UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________________
FORM
_________________________________________
For the quarterly period ended
OR
For the Transition Period from __________to __________
Commission file number
__________________________________________________
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
(Zip Code) |
Registrant's telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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.
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).
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.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of August 31, 2024,
PAYCHEX, INC.
Table of Contents
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PAYCHEX, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
In millions, except per share amounts
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For the three months ended |
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August 31, |
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August 31, |
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2024 |
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2023 |
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Revenue: |
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Management Solutions |
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$ |
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$ |
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PEO and Insurance Solutions |
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Total service revenue |
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Interest on funds held for clients |
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Total revenue |
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Expenses: |
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Cost of service revenue |
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Selling, general and administrative expenses |
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Total expenses |
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Operating income |
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Other income, net |
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Income before income taxes |
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Income taxes |
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Net income |
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$ |
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$ |
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Other comprehensive income/(loss), net of tax |
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( |
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Comprehensive income |
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$ |
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$ |
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Basic earnings per share |
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$ |
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$ |
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Diluted earnings per share |
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$ |
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$ |
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Weighted-average common shares outstanding |
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Weighted-average common shares outstanding, assuming dilution |
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See Notes to Consolidated Financial Statements.
1
PAYCHEX, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
In millions, except per share amounts
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August 31, |
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May 31, |
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2024 |
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2024 |
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Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Corporate investments |
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Interest receivable |
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Accounts receivable, net of allowance for credit losses |
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PEO unbilled receivables, net of advance collections |
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Prepaid income taxes |
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— |
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Prepaid expenses and other current assets |
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Current assets before funds held for clients |
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Funds held for clients |
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Total current assets |
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Long-term corporate investments |
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— |
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Property and equipment, net of accumulated depreciation |
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Operating lease right-of-use assets, net of accumulated amortization |
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Intangible assets, net of accumulated amortization |
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Goodwill |
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Long-term deferred costs |
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Other long-term assets |
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Total assets |
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$ |
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$ |
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Liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued corporate compensation and related items |
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Accrued worksite employee compensation and related items |
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Short-term borrowings |
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Accrued income taxes |
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— |
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Deferred revenue |
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Other current liabilities |
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Current liabilities before client fund obligations |
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Client fund obligations |
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Total current liabilities |
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Accrued income taxes |
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Deferred income taxes |
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Long-term borrowings, net of debt issuance costs |
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Operating lease liabilities |
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Other long-term liabilities |
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Total liabilities |
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Stockholders’ equity |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See Notes to Consolidated Financial Statements.
2
PAYCHEX, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
In millions, except per share amounts
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For the three months ended August 31, 2024 |
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Common stock |
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Accumulated other comprehensive loss |
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Shares |
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Amount |
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Additional paid-in capital |
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Retained earnings |
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Net unrealized loss on AFS securities |
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Foreign currency translation |
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Total accumulated comprehensive loss |
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Total |
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Balance as of May 31, 2024 |
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$ |
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$ |
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$ |
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$ |
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( |
) |
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$ |
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( |
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$ |
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( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Unrealized gains on securities, net of $ |
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— |
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— |
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— |
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— |
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— |
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Reclassification adjustment for realized gains on securities, net of $ |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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( |
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Cash dividends declared ($ |
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— |
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— |
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— |
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( |
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— |
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— |
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— |
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( |
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Repurchases of common shares (2) |
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( |
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( |
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( |
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( |
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— |
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— |
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— |
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( |
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Stock-based compensation costs |
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— |
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— |
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— |
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— |
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— |
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— |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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— |
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— |
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Activity related to equity-based plans |
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( |
) |
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— |
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— |
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— |
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( |
) |
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Balance as of August 31, 2024 |
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$ |
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$ |
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$ |
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$ |
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( |
) |
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$ |
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( |
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$ |
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( |
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$ |
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For the three months ended August 31, 2023 |
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Common stock |
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Accumulated other comprehensive loss |
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Shares |
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Amount |
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Additional paid-in capital |
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Retained earnings |
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Net unrealized loss on AFS securities |
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Foreign currency translation |
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Total accumulated comprehensive loss |
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Total |
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Balance as of May 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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( |
) |
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$ |
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( |
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$ |
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( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Unrealized losses on securities, net of $ |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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( |
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Reclassification adjustment for realized losses on securities, net of $ |
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— |
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— |
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— |
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— |
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— |
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Cash dividends declared ($ |
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— |
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— |
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— |
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( |
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— |
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— |
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— |
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( |
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Repurchases of common shares (2) |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation costs |
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— |
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— |
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— |
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— |
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— |
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— |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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— |
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— |
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Activity related to equity-based plans |
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( |
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— |
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— |
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— |
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Balance as of August 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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( |
) |
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$ |
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( |
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$ |
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( |
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$ |
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See Notes to Consolidated Financial Statements.
3
PAYCHEX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
In millions
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For the three months ended |
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August 31, |
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August 31, |
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2024 |
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2023 (1) |
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Operating activities |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Amortization of premiums and discounts on AFS securities, net |
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( |
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( |
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Amortization of deferred contract costs |
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Stock-based compensation costs |
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Benefit from deferred income taxes |
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( |
) |
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( |
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Provision for credit losses |
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Net realized (gains)/losses on sales of AFS securities |
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( |
) |
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Changes in operating assets and liabilities: |
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Interest receivable |
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Accounts receivable and PEO unbilled receivables, net |
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( |
) |
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Prepaid expenses and other current assets |
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Accounts payable and other current liabilities |
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Deferred costs |
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( |
) |
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( |
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Net change in other long-term assets and liabilities |
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Net change in operating lease right-of-use assets and liabilities |
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( |
) |
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( |
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Net cash provided by operating activities |
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Investing activities |
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Purchases of AFS securities |
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( |
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( |
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Proceeds from sales and maturities of AFS securities |
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Net purchases of short-term accounts receivable |
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( |
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( |
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Purchases of property and equipment |
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( |
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( |
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Acquisition of businesses, net of cash acquired |
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— |
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( |
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Purchases of other assets, net |
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( |
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( |
) |
Net cash used in investing activities |
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( |
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( |
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Financing activities |
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Net change in client fund obligations |
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( |
) |
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Net change in short-term borrowings |
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— |
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Dividends paid |
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( |
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( |
) |
Repurchases of common shares |
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( |
) |
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— |
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Activity related to equity-based plans |
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( |
) |
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Net cash (used in)/provided by financing activities |
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( |
) |
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Net change in cash, restricted cash, and equivalents |
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( |
) |
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Cash, restricted cash, and equivalents, beginning of period |
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Cash, restricted cash, and equivalents, end of period |
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$ |
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$ |
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||
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|
|
|
|
|
|
|
|
||
Reconciliation of cash, restricted cash, and equivalents |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
||
Restricted cash |
|
|
|
|
|
|
|
|
||
Restricted cash and restricted cash equivalents included in funds held for clients |
|
|
|
|
|
|
|
|
||
Total cash, restricted cash, and equivalents |
|
$ |
|
|
|
$ |
|
|
||
See Notes to Consolidated Financial Statements.
4
PAYCHEX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
August 31, 2024
Note A: 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 (“HCM”) solutions for human resources (“HR”), payroll, benefits, and insurance for small- to medium-sized businesses in the United States (“U.S.”) and parts of Europe. The Company also has operations in India. Paychex, a Delaware corporation formed in 1979, reports as
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 ("Form 10-Q") and Article 10 of Regulation S-X. Accordingly, they do not include all 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. Certain disclosures are reported as zero balances due to rounding. In the opinion of management, the information furnished herein reflects all adjustments (consisting of items of a normal recurring nature) necessary for a fair statement of the results for the interim period. These consolidated 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”) for the fiscal year ended May 31, 2024 (“fiscal 2024”). Operating results and cash flows for the three months ended August 31, 2024 are not necessarily indicative of the results that may be expected for other interim periods or for the fiscal year ending May 31, 2025 (“fiscal 2025”).
Reclassifications: Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported consolidated earnings.
Revision to previously issued financial statements: The consolidated statement of cash flows for the three months ended August 31, 2023 includes a revision to previously reported amounts related to the presentation of the cash flows associated with short-term receivables purchased from the Company’s clients under non-recourse arrangements. The revision increased net cash provided by operating activities and decreased net cash provided by investing activities by $
Restricted cash and restricted cash equivalents: Restricted cash and restricted cash equivalents are recorded at fair value, and consist of cash and cash equivalents, primarily money market securities, included in funds held for clients and cash that is restricted in use to secure commitments for certain workers’ compensation insurance policies.
Accounts receivable, net of allowance for credit losses: Accounts receivable balances are shown on the Consolidated Balance Sheets net of the allowance for credit losses of $
The Company is exposed to credit losses through the sale of services, payment of client obligations, and collection of purchased receivables. To mitigate this credit risk, the Company has multiple programs in place to assess and continuously monitor each client’s ability to pay for these solutions and support. Credit monitoring programs include, but are not limited to, new client credit reviews, establishing appropriate credit limits, monitoring of credit distressed clients, and early electronic wire and collection procedures. The Company also considers contract terms and conditions, client business type or strategy and may require collateralized asset support or prepayment to mitigate credit risk.
Accounts receivable are written off and charged against the allowance for credit losses when the Company has exhausted all collection efforts without success. The Company estimates its credit losses based on historical loss activity adjusted for current economic conditions and reasonable and supportable forecast factors, when applicable. The provision for the allowance for credit losses and accounts written off were
5
Professional Employer Organization (“PEO”) unbilled receivables, net of advance collections: PEO unbilled receivables, including estimated revenues, offset by advance collections from clients, are recorded as PEO unbilled receivables, net of advance collections on the Company’s Consolidated Balance Sheets. As of August 31, 2024 and May 31, 2024, advance collections were $
PEO insurance reserves: As part of its PEO solution, the Company offers workers’ compensation insurance and health insurance coverage to clients for the benefit of client employees. Workers’ compensation insurance is primarily provided under fully insured high deductible workers’ compensation insurance policies. Workers’ compensation insurance reserves are established to provide for the estimated costs of paying claims up to per occurrence liability limits. These reserves include estimates of certain expenses associated with processing and settling claims. For fiscal 2025 and 2024, the Company has an aggregate maximum liability of $
With respect to PEO health insurance coverage, the Company offers various health insurance plans that take the form of either fully insured guaranteed cost plans or fully insured insurance arrangements where the Company retains risk. A reserve for insurance arrangements where the Company retains risk is established to provide for the payment of claims in accordance with the Company’s service contract with the carrier. The claims reserve includes estimates for reported losses, plus amounts for those claims incurred but not reported, and estimates of certain expenses associated with processing and settling the claims. The Company’s maximum individual claims liability is $
In establishing the PEO workers' compensation insurance reserves, the Company uses an independent actuarial estimate of undiscounted future cash payments that would be made to settle claims. Estimating the ultimate cost of future claims is an uncertain and complex process based upon historical loss experience and accepted actuarial methods and assumptions. These reserves are 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 members of its Board of Directors (the “Board”) consisting of stock options, restricted stock units, and restricted stock awards. The Company accounts for all stock-based awards to employees and members of the Board as compensation costs in the consolidated financial statements based on their fair values measured as of the date of grant. These costs are recognized over the requisite service period. Stock-based compensation costs recognized were $
Recently adopted accounting pronouncements: There were
Recently issued accounting pronouncements: In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The requirements are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, and are required to be applied retrospectively. This ASU is applicable to the Company’s Annual Report on Form 10-K for the fiscal year ending May 31, 2025, and subsequent interim periods, with early application permitted. The requirements of this ASU are disclosure-related and will not have an impact on the Company’s financial condition, results of operations, or cash flows. The Company is currently evaluating the impact of adopting this ASU on its reportable segment disclosures.
In December 2023, the FASB issued ASU No. 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This ASU updates income tax disclosure requirements primarily by requiring specific categories and greater disaggregation within the rate reconciliation and disaggregation of income taxes paid by jurisdiction. This ASU is effective for annual periods beginning after December 15, 2024, and is applicable to the Company’s fiscal year beginning June 1, 2025, with early application permitted. The transition method is prospective with the retrospective method permitted. The requirements of this ASU are
6
disclosure-related and will not have an impact on the Company’s financial condition, results of operations, or cash flows. The Company is currently evaluating the impact of adopting this ASU on its income tax disclosures.
Note B: Service Revenue
Service revenue is primarily attributable to fees for providing services to the Company’s clients and is recognized when control of the contracted services is transferred to its clients, in an amount that reflects the consideration it expects to receive in exchange for such services. Insurance Solutions revenue is commissions earned on premiums collected and remitted to insurance carriers. The Company’s contracts generally do not contain specified contract periods and may be terminated by either party with a
Based upon similar operational and economic characteristics, the Company’s service revenue is disaggregated by Management Solutions and PEO and Insurance Solutions as reported in the Company’s Consolidated Statements of Income and Comprehensive Income. 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.
Management Solutions Revenue
Management Solutions revenue is primarily derived from the Company’s integrated HCM services and HR solutions. Clients can select services on an á la carte basis or as part of various product bundles. The Company’s offerings often leverage the information gathered in its base payroll processing service, allowing it to provide comprehensive services covering the HCM spectrum. Management Solutions revenue is generally recognized over time as services are performed and the client simultaneously receives and controls the benefits from these services.
Revenue earned from delivery service for the distribution of certain client payroll checks and reports is also included in Management Solutions revenue in the Company’s Consolidated Statements of Income and Comprehensive Income. Delivery service revenue is recognized at a point in time following the delivery of payroll checks, reports, quarter-end packages, and tax returns to the Company’s clients.
PEO and Insurance Solutions Revenue
PEO solutions are sold through the Company’s registered and licensed subsidiaries and offer businesses HCM and HR solutions. The Company serves as a co-employer of its clients’ employees, offers health insurance coverage to client employees, and assumes the risks and rewards of workers’ compensation insurance and certain health insurance offerings. PEO Solutions revenue is recognized over time as the services are performed and the client simultaneously receives and controls the benefits from these services. PEO Solutions revenue is reported net of certain pass-through costs billed and incurred, which include payroll wages, payroll taxes, including federal and state unemployment insurance, and health insurance premiums on guaranteed cost benefit plans. For workers’ compensation and health insurance plans where the Company retains risk, revenues and costs are recorded on a gross basis.
PEO pass-through costs netted within the PEO and Insurance Solutions revenue were as follows:
|
|
For the three months ended |
|
|||||||
|
|
August 31, |
|
|||||||
In millions |
|
2024 |
|
|
2023 |
|
||||
Payroll wages and payroll taxes |
|
$ |
|
|
|
$ |
|
|
||
State unemployment insurance (included in payroll wages and payroll taxes) |
|
$ |
|
|
|
$ |
|
|
||
Guaranteed cost benefit plans |
|
$ |
|
|
|
$ |
|
|
||
Insurance solutions are sold through the Company’s licensed insurance agency, Paychex Insurance Agency, Inc., which provides insurance through a variety of carriers, allowing companies to expand their employee benefit offerings at an affordable cost. Insurance offerings include property and casualty coverage such as workers’ compensation, business-owner policies, commercial auto, cyber security, and health and benefits coverage, including health, dental, vision, life and disability. Insurance Solutions revenue reflects commissions earned on remitted insurance services premiums billed and is recognized over time as services are performed and the client simultaneously receives and controls the benefits from these services.
7
Contract Balances
The timing of revenue recognition for Management Solutions and PEO and Insurance Solutions is consistent with the invoicing of clients as they both occur during the respective client payroll period for which the services are provided. Therefore, the Company does not recognize a contract asset or liability resulting from the timing of revenue recognition and invoicing.
Payments received for certain of the Company’s service offerings for set-up fees are considered a material right. Therefore,
Changes in deferred revenue related to material rights that exceed one year were as follows:
|
|
For the three months ended |
|
|||||||
|
|
August 31, |
|
|||||||
In millions |
|
2024 |
|
|
2023 |
|
||||
Balance, beginning of period |
|
$ |
|
|
|
$ |
|
|
||
Deferral of revenue |
|
|
|
|
|
|
|
|
||
Recognition of unearned revenue |
|
|
|
( |
) |
|
|
|
( |
) |
Balance, end of period |
|
$ |
|
|
|
$ |
|
|
||
Deferred revenue related to material rights is reported in the deferred revenue and other long-term liabilities line items on the Company’s Consolidated Balance Sheets. As of August 31, 2024, the Company expects to recognize deferred revenue related to these material rights for the remainder of fiscal 2025 and subsequent fiscal years as follows:
In millions |
|
Estimated |
|
||
Year ending May 31, |
|
recognition of unearned revenue |
|
||
|
$ |
|
|
||
|
|
|
|
||
|
|
|
|
||
Total recognition of unearned revenue |
|
$ |
|
|
|
Assets Recognized from the Costs to Obtain and Fulfill Contracts
The Company recognizes an asset for the incremental costs of obtaining a contract with a client if it is expected that the economic benefit and amortization period will be longer than one year. The Company also recognizes an asset for the costs to fulfill a contract with a client if the costs are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered.
Deferred costs to obtain and fulfill contracts are reported in the prepaid expenses and other current assets and long-term deferred costs line items on the Company’s Consolidated Balance Sheets. Amortization expense related to costs to obtain and fulfill a contract are included in cost of service revenue and selling, general and administrative expenses in the Company’s Consolidated Statements of Income and Comprehensive Income and recognized over the expected economic benefit period.
The Company regularly reviews its deferred costs for potential impairment and did
Changes in deferred costs to obtain and fulfill contracts were as follows:
Costs to obtain contracts: |
|
|
|
|
|
|
|
|
||
|
|
For the three months ended |
|
|||||||
|
|
August 31, |
|
|||||||
In millions |
|
2024 |
|
|
2023 |
|
||||
Balance, beginning of period |
|
$ |
|
|
|
$ |
|
|
||
Capitalization of costs |
|
|
|
|
|
|
|
|
||
Amortization |
|
|
|
( |
) |
|
|
|
( |
) |
Balance, end of period |
|
$ |
|
|
|
$ |
|
|
||
8
Costs to fulfill contracts: |
|
|
|
|
|
|
|
|
||
|
|
For the three months ended |
|
|||||||
|
|
August 31, |
|
|||||||
In millions |
|
2024 |
|
|
2023 |
|
||||
Balance, beginning of period |
|
$ |
|
|
|
$ |
|
|
||
Capitalization of costs |
|
|
|
|
|
|
|
|
||
Amortization |
|
|
|
( |
) |
|
|
|
( |
) |
Balance, end of period |
|
$ |
|
|
|
$ |
|
|
||
Note C: Basic and Diluted Earnings Per Share
Basic and diluted earnings per share were calculated as follows:
|
|
For the three months ended |
|
|||||||
|
|
August 31, |
|
|
August 31, |
|
||||
In millions, except per share amounts |
|
2024 |
|
|
2023 |
|
||||
Basic earnings per share: |
|
|
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
|
$ |
|
|
||
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
||
Basic earnings per share |
|
$ |
|
|
|
$ |
|
|
||
Diluted earnings per share: |
|
|
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
|
$ |
|
|
||
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
||
Dilutive effect of common share equivalents |
|
|
|
|
|
|
|
|
||
Weighted-average common shares outstanding, assuming dilution |
|
|
|
|
|
|
|
|
||
Diluted earnings per share |
|
$ |
|
|
|
$ |
|
|
||
Weighted-average anti-dilutive common share equivalents |
|
|
|
|
|
|
|
|
||
Weighted-average common share equivalents that have an anti-dilutive impact are excluded from the computation of diluted earnings per share.
9
Note D: Business Combinations
Effective July 31, 2023, substantially all of the net assets of Alterna Capital Solutions LLC (“Alterna”), were acquired by a wholly owned subsidiary of the Company. Alterna purchases outstanding accounts receivable of their customers under non-recourse arrangements. This acquisition allows the Company to increase and diversify its portfolio of solutions and support serving small- to medium-sized businesses. The acquisition consideration was comprised of a base purchase price of $
Note E: Other Income, Net
Other income, net, consisted of the following items:
|
|
For the three months ended |
|
|||||||
|
|
August 31, |
|
|
August 31, |
|
||||
In millions |
|
2024 |
|
|
2023 |
|
||||
Interest income on corporate investments |
|
$ |
|
|
|
$ |
|
|
||
Interest expense |
|
|
|
( |
) |
|
|
|
( |
) |
Other |
|
|
|
|
|
|
|
|
||
Other income, net |
|
$ |
|
|
|
$ |
|
|
||
Note F: Funds Held for Clients and Corporate Investments
Funds held for clients and corporate investments were as follows:
|
|
August 31, 2024 |
|
|||||||||||||||||
|
|
|
|
|
|
Gross |
|
|
Gross |
|
|
|
|
|
||||||
|
|
Amortized |
|
|
unrealized |
|
|
unrealized |
|
|
Fair |
|
||||||||
In millions |
|
cost |
|
|
gains |
|
|
losses |
|
|
value |
|
||||||||
Type of issue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Funds held for clients' money market securities and other |
|
$ |
|
|
|
$ |
|
— |
|
|
$ |
|
— |
|
|
$ |
|
|
||
AFS securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asset-backed securities |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|||
Corporate bonds |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|||
Municipal bonds |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|||
U.S. government agency and treasury securities |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||