Company: ADP
Filing Date: 2025-01-30
Form Type: 10-Q
Source: 0000008670-25-000007
Chunk: 72

Company: AUTOMATIC DATA PROCESSING INC
Filing Date: 2025-01-30
Form: 10-Q
Item: Part I, Item 1
Chunk 72
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3 $7,475.7 Funds held for clients35,281.9 32,646.3 34,034.4 31,887.8 Total$45,246.8 $40,469.3 $44,351.7 $39,363.5     Average interest rates earned exclusive of realized   (gains)/losses on:    Corporate investments3.4 %2.9 %3.4 %2.8 %Funds held for clients3.1 %2.8 %3.1 %2.7 %Total3.2 %2.8 %3.2 %2.7 %Net realized losses on available-for-sale securities$0.6 $2.0 $0.8 $4.0 

 December 31, 2024June 30, 2024Net unrealized pre-tax losses on available-for-sale securities$(1,074.5)$(1,515.8)Total available-for-sale securities at fair value$33,019.9 $31,207.5 

We are exposed to interest rate risk in relation to securities that mature, as the proceeds from maturing securities are reinvested. Factors that influence the earnings impact of interest rate changes include, among others, the amount of invested funds and the overall portfolio mix between short-term and long-term investments. This mix varies during the fiscal year and is impacted by daily interest rate changes. The annualized interest rate earned on our entire portfolio increased from 2.7% for the six months ended December 31, 2023 to 3.2% for the six months ended December 31, 2024. A hypothetical change in both short-term interest rates (e.g., overnight interest rates or the federal funds rate) and intermediate-term interest rates of 25 basis points applied to the estimated average investment balances and any related short-term borrowings would result in approximately a $20 million impact to earnings before income taxes over the ensuing twelve-month period ending December 31, 2025. A hypothetical change in only short-term interest rates of 25 basis points applied to the estimated average short-term investment balances and any related short-term borrowings would result in approximately a $9 million impact to earnings before income taxes over the ensuing twelve-month period ending December 31, 2025.

We are exposed to credit