PAYCHEX INC
For the period ended Aug 31, 2024. Filed Oct 1, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Aug 31, 2024 · Filed Oct 1, 2024
PAYX$117.06-2.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-02-29; filed 2024-04-02.
0000950170-24-040129
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-08-31; filed 2024-10-01.
0000950170-24-110834
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 148 previous paragraphs and 157 current paragraphs.
77 unchanged; 52 reworded; 24 added; 18 removed; 1 previous and 4 current paragraphs rearranged.
Tables are not compared: 13 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
our ability to attract and retain qualified people; and
Current report
We offer a full range of integrated HCM solutions from hire to retire for businesses and their employees. Clients may choose from a breadth of solutions that cover the spectrum of the employee life cycle, but we also allow integrations with popular HR, accounting, point-of-sale, and productivity applications available on the market today.
Current report
We support our small-business clients by utilizing our proprietary, robust, software as a service (“SaaS”) Paychex Flex® platform and the Company’s SurePayroll® SaaS-based solutions. Our medium-sized clients generally have more complex payroll and employee benefit needs, though with the environment of increasing regulations, we believe the need for HR outsourcing services has been moving down-market. Any of our clients on Paychex Flex can opt for the integrated suite of HCM solutions, which allows clients to choose the service and software solutions that will meet the needs of their businesses.
Current report
First Quarter Business Highlights
Current report
Management Solutions revenue: $961.7 million for the first quarter, reflecting an increase of 1%:
Current report
PEO and Insurance Solutions revenue: $319.3 million for the first quarter, reflecting an increase of 7%:
Current report
Other expenses:$151.2 million for the first quarter, reflecting an increase of 6%, primarily related to continued investment in technology, sales, and marketing.
Current report
Operating income: Operating income increased 2% to $546.7 million for the first quarter. Operating income was impacted by the expiration of the ERTC program and one less payroll processing day as compared with the prior year quarter.
Current report
Subsequent to August 31, 2024, we borrowed twice, on an overnight basis, $333.5 million on a weighted-average basis under our PNC and JPM credit facilities.
Current report
Primary sources of cash, restricted cash, and equivalents are through collections for services rendered to our customers and interest earned on funds held for clients and corporate investments. Primary uses of cash include employee compensation and contractual obligations related to business operations, cash dividends paid, share repurchases, purchases of property and equipment, and acquisitions.
Current report
Our investment portfolio incorporates both corporate cash and funds held for clients. Interest rates, market conditions, and our volatile cash flows are among several factors influencing our investment strategy directing the mix between long-term and VRDN AFS securities compared to short-term restricted cash and cash equivalents held in the portfolio. A portfolio strategy that favors larger balances held in restricted cash and cash equivalents will impact our investing activities due to the offsetting activity in the purchases and sales or maturities of AFS investments.
Current report
Our cash flows include certain activities that are short-term in nature and have an impact on short-term cash flows due to timing of collection and settlement of obligations as follows:
Current report
PEO receivables and worksite-employee ("WSE") accrued compensation: PEO receivables and WSE accrued compensation fluctuate based on either/both: (1) the timing of the payroll cut-off date and the Company’s month-end close, and (2) the timing of when cash is collected from the customer, and it is remitted to either the WSE for wages earned or applicable tax or regulatory agencies for payroll taxes. PEO accounts receivable collections and compensation payments to WSEs and applicable tax or regulatory agencies are settled through our corporate cash and the fluctuations impact our operating activities.
Current report
Summarized cash operating, investing, and financing cash flow information for the first quarter and the prior period:
Current report
Net increase in accrued income taxes due to the timing of our first quarter tax installment, which historically is settled during our second fiscal quarter; offset by
Current report
A net decrease in accrued corporate compensation primarily due to the settlement of fiscal 2024 year-end bonuses, offset by an increase in accrued payroll due to the timing of processing.
Current report
Net increase in accrued income taxes due to the timing of our first quarter tax installment, which historically is settled during our second fiscal quarter;
Current report
A net decrease in accrued corporate compensation primarily due to the settlement of fiscal 2023 year-end bonuses.
Current report
Cash used to develop and enhance our client facing internal-use software and the acquisition of third-party customer lists;
Current report
Net purchases of AFS securities related to investment in our long-term portfolio.
Current report
Cash used to develop and enhance our client facing internal-use software and the acquisition of third-party customer lists; and
Current report
Net sales from AFS securities primarily due to a shift from investing in VRDNs to reinvesting in cash and cash equivalents due to more favorable interest rates. Our VRDN holdings were $11.3 million at August 31, 2023 compared to $344.1 million at May 31, 2023.
Current report
Increase in client fund obligations related to the timing of collections and remittances of client funds. The accrual balance as of May 31, 2023 was impacted by the deferral of semi-weekly payroll tax payments due to the Memorial Day holiday; offset by
Current report
CRITICAL ACCOUNTING ESTIMATES
Removed paragraphs (18)
Previous report
changes in the availability and retention of qualified people; and
Previous report
Paychex Flex® is our proprietary HCM software-as-a-service (“SaaS”) platform that provides seamless workforce management throughout the employee life cycle from recruiting and hiring to retirement through an integrated suite of solutions and digital support capabilities. It utilizes a single cloud-based platform, with single client and employee records that allows a client to customize their set of solutions and modify it as their needs change. In addition, we provide comprehensive HR advisory solutions to help our clients plan, manage, and comply with all aspects of HR.
Previous report
Third Quarter and Year to Date Business Highlights
Previous report
n/m – not meaningful
Previous report
Management Solutions revenue: $1.0 billion for the third quarter and $2.9 billion for the nine months, reflecting increases of 2% and 4%, respectively:
Previous report
PEO and Insurance Solutions revenue: $345.5 million for the third quarter and $939.0 million for the nine months, reflecting increases of 8% and 7%, respectively:
Previous report
o
Previous report
Higher revenue from ancillary services for the nine months.
Previous report
Compensation-related expenses:$461.6 million for the third quarter and $1.4 billion for the nine months, reflecting increases of 2% for the third quarter and 3% for the nine months, driven by increases in average headcount and wage rates.
Previous report
Other expenses: $163.3 million for the third quarter and $449.0 million for the nine months, reflecting a decrease of 2% for the third quarter and an increase of 5% for the nine months. The increase for the nine months was primarily due to continued investment in technology, sales and marketing.
Previous report
Operating income: Operating income increased 6% to $649.8 million for the third quarter and 7% to $1.7 billion for the nine months, as a result of revenue growth which outpaced expense increases as previously discussed.
Previous report
Subsequent to February 29, 2024, there were no additional overnight borrowings under our JPM or PNC credit facilities.
Previous report
Various changes in other assets and liabilities in the normal course of business.
Previous report
Lower net sales of AFS securities related to investments in VRDNs, the proceeds from which were reinvested into cash, money market securities or cash equivalents earning more favorable interest rates;
Previous report
Increase in cash spending for upgrades to our internal use software and client lists.
Previous report
Fluctuations in the net purchases and sales/maturities of AFS securities are also due to timing within the client funds portfolio and market conditions. Amounts will vary based upon the timing of collection from clients and the related remittance to applicable tax or regulatory agencies for payroll tax administration services and to employees of clients utilizing employee payment services.
Previous report
Discussion of interest rates and related risks is included in the “Market Risk Factors” section of this Item 2.
Previous report
CRITICAL ACCOUNTING POLICIES
Reworded paragraphs (52)
Previous wording
Management’s Discussion and Analysis of Financial Condition and Results of Operations reviews the operating results of Paychex, Inc. and its wholly owned subsidiaries (“Paychex,” the “Company,” “we,” “our,” or “us”) for the three months ended February 29, 2024 (the “third quarter”), the nine months ended February 29, 2024 (the “nine months”), the respective prior year periods ended February 28, 2023 (the “prior year periods”), and our financial condition as of February 29, 2024. The focus of this review is on the underlying business reasons for material changes and trends affecting our revenue, expenses, net income, and financial condition. This review should be read in conjunction with the February 29, 2024 consolidated financial statements and the related Notes to Consolidated Financial Statements (Unaudited) contained in this Quarterly Report on Form 10-Q (“Form 10-Q”). This review should also be read in conjunction with our Annual Report on Form 10-K (“Form 10-K”) for the year ended May 31, 2023 (“fiscal 2023”). Forward-looking statements in this Form 10-Q are qualified by the cautionary statement included under the next sub-heading, “Cautionary Note Regarding Forward-Looking Statements.”
Current wording
Management’s Discussion and Analysis of Financial Condition and Results of Operations reviews the operating results of Paychex, Inc. and its wholly owned subsidiaries (“Paychex,” the “Company,” “we,” “our,” or “us”) for the three months ended August 31, 2024 (the “first quarter”), the prior year period ended August 31, 2023 (the “prior year period”), and our financial condition as of August 31, 2024. The focus of this review is on the underlying business reasons for material changes and trends affecting our revenue, expenses, net income, and financial condition. This review should be read in conjunction with the August 31, 2024 consolidated financial statements and the related Notes to Consolidated Financial Statements (Unaudited) contained in this Quarterly Report on Form 10-Q (“Form 10-Q”). This review should also be read in conjunction with our Annual Report on Form 10-K (“Form 10-K”) for the year ended May 31, 2024 (“fiscal 2024”). Forward-looking statements in this Form 10-Q are qualified by the cautionary statement included under the next sub-heading, “Cautionary Note Regarding Forward-Looking Statements.”
Previous wording
Certain written and oral statements made by us may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States (“U.S.”) Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by such words and phrases as “expect,” “estimate,” “intend,” “outlook,” “will,” “would,” “project,” “projections,” “strategy,” “anticipate,” “believe,” “could,” “may,” “potential,” “possible,” “purpose,” and other similar words or phrases. Examples of forward-looking statements include, among others, statements we make regarding operating performance, events, or developments that we expect or anticipate will occur in the future, including statements relating to our outlook, revenue growth, earnings, earnings-per-share growth, or similar projections.
Current wording
Certain written statements made in this Form 10-Q may contain, and members of management may from time to time make or discuss statements which constitute, “forward-looking statements” within the meaning of the safe harbor provisions of the United States (“U.S.”) Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by such words and phrases as “expect,” “estimate,” “intend,” “intent,” “outlook,” “will,” “would,” “projections,” “strategy,” “mission,” “anticipate,” “believe,” “could,” “may,” “target,” “potential,” “purpose,” “design,” “might,” and other similar words or phrases. Forward-looking statements include, without limitation, all matters that are not historical facts. Examples of forward-looking statements include, among others, statements we make regarding operating performance, events, or developments that we expect or anticipate will occur in the future, including statements relating to our outlook, revenue growth, earnings, earnings-per-share growth, and similar projections.
Previous wording
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict, many of which are outside our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance upon any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:
Current wording
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to known and unknown uncertainties, risks, changes in circumstances, and other factors that are difficult to predict, many of which are outside our control. Our actual performance and outcomes, including without limitation, our actual results and financial condition, may differ materially from those indicated in or suggested by the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:
Previous wording
our compliance with data privacy laws and regulations;
Current wording
our compliance with data privacy and artificial intelligence laws and regulations;
Previous wording
Our investor presentation regarding the financial results for the third quarter is available and accessible on our Paychex Investor Relations portal athttps://investor.paychex.com. Information available on our website is not a part of, and is not incorporated into, this Form 10-Q. We intend to make future investor presentations available exclusively on our Paychex Investor Relations portal.
Current wording
Our investor presentation regarding the financial results for the first quarter is available and accessible on our Paychex Investor Relations portal athttps://investor.paychex.com. Information available on our website is not a part of, and is not incorporated into, this Form 10-Q. We intend to make future investor presentations available exclusively on our Paychex Investor Relations portal.
Previous wording
We are a leading provider of integrated human capital management (“HCM”) solutions for human resources (“HR”), payroll, benefits, and insurance for small- to medium-sized businesses and their employees across the United States (“U.S.”) and parts of Europe. We offer a comprehensive portfolio of HCM technology and HR advisory solutions that help our clients navigate the challenges of HR.
Current wording
We are an industry-leading human capital management (“HCM”) company delivering a full suite of technology and advisory services in human resources (“HR”), employee benefit solutions, insurance and payroll processing for small- to medium-sized businesses and their employees across the U.S. and parts of Europe.
Previous wording
Our strategy focuses on providing industry-leading, integrated technology; delivering superior customer experiences; expanding our leadership in HR; growing our client bases; and engaging in strategic acquisitions. We believe that successfully executing this strategy will lead to strong, long-term financial performance.
Current wording
Our mission is to be the leading provider of HR, employee benefits, insurance, and payroll solutions by being an essential partner to small- and medium-sized businesses across the U.S. and parts of Europe. Our strategy focuses on providing industry-leading, integrated technology; delivering superior customer experiences; expanding our leadership in HR; growing our client bases; and engaging in strategic acquisitions. We believe that successfully executing this strategy will lead to strong, long-term financial performance.
Previous wording
We closely monitor the evolving challenges and needs of small- and mid-sized businesses, and proactively aid our clients in navigating these challenges. Through our unique blend of innovative technology solutions, backed by our extensive compliance and HR expertise, we help clients more effectively hire, engage, train, and retain top talent in this challenging workforce environment. As businesses operate in a tight labor market, having an online portal for employee self-service that is intuitive and easy-to-use helps increase employee retention and efficiency for our clients. We continue to invest in our technology, enhancing our solutions to continuously improve the customer and employee experiences from hiring and onboarding through employee retention.
Current wording
We closely monitor the evolving challenges and needs of small- and mid-sized businesses, and proactively aid our clients in navigating macroeconomic challenges, legislative changes, and other complexities they may face. Through our unique blend of innovative technology solutions, backed by our extensive compliance and HR expertise, we help clients more effectively hire, develop, and retain top talent in this challenging workforce environment. Our ongoing investments in our platforms have prepared us well for the demands of the current business and regulatory environments, allowing us to adapt while maintaining strong solutions and support delivery, resulting in high levels of client satisfaction and retention.
Previous wording
Highlights compared to the prior year periods are as follows:
Current wording
Highlights compared to the prior year period are as follows:
Previous wording
For further analysis of our results of operations for the third quarter and nine months, the prior year periods, and our financial position as of February 29, 2024, refer to the tables and analysis in the “Results of Operations” and “Liquidity and Capital Resources” sections of this Item 2.
Current wording
For further analysis of our results of operations for the first quarter and prior year period, and our financial position as of August 31, 2024, refer to the tables and analysis in the “Results of Operations” and “Liquidity and Capital Resources” sections of this Item 2.
Previous wording
The changes in revenue as compared to the prior year periods were primarily driven by the following factors:
Current wording
Total revenue increased to $1.3 billion for the first quarter, reflecting an increase of 3% compared to the prior year period. Excluding the impact of the expiration of the Employee Retention Tax Credit ("ERTC") program and one less payroll processing day as compared with the prior year quarter, revenue growth was 7%. The changes in revenue as compared to the prior year period were primarily driven by the following factors:
Previous wording
Growth in the number of clients served across our suite of HCM solutions;
Current wording
Growth in the number of clients served across our suite of HCM solutions and client worksite employees for HR solutions;
Previous wording
A decline in revenue from ancillary services, primarily due to the winding down of our Employee Retention Tax Credit Service.
Current wording
Lower revenue from ancillary services, primarily due to the expiration of our ERTC Service.
Previous wording
Growth in the number of average PEO worksite employees;
Current wording
Growth in the number of average PEO worksite employees; and
Previous wording
Increase in PEO insurance revenues; and
Current wording
Increase in PEO insurance revenues.
Previous wording
Interest on funds held for clients: $43.9 million for the third quarter and $108.1 million for the nine months, reflecting increases of 25% and 44%, respectively, primarily due to higher average interest rates.
Current wording
Interest on funds held for clients: $37.5 million for the first quarter, reflecting an increase of 15%, primarily due to higher average interest rates and average investment balances.
Previous wording
(1) The net unrealized loss on our investment portfolio was approximately $149.4 million as of March 28, 2024. Refer to Note F in the Notes to Consolidated Financial Statements contained in this Form 10-Q for more information regarding AFS securities held in an unrealized loss position.
Current wording
(1) The net unrealized loss on our investment portfolio was approximately $49.3 million as of September 27, 2024. Refer to Note F in the Notes to Consolidated Financial Statements and the "Market Risk Factors" caption contained in this Form 10-Q for more information regarding AFS securities held in an unrealized loss position.
Previous wording
(2) The Federal Funds rate was in the range of 5.25% to 5.50% as of February 29, 2024 and in the range of 5.00% to 5.25% as of May 31, 2023.
Current wording
(2) The Federal Funds rate was in the range of 5.25% to 5.50% as of August 31, 2024 and as of May 31, 2024. Effective September 19, 2024, the Federal Reserve decreased the Federal Funds rate to a range of 4.75% to 5.00%.
Previous wording
Total expenses: The following table summarizes the total combined cost of service revenue and selling, general and administrative expenses for the periods below:
Current wording
Total expenses: The following table summarizes the total combined cost of service revenue and selling, general and administrative expenses for the period below:
Previous wording
Total expenses increased 3% to $789.5 million for the third quarter and 4% to $2.3 billion for the nine months compared to the prior year periods. Total expenses increased as a result of the following:
Current wording
Total expenses increased 3% to $771.8 million for the first quarter compared to the prior year period. Total expenses increased as a result of the following:
Previous wording
PEO direct insurance costs: $119.8 million for the third quarter and $341.5 million for the nine months, reflecting increases of 14% for the third quarter and 9% for the nine months, related to growth in average worksite employees and PEO insurance revenues.
Current wording
PEO direct insurance costs: $130.3 million for the first quarter, reflecting an increase of 18%, related to growth in average worksite employees and PEO insurance revenues.
Previous wording
Other income, net: Other income, net increased $3.9 million to $9.4 million for the third quarter and $29.1 million to income of $33.9 million for the nine months, primarily as a result of higher average interest rates earned on our corporate investments.
Current wording
Other income, net: Other income, net decreased 19% to $10.4 million for the first quarter, primarily as a result of lower average investment balances on our corporate investments.
Previous wording
Income taxes: Our effective income tax rate was 24.4% for the third quarter and 24.1% for the nine months, compared to 24.3% and 23.8%, for the prior year periods, respectively. All periods were impacted by the recognition of excess tax benefits related to employee stock-based compensation payments.
Current wording
Income taxes: Our effective income tax rate was 23.3% for the first quarter, compared to 23.7%, for the prior year period. Both periods were impacted by the recognition of excess tax benefits related to employee stock-based compensation payments.
Previous wording
As of February 29, 2024, our financial position remained strong with cash, restricted cash, and total corporate investments of $1.8 billion. Total short-term and long-term borrowings, net of debt issuance costs, were $817.3 million as of February 29, 2024. Our primary source of cash is our ongoing operations. Cash flow from operations was $1.7 billion for the nine months. Our positive cash flows have allowed us to support our business, pay dividends, and repurchase shares of our common stock. We currently anticipate that cash, restricted cash, and total corporate investments as of February 29, 2024, along with projected operating cash flows and available short-term financing, will support our business operations, capital purchases, share repurchases, and dividend payments for the foreseeable future.
Current wording
Our financial position as of August 31, 2024 remained strong with cash, restricted cash, and total corporate investments of $1.6 billion. Short-term borrowings of $18.9 million and long-term borrowings of $800.0 million were outstanding as of August 31, 2024. Our unused capacity under our unsecured credit facilities was approximately $2.0 billion as of August 31, 2024. Our primary source of cash is our ongoing operations, which was $546.1 million for the first quarter. Our positive cash flows have allowed us to support our business, and pay dividends. We currently anticipate that corporate cash, corporate restricted cash, and total corporate investments as of August 31, 2024, along with projected operating cash flows and available short-term financing, will support our business operations, capital purchases, primarily investment in our technology solutions, share repurchases, dividend payments, and the servicing of long-term debt for the foreseeable future.
Previous wording
We believe that our investments in an unrealized loss position as of February 29, 2024 were not impaired due to increased credit risk or other valuation concerns, nor has any event occurred subsequent to that date to indicate any change in our assessment.
Current wording
For client funds liquidity, we have the ability to borrow on our unsecured credit facilities or use corporate liquidity when necessary to meet short-term funding needs related to client fund obligations. Historically, we have borrowed, typically on an overnight basis, to settle short-term client fund obligations, rather than liquidate previously collected client funds invested in our long-term AFS portfolio. We believe that our investments in an unrealized loss position as of August 31, 2024 were not impaired due to increased credit risk or other valuation concerns, nor has any event occurred subsequent to that date to indicate any change in our assessment. We do not intend to sell these investments until recovery of their amortized cost basis or maturity and further believe that it is not more-than-likely that we would be required to sell these investments prior to that time.
Previous wording
Details of borrowings under each credit facility during the third quarter and the prior year period were as follows:
Current wording
Details of borrowings under each credit facility during the first quarter were as follows:
Previous wording
Short-term borrowings are primarily used for the settlement of client fund obligations, rather than liquidating previously collected client funds that have been invested in AFS securities allocated to our long-term investment portfolio.
Current wording
We primarily use short-term borrowings to settle client fund obligations, rather than liquidating previously collected client funds invested in our long-term AFS investment portfolio.
Previous wording
Letters of credit: As of February 29, 2024, we had irrevocable standby letters of credit available totaling $170.8 million, required to secure commitments for certain insurance policies. The letters of credit expire at various dates between March 03, 2024 and October 09, 2025. No amounts were outstanding on these letters of credit during the third quarter or as of February 29, 2024.
Current wording
Letters of credit: As of August 31, 2024, we had irrevocable standby letters of credit available totaling $165.4 million, primarily to secure commitments for certain insurance policies. The letters of credit expire at various dates between October 02, 2024 and August 24, 2025. No amounts were outstanding on these letters of credit during the first quarter or as of August 31, 2024.
Previous wording
Refer to Note M of the Notes to Consolidated Financial Statements contained in Item 8 of our Form 10-K for fiscal 2023 for further discussion on our long-term financing.
Current wording
Long-term financing: We have borrowed $800.0 million through the issuance of long-term private placement debt. Refer to Note N of the Notes to Consolidated Financial Statements contained in Item 8 of our Form 10-K for fiscal 2024 for further discussion on our long-term financing.
Previous wording
Other commitments: We had outstanding commitments under existing workers’ compensation insurance agreements and legally binding contractual arrangements. We also entered into various purchase commitments with vendors in the ordinary course of business and had outstanding commitments to purchase approximately $6.3 million of capital assets as of February 29, 2024. In addition, we are involved in three limited partnership agreements to contribute a maximum of $30.0 million to venture capital funds in the financial technology sector. As of February 29, 2024, we have contributed approximately $23.2 million of the total funding commitment.
Current wording
Other commitments: We had outstanding commitments under existing workers’ compensation insurance agreements and legally binding contractual arrangements. We also entered into various purchase commitments with vendors in the ordinary course of business and had outstanding commitments to purchase approximately $3.9 million of capital assets as of August 31, 2024. In addition, we are involved in three limited partnership agreements to contribute a maximum of $30.0 million to venture capital funds in the financial technology sector. As of August 31, 2024, we have contributed approximately $23.6 million of the total funding commitment.
Previous wording
In the normal course of business, we make 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. We have also entered into indemnification agreements with our officers and directors, which require us to defend and, if necessary, indemnify these individuals for certain pending or future claims as they relate to their services provided to us.
Current wording
In the normal course of business, we make 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. We have also entered into indemnification agreements with our officers, directors, and fiduciaries of certain of our retirement plans, which require us to defend and, if necessary, indemnify these individuals for certain pending or future legal claims as they relate to their services provided to us.
Previous wording
We currently self-insure the deductible portion of various insured exposures under certain corporate employee and PEO employee health and medical benefit plans. Our estimated loss exposure under these insurance arrangements is recorded in other current liabilities on our Consolidated Balance Sheets. Historically, the amounts accrued have not been material and were not material as of February 29, 2024. We also maintain insurance coverage in addition to our 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 our captive insurance company.
Current wording
We currently self-insure the deductible portion of various insured exposures under certain corporate and PEO employee health and medical benefit plans. Our estimated loss exposure under these insurance arrangements is recorded in other current liabilities on our Consolidated Balance Sheets. Historically, the amounts accrued have not been material and were not material as of August 31, 2024. We also maintain corporate insurance coverage in addition to our 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 retention through our captive insurance company.
Previous wording
The client fund obligations liability will vary based on the timing of collecting client funds and the related required remittance of funds to applicable tax or regulatory agencies for payroll tax administration services and to employees of clients utilizing employee payment services. Collections from clients are typically remitted from one to 30 days after receipt, with some items extending to 90 days.
Current wording
Client fund obligations: Client fund obligations liability will vary based on the timing of when cash is collected from the clients and when it is remitted to employees of the clients utilizing employee payment services or applicable tax or regulatory agencies for payroll tax administration services. Collections from clients are typically remitted from one to 30 days after receipt, with some items extending to 90 days. Fluctuations in client fund obligations impact financing activities.
Previous wording
The changes in our cash flow for the nine months compared to the prior year period were primarily the result of the following key drivers:
Current wording
The changes in our cash flow for the first quarter compared to the prior year period were primarily the result of the following key drivers:
Previous wording
Higher net income attributable to the reasons discussed in the “Results of Operations” section of this Item 2;
Current wording
Net income attributable to the reasons discussed in the “Results of Operations” section of this Item 2;
Previous wording
Net changes in PEO assets and liabilities as a result of the timing of cash collected and the settlement of payroll taxes;
Current wording
Net changes in PEO assets and liabilities as a result of the timing of cash collected and the settlement of payroll taxes; and
Previous wording
A net increase in refunds owed to our PEO clients related to tax benefits allowed under the Coronavirus Aid, Relief, and Economic Security Act; and
Current wording
A net increase in refunds owed to our PEO clients related to tax benefits allowed under the Coronavirus Aid, Relief, and Economic Security Act; offset by
Previous wording
Increase in net purchases of short-term accounts receivable was primarily due to an increases in our client base, funding to existing client base, and the timing of cash collections on outstanding receivables and cash settlement of the related reserve; and
Current wording
Net purchases of short-term accounts receivable due to an increase in our client base, the timing of cash collections on outstanding receivables and cash settlement of the related reserve; and
Previous wording
Dividends paid increased compared to the prior year period due to an increase in our cumulative dividend from $2.37 per share to $2.67 per share. The payment of future dividends is dependent on our future earnings and cash flow and is subject to the discretion of our Board of Directors (the "Board").
Current wording
Dividends paid at $0.98 per share. The payment of future dividends is dependent on our future earnings and cash flow and is subject to the discretion of our Board of Directors (the "Board");
Previous wording
Cash used to repurchase 1.5 million shares of our common stock at a weighted average price of $115.37 per share during the nine months. There were no repurchases of our common shares during the fiscal 2023 period. All repurchased shares were retired upon acquisition; and
Current wording
Cash used to repurchase 0.8 million shares of our common stock at a weighted average price of $125.50 per share during the first quarter. All repurchased shares were retired upon acquisition; and
Showing the first 40 of 52 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Net income attributable to the reasons discussed in the “Results of Operations” section of this Item 2;
Current report — wording carried from elsewhere
Net changes in PEO assets and liabilities as a result of the timing of cash collected and the settlement of payroll taxes; and
Current report — wording carried from elsewhere
Net purchase of short-term accounts receivable due to an increase in our client base, and funding to existing client base, and the timing of net cash collections; offset by
Current report — wording carried from elsewhere
Dividends paid at $0.89 per share. The payment of future dividends is dependent on our future earnings and cash flow and is subject to the discretion of our Board.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Long-term financing: We have borrowed $800.0 million through the issuance of long-term private placement debt (“Senior Notes”). Certain information related to our Senior Notes are as follows: