-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WXoiCtYG1GF0m6XsllMnL5yOF9rxHmsx0TKRo1E2foaXbIzrY9XmzzU5xWWxxApc 05PWP77pkTrUp0h89pp1mA== 0000008670-95-000010.txt : 19951107 0000008670-95-000010.hdr.sgml : 19951107 ACCESSION NUMBER: 0000008670-95-000010 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19951027 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19951106 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUTOMATIC DATA PROCESSING INC CENTRAL INDEX KEY: 0000008670 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 221467904 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05397 FILM NUMBER: 95587516 BUSINESS ADDRESS: STREET 1: ONE ADP BOULVARD CITY: ROSELAND STATE: NJ ZIP: 07068 BUSINESS PHONE: 2019945000 MAIL ADDRESS: STREET 1: ONE ADP BOULEVARD CITY: ROSELAND STATE: NJ ZIP: 07068 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 October 27, 1995 Date of Report (Date of earliest event reported) AUTOMATIC DATA PROCESSING, INC. (Exact name of registrant as specified in its charter) Delaware 1-5397 22-1467904 (State or other jurisdiction (Commission (IRS Employer of incorporation File Number) (Identification No.) One ADP Boulevard, Roseland, New Jersey 07068 (Address of principal executive offices) Registrant's telephone number, including area code (201) 994-5000 (Former name or former address, if changed since last report.) Item 2. Acquisition or Disposition of Assets. (a) On October 27, 1995, the Registrant acquired control of the GSI Group (as defined below) when it announced that, pursuant to an ongoing tender offer that was commenced on October 16, 1995 for all of the outstanding shares of GSI Participations SCA ("GPSCA") not held by GSI Associes S.A.("GA"), and all of the shares of GA, it had acquired control over 80% of the outstanding shares of GPSCA. The shares of GPSCA held by GA are the only asset held by GA. The Registrant expects to acquire control of approximately 100% of the outstanding shares of GPSCA by January 15, 1996, the expiration date for the ongoing tender offer. If the Registrant purchases all of the shares of GPSCA not held by GA and all of the shares of GA, the total purchase price will be approximately FF 2.3 billion (approximately US $460 million). The purchase price was determined by arms-length negotiations between representatives of the Registrant, the shareholders of GPSCA and the shareholders of GA, respectively, following a competitive bidding process, and the funds used and to be used by the Registrant in connection with the acquisition of the aforementioned shares of GPSCA and GA are from the Registrant's working capital. Prior to the Registrant's acquisition of the aforementioned shares of GPSCA and GA, such shares were held primarily by institutional investors and individuals who are employees or former employees of GSI Group (as defined below). GPSCA, together with its subsidiaries (collectively, the "GSI Group"), is the European leader in providing payroll and human resource information services. GSI Group also provides facilities management, banking, clearing and other information services. For a more complete description of GSI Group, see the Registrant's press release which is filed as Exhibit B-1 to this Form 8-K. (b) The assets acquired by the Registrant as a result of the acquisition described herein, which assets consist primarily of property, plant, equipment, accounts receivable and certain intangible property, are used by GSI Group in providing the services described in Item 2(a) above, and the Registrant intends to continue such use of such assets. Item 7. Financial Statements and Exhibits. (a) The annual audited financial statements of the acquired business which are required by Item 7(a) of this Form 8-K are filed as Exhibit C-1 to this Form 8-K. It is impracticable at this time for the Registrant to provide the unaudited financial statements for the interim periods which are required by Item 7(a) of this Form 8-K. Such unaudited financial statements for the interim periods will be filed by the Registrant as an amendment to this Form 8-K as soon as practicable, but in any event not later than 60 days after the date hereof. (b) It is impracticable at this time for the Registrant to provide the pro forma financial information relative to the acquired business which is required by Item 7(b) of this Form 8- K. Such pro forma financial information will be filed by the Registrant as an amendment to this Form 8-K as soon as practicable, but in any event not later than 60 days after the date hereof. (c) The following are filed as exhibits to this Form 8-K: Exhibit A-1 Letter dated August 25, 1995 from the Registrant to Maison Lazard et Cei, financial advisors to the shareholders of GPSCA and GA, setting forth the terms and conditions of the acquisition (along with Exhibits A, B and C attached thereto). Exhibit B-1 Press Release dated October 27, 1995. Exhibit C-1 Audited Financial Statements of Acquired Business which are required by Item 7(a) of Form 8-K. SIGNATURE 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 hereunto duly authorized. AUTOMATIC DATA PROCESSING, INC. (Registrant) By: /s/ James B. Benson Name: James B. Benson Title: Corporate Vice President Date: November 6, 1995 INDEX TO EXHIBITS Exhibit A-1 Letter dated August 25, 1995 from the Registrant to Maison Lazard et Cie, financial advisors to the shareholders of GPSCA and GA, setting forth the terms and conditions of the acquisition (along with Exhibits A, B and C attached thereto). Exhibit B-1 Press Release dated October 27, 1995 Exhibit C-1 Audited Financial Statements of Acquired Business which are required by Item 7(a) of Form 8-K EX-2 2 EXHIBIT A-1 Automatic Data Processing, Inc. One ADP Boulevard Roseland, NJ 07068 U.S.A August 25,1995 Maison Lazard et Cie 12 avenue Percier 75008 Paris Dear Sirs, 1. Subject to the terms and conditions of this letter, we hereby offer, irrevocably and with intent to be legally bound, to purchase, at the price specified in paragraph 5: (i) all of the shares of GSI Participations SCA ("GPSCA") not held by GSI Associes S.A. ("GA"); and (ii) all of the shares of GA. 2. The present offer is subject to the condition of the holding of a meeting of the Board of Directors of GA, to be convened no later than 7 p.m., Paris time, August 25, 1995, at which said Board shall: (i) endorse the present offer; (ii) convene a meeting of the shareholders of GA to be held no later than October 6, 1995 for the purpose of: - endorsement of the transactions contemplated herein; and - amendment of the by-laws of GA to the extent necessary to implement the transactions contemplated herein (including if so requested by ADP the right of GPSCA to replace GA as associe commandite of GPSCA or to terminate the commandite arrangement); and (iii) approve a report to the shareholders which recommends the approval of the aforesaid transactions and amendments of the by-laws of GA referred to in (ii) above. 3. The present offer is subject to the additional condition that, on or before September 6, 1995, shareholders of GPSCA representing no less than 67% of the capital of said company (including all of the Individuals listed in Exhibit A) provide to ADP: -2- 3.1 - representations substantially in the form of Exhibit B; 3.2 - a call option with respect to their shares which, subject to the provisions of paragraph 11, can be exercised by ADP at its sole discretion during a period of two years from the date hereof, at the price defined in paragraph 5 below; 3.3 - in the event of a capital increase of GPSCA, a commitment either to transfer all of such shareholder's subscription rights to ADP or to exercise such rights (in which event the shares issued pursuant to such exercise of rights will become subject to the aforesaid call option); and a commitment not to support any capital increase reserved to a third party; 3.4 - a commitment not to tender their shares to any third party until the earlier of (i) two years from the date hereof, or (ii) the listing of GPSCA shares on the cote officielle or second marche; and 3.5 - in the event of a listing of GPSCA shares as provided in the preceding subparagraph, a right of first refusal entitling ADP to acquire said shares (i) at the listed price on the date upon which said shareholder proposes to sell such shares, if the shareholder proposes to sell its shares on the market or (ii) at the price offered by a third party, if the shareholder proposes to sell its shares to such third party. Such right of first refusal shall expire two years following the date hereof. 4. At its aforesaid meeting on August 25, 1995, the Board of Directors of GA shall undertake on behalf of GA and GPSCA that: 4.1 neither of such companies shall, directly or indirectly, enter into any discussion, negotiation or agreement with any third party pertaining to the sale of any shares in GA or GPSCA ; and 4.2 each such company shall exercise its best efforts, to the extent permitted by law, in order to convince its shareholders to tender their shares to ADP so as to permit ADP to obtain no less than 67% of the shares of said company. 5. The aggregate purchase price to be paid by ADP for one hundred per cent of the equity securities of GA and of all of the equity securities of GPSCA not held by GA is 2.3 billion French Francs, it being understood: 5.1 that the respective prices paid for each share of GA and each share of GPSCA shall be computed by Lazard Freres & Cie on a proportional basis taking into account GA's holdings of GPSCA shares, and such determination shall be definitive and binding on all parties; and -3- 5.2 that said purchase prices may be adjusted in accordance with Exhibit C. Such purchase prices shall be paid to the tendering shareholder in cash, immediately upon surrender of the relevant shares minus the advisory fee payable to Maison Lazard & Cie pursuant to its engagement agreement with GPSCA (the relevant terms of which shall be communicated to ADP by GPSCA), which fee shall be withheld from such payment and paid directly to Maison Lazard & Cie. 6. ADP undertakes to exercise its best efforts in order to obtain promptly all governmental approvals necessary in order to consummate the transactions discussed herein. ADP represents that it is duly authorized to carry out the transactions herein contemplated without any further action by its Board of Directors or any other body of ADP. 7. Subject only to ADP's receipt of governmental approvals as provided in paragraph 6, to favorable action by the Board of Directors and the shareholders of GA and GPSCA as provided in paragraphs 2 and 3 above, and to the provisions of paragraph 11, ADP shall purchase at the price defined in paragraph 5 all of the shares of GA and GPSCA that are tendered to it within 30 days of fulfillment of the last of such conditions. In the event that such 30 day period does not commence until after November 15, 1995 (otherwise than as a result of ADP's failure to secure such governmental approvals on or before such date), ADP's obligations shall be subject to the additional condition that there shall have been no material adverse change affecting the business or financial condition of GPSCA between the date hereof and the date of commencement of such 30-day period. 8. If the shareholders of GA fail to vote favorably any of the resolutions contemplated in paragraph 2 above, ADP shall nonetheless be required to offer to purchase at the price provided for in paragraph 5 all of the GA shares and all of the GPSCA shares not held by GA provided only that: 8.1 GA ceases to be the associe commandite of GPSCA at any time within the two year period following the date hereof; 8.2 there shall have been no material adverse change affecting the business or financial condition of GPSCA between the date hereof and the date of termination of GA's status as associe commandite of GPSCA, it being understood that, subject to the provisions of paragraph 11, ADP shall be required to purchase all shares tendered during the period of 90 days following the date of such termination of GA's status as associe commandite effective as of the last day of such period; -4- 8.3 the obligation of ADP to acquire the GA shares under this paragraph 8 shall be subject to the additional conditions that (i) GA shall have adopted the amendments to its by-laws necessary in order to make such acquisition possible and that (ii) a majority of the shares of GA are tendered to ADP prior to expiration of such 90-day period. In the event that either of such conditions is not satisfied within such period, ADP shall have no further obligation with respect to the GA shares but shall continue to be obligated to acquire the GPSCA shares as provided elsewhere herein. 9. Until the date of the shareholders' meeting of GA contemplated in paragraph 2 or, if the GA shareholders adopt at the said meeting the resolutions contemplated in said paragraph 2, until the end of the 30-day period mentioned in paragraph 7, GA and GPSCA and all companies directly or indirectly under their control shall be managed in the ordinary course of business only and shall refrain (i) from purchasing or selling any substantial asset outside of the ordinary course of business (with the exception of the Businesses listed in Table 1 of Exhibit C), (ii) from modifying their respective bylaws or capital structure in any respect whatsoever (except as provided for herein), and (iii) from deciding any distribution of dividends and/or assets, except as permitted pursuant to paragraph 10. GA and GPSCA shall, until completion of all actions contemplated herein, keep ADP informed of all steps taken by GA and GPSCA to meet the conditions set forth herein, and shall provide to ADP copies of their respective management accounts and of all audited accounts. 10. There shall be no declaration or distribution of dividends by GPSCA in excess of the amount mandated under article 29 of GPSCA's statutes (as presently in effect) without the prior consent of ADP prior to expiration of the period of two years from the date hereof, it being understood, however, that ADP acknowledges and accepts the advance on dividends paid in July 1995. 11. ADP agrees not to make any purchase of GA or GPSCA shares outside the 30-day period specified in paragraph 7 and the 90-day period specified in paragraph 8 without the prior consent of Lazard Freres & Cie, which shall not be withheld unless the effect of such proposed sale outside such periods would, in the discretionary judgement of Lazard Freres & Cie, be to distort the price adjustment computation contemplated in Exhibit C. Notwithstanding any other provisions of this letter, ADP agrees not to cause either of such periods to commence prior to October 16, 1995 without the consent of GPSCA. -5- 12. This offer shall be governed by and interpreted in accordance with French law. Signed in 5 originals. Fred D. Anderson, Jr. Corporate Vice President, Chief Financial Officer G. Harry Durity Corporate Vice President, Worldwide Business Development EXHIBIT A Individuals Jacques Valet Philippe Gluntz Ehran Dilman Andoni Itturioz Christian Manivel Georges Raffoul EXHIBIT B Representations of certain sellers of HPSCA shares 1. The seller is the sole owner of the HPSCA shares transferred by it. All such shares are free and clear of all liens and other encumbrances. The seller is not bound by any agreement limiting seller's right to transfer the shares to ADP. 2. The seller has full capacity to transfer the shares. The seller has obtained all third party consents required in order for the shares to be validly transferred to ADP (other than governmental authorizations, which shall be the sole responsibility of ADP). EXHIBIT C Purchase price adjustment mechanism A purchase price adjustment shall be computed by Lazard Freres & Cie, as of the earliest of (i) the first day of the 30- day period specified in paragraph 7, (ii) the first day of the 90-day period specified in paragraph 8, and (iii), subject to paragraph 11, the first acquisition of any GA or GPSCA shares by ADP (the "Adjustment Date") as follows. The aggregate purchase price shall be increased by any aggregate surplus and reduced by any aggregate shortfall between (i) net alter tax proceeds from the divestiture of the Businesses set out below in Table 1 which have been divested prior to such Adjustment Date; and (ii) their respective Estimated Values set out below in Table 1. Said purchase price shall also be reduced by 33% of the aggregate Estimated Values set out below in Table 1 for the Businesses which have not been divested as of the Adjustment Date, provided, however, that in respect of any Business which, as of the Adjustment Date, has not been divested but is the subject of a binding divestiture agreement (including such an agreement that is conditional upon customary closing conditions such as governmental approvals), the rate of reduction shall be 15% in lieu of 33%. Table 1 Businesses Estimated Value Transport & Tourisme FFr. 7 million Technologies Avancees FFr. 80 million DMS FFr. 6 million MSS FFr. 21 million Industrie FFr. 4 million Total FFr. 118 million The price shall also be increased by the amount of any proceeds payable to GPSCA or GA in consideration of any shares issued pursuant to any options that may have been issued and remain outstanding as of the date hereof, insofar as such shares are required to be taken into account as "equity securities" for purposes of computing prices per share pursuant to paragraph 5. Any adjustments made by Lazard Freres & Cie shall be definitive and binding on all parties. EX-2 3 EXHIBIT B-1 Arthur Schmidt & Associates,Inc. For:AUTOMATIC DATA PROCESSING,INC 342 Madison Avenue (NYSE:AUD) New York, New York 10173 Tel: (212) 953-5555 Fax: (212) 953-5554 FOR IMMEDIATE RELEASE ADP ACQUIRES CONTROL OF GSI ROSELAND, NJ, Oct. 27, 1995 -- Automatic Data Processing, Inc. has acquired control of GSI, a leading computer services company based in Paris, France. ADP now controls 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. As previously announced on August 31, 1995, ADP agreed to acquire for cash all of the outstanding shares of GSI for a total price of FF 2.3 billion (approximately US $460 million). GSI's revenues are in excess of FF 2 billion (US $400 million), and the company has over 3,000 employees, with operations in France, Germany, Italy, Spain, Switzerland and the United Kingdom. Josh S. Weston, chairman and chief executive officer of ADP, said, "With the acquisition of GSI, we will now be positioned to become the leader of payroll and human resource information services in Europe." ADP, with $3 billion in revenue and 350,000 clients, is one of the largest independent computing services firms in the world. #MDS#JMC# The information and opinions contained in this release have been furnished and approved by Automatic Data Processing, Inc. We are retained by them as investor relations counsel. EX-13 4 EXHIBIT C-1 1994 Consolidated Accounts GSI Auditor's report on the consolidated accounts To the Associates of GSI-Participations. In accordance with the assignment vested in us by General Meetings of May 23, 1991 and June 24, 1994, we herewith present our report on: .our examination of the consolidated financial statements of GSI-Participations, as appended to this report, .our verification of the Group's management report, with respect to the year ended December 31, 1994. OPINION ON CONSOLIDATED FINANCIAL STATEMENTS In auditing the consolidated financial statements, we have performed such examinations and verifications as we deemed necessary in accordance with generally accepted accounting standards. In our opinion, the consolidated financial statements present fairly the net worth, financial position and earnings of the Group made up of the consolidated companies. SPECIFIC VERIFICATIONS In accordance with generally accepted accounting standards, we have also made the specific verifications required by law. In our opinion, the information in the Group's management report fairly and accurately reflects the consolidated financial statements. Paris, April 20, 1995 The statutory auditors Andre Huet Barbier Frinault & Autres Member of the Worldwide Arthur Andersen Organization, represented by Claude Weill -1- Consolidated balance sheets as at December 31, 1994 and 1993
Assets In FRF thousands December 31, 1994 December 31, 1993 Gross Amortization Net Net amounts and provisions Goodwill (note 3.1) 224,713 (45,775) 178,938 186,100 Other intangibles 96,276 (80,293) 15,983 13,765 Tangible assets (note 3.2) 566,784 (406,344) 160,440 165,675 Investments and other long-term assets (note 3.3) 59,058 (6,981) 52,077 53,357 TOTAL FIXED ASSETS 946,831 (539,393) 407,438 418,897 Inventories and work in progress (note 3.4) 4,161 - 4,161 4,360 Accounts receivable 625,460 (29,184) 596,276 577,330 Other receivables 220,852 (200) 220,652 168,253 Cash and marketable securities 312,260 - 312,260 307,543 Prepaid expenses 49,012 - 49,012 44,641 TOTAL CURRENT ASSETS 1,211,745 (29,384) 1,182,361 1,102,127 TOTAL ASSETS 2,158,576 (568,777) 1,589,799 1,521,024
-2- Liabilities and shareholders' equity In FRF thousands December 31, 1994 December 31, 1993 Share capital (note 3.5) 104,890 104,890 Additional paid-in capital 190,545 190,545 Consolidated retained earnings (note 3.5) 95,225 87,595 Net income for the year (31,617) 33,138 TOTAL SHAREHOLDERS' EQUITY 359,043 416,168 Minority interests 52,475 57,150 Provisions for liabilities and charges (note 3.6) 94,438 59,591 Long-term borrowings (note 3.7) 70,332 75,324 Short-term borrowings (note 3.8) 28,182 36,744 Accounts payable 212,237 199,819 Accrued taxes, compensation and benefits 493,900 441,861 Other liabilities (note 3.9) 91,065 67,649 Deferred income (note 3.10) 188,127 166,718 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,589,799 1,521,024
-3- Consolidated income statements for the years 1994 and 1993
In FRF thousands December 31, 1994 December 31, 1993 Total revenues (note 4.1) 2,605,285 2,588,346 Cost of goods sold 88,062 79,014 Other purchases and external charges 879,230 851,068 Value added 1,637,993 1,658,264 Taxes other than income tax 66,443 63,327 Personnel costs (notes 4.2) 1,412,075 1,390,908 Gross operating income 159,475 204,029 Amortization and provisions-net 88,190 101,390 OPERATING INCOME 71,285 102,639 Interest income-net (note 4.3) 1,790 11,046 Non-current income (note 4.5) (80,886) (3,167) Income on ordinary activities before tax (7,811) 110,518 Employee profit sharing (6,103) (11,183) Income tax (note 4.4) 2,848 (33,707) Net income after tax (11,066) 65,628 Group share (16,765) 52,068 Extraordinary expense - net of tax (note 4.6) (4,211) (9,623) Amortization of goodwill (13,231) (12,953) CONSOLIDATED NET INCOME (28,508) 43,052 Minority interest 3,109 9,914 Group share (31,617) 33,138
-4- Consolidated statement of cash flows for the years 1994 and 1993
In FRF thousands December 31, 1994 December 31, 1993 Operating activities Consolidated net income (28,508) 43,052 Amortization 110,181 102,044 Elimination of capital gains and losses (2,255) 1,206 Cash flow 79,418 146,302 Movements in working capital 74,801 41,149 TOTAL OPERATING ACTIVITIES 154,219 187,451 Investing activities Acquisition of fixed assets (112,593) (105,859) Acquisition of long-term investments (10,715) (1,774) Disposal of fixed assets 16,076 7,834 Net cash resulting from acquisitions and disposals of subsidiaries and activities - (248) TOTAL INVESTING ACTIVITIES (107,232) (100,047) Financing activities Dividend paid (33,472) (31,589) Other movements (574) - TOTAL FINANCING ACTIVITIES (34,046) (31,589) Foreign currency translation differences 2,526 (5,716) Changes in cash and cash equivalents 15,467 50,099 Cash and cash equivalents at the start of the year 206,655 156,556 Cash and cash equivalents at the end of the year 222,122 206,655
-5- Changes in shareholders' equity and minority interests
In FRF thousands Shareholders' Minority Total equity Interests At December 31, 1992 413,567 54,910 468,477 Dividends paid (24,704) (6,885) (31,589) Foreign currency translation differences (5,833) (789) (6,622) 1993 net income 33,138 9,914 43,052 At December 31, 1993 416,168 57,150 473,318 Dividends paid (25,452) (8,020) (33,472) Foreign currency translation differences 205 550 755 Other movements (261) (314) (575) 1994 net income (31,617) 3,109 (28,508) At December 31, 1994 359,043 52,475 411,518
Per share information (group share)
In FRF thousands 1994 1993 Net income after tax (16) 50 Consolidated net income (30) 32 Net assets before distribution 342 397
-6- 1 - Consolidation principles and methods The consolidated financial statements of GSI-Participations have been prepared according to the accounting standards published by the International Accounting Standards Committee (IASC) and conform to French law on consolidated financial statements. 1.1. GROUP STRUCTURE The consolidated financial statements include the financial statements of GSI-Participations and those of its direct and indirect subsidiaries listed in the Appendix. Companies wholly owned by the Group are consolidated using the full consolidation method. The "groupement d'interet economique" (GIE) GSA, 51%-owned by GSI on a joint basis with Steria and Andersen Consulting, is consolidated using the proportional consolidation method. 1.2 GOODWILL Goodwill represents the difference between the acquisition price and the Group share in the underlying unallocated net assets and liabilities of the company acquired. Goodwill is reported separately on the balance sheet. For those acquisitions which represent a major expansion of the Group's activities in terms of expertise or geographical market coverage, goodwill is amortized using the straight line method over a maximum period of 20 years. Only the goodwill on the acquisition of the minority interests on GSI SA is amortized over a 40 year period. Other goodwill is amortized over a shorter period not exceeding 5 years. 1.3 TRANSLATION OF FOREIGN CURRENCIES The balance sheets of foreign subsidiaries are translated into French francs at the exchange rate in effect at the end of the year and their income statements are translated at the average exchange rate for the year. The impact on equity of exchange rate movements from one year to the next has been included directly in consolidated retained earnings. 2- Accounting principles and bases of valuation 2.1 RESEARCH AND DEVELOPMENT EXPENDITURE Expenditure on research and development is written-off in the year in which it occurred. 2.2 INTANGIBLE ASSETS Software and licenses acquired are amortized over a period of 1 to 3 years. Other intangibles are amortized over a maximum period of 5 years. 2.3 PROPERTY, PLANT AND EQUIPMENT Property, plan and equipment are stated at cost. Depreciation is based on the expected useful life and is charged using either the straight line or the declining balance method, depending on the nature of the assets concerned. Computer hardware is depreciated over a period of 2 to 5 years. Other fixed assets (fixtures, furniture, equipment, etc. ) are depreciated over a period of 5 to 10 years. 2.4 DEFERRED TAXES The effects of deferred taxation resulting from temporary differences between the fiscal value and the accounting value of assets and liabilities are recorded in the consolidated financial statements using the liability method. -7- No account is taken in the financial statements of deferred tax assets resulting from tax loss carry forwards,and the temporary timing differences are written off as they arise. 2.5 RETIREMENT BENEFITS Retirement benefits for the employees of companies in France are fully provided for in the balance sheet. The provision is calculated using the discounted present vale of future benefits. Similar rights recognized by subsidiaries outside France are included in the consolidated financial statements. 2.6 ACCOUNTING TREATMENT OF RESULTS ON LONG-TERM CONTRACTS Profits and losses on long-term contracts are recorded using the percentage of completion method. According to this method, revenue and margin are recorded as the contract progresses; losses are fully provided for when they seem probable and the excess or shortfall in invoicing compared with the level of work in progress is recorded as deferred income or income receivable. -8- 3 - Notes to the balance sheet
3.1 GOODWILL In FRF thousands December 31, 1994 December 31, 1993 Gross value 224,713 218,290 Amortization to date (45,775) (32,190) NET VALUE 178,938 186,100
3.2 TANGIBLE ASSETS In FRF thousands
.Gross December Acquisitions Disposals Adjustments December values 31, 1993 in 31, 1994 translation Land and 9,147 59 (90) 171 9,287 buildings Machinery 290,552 49,026 (37,351) 5,550 307,777 and equipment Other 234,594 38,492 (15,077) (8,289) 249,720 fixed assets TOTAL 534,293 87,577 (52,518) (2,568) 566,784 .Amorti- December Charges Write-backs Adjustments December zation 31, 1993 in 31, 1994 translation Land and 2,373 322 (51) 23 2,667 buildings Machinery 208,783 51,289 (32,035) 4,491 232,528 and equipment Other 157,462 30,450 (10,372) (6,391) 171,149 fixed assets TOTAL 368,618 82,061 (42,458) (1,877) 406,344
-9- 3.3 INVESTMENTS AND OTHER LONG-TERM ASSETS In FRF thousands
December 31, 1994 December 31, 1993 Gross Provision for Net Net write down Non- 19,593 (6,981) 12,612 15,556 consoli- dated investments Loans 23,573 - 23,573 23,256 Other 15,892 - 15,892 14,545 TOTAL 59,058 (6,981) 52,077 53,357 Loans include FRF21,259 thousand for non-interest bearing loans in respect of the mandatory national programme to provide housing funds. With effect from 1992, payments to these funds have been written off in the year in which they were made.
3.4 INVENTORIES AND WORK IN PROGRESS Inventories include supplies valued at average purchase cost. 3.5 SHAREHOLDERS' EQUITY .Share capital .Consolidated retained earnings On December 31, 1994, the These reserves mainly represent: capital of GSI-Participations - the translation reserve; was FRF104,890 thousand - non-distributed earnings represented by 1,048,900 retained by consolidated of shares FRF100 each. companies, net of the balance of the 1987 write-off of goodwill. 3.6 PROVISIONS FOR LIABILITIES AND CHARGES In FRF thousands
December 31, 1994 December 31, 1993 Provisions for 10,483 15,882 commercial liabilities and litigation Guarantees and 12,473 17,380 provisions on contracts Retirement benefits 18,679 16,473 (net of tax) Restructuring costs 40,440 - Other 12,363 9,856 TOTAL 94,438 59,591
-10- 3.7 LONG-TERM BORROWINGS In FRF thousands
December 31, 1994 December 31, 1993 Change Loan note 70,332 70,357 (25) Other borrowings - 4,967 (4,967) of over one year TOTAL 70,332 75,324 (4,992)
The loan note issued in 1987 by GSI-Participations is to be redeemed by the end of 1995. 3.8 SHORT-TERM BORROWINGS In FRF thousands
December 31, 1994 December 31, 1993 Change Other borrowings - 1,219 (1,219) of less than one year Bank overdrafts 19,806 24,345 (4,539) Employee profit 8,376 11,180 (2,804) sharing TOTAL 28,182 36,744 (8,562)
3.9 OTHER LIABILITIES 3.10 DEFERRED INCOME This includes advance payments In accordance with the received from customers of accounting treatments of FRF53,892 thousand (FRF49,814 long-term contracts (see thousand at December 31, 1993). note 2.6), this included FRF183 million of income invoiced in advance. 3.11 CONTINGENT LIABILITIES In FRF thousands
December 31, 1994 December 31, 1993 - -Lease and short 114,270 71,648 term rental commitments for computer equipment - -Commitments under 217,886 187,499 property leases - -Other commitments 31,367 27,041
All leases are accounted for as operating expenses. -11- 4 - Notes to the income statement 4.1 ANALYSIS OF TOTAL REVENUES In FRF thousands
December 31, 1994 December 31, 1993 France 1,644,216 1,653,955 Europe (excluding France) 877,469 855,027 Other countries 83,600 79,364 TOTAL 2,605,285 2,588,346
All revenues arise from the computer services sector. The growth of net revenues is 0.7% (2% with a constant Group structure and exchange rates). 4.2 NUMBER OF EMPLOYEES On December 31, 1994 the number of employees was 3,880. The average number of employees during the year was 3,837. 4.3 FINANCIAL INCOME-NET In FRF thousands
December 31, 1994 December 31, 1993 Change Net deposit and 11,815 18,766 (6,951) other income Exchange gains 1,844 6,313 (4,469) Other financial 278 1,635 (1,357) income TOTAL FINANCIAL 13,937 26,714 (12,777) INCOME Interest on loan note 4,200 4,200 0 Exchange losses 2,564 5,739 (3,175) Other financial 5,383 5,729 (346) expense TOTAL FINANCIAL 12,147 15,668 (3,521) FINANCIAL INCOME 1,790 11,046 (9,256)
The decline in financial income is due primarily to a 37% reduction in deposit and other income, caused mainly by lower short-term interest rates in Europe. -12- 4.4 INCOME TAX In FRF thousands
The income tax charge for the year was as follows: December 31, 1994 December 31, 1993 Current taxes (13,109) (44,783) Deferred taxes 14,443 3,644 Distribution tax (1,598) - R & D tax credit 3,112 7,432 TOTAL 2,848 (33,707)
At December 31, 1994 the Group has tax loss carry forwards of some FRF60 million of which FRF5 million can be carried forward indefinitely. 4.5 EXCEPTIONAL EXPENSE 4.6 EXTRAORDINARY EXPENSE The exceptional loss of The loss of FRF4,211 thousand FRF80,886 thousand includes (net of tax) relates restructuring costs amounting to primarily to the cost to FRF66,025 thousand. incurred in the disposal of certain activities. -13- Appendix Group structure at December 31, 1994 and 1993
Legal Form Holding % 1994 1993 .Companies in France Generale de Service SA 99 99 Informatique GSI Division des Banques SA 99 99 GSI Ingenierie et Service SA 99 99 CS Informatic SA 99 99 GSI Transport Tourisme SA 59 59 GSI Finances SA 99 99 GSI Entreprise-Centre Francais de Recherche Operationnelle (CFRO) SA 99 99 GSI Industrie SA 99 99 GSI Midi SA 99 99 GSI G.P. Rhone-Alpes SA 99 99 GSI France Nord SA 99 99 GSI Telematique SA 99 99 GSI Tecsi SA 70 69 GSI Services, groupement d'interet economique forme entre certaines filiales du groupe GIE - - Generale de Service SARL 99 99 GSI ASCII SA 99 99 GSI Motor Trade SA 99 99 GSI Erli SA 69 69 GSI Sceta Informatique Transport SA 50 50 Sesamtel-GSI SA 59 57 GSI Contact SA 99 99 GSI TPI SA 51 51 Navitel SA 29 29 GSI Distribution SA 99 99 GSI Systemes SA 99 99 GSA GIE 51 52 GSI AMI SA 99 99 GSI GE SA 99 - GSI Diffusion SA 99 - GSI Entreprises SA 99 - GSI SM SA 99 - GSI ST SA 99 - GSI IR SAS 99 - -14- Group structure at December 31, 1994 and 1993 Legal Form Holding % 1994 1993 .Companies outside France GSI SA (Belgium) SA/NV 99 99 GSI Travel & Transportation Belgium SA/NV 59 59 GSI UK Ltd. 99 99 GSI Travel & Transportation UK Ltd. 59 59 GSI Resource UK Ltd. 99 99 GSI Italia SpA 99 99 GSI Datel (Germany) GmbH 94 94 GSI Danet (Germany) GmbH 57 57 GSI Danet IS (Germany) GmbH 43 43 GSI Autocomp (Germany) GmbH 94 94 GSI Transport & Touristik (Germany) GmbH 59 59 GSI Suisse SA 99 99 GSI Nederland BV 99 99 GSI Travel & Transportation Nederland BV 59 59 GSI USA and its subsidiary TDSI Inc. 99 99 GSI Danet USA Inc. 57 57 Seresco (Spain) and its subsidiaries SA 99 99 Tecsidel (Spain) SA 79 79 GSI Transporte & Turismo (Spain) SA 59 59 GSI Incorporated System (Canada) Inc. 99 99 GSI Transport Tourisme (Switzerland) SA 59 59 GSI Ucoms (The Netherlands) BV 59 59 GSI Information Systems Singapore PTE Ltd. 99 99 Lammert-Paisy (Germany) GmbH 94 94 GSI Softmark (Germany) GmbH 94 94 PAB (Germany) GmbH 94 94 GSI Argentina SA 99 99 GSI de Mexico SA 84 -
-15- GSI 25, bd de l'Amiral Bruix - 75782 Paris Cdx 16, France - Tel: +33(1) 45 02 75 Fax: +33(1) 45 00 59 43 EX-2 5 (201) 994-5677 November 6, 1995 Securities and Exchange Commission Filing Desk Judiciary Plaza 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Current Report on Form 8-K of Automatic Data Processing, Inc. ("ADP") Gentlemen: We hereby electronically file via EDGAR, pursuant to applicable rules promulgated under the Securities Exchange Act of 1934, as amended, ADP's Current Report on Form 8-K (the "Form 8- K"), including exhibits. One (1) manually signed copy of the Form 8-K, with exhibits, is being mailed on the date hereof to each of the New York Stock Exchange, the Pacific Stock Exchange and the Chicago Stock Exchange. Sincerely, /s/ Daniel A. Zaccardo Daniel A. Zaccardo, Esq. cc (w/encl): The New York Stock Exchange The Pacific Stock Exchange The Chicago Stock Exchange -----END PRIVACY-ENHANCED MESSAGE-----