SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1994 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 (I.R.S. Employer
incorporation or organization) Identification Number)
One ADP Boulevard, Roseland, New Jersey 07068
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code
(201) 994-5000
No change
Former name, former address & former fiscal year, if
changed since last report.
Indicate by check mark whether the Registrant (1) has
filed all annual, quarterly and other reports required
to be filed with the commission and (2) has been
subject to the filing requirements for at least the
past 90 days.
X Yes No
As of May 3, 1994 there were 140,667,108 common shares outstanding.
<PAGE>
Form 10Q
Part I. Financial Information
Statements of Consolidated Earnings
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
March 31, March 31,
1994 1993 1994 1993
Revenue $674,405 $612,956 $1,804,049 $1,626,730
Operating 266,061 236,569 729,317 657,250
expenses
General, 184,313 179,483 508,605 474,764
administrative
and selling
expenses
Depreciation 36,571 35,719 108,881 101,866
and
amortization
Systems 41,841 34,657 115,865 95,886
development
and
programming
costs
Interest 5,129 4,848 15,461 14,684
expense
533,915 491,276 1,478,129 1,344,450
EARNINGS BEFORE
INCOME
TAXES AND
CUMULATIVE
EFFECT OF
ACCOUNTING
CHANGE 140,490 121,680 325,920 282,280
Provision 35,500 29,200 82,240 67,750
for income
taxes
NET EARNINGS
BEFORE
CUMULATIVE
EFFECT OF
ACCOUNTING
CHANGE 104,990 92,480 243,680 214,530
Cumulative
effect of
accounting
change -- -- 2,700 --
NET $104,990 $ 92,480 $ 246,380 $ 214,530
EARNINGS
EARNINGS
PER SHARE:
Before
Cumulative
Effect of
Accounting
Change $ .74 $ .65 $ 1 .73 $ 1.52
Cumulative
Effect of
Accounting
Change -- -- .02 --
NET $ .74 $ .65 $ 1.75 $ 1.52
INCOME
Dividends $ .13 $ .115 $ .39 $ .345
per share
See notes to consolidated statements.
<PAGE>
Form 10Q
Consolidated Balance Sheets
(In thousands)
March 31, June 30,
Assets 1994 1993
Cash and cash equivalents $ 121,527 $ 180,802
Short-term marketable 409,304 187,358
securities
Accounts receivable 319,409 294,282
Other current assets 96,920 108,861
Total current assets 947,160 771,303
Long-term marketable 494,102 518,292
securities
Long-term receivables 152,946 134,631
Land and buildings 281,417 257,837
Data processing equipment 414,636 382,049
Furniture, leaseholds and 285,897 272,036
other 981,950 911,922
Less accumulated (595,410) (550,747)
depreciation 386,540 361,175
Other assets 80,530 78,820
Intangibles 580,424 575,179
$2,641,702 $2,439,400
Liabilities and Shareholders'
Equity
Accounts payable $ 48,110 $ 65,537
Accrued expenses 317,131 309,097
& other current
liabilities
Income taxes 87,597 40,176
Current portion of 2,324 1,446
long-term debt
Total current liabilities 455,162 416,256
Long-term debt 368,526 347,583
Other liabilities 57,036 49,519
Deferred income taxes 39,521 74,931
Deferred revenue 57,953 56,655
Shareholders' equity:
Common stock 15,712 15,712
Capital in excess of par 317,400 300,010
value
Retained earnings 1,821,498 1,630,135
Treasury stock (491,106) (451,401)
1,663,504 1,494,456
$2,641,702 $2,439,400
See notes to consolidated statements.
<PAGE>
Form 10Q
Condensed Statements of Consolidated Cash Flows
(In thousands)
Nine Months Ended
March 31,
1994 1993
Cash Flows From Operating
Activities:
Net earnings $ 246,380 $ 214,530
Expenses not requiring outlay
of cash 126,728 117,520
Changes in operating net assets (33,974) (65,967)
Net cash flows from operating
activities 339,134 266,083
Cash Flows From Investing
Activities:
Marketable securities (197,756) (215,700)
Capital expenditures (73,287) (59,333)
Other changes to property,
plant and equipment 7,76 3,402
Additions to intangibles (20,240) (21,549)
Acquisitions of businesses (40,716) (56,918)
Net cash flows from investing
activities (324,237) (350,098)
Cash Flows From Financing
Activities:
Repayments of long-term debt (1,480) (6,715)
Proceeds from issuance of
common stock 67,906 64,892
Repurchases of common stock (84,572) (3,805)
Dividends paid (55,016) (48,760)
Other (1,010) 2,876
Net cash flows from
financing activities (74,172) 8,488
Net change in cash and
cash equivalents (59,275) (75,527)
Cash and cash equivalents, at
beginning of period 180,802 304,021
Cash and cash equivalents,
at end of period $ 121,527 $ 228,494
See notes to consolidated statements.
<PAGE>
Form 10Q
Notes to Consolidated Statements
The information furnished herein reflects all
adjustments which are, in the opinion of management,
necessary for a fair presentation of the results for
the interim periods. All adjustments are of a normal
recurring nature. These statements should be read in
conjunction with the annual financial statements and
related notes of the Company for the year ended June
30, 1993.
Note A - The Company adopted Financial Accounting
Standards Statement No. 109, "Accounting for
Income Taxes", effective July 1, 1993. The
cumulative effect of adopting this statement
on the Company's financial statements was to
increase net earnings by $2.7 million ($.02
per share) for the three months ended
September 30, 1993.
The method used to compute the provision for
income taxes is based on the effective income
tax rate anticipated for the fiscal years,
and for fiscal '94 reflects the increased
statutory rate contained in the Omnibus
Budget Reconciliation Act of 1993 enacted in
August 1993. The provision for the three
months ended September 30, 1993 also includes
certain one-time impacts of the Act, which in
the aggregate were not material.
Note B - The results of operations for the nine months
ended March 31, 1994 may not be indicative of
the results to be expected for the year
ending June 30, 1994.
Note C - Earnings per share are based on a weighted
average of the number of shares outstanding,
which for the quarters ended March 31, 1994
and 1993 were 141,649,000 and 142,551,000,
respectively, and for the nine months ended
March 31, 1994 and 1993 were 140,940,000 and
141,239,000, respectively.
<PAGE>
Form 10Q
MANAGEMENT'S DISCUSSION AND ANALYSIS
OPERATING RESULTS
Revenue and earnings again reached record levels during
the quarter ended March 31, 1994.
Revenue and revenue growth by ADP's major service
groups are shown below:
Revenue
3 Months Ended 9 Months Ended
March 31, March 31,
1993 1994 1993 1994
($ in millions)
Employer Services $ 386 $ 419 $ 986 $1071
Brokerage Services 129 152 331 410
Dealer Services 71 85 201 246
Other 27 18 109 77
$ 613 $ 674 $1627 $1804
Revenue Growth
3 Months Ended 9 Months Ended
March 31, March 31,
1993 1994 1993 1994
Employer Services 17% 9% 17% 9%
Brokerage Services 14 18 19 24
Dealer Services 15 20 18 22
Other (31) (33) (19) (29)
12% 10% 14% 11%
Consolidated revenue for the quarter of $674 million
was up 10% from last year. Revenue growth in Employer,
Brokerage, and Dealer Services, was 9%, 18%, and 20%,
respectively. These three businesses account for over
90% of ADP's total revenue. Brokerage and Dealer
Services continued to have especially strong internal
revenue growth. As expected, overall revenue growth
decelerated slightly in the third quarter as the last
acquisition of any size reached its anniversary date.
The primary components of Other revenue shown above are
Claims Solutions, Network, Wholesale Distribution, and
European payroll services. In addition, Other revenue
has been reduced to adjust for the difference between
actual interest earned on invested tax filing funds and
income credited to Employer Services at a standard rate
of 7.8%.
Pretax earnings for the quarter increased 15% from last
year, as margins continued to improve due to aggressive
automation and high Brokerage trading volume. Systems
development and programming costs increased during the
quarter at a faster rate than revenue growth. R&D
investments have increased, especially in Employer
Services, to accelerate automation, adopt new
technologies, and develop new products.
<PAGE>
Form 10Q
Net earnings for the quarter, after a higher effective
tax rate, increased 14% to $105 million. The effective
tax rate of 25.3% increased from 24.0% in the
comparable quarter last year, primarily as a result of
the increased federal statutory tax rate enacted in
August. The Company expects the effective tax rate for
the full year to approximate the third quarter rate.
Earnings per share for the quarter increased 14% to
$.74 from $.65 last year. Earnings per share for the
first nine months of fiscal 1994 increased 14% to $1.73
from $1.52 last year, before a one-time gain of $.02 in
the quarter ended September 30, 1993 from an accounting
change. The Company adopted Financial Accounting
Standards Board Statement No. 109, "Accounting for
Income Taxes", effective July 1, 1993. The cumulative
effect of adopting this statement was to increase net
earnings by $2.7 million ($.02 per share) for the 3
months ended September 30, 1993.
FINANCIAL CONDITION
The Company's financial condition and balance sheet
remain exceptionally strong, and operations continue to
generate a strong cash flow. At March 31, 1994, the
Company had cash and marketable securities in excess of
$1 billion. Shareholders' equity exceeded $1.6 billion
and the ratio of long-term debt to equity was 22%.
Capital expenditures for fiscal 1994 are expected to
approximate $100 million. Capital expenditures for
fiscal 1993 were $87 million.
During the quarter, ADP purchased approximately 750,000
shares of common stock for treasury. During the nine
months ended March 31, 1994, the Company purchased
approximately 1,700,000 shares at an average price of
about $50. The Company has remaining Board
authorization to purchase up to approximately 3.2
million additional shares.
<PAGE>
Form 10Q
PART II. OTHER INFORMATION
All items are either inapplicable or would result in
negative responses and, therefore, have been omitted.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto
duly authorized.
AUTOMATIC DATA PROCESSING, INC.
(Registrant)
Date: May 6, 1994
/s/Fred D. Anderson, Jr.
Fred D. Anderson, Jr.
Chief Financial Officer and
Corporate Vice President
(Principal Financial Officer)
(Title)
