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 September 30, 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 November 4, 1994 there were 141,046,851 common shares outstanding.
<PAGE>
Form 10Q
Part I. Financial Information
Statements of Consolidated Earnings
(In thousands, except per share amounts)
Three Months Ended
September 30, September 30,
1994 1993
Revenue $622,286 $551,983
Operating
expenses 252,697 230,130
General,
administrative
and selling
expenses 188,930 165,544
Depreciation
and
amortization 37,758 35,610
Systems
development
and
programming
costs 44,355 36,557
Interest
expense 5,946 5,282
529,686 473,123
EARNINGS BEFORE
INCOME
TAXES AND
CUMULATIVE
EFFECT OF
ACCOUNTING
CHANGES 92,600 78,860
Provision
for income
taxes 23,900 20,350
NET EARNINGS
BEFORE
CUMULATIVE
EFFECT OF
ACCOUNTING
CHANGES 68,700 58,510
Cumulative
effect of
accounting
changes -- (4,800)
NET
EARNINGS $ 68,700 $ 53,710
EARNINGS
PER SHARE:
Before
cumulative
effect of
accounting
changes $ .49 $ .42
Cumulative
effect of
accounting
changes -- (.03)
NET
EARNINGS $ .49 $ .39
Dividends
per share $ .15 $ .13
See notes to consolidated statements.
<PAGE>
Form 10Q
Consolidated Balance Sheets
(In thousands)
September 30, June 30,
Assets 1994 1994
Cash and cash equivalents $ 265,758 $ 238,626
Short-term marketable
securities 369,291 351,969
Accounts receivable 304,430 298,096
Other current assets 105,136 96,726
Total current assets 1,044,615 985,417
Long-term marketable
securities 467,164 471,595
Long-term receivables 166,452 162,272
Land and buildings 281,754 275,088
Data processing equipment 447,348 433,161
Furniture, leaseholds and
other 290,793 293,044
1,019,895 1,001,293
Less accumulated
depreciation (622,075) (605,445)
397,820 395,848
Other assets 81,273 81,408
Intangibles 620,482 609,025
$2,777,806 $2,705,565
Liabilities and Shareholders'
Equity
Accounts payable $ 53,285 $ 56,151
Accrued expenses
& other current
liabilities 334,855 346,960
Income taxes 91,028 72,867
Current portion of
long-term debt 2,276 2,196
Total current liabilities 481,444 478,174
Long-term debt 377,595 372,959
Other liabilities 77,007 69,504
Deferred income taxes 32,757 33,553
Deferred revenue 62,956 60,124
Shareholders' equity:
Common stock 15,712 15,712
Capital in excess of par 330,636 325,029
value
Retained earnings 1,930,857 1,883,423
Treasury stock (531,158) (532,913)
1,746,047 1,691,251
$2,777,806 $2,705,565
See notes to consolidated statements.
<PAGE>
Form 10Q
Condensed Statements of Consolidated Cash Flows
(In thousands)
Three Months Ended
September 30,
1994 1993
Cash Flows From Operating
Activities:
Net earnings $ 68,700 $ 53,710
Expenses not requiring outlay
of cash 41,517 42,241
Changes in operating net assets (8,131) 20,451
Net cash flows from operating
activities 102,086 116,402
Cash Flows From Investing
Activities:
Marketable securities (12,891) 15,819
Capital expenditures (24,673) (22,096)
Other changes to property,
plant and equipment 2,034 748
Additions to intangibles (4,752) (5,465)
Acquisitions of businesses (21,512) 0
Net cash flows from investing
activities (61,794) (10,994)
Cash Flows From Financing
Activities:
Repayments of long-term debt (87) (636)
Proceeds from issuance of
common stock 8,917 7,773
Repurchases of common stock (678) (44,253)
Dividends paid (21,280) (18,320)
Other (32) 6,551
Net cash flows from
financing activities (13,160) (48,885)
Net change in cash and
cash equivalents 27,132 56,523
Cash and cash equivalents, at
beginning of period 238,626 180,802
Cash and cash equivalents,
at end of period $ 265,758 $ 237,325
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, 1994.
Note A - In fiscal 1994 the Company adopted Financial Accounting
Standards Board Statements No. 109, "Accounting for
Income Taxes", and No. 112, "Employers' Accounting for
Postemployment Benefits" effective July 1, 1993. The
cumulative effect of adopting Statement No. 109 was to
increase net earnings by $2.7 million ($.02 per share).
The cumulative effect of adopting Statement No. 112,
which requires that certain postemployment benefits be
accrued as service is provided, was to decrease net
earnings by $7.5 million ($.05 per share), after $5.0
million of income tax benefit.
Note B - The results of operations for the three months ended
September 30, 1994 may not be indicative of the results
to be expected for the year ending June 30, 1995.
Note C - Earnings per share are based on a weighted average of
the number of shares outstanding, which for the
quarters ended September 30, 1994 and 1993 were
140,769,000 and 140,645,000, respectively.
<PAGE>
FORM 10Q
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OPERATING RESULTS
Revenue and earnings again reached record levels during the
quarter ended September 30, 1994.
Revenue and revenue growth by ADP's major service groups are
shown below:
Revenue Revenue Growth
3 Months Ended 3 Months Ended
September 30, September 30,
1993 1994 1993 1994
($ in millions)
Employer Services $ 318 $ 355 9% 12%
Brokerage Services 127 135 27 6
Dealer Services 78 95 24 22
Other 29 37 (26) 28
$ 552 $ 622 11% 13%
Consolidated revenue for the quarter of $622 million was up 13%
from last year. Revenue growth in Employer and Dealer Services
was 12% and 22%, respectively. In addition, the primary leading
indicators for these businesses, new client sales and client
retention, were very strong. Brokerage Services growth of 6% was
on plan while, as expected, U.S. trading volume was below last
year's record level.
The primary components of "Other revenue" shown above are
services for auto claims, wholesalers, and European payroll
users. In addition, "Other revenue" has been reduced to adjust
for the difference between actual interest income 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 17% from last year, as
pre-tax margins improved primarily from continued productivity
improvements, aided by automation. 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, migrate to new
computing technologies, and develop new products.
Net earnings for the quarter also increased 17% to $69 million.
The effective tax rate of 25.8% was the same as in the
comparable quarter last year. The effective tax rate for the
first quarter of fiscal '94 was higher than that experienced for
the rest of fiscal 1994 because of certain one-time impacts of
adopting the Omnibus Budget Reconciliation Act of 1993.
Earnings per share for the quarter increased 17% to $.49 from $.42
last year before the effects of one-time accounting changes in fiscal
1994. In 1994, the Company adopted Financial Accounting Standards Board
Statements No. 109, "Accounting for Income Taxes", and No. 112,
"Employers' Accounting for Postemployment Benefits", effective
July 1, 1993. The cumulative effect of adopting these statements
was to decrease net earnings in the quarter ended September 30,
1993 by $4.8 million ($.03 per share).
<PAGE>
FORM 10Q
FINANCIAL CONDITION
The Company's financial condition and balance sheet remain
exceptionally strong, and operations continue to generate a
strong cash flow. At September 30, 1994, the Company had cash
and marketable securities of about $1.1 billion. Shareholders'
equity exceed $1.7 billion and the ratio of long-term debt to
equity was 22%.
Capital expenditures for fiscal 1995 are expected to approximate
$130 million. Capital expenditures for fiscal 1994 were $111
million.
During the quarter, ADP purchased approximately 13,000 shares of
common stock for treasury at an average price of about $51. The
Company has remaining Board authorization to purchase up to 2.3
million additional shares to fund our equity related employee
benefit plans.
<PAGE>
FORM 10Q
PART II. OTHER INFORMATION
All items are either inapplicable or would result in negative
responses and, therefore, have been omitted.<PAGE>
<PAGE>
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: November 7, 1994
/s/ Fred D. Anderson, Jr.
Fred D. Anderson, Jr.
Chief Financial Officer and
Corporate Vice President
(Principal Financial Officer)
(Title)
<PAGE>
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