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, 1996 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, 1996 there were 290,357,837 common
shares outstanding.
<PAGE>
Form 10Q
Part I. Financial Information
Statement of Consolidated Earnings
(In thousands, except per share amounts)
Three Months Ended
September 30, September 30,
1996 1995
Revenue $910,730 $747,094
Operating
expenses 391,520 316,778
General,
administrative
and selling
expenses 260,789 215,021
Depreciation
and
amortization 53,068 44,471
Systems
development
and
programming
costs 66,063 54,179
Interest
expense 7,190 5,845
778,630 636,294
EARNINGS BEFORE
INCOME
TAXES 132,100 110,800
Provision
for income
taxes 38,820 28,900
NET
EARNINGS $ 93,280 $ 81,900
EARNINGS
PER SHARE $ .32 $ .28
Dividends per share $ .10 $ .09
See notes to consolidated statements.
<PAGE>
Form 10Q
Consolidated Balance Sheets
(In thousands)
September 30, June 30,
1996 1996
Assets
Cash and cash equivalents $ 402,715 $ 314,416
Short-term marketable 384,898 321,743
securities
Accounts receivable 525,705 507,198
Other current assets 260,314 310,926
Total current assets 1,573,632 1,454,283
Long-term marketable 421,107 462,461
securities
Long-term receivables 183,962 188,184
Land and buildings 331,321 322,975
Data processing equipment 597,559 578,935
Furniture, leaseholds and 337,713 330,610
other
1,266,593 1,232,520
Less accumulated (790,886) (764,254)
depreciation
475,707 468,266
Other assets 22,189 19,597
Intangibles 1,294,348 1,247,094
$3,970,945 $3,839,885
Liabilities and Shareholders' Equity
Notes payable $ 91,228 $ 90,746
Accounts payable 98,468 96,351
Accrued expenses & other current
liabilities 630,066 590,355
Income taxes 84,369 52,954
Current portion of long-term 1,788 5,207
debt
Total current liabilities 905,919 835,613
Long-term debt 408,022 403,743
Other liabilities 82,463 78,508
Deferred income taxes 102,545 112,880
Deferred revenue 101,498 93,795
Shareholders' equity:
Common stock 31,429 31,428
Capital in excess of par 390,055 406,200
value
Retained earnings 2,602,804 2,537,952
Treasury stock (653,790) (660,234)
2,370,498 2,315,346
$3,970,945 $3,839,885
See notes to consolidated statements.
<PAGE>
Form 10Q
Condensed Statements of Consolidated Cash Flows
(In thousands)
Three Months Ended
September 30,
1996 1995
Cash Flows From Operating
Activities:
Net earnings $ 93,280 $ 81,900
Expenses not requiring outlay
of cash 47,399 52,118
Changes in operating net
assets 72,364 45,492
Net cash flows from
operating activities 213,043 179,510
Cash Flows From Investing
Activities:
Purchase of marketable
securities (314,070) (342,791)
Proceeds from sale of
marketable securities 292,269 371,014
Capital expenditures (38,477) (26,952)
Other changes to property,
plant and equipment 1,656 568
Additions to intangibles (4,036) (2,440)
Acquisitions of businesses (22,446) (50,653)
Net cash flows from investing
activities (85,104) (51,254)
Cash Flows From Financing
Activities:
Repayments of long-term debt (3,557) (8,806)
Proceeds from issuance of
common stock 21,028 6,214
Repurchases of common stock (28,815) (23,596)
Dividends paid (29,018) (25,184)
Other 722 (2,298)
Net cash flows from
financing activities (39,640) (53,670)
Net change in cash and
cash equivalents 88,299 74,586
Cash and cash equivalents,
at beginning of period 314,416 313,612
Cash and cash equivalents,
at end of period $402,715 $388,198
See notes to consolidated statements.
<PAGE>
Form 10Q
Notes to Consolidated Statements
The information furnished herein reflects all
adjustments which are, in the opinion of management,
necessary for a fair presentation of the results for
the interim periods. All adjustments are of a normal
recurring nature. These statements should be read in
conjunction with the annual financial statements and
related notes of the Company for the year ended June
30, 1996.
Note A - The results of operations for the three months
ended September 30, 1996 may not be indicative
of the results to be expected for the year
ending June 30, 1997.
Note B - Earnings per share are based on the weighted
average number of shares outstanding, which
for the quarters ended September 30, 1996 and
1995 were 288,368,000 and 287,714,000
respectively.
<PAGE>
Form 10Q
MANAGEMENT'S DISCUSSION AND ANALYSIS
OPERATING RESULTS
Revenue and earnings again reached record levels during
the quarter ended September 30, 1996.
Revenue and revenue growth by ADP's major service
groups are shown below:
Revenue Revenue Growth
3 Months Ended 3 Months Ended
September 30, September 30,
1996 1995 1996 1995
($ in millions)
Employer $ 490 $ 398 23% 13%
Services (a)
Brokerage 188 168 12 24
Services
Dealer Services 152 126 21 33
Other (a) 81 55 47 41
$ 911 $ 747 22% 20%
(a) reclassified
Consolidated revenue for the quarter of $911 million
was up 22% from last year. Revenue growth in the
Company's three largest businesses, Employer, Brokerage
and Dealer Services, was strong at 23%, 12%, and 21%,
respectively. Each includes some acquisitions.
The primary components of "Other revenue" are claims
services, services for wholesalers, the non-employer
services businesses of GSI 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. In prior
years, this standard rate was 7.8%. In fiscal 97 the
standard rate was changed to 6.0% and, accordingly, the
previously reported balances for Employer Services and
"Other revenue" have been reclassified.
Pretax earnings for the quarter increased 19% from last
year. Consolidated margins decreased slightly in the
quarter, as expected, because of the impact of prior
year's acquisitions. Systems development and
programming investments increased to accelerate
automation, migrate to new computing technologies, and
develop new products.
Net earnings for the quarter, after a higher effective
tax rate, increased 14% to $93 million. The effective
tax rate was 29.4%,increased from 26.1% in the
comparable quarter last year, primarily because of the
impact of non-deductible intangibles arising from the
GSI acquisition and an increased mix of taxable vs.
non-taxable investments.
Earnings per share grew 14% to $.32 from $.28 last
year.
For the full year, we continue to expect double-digit
revenue growth and about 15% earnings per share growth.
<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, 1996,
the Company had cash and marketable securities in
excess of $1.2 billion. Shareholders' equity exceeded
$2.3 billion and the ratio of long-term debt to equity
was 17%.
A portion of the GSI purchase price was funded by
borrowing approximately 466 million French Francs
(equivalent to $91 million at September 30, 1996) with
the remainder coming from the Company's cash and
marketable securities.
Capital expenditures for fiscal 1997 are expected to
approximate $200 million, compared to $168 million in
fiscal 1996.
During the quarter, ADP purchased 782,500 shares of
common stock for treasury at an average price of about
$37. The Company has remaining Board authorization to
purchase up to 6.8 million additional shares to fund
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.
<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 13, 1996
Richard J. Haviland
Vice President, Finance
(Principal Financial Officer)
(Title)
<PAGE>
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