-----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, ERt9fkvvIS3WYY9f37tkbohgASJWs2/EFBi7PPG667LT8YEOo7j/AyYpLGCL/sa6 wZZ84rnd/8Pw8mYp5zBCxw== 0000008670-95-000015.txt : 19951202 0000008670-95-000015.hdr.sgml : 19951202 ACCESSION NUMBER: 0000008670-95-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NYSE 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: 95592676 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 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 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. 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. 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. 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. 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 $460 million). Effective November 1, 1995 ADP acquired control of GSI. As of that date, ADP controlled over 80% of the shares of GSI and expects to complete the purchase of close to 100% by the end of the ongoing shareholder tender period which expires on January 16, 1996. Note B - The results of operations for the three months ended September 30, 1995 may not be indicative of the results to be expected for the year ending June 30, 1996. Note C - Earnings per share are based on a weighted average of the number of shares outstanding, which for the quarters ended September 30, 1995 and 1994 were 143,857,000 and 140,769,000, respectively. Note D - Effective July 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities", under which most of the Company's investments in marketable securities are classified as "available-for-sale securities". The impact of adopting this statement was not material. Note E - On November 14, 1995, the Company declared a two-for-one common stock split to be distributed January 1,1996 to shareholders of record December 15, 1995. This stock split has not yet been reflected in the accompanying financial statements. FORM 10Q MANAGEMENT'S DISCUSSION AND ANALYSIS OPERATING RESULTS Revenue and earnings again reached record levels during the quarter ended September 30, 1995. Revenue and revenue growth by ADP's major service groups are shown below: Revenue Revenue Growth 3 Months Ended 3 Months Ended September 30, September 30, 1994 1995 1994 1995 ($ 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. 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. 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. 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) EX-27 2
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