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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number 1-5397
AUTOMATIC DATA PROCESSING, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-1467904
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One ADP Boulevard, Roseland, New Jersey 07068
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 201-994-5000
Securities registered pursuant to Section 12(b) of the Act:
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
Securities registered pursuant to Section 12(g) of the Act: NONE
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 (Sec.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 September 13, 1996 was $12,171,600,382. On September 13, 1996,
there were 290,038,815 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 1996 Annual Report to Shareholders Parts I, II &
IV
Portions of the Registrant's Proxy Statement for Annual Meeting of Stockholders
to be held on November 12, 1996. Part III
- --------------------------------------------------------------------------------
Part I
Item 1. Business
- -----------------
Automatic Data Processing, Inc., incorporated in Delaware in 1961, and its
subsidiaries (collectively, "ADP") are engaged in the computing services
business. The following summary describes ADP's activities.
Industry Segment
All of ADP's computing services enable clients to process and/or distribute
data (their own, ADP's or that of third parties) and/or to interactively access
and utilize ADP and third party databases and information, utilizing ADP's
batch, interactive and client site systems.
Employer Services
ADP's Employer Services offers a comprehensive range of payroll, payroll
tax deposit and reporting, human resources (HR), benefits outsourcing,
timekeeping, 401(k) recordkeeping, and unemployment compensation management
services. These services are provided to over 350,000 clients engaged in a wide
variety of businesses. In addition to its direct marketing, ADP has marketing
relationships with many banks and accountants whereby ADP offers its services to
their business clients. Employer services are offered from 40 computer centers
and 73 satellite sales and service centers in the United States, 14 computer
centers in Western Europe and one center in Canada. For clients who desire to
do their own processing, client site payroll and HR software is available.
Payroll and tax filing services comprise over 87% of Employer Services'
revenue. Payroll services include the preparation of pay checks and 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 services process federal, state and local payroll taxes on
behalf of ADP clients and remit such taxes to the appropriate taxing authorities
when due. As new products evolve (such as new hire reporting, ADP check/full
service direct deposit and wage garnishment payment), the ADP Tax Filing center
is also responsible for the efficient movement of funds and information to
third parties. Over 260,000 clients rely on tax filing to assure regulatory
compliance.
Approximately 45% of Employer Services' payroll and payroll tax filing
services revenue for the past three fiscal years have been attributable to its
heartland accounts (companies with between 1 and 99 employees), approximately
40% to major accounts (between 100 and 999 employees) and approximately 15% to
national accounts (with 1,000 or more employees).
Autopay continues to be ADP's most popular, flexible and comprehensive
payroll product with over 225,000 clients. Recently, PC/Payroll for Windows was
introduced. ADP offers EasyPay, a simple, low-cost, outsourcing payroll
solution for approximately 100,000 clients in the heartland
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market. For heartland clients who prefer client site processing for managing
payroll and payroll taxes, ADP has a PC-based product called SoftPay. For
national accounts clients, ADP's Client Server Series provides fully integrated
client site payroll, HR and benefits administration and outsourcing services.
ADP's Application Group installs and implements client server systems for ADP
clients and other users of server technology.
Full Service Direct Deposit in association with major bank partners permits
employers to easily, rapidly and economically make electronic direct deposits
to employee bank accounts. ADP's joint venture with Checkfree Corporation
provides electronic banking and bill payment services to small businesses to
help them manage money and improve their accounts payable process.
ADP's HR services, operating in conjunction with a client's payroll
database, provide comprehensive recordkeeping HR services, including benefits
administration and outsourcing, applicant tracking, employee history and
position control. The various HR systems run on standalone PC's, local or wide
area networks or client/server systems.
ADP Total Time provides a comprehensive time-keeping system fully
integrated into ADP's payroll systems. ADP's unemployment compensation service
aids clients in managing and reducing unemployment insurance costs. ADP's
Peachtree and One Write accounting packages are sold through retail channels.
ADP also offers 401(k) recordkeeping, benefits administration and benefits
consulting. Comprehensive 401(k) administrative services relating to defined
benefit plans, flexible spending, healthcare and other group benefits are
offered.
As more ADP clients become multinational in scope, it becomes increasingly
important to offer services on a global scale. Last January, ADP acquired
Paris-based GSI, Europe's largest provider of payroll and related HR services.
In Europe, ADP's services for payroll and HR management are now provided in
Belgium, France, Germany, Italy, the Netherlands, Spain, Switzerland and the
United Kingdom. This makes ADP the first provider of integrated payroll and HR
services to U.S. corporations and their European subsidiaries.
Brokerage Services
ADP's Brokerage Services provides high quality, high speed securities
transaction processing, investor support tools, market data services, and
investor communications related services to the financial community worldwide.
ADP is the largest provider of such third-party processing and retail equity
information systems in the U.S. and Canada. Brokerage Services now supplies
over 2,600 firms globally with technology-based information solutions.
ADP provides front-office database, news, analytic and quotation services
for the investment and brokerage community through terminals located on brokers'
desks. ADP provides such services through interactive work stations (utilizing
client-server architecture) for all active equity securities, commodities,
currencies, and interest rate futures. ADP also offers its international
clients real-time news processing systems, real-time fixed income, foreign
exchange and money market information, and sophisticated analytics. ADP's
Power Partner service is based on state-of-the-art "object linking and embedding
technology" which allows clients to modularly build, and
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seamlessly integrate, market information, securities processing systems, broker
productivity tools, client applications and third party software into their
workstations. Global Treasury Information Services (GTIS) keeps its clients in
tune with price information, news and commentary on world markets in the areas
of fixed income, foreign exchange, money markets, futures and metals.
Information is contributed directly to GTIS by key institutions (e.g., banks
and brokers) who participate in these markets.
Brokerage Services continued its expansion in the institutional
marketplace with several acquisitions. The DAIS Group provides sophisticated
quantitative models to help portfolio managers assess risk and select stocks.
Merrin Financial provides automated securities trade order management and
routing solutions for investment managers and securities brokers. Information
Catalysts (ICI) markets automated and fixed income trading, operations and
accounting software for domestic and international banks and securities
brokerage firms.
ADP provides back-office stock brokerage and related financial computing
services such as trade processing, cage management, stock loan accounting,
on-line inquiry and data collection, portfolio reporting, order matching and
on-line trading. All of these services are offered in the United States and
Canada. ADP's GlossTrader client-server system offers global multicurrency
clearance and settlement services for international securities.
ADP provides shareholder communication services in the United States and
Canada, handling all shareholder mailings and proxy processing for shareholders
whose securities are left in "street name" in the custody of ADP's "nominee"
clients (principally brokerage firms and banks). In fiscal 1996, ADP processed
over 235 million shareholder mailings for over 12,000 publicly held
corporations, mutual funds and financial institutions. Shareholder ballots
representing approximately 127 billion shares were electronically processed. As
part of its shareholder communication services, ADP introduced StreetLink, a
quickly deliverable laser printed alternative to expensive quarterly mailings to
shareholders. Proxy Edge is an electronic voting service which dramatically
improves voting efficiency and record keeping. PhoneVOTE Services enables
mutual fund shareholders to vote their proxy over the telephone for same-day
tabulation.
Dealer Services
ADP's Dealer Services provides industry-specific computing, data and
professional services to automobile, truck and farm equipment dealers and
manufacturers in the U.S., Canada, Europe, Asia and Latin America. Over 16,000
dealers use ADP's on-site systems and communications networks to manage every
area of sales and operations. ADP addresses critical dealership areas and
offers software and professional services to improve consumer loyalty, asset
management, innovative technology, employee productivity training, manufacturer
relations, business improvements and real-time information access. It offers
clients a service solution which includes ADP computer hardware, licensed
software, software support and hardware maintenance services. Clients use ADP's
systems to manage their accounting, inventory, factory communications,
scheduling, leasing,sales and service activities. In addition, ADP offers
more than 95 manufacturer subsystems for pricing updates and factory ordering.
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ADP establishes and maintains communications networks for its clients which
allow interactive communications between manufacturers and their respective
dealers. These communication networks are used for new vehicle ordering, status
inquiry and warranty claims, parts and vehicle locating, credit checks, vehicle
repair estimating, vehicle registration and vehicle lienholder information.
ADP continues to automate the business processes for its clients through
value-added products such as paperless parts cataloging, repair shop pricing and
scheduling, laser printing, and data archiving and document storage. ADP's
Laser Station replaces pre-printed, multipart, carbonized forms with customized
laser-printed originals, allowing dealers to print from a single laser printer
all types of customer communications, including customer satisfaction surveys,
service reminders, invoices and statements. ADP's Document Storage & Data
Archiving product is designed to create a paperless office, using optical disk
and scanning technologies to electronically scan, store and retrieve purchase
orders, invoices, checks, other documents and even customer signatures. ADP's
New Vehicle Order System increases vehicle order accuracy, improves vehicle
management and reduces floor plan interest expense. The Used Vehicle Network
helps dealers manage their used vehicles more efficiently.
As industry change accelerated, ADP introduced its Advisor family of
products. Super Service Advisor fully automates the reservation and service
write-up process using hand-held wireless, electronic clipboard technology.
Sales Advisor is a complete retail sales process application designed to improve
sales performance and customer handling. The ADP Sales Kiosk is a
state-of-the-art interactive sales presentation tool, and ADP's Relationship
Marketing System (RMS) automates all phases of customer contact from initial
prospect through the purchase life cycle and on-going service.
Changes in customer expectations and manufacturer's requirements are
modifying how the traditional dealership conducts business. In response to
these changes, ADP is providing consulting services to its dealer clients to
help them reengineer their management processes. It also offers solutions to
help employee productivity and training, and provides the tools and services
necessary to improve dealership productivity and profitability.
Claims Services
ADP provides auto repair estimating and parts availability services to
insurance companies, claims adjusters, repair shops and salvage yards involved
in auto collision repair and valuation in the United States and Canada. The
services include automated collision damage repair estimating for cars and
trucks, vehicle valuation services for total losses, and parts locating and
pricing services to auto insurers and repairers to facilitate the claims
settlement and parts locating processes. ADP provides management information
and vehicle damageability and repair cost statistics to insurance companies,
government agencies and automobile manufacturers. A pen-based, mobile auto
estimating system, using state-of-the-art technology and graphical user
interfaces, was recently introduced. Satellite and voice-based trading networks
for the location and pricing of recycled parts, and ADP's salvage-related
products and services, have been significantly expanded.
ADP provides services that evaluate the appropriateness of medical
treatment and invoicing for auto accident victims. The core product, Provider
Bill Audit, is an expert system that performs fee and utilization audits of
medical provider bills involving soft tissue injury and that provides auto
-4-
insurers with a consistent methodology for assessing the proper diagnoses and
treatment of automobile-related injuries.
ADP also provides a property loss repair and replacement system to assist
in settling homeowners' claims.
Nature of Services Provided
In each of Employer Services, Dealer Services, Claims Services and most of
Brokerage Services, ADP's services primarily involve the processing and
utilization of client and/or third party data. In the front-office component of
the Brokerage Services business, the primary service takes the form of providing
securities, commodities and currencies quotation data (which data is provided by
various exchanges) and news to clients; this front-office component represents
less than 10% of consolidated revenue.
Services to all industries are generally available by the electronic
transmission (through communications lines) of computer-generated data and
information from and to clients. Services are offered through a variety of
systems and networks which run on industry-standard operating systems.
Virtually none of ADP's services require ADP-proprietary hardware and/or
operating systems.
All of ADP's services utilize somewhat similar facilities, computers,
communications networks, salesforces, and client service support personnel.
ADP's businesses share numerous facilities, selected computer rooms and
communications networks, and ADP occasionally transfers some of its employees
among business units. The input and output of all of ADP's businesses is data
and information. On occasion ADP has transferred services and products between
business units.
While the labor intensiveness of a service may vary somewhat based on the
degree of automation and complexity in providing the service, all services use
the same basic functions as described above. None of ADP's service offerings
are particularly capital intensive.
Markets and Marketing Methods
All of ADP's services are sold broadly across the United States and Canada.
Non-North American services amounted to approximately 11% of fiscal 1996
revenue. All services use common marketing techniques, including direct sales
methodologies with emphasis on referral sources.
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.
While concentrations of clients exist, no one business group is material
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to ADP's overall revenue. Employer Services also sells to auto dealers,
brokerage clients, and insurance clients.
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 independent computing services
companies in the United States.
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 computing services to over 375,000 clients. Annual revenues
attributable to large client accounts range from $1 million to approximately $67
million per client, while thousands of small client accounts produce annual
revenues of less than $1,000 each. ADP's largest single client accounts for
approximately 2% of its annual revenue.
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 seven years in Employer Services and is
ten or more years in Brokerage, Dealer and Claims Services, and does not vary
significantly from period to period.
Discounts, rebates and promotions offered by ADP to clients are not
material.
ADP's services are provided under written Price Quotations or Services
Agreements having varying terms and conditions. No one Price Quotation or
Service Agreement is material to ADP.
-6-
Systems Development and Programming
During the fiscal years ended June 30, 1996, 1995 and 1994, ADP spent
$249,635,000, $193,173,000 and $160,803,000, respectively, on systems
development and programming activities for the development of new, and the
improvement and maintenance of existing, computing services.
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 revenue or negatively impacts its existing products and services, and each
existing product and service has 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. Licenses, patents, trademarks and franchises are not material to ADP's
business as a whole.
Compensation of Marketing and Sales Personnel
The compensation arrangements of ADP's marketing and sales personnel vary
significantly based on the tenure of the particular salesperson, with the
commission-based portion of total compensation averaging approximately 40%. ADP
sets minimum sales quotas on an individual basis.
Computer Systems
ADP does not manufacture computer systems or act as a distributor of
computer systems. ADP may, however, be deemed to be a value-added reseller of
computer systems insofar as its services often include computer equipment as
part of the total service solution.
ADP's services are offered on a variety of computer platforms which run
various operating systems. These computer platforms include those offered by
IBM, IBM-compatibles, Digital Equipment Corporation, Apple, Motorola, Hewlett
Packard and McDonnell Douglas. The industry-standard operating systems
supporting such computer platforms include DOS, Windows, OS2, VSE, MVS, VMS,
System 7 OS, Unix, Reality and Pick.
ADP's service warranty to its clients is 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.
Number of Employees
ADP employed approximately 29,000 persons as of June 30, 1996.
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Executive Officers of the Registrant
See Item 10 in Part III hereof.
Item 2. Properties
ADP leases space for more than 55 of its processing centers. In addition,
ADP leases numerous small processing centers and sales offices. All of these
leases, which aggregate approximately 5,020,469 square feet in the United
States, Canada, Europe and Asia, expire at various times up to the year 2016.
ADP owns 23 of its processing facilities and its corporate headquarters in
Roseland, New Jersey, which aggregate approximately 2,331,645 square feet.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None
-8-
Part II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
See "Market Price and Dividend Data" on page 18 of the Registrant's 1996
Annual Report to Shareholders, which information is incorporated herein by
reference. As of August 25, 1996, the Registrant had 27,186 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" on page 16 of the Registrant's 1996 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" on pages 17 and 18 of the
Registrant's 1996 Annual Report to Shareholders, the Letter to Shareholders on
pages 2-4 of such report and the business descriptions on pages 5-15 of such
report, which information is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The financial statements described in Item 14(a) hereof are incorporated
herein.
The following supplementary data is incorporated herein by reference:
Page in 1996 Annual
Report to Shareholders
----------------------
Quarterly Financial Results (unaudited) for
the three years ended June 30, 1996 27
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
-9-
Part III
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
- -------------------- --- --------------------- ----------
James B. Benson 51 Vice President, General 1977
Counsel and Secretary
Gary C. Butler 49 Group President of 1975
Employer Services
Robert J. Casale 57 Group President of 1988
Brokerage Services
G. Harry Durity 49 Vice President, 1994
Worldwide Business
Development
Richard J. Haviland 50 Vice President, Finance 1982
Michael R. Holmes 38 Vice President, 1991
Human Resources
Peter M. Leger 45 President of 1992
Dealer Services
S. Michael Martone 48 President of Claims 1987
Services
Joseph B. Pirret 55 Vice President 1974
and Treasurer
Arthur F. Weinbach 53 President and 1980
Chief Executive Officer
Messrs. Benson, Butler, Casale, Haviland, Holmes, Pirret and Weinbach have
each been employed by ADP in senior executive positions for more than the past
five years.
G. Harry Durity joined ADP in August 1994 as Corporate Vice President,
Worldwide Business Development. Prior to joining ADP he was Senior Vice
President - Corporate Development of Revlon Consumer Products Company. Between
1990 and February 1993 when he joined Revlon, he was President of The Highlands
Group, Inc.
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Peter M. Leger joined ADP in March 1992 as Executive Vice President, North
America of Dealer Services and was promoted to President of Dealer Services in
January 1995. Prior to joining ADP, he was employed by Reuters North America in
various senior executive positions.
S. Michael Martone joined ADP in 1987. Prior to his promotion to
President of the Claims Solutions Group in December 1995, he held senior vice
president positions in both the Employer Services Group and the Dealer Services
Group.
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 1996
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 1996 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 1996 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 1996 Annual Meeting of Stockholders, which
information is incorporated herein by reference.
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Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)1. Financial Statements
The following consolidated financial statements of Automatic Data
Processing, Inc. and its subsidiaries are included in Part II, Item 8:
Page in 1996 Annual
Report to Shareholders
----------------------
Independent Auditors' Report 28
Consolidated Balance Sheets - June 30, 1996 and 1995 20
Statements of Consolidated Earnings - years
ended June 30, 1996, 1995 and 1994 19
Statements of Shareholders' Equity - years
ended June 30, 1996, 1995 and 1994 21
Statements of Consolidated Cash Flows - years
ended June 30, 1996, 1995 and 1994 22
Notes to Consolidated Statements 23-27
Financial information of the Registrant is omitted because the Registrant
is primarily an operating 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
-----------------
Schedule II - Valuation and Qualifying Accounts 15
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
December 15, 1994 - incorporated by reference to Exhibit
(3)-#1 to Registrant's Annual Report on Form 10-K for the
fical year ended June 30, 1995
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3.2 - By-Laws as currently in effect - incorporated by reference
to Exhibit (3)-#2 to Registrant's Annual Report on Form
10-K for the fiscal year ended June 30, 1991
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 - Employment Agreement with Josh S. Weston - incorporated by
reference to Exhibit 10(ii) to Registrant's Annual Report
on Form 10-K for the fiscal year ended June 30, 1986
(Management Contract)
10.1(a) - Amendment to Employment Agreement with Josh S. Weston -
incorporated by reference to Exhibit 10(ii)(A)-#2 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended June 30, 1990 (Management Contract)
10.1(b) - Amendment to Employment Agreement with Josh S. Weston -
incorporated by reference to Exhibit 10(ii)(A)-3 to
Registrant's Annual Report on Form 10-K for the fiscal year
ended June 30, 1994 (Management Contract)
10.1(c) - Amendment to Employment Agreement with Josh S. Weston
(Management Contract) - incorporated by reference to
Exhibit 10(ii)(A)-4 to Registrant's Annual Report on Form
10-K for the fiscal year ended June 30, 1995
10.2 - Letter Agreement dated as of August 1, 1996 between
Automatic Data Processing, Inc. and Arthur F. Weinbach
(Management Contract)
10.3 - Agreement with Robert J. Casale - incorporated by reference
to Exhibit 10(iii)(A)-#1 to Registrant's Annual Report on
Form 10-K for the fiscal year ended June 30, 1990
(Management Contract)
10.4 - Agreement with Gary C. Butler - incorporated by reference
to Exhibit 10(iii)(A)-#2 to Registrant's Annual Report on
Form 10-K for the fiscal year ended June 30, 1991
(Management Contract)
10.5 - 1981 Key Employees' Stock Option Plan - incorporated by
reference to Registrant's Registration Statement No.
2-75287 on Form S-8 (Management Compensatory Plan)
10.5(a) - Amendment to 1981 Key Employees' Stock Option Plan -
incorporated by reference to Registrant's Annual Report on
Form 10-K for the fiscal year ended June 30, 1989
(Management Compensatory Plan)
10.6 - Key Employees' Restricted Stock Plan - incorporated by
reference to Registrant's Registration Statement No.
33-25290 on Form S-8 (Management Compensatory Plan)
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10.7 - 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)
10.8 - 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)
10.9 - 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)
10.10 - 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)
10.11 - 1994 Executive Compensation Plan - incorporated by
reference to Exhibit A to Registrant's Proxy Statement for
its Annual Meeting of Stockholders held November 15, 1994
(Management Compensatory Plan)
11 - Schedule of Calculation of Earnings Per Share
13 - Pages 2-28 of the 1996 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' Report on Schedules and Consent
27 - Financial Data Schedule
(b) None.
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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, 1996:
Allowance for doubtful accounts:
Current $23,035 $9,115 $4,835(B) $2,358(A) $34,627
Long-term $26,166 $2,986 -- $3,425(A) $25,727
Year ended June 30, 1995:
Allowance for doubtful accounts:
Current $20,513 $8,415 $904(B) $6,797(A) $23,035
Long-term $24,526 $3,916 -- $2,276(A) $26,166
Year ended June 30, 1994:
Allowance for doubtful accounts:
Current $18,112 $6,838 $492(B) $4,929(A) $20,513
Long-term $21,684 $4,366 -- $1,524(A) $24,526
(A) Doubtful accounts written off, less recoveries on accounts previously
written off.
(B) Acquired in purchase/pooling transactions.
-15-
SIGNATURES
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.
AUTOMATIC DATA PROCESSING, INC.
(Registrant)
September 23, 1996 By: /s/ Arthur F. Weinbach
-------------------------------------
Arthur F. Weinbach
President and Chief Executive Officer
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 President and Chief September 23, 1996
- ---------------------------
(Arthur F. Weinbach) Executive Officer
(Principal Executive Officer)
/s/ Richard J. Haviland Vice President, Finance September 23, 1996
- ---------------------------
(Richard J. Haviland) (Principal Financial Officer)
/s/ Josh S. Weston Chairman of the Board September 23, 1996
- ---------------------------
(Josh S. Weston)
/s/ Gary C. Butler Director September 23, 1996
- ---------------------------
(Gary C. Butler)
/s/ Joseph A. Califano, Jr. Director September 23, 1996
- ---------------------------
(Joseph A. Califano, Jr.)
/s/ Leon G. Cooperman Director September 23, 1996
- ---------------------------
(Leon G. Cooperman)
___________________________ Director September __, 1996
(George H. Heilmeier)
/s/ Ann Dibble Jordan Director September 23, 1996
- ---------------------------
(Ann Dibble Jordan)
-16-
/s/ Harvey M. Krueger Director September 23, 1996
- ---------------------------
(Harvey M. Krueger)
___________________________ Director September __, 1996
(Charles P. Lazarus)
___________________________ Director September __, 1996
(Frederic V. Malek)
/s/ Henry Taub Director September 23, 1996
- ---------------------------
(Henry Taub)
___________________________ Director September __, 1996
(Laurence A. Tisch)
-17-
APPENDIX
(As required pursuant to Rule 304(a) of Regulation S-T)
The following is a narrative description of the graphic or
image material which appears in Exhibit 13 to the Registrant's
Annual Report on Form 10-K (the "Form 10-K"). Exhibit 13
contains particular pages from the Registrant's 1996 Annual
Report to Shareholders (the "1996 Annual Report") which are
incorporated by reference into the Form 10-K.
Page in 1996
Annual Report Description
------------- -----------
2 The photograph on page 2 of the 1996 Annual
Report is of Josh S. Weston, Chairman.
3 The photograph on page 3 of the 1996 Annual
Report is of Arthur F. Weinbach, President
and Chief Executive Officer.
5 The photograph on page 5 of the 1996 Annual
Report is described in the following caption
on page 5: "Below: World famous toy retailer,
F.A.O. Schwarz counts on ADP to process its
payroll for 900 employees. In over 40
states, ADP handles the company's payroll tax
filing and reporting. Pictured below are
Jennifer Miller (right), Major Account
District Manager for ADP, and F.A.O. Schwarz
Payroll Manager, Teddi O'Reilly (left)."
6 The photograph on page 6 of the 1996 Annual
Report is described in the following caption
on page 6: "Below: ADP is pleased to be a
supporter of our client Habitat for Humanity
International, a non-profit organization
dedicated to eliminating poverty housing
worldwide. Habitat looks to ADP to handle
its payroll processing, tax filing and new
hire reporting."
7 The photograph on page 7 of the 1996 Annual
Report is described in the following caption
on page 7: "Above: ADP Client Service
Representative, Linda Del Savio (left) with
Dennis Crumpler, Chairman and CEO of Atlanta-
based XcelleNet, a worldwide leader in
software for remote access computing that
relies upon ADP to provide state-of-the-art
payroll processing and information support.
ADP depends upon XcelleNet's Remote Ware to
keep its Client Service work station software
up to date."
8 The two photographs on page 8 of the 1996
Annual Report are described in the following
caption on page 8: "Right: Anthony
Portelli (left), Director, SBC Warburg Inc.,
thanks Tevin Datz (right), Vice President,
Account Management, for ADP's support and
dedication during the recent merger of SBC
Capital Markets Inc., and SG Warburg, which
created the new entity SBC Warburg Inc.
ADP's proactive planning and solid commitment
ensured an efficient and seamless
consolidation of the two firms' books and
records. Below: Hussein Khoder (right), ADP
Vice President, Account Management, and Bill
Anderson (left), Executive Vice President &
Chief Executive Information Officer,
Prudential Securities, discuss implementing
ADP's strategic products on Prudential's
technology platform. The firms recently
strengthened their thirteen-year partnership
by entering into an agreement to install over
12,000 Power Partner workstations in
Prudential's retail offices, worldwide."
9 The photograph on page 9 of the 1996 Annual
Report is described in the following caption
on page 9: "Above: (from right to left)
Bruce Barnett, ICS, VP of Account Management,
and Steven DeBernardo, Client Services
Director, discuss applications with Bear
Stearns & Co. Inc. executives, Joseph
Kruszka, Managing Director, and Jeffrey C.
Bernstein, Senior Managing Director.
Frequent consultation helps both firms
identify opportunities. Bear Stearns uses
several ADP products and is one of our
largest and longest client relationships."
10 The photograph on page 10 of the 1996 Annual
Report is described in the following caption
on page 10: "Below: Ross Pope, (left) ADP
Regional Director of Sales, and Terry Petit,
(right) Client Relations Director, discuss
the ADP Advisor family of products with Keith
McCluskey (center), President, McCluskey
Chevrolet in Cincinnati, Ohio. McCluskey
Chevrolet is a member of Driver's Mart
Worldwide Inc., a used-car mega retail chain
established by a group of elite auto dealers.
ADP partnered with Driver's Mart in
developing the first truly interactive auto
retailing system. It promises to
revolutionize customer buying experiences."
11 The two photographs on page 11 of the 1996
Annual Report are described in the following
captions on page 11: "Above: Nancy Rozinsky
(left), ADP Fixed Operations Product Leader,
discusses process improvements with Hank
Faulkner (center), CEO, and Walt Huber
(right), Director of Operations, The Faulkner
Organization, Trevose, Pennsylvania. The
Faulkner Organization owns eighteen
dealerships, and uses ADP's on-site systems
and communications networks to manage every
area of their operation. Left: ADP
AutoConnect is the most complete Internet
service
created for both auto dealers and consumers.
Cole Younger (right), ADP Major Account
Executive, demonstrates how a web site on ADP
AutoConnect will assist in advertising
efforts for their sixteen dealerships with
Glenn Gardner (left), General Manager, and
Joseph Holman (center), Chairman of the
Board, Holman Enterprises, Pennsauken, NJ.
ADP AutoConnect is home to the largest
community of dealer web sites on the
Internet."
12 The photograph on page 12 of the 1996 Annual
Report is described in the following caption
on page 12: "Below: Zurich Canada conducts
electronic commerce with collision repair
facilities and independent appraisal firms,
unifying and controlling the claims
restoration process with information systems
and network communications from ADP. Nick
Briante, Senior Vice President, Claims
(right), and Trevor Hayes, National Appraisal
Manager (left), meet with ADP's Director of
Client Relations, John Kotsopoulos, to
explore the implementation of Electronic
Funds Transfer as the next step in Zurich's
blueprint for overall process improvement and
increased customer satisfaction."
13 The two photographs on page 13 of the 1996
Annual Report are described in the following
caption on page 13: "Above and left: When
American Family Insurance Company invented
their Concept Claims System (CCS), technology
provided a means to implement their dream of
a paperless work environment. One of their
Physical Damage Representatives, Bob
Schubring, uses his mobile ADP system to
capture digital images of the damaged vehicle
and write the computerized estimate while
still in the field. As soon as he transmits
this electronic claims folder to Donna Drews,
the Drive-in Claims Processor at the office,
she starts the check-in process to file the
claim in CCS. Within a matter of minutes,
claims representatives at American Family can
access the information - simply by opening
the folder on their computer screen - as they
provide service for the policyholder."
14 The two photographs on page 14 of the
1996 Annual Report are described in the
following caption on page 14: "Above:
Catherine Marioli, Compagnie Francaise
Philips Payroll/HR Specialist based in Paris,
uses a complete ADP-GSI solution that serves
all of Philips' needs for payroll and human
resources management in France. Philips is a
supplier of lighting and electronics products,
systems and services and has developed a wide
range of multimedia activities. Right:
Michael Kurch (right), ADP Sales Manager
(Germany), Johannes Sczepan (center),
Managing Director, and Peter Nuhs (left), IT
Manager of Georg von Opel
Group discussing the implementation of ADP's
new sales advisor system. George von Opel
Group is one of ADP's strategic clients in
Germany generating more than 30,000 new and
used car sales through almost 40 locations in
Germany."
15 The photograph on page 15 of the 1996 Annual
Report is described in the following caption
on page 15: "Above: Ian Buchanan, Deputy
Managing Director, Information Systems,
Nomura International (left), with Terry
Williams, Wilco Chairman. Wilco specializes
in meeting the needs of the international
securities industry and global custodians.
Wilco's global trading and settlement system,
Gloss, was selected by Nomura because of its
ability to process high volumes on a
resilient client server platform."