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, 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 May 8, 1995 there were 144,156,693 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,
1995 1994 1995 1994
Revenue $798,989 $674,405 $2,093,872 $1,804,049
Operating
expenses 309,574 266,061 830,378 729,317
General,
administrative
and selling
expenses 224,096 184,313 596,946 508,605
Depreciation
and
amortization 42,131 36,571 119,641 108,881
Systems
development
and
programming
costs 48,120 41,841 138,940 115,865
Interest
expense 5,978 5,129 18,177 15,461
629,899 533,915 1,074,082 1,478,129
EARNINGS
BEFORE
INCOME
TAXES AND
CUMULATIVE
EFFECT OF
ACCOUNTING
CHANGES 169,090 140,490 389,790 325,920
Provision for
income taxes 43,820 35,500 100,900 82,240
NET EARNINGS
BEFORE
CUMULATIVE
EFFECT OF
ACCOUNTING
CHANGES 125,270 104,990 288,890 243,680
Cumulative
effect of
accounting
changes -- -- -- (4,800)
NET
EARNINGS $125,270 $104,990 $ 288,890 $ 238,880
EARNINGS PER
SHARE:
Before
cumulative
effect of
accounting
changes $ .87 $ .74 $ 2.03 $ 1.73
Cumulative
effect of
accounting
changes -- -- -- (.03)
NET
INCOME $ .87 $ .74 $ 2.03 $ 1.70
Dividends
per share $ .15 $ .13 $ .45 $ .39
See notes to consolidated statements.
<PAGE>
Form 10Q
Consolidated Balance Sheets
(In thousands)
March 31, June 30,
Assets 1995 1994
Cash and cash equivalents $ 377,597 $ 238,626
Short-term marketable 355,246 351,969
securities
Accounts receivable 379,224 298,096
Other current assets 110,993 96,726
Total current assets 1,223,060 985,417
Long-term marketable 533,728 471,595
securities
Long-term receivables 177,901 162,272
Land and buildings 284,333 275,088
Data processing equipment 490,410 433,161
Furniture, leaseholds and 299,859 293,044
other
1,074,602 1,001,293
Less accumulated (668,152) (605,445)
depreciation
406,450 395,848
Other assets 82,653 81,408
Intangibles 656,408 609,025
$3,080,200 $2,705,565
Liabilities and Shareholders' Equity
Accounts payable $ 53,641 $ 56,151
Accrued expenses 373,326 346,960
& other current
liabilities
Income taxes 76,799 72,867
Current portion of long-term 2,792 2,196
debt
Total current liabilities 506,558 478,174
Long-term debt 394,482 372,959
Other liabilities 67,939 69,504
Deferred income taxes 18,500 33,553
Deferred revenue 73,130 60,124
Shareholders' equity:
Common stock 15,712 15,712
Capital in excess of par 358,769 325,029
value
Retained earnings 2,106,332 1,883,423
Treasury stock (461,222) (532,913)
2,019,591 1,691,251
$3,080,200 $2,705,565
See notes to consolidated statements.
<PAGE>
Form 10Q
Condensed Statements of Consolidated Cash Flows
(In thousands)
Nine Months Ended
March 31,
1995 1994
Cash Flows From Operating
Activities:
Net earnings $ 288,890 $ 238,880
Expenses not requiring 129,140 126,728
outlay of cash
Changes in operating net (97,429) (26,474)
assets
Net cash flows from operating 320,601 339,134
activities
Cash Flows From Investing
Activities:
Marketable securities (65,410) (197,756)
Capital expenditures (81,047) (73,287)
Other changes to property, plant 1,338 7,762
and equipment
Additions to intangibles (28,274) (20,240)
Acquisitions of businesses (41,676) (40,716)
Net cash flows from investing (215,069) (324,237)
activities
Cash Flows From Financing
Activities:
Repayments of long-term debt (1,837) (1,480)
Proceeds from issuance of common 93,546 67,906
stock
Repurchases of common stock (1,999) (84,572)
Dividends paid (63,993) (55,016)
Other 7,722 (1,010)
Net cash flows from financing 33,439 (74,172)
activities
Net change in cash and cash 138,971 (59,275)
equivalents
Cash and cash equivalents, at 238,626 180,802
beginning of period
Cash and cash equivalents, at $ 377,597 $ 121,527
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 $5.0 million
of income tax benefit.
Note B - The results of operations for the nine
months ended March 31, 1995 may not be
indicative of the results to be expected for
the year ending June 30, 1995.
Note C - Earnings per share are based on the weighted
average number of shares outstanding,
which for the quarters ended March 31,
1995 and 1994 were 143,546,000 and
141,649,000, respectively. The weighted average
number of shares for the nine months ended
March 31, 1995 and 1994 were 142,019,000
and 140,940,000 respectively.
Note D - Effective July 1, 1994, the Company adopted
Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments
in Debt and Equity Securities", under which
most of the Company's investments in marketable
securities are classified as "available-for-sale
securities". The impact of adopting this statement
was not material.
<PAGE>
Form 10Q
MANAGEMENT'S DISCUSSION AND ANALYSIS
OPERATING RESULTS
Revenue and earnings again reached record levels during
the quarter ended March 31, 1995.
Revenue and revenue growth by ADP's major service
groups are shown below:
Revenue
3 Months Ended 9 Months Ended
March 31, March 31,
1994 1995 1994 1995
($ in millions)
Employer Services $ 419 $ 475 $1071 $1211
Brokerage Services 152 170 410 444
Dealer Services 85 112 246 317
Other 18 42 77 122
$ 674 $ 799 $1804 $2094
Revenue Growth
3 Months Ended 9 Months Ended
March 31, March 31,
1994 1995 1994 1995
Employer Services 9% 13% 9% 13%
Brokerage Services 18 12 24 8
Dealer Services 20 32 22 29
Other (33) 133 (29) 58
10% 18% 11% 16%
Consolidated revenue for the quarter of $799 million
was up 18% from last year. Revenue growth in each of
the three largest businesses, which in the aggregate
represent over 90% of total revenue, was at a
double-digit rate. Employer Services' revenue growth
of 13% was due to strong new client sales, improved
client retention and previously announced acquisitions.
Dealer Services'buoyant revenue growth of 32% reflects
internal growth of over 15% and the effect of several
small acquisitions. Brokerage Services'growth of 12%
was higher than expected primarily as a result of very
strong seasonal Proxy mailing volume, and several small
non-recurring items. Consolidated revenue for the 9 months
of $2094 million was up 16% from last year.
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 both the quarter and the nine months
increased 20% from last year. Pre-tax margins improved
slightly, primarily from continued productivity improvements
and the impact of higher interest rates. This increase was
after absorbing increased systems development and programming
investments.
<PAGE>
Form 10Q
Net earnings for the quarter and the nine month period increased 19%.
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
$.87 from $.74 last year. Earnings per share for the
nine month period increased 17% to $2.03 from $1.73 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 March 31, 1995, the
Company had cash and marketable securities in excess of
$1.2 billion. Shareholders' equity exceeded $2 billion
and the ratio of long-term debt to equity was approximately
20%.
Capital expenditures for fiscal 1995 are expected to
approximate $125 million. Capital expenditures for
fiscal 1994 were $111 million.
During the nine 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.
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: May 11, 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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