What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-08-06 compared with 2024-08-07 · 215 added, 129 removed, 1053 unchanged (25% of the section changed)

95 unchanged sentences

Net earnings $ 4,079.7 $ 3,752.0 $ 3,412.0

Other comprehensive (loss)/income:

Other comprehensive income/(loss):

Currency translation adjustments 89.0 ( 38.0 ) 13.4

1 unchanged sentence

Tax effect ( 250.7 ) ( 162.2 ) 113.3

Reclassification of net losses on available-for-sale securities to net earnings 5.9 14.7 4.4

Reclassification of realized net losses on available-for-sale securities to net earnings 1.7 5.9 14.7

Tax effect ( 0.3 ) ( 1.3 ) ( 3.3 )

Unrealized losses on cash flow hedging activities ( 15.6 ) — —

Tax effect 3.8 — —

Amortization of unrealized losses on cash flow hedging activities 5.4 4.4 4.4

Tax effect ( 1.3 ) ( 1.1 ) ( 1.1 )

Pension net gains/(losses) arising during the year 5.6 60.3 ( 229.8 )

Pension net gains arising during the year 8.5 5.6 60.3

Tax effect ( 2.1 ) ( 1.1 ) ( 13.3 )

11 unchanged sentences

Cash and cash equivalents $ 3,347.8 $ 2,913.4

Short-term marketable securities 4,498.8 384.0

Accounts receivable, net of allowance for doubtful accounts of $ 47.1 and $ 52.2 , respectively

20 unchanged sentences

Obligations under reverse repurchase agreements (A) 38.4 385.4

Obligations under commercial paper borrowings 4,769.5 —

Income taxes payable 9.1 15.1

25 unchanged sentences

Total liabilities and stockholders’ equity $ 53,369.3 $ 54,362.7

(A) As of June 30, 2024, $ 384.0 million of short-term marketable securities and $ 1.4 million of cash and cash equivalents have been pledged as collateral under the Company's reverse repurchase agreements.

As of June 30, 2023, $ 104.6 million of long-term marketable securities and $ 0.8 million of cash and cash equivalents have been pledged as collateral under the Company's reverse repurchase agreements (see Note 8).

(A) As of June 30, 2025, $ 38.4 million of short-term marketable securities have been pledged as collateral under the Company's reverse repurchase agreements.

As of June 30, 2024, $ 384.0 million of short-term marketable securities and $ 1.4 million of cash and cash equivalents have been pledged as collateral under the Company's reverse repurchase agreements (see Note 9).

See notes to the Consolidated Financial Statements.

7 unchanged sentences

Net earnings — — — 3,412.0 — —

Other comprehensive income — — — — — ( 2,004.3 )

Other comprehensive loss — — — — — ( 312.1 )

Stock-based compensation expense — — 196.3 — — —

15 unchanged sentences

Net earnings — — — 4,079.7 — —

Other comprehensive loss — — — — — 497.5

Other comprehensive income — — — — — 924.9

Stock-based compensation expense — — 234.9 — — —

39 unchanged sentences

Cash Flows from Financing Activities:

Net increase/(decrease) in client funds obligations 1,014.1 ( 12,701.6 ) 17,057.9

Net cash received from the Internal Revenue Service 602.7 — —

Net (decrease)/increase in client funds obligations ( 8,274.0 ) 1,014.1 ( 12,701.6 )

Net cash (distributed)/received from the Internal Revenue Service ( 552.2 ) 602.7 —

Payments of debt ( 1,001.2 ) ( 0.9 ) ( 1.0 )

Proceeds from the issuance of debt 1,980.3 — —

Settlement of cash flow hedges ( 15.6 ) — —

Repurchases of common stock ( 1,280.5 ) ( 1,231.7 ) ( 1,121.4 )

1 unchanged sentence

Dividends paid ( 2,398.9 ) ( 2,183.1 ) ( 1,903.6 )

Net proceeds/(payments) related to reverse repurchase agreements 320.0 ( 44.7 ) 128.3

Net cash flows provided by/(used in) financing activities ( 1,431.7 ) ( 15,680.7 ) 13,653.4

Net (payments)/proceeds related to reverse repurchase agreements ( 331.8 ) 320.0 ( 44.7 )

Net proceeds from issuance of commercial paper 4,769.5 — —

Net cash flows used in financing activities ( 6,973.4 ) ( 1,431.7 ) ( 15,680.7 )

Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents 37.3 ( 22.4 ) ( 21.1 )

27 unchanged sentences

Actual results may differ from those estimates.

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

We also updated the description of "Systems development and programming costs" to "Research and development" within the Statement of Consolidated Earnings, this change did not result in changes to current or previously reported amounts.

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

Description of Business.

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Employer Services and Professional Employer Organization (“PEO”) Services.

The primary components of the “Other” segment are certain corporate overhead charges and expenses that have not been allocated to the reportable segments, including corporate functions, costs related to our transformation office, legal settlements, severance costs, non-recurring gains and losses, the elimination of intercompany transactions, and interest expense.

The primary components of the "Other" category include certain corporate overhead charges and expenses that have not been allocated to the reportable segments, including corporate functions, legal settlements, severance costs, non-recurring gains and losses, the elimination of intercompany transactions, and interest expense.

Revenue Recognition.

Revenues are primarily attributable to fees for providing services ( e.g., Employer Services' payroll processing fees), investment income on payroll funds, payroll tax filing funds, other Employer Services' client-related funds, and fees charged to implement clients on the Company's solutions.

The Company enters into agreements for a fixed fee per transaction ( e.g., number of payees or number of payrolls processed).

The Company enters into agreements for a fixed fee per transaction ( e.g., number of payees).

The Company enters into service agreements with clients that include anywhere from one service to a full suite of services.

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The performance obligations in the agreements are generally combined into one performance obligation, as they are considered a series of distinct services, and are satisfied over time because the client simultaneously receives and consumes the benefits provided as the Company performs the services.

The Company uses the output method based on a fixed fee per employee serviced to recognize revenue, as the value to the client of the goods or services transferred to date (e.g.

number of payees or number of payrolls processed) appropriately depicts our performance towards complete satisfaction of the performance obligation.

The Company uses the output method based on a fixed fee per employee serviced to recognize revenue, as the value to the client of the goods or services transferred to date (e.g., number of payees) appropriately depicts our performance towards complete satisfaction of the performance obligation.

The fees are typically billed in the period in which services are performed.

PEO, a component of the HR Outsourcing (“HRO”) business pillar, provides a comprehensive human resources outsourcing solution, including offering benefits, providing workers’ compensation insurance, and administering state unemployment insurance, among other human resources functions.

Amounts collected from PEO worksite employers include payroll, fees for benefits, and an administrative fee that also includes payroll taxes, fees for workers’ compensation and state unemployment taxes.

PEO, a component of the HR Outsourcing (“HRO”) business, provides a comprehensive human resources outsourcing solution, including offering benefits, providing workers’ compensation insurance, and administering state unemployment insurance, among other human resources functions.

Amounts collected from PEO worksite employers include payroll and payroll taxes, fees for benefits, and an administrative fee that also includes payroll taxes, fees for workers’ compensation and state unemployment taxes.

The payroll and payroll taxes collected from the worksite employers are presented in revenue net, as the Company does not retain risk and acts as an agent with respect to this aspect of the PEO arrangement.

With respect to the payroll and payroll taxes, the worksite employer is primarily responsible for providing the service and has discretion in establishing wages.

With respect to the payroll and payroll taxes, the PEO worksite employer is primarily responsible for providing the service and has discretion in establishing wages.

The fees collected from the worksite employers for benefits (i.e., PEO zero-margin benefits pass-throughs), workers’ compensation and state unemployment taxes are presented in revenues and the associated costs of benefits, workers’ compensation and state unemployment taxes are included in operating expenses, as the Company does retain risk and acts as a principal with respect to this aspect of the arrangement.

3 unchanged sentences

Therefore, the Company defers revenue associated with these set up fees and records them over the period in which such clients are expected to benefit from the material right, which is approximately five to seven years .

Collection of consideration the Company expects to receive to perform it services typically occurs within 30 to 60 days of billing.

Collection of consideration the Company expects to receive to perform its services typically occurs within 30 to 60 days of billing.

We assess the collectability of revenues based primarily on the creditworthiness of the customer as determined by credit checks and analysis, as well as the customer's payment history and their intention to pay the consideration.

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If either of those two conditions is met, the Company would recognize a charge in earnings equal to the entire difference between the security's amortized cost basis and its fair value.

If the Company does not intend to sell a security or it is not more likely than not that it will be required to sell the security before recovery, the unrealized loss is separated into an amount representing the credit loss, which is recognized in earnings, and the amount related to all other factors, which is recognized in accumulated other comprehensive income (loss).

Premiums and discounts are amortized or accreted over the life of the related available-for-sale security as an adjustment to yield using the effective-interest method.

If the Company does not intend to sell a security or it is not more likely than not that it will be required to sell the security before recovery, the unrealized loss is separated into an amount representing the credit loss, which is recognized in earnings, and an amount related to all other factors, which is recognized in accumulated other comprehensive income (loss).

Premiums and discounts are amortized or accreted over the life of the related available-for-sale security as an adjustment to the yield using the effective-interest method.

Dividend and interest income are recognized when earned.

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The Company had no available-for-sale securities included in Level 1 and Level 3 at June 30, 2025.

The Company issued three series of fixed-rate notes with staggered maturitie s of 7 and 10 -years totaling $ 3.0 billion (collectively the “Notes”).

The Company issued four series of fixed-rate notes with staggered maturitie s of 7 and 10 -years totaling $ 4.0 billion (collectively the “Notes”).

The fair value of the Notes are estimated in Note 10 utilizing a variety of inputs obtained from an independent pricing service, including benchmark yields, reported trades, non-binding broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data.

7 unchanged sentences

Property, plant and equipment is stated at cost less accumulated depreciation on the Consolidated Balance Sheets.

Depreciation is recognized over the estimated useful lives of the assets using the straight-line

Leasehold improvements are amortized over the shorter of the term of the lease or the estimated useful lives of the improvements.

Depreciation is recognized over the estimated useful lives of the assets using the straight-line method.

Leasehold improvements are amortized over the shorter of the term of the lease or the estimated useful lives of the

improvements.

The estimated useful lives of assets are primarily as follows:

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EPS $ 8.25 $ 8.21

There were no stock options excluded from the calculation of diluted earnings per share due to anti-dilution.

Options to purchase 0.2 million and 0.6 million shares of common stock for fiscal 2023 and 2022, respectively, were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

Shares that could potentially dilute basic EPS in the future include outstanding share-based compensation awards, discussed in Note 11.

For fiscal 2025 and 2024, there were no shares excluded from the calculation of diluted EPS, and in fiscal 2023, there were 0.2 million shares excluded from the calculation of diluted EPS because their inclusion would have been anti-dilutive.

Stock-Based Compensation.

54 unchanged sentences

Recently Adopted Accounting Pronouncements

Effective June 30, 2025, the Company adopted accounting standard update ("ASU") 2023-07, " Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures." This update resulted in enhanced disclosures about the Company's reportable segments.

The adoption of ASU 2023-07 did not have a material impact on the Company's consolidated results of operations, financial condition, or cash flows.

Refer to Note 15 for further details.

Recently Issued Accounting Pronouncements

Standard Description Effective Date Effect on Financial Statements or Other Significant Matters

ASU 2023-09 Income Taxes (Topic 740):

Improvements to Income Tax Disclosures This update enhances the transparency and decision usefulness of income tax disclosures to better assess how an entity’s operations and related tax risks, tax planning and operational opportunities affect its tax rate and prospects for future cash flows.

ASU 2024-03 Disaggregation of Income Statement Expenses (Subtopic 220-40) This update improves financial reporting by requiring enhanced disclosures of the expense captions in the Income Statement within the Notes to the financial statements.

June 30, 2028

(fiscal 2028) The Company is assessing this guidance.

The adoption will modify disclosures but will not have an impact on the Company's consolidated results of operations, financial condition, and cash flows.

ASU 2023-07 Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures This update improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and certain quantitative disclosures.

The adoption will modify disclosures but will not have an impact on the Company's consolidated results of operations, financial condition, or cash flows.

ASU 2023-09 Income Taxes (Topic 740):

June 30, 2026

(fiscal 2026) The Company is assessing this guidance.

The adoption will modify disclosures but will not have an impact on the Company's consolidated results of operations, financial condition, and cash flows.

Based upon similar operational and economic characteristics, the Company’s revenues are disaggregated by its three business pillars as follows:

Human Capital Management (“HCM”), HR Outsourcing (“HRO”), and Global (“Global”) Solutions, with separate disaggregation for PEO zero-margin benefits pass-through revenues and client fund interest revenues.

The adoption will modify disclosures but will not have an impact on the Company's consolidated results of operations, financial condition, or cash flows.

Based upon similar operational and economic characteristics, the Company’s revenues are disaggregated as follows:

Human Capital Management (“HCM”), HR Outsourcing (“HRO”), and Global Solutions (“Global”), with separate disaggregation for PEO zero-margin benefits pass-through revenues and client fund interest revenues.

The Company believes these revenue categories depict how the nature, amount, timing, and uncertainty of its revenue and cash flows are affected by economic factors.

6 unchanged sentences

The Company recognizes client fund interest revenues on collected but not yet remitted funds held for clients in revenues as earned, as the collection, holding and remittance of these funds are critical components of providing these services.

The following tables provide details of revenue by our business pillars and includes a reconciliation to the Company’s reportable segments.

The following tables provide details of the Company's revenues and includes a reconciliation to the Company’s reportable segments:

Types of Revenues 2025 2024 2023

48 unchanged sentences

There were no impairment losses incurred during the period.

In October 2024, the Company acquired WorkForce Software, a premier workforce management solutions provider that specializes in supporting large, global enterprises, utilizing cash on hand.

The results of WorkForce Software are reported within the Company’s Employer Services segment.

Pro forma information has not been presented because the effect of the acquisition is not material to the Company's consolidated financial results.

The following table reconciles the purchase price to the cash paid for the acquisition, net of cash acquired:

Purchase price $ 1,170.8

cash acquired ( 12.5 )

Cash paid for acquisition of business, net of cash acquired $ 1,158.3

The preliminary allocation of the purchase price is based upon estimates and assumptions that are subject to change within the measurement period, which is one year from the acquisition date.

The primary areas of the purchase price allocation that are not yet finalized relate to the measurement of certain assets and liabilities, including identifiable intangible assets.

Accordingly, the measurement period for such purchase price allocations will end when the information becomes available but will not exceed twelve months from the date of acquisition.

The acquisition was accounted for using the acquisition method of accounting.

The Company recognized assets acquired and liabilities assumed at their fair value as of the date of acquisition, with the excess recorded to goodwill.

The preliminary purchase price allocation for WorkForce Software is as follows:

Accounts receivable, net of allowance for doubtful accounts 20.0

Identifiable intangible assets (1) 292.0

Goodwill 880.4

Deferred income taxes, net of valuation allowance 51.2

All other assets 14.8

Total assets acquired $ 1,270.9

Deferred revenue $ 39.6

All other liabilities 60.5

Total liabilities assumed $ 100.1

Total net assets acquired $ 1,170.8

(1) Intangible assets are recorded at estimated fair value, as determined by management based on available information which includes an estimated valuation by an independent third-party.

The fair values assigned to identifiable intangible assets were determined through the use of the income approach, specifically the relief from royalty and the multi-period excess earnings methods.

The major assumptions used in arriving at the estimated identifiable intangible asset values included management’s estimates of future cash flows, discounted at an appropriate rate of return which are based on the weighted average cost of capital for both the Company and other market participants, projected customer attrition rates, as well as applicable royalty rates for comparable assets.

The useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to the future cash flows.

The estimated fair value of intangible assets and related useful lives as included in the estimated purchase price allocation include:

Estimated Fair Value Estimated Useful Life

Technology $ 115.0 7

Customer/Partner relationships $ 170.0 8

Tradename $ 7.0 4

The goodwill recorded as a result of the WorkForce Software transaction represents future economic benefits the Company expects to achieve as a result of the acquisition, including expected synergies along with the value of the assembled workforce.

None of the goodwill resulting from the acquisition is tax deductible.

OTHER (INCOME)/EXPENSE, NET

Other (income)/expense, net consists of the following:

Other income, net consists of the following:

Years ended June 30, 2025 2024 2023

4 unchanged sentences

Non-service components of pension income, net ( 31.3 ) ( 34.2 ) ( 50.8 )

Other (income)/expense, net $ ( 286.7 ) $ ( 183.5 ) $ ( 82.8 )

In fiscal 2024, interest income on corporate funds increased as compared to fiscal 2023, due to higher average interest rates of 3.3 % for the year ended June 30, 2024, as compared to 2.4 % for the year ended June 30, 2023, coupled with higher average investment balances for the year ended June 30, 2024 as compared to the year ended June 30, 2023.

In fiscal 2024, the Company recognized a gain of $ 17.1 million, in relation to the sale of buildings and land.

In fiscal 2022, the Company recorded impairment charges of $ 23.0 million, which is comprised of $ 12.1 million related to software and customer lists which were determined to have no future use and impairment charges of $ 10.9 million related to operating right-of-use assets associated with exiting certain leases early.

Other income, net $ ( 354.1 ) $ ( 286.7 ) $ ( 183.5 )

In fiscal 2025, the Company's corporate funds average investment balance was $ 9.2 billion as compared to $ 7.4 billion in fiscal 2024, and average interest rates related to corporate funds were 3.5 % in fiscal 2025 as compared to 3.3 % in fiscal 2024.

In fiscal 2025, the Company recognized a gain of $ 5.0 million, in relation to sales of buildings.

See Note 11 of our Consolidated Financial Statements for further details on non-service components of pension income, net.

11 unchanged sentences

1,972.0 16.4 ( 32.4 ) 1,956.0

government agency securities 1,645.0 0.5 ( 140.6 ) 1,504.9

Asset-backed securities 1,837.8 22.6 ( 15.5 ) 1,844.9

government agency securities 1,328.5 2.3 ( 80.0 ) 1,250.8

Canadian provincial bonds 1,155.8 13.8 ( 27.7 ) 1,141.9

Commercial mortgage-backed securities 535.9 — ( 35.1 ) 500.8

Other securities 1,977.3 7.2 ( 62.8 ) 1,921.7

13 unchanged sentences

government agency securities

1,645.0 0.5 ( 140.6 ) 1,504.9

Asset-backed securities 1,394.9 3.9 ( 43.0 ) 1,355.8

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( 1.4 ) 219.2 ( 31.0 ) 870.2 ( 32.4 ) 1,089.4

Asset-backed securities ( 0.2 ) 101.4 ( 15.3 ) 481.4 ( 15.5 ) 582.8

government agency securities

( 0.1 ) 8.0 ( 79.9 ) 1,093.8 ( 80.0 ) 1,101.8

Asset-backed securities ( 2.3 ) 351.4 ( 40.7 ) 668.0 ( 43.0 ) 1,019.4

Canadian provincial bonds ( 0.8 ) 44.3 ( 26.9 ) 588.8 ( 27.7 ) 633.1

Commercial mortgage-backed securities ( 0.5 ) 11.2 ( 34.6 ) 489.6 ( 35.1 ) 500.8

Other securities ( 1.5 ) 168.4 ( 61.3 ) 1,130.2 ( 62.8 ) 1,298.6

22 unchanged sentences

At June 30, 2025, Corporate bonds include investment-grade debt securities, with a wide variety of issuers, industries, and sectors, primarily carry credit ratings of A and above, and have maturities ranging from July 2025 through June 2035.

At June 30, 2024, asset-backed securities include AAA-rated senior tranches of securities with predominately prime collateral of fixed-rate auto loan, credit card, and equipment lease receivables with fair values of $ 686.8 million, $ 413.3 million, and

$ 168.9 million, respectively.

At June 30, 2025, asset-backed securities include AAA-rated senior tranches of securities with predominately prime collateral of fixed-rate auto loan, credit card, and device payment plan agreement receivables with fair values of $ 824.8 million, $ 549.3 million, and $ 254.8 million, respectively.

These securities are collateralized by the cash flows of the underlying pools of receivables.

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government agency securities primarily include debt directly issued by Federal Farm Credit Banks and Federal Home Loan Banks with fair values of $ 922.1 million and $ 267.2 million, respectively.

government agency securities represent senior, unsecured, non-callable debt that primarily carry ratings of Aaa by Moody's and AA+ by Standard & Poor's, with maturities ranging from July 2024 through March 2034.

At June 30, 2024, U.S.

government agency commercial mortgage-backed securities of $ 500.8 million include those issued by Federal Home Loan Mortgage Corporation and Federal National Mortgage Association.

At June 30, 2024, other securities primarily include municipal bonds, diversified with a variety of issuers, with credit ratings of A and above, with fair values of $ 529.3 million, AA-rated United Kingdom Gilt securities of $ 400.3 million and AAA-rated supranational bonds of $ 209.8 million.

At June 30, 2025, other securities primarily include municipal bonds, diversified with a variety of issuers, with credit ratings of A and above, with fair values of $ 536.0 million, AA-rated United Kingdom Gilt securities of $ 550.8 million, commercial mortgage-backed securities of $ 438.6 million, and AAA-rated supranational bonds of $ 230.3 million.

Classification of corporate investments on the Consolidated Balance Sheets is as follows:

2 unchanged sentences

Cash and cash equivalents $ 3,347.8 $ 2,913.4

Short-term marketable securities (a) 384.0 14.7

Long-term marketable securities (b) — 104.6

Short-term marketable securities 4,498.8 384.0

Total corporate investments $ 7,846.6 $ 3,297.4

(a) - Short-term marketable securities are included within Other current assets on the Consolidated Balance Sheets.

(b) - Long-term marketable securities are included within Other assets on the Consolidated Balance Sheets.

Funds held for clients represent assets that, based upon the Company's intent, are restricted for use solely for the purposes of satisfying the obligations to remit funds relating to the Company’s payroll and payroll tax filing services, which are classified as client funds obligations on our Consolidated Balance Sheets.

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Depreciation of property, plant and equipment was $ 201.8 million, $ 190.3 million, and $ 176.5 million for fiscal 2025, 2024 and 2023, respectively.

The Company has certain assets classified as held for sale given intent to sell.

The fair value of these assets was approximately $ 5.0 million and $ 17.3 million as of June 30, 2024 and 2023, respectively, and is not material for reclassification separately on the Consolidated Balance Sheets.

As of June 30, 2025, the Company did not have any assets classified as held for sale.

As of June 30, 2024, t he Company had certain assets classified as held for sale with a fair value of approximately $ 5.0 million, which is not material for reclassification separately on the Consolidated Balance Sheet.

The Company records leases on the Consolidated Balance Sheets as operating lease ROU assets, records the current portion of operating lease liabilities within accrued expenses and other current liabilities and, separately, records long-term operating lease liabilities.

The difference between total ROU assets and total lease liabilities are primarily attributable to pre-payments of our obligations and the recognition of various lease incentives.

The difference between total ROU assets and total lease liabilities are primarily attributable to prepayments of our obligations and the recognition of various lease incentives.

The Company has entered into operating lease agreements for facilities and equipment.

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All intangible assets have finite lives and, as such, are subject to amortization.

The weighted average remaining useful life of the intangible assets is 5 years ( 6 years for software and software licenses, 3 years for customer contracts and lists, and 1 year for other intangibles).

The weighted average remaining useful life of the intangible assets is 5 years ( 5 years for software and software licenses, 4 years for customer contracts and lists, and 3 years for other intangibles).

Amortization of intangible assets was $ 380.6 million, $ 371.6 million, and $ 372.8 million for fiscal 2025, 2024, and 2023, respectively.

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The Company has a $ 4.6 billion, 364 -day credit agreement that matures in June 2026 with a one-year term-out option.

The Company also has a $ 2.25 billion five-year credit facility that matures in June 2028 that contains an accordion feature under which the aggregate commitment can be increased by $ 500 million, su bject to the availability of additional commitments.

In addition, t he Company also has a five-year $ 3.5 billion credit facility maturing in June 2029 that contains an accordion feature under which the aggregate commitment can be increased by $ 500 million, subject to the availability of additional commitments.

The Company also has a $ 3.5 billion five-year credit facility that matures in June 2029 that contains an accordion feature under which the aggregate commitment can be increased by $ 500 million, subject to the availability of additional commitments.

In addition, the Company also has a $ 2.5 billion five-year credit facility maturing in June 2030 that contains an accordion feature under which the aggregate commitment can be increased by $ 500 million, subject to the availability of additional commitments.

The interest rate applicable to committed borrowings is tied to SOFR, the effective federal funds rate, or the prime rate depending on the notification provided by the Company to the syndicated financial institutions prior to borrowing.

The Company is also required to pay facility fees on the credit agreements.

The primary uses of the credit fac ilities are to provide liquidity to the commercial paper program and funding for general corporate purposes, if necessary.

The Company had no b orrowings through June 30, 2024 and 2023 under the credit agreements.

The primary uses of the credit facilities are to provide liquidity to the commercial paper program and funding for general corporate purposes, if necessary.

The Company had no borrowings through June 30, 2025 and 2024 under the credit agreements.

The Company's U.S.

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Maturities of commercial paper can range from overnight to up to 364 days.

At June 30, 2024 and 2023 the Company had no co mmercial paper borrowing outstanding.

As of June 30, 2025 the Company had $ 4.8 billion of commercial paper outstanding, which was repaid in early July 2025.

As of June 30, 2024, the Company had no co mmercial paper borrowing outstanding.

Details of the borrowings under the commercial paper program are as follows:

5 unchanged sentences

These agreements generally have terms ranging from overnight to up to five business days.

At June 30, 2024 and 2023, the Company had $ 385.4 million and $ 105.4 million, respectively, of outstanding obligations related to the reverse repurchase agreements.

As of June 30, 2025 and 2024, the Company had $ 38.4 million and $ 385.4 million, respectively, of outstanding obligations related to the reverse repurchase agreements.

The Company has $ 7.5 billion available on a committed basis under the U.S.

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Years ended June 30, 2025 2024

Average outstanding balances $ 1,828.6 $ 1,279.9

Average outstanding balances (in billions) $ 2.9 $ 1.8

Weighted average interest rates 4.8 % 5.5 %

The Company issued three series of fixed-rate notes with staggered maturities of 7 and 10 -years totaling $ 3.0 billion (collectively the “Notes”).

The Company issued four series of fixed-rate notes with staggered maturities of 7 and 10 -years totaling $ 4.0 billion (collectively the “Notes”).

The Notes are senior unsecured obligations, and interest is payable in arrears, semi-annually.

During the first quarter ended September 30, 2024, the Company issued $ 1.0 billion of senior notes due in 2034 bearing a fixed interest rate of 4.450 %.

In connection with the senior notes issuance, the Company terminated several derivative contracts in place to hedge exposure in changes in benchmark interest rates for the senior notes issued with an aggregate notional amount totaling $ 1.0 billion (of which $ 400.0 million were executed during the first quarter ended September 30, 2024 and $ 600.0 million were executed on the day of issuance).

Since these derivative contracts were classified as cash flow hedges, the unamortized loss of $ 12.5 million was deferred in accumulated other comprehensive (loss)/income and will be amortized to earnings over the life of the respective issued Note as the interest payments are made.

During the fourth quarter ended June 30, 2025, the Company issued $ 1.0 billion of senior notes due in 2032 bearing a fixed interest rate of 4.750 %.

In connection with the senior notes issuance, the Company also terminated several derivative contracts in place to hedge exposure in changes in benchmark interest rates for the senior notes issued with an aggregate notional amount totaling $ 1.0 billion (of which $ 300.0 million were entered into during the third quarter ended March 31, 2025, $ 100.0 million were entered into during the fourth quarter ended June 30, 2025, and $ 600.0 million were entered into on the day of issuance).

Since these derivative contracts were classified as cash flow hedges, the unamortized loss of $ 3.0 million was deferred in accumulated other comprehensive (loss)/income and will be amortized to earnings over the life of the respective issued Note as the interest payments are made.

During the fourth quarter ended June 30, 2025, the Company redeemed $ 1.0 billion of senior notes which were due to mature on September 15, 2025 and were bearing a fixed interest rate of 3.375 %.

The principal amounts and associated effective interest rates of the Notes and other debt as of June 30, 2025 and 2024 are as follows:

6 unchanged sentences

1.83 % 1,000.0 1,000.0

Fixed-rate 4.750 % notes due May 8, 2032

4.95 % 1,000.0 —

Fixed-rate 4.450 % notes due September 9, 2034

4.75 % 1,000.0 —

Other 2.9 4.1

10 unchanged sentences

Stock-based compensation consists of the following:

The Company's share-based compensation consists of stock options, time-based restricted stock, time-based restricted stock units, performance-based restricted stock, and performance-based restricted stock units.

The Company's share-based compensation plan consists of stock options, time-based restricted stock, time-based restricted stock units, performance-based restricted stock, and performance-based restricted stock units.

The Company also offers an employee stock purchase plan for eligible employees .

Beginning in September 2022, the Company discontinued granting stock options, time-based restricted stock and performance-based restricted stock.

Any such future awards will be grants of time-based restricted stock units and/or performance-based restricted stock units, depending on employee eligibility.

Time-based restricted stock unit awards and performance-based restricted stock unit awards granted to employees with a home country of the United States are settled in stock, and for awards granted to employees with a home country outside the United States are generally settled in cash.

Any such future awards granted September 2022 and after will be grants of time-based restricted stock units and/or performance-based restricted stock units, depending on employee eligibility.

Time-based restricted stock unit awards and performance-based restricted stock unit awards granted to employees with a home country of the United States are settled in stock, and awards granted to employees with a home country outside the United States are generally settled in cash.

As of June 30, 2025, approximately 19.3 million registered shares were available for future grants, excluding the impact of performance-based restricted stock units outstanding as of June 30, 2025, from the 26.6 million shares previously authorized for issuance under the share-based compensation plan.

• Restricted Stock.

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• Employee Stock Purchase Plan.

The Company offers an employee stock purchase plan that allows eligible employees to purchase shares of common stock at a price equal to 95 % of the market value for the Company's common stock on the last day of the offering period.

The Company offers an employee stock purchase plan that allows eligible employees to purchase shares of common stock at a price equal to 95 % of the market value of the Company's common stock on the last day of the offering period.

This plan has been deemed non-compensatory and, therefore, no compensation expense has been recorded.

As of June 30, 2025, approximately 4.6 million shares were available for future issuances from the 70.0 million shares previously authorized for issuance under the employee stock purchase plan.

The Company currently utilizes treasury stock to satisfy stock option exercises, issuances under the Company's employee stock purchase plan, and restricted stock awards.

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Income tax benefit $ 66.0 $ 60.2 $ 54.5

As of June 30, 2024, the total remaining unrecognized compensation cost related to unvested stock options, restricted stock units, and restricted stock awards amounted to $ 2.9 million, $ 186.9 million, and $ 11.3 million, respectively, which will be amortized over the weighted-average remaining requisite service periods of 1.0 year, 1.8 years, and 0.7 years, respectively.

As of June 30, 2025, the total remaining unrecognized compensation cost related to unvested stock options, restricted stock units, and restricted stock awards amounted to $ 0.3 million, $ 206.8 million, and $ 0.8 million, respectively, which will be amortized over the weighted-average remaining requisite service periods of 0.2 years, 1.7 years, and 0.2 years, respectively.

In fiscal 2025, the following activity occurred under the Company’s existing plans:

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Options exercisable at June 30, 2025 882 $ 157

Shares available for future grants, end of year 20,061

Shares reserved for issuance under stock option plans, end of year 22,103

The aggregate intrinsic value of outstanding stock options and exercisable stock options as of June 30, 2025 was $ 149.3 million and $ 133.7 million, respectively, of which each have remaining lives of 4 years.

The aggregate intrinsic value for stock options exercised in fiscal 2025, 2024, and 2023 was $ 134.0 million, $ 63.2 million, and $ 80.6 million, respectively.

Time-Based Restricted Stock and Time-Based Restricted Stock Units:

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Restricted shares/units outstanding at June 30, 2025 27 751

The aggregate intrinsic value of outstanding stock options and exercisable stock options as of June 30, 2024 was $ 162.5 million and $ 130.9 million, respectively, which have a remaining life of 5 years and 4 years, respectively.

The aggregate intrinsic value for stock options exercised in fiscal 2024, 2023, and 2022 was $ 63.2 million, $ 80.6 million, and $ 80.8 million, respectively.

The fair value for stock options granted was estimated at the date of grant using the following assumptions:

2024 2023 2022

Risk-free interest rate N/A N/A — %

Dividend yield N/A N/A 1.8 %

Weighted average volatility factor N/A N/A 22.7 %

Weighted average expected life (in years) N/A N/A 4.9

Weighted average fair value (in dollars) N/A N/A $ 33.03

The weighted average fair values of shares/units granted were as follows:

Year ended June 30, 2024 2023 2022

Years ended June 30, 2025 2024 2023

Performance-based restricted shares/units $ 283.84 $ 262.56 $ 245.96

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Interest cost 87.4 84.6

Actuarial gain (a) ( 14.6 ) ( 48.2 )

Actuarial loss/(gain) (a) 26.0 ( 14.6 )

Currency translation adjustments 5.9 0.8

Acquisitions — 0.7

Curtailments and special termination benefits ( 0.3 ) —

Benefits paid ( 112.6 ) ( 95.6 )

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Funded status - plan assets less benefit obligations $ 219.6 $ 173.4

(a) The actuarial gain for fiscal 2024 was primarily due to demographic changes.

(a) The actuarial loss for fiscal 2025 was primarily due to changes in the discount rate.

The amounts recognized on the Consolidated Balance Sheets as of June 30, 2025 and 2024 consisted of:

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Increase in compensation levels N/A N/A

Assumptions used to determine the net pension expense generally were:

Assumptions used to determine the net pension (income)/expense generally were:

Years ended June 30, 2025 2024 2023

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The interest crediting rate is based on the current and expected future ten-year U.S.

Treasury rates and a minimum of 3.25 %.

Treasury rates or a minimum of 3.25 %.

The expected long-term rate of return on assets is determined based on historical and expected future rates of return on plan assets considering the target asset mix and the long-term investment strategy.

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None of the pension plans' assets are directly invested in the Company's stock, although the pension plans may hold a minimal amount of Company stock to the extent of the Company's participation in equity indices.

The pension plans' investments included in Level 1 are valued using closing prices for identical instruments that are traded on active exchanges.

The pension plans' investments included in Level 2 are valued utilizing inputs obtained from an independent pricing service, which are reviewed by the Company for reasonableness.

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Government securities — 490.4 — 490.4

Mutual funds 18.2 279.0 — 297.2

Corporate and municipal bonds — 695.4 — 695.4

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The effective tax rate in fiscal 2025 and 2024 was 23.2 % and 23.0 %, respectively.

The decrease in the effective tax rate is primarily due to a valuation allowance release and an intercompany transfer of certain assets offset by a lower benefit for adjustments to prior year tax liabilities in fiscal 2024.

The increase in the effective tax rate is primarily due to higher reserves for uncertain tax positions in fiscal 2025 and a valuation allowance release in fiscal 2024 offset by an increase in the excess tax benefit on stock-based compensation in fiscal 2025.

The effective tax rate for fiscal 2024 and 2023 was 23.0 % and 23.1 %, respectively.

The increase in the effective tax rate is primarily due to an intercompany transfer of certain assets that resulted in a lower effective tax rate in fiscal 2022 and higher reserves for uncertain tax positions in fiscal 2023.

The significant components of deferred income tax assets and liabilities and their balance sheet classifications are as follows:

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Net operating losses 59.3 41.7

Prepaid royalty — 18.0

Disallowed business interest expense carryforward 30.9 —

Unrealized investment losses, net 98.4 351.4

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Deferred tax liabilities 839.1 780.8

Net deferred tax assets $ 135.9 $ 257.5

Net deferred tax (liabilities)/assets $ ( 107.5 ) $ 135.9

There are $ 56.1 million and $ 200.2 million of long-term deferred tax assets included in other assets on the Consolidated Balance Sheets at June 30, 2025 and 2024, respectively.

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As of June 30, 2025, it is not practicable to estimate the unrecognized tax liability that would occur upon distribution.

The Company has estimated foreign net operating loss carry-forwards of approximately $ 74.0 million as of June 30, 2024, of which $ 0.9 million expire through June 2034 and $ 73.1 million have an indefinite utilization period.

The Company has estimated foreign net operating loss carry-forwards of approximately $ 117.3 million as of June 30, 2025, of which $ 17.8 million expire through the year ending June 30, 2045 and $ 99.5 million have an indefinite utilization period.

As of June 30, 2025, the Company has approximately $ 107.3 million of federal net operating loss carry-forwards from acquired companies.

The net operating losses have an annual utilization limitation pursuant to section 382 of the Internal Revenue Code and expire through June 2036.

The Company has state net operating loss carry-forwards of approximately $ 196.8 million as of June 30, 2024, which expire through June 2043.

The net operating losses have an annual utilization limitation pursuant to section 382 of the Internal Revenue Code, of which $ 16.4 million expire through the year ending June 30, 2036 and $ 90.9 million have an indefinite utilization period.

The Company has state net operating loss carry-forwards of approximately $ 109.2 million as of June 30, 2025, which expire through the year ending June 30, 2045.

The Company has recorded valuation allowances of $ 23.8 million and $ 11.1 million at June 30, 2025 and 2024, respectively, to reflect the estimated amount of domestic and foreign deferred tax assets that may not be realized.

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Interest expense and penalties associated with uncertain tax positions have been recorded in the provision for income taxes on the Statements of Consolidated Earnings.

During the fiscal years 2024, 2023, and 2022, the Company recorded interest expense of $ 5.7 million, $ 9.1 million, and $ 3.5 million, respectively.

During the years ended June 30, 2025, 2024, and 2023, the Company recorded interest expense of $ 4.3 million, $ 5.7 million, and $ 9.1 million, respectively.

Penalties recorded during fiscal years 2025, 2024, and 2023 were not significant.

During fiscal year 2022, the Company recorded penalties of $ 0.3 million.

At June 30, 2025 and June 30, 2024, the Company had accrued interest of $ 36.9 million and $ 32.6 million, respectively, recorded on the Consolidated Balance Sheets within other liabilities.

At June 30, 2024, the Company had no accrued penalties.

At June 30, 2023, the Company's accrued penalties recorded on the Consolidated Balance Sheets within other liabilities were no t material.

At June 30, 2022, the Company's accrued penalties of $ 0.3 million, were recorded on the Consolidated Balance Sheets within income taxes payable.

At June 30, 2025 the Company had accrued penalties of $ 0.3 million recorded on the Consolidated Balance Sheets within other liabilities.

At June 30, 2024, the Company had no accrued penalties recorded on the Consolidated Balance Sheets.

The Company is routinely examined by the IRS and tax authorities in foreign countries in which it conducts business, as well as tax authorities in states in which it has significant business operations.

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Massachusetts 2016 - 2022

Michigan 2020 - 2023

New Jersey 2020 - 2022

New York City 2016 - 2021

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If certain pending tax matters settle within the next twelve months, the total amount of unrecognized tax benefits may increase or decrease for all open tax years and jurisdictions.

Based on current estimates, the Company is not projecting any settlements.

Audit outcomes and the timing of audit settlements are subject to significant uncertainty.

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COMMITMENTS AND CONTINGENCIES

As of June 30, 2024, the Company has purchase commitments of approximately $ 1,191.6 million, including a reinsurance premium with Chubb for the fiscal 2025 policy year, as well as obligations related to software license agreements, and purchase and maintenance agreements on our software, equipment, and other assets, of which $ 322.1 million relates to fiscal 2025, $ 426.7 million relates to the fiscal years ending June 30, 2026 through fiscal 2027, $ 117.7 million relates to fiscal years ending June 30, 2028 through fiscal 2029, and the remaining relates to fiscal years thereafter.

As of June 30, 2025, the Company has purchase commitments of approximately $ 1,498.9 million, including a reinsurance premium with Chubb for the fiscal 2026 policy year, as well as obligations related to software license agreements, and purchase and maintenance agreements on our software, equipment, and other assets, of which $ 331.6 million relates to the year ending

June 30, 2026, $ 566.6 million relates to the years ending June 30, 2027 through 2028, $ 211.9 million relates to the years ending June 30, 2029 through 2030, and the remaining relates to fiscal years thereafter.

In May 2020, a putative class action complaint was filed against ADP, TotalSource and related defendants in the U.S.

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Comprehensive income is a measure of income that includes both net earnings and other comprehensive income/(loss).

Other comprehensive (loss)/income results from items deferred on the Consolidated Balance Sheets in stockholders' equity.

Other comprehensive (loss)/income was $ 497.5 million, ($ 312.1 ) million, and ($ 2,004.3 ) million in fiscal 2024, 2023, and 2022, respectively.

Changes in Accumulated Other Comprehensive Income (“AOCI”) by component are as follows:

Currency Translation Adjustment Net Gains/(Losses) on Available-for-sale Securities Cash Flow Hedging Activities Pension Liability Accumulated Other Comprehensive (Loss) /Income

Other comprehensive income/(loss) results from items deferred on the Consolidated Balance Sheets in stockholders' equity.

Other comprehensive income/(loss) was $ 924.9 million, $ 497.5 million, and ($ 312.1 ) million in fiscal 2025, 2024, and 2023, respectively.

Changes in AOCI by component are as follows:

Currency Translation Adjustment Net Gains/(Losses) on Available-for-sale Securities Cash Flow Hedging Activities Pension Liability Accumulated Other Comprehensive Income/(Loss)

Balance at June 30, 2022 $ ( 354.2 ) $ ( 1,330.0 ) $ ( 26.6 ) $ ( 282.9 ) $ ( 1,993.7 )

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Balance at June 30, 2023 $ ( 340.8 ) $ ( 1,705.6 ) $ ( 23.3 ) $ ( 236.1 ) $ ( 2,305.8 )

Other comprehensive income/(loss) before reclassification adjustments 13.4 ( 500.3 ) — 60.3 ( 426.6 )

Other comprehensive (loss)/income before reclassification adjustments ( 38.0 ) 685.2 — 5.6 652.8

Tax effect — ( 162.2 ) — ( 1.1 ) ( 163.3 )

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Employer Services and PEO Services.

Certain revenues and expenses are charged to the reportable segments at a standard rate for management reasons.

Other costs are recorded based on management responsibility.

The Company's Chief Operating Decision Maker does not review assets at the reportable segment level, hence segment disclosure relating to total assets has not been provided .

Employer Services PEO Services Other Total

Year ended June 30, 2024

Revenues $ 12,980.8 $ 6,233.6 $ ( 11.8 ) $ 19,202.6

Earnings before income taxes 4,555.5 921.5 ( 604.7 ) 4,872.3

Capital expenditures 157.3 — 54.4 211.7

Depreciation and amortization 486.6 6.8 68.5 561.9

Year ended June 30, 2023

Revenues $ 12,042.6 $ 5,984.2 $ ( 14.6 ) $ 18,012.2

Earnings before income taxes 3,974.2 977.3 ( 513.9 ) 4,437.6

Capital expenditures 161.4 — 44.6 206.0

Depreciation and amortization 467.6 7.5 74.2 549.3

Year ended June 30, 2022

Revenues $ 10,967.7 $ 5,545.7 $ ( 15.1 ) $ 16,498.3

Earnings before income taxes 3,406.3 871.2 ( 473.4 ) 3,804.1

Capital expenditures 125.4 — 51.7 177.1

Depreciation and amortization 428.5 8.3 78.3 515.1

The Company's Chief Operating Decision Maker ("CODM") is the Chief Executive Officer.

For each reportable segment, the CODM uses earnings before income taxes, including plan-to-actual and forecast-to-actual results, to assess segment performance and allocate resources (including personnel and capital resources) amongst its strategic business units.

The CODM does not review assets at the reportable segment level, hence segment disclosure relating to total assets has not been provided.

The following tables present the Company's revenues, significant segment expenses, and earnings before income taxes by reportable segment:

Year ended June 30, 2025 Employer Services PEO Services Total

Revenues from external customers $ 12,692.2 $ 6,679.6 $ 19,371.8

Interest on funds held for clients 1,178.3 10.8 1,189.1

Intercompany revenues 12.6 — 12.6

Total segment revenues 13,883.1 6,690.4 20,573.5

Reconciliation of revenues:

Intercompany eliminations ( 12.6 )

Total consolidated revenues $ 20,560.9

Less segment expenses:

Selling and marketing 2,177.1 362.8

Zero-margin benefits pass-through costs — 4,289.0

Worker's compensation coverage and state unemployment taxes — 681.3

Other segment expenses (b) 6,697.5 406.8

Total segment earnings before income taxes 5,008.5 950.5 5,959.0

Reconciliation of earnings before income taxes:

Other (c) ( 648.9 )

Total consolidated earnings before income taxes $ 5,310.1

Year ended June 30, 2024 Employer Services PEO Services Total

Revenues from external customers $ 11,953.6 $ 6,224.3 $ 18,177.9

Interest on funds held for clients 1,015.4 9.3 1,024.7

Intercompany revenues 11.8 — 11.8

Total segment revenues 12,980.8 6,233.6 19,214.4

Reconciliation of revenues:

Intercompany eliminations ( 11.8 )

Total consolidated revenues $ 19,202.6

Less segment expenses:

Selling and marketing 2,025.0 330.5

Zero-margin benefits pass-through costs — 3,975.9

Worker's compensation coverage and state unemployment taxes — 613.4

Other segment expenses (b) 6,400.3 392.3

Total segment earnings before income taxes 4,555.5 921.5 5,477.0

Reconciliation of earnings before income taxes:

Other (c) ( 604.7 )

Total consolidated earnings before income taxes $ 4,872.3

Year ended June 30, 2023 Employer Services PEO Services Total

Revenues from external customers $ 11,222.0 $ 5,976.8 $ 17,198.8

Interest on funds held for clients 806.0 7.4 813.4

Intercompany revenues 14.6 — 14.6

Total segment revenues 12,042.6 5,984.2 18,026.8

Reconciliation of revenues:

Intercompany eliminations ( 14.6 )

Total consolidated revenues $ 18,012.2

Less segment expenses:

Selling and marketing 1,885.3 307.4

Zero-margin benefits pass-through costs — 3,800.9

Worker's compensation coverage and state unemployment taxes — 606.3

Other segment expenses (b) 6,183.1 292.3

Total segment earnings before income taxes 3,974.2 977.3 4,951.5

Reconciliation of earnings before income taxes:

Other (c) ( 513.9 )

Total consolidated earnings before income taxes $ 4,437.6

(a) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

Intercompany expenses are included in the amounts shown.

(b) Other segment expenses for both reportable segments include operating, research and development, depreciation and amortization, and other general and administrative expenses.

(c) Other represents certain corporate overhead charges and expenses that have not been allocated to the reportable segments, including corporate functions, legal settlements, severance costs, non-recurring gains and losses, the elimination of intercompany transactions, and interest income and expense.

The following table presents the Company's depreciation and amortization included in earnings before income taxes for each reportable segment:

Years ended June 30, 2025 2024 2023

Employer Services $ 512.4 $ 486.6 $ 467.6

PEO Services 6.7 6.8 7.5

Other 63.3 68.5 74.2

Total depreciation and amortization $ 582.4 $ 561.9 $ 549.3

The following table presents the Company's revenues and assets by geographic area:

United States Europe Canada Other Total

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data