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 December 31, 1993 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 January 31, 1994 there were 141,857,246 common
shares outstanding. Form 10Q
<PAGE>
Part I. Financial Information
Statements of Consolidated Earnings
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
1993 1992 1993 1992
Revenue $577,661 $518,471 $1,129,644 $1,013,774
Operating
expenses 233,127 212,602 463,257 420,681
General,
administrative
and selling
expenses 158,748 144,754 324,292 295,281
Depreciation
and
amortization 36,700 33,277 72,310 66,147
Systems
development
and
programming
costs 37,467 30,866 74,024 61,229
Interest
expense 5,049 4,692 10,331 9,836
471,091 426,191 944,214 853,174
EARNINGS
BEFORE
INCOME
TAXES AND
CUMULATIVE
EFFECT OF
ACCOUNTING
CHANGE 106,570 92,280 185,430 160,600
Provision for
income taxes 26,390 22,150 46,740 38,550
NET EARNINGS
BEFORE
CUMULATIVE
EFFECT OF
ACCOUNTING
CHANGE 80,180 70,130 138,690 122,050
Cumulative
effect of
accounting
change -- -- 2,700 --
NET
EARNINGS $ 80,180 $ 70,130 $ 141,390 $ 122,050
EARNINGS PER
SHARE:
Before
Cumulative
Effect of
Accounting
Change $ .57 $ .50 $ .99 $ .87
Cumulative
Effect of
Accounting
Change -- -- .02 --
NET
INCOME $ .57 $ .50 $ 1.01 $ .87
Dividends
per share $ .13 $ .115 $ .26 $ .23
See notes to consolidated statements. Form 10Q
<PAGE>
Consolidated Balance Sheets
(In thousands)
December 31, June 30,
Assets 1993 1993
Cash and cash equivalents $ 143,482 $ 180,802
Short-term marketable 308,524 187,358
securities
Accounts receivable 286,095 294,282
Other current assets 98,770 108,861
Total current assets 836,871 771,303
Long-term marketable 532,082 518,292
securities
Long-term receivables 148,842 134,631
Land and buildings 255,906 257,837
Data processing equipment 398,124 382,049
Furniture, leaseholds and 277,596 272,036
other 931,626 911,922
Less accumulated (571,638) (550,747)
depreciation 359,988 361,175
Other assets 78,162 78,820
Intangibles 561,245 575,179
$2,517,190 $2,439,400
Liabilities and Shareholders' Equity
Accounts payable $ 44,407 $ 65,537
Accrued expenses
& other current
liabilities 275,864 309,097
Income taxes 76,393 40,176
Current portion of long-term 1,305 1,446
debt
Total current liabilities 397,969 416,256
Long-term debt 358,134 347,583
Other liabilities 63,947 49,519
Deferred income taxes 39,027 74,931
Deferred revenue 57,595 56,655
Shareholders' equity:
Common stock 15,712 15,712
Capital in excess of par 309,877 300,010
value
Retained earnings 1,734,966 1,630,135
Treasury stock (460,037) (451,401)
1,600,518 1,494,456
$2,517,190 $2,439,400
See notes to consolidated statements. Form 10Q
<PAGE>
Condensed Statements of Consolidated Cash Flows
(In thousands)
Six Months Ended
December 31,
1993 1992
Cash Flows From Operating
Activities:
Net earnings $ 141,390 $ 122,050
Expenses not requiring 85,509 76,457
outlay of cash
Changes in operating net (38,722) (30,979)
assets
Net cash flows from operating 188,177 167,528
activities
Cash Flows From Investing
Activities:
Marketable securities (134,956) (164,049)
Capital expenditures (45,353) (41,721)
Other changes to property, plant 4,180 2,516
and equipment
Additions to intangibles (14,285) (16,337)
Acquisitions of businesses (12,306) (10,083)
Net cash flows from investing (202,720) (229,674)
activities
Cash Flows From Financing
Activities:
Proceeds from long-term debt -- 691
Repayments of long-term debt (780) (1,894)
Proceeds from issuance of common 52,166 48,286
stock
Repurchases of common stock (45,915) (3,805)
Dividends paid (36,559) (32,362)
Other 8,311 (2,653)
Net cash flows from financing (22,777) 8,263
activities
Net change in cash and cash (37,320) (53,883)
equivalents
Cash and cash equivalents, at 180,802 304,021
beginning of period
Cash and cash equivalents, at $ 143,482 $ 250,138
end of period
See notes to consolidated statements. Form 10Q
<PAGE>
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 Board 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 six
months ended December 31, 1993 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 December 31,
1993 and 1992 were 140,513,000 and
140,782,000, respectively.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
<PAGE>
OPERATING RESULTS
Revenue and earnings again reached record levels during
the quarter ended December 31, 1993.
Revenue and revenue growth by ADP's major service
groups are shown below:
Revenue
3 Months Ended 6 Months Ended
December 31, December 31,
1992 1993 1993 1993
($ in millions)
Employer Services $ 306 $ 334 $ 600 $ 652
Brokerage Services 102 131 202 258
Dealer Services 68 84 130 161
Other 42 29 82 59
$ 518 $ 578 $1014 $1130
Revenue Growth
3 Months Ended 6 Months Ended
December 31, December 31,
1992 1993 1992 1993
Employer Services 17% 9% 17% 9%
Brokerage Services 20 28 22 28
Dealer Services 24 24 20 24
Other (13) (31) (12) (28)
15% 11% 15% 11%
Consolidated revenue for the quarter of $578 million
was up 11% from last year. Revenue growth in Employer,
Brokerage, and Dealer Services, was 9%, 28%, and 24%,
respectively. These three businesses account for over
90% of ADP's total revenue. Brokerage and Dealer
Services had very bouyant revenue growth which was
further aided by fiscal 1993 acquisitions. Overall
revenue growth is expected to decelerate in the second
half as the acquisition anniversary dates are reached.
The primary components of Other revenue shown above are
Automotive Claims, 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%.
Pre-tax earnings for the quarter increased 15% from
last year, as margins improved more than expected in
each major business 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.
Net earnings for the quarter, on a higher effective tax
rate, increased 14% to $80 million. The effective tax
rate of 24.8% increased from 24.0% in the comparable
quarter last year, primarily as a result of the
increased statutory tax rate enacted in August by the
Omnibus Budget Reconciliation Act of 1993. The Company
expects the effective tax rate for the full year to
approximate 25.0%.
Earnings per share for the quarter increased 14% to
$.57 from $.50 last year. Earnings per share for the
first six months of fiscal 1994 increased 14% to $.99
from $.87 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 December 31, 1993, the
Company had cash and marketable securities of about
$984 million. 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 first six months, ADP purchased
approximately 948,000 shares of common stock for
treasury at an average price of about $48. The Company
has remaining Board authorization to purchase up to
approximately 4 million additional shares. Form 10Q
<PAGE>
PART II. OTHER INFORMATION
All items are either inapplicable or would result in
negative responses and, therefore, have been omitted. Form 10Q
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: February 9, 1994
/s/ Fred D. Anderson, Jr.
Fred D. Anderson, Jr.
Chief Financial Officer and
Corporate Vice President
(Principal Financial Officer)
(Title)
