UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________

FORM 10-Q

______________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended December 31, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to    

Commission File Number 1-5397

__________________________

AUTOMATIC DATA PROCESSING, INC.

(Exact name of registrant as specified in its charter)

__________________________

Delaware		22-1467904
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)
One ADP Boulevard
Roseland,	NJ	07068
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (973) 974-5000

__________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.10 Par Value (voting)	ADP	NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ý   No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ý   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock as of January 27, 2021 was 427,940,220.

Table of Contents

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Statements of Consolidated Earnings Three and six months ended December 31, 2020 and 2019	3
	Statements of Consolidated Comprehensive Income Three and six months ended December 31, 2020 and 2019	4
	Consolidated Balance Sheets At December 31, 2020 and June 30, 2020	5
	Statements of Consolidated Cash Flows Six months ended December 31, 2020 and 2019	6
	Notes to the Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 6.	Exhibits	43
	Signatures	44

2

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Automatic Data Processing, Inc. and Subsidiaries

Statements of Consolidated Earnings

(In millions, except per share amounts)

(Unaudited)

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2020		2019		2020		2019
REVENUES:
Revenues, other than interest on funds held for clients and PEO revenues	$	2,405.2	$	2,398.4	$	4,674.9	$	4,704.7
Interest on funds held for clients	105.4		137.7		211.9		271.5
PEO revenues (A)	1,185.1		1,133.4		2,279.7		2,189.0
TOTAL REVENUES	3,695.7		3,669.5		7,166.5		7,165.2
EXPENSES:
Costs of revenues:
Operating expenses	1,847.8		1,836.0		3,610.0		3,623.6
Systems development and programming costs	174.5		168.7		343.2		336.9
Depreciation and amortization	100.1		89.4		203.6		178.3
TOTAL COSTS OF REVENUES	2,122.4		2,094.1		4,156.8		4,138.8
Selling, general, and administrative expenses	755.8		754.3		1,436.9		1,480.9
Interest expense	13.9		31.6		29.0		71.5
TOTAL EXPENSES	2,892.1		2,880.0		5,622.7		5,691.2
Other (income)/expense, net	(29.0)		(46.0)		(54.0)		(100.6)
EARNINGS BEFORE INCOME TAXES	832.6		835.5		1,597.8		1,574.6
Provision for income taxes	185.1		183.9		348.2		340.6
NET EARNINGS	$	647.5	$	651.6	$	1,249.6	$	1,234.0
BASIC EARNINGS PER SHARE	$	1.51	$	1.51	$	2.92	$	2.86
DILUTED EARNINGS PER SHARE	$	1.51	$	1.50	$	2.91	$	2.84
Basic weighted average shares outstanding	427.4		431.5		428.0		432.1
Diluted weighted average shares outstanding	429.0		433.3		429.5		434.3

(A) Professional Employer Organization (“PEO”) revenues are net of direct pass-through costs, primarily consisting of payroll wages and payroll taxes of $13,349.1 million and $12,371.6 million for the three months ended December 31, 2020 and 2019, respectively, and $24,364.9 million and $22,882.2 million for the six months ended December 31, 2020 and 2019, respectively.

See notes to the Consolidated Financial Statements.

3

Automatic Data Processing, Inc. and Subsidiaries

Statements of Consolidated Comprehensive Income

(In millions)

(Unaudited)

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2020		2019		2020		2019
Net earnings	$	647.5	$	651.6	$	1,249.6	$	1,234.0
Other comprehensive income/(loss):
Currency translation adjustments	61.9		34.3		112.3		(14.6)
Unrealized net (losses)/gains on available-for-sale securities	(44.1)		(35.5)		(68.7)		60.6
Tax effect	10.0		7.5		15.5		(13.3)
Reclassification of net (gains)/losses on available-for-sale securities to net earnings	(7.7)		(7.1)		(8.0)		(9.4)
Tax effect	1.7		1.6		1.8		2.1
Unrealized (losses)/gains on cash flow hedging activities	—		0.7		(3.3)		0.7
Tax effect	—		(0.2)		0.8		(0.2)
Amortization of unrealized losses on cash flow hedging activities	1.1		—		1.7		—
Tax effect	(0.4)		—		(0.4)		—
Reclassification of pension liability adjustment to net earnings	2.5		1.9		5.0		0.2
Tax effect	(0.6)		(0.5)		(1.6)		—
Other comprehensive income, net of tax	24.4		2.7		55.1		26.1
Comprehensive income	$	671.9	$	654.3	$	1,304.7	$	1,260.1

See notes to the Consolidated Financial Statements.

4

Automatic Data Processing, Inc. and Subsidiaries

Consolidated Balance Sheets

(In millions, except per share amounts)

(Unaudited)

	December 31,		June 30,
	2020		2020
Assets
Current assets:
Cash and cash equivalents	$	1,602.2	$	1,908.5
Accounts receivable, net of allowance for doubtful accounts of $86.3 and $92.5, respectively	2,509.8		2,441.3
Other current assets	684.1		506.2
Total current assets before funds held for clients	4,796.1		4,856.0
Funds held for clients	36,866.2		26,708.1
Total current assets	41,662.3		31,564.1
Long-term receivables, net of allowance for doubtful accounts of $0.6 and $0.5, respectively	15.3		18.6
Property, plant and equipment, net	692.7		703.9
Operating lease right-of-use asset	501.1		493.7
Deferred contract costs	2,417.2		2,401.6
Other assets	483.5		458.4
Goodwill	2,346.6		2,309.4
Intangible assets, net	1,207.2		1,215.8
Total assets	$	49,325.9	$	39,165.5
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	113.9	$	102.0
Accrued expenses and other current liabilities	1,778.1		1,980.7
Accrued payroll and payroll-related expenses	587.4		557.0
Dividends payable	394.4		387.3
Short-term deferred revenues	207.7		212.5
Obligations under reverse repurchase agreements (A)	—		13.6
Short-term debt	—		1,001.8
Income taxes payable	28.9		40.1
Total current liabilities before client funds obligations	3,110.4		4,295.0
Client funds obligations	36,066.1		25,831.6
Total current liabilities	39,176.5		30,126.6
Long-term debt	1,994.1		1,002.8
Operating lease liabilities	357.4		344.4
Other liabilities	812.5		837.0
Deferred income taxes	711.5		731.9
Long-term deferred revenues	373.9		370.6
Total liabilities	43,425.9		33,413.3
Commitments and contingencies (Note 13)
Stockholders' equity:
Preferred stock, $1.00 par value: authorized, 0.3 shares; issued, none	—		—
Common stock, $0.10 par value: authorized, 1,000.0 shares; issued, 638.7 shares at December 31, 2020 and June 30, 2020;  outstanding, 428.1 and 429.9 shares at December 31, 2020 and June 30, 2020, respectively	63.9		63.9
Capital in excess of par value	1,407.6		1,333.8
Retained earnings	18,893.6		18,436.3
Treasury stock - at cost: 210.6 and 208.9 shares at December 31, 2020 and June 30, 2020, respectively	(14,505.4)		(14,067.0)
Accumulated other comprehensive income (loss)	40.3		(14.8)
Total stockholders’ equity	5,900.0		5,752.2
Total liabilities and stockholders’ equity	$	49,325.9	$	39,165.5

(A) As of June 30, 2020, $13.6 million of long-term marketable securities have been pledged as collateral under the Company's reverse repurchase agreements (see Note 9).

See notes to the Consolidated Financial Statements.

5

Automatic Data Processing, Inc. and Subsidiaries

Statements of Consolidated Cash Flows

(In millions)

(Unaudited)

	Six Months Ended
	December 31,
	2020		2019
Cash Flows from Operating Activities:
Net earnings	$	1,249.6	$	1,234.0
Adjustments to reconcile net earnings to cash flows provided by operating activities:
Depreciation and amortization	257.8		234.9
Amortization of deferred contract costs	464.9		456.0
Deferred income taxes	1.3		44.1
Stock-based compensation expense	80.9		73.3
Net pension income	(22.0)		(0.4)
Net amortization of premiums and accretion of discounts on available-for-sale securities	28.7		26.3
Impairment of assets	5.0		—
Gain on sale of assets	(1.8)		(2.1)
Other	2.4		6.5
Changes in operating assets and liabilities:
Increase in accounts receivable	(86.5)		(198.8)
Increase in other assets	(643.3)		(605.4)
Increase in accounts payable	10.2		12.3
Decrease in accrued expenses and other liabilities	(158.9)		(149.8)
Net cash flows provided by operating activities	1,188.3		1,130.9
Cash Flows from Investing Activities:
Purchases of corporate and client funds marketable securities	(3,554.8)		(2,875.3)
Proceeds from the sales and maturities of corporate and client funds marketable securities	2,832.5		2,995.2
Capital expenditures	(81.0)		(100.7)
Additions to intangibles	(148.1)		(167.7)
Proceeds from sale of property, plant, and equipment and other assets	1.8		23.6
Net cash flows used in investing activities	(949.6)		(124.9)
Cash Flows from Financing Activities:
Net increase in client funds obligations	10,036.4		7,093.7
Payments of debt	(1,001.1)		(1.1)
Proceeds from the issuance of debt	991.1		—
Settlement of cash flow hedges	(43.6)		—
Repurchases of common stock	(475.1)		(615.1)
Net proceeds from stock purchase plan and stock-based compensation plans	39.1		(4.4)
Dividends paid	(781.7)		(686.0)
Net payments related to reverse repurchase agreements	(13.6)		(262.0)
Net cash flows provided by financing activities	8,751.5		5,525.1
Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents	84.7		(12.2)
Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents	9,074.9		6,518.9
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period	7,053.6		6,796.2
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period	$	16,128.5	$	13,315.1
Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the Consolidated Balance Sheets
Cash and cash equivalents	$	1,602.2	$	1,500.4
Restricted cash and restricted cash equivalents included in funds held for clients (A)	14,526.3		11,814.7
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	16,128.5	$	13,315.1
Supplemental disclosures of cash flow information:
Cash paid for interest	$	28.1	$	70.6
Cash paid for income taxes, net of income tax refunds	$	362.7	$	350.4

(A) See Note 6 for a reconciliation of restricted cash and restricted cash equivalents in funds held for clients on the Consolidated Balance Sheets.

See notes to the Consolidated Financial Statements.

6

Automatic Data Processing, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

(Tabular dollars in millions, except per share amounts or where otherwise stated)

(Unaudited)

Note 1.  Basis of Presentation

The accompanying Consolidated Financial Statements and footnotes thereto of Automatic Data Processing, Inc., its subsidiaries and variable interest entity (“ADP” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).  The Consolidated Financial Statements and footnotes thereto are unaudited.  In the opinion of the Company’s management, the Consolidated Financial Statements reflect all adjustments, which are of a normal recurring nature, that are necessary for a fair presentation of the Company’s interim financial results.

The Company has a grantor trust, which holds the majority of the funds provided by its clients pending remittance to employees of those clients, tax authorities, and other payees.  The Company is the sole beneficial owner of the trust.  The trust meets the criteria in Accounting Standards Codification (“ASC”) 810, “Consolidation” to be characterized as a variable interest entity (“VIE”).  The Company has determined that it has a controlling financial interest in the trust because it has both (1) the power to direct the activities that most significantly impact the economic performance of the trust (including the power to make all investment decisions for the trust) and (2) the right to receive benefits that could potentially be significant to the trust (in the form of investment returns) and, therefore, consolidates the trust.  Further information on these funds and the Company’s obligations to remit to its clients’ employees, tax authorities, and other payees is provided in Note 6, “Corporate Investments and Funds Held for Clients.” 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the assets, liabilities, revenue, expenses, and accumulated other comprehensive income that are reported in the Consolidated Financial Statements and footnotes thereto. Actual results may differ from those estimates. Interim financial results are not necessarily indicative of financial results for a full year.  The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020 (“fiscal 2020”).

Certain amounts from the prior year's financial statements have been reclassified in order to conform to the current year's

presentation.

Note 2.  New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Effective July 1, 2020, the Company adopted accounting standard update (“ASU”) 2018-13, “Fair Value Measurement.” The update modifies the disclosure requirements on fair value measurements. The adoption of ASU 2018-13 modified the disclosures in Note 6 but did not have an impact on the Company's consolidated results of operations, financial condition, or cash flows.

Effective July 1, 2020, the Company adopted ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This update introduces the current expected credit loss (“CECL”) model, which requires an entity to measure credit losses based on expected losses rather than incurred losses for certain financial instruments and financial assets, including trade receivables. The adoption of ASU 2016-13 did not have a material impact on the Company's consolidated results of operations, financial condition, or cash flows.

7

Recently Issued Accounting Pronouncements

The following table summarizes recent ASU's issued by the Financial Accounting Standards Board (“FASB”) which have been assessed and are applicable to the Company:

Standard	Description	Effective Date	Effect on Financial Statements or Other Significant Matters
ASU 2018-14 Compensation-Retirement Benefits-Defined Benefit Plans	This update modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans by removing and adding certain disclosures for these plans. The eliminated disclosures include (a) the amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit costs over the next fiscal year, and (b) the effects of a one percentage point change in assumed health care cost trend rates on the net periodic benefit costs and the benefit obligation for post-retirement health care benefits. Additional disclosures include descriptions of significant gains and losses affecting the benefit obligation for the period. The amendments in ASU 2018-14 would need to be applied on a retrospective basis.	July 1, 2021 (Fiscal 2022)	The adoption of this guidance will modify disclosures but will not have an impact on the Company's consolidated results of operations, financial condition, or cash flows.

Note 3.  Revenue

Based upon similar operational and economic characteristics, the Company’s revenues are disaggregated by its three strategic pillars: Human Capital Management (“HCM”), HR Outsourcing (“HRO”), and Global (“Global”) Solutions, with separate disaggregation for PEO zero-margin benefits pass-through revenues and client funds interest revenues. The Company believes these revenue categories depict how the nature, amount, timing, and uncertainty of its revenue and cash flows are affected by economic factors.

The following tables provide details of revenue by our strategic pillars, and include a reconciliation to the Company’s reportable segments:

	Three Months Ended				Six Months Ended
	December 31,				December 31,
Types of Revenues	2020		2019		2020		2019
HCM	$	1,624.8	$	1,647.9	$	3,155.4	$	3,216.5
HRO, excluding PEO zero-margin benefits pass-throughs	668.7		650.1		1,251.1		1,241.2
PEO zero-margin benefits pass-throughs	765.9		722.4		1,507.0		1,421.5
Global	530.9		511.4		1,041.1		1,014.5
Interest on funds held for clients	105.4		137.7		211.9		271.5
Total Revenues	$	3,695.7	$	3,669.5	$	7,166.5	$	7,165.2

8

Reconciliation of disaggregated revenue to our reportable segments for the three months ended December 31, 2020:

Types of Revenues	Employer Services		PEO		Other		Total
HCM	$	1,625.2	$	—	$	(0.4)	$	1,624.8
HRO, excluding PEO zero-margin benefits pass-throughs	250.1		419.2		(0.6)		668.7
PEO zero-margin benefits pass-throughs	—		765.9		—		765.9
Global	530.9		—		—		530.9
Interest on funds held for clients	104.4		1.0		—		105.4
Total Segment Revenues	$	2,510.6	$	1,186.1	$	(1.0)	$	3,695.7

Reconciliation of disaggregated revenue to our reportable segments for the three months ended December 31, 2019:

Types of Revenues	Employer Services		PEO		Other		Total
HCM	$	1,649.8	$	—	$	(1.9)	$	1,647.9
HRO, excluding PEO zero-margin benefits pass-throughs	239.9		411.0		(0.8)		650.1
PEO zero-margin benefits pass-throughs	—		722.4		—		722.4
Global	511.4		—		—		511.4
Interest on funds held for clients	136.4		1.3		—		137.7
Total Segment Revenues	$	2,537.5	$	1,134.7	$	(2.7)	$	3,669.5

Reconciliation of disaggregated revenue to our reportable segments for the six months ended December 31, 2020:

Types of Revenues	Employer Services		PEO		Other		Total
HCM	$	3,157.4	$	—	$	(2.0)	$	3,155.4
HRO, excluding PEO zero-margin benefits pass-throughs	479.3		772.7		(0.9)		1,251.1
PEO zero-margin benefits pass-throughs	—		1,507.0		—		1,507.0
Global	1,041.1		—		—		1,041.1
Interest on funds held for clients	209.6		2.3		—		211.9
Total Segment Revenues	$	4,887.4	$	2,282.0	$	(2.9)	$	7,166.5

Reconciliation of disaggregated revenue to our reportable segments for the six months ended December 31, 2019:

Types of Revenues	Employer Services		PEO		Other		Total
HCM	$	3,219.8	$	—	$	(3.3)	$	3,216.5
HRO, excluding PEO zero-margin benefits pass-throughs	475.6		767.5		(1.9)		1,241.2
PEO zero-margin benefits pass-throughs	—		1,421.5		—		1,421.5
Global	1,014.5		—		—		1,014.5
Interest on funds held for clients	269.0		2.5		—		271.5
Total Segment Revenues	$	4,978.9	$	2,191.5	$	(5.2)	$	7,165.2

Contract Balances

The timing of revenue recognition for HCM, HRO and Global Solutions is consistent with the invoicing of clients, as invoicing occurs in the period the services are provided. Therefore, the Company does not recognize a contract asset or liability resulting from the timing of revenue recognition and invoicing.

9

Changes in deferred revenue related to set up fees for the six months ended December 31, 2020 were as follows:

Contract Liability
Contract liability, July 1, 2020	$	522.7
Recognition of revenue included in beginning of year contract liability	(85.8)
Contract liability, net of revenue recognized on contracts during the period	64.1
Currency translation adjustments	20.6
Contract liability, December 31, 2020	$	521.6

Note 4.  Earnings per Share (“EPS”)

	Basic		Effect of Employee Stock Option Shares	Effect of Employee Restricted Stock Shares	Diluted
Three Months Ended December 31, 2020
Net earnings	$	647.5			$	647.5
Weighted average shares (in millions)	427.4		0.7	0.9	429.0
EPS	$	1.51			$	1.51
Three Months Ended December 31, 2019
Net earnings	$	651.6			$	651.6
Weighted average shares (in millions)	431.5		1.1	0.7	433.3
EPS	$	1.51			$	1.50
Six Months Ended December 31, 2020
Net earnings	$	1,249.6			$	1,249.6
Weighted average shares (in millions)	428.0		0.7	0.8	429.5
EPS	$	2.92			$	2.91
Six Months Ended December 31, 2019
Net earnings	$	1,234.0			$	1,234.0
Weighted average shares (in millions)	432.1		1.1	1.1	434.3
EPS	$	2.86			$	2.84

Options to purchase 1.2 million and 1.3 million shares of common stock for the three months ended December 31, 2020 and 2019, respectively, and 1.8 million and 1.0 million shares of common stock for the six months ended December 31, 2020 and 2019, respectively, were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

Note 5. Other (Income)/Expense, Net

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2020		2019		2020		2019
Interest income on corporate funds	$	(10.4)	$	(25.7)	$	(24.3)	$	(58.0)
Realized (gains) / losses on available-for-sale securities, net	(7.7)		(7.1)		(8.0)		(9.4)
Impairment of assets	2.2		—		5.0		—
Gain on sale of assets	(1.6)		(0.2)		(1.8)		(2.1)
Non-service components of pension income, net (see Note 11)	(11.5)		(13.0)		(24.9)		(31.1)
Other (income)/expense, net	$	(29.0)	$	(46.0)	$	(54.0)	$	(100.6)

Other (income)/expense, net, decreased for the three and six months ended December 31, 2020 primarily as a result of a decrease in interest income on corporate funds due to lower interest rates earned.

10

Note 6. Corporate Investments and Funds Held for Clients

Corporate investments and funds held for clients at December 31, 2020 and June 30, 2020 were as follows:

	December 31, 2020
	Amortized Cost		Gross Unrealized  Gains		Gross Unrealized Losses		Fair Market Value (A)
Type of issue:
Money market securities, cash and other cash equivalents	$	16,128.5	$	—	$	—	$	16,128.5
Available-for-sale securities:
Corporate bonds	10,266.6		439.7		(0.9)		10,705.4
Asset-backed securities	2,741.5		87.3		—		2,828.8
U.S. Treasury securities	3,609.3		93.8		(0.1)		3,703.0
U.S. government agency securities	1,403.4		30.4		(0.9)		1,432.9
Canadian government obligations and Canadian government agency obligations	1,084.9		21.8		(0.1)		1,106.6
Commercial mortgage-backed securities	805.8		54.6		—		860.4
Canadian provincial bonds	713.9		34.5		(0.1)		748.3
Other securities	925.0		40.2		(0.1)		965.1
Total available-for-sale securities	21,550.4		802.3		(2.2)		22,350.5
Total corporate investments and funds held for clients	$	37,678.9	$	802.3	$	(2.2)	$	38,479.0

(A) Included within available-for-sale securities are corporate investments with fair values of $10.6 million and funds held for clients with fair values of $22,339.9 million. All available-for-sale securities were included in Level 2 of the fair value hierarchy.

	June 30, 2020
	Amortized  Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value (B)
Type of issue:
Money market securities, cash and other cash equivalents	$	7,053.6	$	—	$	—	$	7,053.6
Available-for-sale securities:
Corporate bonds	9,188.7		473.4		—		9,662.1
Asset-backed securities	3,274.6		96.0		(0.5)		3,370.1
U.S. Treasury securities	3,580.6		120.8		—		3,701.4
U.S. government agency securities	1,128.2		35.6		—		1,163.8
Canadian government obligations and Canadian government agency obligations	1,018.7		23.1		—		1,041.8
Commercial mortgage-backed securities	814.3		53.9		—		868.2
Canadian provincial bonds	676.6		33.6		—		710.2
Other securities	1,018.1		41.1		(0.2)		1,059.0
Total available-for-sale securities	20,699.8		877.5		(0.7)		21,576.6
Total corporate investments and funds held for clients	$	27,753.4	$	877.5	$	(0.7)	$	28,630.2

(B) Included within available-for-sale securities are corporate investments with fair values of $13.6 million and funds held for clients with fair values of $21,563.0 million. All available-for-sale securities were included in Level 2 of the fair value hierarchy.

11

For a description of the fair value hierarchy and the Company's fair value methodologies, including the use of an independent third-party pricing service, see Note 1 “Summary of Significant Accounting Policies” in the Company's Annual Report on Form 10-K for fiscal 2020. The Company concurred with and did not adjust the prices obtained from the independent pricing service. The Company had no available-for-sale securities included in Level 1 or Level 3 at December 31, 2020.

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, 2020, are as follows: 

	December 31, 2020
	Securities in Unrealized Loss Position Less Than 12 Months				Securities in Unrealized Loss Position Greater Than 12 Months				Total
	Gross Unrealized Losses		Fair Market Value		Gross Unrealized Losses		Fair Market Value		Gross Unrealized Losses		Fair Market Value
Corporate bonds	$	(0.9)	$	379.3	$	—	$	—	$	(0.9)	$	379.3
Asset-backed securities	—		3.2		—		—		—		3.2
U.S. Treasury securities	(0.1)		14.1		—		—		(0.1)		14.1
U.S. government agency securities	(0.9)		348.6		—		—		(0.9)		348.6
Canadian government obligations and Canadian government agency obligations	(0.1)		68.1		—		—		(0.1)		68.1
Commercial mortgage-backed securities	—		—		—		1.4		—		1.4
Canadian provincial bonds	(0.1)		45.7		—		—		(0.1)		45.7
Other securities	(0.1)		28.2		—		—		(0.1)		28.2