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, 1995 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 7, 1995 there were 144,002,000 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,
1995 1994
Revenue $747,094 $622,286
Operating
expenses 316,778 252,697
General,
administrative
and selling
expenses 215,021 188,930
Depreciation
and
amortization 44,471 37,758
Systems
development
and
programming
costs 54,179 44,355
Interest
expense 5,845 5,946
636,294 529,686
EARNINGS BEFORE
INCOME
TAXES 110,800 92,600
Provision
for income
taxes 28,900 23,900
NET
EARNINGS $81,900 $ 68,700
EARNINGS
PER SHARE: $ .57 $ .49
Dividends
per share $ .18 $ .15
See notes to consolidated statements.
<PAGE>
Form 10Q
Consolidated Balance Sheets
(In thousands)
September 30, June 30,
Assets 1995 1995
Cash and cash equivalents $ 388,198 $ 313,612
Short-term marketable
securities 343,577 384,009
Accounts receivable 385,487 377,145
Other current assets 128,793 136,377
Total current assets 1,246,055 1,211,143
Long-term marketable
securities 606,477 594,268
Long-term receivables 187,351 189,858
Land and buildings 287,062 287,186
Data processing equipment 519,291 501,403
Furniture, leaseholds and
other 316,694 309,592
1,123,047 1,098,181
Less accumulated
depreciation (706,038) (682,222)
417,009 415,959
Other assets 78,735 84,212
Intangibles 739,791 705,656
$3,275,418 $3,201,096
Liabilities and Shareholders'
Equity
Accounts payable $ 60,545 $ 65,955
Accrued expenses
& other current
liabilities 402,492 385,040
Income taxes 102,225 82,672
Current portion of
long-term debt 2,094 9,556
Total current liabilities 567,356 543,223
Long-term debt 393,786 390,177
Other liabilities 76,298 66,865
Deferred income taxes 21,891 18,844
Deferred revenue 84,622 85,372
Shareholders' equity:
Common stock 15,712 15,712
Capital in excess of par 366,465 367,619
value
Retained earnings 2,239,553 2,182,838
Treasury stock (490,265) (469,554)
2,131,465 2,096,615
$3,275,418 $3,201,096
See notes to consolidated statements.
<PAGE>
Form 10Q
Condensed Statements of Consolidated Cash Flows
(In thousands)
Three Months Ended
September 30,
1995 1994
Cash Flows From Operating
Activities:
Net earnings $ 81,900 $ 68,700
Expenses not requiring outlay
of cash 52,118 47,568
Changes in operating net assets 45,492 (14,182)
Net cash flows from operating
activities 179,510 102,086
Cash Flows From Investing
Activities:
Marketable securities 28,223 (12,891)
Capital expenditures (26,952) (24,673)
Other changes to property,
plant and equipment 568 2,034
Additions to intangibles (2,440) (4,752)
Acquisitions of businesses (50,653) (21,512)
Net cash flows from investing
activities (51,254) (61,794)
Cash Flows From Financing
Activities:
Repayments of long-term debt (8,806) (87)
Proceeds from issuance of
common stock 6,214 8,917
Repurchases of common stock (23,596) (678)
Dividends paid (25,184) (21,280)
Other (2,298) (32)
Net cash flows from
financing activities (53,670) (13,160)
Net change in cash and
cash equivalents 74,586 27,132
Cash and cash equivalents, at
beginning of period 313,612 238,626
Cash and cash equivalents,
at end of period $ 388,198 $ 265,758
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, 1995.
Note A - ADP has agreed to acquire all of the outstanding shares of
GSI-Participations, a leading computer services company based
in Paris, France, for a total price of approximately FF 2.3
billion (approximately U.S. dollar $460 million). Effective
November 1, 1995 ADP acquired control of GSI. As of that date,
ADP controlled over 80% of the shares of GSI and expects to
complete the purchase of close to 100% by the end of the
ongoing shareholder tender period which expires on January 16,
1996.
Note B - The results of operations for the three months ended
September 30, 1995 may not be indicative of the results
to be expected for the year ending June 30, 1996.
Note C - Earnings per share are based on a weighted average of
the number of shares outstanding, which for the
quarters ended September 30, 1995 and 1994 were
143,857,000 and 140,769,000, respectively.
Note D - Effective July 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", under which most of
the Company's investments in marketable securities are classified
as "available-for-sale securities". The impact of adopting this
statement was not material.
Note E - On November 14, 1995, the Company declared a two-for-one common
stock split to be distributed January 1,1996 to shareholders of
record December 15, 1995. This stock split has not yet been
reflected in the accompanying financial statements.
<PAGE>
FORM 10Q
MANAGEMENT'S DISCUSSION AND ANALYSIS
OPERATING RESULTS
Revenue and earnings again reached record levels during the quarter ended
September 30, 1995.
Revenue and revenue growth by ADP's major service groups are shown below:
Revenue Revenue Growth
3 Months Ended 3 Months Ended
September 30, September 30,
1994 1995 1994 1995
($ in millions)
Employer Services (R)$ 367 $ 413 11% 13%
Brokerage Services 135 168 6 24
Dealer Services 95 126 22 33
Other (R) 25 40 47 60
$ 622 $ 747 13% 20 %
(R) reclassified
Consolidated revenue for the quarter of $747 million was up 20% from last year.
Revenue growth in Employer, Brokerage, and Dealer Services was 13%, 24%,
and 33%, respectively. The growth rate in Employer Services was primarily due
to strong new client sales and client retention, and a few small acquisitions.
Brokerage Services' growth was aided by higher trading volumes and acquisitions.
Dealer Services' growth was primarily from an expanded array of products and
services and several small acquisitions.
The primary components of "Other revenue" are claims services, services for
wholesalers and interest income. 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% The revenue from two businesses providing payroll services in Europe have
been reclassified from Other revenue and are now included in Employer Services.
Pretax earnings for the quarter increased 20% from last year. Pretax margins
were relatively flat with the prior year as continued automation and
productivity gains and the impact of higher interest rates enabled the Company
to offset the start-up costs associated with new products and acquisitions.
Systems development and programming investments increased to accelerate
automation, migrate to new computing technologies, and develop new products.
Net earnings for the quarter increased 19% to $82 million. The effective tax
rate was 26.1%, slightly higher than last year.
Earnings per share for the quarter increased 16% to $.57 from $.49 last year,
on an increased number of shares.
Effective November 1, 1995, ADP acquired control of GSI, a leading computer
services company based in Paris, France. As of this date, ADP controlled over
80% of the shares of GSI, and expects to complete the purchase of close to 100%
of GSI by the January 15, 1996 end of the ongoing shareholder tender.
Total purchase price is expected to approximate FF 2.3 billion (approximately
U.S. dollar $460 million).
GSI is the leading European provider of payroll and human resource information
services. GSI also provides facilities management, banking, clearing, and
other information services in Europe. The GSI acquisition, which will add about
$400 million in annual revenue, will have a slightly dilutive effect of about 1%
to 2% on ADP's 1996 earnings per share. The Company continues to expect growth
of about 15% in both revenue and earnings per share before the effect of the
GSI acquisition.
<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, 1995,
the Company had cash and marketable securities in excess of $1.3 billion.
Shareholders' equity exceeded $2.1 billion and the ratio of long-term debt to
equity was 18%.
The GSI purchase price of approximately $460 million will be funded by borrowing
approximately $100 million of short-term debt with the remainder coming from the
Company's cash and marketable securities.
Capital expenditures for fiscal 1996 are expected to approximate $150 million,
compared to $118 million in fiscal 1995.
During the quarter, ADP purchased approximately 372,000 shares of common stock
for treasury at an average price of about $63. The Company has remaining Board
authorization to purchase up to 6.7 million additional shares to fund our
equity related employee benefit plans.
<PAGE>
FORM 10Q
PART II. OTHER INFORMATION
Except as noted below, all other items are either inapplicable
or would result in negative responses and, therefore, have been
omitted.
Item (6a.) Reports on Form 8-K -- on September 1, 1995 Automatic Data
Processing, Inc. (ADP) filed a form 8-K Current Report pursuant
to its announcement on August 31,1995 to acquire for cash all of
the outstanding shares of GSI, a European computer services company
based in Paris, France. On November 6, 1995, ADP filed a Form 8-K
Current Report announcing it had acquired control of GSI and
provided annual audited financial statements for the acquired
business. On November 13, 1995 ADP filed a Form 8-K/A Current Report
which provided interim and pro forma financial information relative
to the acquired business.
<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 14, 1995
/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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