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, 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 January 31, 1995 there were 143,071,379 common
shares outstanding.
<PAGE> Form 10Q
Part I. Financial Information
Statements of Consolidated Earnings
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
1994 1993 1994 1993
Revenue $672,597 $577,661 $1,294,883 $1,129,644
Operating
expenses 268,107 233,127 520,804 463,257
General,
administrative
and selling
expenses 183,923 158,748 372,852 324,292
Depreciation
and
amortization 39,751 36,700 77,509 72,310
Systems
development
and
programming
costs 46,464 37,467 90,819 74,024
Interest
expense 6,252 5,049 12,199 10,331
544,497 471,091 1,074,183 944,214
EARNINGS
BEFORE
INCOME
TAXES AND
CUMULATIVE
EFFECT OF
ACCOUNTING
CHANGES 128,100 106,570 220,700 185,430
Provision for
income taxes 33,180 26,390 57,080 46,740
NET EARNINGS
BEFORE
CUMULATIVE
EFFECT OF
ACCOUNTING
CHANGES 94,920 80,180 163,620 138,690
Cumulative
effect of
accounting
changes -- -- -- (4,800)
NET
EARNINGS $ 94,920 $ 80,180 $ 163,620 $ 133,890
EARNINGS PER
SHARE:
Before
Cumulative
Effect of
Accounting
Changes $ .67 $ .57 $ 1.16 $ .99
Cumulative
Effect of
Accounting
Changes -- -- -- (.03)
NET
INCOME $ .67 $ .57 $ 1.16 $ .96
Dividends
per share $ .15 $ .13 $ .30 $ .26
See notes to consolidated statements.
<PAGE>
Form 10Q
Consolidated Balance Sheets
(In thousands)
December 31, June 30,
Assets 1994 1994
Cash and cash equivalents $ 288,160 $ 238,626
Short-term marketable 340,002 351,969
securities
Accounts receivable 325,998 298,096
Other current assets 105,759 96,726
Total current assets 1,059,919 985,417
Long-term marketable 539,604 471,595
securities
Long-term receivables 172,343 162,272
Land and buildings 283,013 275,088
Data processing equipment 462,679 433,161
Furniture, leaseholds and 289,966 293,044
other
1,035,658 1,001,293
Less accumulated (634,395) (605,445)
depreciation
401,263 395,848
Other assets 84,174 81,408
Intangibles 630,558 609,025
$2,887,861 $2,705,565
Liabilities and Shareholders' Equity
Accounts payable $ 50,911 $ 56,151
Accrued expenses 322,421 346,960
& other current
liabilities
Income taxes 81,544 72,867
Current portion of long-term 2,366 2,196
debt
Total current liabilities 457,242 478,174
Long-term debt 382,091 372,959
Other liabilities 81,450 69,504
Deferred income taxes 15,817 33,553
Deferred revenue 66,285 60,124
Shareholders' equity:
Common stock 15,712 15,712
Capital in excess of par 347,293 325,029
value
Retained earnings 2,006,066 1,883,423
Treasury stock (484,095) (532,913)
1,884,976 1,691,251
$2,887,861 $2,705,565
See notes to consolidated statements.
<PAGE>
Form 10Q
Condensed Statements of Consolidated Cash Flows
(In thousands)
Six Months Ended
December 31,
1994 1993
Cash Flows From Operating
Activities:
Net earnings $ 163,620 $ 133,890
Expenses not requiring 78,930 85,509
outlay of cash
Changes in operating net (66,244) (31,222)
assets
Net cash flows from operating 176,306 188,177
activities
Cash Flows From Investing
Activities:
Marketable securities (56,042) (134,956)
Capital expenditures (52,230) (45,353)
Other changes to property, plant 2,797 4,180
and equipment
Additions to intangibles (8,531) (14,285)
Acquisitions of businesses (26,301) (12,306)
Net cash flows from investing (140,307) (202,720)
activities
Cash Flows From Financing
Activities:
Repayments of long-term debt (364) (780)
Proceeds from issuance of common 59,411 52,166
stock
Repurchases of common stock (1,999) (45,915)
Dividends paid (42,543) (36,559)
Other (970) 8,311
Net cash flows from financing 13,535 (22,777)
activities
Net change in cash and cash 49,534 (37,320)
equivalents
Cash and cash equivalents, at 238,626 180,802
beginning of period
Cash and cash equivalents, at $ 288,160 $ 143,482
end of period
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 - Effective July 1, 1993, the Company adopted Financial
Accounting Standards Board Statements No. 109,
"Accounting for Income Taxes", and No. 112,
"Employers' Accounting for Postemployment Benefits".
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 $5.0 million
of income tax benefit.
Note B - The results of operations for the six
months ended December 31, 1994 may not be
indicative of the results to be expected for
the year ending June 30, 1995.
Note C - Earnings per share are based on the weighted
average number of shares outstanding,
which for the quarters ended December 31,
1994 and 1993 were 141,718,000 and
140,513,000, respectively. The weighted average
number of shares for the six months ended
December 31, 1994 and 1993 were 141,250,000
and 140,585,000 respectively.
Note D - Effective July 1, 1994, the Company adopted
Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments
in Debt and Equity Securities", under which
most of the Company's investments in marketable
securities are classified as "available-for-sale
securities". The impact of adopting this statement
was not material.
<PAGE>
Form 10Q
MANAGEMENT'S DISCUSSION AND ANALYSIS
OPERATING RESULTS
Revenue and earnings again reached record levels during
the quarter ended December 31, 1994.
Revenue and revenue growth by ADP's major service
groups are shown below:
Revenue
3 Months Ended 6 Months Ended
December 31, December 31,
1993 1994 1993 1994
($ in millions)
Employer Services $ 334 $ 382 $ 652 $ 737
Brokerage Services 131 139 258 274
Dealer Services 84 109 161 204
Other 29 43 59 80
$ 578 $ 673 $1130 $1295
Revenue Growth
3 Months Ended 6 Months Ended
December 31, December 31,
1993 1994 1993 1994
Employer Services 9% 14% 9% 13%
Brokerage Services 28 6 28 6
Dealer Services 24 30 24 27
Other (31) 48 (28) 36
11% 16% 11% 15%
Consolidated revenue for the quarter of $673 million
was up 16% from last year. Revenue growth in Employer,
and Dealer Services, was 14% and 30% respectively.
The primary leading indicators of these businesses,
new client sales and client retention, continue
to be very strong. Dealer Services' bouyant growth
included internal growth of over 15% and the effect
of several small acquisitions. Brokerage Services'
growth of 6% was, as expected, about the same as the
first quarter; overall trading volume was relatively
flat with last year's record level.
The primary components of "Other revenue" shown above are
for automotive 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 20% 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.
<PAGE>
Form 10Q
Net earnings for the quarter increased 18% to $95 million.
The effective tax rate of 25.9% was higher than in
the comparable period last year as earnings on
municipal investments are expected to represent a smaller
percent of total earnings in fiscal 1995 than in fiscal 1994.
Earnings per share for the quarter increased 18% to
$.67 from $.57 last year. Earnings per share for the
six month period increased 17% to $1.16 from $.99 last
year, before the effects of one-time accounting changes
in fiscal 1994. In 1994, the Company adopted Financial
Accounting Standards Board Statement 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).
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, 1994, the
Company had cash and marketable securities of almost
$1.2 billion. Shareholders' equity exceeded $1.8
billion and the ratio of long-term debt to equity was
20%.
Capital expenditures for fiscal 1995 are expected to
approximate $130 million. Capital expenditures for
fiscal 1994 were $111 million.
During the first six months, ADP purchased
approximately 38,000 shares of common stock for
treasury at an average price of about $52. The Company
has remaining Board authorization to purchase up to
approximately 2.3 million additional shares to fund
various 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>
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 10, 1995
/s/ Fred D. Anderson, Jr.
Fred D. Anderson, Jr.
Chief Financial Officer and
Corporate Vice President
(Principal Financial Officer)
(Title)
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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