| Funds Held for Clients and Corporate Investments |
Note F — Funds Held for Clients and Corporate Investments
Funds held for clients and corporate investments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2017
|
|
|
|
|
|
|
Gross
|
|
Gross
|
|
|
|
|
|
|
Amortized
|
|
unrealized
|
|
unrealized
|
|
Fair
|
|
In millions
|
|
cost
|
|
gains
|
|
losses
|
|
value
|
|
Type of issue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds held for clients money market securities and other
cash equivalents
|
|
$
|
264.8
|
|
$
|
—
|
|
$
|
—
|
|
$
|
264.8
|
|
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
|
208.6
|
|
|
2.7
|
|
|
(0.5)
|
|
|
210.8
|
|
General obligation municipal bonds
|
|
|
1,422.0
|
|
|
21.2
|
|
|
(0.9)
|
|
|
1,442.3
|
|
Pre-refunded municipal bonds(1)
|
|
|
54.6
|
|
|
0.9
|
|
|
—
|
|
|
55.5
|
|
Revenue municipal bonds
|
|
|
929.2
|
|
|
12.5
|
|
|
(0.8)
|
|
|
940.9
|
|
U.S. government agency securities
|
|
|
328.9
|
|
|
0.5
|
|
|
(3.6)
|
|
|
325.8
|
|
Variable rate demand notes
|
|
|
1,637.9
|
|
|
—
|
|
|
—
|
|
|
1,637.9
|
|
Total available-for-sale securities
|
|
|
4,581.2
|
|
|
37.8
|
|
|
(5.8)
|
|
|
4,613.2
|
|
Other
|
|
|
14.8
|
|
|
1.9
|
|
|
—
|
|
|
16.7
|
|
Total funds held for clients and corporate investments
|
|
$
|
4,860.8
|
|
$
|
39.7
|
|
$
|
(5.8)
|
|
$
|
4,894.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2016
|
|
|
|
|
|
|
Gross
|
|
Gross
|
|
|
|
|
|
|
Amortized
|
|
unrealized
|
|
unrealized
|
|
Fair
|
|
In millions
|
|
cost
|
|
gains
|
|
losses
|
|
value
|
|
Type of issue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds held for clients money market securities and other
cash equivalents
|
|
$
|
502.4
|
|
$
|
—
|
|
$
|
—
|
|
$
|
502.4
|
|
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
|
128.4
|
|
|
2.9
|
|
|
(0.1)
|
|
|
131.2
|
|
General obligation municipal bonds
|
|
|
1,594.1
|
|
|
27.6
|
|
|
(0.1)
|
|
|
1,621.6
|
|
Pre-refunded municipal bonds(1)
|
|
|
60.2
|
|
|
1.4
|
|
|
—
|
|
|
61.6
|
|
Revenue municipal bonds
|
|
|
916.2
|
|
|
15.8
|
|
|
(0.2)
|
|
|
931.8
|
|
U.S. government agency securities
|
|
|
160.8
|
|
|
0.6
|
|
|
(0.3)
|
|
|
161.1
|
|
Variable rate demand notes
|
|
|
1,234.6
|
|
|
—
|
|
|
—
|
|
|
1,234.6
|
|
Total available-for-sale securities
|
|
|
4,094.3
|
|
|
48.3
|
|
|
(0.7)
|
|
|
4,141.9
|
|
Other
|
|
|
14.2
|
|
|
0.8
|
|
|
(0.1)
|
|
|
14.9
|
|
Total funds held for clients and corporate investments
|
|
$
|
4,610.9
|
|
$
|
49.1
|
|
$
|
(0.8)
|
|
$
|
4,659.2
|
|
(1)
|
|
Pre-refunded municipal bonds are secured by an escrow fund of U.S. government obligations.
|
Included in money market securities and other cash equivalents as of May 31, 2017 and May 31, 2016 are money market funds and bank demand deposit accounts.
Classification of investments on the Consolidated Balance Sheets is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31,
|
|
In millions
|
|
2017
|
|
2016
|
|
Funds held for clients
|
|
$
|
4,301.9
|
|
$
|
3,997.5
|
|
Corporate investments
|
|
|
138.8
|
|
|
220.6
|
|
Long-term corporate investments
|
|
|
454.0
|
|
|
441.1
|
|
Total funds held for clients and corporate investments
|
|
$
|
4,894.7
|
|
$
|
4,659.2
|
The Company’s available-for-sale securities reflected a net unrealized gain of $32.0 million and $47.6 million as of May 31, 2017 and May 31, 2016, respectively. Included in the net unrealized gain total as of May 31, 2017 and May 31, 2016, there were 216 and 63 available-for-sale securities in an unrealized loss position, respectively. The available-for-sale securities in an unrealized loss position were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2017
|
|
|
|
Securities in an unrealized
loss position for less than
twelve months
|
|
Securities in an unrealized
loss position for more than
twelve months
|
|
Total
|
|
|
|
Gross
|
|
|
|
|
Gross
|
|
|
|
|
Gross
|
|
|
|
|
|
|
unrealized
|
|
Fair
|
|
unrealized
|
|
Fair
|
|
unrealized
|
|
Fair
|
|
In millions
|
|
losses
|
|
value
|
|
losses
|
|
value
|
|
losses
|
|
value
|
|
Type of issue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
(0.5)
|
|
$
|
43.6
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(0.5)
|
|
$
|
43.6
|
|
General obligation municipal bonds
|
|
|
(0.9)
|
|
|
188.8
|
|
|
—
|
|
|
—
|
|
|
(0.9)
|
|
|
188.8
|
|
Pre-refunded municipal bonds
|
|
|
—
|
|
|
9.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.2
|
|
Revenue municipal bonds
|
|
|
(0.8)
|
|
|
154.8
|
|
|
—
|
|
|
1.0
|
|
|
(0.8)
|
|
|
155.8
|
|
U.S. government agency securities
|
|
|
(3.6)
|
|
|
210.0
|
|
|
—
|
|
|
—
|
|
|
(3.6)
|
|
|
210.0
|
|
Total
|
|
$
|
(5.8)
|
|
$
|
606.4
|
|
$
|
—
|
|
$
|
1.0
|
|
$
|
(5.8)
|
|
$
|
607.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2016
|
|
|
|
Securities in an unrealized
loss position for less than
twelve months
|
|
Securities in an unrealized
loss position for more than
twelve months
|
|
Total
|
|
|
|
Gross
|
|
|
|
|
Gross
|
|
|
|
|
Gross
|
|
|
|
|
|
|
unrealized
|
|
Fair
|
|
unrealized
|
|
Fair
|
|
unrealized
|
|
Fair
|
|
In millions
|
|
losses
|
|
value
|
|
losses
|
|
value
|
|
losses
|
|
value
|
|
Type of issue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
(0.1)
|
|
$
|
14.7
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(0.1)
|
|
$
|
14.7
|
|
General obligation municipal bonds
|
|
|
(0.1)
|
|
|
48.9
|
|
|
—
|
|
|
2.8
|
|
|
(0.1)
|
|
|
51.7
|
|
Pre-refunded municipal bonds
|
|
|
—
|
|
|
5.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.7
|
|
Revenue municipal bonds
|
|
|
—
|
|
|
20.7
|
|
|
(0.2)
|
|
|
11.7
|
|
|
(0.2)
|
|
|
32.4
|
|
U.S. government agency securities
|
|
|
(0.3)
|
|
|
51.1
|
|
|
—
|
|
|
—
|
|
|
(0.3)
|
|
|
51.1
|
|
Total
|
|
$
|
(0.5)
|
|
$
|
141.1
|
|
$
|
(0.2)
|
|
$
|
14.5
|
|
$
|
(0.7)
|
|
$
|
155.6
|
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 held as of May 31, 2017 that had unrealized losses of $5.8 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 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 substantial portion of the securities in an unrealized loss position as of May 31, 2017 and May 31, 2016 held an AA 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 from the sale of available-for-sale securities were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended May 31,
|
|
In millions
|
|
2017
|
|
2016
|
|
2015
|
|
Gross realized gains
|
|
$
|
0.1
|
|
$
|
0.1
|
|
$
|
0.3
|
|
Gross realized losses
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net realized gains
|
|
$
|
0.1
|
|
$
|
0.1
|
|
$
|
0.3
|
The amortized cost and fair value of available-for-sale securities that had stated maturities as of May 31, 2017 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2017
|
|
|
|
Amortized
|
|
Fair
|
|
In millions
|
|
cost
|
|
value
|
|
Maturity date:
|
|
|
|
|
|
|
|
Due in one year or less
|
|
$
|
308.8
|
|
$
|
309.3
|
|
Due after one year through three years
|
|
|
762.1
|
|
|
768.2
|
|
Due after three years through five years
|
|
|
1,067.0
|
|
|
1,086.2
|
|
Due after five years
|
|
|
2,443.3
|
|
|
2,449.5
|
|
Total
|
|
$
|
4,581.2
|
|
$
|
4,613.2
|
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.
|