Delaware 22-1467904
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One ADP Boulevard, Roseland, New Jersey 07068
(Address of principal executive offices) (Zip Code)
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Name of each exchange on
Title of each class which registered
Common Stock, $.10 Par Value New York Stock Exchange
(voting) Chicago Stock Exchange
Pacific Stock Exchange
Liquid Yield Option Notes due 2012 New York Stock Exchange
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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes x No _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ x ]
The aggregate market value of the voting stock held by non-affiliates of the Registrant as of August 31, 2001 was approximately $32,098,454,526. On August 31, 2001, there were 620,140,157 shares of Common Stock outstanding.
Item 1. Business
Automatic Data Processing, Inc., incorporated in Delaware in 1961(together with its subsidiaries "ADP" or the "Registrant"), is one of the largest providers of computerized transaction processing, data communication, and information services in the world. For financial information by segment and by geographic area, see Note 12 of the "Notes to Consolidated Financial Statements" contained in ADP's 2001 Annual Report to Shareholders, which information is incorporated herein by reference. The following summary describes ADP's activities.
Employer Services
Employer Services offers a comprehensive range of payroll processing, human resource information management ("HR"), benefits administration, time and labor management, payroll tax filing and reporting, professional employer organization ("PEO"), regulatory compliance management (i.e., new hire reporting, wage garnishment processing and COBRA administration), unemployment compensation management and retirement plan services to approximately 455,000 employers in the United States, Canada, Europe, Latin America, Australia, and the Pacific Rim. These services are marketed through ADP's direct marketing sales forces and through other indirect sales channels such as marketing relationships with banks, accountants, and online companies through which ADP's services are marketed to their customers. In fiscal 2001, North America accounted for 88% of Employer Services' revenues, with Europe generating 11% of Employer Services' revenues, and Latin America (primarily Brazil), Australia and the Pacific Rim contributing the remainder.
Employer Services' approach to the market is to match a client's needs with the product that will best meet expectations. In North America, approximately 32% of Employer Services' revenues during the past fiscal year was attributable to its Emerging Business Services (companies with fewer than 100 employees); approximately 35% of such revenues was attributable to Major Accounts (companies with between 100 and 999 employees); approximately 27% of such revenues was attributable to National Accounts Services (companies with 1,000 or more employees); and approximately 6% of such revenues was attributable to ADP's PEO business, called TotalSource(R).
Emerging Business Services ("EBS") processes payroll for over 370,000 clients. EBS provides these smaller companies of usually 1-99 employees with leading solutions, including a range of value-added services that are specifically designed for small business clients. Major Accounts (100-999 employees) offers a full suite of best-of-breed employer services solutions for mid-sized companies, including full database and other functional integration between payroll and HR. Many of the world's largest corporations (1,000 or more employees) are National Accounts Services clients. In many cases, ADP provides system solutions for its clients' entire human resource, payroll and benefits needs and, through ADP Connection(TM), ADP can enable its largest clients to interface their major enterprise resource planning applications with ADP's outsourced payroll services. For those companies who choose to process these applications in-house, ADP also delivers stand-alone services such as payroll tax filing, check printing and distribution, and year-end statements (i.e., W-2's). Other large clients rely on ADP to design and deliver their own customized human resource information systems and benefits outsourcing solutions.
In North America, ADP provides payroll services that include the preparation of client employee paychecks and electronic direct deposits, along with supporting journals, summaries and management reports. ADP also supplies the quarterly and annual social security, medicare, and federal, state and local income tax withholding reports required to be filed by employers and employees. ADP's tax filing service processes federal, state and local payroll taxes on behalf of ADP clients and remit such taxes to the appropriate taxing authorities. Through service offerings such as new hire reporting, ADP Check/full service direct deposit (in conjunction with major bank partners) and wage garnishment payment, the ADP Tax and Financial Services Center is also responsible for the efficient movement of funds and information to third parties. In Europe, Latin America, Australia and the Pacific Rim, Employer Services provides full departmental outsourcing of payroll services.
ADP's HR services, operating in conjunction with a client's payroll database, provide comprehensive HR recordkeeping services, including benefits administration and outsourcing, applicant tracking, employee history and position control. ADP's benefits administration services, including management of the open enrollment of benefits, COBRA and Flexible Spending Account administration and 401(k) recordkeeping, provide benefits administration across all market segments. In fiscal 2001, ADP became the tenth largest provider of 401(k) retirement plans. In fiscal 2001, ADP grew its COBRA administration services business over 30% and introduced a new Web-based version of its existing COBRA product.
The ADP Tax and Financial Services Center supports large, mid-sized and small clients. It provides an electronic interface between approximately 350,000 ADP clients in the United States and Canada and about 2,000 federal, state and local tax agencies, from the Internal Revenue Service to local town governments. In fiscal 2001, the ADP Tax and Financial Services Center printed and delivered over 43 million year-end tax statements in North America, and moved over $500 billion in client funds to tax authorities and its clients' employees via electronic transfer, direct deposit and ADP Check.
TotalSource provides clients with comprehensive employment administration outsourcing solutions, including payroll, HR, benefits administration and workers' compensation insurance. TotalSource, the second largest PEO in the U.S., has 18 offices located in nine states and serves over 3,000 PEO clients and approximately 70,000 work-site employees in 50 states. TotalSource revenues increased 12% in fiscal 2001 over the previous fiscal year.
ADP complements its payroll and HR services with additional employer services that include products such as time and labor management and unemployment compensation management. This fiscal year, ADP expanded its time and labor management business by over 20%. ADP's unemployment compensation services aid clients in managing and reducing unemployment insurance costs.
ADP is in the process of Internet-enabling existing product offerings, while at the same time creating new products expressly designed for the Internet. This year, for example, ADP delivered the ADP EasyPayNet(sm) Web-based payroll service to over 4,000 EBS clients, launched its Internet-based PayeXpert(R) solution for Major Accounts clients, and introduced the Enterprise HRMS integrated HR, payroll and benefits solution for National Accounts Services clients that feature Internet-based employer self-service capabilities. Further, in fiscal 2001, ADP launched Benefits eXpert(sm), an Internet-based benefits administration and employee self-service solution that allows mid-market companies to manage more efficiently their employees' health and welfare benefits.
Brokerage Services
Brokerage Services provides transaction processing systems, desktop productivity applications and investor communication services to the financial services industry worldwide. ADP's products and services include: (i) global order entry, trade processing and settlement systems including automated inquiry, reporting and record keeping services for trading virtually all financial instruments such as equities, fixed income, foreign currency, commodities and derivatives; (ii) full-service investor communications services including state-of-the-art electronic delivery and Internet solutions, financial printing, proxy distribution and processing, regulatory mailings and fulfillment services; (iii) real-time order entry and processing services for Web-based brokerage firms; (iv) automated, browser-based, desktop productivity tools for financial consultants, institutional investors and corporate secretaries; and (v) integrated delivery of multiple products and services through ADP's Global Processing Solution(sm). The Global Processing Solution is ADP's comprehensive system for handling transactions in any financial instrument, in any market, at any time.
ADP serves a diverse client base, including full-service, discount and online brokerage firms, global banks; mutual funds; institutional investors; specialty trading firms; clearing firms; as well as publicly traded corporations. Brokerage Services provides securities transaction processing, printing and electronic distribution of shareholder communications and other services to clients in North America, Europe, Pacific Rim, Latin America and Australia.
In fiscal 2001, ADP processed a significant portion of U.S. and Canadian securities transactions, with average daily volumes of more than 1.3 million trades per day. In addition, ADP served the North American securities transaction processing needs of most large global banks. In fiscal 2001, ADP converted Lehman Brothers to Brokerage Processing Services, completing the first phase of its implementation to ADP's Global Processing Solution. Further, ADP signed agreements to provide the Global Processing Solution to Bank of America and several other large institutions.
Brokerage Services also provides computerized proxy vote tabulation and shareholder communication, distribution and fulfillment services, including Internet-enabled products and services. ADP served approximately 14,000 publicly traded companies and 450 mutual funds on behalf of more than 800 brokerage firms and banks in fiscal 2001. In fiscal 2001, ADP distributed more than 780 million shareholder communications on behalf of its clients worldwide, nearly 50% more than fiscal 1999. This year, ADP delivered 5.3 million investor communications via the Internet, which is 132% more than the prior fiscal year.
Internationally, Brokerage Services integrates the delivery of multiple products and services through its Global Processing Solution. ADP now serves brokerage and banking clients in more than 25 countries, providing global trade processing and settlement systems for international securities in multiple currencies. In fiscal 2001, ADP, through its subsidiary Wilco International Limited, doubled its global product development and outsourced client services operations in India, expanded its global trade processing and settlement services for international securities to Australia and extended its reach into the global retail securities markets in the U.K.
Dealer Services
Dealer Services provides integrated dealer management systems ("DMS") and business performance solutions for motor vehicle (automobile and truck) dealers and their manufacturers worldwide. More than 16,000 automobile and truck dealers throughout North America and Europe and more than 30 vehicle manufacturers use ADP's DMS, networking solutions, data integration, consulting and/or marketing services.
ADP offers its dealership clients a service solution that includes computer hardware, hardware maintenance services, licensed software, software support, system design and network consulting services. ADP also offers its dealership clients "front-end" dealership sales process and business development training services, consulting services, software products and customer relationship management solutions. Clients use an ADP DMS to manage business activities such as accounting, inventory, factory communications, scheduling, vehicle financing, insurance, sales and service. ADP designs, establishes and maintains communications networks for its clients that allow interactive communications among multiple site locations (for larger dealers) as well as links between franchised dealers and their vehicle manufacturer franchisors. These networks are used for activities such as new vehicle ordering and status inquiry, warranty submission and validation, parts and vehicle locating, dealership customer credit application submission and decisioning, vehicle repair estimating, and obtaining vehicle registration and lien holder information.
Claims Services
Claims Services offers a broad line of automated information tools to property and casualty insurance companies, claims adjusters, repair shops and auto parts recycling facilities. These tools help insurers to improve their performance by accelerating the claims review and settlement process and streamlining workflow. The products and services include the following: vehicle repair estimating applications and total loss vehicle valuation applications and related databases for the property and casualty, and collision repair industries; medical cost management applications and services for the auto casualty and workers' compensation markets; auto body shop management systems; and parts locator systems.
Markets and Marketing Methods
All of ADP's services are sold broadly across the United States, Canada and Europe. Some employer services and brokerage services are also offered in Latin America (primarily Brazil), Australia and the Pacific Rim.
None of ADP's major business groups have a single homogenous client base or market. For example, while Brokerage Services primarily serves the retail brokerage market, it also serves banks, commodity dealers, the institutional brokerage market and individual non-brokerage corporations. Dealer Services primarily serves automobile dealers, but also serves truck and agricultural equipment dealers, auto repair shops, used car lots, state departments of motor vehicles and manufacturers of automobiles, trucks and agricultural equipment. Claims Services has many clients who are insurance companies, but also provides services to automobile manufacturers, body repair shops, salvage yards, distributors of new and used automobile parts and other non-insurance clients. Employer Services has clients from a large variety of industries and markets. Within this client base are concentrations of clients in specific industries. Employer Services also sells to auto dealers, brokerage clients and insurance clients. While concentrations of clients exist, no one business group is material to ADP's overall revenues.
None of ADP's businesses are overly sensitive to price changes. Economic conditions among selected clients and groups of clients may and do have a temporary impact on demand for ADP's services.
ADP enjoys a leadership position in each of its major service offerings and does not believe any major service or business unit in ADP is subject to unique market risk.
Competition
The computing services industry is highly competitive. ADP knows of no reliable statistics by which it can determine the number of its competitors, but it believes that it is one of the largest providers of computerized transaction processing, data communication and information services in the world.
ADP's competitors include other independent computing services companies, divisions of diversified enterprises and banks. Another competitive factor in the computing services industry is the in-house computing function, whereby a company installs and operates its own computing systems.
Competition in the computing services industry is primarily based on service responsiveness, product quality and price. ADP believes that it is very competitive in each of these areas and that there are no material negative factors impacting ADP's competitive position in the computing services industry. No one competitor or group of competitors is dominant in the computing services industry.
Clients and Client Contracts
ADP provides its services to over 500,000 clients. No single client accounts for revenues in excess of 2% of annual consolidated revenues.
ADP has no material "backlog" because the period between the time a client agrees to use ADP's services and the time the service begins is generally very short and because no sale is considered firm until it is installed and begins producing revenue.
ADP's average client retention is more than 8 years in Employer Services and is 10 or more years in Brokerage, Dealer and Claims Services, and does not vary significantly from period to period.
ADP's services are provided under written price quotations or service agreements having varying terms and conditions. No one price quotation or service agreement is material to ADP. Discounts, rebates and promotions offered by ADP to clients are not material.
ADP offers a service warranty to its clients that if any errors or omissions occur in its service offerings, ADP will correct them as soon as possible. In addition, ADP provides, either directly or through third parties, maintenance and support for the ADP provided equipment and software which facilitates the delivery of its services to clients.
During the fiscal years ended June 30, 2001, 2000 and 1999, ADP expensed $514 million, $460 million and $412 million, respectively, on investments in systems development and programming, migration to new computing technologies and the development of new products.
Product Development
ADP continually upgrades, enhances and expands its existing products and services. Generally, no new product or service has a significant effect on ADP's revenues or negatively impacts its existing products and services, and ADP's products and services have a significant remaining life cycle.
Licenses
ADP is the licensee under a number of agreements for computer programs and databases. ADP's business is not dependent upon a single license or group of licenses. Third-party licenses, patents, trademarks and franchises are not material to ADP's business as a whole.
Number of Employees
ADP employed approximately 41,000 persons as of June 30, 2001.
Item 2. Properties
ADP leases space for 48 of its principal processing centers. In addition, ADP leases numerous other small processing centers and sales offices. All of these leases, which aggregate approximately 6,200,000 square feet in the United States, Canada, Europe, Latin America (primarily Brazil), Pacific Rim, Australia and South Africa, expire at various times up to the year 2016. ADP owns 31 of its processing facilities and its corporate headquarters complex in Roseland, New Jersey, which aggregate approximately 3,000,000 square feet.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
See "Market Price, Dividend Data and Other" contained in the Registrant's 2001 Annual Report to Shareholders, which information is incorporated herein by reference. As of August 31, 2001, the Registrant had 33,905 registered holders of its Common Stock, par value $.10 per share. The Registrant's Common Stock is traded on the New York, Chicago and Pacific Stock Exchanges.
Item 6. Selected Financial Data
See "Selected Financial Data" contained in the Registrant's 2001 Annual Report to Shareholders, which information is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
See "Management's Discussion and Analysis" contained in the Registrant's 2001 Annual Report to Shareholders, which information is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Approximately 40% of the Registrant's overall investment portfolio is invested in overnight interest-bearing instruments, which are therefore impacted immediately by changes in interest rates. The other 60% of the Registrant's investment portfolio is invested in fixed-income securities, with maturities up to ten years, which are also subject to interest rate risk, including reinvestment risk. The Registrant has historically had the ability to hold these investments until maturity, and therefore this has not had an adverse impact on income or cash flows.
The earnings impact of future rate changes is not precisely predictable because many factors influence the return on the Registrant's portfolio. These factors include, among others, the overall portfolio mix between short-term and long-term investments. The mix varies during the year and is impacted by daily interest rate changes. A hypothetical change in interest rates of 25 basis points applied to the June 30, 2001 balances would result in a $12 million pre-tax earnings impact over the following twelve-month period.
Item 8. Financial Statements and Supplementary Data
The financial statements described in Item 14(a)1. hereof are incorporated herein.
The following supplementary data is incorporated herein by reference:
Quarterly Financial Results (unaudited) for the two years ended June 30, 2001 (see Note 13 of the "Notes to Consolidated Financial Statements" contained in ADP's 2001 Annual Report to Shareholders)
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 10. Directors and Executive Officers of the Registrant
Executive Officers of the Registrant
The executive officers of the Registrant, their ages, positions and the period
during which they have been employed by ADP are as follows:
Employed by
Name Age Position ADP Since
-------------------- --- -------------------------- ----------
John D. Barfitt 48 President, Employer 1979
Services--International
James B. Benson 56 Vice President, General 1977
Counsel and Secretary
Richard C. Berke 56 Vice President, Human 1989
Resources
Gary C. Butler 54 President and Chief 1975
Operating Officer
Raymond L. Colotti 55 Vice President and 1995
Treasurer
Richard J. Daly 48 Group President, 1989
Brokerage Services
Richard A. Douville 46 Vice President, 1999
Finance
G. Harry Durity 54 Vice President, 1994
Worldwide Business
Development
Karen E. Dykstra 42 Vice President, 1981
Finance
Russell P. Fradin 46 Group President, 1996
Employer Services - North America
Eugene A. Hall 45 Senior Vice President, and 1998
President of Financial
and Technology Services,
Employer Services - North America
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John Hogan 53 Group President, 1993
Brokerage Services
Campbell Langdon 40 Vice President, 2000
Strategic Development
S. Michael Martone 53 Group President, Dealer 1987
Services
Arthur F. Weinbach 58 Chairman and 1980
Chief Executive Officer
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Messrs. Benson, Berke, Butler, Daly, Durity, Hogan, Martone and Weinbach have each been employed by ADP in senior executive positions for more than the past five years.
John D. Barfitt joined ADP in 1979. Prior to his promotion to President, Employer Services -International he served as President, Claims Services at ADP from 1998 to 2000 and Senior Vice President - Automotive Claims Services at ADP from 1996 to 1998.
Raymond L. Colotti joined ADP in 1995. Prior to his promotion to Vice President and Treasurer, he served as President of ADP Atlantic, Inc. and its related companies from 1995 to 1997.
Karen E. Dykstra joined ADP in 1981. Prior to her promotion to Vice President, Finance in 2001, she served as Vice President and Controller from 1998 to 2001, Assistant Corporate Controller from 1996 to 1998 and as Chief Financial Officer of Dealer Services from 1995 to 1996.
Richard A. Douville joined ADP in 1999 as Vice President, Finance. Prior to joining ADP, he served as Senior Vice President and Chief Financial Officer from 1996 to 1999 and as Vice President and Treasurer from 1993 to 1996 at United States Surgical Corporation.
Russell P. Fradin joined ADP in 1996. Prior to his promotion to Group President, Employer Services - North America, he served as Senior Vice President. Prior to joining ADP, he was a senior partner of McKinsey & Company and had been associated with that firm for 18 years.
Eugene A. Hall joined ADP in 1998 as Senior Vice President. In 2000, he also became President of Financial and Technology Services of Employer Services - North America. Prior to joining ADP, he was a senior partner of McKinsey & Company and had been associated with that firm for 16 years.
Campbell Langdon joined ADP in 2000 as Vice President, Strategic Development. Prior to joining ADP, he was a partner of McKinsey & Company and had been associated with that firm for 11 years.
Each of ADP's executive officers is elected for a term of one year and until their successors are chosen and qualified or until their death, resignation or removal.
Directors of the Registrant
See "Election of Directors" in the Proxy Statement for Registrant's 2001 Annual Meeting of Stockholders, which information is incorporated herein by reference.
Section 16(a) Beneficial Ownership Reporting Compliance
See "Section 16(a) Beneficial Ownership Reporting Compliance" in the Proxy Statement for Registrant's 2001 Annual Meeting of Stockholders, which information is incorporated herein by reference.
Item 11. Executive Compensation
See "Compensation of Executive Officers" in the Proxy Statement for Registrant's 2001 Annual Meeting of Stockholders, which information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
See "Election of Directors - Security Ownership of Certain Beneficial Owners and Managers" in the Proxy Statement for Registrant's 2001 Annual Meeting of Stockholders, which information is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
See "Compensation of Executive Officers - Certain Transactions" in the Proxy Statement for Registrant's 2001 Annual Meeting of Stockholders, which information is incorporated herein by reference.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)1. Financial Statements
The following reports and consolidated financial statements of the Registrant contained in the Registrant's 2001 Annual Report to Shareholders are also included in Part II, Item 8:
Statements of Consolidated Earnings - years ended June 30, 2001, 2000 and 1999
Statements of Consolidated Shareholders' Equity - years ended June 30, 2001, 2000 and 1999
Statements of Consolidated Cash Flows - years ended June 30, 2001, 2000 and 1999
Financial information of the Registrant is omitted because the Registrant is primarily a holding company. The Registrant's subsidiaries, which are listed on Exhibit 21 attached hereto, are wholly-owned.
2. Financial Statement Schedules
Page in Form 10-K
Independent Auditors' Report on Schedule 16
Schedule II - Valuation and Qualifying Accounts 17
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All other Schedules have been omitted because they are inapplicable or are not required or the information is included elsewhere in the financial statements or notes thereto.
3. The following exhibits are filed with this Form 10-K or incorporated herein by reference to the document set forth next to the exhibit in the list below:
3.1 - Amended and Restated Certificate of Incorporation dated
November 11, 1998 - incorporated by reference to Exhibit
3.1 to Registrant's registration statement on Form S-4
filed with the Commission on February 9, 1999
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3.2 - Amended and Restated By-laws of the Registrant -
incorporated by reference to Exhibit 3.2 to Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter
ended December 31, 2000
4 - Indenture dated as of February 20, 1992 between Automatic
Data Processing, Inc. and Bankers Trust Company, as
trustee, regarding the Liquid Yield Option Notes due 2012
of the Registrant - incorporated by reference to Exhibit
(4)-#1 to Registrant's Annual Report on Form 10-K for the
fiscal year ended June 30, 1992
10.1 - Letter Agreement dated as of August 13, 2001 between
Automatic Data Processing, Inc. and Arthur F. Weinbach
(Management Contract)
10.2 - Letter Agreement dated September 14, 1998 between
Automatic Data Processing, Inc. and Gary Butler -
incorporated by reference to Exhibit 10.2 to Registrant's
Annual Report on Form 10-K for the fiscal year ended June
30, 1998 (Management Contract)
10.3 - Key Employees' Restricted Stock Plan - incorporated by
reference to Registrant's Registration Statement No.
33-25290 on Form S-8 (Management Compensatory Plan)
10.4 - Supplemental Officers' Retirement Plan, as amended and
restated - incorporated by reference to Exhibit
10(iii)(A)-#5 to Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1993 (Management
Compensatory Plan)
10.4(a) - Amendment to Supplemental Officers' Retirement Plan -
incorporated by reference to Exhibit 10(iii)(A)- #5 to
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1997 (Management Compensatory Plan)
10.5 - 1989 Non-Employee Director Stock Option Plan -
incorporated by reference to Exhibit 10(iii)(A)-#7
to Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1990 (Management Compensatory Plan)
10.5(a) - Amendment to 1989 Non-Employee Director Stock Option Plan
- incorporated by reference to Exhibit 10(6)(a) to
Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1997 (Management Compensatory Plan)
10.6 - 1990 Key Employees' Stock Option Plan - incorporated by
reference to Exhibit 10(iii)(A)-#8 to Registrant's Annual
Report on Form 10-K for the fiscal year ended June 30,
1990 (Management Compensatory Plan)
10.6(a) - Amendment to 1990 Key Employees' Stock Option Plan -
incorporated by reference to Exhibit 10(7)(a) to
Registrant's Annual Report on Form
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10-K for the fiscal year ended June 30, 1997 (Management
Compensatory Plan)
10.7 - 1994 Directors' Pension Arrangement - incorporated by
reference to Exhibit 10(iii)(A)-#10 to Registrant's
Annual Report on Form 10-K for the fiscal year ended June
30, 1994 (Management Compensatory Plan)
10.8 - 2000 Key Employees' Stock Option Plan - incorporated by
reference to Exhibit 10.10 to Registrant's Annual Report
on Form 10-K for the fiscal year ended June 30, 1999
(Management Compensatory Plan)
10.9 - 2001 Executive Incentive Compensation Plan (Management
Compensatory Plan)
10.10 - Change in Control Severance Plan for Corporate Officers -
incorporated by reference to Exhibit 10.3 to Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2001
11 - Schedule of Calculation of Earnings Per Share
13 - Pages 20 to 35 of the 2001 Annual Report to Shareholders
(with the exception of the pages incorporated by
reference herein, the Annual Report is not a part of this
filing)
21 - Subsidiaries of the Registrant
23 - Independent Auditors' Consent
(b) None.
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To the Board of Directors
and Shareholders of
Automatic Data Processing, Inc.
Roseland, New Jersey
We have audited the consolidated financial statements of Automatic Data Processing, Inc. and subsidiaries as of June 30, 2001 and 2000, and for each of the three years in the period ended June 30, 2001, and have issued our report thereon dated August 13, 2001; such consolidated financial statements and report are included in your 2001 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the financial statement schedule of Automatic Data Processing, Inc., listed in Item 14. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
/s/ Deloitte & Touche LLP New York, New York August 13, 2001 |
AUTOMATIC DATA PROCESSING, INC.
AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- ---------
Additions
--------------------------
(1) (2)
Charged to
Balance at Charged to other Balance at
beginning costs and accounts- Deductions- end of
of period expenses describe describe period
--------- --------- --------- ---------- ----------
Year ended June 30, 2001:
Allowance for doubtful accounts:
Current $48,448 $ 16,431 $ 114 (B) $ (22,997) (A) $ 41,996
Long-term $16,946 $ 1,369 $ -- $ (1,649) (A) $ 16,666
Deferred Tax Valuation Allowance $22,163 $ -- $ (165) (C) $ (7,750) (D) $ 14,248
Year ended June 30, 2000:
Allowance for doubtful accounts:
Current $46,357 $ 25,020 $1,663 (B) $ (24,592) (A) $ 48,448
Long-term $16,556 $ 1,942 $ -- $ (1,552) (A) $ 16,946
Deferred Tax Valuation Allowance $22,496 $ -- $ (333)(C) $ -- $ 22,163
Year ended June 30, 1999:
Allowance for doubtful accounts:
Current $45,595 $ 17,551 $1,788 (B) $ (18,577) (A) $ 46,357
Long-term $14,431 $ 2,470 $ -- $ (345) (A) $ 16,556
Deferred Tax Valuation Allowance $22,639 $ -- $ (143)(C) $ -- $ 22,496
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(A) Doubtful accounts written off, less recoveries on accounts previously
written off.
(B) Acquired in purchase/pooling transactions.
(C) Related to foreign exchange fluctuation.
(D) Related to the net deferred tax assets recorded in purchase accounting. The
recognition of this allowance reduces the excess purchase price over the net
assets acquired.
Pursuant to the requirements of Section 13 or 15(d) 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.
September 14, 2001 By: /s/ Arthur F. Weinbach
-------------------------
Arthur F. Weinbach
Chairman and
Chief Executive Officer
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
Signature Title Date
/s/ Arthur F. Weinbach Chairman, Chief Executive September 14, 2001
----------------------------------
(Arthur F. Weinbach) Officer and Director
(Principal Executive Officer)
/s/ Karen E. Dykstra Vice President, Finance September 14, 2001
----------------------------------
(Karen E. Dykstra) (Principal Financial Officer
and Controller)
/s/ Gregory D. Brenneman Director September 14, 2001
----------------------------------
(Gregory D. Brenneman)
/s/ Gary C. Butler Director September 14, 2001
----------------------------------
(Gary C. Butler)
/s/ Joseph A. Califano, Jr. Director September 14, 2001
----------------------------------
(Joseph A. Califano, Jr.)
/s/ Leon G. Cooperman Director September 14, 2001
----------------------------------
(Leon G. Cooperman)
/s/ George H. Heilmeier Director September 14, 2001
----------------------------------
(George H. Heilmeier)
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Signature Title Date /s/ Ann Dibble Jordan Director September 14, 2001 ---------------------------------- (Ann Dibble Jordan) /s/ Harvey M. Krueger Director September 14, 2001 ---------------------------------- (Harvey M. Krueger) /s/ Frederic V. Malek Director September 14, 2001 ---------------------------------- (Frederic V. Malek) /s/ Henry Taub Director September 14, 2001 ---------------------------------- (Henry Taub) /s/ Laurence A. Tisch Director September 14, 2001 ---------------------------------- (Laurence A. Tisch) /s/ Josh S. Weston Director September 14, 2001 ---------------------------------- (Josh S. Weston) |
EXHIBIT 10.1
Arthur F. Weinbach
1 Twin Oak Road
Short Hills, New Jersey 07078
Dear Art:
This letter outlines our understandings concerning your position as Chairman and Chief Executive Officer of Automatic Data Processing, Inc. ("ADP").
1. Employment. You shall be employed by ADP as its Chairman and Chief Executive Officer, subject to the direction and control of its Board of Directors. You shall also be a member of ADP's Board of Directors and a member of the Board's Executive Committee.
2. Compensation.
a) ADP shall pay you a salary of at least $750,000 per annum.
b) Your target bonus for each fiscal year (i.e. July 1 to June 30) shall be at least $485,000. The actual bonus paid for each fiscal year shall be based upon your accomplishments in relation to pre- established goals (including business growth, increased profitability and other significant items) pursuant to the terms of ADP's 2001 Executive Incentive Compensation Plan (the "Incentive Plan").
c) ADP will continue to sell you restricted stock under the Incentive Plan, such that restrictions will lapse during each fiscal year on the number of shares of restricted stock which had, on the date you originally purchased them, an aggregate market value of at least $1 million. You will also, at all times, own sufficient shares of ADP restricted stock on which restrictions will lapse during each of the following two fiscal years which satisfy the foregoing fiscal year minimum market value test. The Compensation Committee of ADP's Board of Directors (the "Compensation Committee") may, at its sole discretion, require that lapsing of restrictions on your restricted stock in any fiscal year will only occur upon the attainment of pre-established performance goals pursuant to the Incentive Plan. d) You will be granted stock options on an annual basis. The option grants will be for a minimum of 170,000 shares per year. Vesting will be determined by the Compensation Committee; however, all of your stock options will vest on your retirement. Upon your retirement or termination of employment with ADP, you will have 210 days to exercise your vested options.
e) The above salary, bonus and stock arrangements will be reviewed annually by ADP's Board of Directors and may be increased in its sole discretion.
3. Term. The initial term of this letter agreement shall be for a period of one year. This letter agreement shall automatically continue after its initial term for successive one-year periods, unless and until either of us gives the other written notice at least six months prior to the end of the applicable one-year term that this letter agreement shall terminate as at the end of such term.
4. Termination. If your employment with ADP is terminated, you will receive the following compensation:
a) If you are discharged for cause, ADP's obligation to make payments to you shall cease on the date of such discharge. As used herein, the term "for cause" shall cover circumstances where ADP elects to terminate your employment because you have (i) been convicted of a criminal act, (ii) failed or refused to perform your obligations as Chairman and Chief Executive Officer, (iii) committed any act of negligence in the performance of your duties hereunder and failed to take appropriate corrective action, or (iv) committed any act of willful misconduct.
b) If ADP terminates your employment for any reason other than "for cause", for permanent or serious disability or on account of a "Change in Control", you will, for 18 months after such termination date, (i) receive the compensation provided for under Paragraph 2(a) above, (ii) have the restrictions on your restricted stock continue to lapse (without regard to any performance goals), and (iii) have your Company stock options continue to vest.
c) If you become permanently and seriously disabled, either physically or mentally, so that you are absent from your office due to such disability and otherwise unable substantially to perform your services hereunder, ADP may terminate your employment. ADP shall continue to pay you your full compensation up to and including the effective date of your termination for disability. For 36 months after such termination date, you will receive the compensation provided for under Paragraph 2(a) above and have the restrictions on your restricted stock continue to lapse (without regard to any performance goals). All of your outstanding and unvested ADP stock options shall automatically vest on the date of your termination for disability.
e) If a Change in Control occurs and if your employment is terminated (other than for cause) or you resign for "Good Reason" within two years after such Change in Control event, you will receive a termination payment equal to 300% of your "Current Total Annual Compensation". This termination payment will be reduced to either 200% or 100% of your Current Total Annual Compensation if such termination or resignation occurs during the third year, or more than three years, after such Change in Control event, whichever is applicable. In addition, all of your ADP stock options will become fully vested, and all of your ADP restricted stock having restrictions lapsing within three years after the date of such termination or resignation shall have such restrictions automatically removed (without regard to any performance goals). ADP will also pay you a tax equalization payment in an amount which when added to the other amounts payable to you under Paragraph 4(e) will place you in the same after-tax position as if the excise tax penalty of Section 4999 of the Internal Revenue Code of 1986 or any successor statute of similar import did not apply.
f) The termination of this letter agreement or your employment shall not affect those provisions of this letter agreement that apply to any period or periods subsequent to such termination.
5. For purposed of this Agreement, the following definitions shall apply:
a) "Change in Control" shall mean the occurrence of any of the following: (A) any "Person" (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), excluding ADP, any subsidiary of ADP, or any employee benefit plan sponsored or maintained by ADP (including any trustee of any such plan acting in his capacity as trustee), becoming the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of securities of ADP representing 25% or more of the total combined voting power of ADP's then outstanding securities; (B) the merger, consolidation or other business combination of ADP (a "Transaction"), other than a Transaction immediately following which the stockholders of ADP immediately prior to the Transaction continue to be the beneficial owners of securities of the resulting entity representing more than 65% of the voting power in the resulting entity, in substantially the same proportions as their ownership of ADP voting securities immediately prior to the Transaction; or (C) the sale of all or substantially all of ADP's assets, other than a sale immediately following which the stockholders of ADP immediately prior to the sale are the beneficial owners of securities of the purchasing entity representing more than 65% of the voting power in the purchasing entity, in substantially the same proportions as their ownership of ADP voting securities immediately prior to the Transaction.
c) "Current Total Annual Compensation" shall be the total of the following amounts: (A) the greater of your current annual salary for the calendar year in which your employment terminates or for the calendar year immediately prior to the year of such termination; and (B) the average of your annual bonus compensation (prior to any bonus deferral election), for the two most recent calendar years immediately preceding the year in which your employment terminates.
6. SORP. As at July 1, 2001, under the Automatic Data Processing, Inc. Supplemental Officers Retirement Plan (the "SORP"), if your employment hereunder terminates other than for cause: (i) your "Future Service" period shall be deemed to be 17 years as of the date of your termination; (ii) your "Final Average Annual Pay" shall, to the extent applicable, be deemed to include the applicable compensation attributable to the periods covered by the termination payments made to you hereunder; and (iii) if the Compensation Committee deems it to be in ADP's best interests that you retire prior to your 65th birthday, any early retirement benefit payable under the SORP will not be actuarially reduced to reflect the payment of benefits before your "Normal Retirement Date". Your Final Average Annual Pay will not, in any event, be less than the aggregate of the minimum annual salary, bonus and restricted stock amounts payable to you under Paragraph 2 above.
This letter supersedes and replaces the letter dated as of August 1, 1996 between us.
If the foregoing correctly sets forth our understandings, please sign this letter agreement where indicated, whereupon it will become a binding agreement between us.
Very truly yours,
ACCEPTED AND AGREED:
ARTHUR F. WEINBACH
EXHIBIT 10.9
I. Purpose
The purpose of the Automatic Data Processing, Inc. 2001 Executive Incentive Compensation Plan (the "Plan") is to establish an incentive compensation program for certain executive employees of Automatic Data Processing, Inc. (the "Company") and its subsidiaries and divisions who have significant responsibility for the success and growth of the Company and to assist in attracting, motivating and retaining key employees on a competitive basis. The Plan permits the Company to grant annual incentives and performance-based restricted stock awards (respectively "Bonus Awards" and "Performance-Based Restricted Stock Awards") to certain executive employees who make substantial contributions to the Company and/or its subsidiaries and divisions, as determined by the "Committee" (as defined below).
II. Definitions
"Award" means a Bonus Award or a Performance-Based Restricted Stock Award.
"Board" means the Board of Directors of the Company or the Executive Committee thereof.
"Bonus Award" has the meaning ascribed to it in Section I.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a committee selected by the Board to administer the Plan and composed of not less than two directors, each of whom is a "non-employee director" (within the meaning of Rule 16b-3 of the Securities and Exchange Commission under the Exchange Act if and as such Rule is in effect) and an "outside director" (within the meaning of Section 162(m) of the Code).
"Common Stock" means the common stock of the Company, par value $.10 per share.
"Company" has the meaning ascribed to it in Section I.
"Designated Beneficiary" has the meaning ascribed to it in Section XII.
"Effective Date" shall mean July 1, 2001, subject to approval by the Company's shareholders in a manner which complies with the shareholder approval requirements of Section 162(m) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Participant" has the meaning ascribed to it in Section III.
"Performance-Based Restricted Stock Award" has the meaning ascribed to it in Section I.
"Performance Criteria" has the meaning ascribed to it in Section V.A.2.
"Performance Period" means the period during which performance is measured to determine the level of attainment or vesting of an Award.
"Plan" has the meaning ascribed to it in Section I.
"Restricted Shares" means shares of restricted Common Stock granted to a Participant in accordance with Section VII.
"Restricted Stock Vesting Percentage" means the percentage of a Participant's Target Restricted Stock Award, which vests, based upon the level of attainment of Performance Criteria.
"Target Restricted Stock Award" means number of Restricted Shares granted under the Plan to a Participant at the beginning of a Performance Period in the form of a Performance-Based Restricted Stock Award.
III. Eligibility
Any executive employee of the Company or any of its subsidiaries or divisions is eligible to be selected to participate in the Plan. The Committee shall select in its sole discretion those persons from among such employees who shall participate in the Plan in respect of any Performance Period ("Participants"). No person shall at any time have the right to be selected as a Participant nor, having been selected as a Participant for one Performance Period, to be selected as a Participant in any other Performance Period.
IV. Administration
A. The Committee, in its sole discretion, will determine eligibility for participation, establish the maximum Award which may be earned by each Participant, establish Performance Criteria for each Participant, calculate and determine each Participant's level of attainment of such Performance Criteria, and calculate the Bonus Award and Restricted Stock Vesting Percentage for each Participant based upon such level of attainment. In addition to the authority otherwise prescribed in the Plan, the Committee shall have the authority in its sole discretion to prescribe such limitations, restrictions, and conditions upon, provisions for vesting and acceleration of, provisions prescribing the nature and amount of legal consideration to be received upon the grant of a Performance-Based Restricted Stock Award and all other terms and conditions of any Award as the Committee deems appropriate, provided that none of the foregoing conflicts with any of the express terms or limitations of the Plan.
B. Except as otherwise herein expressly provided, full power and authority to construe, interpret, and administer the Plan shall be vested in the Committee, including the power to amend or terminate the Plan as further described in Section XV. The Committee may at any time adopt such rules, regulations, policies, or practices as, in its sole discretion, it shall determine to be necessary or appropriate for the administration of, or the performance of its respective responsibilities under, the Plan. The Committee may at any time amend, modify, suspend, or terminate such rules, regulations, policies, or practices. All actions taken and all interpretations and determinations made by the Committee (and by the Company's executive officers in furtherance of such interpretations and determinations) shall be binding upon all affected persons.
C. All expenses and liabilities incurred by members of the Committee in connection with the administration of the Plan shall be borne by the Company. The Committee may employ attorneys, consultants, accountants, appraisers, or other persons to assist it in the discharge of its duties hereunder. The Committee, the Company and its officers and directors shall be entitled to rely upon the advice, opinions or valuations of any such persons.
D. Notwithstanding the foregoing or any other provision of the Plan, the Board may at any time or from time to time resolve to administer the Plan and in such case, references herein to the Committee shall mean the Board when so acting.
V. Performance Criteria and Section 162(m)
A. Awards granted under the Plan are intended to qualify for the exception to Section 162(m) of the Code applicable to "performance-based compensation," and will be subject to the following requirements, notwithstanding any other provision of the Plan to the contrary:
1. No Bonus Award may be paid or Performance-Based Restricted Stock Award vest unless and until the shareholders of the Company have approved the Plan in a manner which complies with the shareholder approval requirements of Section 162(m) of the Code and the Treasury Regulations promulgated thereunder.
2. The performance goals to which the payment or vesting, as
applicable, of an Award is subject must be based solely on
objective performance criteria established by the Committee,
in accordance with this Section V ("Performance Criteria").
Such Performance Criteria must be established by the Committee
within the time limits required in order for the Award to
qualify for the performance-based compensation exception to
Section 162(m) of the Code.
3. No Award may be paid or vested, as applicable, until the Committee has certified the level of attainment of the applicable Performance Criteria.
B. Performance Criteria shall be measured in terms of one or more of the following objectives, described as they relate to Company-wide objectives or of a subsidiary, division, department or function of the Company:
(i) Earnings per share;
(ii) Stock price;
(iv) Return on investment;
(v) Return on capital;
(vi) Earnings before interest, taxes, depreciation and amortization;
(vii) Gross or net profits;
(viii) Gross or net revenues;
(ix) Client retention; or
(x) Any combination of the foregoing.
In computing any of the foregoing, unless determined otherwise by
the Committee in respect of any particular Performance Criteria no later than
the time that such Performance Criteria is established, there shall be excluded,
o the extent applicable, the following:
(i) all items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles, all as determined in accordance with standards established by opinion No. 30 of the Accounting Principles Board ("APB Opinion No. 30");
(ii) all items of gain, loss or expense related to restructuring charges of subsidiaries whose operations are not included in operating income for the Performance Period;
(iii) all items of gain, loss or expense related to discontinued operations that do not qualify as a segment of a business as defined under APB Opinion No. 30; and
(iv) any profit or loss attributable to the business operations of any entity acquired by either the Company or any consolidated subsidiary during the Performance Period.
C. As to each Award, the Committee shall specify the Performance Criteria to be achieved, a minimum acceptable level of achievement below which no payment or vesting will occur, and a formula for determining the amount of any payment or vesting to occur if performance is at or above the minimum acceptable level but falls short of full achievement of the specified Performance Criteria.
D. If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances render the Performance Criteria to be unsuitable, the Committee may modify such Performance Criteria or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable; provided, however, that no such modification shall be made if the effect would be to cause an Award to fail to qualify for the performance-based compensation exception to Section 162(m) of the Code. In addition, at the time Performance Criteria are established as to an Award, the Committee is authorized to determine the manner in which the Performance Criteria related thereto will be calculated or measured to take into account certain factors over which the Participant has no control or limited control including changes in industry margins, general economic conditions, interest rate movements and changes in accounting principles.
VI. Bonus Awards
A. The Committee, based upon information to be supplied by management of the Company and, where determined as necessary by the Board, the ratification of the Board, will establish for each Performance Period a target Bonus Award (and, if the Committee deems appropriate, a threshold Award) and Performance Criteria for each Participant selected by the Committee to receive a Bonus Award and communicate such Award levels and Performance Criteria to such Participant prior to or during the Performance Period for which such Bonus Award may be made. Bonus Awards will be earned by Participants based upon the level of attainment of the applicable Performance Criteria during the applicable Performance Period; provided that the Committee may reduce the amount of any Bonus Award in its sole and absolute discretion. As soon as practicable after the end of the applicable Performance Period, the Committee shall determine and certify the level of attainment of the Performance Criteria for each applicable Participant and the Bonus Award to be made to each applicable Participant.
B. Bonus Awards earned during any Performance Period shall be paid as soon as practicable following the end of such Performance Period, unless payment is deferred at the election of a Participant pursuant to a deferred compensation arrangement maintained by the Company. Payment of Bonus Awards shall be made in the form of cash. Bonus Awards earned but not yet paid will not accrue interest.
C. Notwithstanding the above, unless determined otherwise by the Committee, a Participant shall not be eligible to receive payment of his or her Bonus Award earned during a Performance Period unless the Participant is employed on the day such Bonus Award otherwise would be paid; provided that in the event of a Participant's death prior to the payment of a Bonus Award which has been earned, such payment shall be made to the Participant's Designated Beneficiary.
D. Notwithstanding anything in the Plan to the contrary, the maximum amount of any single Bonus Award for any single Performance Period shall be $2,000,000.
VII. Performance-Based Restricted Stock Awards
A. Subject to adjustment pursuant to Section VII.D, the number of shares of Common Stock that may be the subject of Performance-Based Restricted Stock Awards under this Plan is 3,500,000. Such shares may be treasury shares or shares of original issue or a combination of the foregoing. In the event that any Performance-Based Restricted Stock Award under the Plan expires, terminates or is canceled for any reason whatsoever without the Participant having received any benefit therefrom, the shares of Common Stock covered by such Performance-Based Restricted Stock Award shall again become available for future Performance-Based Restricted Stock Awards under the Plan. For purposes of the foregoing sentence, a Participant shall not be deemed to have received any "benefit" in the case of forfeited Restricted Shares by reason of having enjoyed voting rights and dividend rights prior to the date of forfeiture.
B. Each Performance-Based Restricted Stock Award shall be comprised of that number of actual shares of restricted Common Stock equal to the Participant's Target Restricted Stock Award and subject to the terms and conditions of this Plan. For each Participant granted a Performance-Based Restricted Stock Award, the Committee shall establish (i) the Performance Period, (ii) the Target Restricted Stock Award, (iii) the level of Performance Criteria used to determine the Restricted Stock Vesting Percentage and (iv) the level of the Restricted Stock Vesting Percentage determined by the attainment of the Performance Criteria. Each of these items, as well as any other terms and conditions of a Participant's Performance-Based Restricted Stock Award, shall be described in detail in an agreement delivered to the Participant. Each Performance-Based Restricted Stock Award shall vest based upon the level of attainment of the applicable Performance Criteria during the Performance Period and the resulting Restricted Stock Vesting Percentage, as well as, if determined by the Committee, upon the continued employment of the Participant (subject to the terms and conditions of the Participant's Award agreement). As soon as practicable after the end of each applicable Performance Period, the Committee shall determine the level of attainment of the Performance Criteria for each Participant, the associated Restricted Stock Vesting Percentage and the number of Restricted Shares, if any, as to which the restrictions thereon shall lapse at the end of the Performance Period if any other vesting conditions contained in the Participant's Award agreement are satisfied.
C. If determined by the Committee and set forth in an Award agreement, a Participant shall be entitled to payment of dividends on the Restricted Shares comprising his Performance-Based Restricted Stock Award, whether or not such Restricted Shares have vested.
D. In the event of any stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase shares of Common Stock at a price substantially below fair market value, or other similar corporate event that affects the shares of Common Stock granted or made available for issuance under the Plan such that an adjustment is required in order to preserve the benefits or potential benefits intended to be made available under this Plan, then the Committee shall in such manner as the Committee may deem equitable, adjust the number and kind of shares made the subject of Performance-Based Restricted Stock Awards; provided, however, that the number of shares of Common Stock subject to any Performance-Based Restricted Stock Award shall always be a whole number.
E. Performance-Based Restricted Stock Awards shall be granted only pursuant to an Award agreement, which shall be executed by the Participant and a duly authorized officer of the Company and which shall contain such terms and conditions as the Committee shall determine, consistent with the Plan, including the following
2. Restrictions and Conditions
(i) The Performance-Based Restricted Stock Awards shall be subject to Performance Criteria as a condition for the vesting of the Restricted Shares, as provided in the Award agreement. Prior to vesting, no Restricted Share may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant. Any Restricted Share as to which the applicable Performance Period has lapsed without becoming vested shall be forfeited and returned to the Company and treated in accordance with the third sentence of Section VII.A.
(ii) Except as provided in clause (i), the Participant shall have, with respect to the Restricted Shares, all of the rights of a stockholder of the Company, including the right to vote the shares of Common Stock and to receive any cash dividends.
(iii) The Committee may, in its sole discretion, provide that Restricted Shares be held in escrow or trust pending delivery to the Participant upon vesting or delivery to the Company upon forfeiture. The escrow agent may be the Company, at the discretion of the Committee.
(iv) Subject to adjustment pursuant to Section VII.D, the maximum number of Restricted Shares that may be granted to any Participant in a single fiscal year of the Company shall be 200,000.
F. A Participant may make an election pursuant to Section 83(b) of the Code in respect of his or her Restricted Shares and, if he or she does so, he or she shall timely notify the Company of such election and send the Company a copy thereof. The Participant shall be solely responsible for properly and timely completing and filing any such election.
G. Each certificate representing Restricted Shares shall bear an appropriate legend, as determined by the Company, until the lapse of all restrictions with respect to such Restricted Shares.
H. The obligation of the Company to grant or sell Restricted Shares, and to honor the vesting conditions thereof, shall be subject to all applicable laws, rules, and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of any Performance- Based Restricted Stock Award to the contrary, the Company shall be under no obligation to grant or to sell and shall be prohibited from granting or selling any Restricted Shares unless such Restricted Shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel, satisfactory to the Company, that such shares may be granted or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale under the Securities Act any of the Restricted Shares. If the Restricted Shares are granted or sold pursuant to an exemption from registration under the Securities Act, the Company may restrict the transfer of such Restricted Shares and may legend the certificates representing such Restricted Shares in such manner as it deems advisable to ensure the availability of any such exemption.
VIII. Reorganization or Discontinuance
The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company. The Company will make appropriate provision for the preservation of Participants' rights under the Plan in any agreement or plan which it may enter into or adopt to effect any such merger, consolidation, reorganization or transfer of assets.
IX. Non-Alienation of Benefits
A Participant may not assign, sell, encumber, transfer or otherwise dispose of any rights or interests under the Plan except by will or the laws of descent and distribution. Any attempted disposition in contravention of the preceding sentence shall be null and void.
X. No Claim or Right to Plan Participation
No employee or other person shall have any claim or right to be selected as a Participant under the Plan. Neither the Plan nor any action taken pursuant to the Plan shall be construed as giving any employee any right to be retained in the employ of the Company.
XI. Taxes
The Company shall deduct from all amounts paid under the Plan all federal, state, local and other payroll taxes and income tax withholding required by law to be withheld with respect to such payments.
XII. Designation and Change of Beneficiary
Each Participant may indicate upon notice to him or her by the Committee of his or her right to receive an Award a designation of one or more persons who shall be entitled to receive the amount, if any, payable under the Plan upon the death of the Participant ("Designated Beneficiary"). Such designation shall be in writing to the Committee. A Participant may, from time to time, revoke or change his or her Designated Beneficiary without the consent of any prior Designated Beneficiary by filing a written designation with the Committee. The last such designation received by the Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Participant's death, and in no event shall it be effective as of a date prior to such receipt. If no Designated Beneficiary of a Participant is living at the time of the Participant's death, or if the Participant has not designated a Designated Beneficiary, then the Participant's Designated Beneficiary shall be his or her estate.
XIII. Payments to Persons Other Than the Participant
If the Committee shall find that any person to whom any amount is payable under the Plan is unable to care for his or her affairs because of incapacity, illness or accident, or is a minor, or has died, then any payment due to such person or his or her estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if the Committee so directs, be paid to his or her spouse, a child, a relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee, in its sole discretion, to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Company therefor.
XIV. No Liability of Committee Members
No member of the Committee shall be personally liable by reason of any contract or other instrument related to the Plan executed by such member or on his or her behalf in his or her capacity as a member of the Committee, nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each employee, officer, or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including legal fees, disbursements and other related charges) or liability (including any sum paid in settlement of a claim with the approval of the Board) arising out of any act or omission to act in connection with the Plan unless arising out of such person's own fraud or bad faith.
XV. Termination or Amendment
The Committee may amend, suspend or terminate the Plan at any time; provided that no amendment may be made without the approval of the Company's shareholders if the effect of such amendment would be to cause outstanding or pending Awards to cease to qualify for the performance-based compensation exception to Section 162(m) of the Code.
XVI. Unfunded Plan
Participants shall have no right, title, or interest whatsoever in or to any investments, which the Company may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, Designated Beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan.
The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.
The terms of the Plan and all rights thereunder shall be governed by and construed in accordance with the laws of the State of New York, without reference to principles of conflict of laws.
XVIII. Severability
If any provision of the Plan or any award made hereunder is, becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any person or award, or would disqualify the Plan or any award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the award, such provision shall be stricken as to such jurisdiction, person or award and the remainder of the Plan and any such award shall remain in full force and effect.
XIX. Headings
Headings are used herein solely as a convenience to facilitate reference and shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.
XX. Expiration Date
No award shall be made under the Plan after the tenth anniversary of the Effective Date; provided, however, that the Plan shall be resubmitted to the Company's shareholders as necessary to ensure that Awards continue to qualify as "performance-based compensation" for purposes of Section 162(m) of the Code. As of the Effective Date, pursuant to Treasury Regulation ss.1.167-27(e)(4)(vi), the proviso to the preceding sentence requires the Plan to be resubmitted to the Company's shareholders no later than the first shareholder meeting that occurs in the fifth year following the year in which shareholders previously approved the Plan.
As adopted by the Company pursuant to action
of the Board of Directors at a meeting
held on August 13, 2001.
By:
EXHIBIT 11
AUTOMATIC DATA PROCESSING, INC.
AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
Year ended June 30,
-----------------------------------------------------------------
2001 2000 1999 1998 1997
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BASIC EARNINGS PER SHARE:
Net earnings applicable to common shares $924,720 $840,800 $696,840 $608,262 $515,244
======== ======== ======== ======== ========
Average number of common shares outstanding 629,035 626,766 615,630 600,803 588,112
======== ======== ======= ======== ========
Basic earnings per share $ 1.47 $ 1.34 $ 1.13 $ 1.01 $ 0.88
======== ======== ======= ======== ========
DILUTED EARNINGS PER SHARE:
Net earnings used in basic earnings per share $924,720 $840,800 $696,840 $608,262 $515,244
Adjustment for interest (net of tax) - zero coupon
convertible subordinated notes (5.25% yield) 2,341 2,912 3,607 7,833 11,302
-------- -------- ------- -------- --------
Net earnings used for diluted earnings per share $927,061 $843,712 $700,447 $616,095 $526,546
======== ======== ======== ======== ========
Average number of shares outstanding on a diluted basis:
Shares used in calculating basic earnings per share 629,035 626,766 615,630 600,803 588,112
Diluted effect of all stock options outstanding
after application of treasury stock method 13,482 14,823 15,306 13,363 12,633
Shares assumed to be issued upon conversion of
Debentures-Zero coupon convertible
subordinated notes (5.25% yield) 3,472 4,509 5,956 14,030 19,372
-------- -------- ------- -------- --------
Average number of shares outstanding on a
diluted basis 645,989 646,098 636,892 628,196 620,117
======== ======== ======= ======== ========
Diluted earnings per share $ 1.44 $ 1.31 $ 1.10 $ 0.98 $ 0.85
======== ======== ======= ======== ========
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EXHIBIT 13
Selected Financial Data
(In thousands, except per share amounts) Years ended June 30, 2001 2000 1999 1998 1997 ----------------------------------------------------------------------------------------------------- Total revenues $ 7,017,570 $ 6,287,512 $ 5,540,141 $ 4,925,956 $ 4,193,447 Earnings before income taxes $ 1,525,010 $ 1,289,600 $ 1,084,500 $ 890,717 $ 726,439 Net earnings $ 924,720 $ 840,800 $ 696,840 $ 608,262 $ 515,244 ----------------------------------------------------------------------------------------------------- Basic earnings per share $ 1.47 $ 1.34 $ 1.13 $ 1.01 $ .88 Diluted earnings per share $ 1.44 $ 1.31 $ 1.10 $ .98 $ .85 Basic shares outstanding 629,035 626,766 615,630 600,803 588,112 Diluted shares outstanding 645,989 646,098 636,892 628,196 620,117 Cash dividends per share $ .395 $ .33875 $ .295 $ .25625 $ .2225 Return on equity 19.9% 19.7% 18.7% 20.0% 20.6% ----------------------------------------------------------------------------------------------------- At year end: Cash, cash equivalents and marketable securities $ 2,596,964 $ 2,452,549 $ 2,169,040 $ 1,673,271 $ 1,516,450 Working capital $ 1,747,187 $ 1,767,784 $ 907,864 $ 626,063 $ 805,797 Total assets before funds held for clients $ 6,549,980 $ 6,429,927 $ 5,824,820 $ 5,242,867 $ 4,439,293 Total assets $17,889,090 $16,850,816 $12,839,553 $11,787,685 $10,249,089 Long-term debt $ 110,227 $ 132,017 $ 145,765 $ 192,063 $ 402,088 Shareholders' equity $ 4,700,997 $ 4,582,818 $ 4,007,941 $ 3,439,447 $ 2,689,415 ----------------------------------------------------------------------------------------------------- |
2001 data includes a $90 million ($54 million after-tax) non-cash, non-recurring write-off of the Company's investment in Bridge Information Systems, Inc.
1999 data includes non-recurring charges totaling approximately $17 million (after-tax), associated with certain acquisitions and dispositions.
Management's Discussion and Analysis
Operating Results
Revenues and earnings reached record levels during each of the past three fiscal years. Despite a difficult economic environment, fiscal '01 revenues increased 12% to $7.0 billion. Prior to the non-cash, non-recurring charge in '01, pre-tax earnings increased 25% and diluted earnings per share increased 16% to $1.52. In fiscal '00, pre-tax earnings increased 21% and diluted earnings per share increased 16% to $1.31 (prior to the non-recurring charges in '99). Fiscal '01 was ADP's 40th consecutive year of double-digit earnings per share growth since becoming a public company in 1961.
Revenues and revenue growth by ADP's major business units are shown below:
Revenues Revenue Growth
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Years Ended June 30, Years Ended June 30,
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(In millions) 2001 2000 1999 2001 2000 1999
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Employer Services $4,018 $3,579 $3,232 12% 11% 16%
Brokerage Services 1,756 1,477 1,147 19 29 5
Dealer Services 691 725 723 (5) - 7
Other 553 507 438 9 16 23
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Consolidated $7,018 $6,288 $5,540 12% 13% 12%
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Consolidated revenues grew 12% in fiscal '01 primarily from increased market penetration, from an expanded array of products and services, with relatively minor contributions from price increases. Prior to acquisitions and dispositions, revenues increased approximately 11%.
As a result of the weaker economic conditions and the decreases in interest rates during fiscal `01, we instituted a series of initiatives in the latter part of the year to bring our expense structure in line with lower revenue expectations. These actions have resulted in approximately $150 million of lower annual expense run rate as of June 30, 2001 than would otherwise have been the case.
The consolidated pre-tax margin was 23.0% in '01 (prior to the non-recurring charge), 20.5% in '00, and 19.3% in '99 (prior to non-recurring charges). Pre-tax margin improved over the previous year as continued automation and operating efficiencies enabled the Company to offset accelerated investments in new products, and increased spending on systems development and programming. The impact of transitioning the investment portfolio from tax-exempt to taxable instruments also contributed to the margin improvement.
Certain revenues and expenses are charged to business units at a standard
rate for management and motivation reasons. Other costs are recorded based on
management responsibility. As a result, various income and expense items,
including certain non-recurring gains and losses, are recorded at the corporate
level and certain shared costs are not allocated. The prior years' business unit
revenues and pre-tax earnings have been restated to reflect fiscal year 2001
budgeted foreign exchange rates.
Employer Services
Employer Services' revenues grew 12% in fiscal '01, and in the absence of acquisitions and dispositions, revenue growth would have been about 11% in '01, 12% in '00, and 15% in '99.
Employer Services' operating margin was 23.3% in '01, 21.4% in '00, and 20.6% in '99. Employer Services' operating margin improved due to operating efficiencies, cost containment initiatives and also improvements in Europe, slightly offset by investments in new products and acquisitions.
Employer Services' revenues shown above include interest earned on collected but not yet remitted funds held for clients at a standard rate of 6%.
Brokerage Services
Brokerage Services' revenue growth was 19%. In the absence of acquisitions and dispositions, revenue growth would have been about 7% in '01, compared to 31% in '00 and 21% in '99.
Brokerage Services' operating margin was 19% in '01 compared to 23% in '00 and 19% in '99. The lower margins in fiscal '01 resulted from the prior year fourth quarter acquisition of Cunningham Graphics, investments made in data center capacity to support higher trading volumes and the extraordinarily high level of trading activity in '00.
Dealer Services
Dealer Services' revenues decreased 5% in '01. In the absence of acquisitions and dispositions, '01 revenues would have decreased 3%, compared to flat revenues in '00 and 7% revenue growth in '99. Dealer Services' operating margin was 15% in fiscal '01 compared to 16% in '00 and 15% in '99. Dealer Services' operating margin declined due to investments in new products and acquisitions.
Other
The primary components of "Other" revenues are Claims Services, foreign exchange differences, and miscellaneous processing services. "Other" also includes interest on corporate investments of $164 million, $119 million, and $84 million in '01, `00, and '99, respectively. In addition, "Other" revenues have been adjusted for the difference between actual interest earned on invested funds held for clients and interest credited to Employer Services at a standard rate of 6%.
During fiscal '01 the Company recorded a $90 million ($54 million net of tax) write-off of its investment in Bridge Information Systems, Inc. (Bridge), which is reflected in "realized (gains)/losses on investments." This non-cash, non-recurring write-off represented the Company's total recorded investment in Bridge.
During fiscal '00 the Company transitioned a portion of its corporate and client fund investments from tax-exempt to taxable instruments in order to increase liquidity of the overall portfolio. Approximately $2.6 billion of tax-exempt investments were sold prior to maturity at a pre-tax loss of approximately $32 million ($10 million corporate funds, $22 million funds held for clients), and the proceeds were reinvested at higher prevailing interest rates.
During fiscal '99 the Company sold its Peachtree Software and Brokerage Services front-office businesses, and decided to exit several other businesses and contracts. The combination of these transactions and certain other charges resulted in an approximately $37 million reduction in general, administrative and selling expenses and a $40 million provision for income taxes.
Additionally, '99 includes approximately $21 million ($14 million after-tax) of transaction costs and other adjustments in general, administrative and selling expenses, recorded by Vincam prior to the March 1999 pooling transaction.
In each of the past three years, investments in systems development and programming have increased to accelerate automation, migrate to new computing technologies, and develop new products.
Certain member countries of the European Union have transitioned to the Euro as a new common legal currency. The costs of this transition have not had a material effect on ADP.
In '01 the Company's effective tax rate was 39.4%. Excluding the impact of non-recurring charges associated with certain acquisitions, dispositions and other activities, the effective tax rate was 34.8% in '00 and 33.2% in '99. The increased rate in '01 is primarily a result of the transition, referred to above, of a portion of the Company's investment portfolio to taxable investments.
For '02 ADP is planning another record year with revenue growth in the high single digits. In '02 the Company will adopt Statement of Financial Accounting Standard (SFAS) No. 142 "Goodwill and Intangible Assets," which will eliminate goodwill amortization and will require pro forma footnote disclosure of fiscal 2001 results. ADP is also planning diluted earnings per share growth of 13% to 15% over the pro forma fiscal '01 results prior to the non-cash, non-recurring item.
Financial Condition
ADP's financial condition and balance sheet remain exceptionally strong. At June 30, 2001, cash and marketable securities approximated $2.6 billion. Shareholders' equity was approximately $4.7 billion, and return on average equity for the year was approximately 20%. The ratio of long-term debt to equity at June 30, 2001 was 2%.
Cash flow from operating activities approximated $1.5 billion in '01 with another excellent year expected in '02.
In '01 16.6 million shares of common stock were purchased at an average price of approximately $56. The Board of Directors has authorized the purchase of up to 53 million additional shares.
In '01 zero coupon convertible subordinated notes were converted to 1.3 million shares of common stock.
In `01 the Company entered into an unsecured revolving credit agreement with certain financial institutions, which provides for borrowings up to $2.5 billion. Borrowings under the agreement bear interest tied to LIBOR or prime rate depending on the number of days the borrowings are outstanding. The agreement, which expires in October 2001, has no borrowings to date.
During '01 the Company purchased several businesses for approximately $75 million in cash. The cost of acquisitions in '00 and '99 aggregated $200 million and $107 million, respectively.
During '99 the Company issued 7.2 million shares of common stock to acquire Vincam in a pooling of interests transaction, and the Company's results were restated accordingly. The Company also acquired several businesses in fiscal '99 (subsequent to the Vincam merger) in pooling of interests transactions in exchange for approximately 4 million shares of common stock. The Company's consolidated financial statements were not restated because in the aggregate these transactions were not material.
Capital expenditures during '01 were $185 million following investments of $166 million in '00 and $178 million in '99. Capital spending in fiscal '02 should approximate $200 million.
Approximately forty-percent of the Company's overall investment portfolio is invested in overnight interest-bearing instruments, which are therefore impacted immediately by changes in interest rates. The other sixty-percent of the Company's investment portfolio is invested in fixed-income securities, with maturities up to ten years. The Company has historically had the ability to hold these investments until maturity, and therefore this has not had an adverse impact on income or cash flows.
The earnings impact of future rate changes is not precisely predictable because many factors influence the return on the Company's portfolio. These factors include, among others, the overall portfolio mix between short-term and long-term investments. This mix varies during the year and is impacted by daily interest rate changes. A hypothetical change in interest rates of 25 basis points applied to the June 30, 2001 balances would result in a $12 million pre-tax earnings impact over the following twelve-month period.
Market Price, Dividend Data and Other
The market price of the Company's common stock (symbol: ADP) based on New York Stock Exchange composite transactions and cash dividends per share declared during the past two years have been:
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Price Per Share
---------------------- Dividends
Fiscal 2001 quarter ended High Low Per Share
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June 30 $57.1500 $49.5700 $ .10250
March 31 63.5625 48.4700 .10250
December 31 69.9375 58.5000 .10250
September 30 67.8750 49.5000 .08750
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Fiscal 2000 quarter ended
June 30 $57.9375 $44.6875 $ .08750
March 31 55.4375 40.0000 .08750
December 31 54.8125 43.0000 .08750
September 30 44.8750 37.3750 .07625
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As of June 30, 2001 there were approximately 34,000 holders of record of the Company's common stock. Approximately 271,000 additional holders have their stock in "street name".
New Accounting Pronouncements
In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,"Business Combinations" and SFAS No. 142 "Goodwill and Other Intangible Assets," which revise the standards for accounting for business combinations and goodwill and other intangible assets acquired in a business combination. The Company intends to adopt SFAS No.141 and SFAS No.142 in fiscal 2002. The pro forma basic and diluted earnings per share for fiscal 2001 will increase by $.07 per share from $1.47 to $1.54 and $1.44 to $1.51, respectively.
This report contains "forward-looking statements" based on management's expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ from those expressed. Factors that could cause differences include: ADP's success in obtaining, retaining and selling additional services to clients; the pricing of products and services; changes in laws regulating payroll taxes and employee benefits; overall economic trends, including interest rate and foreign currency trends; stock market activity; auto sales and related industry changes; employment levels; changes in technology; availability of skilled technical associates; and the impact of new acquisitions. ADP disclaims any obligations to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Statements of Consolidated Earnings
Automatic Data Processing, Inc. and Subsidiaries
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(In thousands, except per share amounts)
Years ended June 30, 2001 2000 1999
---------- ---------- ----------
Revenues other than interest on funds held for clients
and PEO revenues $6,264,030 $5,729,042 $5,110,262
Interest on funds held for clients 518,956 348,596 269,496
PEO revenues(A) 234,584 209,874 160,383
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Total revenues 7,017,570 6,287,512 5,540,141
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Operating expenses 2,900,124 2,564,496 2,376,172
General, administrative and selling expenses 1,665,447 1,643,360 1,379,026
Systems development and programming costs 514,279 460,275 412,380
Depreciation and amortization 320,856 284,282 272,807
Interest expense 14,260 13,140 19,090
Realized(gains)/losses on investments 77,594 32,359 (3,834)
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5,492,560 4,997,912 4,455,641
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Earnings before income taxes 1,525,010 1,289,600 1,084,500
Provision for income taxes 600,290 448,800 387,660
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Net earnings $ 924,720 $ 840,800 $ 696,840
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Basic earnings per share $ 1.47 $ 1.34 $ 1.13
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Diluted earnings per share $ 1.44 $ 1.31 $ 1.10
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Basic shares outstanding 629,035 626,766 615,630
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Diluted shares outstanding 645,989 646,098 636,892
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(A) Net of pass-through costs of $2,446,768, $2,197,323, and $1,748,841,
respectively.
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See notes to consolidated financial statements.
Consolidated Balance Sheets
Automatic Data Processing, Inc. and Subsidiaries
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(In thousands, except per share amounts)
Years ended June 30, 2001 2000
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Assets
Current assets:
Cash and cash equivalents $ 1,275,356 $ 1,227,637
Short-term marketable securities 515,245 596,792
Accounts receivable 976,638 899,314
Other current assets 316,221 340,709
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Total current assets 3,083,460 3,064,452
Long-term marketable securities 806,363 628,120
Long-term receivables 224,964 245,249
Property, plant and equipment:
Land and buildings 457,110 439,022
Data processing equipment 653,641 612,608
Furniture, leaseholds and other 533,883 498,354
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1,644,634 1,549,984
Less accumulated depreciation (1,029,984) (952,715)
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614,650 597,269
Other assets 219,133 271,136
Intangibles 1,601,410 1,623,701
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Total assets before funds held for clients 6,549,980 6,429,927
Funds held for clients 11,339,110 10,420,889
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Total assets $17,889,090 $16,850,816
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Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ - $ 21,523
Accounts payable 156,324 129,436
Accrued expenses and other current liabilities 1,032,273 1,044,002
Income taxes 147,676 101,707
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Total current liabilities 1,336,273 1,296,668
Long-term debt 110,227 132,017
Other liabilities 208,880 171,843
Deferred income taxes 207,928 151,337
Deferred revenue 85,931 95,361
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Total liabilities before client funds obligations 1,949,239 1,847,226
Client funds obligations 11,238,854 10,420,772
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Total liabilities 13,188,093 12,267,998
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Shareholders' equity:
Preferred stock, $1.00 par value:
Authorized, 300 shares; issued, none -- --
Common stock, $.10 par value:
Authorized, 1,000,000 shares; issued, 638,702
and 631,443 shares , respectively 63,870 63,144
Capital in excess of par value 553,927 402,767
Retained earnings 5,153,408 4,477,141
Treasury stock - at cost 14,766 and 2,697 shares, respectively (837,244) (130,800)
Accumulated other comprehensive income (232,964) (229,434)
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Total shareholders' equity 4,700,997 4,582,818
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Total liabilities and shareholders' equity $17,889,090 $16,850,816
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See notes to consolidated financial statements.
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Statements of Consolidated Shareholders' Equity
Automatic Data Processing, Inc. and Subsidiaries
(In thousands, except per share amounts)
Accumulated
Common Stock Capital in Other
------------------- Excess of Retained Treasury Comprehensive Comprehensive
Shares Amount Par Value Earnings Stock Income Income
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Balance, July 1, 1998 628,576 $62,858 $476,686 $3,372,247 $(370,724) $(101,620)
Net earnings -- -- -- 696,840 -- $ 696,840 --
Currency translation (47,674) (47,674)
Unrealized gain on
securities 13,827 13,827
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Comprehensive income $ 662,993
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---------
Employee stock plans
and related tax
benefits -- -- 44,163 -- 95,086
Treasury stock
acquired (2,550 shares) -- -- -- -- (85,365)
Acquisitions (4,316 shares) -- -- (97,594) (39,533) 119,583
Debt conversion
(2,623 shares) -- -- (1,922) -- 52,216
Dividends
($.295 per share) -- -- -- (181,133) --
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Balance, June 30, 1999 628,576 62,858 421,333 3,848,421 (189,204) (135,467)
Net earnings -- -- -- 840,800 -- $ 840,800 --
Currency translation (86,277) (86,277)
Unrealized loss on
securities (7,690) (7,690)
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Comprehensive income $ 746,833
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---------
Employee stock plans
and related
tax benefits 2,867 286 (7,841) 498 207,322
Treasury stock acquired
(4,648 shares) -- -- -- -- (201,007)
Acquisitions
(478 shares) -- -- 4,359 -- 20,122
Debt conversion
(808 shares) -- -- (15,084) -- 31,967
Dividends
($.33875 per share) -- -- -- (212,578) --
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Balance, June 30, 2000 631,443 63,144 402,767 4,477,141 (130,800) (229,434)
Net earnings -- -- -- 924,720 -- $ 924,720 --
Currency translation (80,816) (80,816)
Unrealized gain on
securities 77,286 77,286
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Comprehensive income $ 921,190
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---------
Employee stock plans
and related
tax benefits 6,878 688 163,464 -- 187,058
Treasury stock acquired
(16,558 shares) -- -- -- -- (935,064)
Acquisitions (22 shares) -- -- 234 -- 839
Debt conversion
(1,303 shares) 381 38 (12,538) -- 40,723
Dividends
($.395 per share) -- -- -- (248,453) --
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Balance, June 30, 2001 638,702 $63,870 $553,927 $5,153,408 $(837,244) $(232,964)
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See notes to consolidated financial statements.
Statements of Consolidated Cash Flows
Automatic Data Processing, Inc. and Subsidiaries