.0% is primarily due to state income taxes, net of federal benefit, partially offset by tax benefits related to tax-exempt municipal bond interest. |
Description of Business, Basis of Presentation, and Significant Accounting Policies (Policies) |
9 Months Ended |
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Feb. 29, 2016 | |
Accounting Policies [Abstract] | |
Description of business | Description of business: Paychex, Inc. and its wholly owned subsidiaries (collectively, the “Company” or “Paychex”) is a leading provider of integrated human capital management solutions for payroll, human resource, retirement, and insurance services for small- to medium-sized businesses in the United States (“U.S.”). The Company also has operations in Germany. Paychex, a Delaware corporation formed in 1979, reports as one segment. Substantially all of the Company’s revenue is generated within the U.S. The Company also generates revenue within Germany, which represented less than one percent of the Company's total revenue for the nine months ended February 29, 2016 and February 28, 2015. Long-lived assets in Germany are insignificant in relation to total long-lived assets of the Company as of February 29, 2016 and May 31, 2015. In addition, the Company has equity method investments for a joint-venture in Brazil and a minority investment in a Canadian entity, neither of which is significant. |
Basis of presentation | Basis of presentation: The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statement presentation. The consolidated financial statements include the consolidated accounts of the Company with all intercompany transactions eliminated. In the opinion of management, the information furnished herein reflects all adjustments (consisting of items of a normal recurring nature), which are necessary for a fair presentation of the results for the interim period. These financial statements should be read in conjunction with the Company’s consolidated financial statements and related Notes to Consolidated Financial Statements presented in the Company’s Annual Report on Form 10-K (“Form 10-K”) as of and for the year ended May 31, 2015 (“fiscal 2015”). Operating results and cash flows for the nine months ended February 29, 2016 are not necessarily indicative of the results that may be expected for other interim periods or the full fiscal year ending May 31, 2016 (“fiscal 2016”). |
Accounts receivables, net of allowance for doubtful accounts | Accounts Receivable, net of allowance for doubtful accounts: Accounts receivable balances are shown on the Consolidated Balance Sheets net of the allowance for doubtful accounts of $4.1 million as of February 29, 2016 and $1.4 million as of May 31, 2015. Accounts receivable balances, net of allowance for doubtful accounts, include: 1) trade receivables for services provided to clients of $175.4 million as of February 29, 2016 and $176.6 million as of May 31, 2015; and 2) purchased receivables related to funding arrangements with clients, resulting from the acquisition of Advance Partners in December 2015, of $178.0 million as of February 29, 2016. |
PEO insurance reserves | PEO insurance reserves: As part of the professional employer organization (“PEO”), the Company offers workers' compensation insurance and health insurance to client companies for the benefit of client employees. For workers' compensation insurance, reserves are established to provide for the estimated costs of paying claims underwritten by the Company. The Company’s maximum individual claims liability is $1.3 million and $1.0 million under its fiscal 2016 and fiscal 2015 policies, respectively. Under the minimum premium plan health insurance offering within the PEO, the Company's health benefits insurance reserves are established to provide for the payment of claims liability charges in accordance with its service contract with the carrier. The Company's maximum individual claims liability is $0.3 million under both its calendar 2016 and 2015 policies. Estimating the ultimate cost of future claims is an uncertain and complex process based upon historical loss experience and actuarial loss projections, and is subject to change due to multiple factors, including economic trends, changes in legal liability law, and damage awards, all of which could materially impact the reserves as reported in the consolidated financial statements. Accordingly, final claim settlements may vary from the present estimates, particularly with workers' compensation insurance where those payments may not occur until well into the future. The Company regularly reviews the adequacy of its estimated insurance reserves. Adjustments to previously established reserves are reflected in the results of operations for the period in which the adjustment is identified. Such adjustments could be significant, reflecting any combination of new and adverse or favorable trends. |
Stock-based compensation costs | Stock-based compensation costs: The Company has issued stock-based awards to employees and directors consisting of stock options, restricted stock awards, restricted stock units, performance shares, and performance stock options. The Company accounts for all stock-based awards to employees and directors as compensation costs in the consolidated financial statements based on the fair value measured as of the date of grant. These costs are recognized over the requisite service period. Stock-based compensation costs recognized were $8.6 million and $26.1 million for the three and nine months ended February 29, 2016 as compared with $8.6 million and $24.0 million for the three and nine months ended February 28, 2015. The methods and assumptions used in the determination of the fair value of stock-based awards are consistent with those described in the Company’s fiscal 2015 Form 10-K. |
Recently adopted and recently issued accounting pronouncements | Recently adopted accounting pronouncements: There were no recently adopted accounting pronouncements during the nine months ended February 29, 2016. Recently issued accounting pronouncements: In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-08 “Revenue from Contracts with Customers (Topic 606) - Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” ASU No. 2016-08 requires an entity to determine whether the nature of its promise to provide goods or services to a customer is performed in a principal or agent capacity and to recognize revenue in a gross or net manner based on its principal/agent designation. ASU No. 2016-08 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017, with early application permitted. This guidance is applicable to the Company's fiscal year beginning June 1, 2018. The Company is currently evaluating this guidance to determine the potential impact on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02 “Leases (Topic 842).” ASU No. 2016-02 improves transparency and comparability among companies by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. ASU No. 2016-02 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2018, with early application permitted. This guidance is applicable to the Company's fiscal year beginning June 1, 2019. The Company is currently evaluating this guidance to determine the potential impact on its consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01 “Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU No. 2016-01 provides updated guidance for the recognition, measurement, presentation, and disclosure of certain financial assets and liabilities. ASU No. 2016-01 is effective for public business entities for annual and interim periods beginning after December 15, 2017, with early application permitted. This guidance is applicable to the Company's fiscal year beginning June 1, 2018. The Company is currently evaluating this guidance to determine the potential impact on its consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17 “Income Taxes (Topic 740) - Balance Sheet Classification of Deferred Taxes.” ASU No. 2015-17 will require that deferred tax assets and liabilities be classified as non-current in a classified statement of financial position. ASU No. 2015-17 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2016. Early application is permitted as of the beginning of an interim or annual reporting period. This guidance is applicable to the Company's fiscal year beginning June 1, 2017. The Company is currently evaluating this guidance, including early application, but does not anticipate a material impact to its consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-12 “Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965) – (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient. Consensuses of the Emerging Issues Task Force.” ASU No. 2015-12 designates contract value as the only required measure for fully benefit-responsive investment contracts; simplifies and makes more effective the investment disclosure requirements under Accounting Standards Codification (“ASC”) topic 820 for fair value, and topics 960, 962 and 965 for employee benefit plans; and provides a similar measurement date practical expedient for employee benefit plans. ASU No. 2015-12 is effective for fiscal years beginning on or after December 15, 2015, and is applicable to the Company's financial reporting for its defined contribution employee benefit plans as of January 1, 2016. This guidance will not have a material impact on the Company's consolidated financial statements. Other recent authoritative guidance issued by the FASB (including technical corrections to the ASC), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not, or are not expected to, have a material effect on the Company’s consolidated financial statements. |
Basic and Diluted Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and diluted earnings per share | Basic and diluted earnings per share were calculated as follows:
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Investment Income, Net (Tables) |
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Investment Income, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Investment Income, Net [Table Text Block] | Investment income, net, consisted of the following items:
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Funds Held for Clients and Corporate Investments (Tables) |
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Funds held for clients and corporate investments | Funds held for clients and corporate investments consisted of the following:
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Classification of investments on the Consolidated Balance Sheets | Classification of investments on the Consolidated Balance Sheets is as follows:
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Securities in an unrealized loss position | The securities in an unrealized loss position were as follows:
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Amortized cost and fair value of available-for-sale securities by contractual maturity | The amortized cost and fair value of available-for-sale securities that had stated maturities as of February 29, 2016 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.
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Fair Value Measurements (Tables) |
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Feb. 29, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets and liabilities measured at fair value on a recurring basis | The Company’s financial assets and liabilities measured at fair value on a recurring basis were as follows:
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Property and Equipment, Net of Accumulated Depreciation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 29, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of property and equipment, at cost | The components of property and equipment, at cost, consisted of the following:
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Goodwill and Intangible Assets, Net of Accumulated Amortization (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 29, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of intangible assets, at cost | The components of intangible assets, at cost, consisted of the following:
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Estimated future amortization expense relating to intangible assets | As of February 29, 2016, the estimated amortization expense relating to intangible asset balances for the full year fiscal 2016 and the following four fiscal years is as follows:
|
Accumulated Other Comprehensive Income (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 29, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in accumulated other comprehensive income | The changes in accumulated other comprehensive income are as follows:
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Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 29, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of Credit [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of credit facility | As of February 29, 2016, the Company had unused borrowing capacity available under four uncommitted, secured, short-term lines of credit at market rates of interest with financial institutions as follows:
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Revolving Credit Facility [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of credit facility | During the nine months ended February 29, 2016 and February 28, 2015, the Company borrowed against this facility, and its predecessor facility, one or two times during a quarter overnight as follows:
|
Description of Business, Basis of Presentation, and Significant Accounting Policies (Details) - USD ($) $ in Millions |
2 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|---|
Feb. 29, 2016 |
Feb. 29, 2016 |
Feb. 28, 2015 |
Feb. 29, 2016 |
Feb. 28, 2015 |
May. 31, 2015 |
Dec. 31, 2014 |
|
Description of Business, Basis of Presentation, and Significant Accounting Policies (Textual) | |||||||
Disclosure on geographic areas, Description of revenue from external customers | revenue within Germany, which represented less than one percent of the Company's total revenue | revenue within Germany, which represented less than one percent of the Company's total revenue | |||||
Disclosure on geographic areas, Long-lived assets | Long-lived assets in Germany are insignificant in relation to total long-lived assets of the Company | Long-lived assets in Germany are insignificant in relation to total long-lived assets of the Company | |||||
Allowance for doubtful accounts | $ 4.1 | $ 4.1 | $ 4.1 | $ 1.4 | |||
Trade accounts receivable, net | 175.4 | 175.4 | 175.4 | 176.6 | |||
Purchased accounts receivable, net | 178.0 | 178.0 | 178.0 | ||||
Maximum individual workers' compensation claims liability | 1.3 | $ 1.0 | |||||
Maximum individual claims liability health insurance | $ 0.3 | $ 0.3 | |||||
Stock-based compensation costs recognized | $ 8.6 | $ 8.6 | $ 26.1 | $ 24.0 |
Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 29, 2016 |
Feb. 28, 2015 |
Feb. 29, 2016 |
Feb. 28, 2015 |
|
Basic earnings per share: | ||||
Net income | $ 180.4 | $ 169.4 | $ 578.7 | $ 513.7 |
Weighted-average common shares outstanding | 360.5 | 363.2 | 360.8 | 363.1 |
Basic earnings per share | $ 0.50 | $ 0.47 | $ 1.60 | $ 1.41 |
Diluted earnings per share: | ||||
Net income | $ 180.4 | $ 169.4 | $ 578.7 | $ 513.7 |
Weighted-average common shares outstanding | 360.5 | 363.2 | 360.8 | 363.1 |
Dilutive effect of common share equivalents | 1.7 | 1.8 | 1.6 | 1.7 |
Weighted-average common shares outstanding, assuming dilution | 362.2 | 365.0 | 362.4 | 364.8 |
Diluted earnings per share | $ 0.50 | $ 0.46 | $ 1.60 | $ 1.41 |
Weighted-average anti-dilutive common share equivalents | 0.7 | 0.0 | 0.7 | 0.4 |
Basic and Diluted Earnings Per Share (Details Textual) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Feb. 29, 2016 |
Feb. 28, 2015 |
Feb. 29, 2016 |
Feb. 28, 2015 |
May. 31, 2014 |
|
Equity, Class of Treasury Stock [Line Items] | |||||
Stock repurchased and retired during period, Shares | 0.9 | 0.4 | 2.2 | 1.7 | |
Stock repurchased and retired during period, Value | $ 45.0 | $ 17.9 | $ 107.9 | $ 70.4 | |
Stock repurchase program, Authorized amount | $ 350.0 | ||||
Common stock issued in connection with the exercise or vesting of stock-based awards | 0.1 | 0.5 | 1.2 | 1.9 |
Business Combination (Details) $ in Millions |
3 Months Ended |
---|---|
Feb. 29, 2016
USD ($)
| |
Business Combinations [Abstract] | |
Business acquisition, effective date of acquisition | Dec. 22, 2015 |
Business acquisition, name of acquired entity | Advance Partners |
Business combination, base purchase price | $ 190.5 |
Business combination, settlement of debt | 118.4 |
Business combination, cash acquired | 12.8 |
Business combination, receivables, net acquired | 164.8 |
Business combination, goodwill acquired | $ 94.7 |
Investment Income, Net (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 29, 2016 |
Feb. 28, 2015 |
Feb. 29, 2016 |
Feb. 28, 2015 |
|
Investment Income, Net [Abstract] | ||||
Interest income on corporate funds | $ 2.1 | $ 2.0 | $ 6.1 | $ 5.9 |
Interest expense | (0.2) | (0.1) | (0.7) | (0.7) |
Net loss from equity-method investments | (0.2) | (0.3) | (0.7) | (0.8) |
Investment income, net | $ 1.7 | $ 1.6 | $ 4.7 | $ 4.4 |
Funds Held for Clients and Corporate Investments (Details 1) - USD ($) $ in Millions |
Feb. 29, 2016 |
May. 31, 2015 |
---|---|---|
Classification of investments on the Consolidated Balance Sheets | ||
Funds held for clients | $ 4,717.2 | $ 4,273.4 |
Corporate investments | 74.1 | 366.6 |
Long-term corporate investments | 428.6 | 399.8 |
Total funds held for clients and corporate investments, Fair value | 5,219.9 | 5,039.8 |
Securities in an unrealized loss position | ||
Less than twelve months, Gross unrealized losses | (0.2) | (7.0) |
Less than twelve months, Fair value | 42.2 | 896.7 |
Twelve months or longer, Gross unrealized losses | (0.2) | (0.5) |
Twelve months or longer, Fair value | 16.2 | 26.3 |
Total, Gross unrealized losses | (0.4) | (7.5) |
Total, Fair value | 58.4 | 923.0 |
Corporate bonds [Member] | ||
Securities in an unrealized loss position | ||
Less than twelve months, Gross unrealized losses | (0.2) | |
Less than twelve months, Fair value | 13.2 | |
Twelve months or longer, Gross unrealized losses | 0.0 | |
Twelve months or longer, Fair value | 0.0 | |
Total, Gross unrealized losses | (0.2) | |
Total, Fair value | 13.2 | |
General obligation municipal bonds [Member] | ||
Securities in an unrealized loss position | ||
Less than twelve months, Gross unrealized losses | 0.0 | (3.8) |
Less than twelve months, Fair value | 6.3 | 535.1 |
Twelve months or longer, Gross unrealized losses | (0.1) | (0.5) |
Twelve months or longer, Fair value | 2.8 | 26.3 |
Total, Gross unrealized losses | (0.1) | (4.3) |
Total, Fair value | 9.1 | 561.4 |
Revenue municipal bonds [Member] | ||
Securities in an unrealized loss position | ||
Less than twelve months, Gross unrealized losses | 0.0 | (3.2) |
Less than twelve months, Fair value | 10.4 | 361.6 |
Twelve months or longer, Gross unrealized losses | (0.1) | 0.0 |
Twelve months or longer, Fair value | 13.4 | 0.0 |
Total, Gross unrealized losses | (0.1) | (3.2) |
Total, Fair value | 23.8 | $ 361.6 |
U.S. government agency securities [Member] | ||
Securities in an unrealized loss position | ||
Less than twelve months, Gross unrealized losses | 0.0 | |
Less than twelve months, Fair value | 12.3 | |
Twelve months or longer, Gross unrealized losses | 0.0 | |
Twelve months or longer, Fair value | 0.0 | |
Total, Gross unrealized losses | 0.0 | |
Total, Fair value | $ 12.3 |
Funds Held for Clients and Corporate Investments (Details 2) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Feb. 29, 2016
USD ($)
Security
|
Feb. 28, 2015
USD ($)
|
Feb. 29, 2016
USD ($)
Security
|
Feb. 28, 2015
USD ($)
|
May. 31, 2015
USD ($)
Security
|
|
Maturity Date: | |||||
Due in one year or less, Amortized cost | $ 368.5 | $ 368.5 | |||
Due in one year or less, Fair value | 370.7 | 370.7 | |||
Due after one year through three years, Amortized cost | 678.0 | 678.0 | |||
Due after one year through three years, Fair value | 686.2 | 686.2 | |||
Due after three years through five years, Amortized cost | 888.4 | 888.4 | |||
Due after three years through five years, Fair value | 909.7 | 909.7 | |||
Due after five years, Amortized cost | 987.3 | 987.3 | |||
Due after five years, Fair value | 1,016.6 | 1,016.6 | |||
Total, Amortized cost | 2,922.2 | 2,922.2 | |||
Fair value | 2,983.2 | 2,983.2 | $ 3,595.6 | ||
Funds Held for Clients and Corporate Investments (Textual) | |||||
Net unrealized gain on available-for-sale securities | $ 61.0 | $ 61.0 | $ 13.6 | ||
Number of available-for-sale securities in an unrealized loss position | Security | 27 | 27 | 280 | ||
Gross realized gains | $ 0.1 | $ 0.0 | $ 0.1 | $ 0.2 | |
Gross realized losses | $ 0.0 | $ 0.0 | $ 0.0 | $ 0.0 | |
Minimum maturity period for VRDNs primarily categorized as due after five years (in years) | 20 years | ||||
Maximum maturity period for VRDNs, primarily categorized as due after five years (in years) | 30 years |
Fair Value Measurements (Details) - USD ($) $ in Millions |
Feb. 29, 2016 |
May. 31, 2015 |
||
---|---|---|---|---|
Available-for-sale securities: | ||||
Available-for-sale securities | $ 2,983.2 | $ 3,595.6 | ||
Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 1,315.9 | 103.1 | ||
Available-for-sale securities: | ||||
Available-for-sale securities | 2,983.2 | 3,595.6 | ||
Other | 13.8 | 14.2 | ||
Liabilities: | ||||
Other long-term liabilities | 13.8 | 14.2 | ||
Quoted prices in active markets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 150.1 | 0.2 | ||
Available-for-sale securities: | ||||
Available-for-sale securities | 0.0 | 0.0 | ||
Other | 13.8 | 14.2 | ||
Liabilities: | ||||
Other long-term liabilities | 13.8 | 14.2 | ||
Significant other observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 1,165.8 | 102.9 | ||
Available-for-sale securities: | ||||
Available-for-sale securities | 2,983.2 | 3,595.6 | ||
Other | 0.0 | 0.0 | ||
Liabilities: | ||||
Other long-term liabilities | 0.0 | 0.0 | ||
Significant unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.0 | 0.0 | ||
Available-for-sale securities: | ||||
Available-for-sale securities | 0.0 | 0.0 | ||
Other | 0.0 | 0.0 | ||
Liabilities: | ||||
Other long-term liabilities | 0.0 | 0.0 | ||
Commercial paper [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 965.8 | 15.0 | ||
Commercial paper [Member] | Quoted prices in active markets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.0 | 0.0 | ||
Commercial paper [Member] | Significant other observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 965.8 | 15.0 | ||
Commercial paper [Member] | Significant unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.0 | 0.0 | ||
Time deposits [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 150.0 | |||
Time deposits [Member] | Quoted prices in active markets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 150.0 | |||
Time deposits [Member] | Significant other observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.0 | |||
Time deposits [Member] | Significant unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.0 | |||
Money market securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.1 | 0.2 | ||
Money market securities [Member] | Quoted prices in active markets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.1 | 0.2 | ||
Money market securities [Member] | Significant other observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.0 | 0.0 | ||
Money market securities [Member] | Significant unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.0 | 0.0 | ||
Corporate bonds [Member] | ||||
Available-for-sale securities: | ||||
Available-for-sale securities | 110.4 | |||
Corporate bonds [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Available-for-sale securities: | ||||
Available-for-sale securities | 110.4 | |||
Corporate bonds [Member] | Quoted prices in active markets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Available-for-sale securities: | ||||
Available-for-sale securities | 0.0 | |||
Corporate bonds [Member] | Significant other observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Available-for-sale securities: | ||||
Available-for-sale securities | 110.4 | |||
Corporate bonds [Member] | Significant unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Available-for-sale securities: | ||||
Available-for-sale securities | 0.0 | |||
General obligation municipal bonds [Member] | ||||
Available-for-sale securities: | ||||
Available-for-sale securities | 1,662.6 | 1,703.7 | ||
General obligation municipal bonds [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 55.1 | |||
Available-for-sale securities: | ||||
Available-for-sale securities | 1,662.6 | 1,703.7 | ||
General obligation municipal bonds [Member] | Quoted prices in active markets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.0 | |||
Available-for-sale securities: | ||||
Available-for-sale securities | 0.0 | 0.0 | ||
General obligation municipal bonds [Member] | Significant other observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 55.1 | |||
Available-for-sale securities: | ||||
Available-for-sale securities | 1,662.6 | 1,703.7 | ||
General obligation municipal bonds [Member] | Significant unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.0 | |||
Available-for-sale securities: | ||||
Available-for-sale securities | 0.0 | 0.0 | ||
Pre-refunded municipal bonds [Member] | ||||
Available-for-sale securities: | ||||
Available-for-sale securities | [1] | 69.7 | 102.7 | |
Pre-refunded municipal bonds [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 20.5 | |||
Available-for-sale securities: | ||||
Available-for-sale securities | 69.7 | 102.7 | ||
Pre-refunded municipal bonds [Member] | Quoted prices in active markets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.0 | |||
Available-for-sale securities: | ||||
Available-for-sale securities | 0.0 | 0.0 | ||
Pre-refunded municipal bonds [Member] | Significant other observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 20.5 | |||
Available-for-sale securities: | ||||
Available-for-sale securities | 69.7 | 102.7 | ||
Pre-refunded municipal bonds [Member] | Significant unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.0 | |||
Available-for-sale securities: | ||||
Available-for-sale securities | 0.0 | 0.0 | ||
Revenue municipal bonds [Member] | ||||
Available-for-sale securities: | ||||
Available-for-sale securities | 951.3 | 963.6 | ||
Revenue municipal bonds [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 12.3 | |||
Available-for-sale securities: | ||||
Available-for-sale securities | 951.3 | 963.6 | ||
Revenue municipal bonds [Member] | Quoted prices in active markets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.0 | |||
Available-for-sale securities: | ||||
Available-for-sale securities | 0.0 | 0.0 | ||
Revenue municipal bonds [Member] | Significant other observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 12.3 | |||
Available-for-sale securities: | ||||
Available-for-sale securities | 951.3 | 963.6 | ||
Revenue municipal bonds [Member] | Significant unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.0 | |||
Available-for-sale securities: | ||||
Available-for-sale securities | 0.0 | 0.0 | ||
U.S. government agency securities [Member] | ||||
Available-for-sale securities: | ||||
Available-for-sale securities | 121.2 | |||
U.S. government agency securities [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 200.0 | |||
Available-for-sale securities: | ||||
Available-for-sale securities | 121.2 | |||
U.S. government agency securities [Member] | Quoted prices in active markets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.0 | |||
Available-for-sale securities: | ||||
Available-for-sale securities | 0.0 | |||
U.S. government agency securities [Member] | Significant other observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 200.0 | |||
Available-for-sale securities: | ||||
Available-for-sale securities | 121.2 | |||
U.S. government agency securities [Member] | Significant unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Cash Equivalents | 0.0 | |||
Available-for-sale securities: | ||||
Available-for-sale securities | 0.0 | |||
Variable rate demand notes [Member] | ||||
Available-for-sale securities: | ||||
Available-for-sale securities | 68.0 | 825.6 | ||
Variable rate demand notes [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Available-for-sale securities: | ||||
Available-for-sale securities | 68.0 | 825.6 | ||
Variable rate demand notes [Member] | Quoted prices in active markets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Available-for-sale securities: | ||||
Available-for-sale securities | 0.0 | 0.0 | ||
Variable rate demand notes [Member] | Significant other observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Available-for-sale securities: | ||||
Available-for-sale securities | 68.0 | 825.6 | ||
Variable rate demand notes [Member] | Significant unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Available-for-sale securities: | ||||
Available-for-sale securities | $ 0.0 | $ 0.0 | ||
|
Property and Equipment, Net of Accumulated Depreciation (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Feb. 29, 2016 |
Feb. 28, 2015 |
Feb. 29, 2016 |
Feb. 28, 2015 |
May. 31, 2015 |
|
Components of property and equipment, at cost | |||||
Land and improvements | $ 8.3 | $ 8.3 | $ 8.3 | ||
Buildings and improvements | 102.5 | 102.5 | 102.1 | ||
Data processing equipment | 196.1 | 196.1 | 190.9 | ||
Software | 438.3 | 438.3 | 391.8 | ||
Furniture, fixtures, and equipment | 128.5 | 128.5 | 145.6 | ||
Leasehold improvements | 106.5 | 106.5 | 106.2 | ||
Construction in progress | 16.0 | 16.0 | 28.5 | ||
Total property and equipment, gross | 996.2 | 996.2 | 973.4 | ||
Less: Accumulated depreciation | 646.2 | 646.2 | 619.5 | ||
Property and equipment, net of accumulated depreciation | 350.0 | 350.0 | $ 353.9 | ||
Property and Equipment, Net of Accumulated Depreciation (Textual) | |||||
Depreciation expense | $ 25.1 | $ 23.0 | $ 73.8 | $ 68.2 |
Goodwill and Intangible Assets, Net of Accumulated Amortization (Details) - USD ($) $ in Millions |
Feb. 29, 2016 |
May. 31, 2015 |
---|---|---|
Components of intangible assets, at cost | ||
Client lists | $ 289.1 | $ 244.6 |
Other intangible assets | 5.5 | 3.2 |
Total intangible assets, gross | 294.6 | 247.8 |
Less: Accumulated amortization | 221.1 | 215.4 |
Intangible assets, net of accumulated amortization | 73.5 | $ 32.4 |
Estimated future amortization expense relating to intangible assets | ||
Fiscal year ending May 31, 2016 | 16.6 | |
Fiscal year ending May 31, 2017 | 17.5 | |
Fiscal year ending May 31, 2018 | 13.9 | |
Fiscal year ending May 31, 2019 | 10.9 | |
Fiscal year ending May 31, 2020 | $ 8.4 |
Goodwill and Intangible Assets, Net of Accumulated Amortization (Details Textual) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Feb. 29, 2016 |
Feb. 28, 2015 |
Feb. 29, 2016 |
Feb. 28, 2015 |
May. 31, 2015 |
|
Goodwill and Intangible Assets, Net of Accumulated Amortization (Textual) | |||||
Goodwill | $ 656.2 | $ 656.2 | $ 561.5 | ||
Amortization expense relating to intangible assets | 5.3 | $ 3.6 | $ 11.3 | $ 10.9 | |
Goodwill, Acquired During Period | $ 94.7 |
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 29, 2016 |
Feb. 28, 2015 |
Feb. 29, 2016 |
Feb. 28, 2015 |
|
Equity [Abstract] | ||||
Accumulated other comprehensive income, Beginning balance | $ 20.3 | $ 22.4 | $ 7.5 | $ 21.5 |
Other comprehensive income/(loss): | ||||
Unrealized gains/(losses) on available-for-sale securities, net of tax | 17.2 | (0.6) | 30.0 | 0.4 |
Reclassification adjustment for the net gain on sale of available-for-sale securities realized in net income, net of tax | 0.0 | 0.0 | 0.0 | (0.1) |
Total other comprehensive income/(loss), net of tax | 17.2 | (0.6) | 30.0 | 0.3 |
Accumulated other comprehensive income, Ending balance | 37.5 | 21.8 | 37.5 | 21.8 |
Total tax expense included in other comprehensive income/(loss) | $ 9.9 | $ 0.0 | $ 17.3 | $ 0.2 |
Commitments and Contingencies (Details) - Line of Credit [Member] $ in Millions |
9 Months Ended |
---|---|
Feb. 29, 2016
USD ($)
| |
JP Morgan Chase Bank, N.A. [Member] | |
Lines of credit | |
Amount available | $ 350 |
Expiration date | Feb. 27, 2017 |
Bank of America, N.A. [Member] | |
Lines of credit | |
Amount available | $ 250 |
Expiration date | Feb. 28, 2017 |
PNC Bank, National Association [Member] | |
Lines of credit | |
Amount available | $ 150 |
Expiration date | Feb. 27, 2017 |
Wells Fargo Bank, National Association [Member] | |
Lines of credit | |
Amount available | $ 150 |
Expiration date | Feb. 27, 2017 |
Commitments and Contingencies Commitments and Contingencies (Details 1) - Revolving Credit Facility [Member] - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 29, 2016 |
Feb. 28, 2015 |
Feb. 29, 2016 |
Feb. 28, 2015 |
|
Line of Credit Facility [Line Items] | ||||
Weighted-average interest rate | 3.25% | 3.25% | ||
Maximum amount borrowed | $ 0.0 | $ 0.0 | $ 350.0 | $ 150.0 |
Average amount borrowed | $ 217.0 | $ 125.0 |
Commitments and Contingencies (Details Textual) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
May. 31, 2016 |
Feb. 29, 2016 |
May. 31, 2015 |
Mar. 17, 2016 |
|
Commitments and Contingencies (Textual) | ||||
Commitments to purchase capital assets | $ 5,800,000 | $ 9,500,000 | ||
Line of Credit [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Amount Outstanding | 0 | |||
Revolving Credit Facility [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Amount outstanding | $ 0 | |||
Line of credit facility, initial term | 5 years | |||
Maximum borrowing capacity | $ 1,000,000,000 | $ 750,000,000 | ||
Expiration date | Aug. 05, 2020 | Jun. 21, 2018 | ||
Standby Letters of Credit [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Amount available | $ 43,000,000 | $ 43,000,000 | ||
Expiration date range of letters of credit | April 2016 and December 2016 | |||
Irrevocable stand by letters of credit amount outstanding | $ 0 | |||
PNC credit facility [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Subsequent Event, Date | Mar. 17, 2016 | |||
Maximum borrowing capacity | $ 150,000,000 |
Income Taxes (Details Textual) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 29, 2016 |
Feb. 28, 2015 |
Feb. 29, 2016 |
Feb. 28, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 36.00% | 36.30% | 33.90% | 36.30% |
Effective income tax rate, excluding tax benefit related to prior years | 36.00% | |||
Federal statutory income tax rate | 35.00% |
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