-----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, NE9yu2sJgB3BorFaPaxbkUtDN5kATptD41V+s28Mz67z21iG01lBoQPIEA1at1Ib aoRIEsr9RCQABPI6wIrIMA== 0000008670-96-000006.txt : 19961204 0000008670-96-000006.hdr.sgml : 19961204 ACCESSION NUMBER: 0000008670-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 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: 96661171 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, 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. 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. 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. 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 $388,198 See notes to consolidated statements. Form 10Q Notes to Consolidated Statements The information furnished herein reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods. All adjustments are of a normal recurring nature. These statements should be read in conjunction with the annual financial statements and related notes of the Company for the year ended June 30, 1996. Note A - The results of operations for the three months ended September 30, 1996 may not be indicative of the results to be expected for the year ending June 30, 1997. Note B - Earnings per share are based on the weighted average number of shares outstanding, which for the quarters ended September 30, 1996 and 1995 were 288,368,000 and 287,714,000 respectively. Form 10Q MANAGEMENT'S DISCUSSION AND ANALYSIS OPERATING RESULTS Revenue and earnings again reached record levels during the quarter ended September 30, 1996. Revenue and revenue growth by ADP's major service groups are shown below: Revenue Revenue Growth 3 Months Ended 3 Months Ended September 30, September 30, 1996 1995 1996 1995 ($ 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. 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. 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. 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) EX-27 2
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