For the second quarter, our operating income was $230.0 million, an increase of 6% from the same period last year. Operating income, net of certain items, (see Note 1 on page 3 for further description of this Non-GAAP financial measure) also increased 6% to $220.0 million for the second quarter compared to $207.2 million for the same period last year.
|For the three months ended November 30,||For the six months ended November 30,|
|$ in millions||2012||2011||Change||2012||2011||Change|
|Excluding interest on funds held for clients||(10.0||)||(10.7||)||(8||)%||(20.1||)||(21.8||)||(8||)%|
|Operating income, net of certain items||$||220.0||$||207.2||6||%||$||447.9||$||425.8||5||%|
|Operating income, net of certain items, as a percent of total service revenue||39.3||%||38.7||%||39.7||%||39.2||%|
Interest on funds held for clients decreased 8% to $10.0 million for the second quarter, compared to the same period last year. This was due to lower average interest rates earned, offset by a 4% increase in average investment balances. The increase in average investment balances was related to growth in checks per payroll and payroll tax administration services clients, wage inflation, and calendar impacts. The decrease in average interest rates earned resulted from declines in average yields on high credit quality financial securities. Also, the lower rate of return reflected the mix in the short-term investment portfolio, with a greater percentage of the portfolio invested in tax-exempt securities. Tax-exempt securities typically earn a lower pre-tax rate of return, but are expected to generate lower income tax expense on interest earned. Investment income, net, increased 22% to $1.9 million for the second quarter, primarily as a result of higher average investment balances from investment of cash generated from operations.