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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
FOR THE FISCAL YEAR ENDED JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-5397
AUTOMATIC DATA PROCESSING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-1467904
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE ADP BOULEVARD, ROSELAND, NEW JERSEY 07068
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 973-974-5000
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
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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 September 10, 1999 was approximately $25,993,400,000. On
September 10, 1999, there were 624,590,771 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 1999 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 9, 1999. Part III
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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 Employer Services offers a comprehensive range of payroll, human
resources, benefits administration, time and attendance and tax filing and
reporting services to more than 425,000 employers in the United States, Canada,
Europe and Latin America. In addition to its direct marketing, Employer Services
has marketing relationships with many banks and accountants whereby ADP offers
its services to their business clients. In fiscal 1999, North America accounted
for 88% of Employer Services' revenues, with Europe generating 11% of Employer
Services' revenues and Latin America (principally Brazil) contributing the
remaining 1%.
In North America, payroll and tax filing and other reporting services
comprise approximately 83% of Employer Services' revenue. Payroll services
include the preparation of client employee paychecks and electronic direct
deposits (in conjunction with major bank partners), 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 and Financial Services Center
is also responsible for the efficient movement of funds and information to third
parties. In Europe and Latin America, ADP Employer Services provides the
European or Latin American equivalent of these services.
ADP's 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 38% of Employer Services' payroll and payroll tax filing services
revenue during the past fiscal year was attributable to its Emerging Business
Services (companies with less than 100 employees); approximately 41% of such
revenue was attributable to Major Accounts (companies with between 100 and 999
employees) and approximately 21% of such revenue was attributable to National
Accounts (companies with 1,000 or more employees).
ADP's Human Resources (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.
Emerging Business Services processes payroll for over 325,000 clients.
EBS provides these smaller companies of usually 1-100 employees with leading
solutions, including a range of value-added services that are specifically
designed for small business clients. Major Accounts (100-1000 employees) offers
a full suite of best-of-breed employer services solutions for mid-size
companies, including full database and other functional integration between
payroll and HR. Many of the world's largest corporations (over 1000 employees)
are ADP National Accounts clients. In many cases, ADP provides system solutions
for its clients' entire human resource, payroll and benefits needs. 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.
The ADP Tax and Financial Services Center supports all three of these
market segments. It provides an electronic interface between approximately
330,000 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 1999, the ADP Tax and Financial Service Center processed
over 16 million federal and other employer payroll tax returns.
This year, ADP became the second largest professional employer
organization ("PEO") in the United States with the acquisition of The Vincam
Group, Inc. A PEO provides a comprehensive outsourcing solution, including
payroll, HR, benefits and workers' compensation to its clients. ADP's combined
PEO business, called TOTALSOURCEsm, supports over 81,000 work-site employees in
eight states.
ADP complements its payroll and HR services with additional employer
services that include products ranging from time and attendance tracking to
401(k) recordkeeping. ADP's unemployment compensation services aid clients in
managing and reducing unemployment insurance costs. ADP enhanced its position as
a leading benefits administration provider with the acquisition of the benefits
administration business of Johnson & Higgins/Kirke Van Orsdel, Inc.
Additionally, ADP initiated relationships with enterprise resource providers,
enabling ADP to link its payroll and HR systems with ERP systems.
The continued increase in multinational companies makes payroll and
human resource management services a global opportunity. ADP Europe provides
payroll solutions to nearly 25,000 clients in nine European countries. ADP
Europe is the only Pan-European service provider, and more than half of the top
500 companies in Europe - those with 1,000 or more employees - are ADP Europe
clients. In fiscal 1999, ADP Europe acquired three companies: Chessington (UK),
Realisator (Switzerland) and Adid (France). Additionally, ADP is well positioned
in Latin America to take advantage of future growth in this market. As
previously stated, Employer Services' European and Latin American operations
already comprise 12% of the consolidated Employer Services worldwide revenues.
In fiscal 1999, ADP initiated Global Business Services. Through Global
Business Services, ADP will provide a dedicated sales and service organization
trained and equipped to handle payroll for clients with diverse locations in
ADP's major world markets.
BROKERAGE SERVICES
ADP Brokerage Services provides transaction processing, desktop
productivity applications and investor communications services to the financial
services industry. These services include 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. ADP Brokerage Services serves a diverse
client base, including full-service and discount brokerage firms, global banks
and Internet brokerage companies, as well as corporations, mutual funds,
institutional investors, trading firms and other providers of financial
services.
In fiscal 1999, ADP Brokerage Services processed a significant portion
of all U.S. and Canadian retail equity transactions, with combined daily volumes
of 827,000 trades per day - clearly making ADP Brokerage Services the largest
provider of transaction processing in North America.
This year, ADP Brokerage Services introduced Internet-based products,
such as electronic delivery of trade confirmations and statements, and a mutual
fund sales tool, where users can view current fund information. ADP's clients
can now order trades on-line for immediate delivery to an investor. ADP
Brokerage Services also acquired Leading Edge Technologies, a supplier of
software solutions to traders in the mortgage-backed securities market, and OMR
Systems, a leading provider of global trade processing solutions for financial
institutions.
ADP Investor Communications Services (ICS), provides data processing,
computerized vote tabulation, printing, mailing and literature fulfillment
services. In fiscal 1999, ICS processed over 450 million shareholder mailings
for over 14,000 publicly-traded companies on behalf of more than 800 brokerage
firms and banks and 450 mutual fund families. This year, ICS tabulated over 50
million ballots representing more than 330 billion shares. Currently, 60% of all
shares are voted over the telephone, the Internet, or via ProxyEdge(R), our
PC-based electronic voting and recordkeeping product. ICS also distributed more
than 10 million prospectuses to meet the post-sale customer compliance
requirements of our clients. In March 1999, ADP ICS acquired Management
Information Services Corp., a provider of shareholder communication services to
mutual funds and the insurance industry.
Internationally, ADP Brokerage Services serves brokerage and banking
clients in 20 countries, processing their transactions in many currencies.
Thirteen of the top 15 global banks use ADP's transactions processing services.
ADP's Wilco Systems' GlossSM series international trading and settlement systems
offer global multi-instrument, multi-currency trading, settlement and accounting
services. The GlossSM product has specific features for North America, Europe,
Asia and emerging markets. In fiscal 1999, ADP ICS distributed proxies and
tabulated votes on behalf of client holdings in more than 70 countries. In
addition, ICS began processing beneficial proxy services for large cap issuers
in the domestic market of The Netherlands.
DEALER SERVICES
ADP's Dealer Services provides computing, data and professional
services to automobile and truck dealerships, as well as manufacturers,
world-wide. Approximately 18,000 dealers (including more than 7,500 European
automobile dealers and parts wholesalers) and more than 30 vehicle manufacturers
use ADP's on-site systems and communications networks to manage sales,
operations and marketing.
ADP offers clients a service solution that includes computer hardware,
licensed software, software support, network consulting, design and hardware
maintenance services. Clients use ADP's systems to manage business activities
such as accounting, inventory, factory communications, scheduling, finance,
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
franchise dealers and their respective manufacturers. These networks are used
for new vehicle ordering, status inquiry and warranty submission and validation,
parts and vehicle locating, credit application submissions, vehicle repair
estimates, vehicle registration and lienholder information.
Changes in customer expectations and manufacturers' 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. ADP also offers solutions to help improve
employee productivity and training, and provides the tools and services
necessary to improve dealership productivity and profitability. ADP continues to
automate the business processes for its clients through value-added products
such as electronic parts catalogues, repair shop pricing and scheduling, laser
printing, data archiving and document storage, and lease fleet management.
Through its ADP Sandy Group unit, ADP Dealer Services assists automobile dealers
and manufacturers in generating brand loyalty and customer satisfaction with
customized communications programs.
The Millennia3 platform is a key component of ADP's current dealer
management system and its go-forward strategy to deliver Web-based client/server
solutions for both automobile dealers and manufacturers. ADP's acquisition this
year of Dealer Solutions, Inc., a developer of Windows NT(R) dealer management
systems software, is another significant step in ADP's Web-based client/server
strategy.
CLAIMS SERVICES
ADP Claims Services offers a broad line of claims information products
to property and casualty insurance companies, claims adjusters, repair shops and
auto parts recycling facilities. These products help insurers to accurately
estimate auto damage, property damage and bodily injury claims and help repair
shops and recyclers locate parts and manage their operations. The products and
services include automated collision damage repair estimating products for cars
and trucks, integrated electronic digital imaging and communications services,
vehicle valuation services for total losses, collision repair management systems
products, aftermarket and recycled parts locating and pricing services and
related management information products. This year, ADP Claims Services
processed approximately 15 million claim estimates. ADP Claims Services has five
product groups.
Insurance Claims Services offers a broad range of cost containment
products and services to the automobile physical damage and property claims
markets in North America and Europe. Through its Claimsflo(R) brand, it assists
a growing number of clients to streamline their workflow, reduce internal
redundancies, prevent fraud and accelerate the process of claim settlement.
Integrated Medical Solutions offers products and services that allow insurers to
efficiently review medical expenses related to auto accidents and workers'
compensation claims. These products and services are designed to assist clients
in identifying and paying for only medically appropriate treatments. Collision
Repair Services provides products for collision repair facilities. ADP Hollander
provides inventory management and communications products and services to the
automotive recycling industry. The products are designed
to assist clients in creating and capturing operational efficiencies and
expanding their market and sales through electronic parts locating with other
auto recyclers and their business partners. Audatex provides insurance claims
estimating outside of North America.
This year, ADP Claims Services introduced to the Canadian market
Electronic Medical Data Interchange (EMDI). EMDI creates an electronic link
between service providers and insurer to facilitate pre-authorization of
treatment. Payment for authorized services is then made via electronic funds
transfer.
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. 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 that 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, sales forces 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. Most ADP services are offered in Western Europe and some employer
services are now offered in Brazil. Services offered outside the United States
amounted to approximately 18% of fiscal 1999 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 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 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 computing services to over 450,000 clients. Annual
revenues attributable to large client accounts range from $1 million to
approximately $43 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 1% 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 eight 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.
SYSTEMS DEVELOPMENT AND PROGRAMMING
During the fiscal years ended June 30, 1999, 1998 and 1997, ADP spent
$412,380,000, $376,485,000 and $297,794,000, 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 that run
various operating systems. These computer platforms include those offered by
IBM, IBM-compatibles, Compaq Computer Corp. (Digital Equipment Corp.), Apple,
Motorola, Hewlett Packard and Boeing Co. (McDonnell Douglas). The
industry-standard operating systems supporting such computer platforms include
DOS, Windows, NT, OS2/Warp, VSE, OS/390, 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 37,000 persons as of June 30, 1999.
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 5,600,000 square feet in the United
States, Canada, Europe, South America, Asia, Australia and South Africa, expire
at various times up to the year 2016. ADP owns 34 of its
processing facilities and its corporate headquarters complex in Roseland, New
Jersey, which aggregate approximately 2,800,000 square feet.
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
See "Market Price, Dividend Data and Other" on page 17 of the
Registrant's 1999 Annual Report to Shareholders, which information is
incorporated herein by reference. As of September 10, 1999, the Registrant had
32,681 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.
On November 10, 1998, the Registrant issued 5,520 shares of its
Common Stock and on April 9, 1999, the Registrant issued an additional 16,377
shares of its Common Stock to the shareholder of a company acquired by the
Registrant in exchange for all of the issued and outstanding shares of the
capital stock of such company pursuant to the terms of a stock purchase
agreement. On April 22, 1999, the Registrant issued 328 shares of its Common
Stock to the shareholders of a company acquired by the Registrant in
exchange for all of the issued and outstanding shares of the capital stock of
such company pursuant to the terms of a stock purchase agreement. On May 21,
1999, the Registrant issued an aggregate amount of 1,395,651 shares of its
Common Stock to the shareholders of a company acquired by the Registrant in
exchange for all of the issued and outstanding shares of the capital stock of
such company in a pooling-of-interests transaction pursuant to the terms of a
merger agreement. On May 28, 1999, the Registrant issued 2,914,135 shares of
its Common Stock to the shareholders of a company acquired by the Registrant
in exchange for all of the issued and outstanding shares of the capital stock of
such company in a pooling-of-interests transaction pursuant to the terms of a
merger agreement. The Registrant issued the foregoing shares of Common Stock
without registration under the Securities Act of 1933, as amended, in
reliance upon the exemption therefrom set forth in Section 4(2) of such Act,
relating to sales by an issuer not involving a public offering.
ITEM 6. SELECTED FINANCIAL DATA
See "Selected Financial Data" on page 15 of the Registrant's 1999
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 16-17 of the
Registrant's 1999 Annual Report to Shareholders, the Letter to Shareholders on
pages 3-4 of such report and the business descriptions on pages 6-13 of such
report, which information is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Registrant's investment portfolio consists primarily of high grade
fixed income investments, such as AA or better rated fixed income municipal
instruments, maturing in less than 7 years, and such portfolio does not subject
the Registrant to material market risk exposures.
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 1999 Annual
REPORT TO SHAREHOLDERS
Quarterly Financial Results (unaudited) for
the two years ended June 30, 1999 27
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
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 54 Vice President, General 1977
Counsel and Secretary
Richard C. Berke 54 Vice President, Human 1989
Resources
Gary C. Butler 52 President and Chief 1975
Operating Officer
Richard J. Daly 46 Group President, 1989
Brokerage Services
G. Harry Durity 52 Vice President, 1994
Worldwide Business
Development
Russell P. Fradin 44 Group President, 1996
Employer Services
Eugene A. Hall 43 Senior Vice President 1998
Richard J. Haviland 53 Chief Financial Officer 1982
and Vice President
John Hogan 51 Group President, 1993
Brokerage Services
S. Michael Martone 51 Group President, Dealer 1987
Services
Arthur F. Weinbach 56 Chairman and 1980
Chief Executive Officer
Messrs. Benson, Berke, Butler, Daly, Durity, Haviland, Hogan, Martone
and Weinbach have each been employed by ADP in senior executive positions for
more than the past five years.
Russell P. Fradin joined ADP in 1996. Prior to his promotion to Group
President, Employer Services, 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. Prior to
joining ADP, he was a senior partner of McKinsey & Company and had been
associated with that firm for 16 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
1999 Annual Meeting of Stockholders, which information is incorporated herein by
reference.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During the fiscal year ended June 30, 1999, no directors or officers
submitted late filings under Section 16(a) of the Exchange Act.
ITEM 11. EXECUTIVE COMPENSATION
See "Compensation of Executive Officers" in the Proxy Statement for
Registrant's 1999 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 1999 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 1999 Annual Meeting of Stockholders, which
information is incorporated herein by reference.
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 1999 Annual
REPORT TO SHAREHOLDERS
----------------------
Independent Auditors' Report 29
Consolidated Balance Sheets - June 30, 1999 and 1998 19
Statements of Consolidated Earnings - years
ended June 30, 1999, 1998 and 1997 18
Statements of Consolidated Shareholders' Equity - years
ended June 30, 1999, 1998 and 1997 20
Statements of Consolidated Cash Flows - years
ended June 30, 1999, 1998 and 1997 21
Notes to Consolidated Statements 22 - 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
Independent Auditors' Report on Schedule 14
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 November 11, 1998 -
incorporated by reference to Exhibit 3.1 to Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended December 31, 1998
3.2 - By-Laws as currently in effect - incorporated by reference to Exhibit (3)-#2 to
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1997
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 1, 1996 between Automatic Data Processing, Inc.
and Arthur F. Weinbach - incorporated by reference to Exhibit 10.2 to Registrant's
Annual Report on Form 10-K for the fiscal year ended June 30, 1996 (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 - 1981 Key Employees' Stock Option Plan - incorporated by reference to Registrant's
Registration Statement No. 2-75287 on Form S-8 (Management Compensatory Plan)
10.3(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)
10.4 - Key Employees' Restricted Stock Plan - incorporated by reference to Registrant's
Registration Statement No. 33-25290 on Form S-8 (Management Compensatory Plan)
10.5 - 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)
10.5(a) - Amendment to Supplemental Officers' Retirement Plan (Management Compensatory 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
10.6 - 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)
10.6(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)
10.7 - 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)
10.7(a) - Amendment to 1990 Key Employees' Stock Option Plan (Management Compensatory Plan) -
incorporated by reference to Exhibit 10(7)(a) to Registrant's Annual Report on Form
10-K for the fiscal year ended June 30, 1997
10.8 - 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)
10.9 - 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)
10.10 - 2000 Key Employees' Stock Option Plan (Management Compensatory Plan)
11 - Schedule of Calculation of Earnings Per Share
13 - Pages 3-29 of the 1999 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
27 - Financial Data Schedule
(b) None.
INDEPENDENT AUDITORS' REPORT ON SCHEDULE
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, 1999 and 1998, and for each
of the three years in the period ended June 30, 1999, and have issued our
report thereon dated August 10, 1999; such consolidated financial statements
and report are included in your 1999 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 10, 1999
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
beginning costs and accounts- Deductions- at end
of period expenses describe describe of period
--------- -------- -------- -------- ---------
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
Year ended June 30, 1998:
Allowance for doubtful accounts:
Current $40,374 $ 17,677 $ 907 (B) $(13,363) $ 45,595
Long-term $20,370 $ 1,345 $ -- $ (7,284) (A) $ 14,431
Year ended June 30, 1997:
Allowance for doubtful accounts:
Current $35,224 $ 13,787 $ 4,067 (B) $(12,704) $ 40,374
Long-term $25,727 $ 1,817 $ -- $ (7,174) (A) $ 20,370
(A) Doubtful accounts written off, less recoveries on accounts previously
written off. (B) Acquired in purchase/pooling transactions.
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 21, 1999 By: /s/ ARTHUR F. WEINBACH
----------------------
Arthur F. Weinbach
Chairman 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 Chairman, Chief Executive September 21, 1999
- ----------------------------- Officer and Director
(Arthur F. Weinbach) (Principal Executive Officer)
/s/ RICHARD J. HAVILAND Chief Financial Officer September 21, 1999
- ----------------------------- (Principal Financial Officer)
(Richard J. Haviland)
/s/ GARY C. BUTLER Director September 21, 1999
- -----------------------------
(Gary C. Butler)
/s/ JOSEPH A. CALIFANO, JR. Director September 21, 1999
- -----------------------------
(Joseph A. Califano, Jr.)
/s/ LEON G. COOPERMAN Director September 21, 1999
- -----------------------------
(Leon G. Cooperman)
/s/ GEORGE H. HEILMEIER Director September 21, 1999
- -----------------------------
(George H. Heilmeier)
Director September 21, 1999
- -----------------------------
(Ann Dibble Jordan)
/s/ HARVEY M. KRUEGER Director September 21, 1999
- -----------------------------
(Harvey M. Krueger)
Director September 21, 1999
- -----------------------------
(Frederic V. Malek)
/s/ HENRY TAUB Director September 21, 1999
- -----------------------------
(Henry Taub)
/s/ LAURENCE A. TISCH Director September 21, 1999
- -----------------------------
(Laurence A. Tisch)
/s/ JOSH S. WESTON Director September 21, 1999
- -----------------------------
(Josh S. Weston)