-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, P+YjCGcFvoghzFG5qsEvhSSuU4qNIi/fjl5gNyMPf8PXkkBzh7ctsdeIk17RGaSD fJ/naj5ReB4h+vJLzmIFHQ== 0000008670-94-000013.txt : 19940602 0000008670-94-000013.hdr.sgml : 19940602 ACCESSION NUMBER: 0000008670-94-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUTOMATIC DATA PROCESSING INC CENTRAL INDEX KEY: 0000008670 STANDARD INDUSTRIAL CLASSIFICATION: 7374 IRS NUMBER: 221467904 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05397 FILM NUMBER: 94526453 BUSINESS ADDRESS: STREET 1: ONE ADP BOULVARD CITY: ROSELAND STATE: NJ ZIP: 07068- BUSINESS PHONE: (201)-994-5000 MAIL ADDRESS: STREET 1: ONE ADP BOULEVARD CITY: ROSELAND STATE: NJ ZIP: 07068 10-Q 1 LIVE 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, 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 May 3, 1994 there were 140,667,108 common shares outstanding. 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, 1994 1993 1994 1993 Revenue $674,405 $612,956 $1,804,049 $1,626,730 Operating 266,061 236,569 729,317 657,250 expenses General, 184,313 179,483 508,605 474,764 administrative and selling expenses Depreciation 36,571 35,719 108,881 101,866 and amortization Systems 41,841 34,657 115,865 95,886 development and programming costs Interest 5,129 4,848 15,461 14,684 expense 533,915 491,276 1,478,129 1,344,450 EARNINGS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE 140,490 121,680 325,920 282,280 Provision 35,500 29,200 82,240 67,750 for income taxes NET EARNINGS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 104,990 92,480 243,680 214,530 Cumulative effect of accounting change -- -- 2,700 -- NET $104,990 $ 92,480 $ 246,380 $ 214,530 EARNINGS EARNINGS PER SHARE: Before Cumulative Effect of Accounting Change $ .74 $ .65 $ 1 .73 $ 1.52 Cumulative Effect of Accounting Change -- -- .02 -- NET $ .74 $ .65 $ 1.75 $ 1.52 INCOME Dividends $ .13 $ .115 $ .39 $ .345 per share See notes to consolidated statements. Form 10Q Consolidated Balance Sheets (In thousands) March 31, June 30, Assets 1994 1993 Cash and cash equivalents $ 121,527 $ 180,802 Short-term marketable 409,304 187,358 securities Accounts receivable 319,409 294,282 Other current assets 96,920 108,861 Total current assets 947,160 771,303 Long-term marketable 494,102 518,292 securities Long-term receivables 152,946 134,631 Land and buildings 281,417 257,837 Data processing equipment 414,636 382,049 Furniture, leaseholds and 285,897 272,036 other 981,950 911,922 Less accumulated (595,410) (550,747) depreciation 386,540 361,175 Other assets 80,530 78,820 Intangibles 580,424 575,179 $2,641,702 $2,439,400 Liabilities and Shareholders' Equity Accounts payable $ 48,110 $ 65,537 Accrued expenses 317,131 309,097 & other current liabilities Income taxes 87,597 40,176 Current portion of 2,324 1,446 long-term debt Total current liabilities 455,162 416,256 Long-term debt 368,526 347,583 Other liabilities 57,036 49,519 Deferred income taxes 39,521 74,931 Deferred revenue 57,953 56,655 Shareholders' equity: Common stock 15,712 15,712 Capital in excess of par 317,400 300,010 value Retained earnings 1,821,498 1,630,135 Treasury stock (491,106) (451,401) 1,663,504 1,494,456 $2,641,702 $2,439,400 See notes to consolidated statements. Form 10Q Condensed Statements of Consolidated Cash Flows (In thousands) Nine Months Ended March 31, 1994 1993 Cash Flows From Operating Activities: Net earnings $ 246,380 $ 214,530 Expenses not requiring outlay of cash 126,728 117,520 Changes in operating net assets (33,974) (65,967) Net cash flows from operating activities 339,134 266,083 Cash Flows From Investing Activities: Marketable securities (197,756) (215,700) Capital expenditures (73,287) (59,333) Other changes to property, plant and equipment 7,76 3,402 Additions to intangibles (20,240) (21,549) Acquisitions of businesses (40,716) (56,918) Net cash flows from investing activities (324,237) (350,098) Cash Flows From Financing Activities: Repayments of long-term debt (1,480) (6,715) Proceeds from issuance of common stock 67,906 64,892 Repurchases of common stock (84,572) (3,805) Dividends paid (55,016) (48,760) Other (1,010) 2,876 Net cash flows from financing activities (74,172) 8,488 Net change in cash and cash equivalents (59,275) (75,527) Cash and cash equivalents, at beginning of period 180,802 304,021 Cash and cash equivalents, at end of period $ 121,527 $ 228,494 See notes to consolidated statements. 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, 1993. Note A - The Company adopted Financial Accounting Standards Statement No. 109, "Accounting for Income Taxes", effective July 1, 1993. The cumulative effect of adopting this statement on the Company's financial statements was to increase net earnings by $2.7 million ($.02 per share) for the three months ended September 30, 1993. The method used to compute the provision for income taxes is based on the effective income tax rate anticipated for the fiscal years, and for fiscal '94 reflects the increased statutory rate contained in the Omnibus Budget Reconciliation Act of 1993 enacted in August 1993. The provision for the three months ended September 30, 1993 also includes certain one-time impacts of the Act, which in the aggregate were not material. Note B - The results of operations for the nine months ended March 31, 1994 may not be indicative of the results to be expected for the year ending June 30, 1994. Note C - Earnings per share are based on a weighted average of the number of shares outstanding, which for the quarters ended March 31, 1994 and 1993 were 141,649,000 and 142,551,000, respectively, and for the nine months ended March 31, 1994 and 1993 were 140,940,000 and 141,239,000, respectively. Form 10Q MANAGEMENT'S DISCUSSION AND ANALYSIS OPERATING RESULTS Revenue and earnings again reached record levels during the quarter ended March 31, 1994. Revenue and revenue growth by ADP's major service groups are shown below: Revenue 3 Months Ended 9 Months Ended March 31, March 31, 1993 1994 1993 1994 ($ in millions) Employer Services $ 386 $ 419 $ 986 $1071 Brokerage Services 129 152 331 410 Dealer Services 71 85 201 246 Other 27 18 109 77 $ 613 $ 674 $1627 $1804 Revenue Growth 3 Months Ended 9 Months Ended March 31, March 31, 1993 1994 1993 1994 Employer Services 17% 9% 17% 9% Brokerage Services 14 18 19 24 Dealer Services 15 20 18 22 Other (31) (33) (19) (29) 12% 10% 14% 11% Consolidated revenue for the quarter of $674 million was up 10% from last year. Revenue growth in Employer, Brokerage, and Dealer Services, was 9%, 18%, and 20%, respectively. These three businesses account for over 90% of ADP's total revenue. Brokerage and Dealer Services continued to have especially strong internal revenue growth. As expected, overall revenue growth decelerated slightly in the third quarter as the last acquisition of any size reached its anniversary date. The primary components of Other revenue shown above are Claims Solutions, Network, Wholesale Distribution, and European payroll services. In addition, Other revenue has been reduced to adjust for the difference between actual interest earned on invested tax filing funds and income credited to Employer Services at a standard rate of 7.8%. Pretax earnings for the quarter increased 15% from last year, as margins continued to improve due to aggressive automation and high Brokerage trading volume. 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, adopt new technologies, and develop new products. Form 10Q Net earnings for the quarter, after a higher effective tax rate, increased 14% to $105 million. The effective tax rate of 25.3% increased from 24.0% in the comparable quarter last year, primarily as a result of the increased federal statutory tax rate enacted in August. The Company expects the effective tax rate for the full year to approximate the third quarter rate. Earnings per share for the quarter increased 14% to $.74 from $.65 last year. Earnings per share for the first nine months of fiscal 1994 increased 14% to $1.73 from $1.52 last year, before a one-time gain of $.02 in the quarter ended September 30, 1993 from an accounting change. The Company adopted Financial Accounting Standards Board Statement No. 109, "Accounting for Income Taxes", effective July 1, 1993. The cumulative effect of adopting this statement was to increase net earnings by $2.7 million ($.02 per share) for the 3 months ended September 30, 1993. 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, 1994, the Company had cash and marketable securities in excess of $1 billion. Shareholders' equity exceeded $1.6 billion and the ratio of long-term debt to equity was 22%. Capital expenditures for fiscal 1994 are expected to approximate $100 million. Capital expenditures for fiscal 1993 were $87 million. During the quarter, ADP purchased approximately 750,000 shares of common stock for treasury. During the nine months ended March 31, 1994, the Company purchased approximately 1,700,000 shares at an average price of about $50. The Company has remaining Board authorization to purchase up to approximately 3.2 million additional shares. Form 10Q PART II. OTHER INFORMATION All items are either inapplicable or would result in negative responses and, therefore, have been omitted. 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 6, 1994 /s/Fred D. Anderson, Jr. Fred D. Anderson, Jr. Chief Financial Officer and Corporate Vice President (Principal Financial Officer) (Title) -----END PRIVACY-ENHANCED MESSAGE-----