AUTOMATIC DATA PROCESSING INC (Form: 10-Q, Received: 05/06/2010 16:14:11)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________

FORM 10-Q

______________

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

For the Quarterly Period Ended March 31, 2010

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

For the Transition Period From to

Commission File Number 1-5397

______________

AUTOMATIC DATA PROCESSING, INC.

(Exact name of registrant as specified in its charter)

______________

Delaware	22-1467904
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

One ADP Boulevard, Roseland, New Jersey	07068
(Address of principal executive offices)	(Zip Code)

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

______________

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

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

The number of shares outstanding of the registrant’s common stock as of April 30, 2010 was 502,987,661.

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Automatic Data Processing, Inc. and Subsidiaries

Statements of Consolidated Earnings

(In millions, except per share amounts)

(Unaudited)

	Three Months Ended					Nine Months Ended
	March 31,					March 31,
	2010			2009		2010			2009
REVENUES:
Revenues, other than interest on funds
held for clients and PEO revenues	$	1,919.3		$	1,878.1	$	5,355.1		$	5,387.2
Interest on funds held for clients		147.9			164.3		403.5			463.5
PEO revenues (A)		376.0			326.3		978.8			886.8
TOTAL REVENUES		2,443.2			2,368.7		6,737.4			6,737.5

EXPENSES:
Costs of revenues:
Operating expenses		1,140.3			1,036.2		3,190.6			3,082.1
Systems development and programming costs		130.0			118.6		376.2			371.0
Depreciation and amortization		60.4			59.9		180.6			176.4
TOTAL COSTS OF REVENUES		1,330.7			1,214.7		3,747.4			3,629.5

Selling, general and administrative expenses		504.9			518.9		1,515.5			1,616.0
Interest expense		1.2			2.5		6.8			29.8
TOTAL EXPENSES		1,836.8			1,736.1		5,269.7			5,275.3

Other (income) expense, net		(26.6	)		4.1		(90.0	)		(77.1	)

EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES		633.0			628.5		1,557.7			1,539.3

Provision for income taxes		231.4			226.4		558.0			561.4

NET EARNINGS FROM CONTINUING OPERATIONS	$	401.6		$	402.1	$	999.7		$	977.9

Earnings from discontinued operations, net of
provision for income taxes of $6.1 and $0.2 for the
three months ended March 31, 2010 and 2009,
respectively, and $7.0 and $2.3 for the nine months
ended March 31, 2010 and 2009, respectively		2.0			0.4		3.8			2.1

NET EARNINGS	$	403.6		$	402.5	$	1,003.5		$	980.0

Basic Earnings Per Share from Continuing Operations	$	0.80		$	0.80	$	1.99		$	1.94
Basic Earnings Per Share from Discontinued Operations		-			-		0.01			-
BASIC EARNINGS PER SHARE	$	0.80		$	0.80	$	2.00		$	1.94

Diluted Earnings Per Share from Continuing Operations	$	0.79		$	0.80	$	1.98		$	1.93
Diluted Earnings Per Share from Discontinued Operations		-			-		0.01			-
DILUTED EARNINGS PER SHARE	$	0.80		$	0.80	$	1.99		$	1.93

Basic weighted average shares outstanding		502.4			501.2		501.9			504.0
Diluted weighted average shares outstanding		505.5			502.4		504.8			507.0

Dividends declared per common share	$	0.3400		$	0.3300	$	1.0100		$	0.9500

(A) Professional Employer Organization (“PEO”) revenues are net of direct pass-through costs, primarily consisting of payroll wages and payroll taxes, of $3,478.6 and $3,359.8 for the three months ended March 31, 2010 and 2009, respectively, and $10,094.1 and $9,441.8 for the nine months ended March 31, 2010 and 2009, respectively.

See notes to the consolidated financial statements.

Automatic Data Processing, Inc. and Subsidiaries

Consolidated Balance Sheets

(In millions, except per share amounts)

(Unaudited)

	March 31,			June 30,
Assets	2010			2009
Current assets:
Cash and cash equivalents	$	1,965.0		$	2,265.3
Short-term marketable securities		38.5			30.8
Accounts receivable, net		1,131.0			1,050.7
Other current assets		621.8			918.9
Assets held for sale		6.6			12.1
Assets of discontinued operations		-			8.5
Total current assets before funds held for clients		3,762.9			4,286.3
Funds held for clients		26,552.1			16,419.2
Total current assets		30,315.0			20,705.5
Long-term marketable securities		104.1			92.4
Long-term receivables, net		133.8			162.6
Property, plant and equipment, net		690.0			734.3
Other assets		757.9			702.7
Goodwill		2,431.2			2,375.5
Intangible assets, net		554.2			578.7
Total assets	$	34,986.2		$	25,351.7

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	96.2		$	130.3
Accrued expenses and other current liabilities		607.3			777.9
Accrued payroll and payroll-related expenses		453.9			402.3
Dividends payable		171.2			162.1
Short-term deferred revenues		333.3			329.8
Obligation under commercial paper borrowing		-			730.0
Income taxes payable		123.2			230.7
Liabilities of discontinued operations		-			7.7
Total current liabilities before client funds obligations		1,785.1			2,770.8
Client funds obligations		25,956.9			15,992.6
Total current liabilities		27,742.0			18,763.4
Long-term debt		41.3			42.7
Other liabilities		474.5			477.1
Deferred income taxes		315.6			254.1
Long-term deferred revenues		474.5			491.8
Total liabilities		29,047.9			20,029.1

Stockholders' equity:
Preferred stock, $1.00 par value:
Authorized, 0.3 shares; issued, none		-			-
Common stock, $0.10 par value:
Authorized, 1,000.0 shares; issued 638.7
shares at March 31, 2010 and June 30, 2009;
outstanding, 502.9 and 501.7 shares at March 31, 2010
and June 30, 2009, respectively		63.9			63.9
Capital in excess of par value		481.5			520.0
Retained earnings		11,211.6			10,716.6
Treasury stock - at cost: 135.8 and 137.0 shares
at March 31, 2010 and June 30, 2009, respectively		(6,085.4	)		(6,133.9	)
Accumulated other comprehensive income		266.7			156.0
Total stockholders’ equity		5,938.3			5,322.6
Total liabilities and stockholders’ equity	$	34,986.2		$	25,351.7

See notes to the consolidated financial statements.

Automatic Data Processing, Inc. and Subsidiaries

Statements of Consolidated Cash Flows

(In millions)

(Unaudited)

	Nine Months Ended
	March 31,
	2010			2009
Cash Flows from Operating Activities:
Net earnings	$	1,003.5		$	980.0
Adjustments to reconcile net earnings to cash flows provided by
operating activities:
Depreciation and amortization		232.8			228.4
Deferred income taxes		50.8			(28.1	)
Stock-based compensation expense		55.0			85.5
Net pension expense		26.0			25.1
Net realized loss from the sales of marketable securities		1.3			14.9
Net amortization of premiums and accretion of discounts on available-for-sale securities		43.6			43.5
Impairment losses on available-for-sale securities		5.3			-
Gain on sale of building		(1.5	)		(2.2	)
(Gain) loss on sale of discontinued businesses, net of tax		(0.2	)		1.0
Other		9.7			(2.9	)
Changes in operating assets and liabilities, net of effects from acquisitions
and divestitures of businesses:
Increase in accounts receivable		(91.6	)		(148.1	)
Decrease (increase) in other assets		155.1			(43.4	)
Decrease in accounts payable		(19.5	)		(37.8	)
(Decrease) increase in accrued expenses and other liabilities		(183.6	)		19.9
Operating activities of discontinued operations		(0.1	)		(0.7	)
Net cash flows provided by operating activities		1,286.6			1,135.1

Cash Flows from Investing Activities:
Purchases of corporate and client funds marketable securities		(2,685.3	)		(2,256.0	)
Proceeds from the sales and maturities of corporate and client funds marketable securities		2,592.9			2,251.7
Net increase in restricted cash and cash equivalents and other restricted assets
held to satisfy client funds obligations		(9,757.5	)		(5,246.7	)
Capital expenditures		(76.5	)		(112.4	)
Additions to intangibles		(87.5	)		(63.8	)
Acquisitions of businesses, net of cash acquired		(98.9	)		(26.4	)
Reclassification from cash and cash equivalents to short-term marketable securities		-			(211.1	)
Proceeds from the sale of property, plant and equipment		3.1			19.9
Other		6.9			7.3
Investing activities of discontinued operations		(0.1	)		(0.1	)
Proceeds from the sale of businesses included in discontinued operations		21.6			-
Net cash flows used in investing activities		(10,081.3	)		(5,637.6	)

Cash Flows from Financing Activities:
Net increase in client funds obligations		9,799.7			6,012.9
Proceeds from issuance of debt		-			12.5
Payments of debt		(1.3	)		(21.5	)
Net purchases of reverse repurchase agreements		-			(11.8	)
Net repayment of commercial paper borrowing		(730.0	)		-
Repurchases of common stock		(279.2	)		(580.4	)
Proceeds from stock purchase plan and exercises of stock options		201.3			75.1
Dividends paid		(498.1	)		(463.9	)
Net cash flows provided by financing activities		8,492.4			5,022.9

Effect of exchange rate changes on cash and cash equivalents		2.0			(74.5	)

Net change in cash and cash equivalents		(300.3	)		445.9

Cash and cash equivalents of continuing operations, beginning of period		2,265.3			917.5
Cash and cash equivalents of discontinued operations, beginning of period		-			-

Cash and cash equivalents, end of period		1,965.0			1,363.4

Less cash and cash equivalents of discontinued operations, end of period		-			-

Cash and cash equivalents of continuing operations, end of period	$	1,965.0		$	1,363.4

See notes to the consolidated financial statements.

Automatic Data Processing, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

(Tabular dollars in millions, except per share amounts)

(Unaudited)

Note 1. Basis of Presentation

The accompanying unaudited consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the results for the interim periods. Adjustments are of a normal recurring nature. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes of Automatic Data Processing, Inc. and subsidiaries (“ADP” or the “Company”) as of and for the year ended June 30, 2009 (“fiscal 2009”). The results of operations for the three and nine months ended March 31, 2010 may not be indicative of the results to be expected for the fiscal year ending June 30, 2010 (“fiscal 2010”).

Note 2. New Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (“FASB”) issued FASB Accounting Standards Codification (“ASC”) 105.10.05, “Generally Accepted Accounting Principles” (“ASC 105.10.05”). ASC 105.10.05 establishes the FASB ASC as the single source of authoritative generally accepted accounting principles (“GAAP”). Pursuant to the provisions of ASC 105.10.05, the Company has updated references to GAAP in its financial statements issued subsequent to September 15, 2009. The adoption of ASC 105.10.05 did not have any impact on the Company’s consolidated results of operations, financial condition or cash flows.

In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-6, “Improving Disclosures about Fair Value Investments.” ASU 2010-6 amends the disclosure requirements in ASC 820.10 “Fair Value Measurements and Disclosures,” which the Company adopted on July 1, 2008, and requires new disclosures regarding transfers in and out of Level 1 and 2 asset categories as well as more detailed information for the Level 3 reconciliation of activity, if required. Since the Company adopted ASC 820.10, the Company has not had any transfers in or out of Level 1 or Level 2, nor has the Company had any Level 3 assets or liabilities. ASU 2010-6 also clarifies existing disclosure requirements regarding the level of disaggregation expected, valuation techniques and inputs to fair value measurements. ASU 2010-6 is effective for interim and annual reporting periods beginning after December 15, 2009. On January 1, 2010, the Company adopted ASU 2010-6 and the adoption did not have a material impact on its consolidated results of operations, financial condition or cash flows.

In October 2009, the FASB issued ASU 2009-13, “Multiple Deliverable Revenue Arrangements.” ASU 2009-13 modifies the guidance related to accounting for arrangements with multiple deliverables by providing an alternative when vendor specific objective evidence (“VSOE”) or third-party evidence (“TPE”) does not exist to determine the selling price of a deliverable. The alternative when VSOE or TPE does not exist is the best estimate of the selling price of the deliverable. Consideration for multiple deliverables is then allocated based upon the relative selling price of the deliverables and revenue is recognized as earned for each deliverable. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, unless the election is made to adopt ASU 2009-13 retrospectively. In either case, early adoption is permitted. The Company is currently evaluating the impact, if any, that the adoption of ASU 2009-13 will have on its consolidated results of operations, financial condition or cash flows.

In October 2009, the FASB issued ASU No. 2009-14, “Certain Revenue Arrangements that Include Software Elements” (“ASU 2009-14”). ASU 2009-14 modifies the scope of the software revenue recognition guidance to exclude (a) non-software components of tangible products and (b) software components of tangible products that are sold, licensed, or leased with tangible products when the software components and non-software components of the tangible product function together to deliver the tangible product’s functionality. ASU 2009-14 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, unless the election is made to adopt ASU 2009-14 retrospectively. In either case, early adoption is permitted. The Company is currently evaluating the impact, if any, that the adoption of ASU 2009-14 will have on its consolidated results of operations, financial condition or cash flows.

In August 2009, the FASB issued ASU No. 2009-05, “Measuring Liabilities at Fair Value” (“ASU 2009-05”). ASU 2009-05 provides additional guidance that clarifies measuring liabilities at fair value under ASC 820.10. ASU 2009-05 is effective for the first reporting period (including interim periods) beginning after August 2009. On October 1, 2009, the Company adopted ASU 2009-05 and the adoption did not have a material impact on its consolidated results of operations, financial condition or cash flows.

In December 2008, the FASB issued ASC 715.20.65, “Retirement Benefits – Defined Benefit Plans.” ASC 715.20.65 requires additional disclosures in relation to plan assets of defined benefit pension or other postretirement plans. ASC 715.20.65 is effective for fiscal years ending after December 15, 2009 with early application permitted. The Company does not anticipate the adoption of ASC 715.20.65 will have a material impact on its consolidated results of operations, financial condition or cash flows.

In June 2008, the FASB issued ASC 260.10.45, “Earnings per Share.” ASC 260.10.45 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. ASC 260.10.45 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Upon adoption, companies are required to retrospectively adjust earnings per share data (including any amounts related to interim periods, summaries of earnings and selected financial data) to conform to provisions of ASC 260.10.45. On July 1, 2009, the Company adopted ASC 260.10.45 and the adoption did not have a material impact on its consolidated results of operations, financial condition or cash flows.

In April 2008, the FASB issued ASC 350.30, “Intangibles – Goodwill and Other.” ASC 350.30 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset. ASC 350.30 also requires expanded disclosure related to the determination of intangible asset useful lives. ASC 350.30 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years for intangible assets acquired after the effective date. On July 1, 2009, the Company adopted ASC 350.30 and the adoption did not have a material impact on its consolidated results of operations, financial condition or cash flows.

In December 2007, the FASB issued ASC 805.10, “Business Combinations.” ASC 805.10 establishes principles and requirements for how the acquirer in a business combination recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any controlling interest in the business and the goodwill acquired. ASC 805.10 further requires that acquisition-related costs and costs associated with restructuring or exiting activities of an acquired entity will be expensed as incurred. ASC 805.10 also establishes disclosure requirements that will require disclosure on the nature and financial effects of the business combination. Additionally, in April 2009, the FASB issued ASC 805.20, “Identifiable Assets and Liabilities, and Any Noncontrolling Interest.” ASC 805.20 amends and clarifies ASC 805.10 to address application issues on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. On July 1, 2009, the Company adopted ASC 805.10 and ASC 805.20 and the adoption did not have a material impact on its consolidated results of operations, financial condition or cash flows as no business combinations had been completed at the time of adoption.

In September 2006, the FASB issued ASC 820.10. ASC 820.10 clarifies the definition of fair value, establishes a framework for measuring fair value, and expands the disclosures on fair value measurements. ASC 820.10 is effective for fiscal years beginning after November 15, 2007, except for non-financial assets and liabilities recognized or disclosed at fair value on a non-recurring basis, for which the effective date is fiscal years beginning after November 15, 2008. On July 1, 2008, the Company adopted ASC 820.10 for assets and liabilities recognized or disclosed at fair value on a recurring basis. On July 1, 2009, the Company adopted ASC 820.10 for non-financial assets that are recognized or disclosed on a non-recurring basis. The adoption of ASC 820.10 did not have an impact on its consolidated results of operations, financial condition or cash flows.

Note 3. Earnings per Share (“EPS”)

			Effect of		Effect of
			Employee		Employee
			Stock		Restricted
			Option		Stock
	Basic		Shares		Shares		Diluted

Three months ended March 31,

2010
Net earnings from continuing operations	$	401.6	$	-	$	-	$	401.6
Weighted average shares (in millions)		502.4		2.8		0.3		505.5
EPS from continuing operations	$	0.80					$	0.79

2009
Net earnings from continuing operations	$	402.1	$	-	$	-	$	402.1
Weighted average shares (in millions)		501.2		0.8		0.4		502.4
EPS from continuing operations	$	0.80					$	0.80

Nine months ended March 31,

2010
Net earnings from continuing operations	$	999.7	$	-	$	-	$	999.7
Weighted average shares (in millions)		501.9		1.8		1.1		504.8
EPS from continuing operations	$	1.99					$	1.98

2009
Net earnings from continuing operations	$	977.9	$	-	$	-	$	977.9
Weighted average shares (in millions)		504.0		1.5		1.5		507.0
EPS from continuing operations	$	1.94					$	1.93

Options to purchase 12.8 million and 35.9 million shares of common stock for the three months ended March 31, 2010 and 2009, respectively, and 19.3 million and 29.6 million shares of common stock for the nine months ended March 31, 2010 and 2009, respectively, were excluded from the calculation of diluted earnings per share because their exercise prices exceeded the average market price of outstanding common shares for the respective period.

Note 4. Other (Income) Expense, net

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2010			2009			2010			2009
Interest income on corporate funds	$	(10.6	)	$	(16.9	)	$	(78.2	)	$	(106.4	)
Realized gains on available-for-sale securities		(1.5	)		(2.8	)		(11.7	)		(5.4	)
Realized losses on available-for-sale securities		0.9			9.4			13.0			20.3
Realized (gain) loss on investment in Reserve Fund		(14.8	)		15.0			(15.2	)		18.3
Impairment losses on available-for-sale securities		-			-			5.3			-
Gain on sales of buildings		-			-			(1.5	)		(2.2	)
Other, net		(0.6	)		(0.6	)		(1.7	)		(1.7	)

Other (income) expense, net	$	(26.6	)	$	4.1		$	(90.0	)	$	(77.1	)

Proceeds from sales and maturities of available-for-sale securities were $2,592.9 million and $2,251.7 million for the nine months ended March 31, 2010 and 2009, respectively.

During the three and nine months ended March 31, 2010, the Company recorded gains of $14.8 million and $15.2 million, respectively, to other (income) expense, net on the Statements of Consolidated Earnings related to the Primary Fund of the Reserve Fund (the “Reserve Fund”). During the three and nine months ended March 31, 2009, the Company recorded losses of $15.0 million and $18.3 million, respectively, to other (income) expense, net on the Statements of Consolidated Earnings related to the Reserve Fund. Refer to Note 7 for additional information related to the Reserve Fund.

At September 30, 2009, the Company concluded that it had the intent to sell certain securities for which unrealized losses of $5.3 million were previously recorded in accumulated other comprehensive income on the Consolidated Balance Sheets. As such, the Company realized impairment losses of $5.3 million in other (income) expense, net on the Statements of Consolidated Earnings during the nine months ended March 31, 2010. During October 2009, the Company sold these securities.

In July 2009, the Company sold a building and, as a result, recorded a gain of $1.5 million in other (income) expense, net, on the Statements of Consolidated Earnings during the nine months ended March 31, 2010. Additionally, in December 2008, the Company sold a building and, as a result, recorded a gain of $2.2 million in other (income) expense, net on the Statements of Consolidated Earnings during the nine months ended March 31, 2009. These buildings were previously reported in assets held for sale on the Consolidated Balance Sheets.

The Company has an outsourcing agreement with Broadridge Financial Solutions, Inc. ("Broadridge") pursuant to which the Company provides data center outsourcing services, which principally consist of information technology services and service delivery network services. During the three months ended March 31, 2010, Broadridge notified the Company that it would not extend the outsourcing agreement beyond its current expiration date of June 30, 2012. The Company is currently evaluating the impact, if any, that this will have and does not currently anticipate this will have a material impact. As a result of the outsourcing agreement, the Company recognized income of $26.2 million and $26.0 million for the three months ended March 31, 2010 and 2009, respectively, which is offset by expenses directly associated with providing such services of $25.6 million and $25.5 million, respectively, both of which were recorded in other (income) expense, net, on the Statements of Consolidated Earnings. The Company recognized income of $78.4 million and $77.8 million for the nine months ended March 31, 2010 and 2009, respectively, which is offset by expenses directly associated with providing such services of $76.7 million and $76.1 million, respectively. The Company had a receivable on the Consolidated Balance Sheets from Broadridge for the services under this agreement of $8.8 million and $8.7 million as of March 31, 2010 and June 30, 2009, respectively.

Note 5. Acquisitions

The Company acquired five businesses during the nine months ended March 31, 2010 for approximately $101.8 million, net of cash acquired. The purchase price for these acquisitions includes $3.7 million in accrued contingent payments expected to be paid in future periods. The Company recorded $83.0 million of goodwill on the Consolidated Balance Sheets related to these acquisitions. Intangible assets acquired, which totaled approximately $28.2 million, consisted of customer contracts and lists and software that are being amortized over a weighted average life of approximately 6 years. The acquisitions were not material to the Company's results of operations, financial position or cash flows.

The Company made $0.7 million of contingent payments relating to previously consummated acquisitions during the nine months ended March 31, 2010.

Note 6. Divestitures

On March 24, 2010, the Company completed the sale of the non-core Commercial Systems business (the “Commercial business”) for approximately $21.6 million in cash. The Commercial business was previously reported in the Dealer Services segment. In connection with the disposal of this business, the Company has classified the results of this business as discontinued operations for all periods presented. Additionally, during the three and nine months ended March 31, 2010, the Company reported a gain of $5.6 million, or $1.0 million after taxes within earnings from discontinued operations on the Statements of Consolidated Earnings.

During the three and nine months ended March 31, 2010, the Company recorded charges of $0.8 million related to a change in estimated taxes on the divestitures of businesses. During the nine months ended March 31, 2009, the Company recorded charges of $1.0 million within earnings from discontinued operations on the Statements of Consolidated Earnings related to a change in estimated taxes on the divestitures of businesses.

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2010		2009		2010		2009

Revenues	$	4.2	$	6.0	$	17.2	$	21.9

Earnings from discontinued operations before income taxes		2.5		0.6		5.2		4.4
Provision for income taxes		0.7		0.2		1.6		1.3
Net earnings from discontinued operations before gain on
disposal of discontinued operations		1.8		0.4		3.6		3.1
Gain (loss) on disposal of discontinued operations, net of
provision for income taxes of $5.4 for the three months
ended March 31, 2010 and $5.4 and $1.0 for the nine
months ended March 31, 2010 and 2009, respectively		0.2		-		0.2		(1.0	)
Net earnings (loss) from discontinued operations	$	2.0	$	0.4	$	3.8	$	2.1

There were no assets or liabilities of discontinued operations as of March 31, 2010. The following are the major classes of assets and liabilities related to discontinued operations as of June 30, 2009:

	June 30,
	2009

Assets:
Accounts receivable, net	$	4.7
Other current assets		2.2
Property, plant and equipment, net		0.2
Intangible assets, net		1.4
Total	$	8.5

Liabilities:
Accrued expenses and other liabilities	$	0.9
Deferred revenues		6.8
Total	$	7.7

Note 7. Corporate Investments and Funds Held for Clients

Corporate investments and funds held for clients at March 31, 2010 and June 30, 2009 were as follows:

March 31, 2010

Gross

Amortized

Unrealized

Cost

Gains

Losses

Fair Value

Type of issue:

Money market securities and other cash

equivalents

13,532.3