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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>/in/edgar/work/20000912/0000008670-00-000026/0000008670-00-000026.txt : 20000922
<SEC-HEADER>0000008670-00-000026.hdr.sgml : 20000922
ACCESSION NUMBER: 0000008670-00-000026
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 7
CONFORMED PERIOD OF REPORT: 20000630
FILED AS OF DATE: 20000912
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: AUTOMATIC DATA PROCESSING INC
CENTRAL INDEX KEY: 0000008670
STANDARD INDUSTRIAL CLASSIFICATION: [7374
] IRS NUMBER: 221467904
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0630
</COMPANY-DATA>
FILING VALUES:
FORM TYPE: 10-K
SEC ACT:
SEC FILE NUMBER: 001-05397
FILM NUMBER: 721361
</FILING-VALUES>
BUSINESS ADDRESS:
STREET 1: ONE ADP BOULVARD
CITY: ROSELAND
STATE: NJ
ZIP: 07068
BUSINESS PHONE: 2019945000
</BUSINESS-ADDRESS>
MAIL ADDRESS:
STREET 1: ONE ADP BOULEVARD
CITY: ROSELAND
STATE: NJ
ZIP: 07068
</MAIL-ADDRESS>
</FILER>
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>FORM 10-K
<TEXT>
- --------------------------------------------------------------------------------
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, 2000
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 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: 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
--- ---
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. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of September 6, 2000 was approximately $38,792,200,000. On
September 6, 2000, there were 630,126,931 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
<S> <C>
Portions of the Registrant's 2000 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 14, 2000. Part III
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Part I
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 11 of the "Notes to Consolidated Financial
Statements" contained in ADP's 2000 Annual Report to Shareholders, which
information is incorporated herein by reference. The following summary describes
ADP's activities.
Employer Services
ADP Employer Services offers a comprehensive range of payroll, human
resources, benefits administration, time and attendance, tax filing and
reporting, professional employer organization ("PEO"), compliance management
(e.g., new hire reporting and wage garnishment processing) and retirement plan
services to 450,000 employers in the United States, Canada, Europe and Latin
America. 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 increasingly, online companies through which ADP's
services are marketed to their customers. In fiscal 2000, 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%. Further, with the acquisition of PayConnect in July of 2000,
ADP entered into the payroll services market of Australia, and currently
provides payroll and HR solutions to over 7,500 clients in Australia.
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 services process federal, state and local payroll taxes on
behalf of ADP clients and remit such taxes to the appropriate taxing authorities
when due. 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 and Latin America, ADP Employer Services provides full
departmental outsourcing of payroll services.
ADP 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 30% of Employer Services' revenue during the past fiscal year was
attributable to its Emerging Business Services (companies with fewer than 100
employees); approximately 34% of such revenue was attributable to Major Accounts
(companies with between 100 and 999 employees); and approximately 25% of such
revenue was attributable to National Accounts (companies with 1,000 or more
employees).
ADP's human resource ("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.
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 ADP launched its eBusiness
2
<PAGE>
Services unit to provide online payroll, HR, 401(k) and other services to
smaller companies that use the Internet to staff, manage, pay and retain their
employees. ADP also introduced ADP Enterprise Payroll, an Internet-based system
with self-service features for large businesses. Clients can now use ADP
Connection(TM) to interface ADP's payroll and tax filing solutions with
enterprise resource planning applications from Oracle(R), SAP and PeopleSoft(R).
ADP is also developing an Internet-based payroll, benefits and HR management
system with self-service features for the middle market.
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
(1000 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. 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.
Further, as part of ADP's initiatives to develop online products and services,
this year ADP acquired Business Management Software, LTD, a United Kingdom-based
software developer and long-term partner of ADP, specializing in the
development of payroll and HR applications.
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 2000 federal, state and
local tax agencies, from the Internal Revenue Service to local town governments.
In fiscal 2000, the ADP Tax and Financial Service Center processed over 17
million federal and other employer payroll tax returns.
In 1999, ADP became the second largest PEO in the United States with
the acquisition of The Vincam Group, Inc. A PEO provides a comprehensive,
bundled outsourcing solution, including payroll, HR, benefits and workers'
compensation to its clients. ADP's combined PEO business, called TotalSource(R),
has 26 offices located in 11 states and supports approximately 85,000 work-site
employees in 48 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. In the last fiscal year, ADP
enhanced its position as a leading benefits administration provider with the
acquisition of netBOA, Inc., a provider of COBRA administration services.
The continued increase in multinational companies makes payroll and
human resource management services a global opportunity. ADP Europe provides
payroll solutions to nearly 24,000 clients in nine European countries and is the
only Pan-European service provider. 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. As this
business grows, ADP's Global Business Services 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.
3
<PAGE>
Brokerage Services
ADP Brokerage Services provides securities transaction processing,
broker productivity applications and investor communication services to the
financial services industry. These services include bank and brokerage
back-office and related financial computing services such as trade processing,
automated inquiry, reporting and record keeping services for virtually all
financial instruments including foreign currency, fixed income, equities,
commodities and derivatives.
ADP 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, specialty trading firms,
and other providers of financial services.
In fiscal 2000, ADP processed a significant portion of U.S. and
Canadian securities transactions, with combined daily volumes of more than 1.2
million trades per day, up 50% from the prior year. In addition, ADP served the
North American securities transaction processing needs of most large global
banks.
This year, ADP processed over 25% of all online trades in North America
and expanded its presence as a leading service provider of Internet-based
brokerage services. ADP also initiated new relationships with Web Street
Securities and Millennium Clearing Company LLC, a subsidiary of National
Discount Brokers Group, Inc.
ADP Brokerage Services also provides computerized proxy vote tabulation
and shareholder communication, distribution and fulfillment services, including
Internet-enabled products and services. In fiscal 2000, ADP handled over 680
million shareholder communications on behalf of its clients worldwide, nearly
35% more than fiscal 1999. It also more than doubled Internet distribution of
shareholder communications in fiscal 2000. ADP also signed Morgan Stanley Dean
Witter to a new multi-year investor communication services contract. This year,
ADP created the IRexpress.com(SM) Internet platform suite of services that
allows investor relations professionals to manage their process, access
institutional ownership of information, and track institutional portfolios
online.
Internationally, ADP Brokerage Services integrated the delivery of
multiple products and services through its Global Processing Solution. ADP now
serves brokerage and banking clients in 25 countries, providing global trade
processing and settlement systems for international securities in multiple
currencies. In fiscal 2000, ADP's Wilco Systems strengthened its ability to
adapt to market changes by setting up a development center in Hyderabad,
India. In fiscal 2000, ADP also launched initiatives to continue serving
the emerging online brokerage markets internationally, developing a new
Internet-enabled trading solution for the European market, with global
straight through processing capabilities, as well as partnering with a
leading provider of end-to-end on-line retail financial services enabling
ADP to offer turnkey Internet solutions. In addition, ADP maintained ISO
9002 certification for shareholder information processing, an international
standard for the highest quality.
In June 2000, ADP acquired Cunningham Graphics International, Inc., a
provider of a wide range of graphic communications services to financial
services, insurance, healthcare, and telecommunication firms, as well as
publishing houses. These services include the production and distribution of
time sensitive analytical research and marketing materials, as well as general
commercial and on-demand printing services. Cunningham Graphics operates in
select international markets through its facilities in the United States, United
Kingdom, Canada, Hong Kong, and Singapore.
4
<PAGE>
Dealer Services
ADP Dealer Services provides e-business and integrated computing
solutions for motor vehicle (car and truck) retailers and their manufacturers
worldwide. Approximately 40% of the automotive retailers in North America (about
20% globally) and more than 30 vehicle manufacturers use ADP's on-site systems
and communications networks to manage sales, operations and marketing, with over
200,000 installed applications.
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.
In fiscal 2000, ADP Dealer Services formed ChoiceParts, LLC with ADP
Claims Services and other partners to establish an efficient parts procurement
marketplace for auto retailers and collision repair centers. ADP's acquisition
last year of Dealer Solutions, Inc., a developer of Windows NT(R) dealer
management systems software, is another significant step in ADP's Internet-based
strategy. This past fiscal year, ADP launched DealerSuite.com(SM), an e-business
portal that provides dealers with quick access to a wide range of Internet-based
products, services and tools, including consumer finance sources, online
training, and ADP customer service. ADP also introduced myautogarage.com(SM),
ADP's Internet initiative with IBM that links dealers and manufacturers with
vehicle owners to create unique brand loyalty relationships.
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 the following: repair estimating applications and databases for
the property and casualty, and collision repair industries, including
wireless-enabled, digital imaging, and complete workflow services; total loss
vehicle valuations; body shop management systems; parts locator systems; and
medical cost containment applications and services for the auto injury and
workers' compensation markets.
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 offered in Brazil and Australia. 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,
5
<PAGE>
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 revenue.
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 nearly 500,000 clients. No single client
accounts for revenues in excess of 1% of annual consolidated 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 about 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.
6
<PAGE>
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.
Systems Development and Programming
During the fiscal years ended June 30, 2000, 1999 and 1998, ADP spent
$460 million, $412 million and $376 million, 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
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 40,000 persons as of June 30, 2000.
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 5,800,000 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 30 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
7
<PAGE>
Part II
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 2000 Annual Report to Shareholders, which information is
incorporated herein by reference. As of September 6, 2000, the Registrant had
33,985 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 July 6, 1999, the Registrant issued 6,317 shares of its Common Stock
in respect of an earnout paid to certain shareholders of a company previously
acquired by the Registrant in exchange for all of the issued and outstanding
shares of such company pursuant to a stock acquisition agreement dated April 28,
1998. On December 23, 1999, the Registrant issued 178,228 shares of its Common
Stock in respect of an earnout paid to certain shareholders of a company
previously acquired by the Registrant in exchange for all of the issued and
outstanding shares of such company pursuant to a stock purchase agreement dated
February 11, 1998. On June 30, 2000, the Registrant issued 293,325 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 share purchase 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" contained in the Registrant's 2000 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 2000 Annual Report to Shareholders, which information is
incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Approximately half 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 half of the Registrant's
investment portfolio is invested in fixed-income securities, with maturities up
to five and a half 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.
8
<PAGE>
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:
Quarterly Financial Results (unaudited) for the two years ended June
30, 2000 (see Note 12 of the "Notes to Consolidated Financial
Statements" contained in ADP's 2000 Annual Report to Shareholders)
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
9
<PAGE>
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:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Employed by
Name Age Position ADP Since
- -------------------- --- -------------------------- ----------
John D. Barfitt 47 President, Claims 1979
Services
James B. Benson 55 Vice President, General 1977
Counsel and Secretary
Richard C. Berke 55 Vice President, Human 1989
Resources
Gary C. Butler 53 President and Chief 1975
Operating Officer
Raymond L. Colotti 54 Vice President and 1995
Treasurer
Richard J. Daly 47 Group President, 1989
Brokerage Services
Richard A. Douville 45 Vice President, 1999
Finance
G. Harry Durity 53 Vice President, 1994
Worldwide Business
Development
Karen E. Dykstra 41 Vice President and 1981
Controller
Russell P. Fradin 45 Group President, 1996
Employer Services - North America
Eugene A. Hall 44 Senior Vice President and 1998
President of Financial
and Technology Services,
Employer Services - North America
Richard J. Haviland 54 Chief Financial Officer 1982
and Vice President
10
<PAGE>
John Hogan 52 Group President, 1993
Brokerage Services
Campbell Langdon 39 Vice President, 2000
Strategic Development
S. Michael Martone 52 Group President, Dealer 1987
Services
Arthur F. Weinbach 57 Chairman and 1980
Chief Executive Officer
</TABLE>
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.
John D. Barfitt joined ADP in 1979. Prior to his promotion to
President, Claims Services, he served as Senior Vice President - Automotive
Claims Services at ADP from 1996 to 1998 and Senior Vice President - Value Added
Services at ADP from 1994 to 1996.
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 and Controller in 1998, she served as 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 was a Senior Vice President and Chief Financial Officer
of United States Surgical Corporation for six years.
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
2000 Annual Meeting of Stockholders, which information is incorporated herein by
reference.
11
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
See "Section 16(a) Beneficial Ownership Reporting Compliance" in the
Proxy Statement for Registrant's 2000 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 2000 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 2000 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 2000 Annual Meeting of Stockholders, which
information is incorporated herein by reference.
12
<PAGE>
Part IV
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 2000 Annual Report to Shareholders are
also included in Part II, Item 8:
Statements of Consolidated Earnings - years
ended June 30, 2000, 1999 and 1998
Consolidated Balance Sheets - June 30, 2000 and 1999
Statements of Consolidated Shareholders' Equity - years ended June
30, 2000, 1999 and 1998
Statements of Consolidated Cash Flows - years ended June 30, 2000,
1999 and 1998
Notes to Consolidated Financial Statements
Report of Management
Independent Auditors' Report
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 16
Schedule II - Valuation and Qualifying Accounts 17
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
13
<PAGE>
3.2 - By-Laws as currently in effect (amended May 15, 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 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)
10.4 - 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 -
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)
10.6 - 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 -
incorporated by reference to Exhibit 10(7)(a) to
Registrant's Annual Report on Form
14
<PAGE>
10-K for the fiscal year ended June 30, 1997
(Management Compensatory Plan)
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 - 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)
11 - Schedule of Calculation of Earnings Per Share
13 - Pages 18 - 32 of the 2000 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.
15
<PAGE>
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, 2000 and 1999, and for each of
the three years in the period ended June 30, 2000, and have issued our report
thereon dated August 14, 2000; such consolidated financial statements and report
are included in your 2000 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 14, 2000
16
<PAGE>
AUTOMATIC DATA PROCESSING, INC.
AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
<TABLE>
<CAPTION>
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
--------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
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
Year ended June 30, 1998:
Allowance for doubtful accounts:
Current $40,374 $ 17,677 $ 907 (B) $ (13,363) (A) $ 45,595
Long-term $20,370 $ 1,345 $ -- $ (7,284) (A) $ 14,431
Deferred Tax Valuation Allowance $22,776 $ -- $ (137)(C) $ -- $ 22,639
(A) Doubtful accounts written off, less recoveries on accounts previously written off.
(B) Acquired in purchase/pooling transactions.
(C) Related to foreign exchange fluctuation.
</TABLE>
17
<PAGE>
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 12, 2000 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.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ------- ------
<S> <C> <C>
/s/ Arthur F. Weinbach Chairman, Chief Executive September 12, 2000
- ---------------------------------
(Arthur F. Weinbach) Officer and Director
(Principal Executive Officer)
/s/ Richard J. Haviland Chief Financial Officer September 12, 2000
- ---------------------------------
(Richard J. Haviland) (Principal Financial Officer)
/s/ Gary C. Butler Director September 12, 2000
- ---------------------------------
(Gary C. Butler)
/s/ Joseph A. Califano, Jr. Director September 12, 2000
- ---------------------------------
(Joseph A. Califano, Jr.)
/s/ Leon G. Cooperman Director September 12, 2000
- ---------------------------------
(Leon G. Cooperman)
/s/ George H. Heilmeier Director September 12, 2000
- ---------------------------------
(George H. Heilmeier)
/s/ Ann Dibble Jordan Director September 12, 2000
- ---------------------------------
(Ann Dibble Jordan)
18
<PAGE>
/s/ Harvey M. Krueger Director September 12, 2000
- ---------------------------------
(Harvey M. Krueger)
/s/ Frederic V. Malek Director September 12, 2000
- ---------------------------------
(Frederic V. Malek)
/s/ Henry Taub Director September 12, 2000
- ---------------------------------
(Henry Taub)
/s/ Laurence A. Tisch Director September 12, 2000
- ---------------------------------
(Laurence A. Tisch)
/s/ Josh S. Weston Director September 12, 2000
- ---------------------------------
(Josh S. Weston)
</TABLE>
19
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.(II)
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>EXHIBIT 3.2 BY-LAWS
<TEXT>
Exhibit 3.2
AUTOMATIC DATA PROCESSING, INC.
BY-LAWS
As Amended and Restated on March 24, 1997
(further amended on May 15, 2000)
<PAGE>
<TABLE>
<CAPTION>
AUTOMATIC DATA PROCESSING, INC.
BY-LAWS
TABLE OF CONTENTS
SECTION PAGE
<S> <C> <C>
ARTICLE I STOCKHOLDERS 1
Section 1.01. Annual Meetings 1
Section 1.02. Special Meetings 1
Section 1.03. Notice of Meetings; Waiver 1
Section 1.04. Quorum 2
Section 1.05. Voting 2
Section 1.06. Voting by Ballot 2
Section 1.07. Adjournment 2
Section 1.08. Proxies 2
Section 1.09. Organization; Procedure 3
Section 1.10. Inspectors of Elections 3
Section 1.11. Opening and Closing of Polls 4
Section 1.12. Consent of Stockholders in Lieu of Meeting 4
ARTICLE II BOARD OF DIRECTORS 4
Section 2.01. General Powers 4
Section 2.02. Number and Term of Office 4
Section 2.03. Election of Directors 5
Section 2.04. Annual and Regular Meetings 5
Section 2.05. Special Meetings; Notice 5
Section 2.06. Quorum; Voting 5
Section 2.07. Adjournment 5
Section 2.08. Action Without a Meeting 6
Section 2.09. Regulations; Manner of Acting 6
Section 2.10. Action by Telephonic Communications 6
Section 2.11. Resignations 6
Section 2.12. Removal of Directors 6
Section 2.13. Vacancies and Newly Created Directorships 6
Section 2.14. Compensation 7
Section 2.15. Reliance on Accounts and Reports, etc. 7
Section 2.16. Honorary Directors 7
<PAGE>
ARTICLE III EXECUTIVE COMMITTEE, AUDIT COMMITTEE,
COMPENSATION COMMITTEE AND OTHER COMMITTEES 7
Section 3.01. How Constituted 7
Section 3.02. Powers; Duties and Responsibilities 8
Section 3.03. Proceedings 10
Section 3.04. Quorum and Manner of Acting 10
Section 3.05. Action by Telephonic Communications 10
Section 3.06. Absent or Disqualified Members 10
Section 3.07. Resignations 10
Section 3.08. Removal 11
Section 3.09. Vacancies 11
ARTICLE IV OFFICERS 11
Section 4.01. Number 11
Section 4.02. Election 11
Section 4.03. Salaries 11
Section 4.04. Removal and Resignation; Vacancies 11
Section 4.05. Authority and Duties of Officers 12
Section 4.06. Chairman 12
Section 4.07. President 12
Section 4.08. Vice Presidents 12
Section 4.09. Secretary 12
Section 4.10. Treasurer 13
Section 4.11. Assistant Secretary and Assistant Treasurers 13
Section 4.12. Security 13
ARTICLE V CAPITAL STOCK 13
Section 5.01. Certificates of Stock, Uncertificated Shares 13
Section 5.02. Signatures; Facsimile 14
Section 5.03. Lost, Stolen or Destroyed Certificates 14
Section 5.04. Transfer of Stock 14
Section 5.05. Record Date 14
Section 5.06. Registered Stockholders 15
Section 5.07. Transfer Agent and Registrar 15
ARTICLE VI INDEMNIFICATION 15
Section 6.01. Nature of Indemnity 15
Section 6.02. Successful Defense 16
Section 6.03. Determination that Indemnification is Proper 16
Section 6.04. Advance Payment of Expenses 16
<PAGE>
Section 6.05. Procedure for Indemnification of Directors & Officers 17
Section 6.06. Survival; Preservation of Other Rights 17
Section 6.07. Insurance 18
Section 6.08. Severability 18
ARTICLE VII GENERAL PROVISIONS 18
Section 7.01. Dividends 18
Section 7.02. Reserves 19
Section 7.03. Execution of Instruments 19
Section 7.04. Corporate Indebtedness 19
Section 7.05. Fiscal Year 19
Section 7.06. Seal 19
Section 7.07. Books and Records; Inspection 19
ARTICLE VIII AMENDMENT OF BY-LAWS 20
Section 8.01. Amendment 20
ARTICLE IX CONSTRUCTION 20
Section 9.01. Construction 20
</TABLE>
<PAGE>
AUTOMATIC DATA PROCESSING, INC.
BY-LAWS
As Amended and Restated on March 24, 1997
(further amended on May 15, 2000)
ARTICLE I
STOCKHOLDERS
Section 1.01. Annual Meetings. The annual meeting of the stockholders of
----------------
the Corporation for the election of directors and for the transaction of such
other business as properly may come before such meeting shall be held at such
place, either within or without the State of Delaware, and at such date and
hour, as may be fixed from time to time by resolution of the Board of Directors
and set forth in the notice or waiver of notice of the meeting. [Sections
211(a), (b).]1
Section 1.02. Special Meetings. Special meetings of the stockholders may be
----------------
called at any time by the Chief Executive Officer or the Secretary or by the
Board of Directors. A special meeting shall be called by the Chief Executive
Officer or by the Secretary immediately upon receipt of a written request
therefor by stockholders holding in the aggregate not less than one-third in
number of the outstanding shares of the Corporation at the time entitled to vote
at any meeting of the stockholders. Such special meetings of the stockholders
shall be held at such places, within or without the State of Delaware, as shall
be specified in the respective notices or waivers of notice thereof. [Section
211(d).]
Section 1.03. Notice of Meetings; Waiver. The Secretary or any Assistant
---------------------------
Secretary shall cause written notice of the place, date and hour of each meeting
of the stockholders, and, in the case of a special meeting, the purpose or
purposes for which such meeting is called, to be given personally or by mail,
not less than ten nor more than sixty days prior to the meeting, to each
stockholder of record entitled to vote at such meeting. If such notice is
mailed, it shall be deemed to have been given to a stockholder when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the record of stockholders of the Corporation, or, if
he or she shall have filed with the Secretary of the Corporation a written
request that notices to him or her be mailed to some other address, then
directed to him or her at such other address. Such further notice shall be given
as may be required by law.
No notice of any meeting of stockholders need be given to any stockholder
who submits a signed waiver of notice, whether before or after the meeting.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the stockholders need be
____________________
[FN]
1 Citations are to the General Corporation Law of the State of Delaware as in
effect on January 1, 1996 (the "GCL"). The citations are inserted for reference
only, and do not constitute a part of the By-Laws.
</FN>
<PAGE>
specified in a written waiver of notice. The attendance of any stockholder at a
meeting of stockholders shall constitute a waiver of notice of such meeting,
except when the stockholder attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
on the ground that the meeting is not lawfully called or convened. [Sections
222, 229.]
Section 1.04. Quorum. Except as otherwise required by law or by the
------
Certificate of Incorporation, the presence in person or by proxy of the holders
of record of a majority of the shares entitled to vote at a meeting of
stockholders shall constitute a quorum for the transaction of business at such
meeting. [Section 216.]
Section 1.05. Voting. If, pursuant to Section 5.05 of these By-Laws, a
------
record date has been fixed, every holder of record of shares entitled to vote at
a meeting of stockholders shall be entitled to one vote for each share
outstanding in his or her name on the books of the Corporation at the close of
business on such record date. If no record date has been fixed, then every
holder of record of shares entitled to vote at a meeting of stockholders shall
be entitled to one vote for each share of stock standing in his or her name on
the books of the Corporation at the close of business on the day next preceding
the day on which notice of the meeting is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. Except as otherwise required by law or by the Certificate of Incorporation
or by these By-Laws, the vote of a majority of the shares represented in person
or by proxy at any meeting at which a quorum is present shall be sufficient for
the transaction of any business at such meeting. [Sections 212(a), 213, 216.]
Section 1.06. Voting by Ballot. No vote of the stockholders need be taken
----------------
by written ballot unless demanded by the holders of at least fifteen percent
(15%) of the shares represented in person or by proxy at any meeting at which a
quorum is present or as otherwise required by law. Any vote which need not be
taken by ballot may be conducted in any manner approved by the meeting.
Section 1.07. Adjournment. If a quorum is not present at any meeting of the
-----------
stockholders, the holders of a majority of the shares present in person or by
proxy shall have the power to adjourn any such meeting from time to time until a
quorum is present. Notice of any adjourned meeting of the stockholders of the
Corporation need not be given if the place, date and hour thereof are announced
at the meeting at which the adjournment is taken, provided, however, that if the
adjournment is for more than thirty days, or if after the adjournment a new
record date for the adjourned meeting is fixed pursuant to Section 5.05 of these
By-Laws, a notice of the adjourned meeting, conforming to the requirements of
Section 1.03 of these By-Laws, shall be given to each stockholder of record
entitled to vote at such meeting. At any adjourned meeting at which a quorum is
present, any business may be transacted that might have been transacted on the
original date of the meeting. [Section 222(c).]
Section 1.08. Proxies. Any stockholder entitled to vote at any meeting of
-------
the stockholders or to express consent to or dissent from corporate action in
writing without a meeting may authorize another person or persons to vote at any
such meeting and express such
2
<PAGE>
consent or dissent for him or her by proxy. Every proxy shall be revocable at
the pleasure of the stockholder executing it, except in those cases where
applicable law provides that a proxy shall be irrevocable. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy or by filing
another duly executed proxy bearing a later date with the Secretary. [Section
212.]
Section 1.09. Organization; Procedure. At every meeting of stockholders the
-----------------------
presiding officer shall be the Chairman or, in the event of his or her absence
or should the Chairman in his or her discretion determine not to preside, in the
following order of availability, the Chief Executive Officer, the President, or
a Vice President, and in the case more than one Vice President shall be present,
that Vice President designated by the Board of Directors (or in the absence of
any such designation, the most senior Vice President, based on title). In case
none of the foregoing officers designated to be the presiding officer shall be
present, a presiding officer shall be chosen by the vote of a majority of the
shares represented in person or by proxy and entitled to vote at the meeting.
The Secretary, or in the event of his or her absence or disability, the
Assistant Secretary, if any, or if there be no Assistant Secretary, in the
absence of the Secretary, an appointee of the presiding officer, shall act as
secretary of the meeting. The order of business and all other matters of
procedure at every meeting of stockholders may be determined by such presiding
officer.
Section 1.10. Inspectors of Elections. Preceding any meeting of the
-------------------------
stockholders, the Board of Directors shall appoint one or more persons to act as
Inspectors of Elections, and may designate one or more alternate inspectors. In
the event no inspector or alternate is able to act, the person presiding at the
meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before entering upon the discharge of the duties of an inspector,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his or her ability. The
inspector shall:
(a) ascertain the number of shares outstanding and the voting
power of each;
(b) determine the shares represented at a meeting and the
validity of proxies and ballots;
(c) count all votes and ballots;
(d) determine and retain for a reasonable period a record of
the disposition of any challenge made to any determination by the
inspectors; and
(e) certify his or her determination of the number of shares
represented at the meeting, and his or her count of all votes and
ballots.
The inspector may appoint or retain other persons or entities to assist in the
performance of the duties of inspector. [Sections 231(a), (b).]
3
<PAGE>
Section 1.11. Opening and Closing of Polls. The date and time for the
-------------------------------
opening and the closing of the polls for each matter to be voted upon at a
stockholder meeting shall be announced at the meeting. The inspector of the
election shall be prohibited from accepting any ballots, proxies or votes or any
revocations thereof or changes thereto after the closing of the polls, unless
the Court of Chancery upon application by a stockholder shall determine
otherwise. [Section 231(c).]
Section 1.12. Consent of Stockholders in Lieu of Meeting. To the fullest
-------------------------------------------
extent permitted by law, whenever the vote of stockholders at a meeting thereof
is required or permitted to be taken for or in connection with any corporate
action, such action may be taken without a meeting, without prior notice and
without a vote of stockholders, if a consent or consents in writing, setting
forth the action so taken, shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted and shall be delivered to the Corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the Corporation having custody of the
book in which proceedings of meetings of stockholders are recorded.
Every written consent shall bear the date of signature of each stockholder
who signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty days of the earliest
dated consent delivered in the manner required by law to the Corporation,
written consents signed by a sufficient number of holders to take action are
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing and who, if the action had been
taken at a meeting, would have been entitled to notice of the meeting if the
record date for such meeting had been the date that written consents signed by a
sufficient number of stockholders to take the action were delivered to the
Corporation as provided in this Section 1.12. [Section 228(a), (c), (d).]
ARTICLE II
BOARD OF DIRECTORS
Section 2.01. General Powers. Except as may otherwise be provided by law,
--------------
by the Certificate of Incorporation or by these By-Laws, the property, affairs
and business of the Corporation shall be managed by or under the direction of
the Board of Directors and the Board of Directors may exercise all the powers of
the Corporation. [Section 141(a).]
Section 2.02. Number and Term of Office. The number of directors
-----------------------------
constituting the entire Board of Directors shall be between 9 and 13, which
number may be modified from time to time by resolution of the Board of
Directors, but in no event shall the number of directors be
4
<PAGE>
less than three. No person shall be nominated by the Board of Directors to serve
as a director after he or she has passed his or her 72nd birthday, unless the
Executive Committee of the Board of Directors has voted (in its capacity as the
nominating committee), on an annual basis, to waive, or continue to waive, the
mandatory retirement age of such person as a director. Each director (whenever
elected) shall hold office until his or her successor has been duly elected and
qualified, or until his or her earlier death, resignation or removal. [Section
141(b).]
Section 2.03. Election of Directors. Except as otherwise provided in
-----------------------
Sections 2.12 and 2.13 of these By-Laws, the directors shall be elected at each
annual meeting of the stockholders. If the annual meeting for the election of
directors is not held on the date designated therefor, the directors shall cause
the meeting to be held as soon thereafter as convenient. At each meeting of the
stockholders for the election of directors, provided a quorum is present, the
directors shall be elected by a plurality of the votes validly cast in such
election. [Sections 211(b), (c), 216.]
Section 2.04. Annual and Regular Meetings. The annual meeting of the Board
---------------------------
of Directors for the purpose of electing officers and for the transaction of
such other business as may come before the meeting shall be held as soon as
possible following adjournment of the annual meeting of the stockholders at the
place of such annual meeting of the stockholders. Notice of such annual meeting
of the Board of Directors need not be given. The Board of Directors from time to
time may by resolution provide for the holding of regular meetings and fix the
place (which may be within or without the State of Delaware) and the date and
hour or such meetings. Notice of regular meetings need not be given. [Section
141(g).]
Section 2.05. Special Meetings; Notice. Special meetings of the Board of
-------------------------
Directors may be called by the Chairman, the Chief Executive Officer, the
Secretary or an Assistant Secretary, if any, and, on the written request of any
two directors, the Secretary or an Assistant Secretary shall call such meeting.
Special meetings shall be held at such place (within or without the State of
Delaware), date and hour as may be specified in the respective notices or
waivers of notice of such meetings. Special meetings of the Board of Directors
may be called on twenty-four hours' notice, if notice is given to each director
personally or by telephone or telegram, or on five days' notice, if notice is
mailed to each director, addressed to him or her at his or her usual place of
business. Notice of any special meeting need not be given to any director who
attends such meeting without protesting the lack of notice to him or her, prior
to or at the commencement of such meeting, or to any director who submits a
signed waiver of notice, whether before or after such meeting, and any business
may be transacted thereat. [Sections 141(g), 229.]
Section 2.06. Quorum; Voting. At all meetings of the Board of Directors,
---------------
the presence of at least one-third of the total authorized number of directors,
but not less than two directors, shall constitute a quorum for the transaction
of business. Except as otherwise required by law, the Certificate of
Incorporation or these By-Laws, the vote of a majority of the directors present
at any meeting at which a quorum is present shall be the act of the Board of
Directors. [Section 141(b).]
Section 2.07. Adjournment. A majority of the directors present, whether or
-----------
not a quorum is present, may adjourn any meeting of the Board of Directors to
another time or place. No
5
<PAGE>
notice need be given of any adjourned meeting unless the time and place of the
adjourned meeting are not announced at the time of adjournment, in which case
notice conforming to the requirements of Section 2.05 of these By-Laws shall be
given to each director.
Section 2.08. Action Without a Meeting. Any action required or permitted to
------------------------
be taken at any meeting of the Board of Directors may be taken without a meeting
if all members of the Board of Directors consent thereto in writing, and such
writing or writings are filed with the minutes of proceedings of the Board of
Directors. [Section 141(f).]
Section 2.09. Regulations; Manner of Acting. To the extent consistent with
------------------------------
applicable law, the Certificate of Incorporation and these By-Laws, the Board of
Directors may adopt such rules and regulations for the conduct of meetings of
the Board of Directors and for the management of the property, affairs and
business of the Corporation as the Board of Directors may deem appropriate. The
directors shall act only as a Board, and the individual directors shall have no
power as such.
Section 2.10. Action by Telephonic Communications. Except as otherwise
-------------------------------------
determined by the Board of Directors, members of the Board of Directors may
participate in a meeting of the Board of Directors by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this provision shall constitute presence in person at such meeting.
[Section 141(i).]
Section 2.11. Resignations. Any director may resign at any time by
------------
delivering a written notice of resignation, signed by such director, to the
Chairman or the Chief Executive Officer. Unless otherwise specified therein,
such resignation shall take effect upon delivery. [Section 141(b).]
Section 2.12. Removal of Directors. Any director may be removed at any
---------------------
time, either for or without cause, upon the affirmative vote of the holders of a
majority of the outstanding shares of stock of the Corporation entitled to vote
for the election of such director. Any vacancy in the Board of Directors caused
by any such removal may be filled at such meeting by the stockholders entitled
to vote for the election of the director so removed. If such stockholders do not
fill such vacancy at such meeting (or in the written instrument effecting such
removal, if such removal was effected by consent without a meeting), such
vacancy may be filled in the manner provided in Section 2.13 of these By-Laws.
[Section 141(k).]
Section 2.13. Vacancies and Newly Created Directorships. If any vacancies
------------------------------------------
shall occur in the Board of Directors, by reason of death, resignation, removal
or otherwise, or if the authorized number of directors shall be increased, the
directors then in office shall continue to act, and such vacancies and newly
created directorships may be filled by a majority of the directors then in
office, although less than a quorum. A director elected to fill a vacancy or a
newly created directorship shall hold office until his or her successor has been
elected and qualified or until his or her earlier death, resignation or removal.
Any such vacancy or newly created directorship may also be filled at any time by
vote of the stockholders. [Section 223.]
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Section 2.14. Compensation. Each director, in consideration of his or her
------------
service as such, shall be entitled to receive from the Corporation such amount
per annum or such fees for attendance at directors' meetings, or both, as the
Board of Directors may from time to time determine, together with reimbursement
for the reasonable out-of-pocket expenses, if any, incurred by such director in
connection with the performance of his or her duties. Each director who shall
serve as a member of any Committee designated by the Board of Directors in
consideration of serving as such shall be entitled to such additional amount per
annum or such fees for attendance at committee meetings, or both, as the Board
of Directors may from time to time determine, together with reimbursement for
the reasonable out-of-pocket expenses, if any, incurred by such director in the
performance of his or her duties. Nothing contained in this Section 2.14 shall
preclude any director from serving the Corporation or its subsidiaries in any
other capacity and receiving proper compensation. [Section 141(h).]
Section 2.15. Reliance on Accounts and Reports, etc. A director, or a
-----------------------------------------
member of any Committee designated by the Board of Directors shall, in the
performance of his or her duties, be fully protected in relying in good faith
upon the records of the Corporation and upon information, opinions, reports or
statements presented to the Corporation by any of the Corporation's officers or
employees, or Committees designated by the Board of Directors, or by any other
person as to the matters the member reasonably believes are within such other
person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation. [Section 141(e).]
Section 2.16. Honorary Directors. The Board of Directors may, by vote at a
------------------
regularly held meeting, appoint at its discretion individuals as Honorary
Directors to serve for such period of time and with such compensation as shall
be fixed by the Board of Directors. Individuals appointed as Honorary Directors
shall have the right to attend regularly scheduled Board of Directors meetings
but shall not have the right to cast a vote.
ARTICLE III
EXECUTIVE COMMITTEE, AUDIT COMMITTEE,
COMPENSATION COMMITTEE AND OTHER COMMITTEES
Section 3.01. How Constituted. The Board of Directors shall have an
----------------
Executive Committee, an Audit Committee and a Compensation Committee, each such
Committee to consist of such number of directors as from time to time may be
fixed by the Board of Directors in accordance with this Section 3.01. The
Executive Committee shall consist of three or more directors. The Audit
Committee and Compensation Committee shall each consist of three or more outside
directors, with each Audit Committee member having such level of independence as
shall be deemed necessary by the Board of Directors. The Board of Directors may
designate one or more other Committees, each of which shall consist of such
number of directors as from time to time may be fixed by the Board of Directors.
The Board of Directors may designate one or more directors as alternate members
of any Committee, who may replace any absent or
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disqualified member or members at any meeting of such Committee. Thereafter,
members (and alternate members, if any) of each Committee may be designated at
the annual meeting of the Board of Directors. Any Committee, other than the
Executive Committee, Audit Committee and Compensation Committee, may be
abolished or re-designated from time to time by the Board of Directors. Each
member (and each alternate member) of any Committee (whether designated at an
annual meeting of the Board of Directors or to fill a vacancy or otherwise)
shall hold office until his or her successor shall have been designated or until
he or she shall cease to be a director, or until his or her earlier death,
resignation or removal. [Section 141(c).]
Section 3.02. Powers; Duties and Responsibilities. During the intervals
-------------------------------------
between the meetings of the Board of Directors, the Executive Committee, except
as otherwise provided in this Section 3.02, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
property, affairs and business of the Corporation, including the power to
declare dividends and to authorize the issuance of stock. The Executive
Committee shall, in addition, act as the corporate governance/nominating
committee to advise the Board of Directors (as a whole) on corporate governance
matters, to develop policies on the size and composition of the Board, to review
possible candidates for Board membership, to perform Board evaluations, and to
recommend a slate of nominees to the Board with respect to nominations for the
Board. The Executive Committee may not recommend any person to serve as a
director after he or she has passed his or her 72nd birthday, unless the
Committee has voted (in its capacity as the nominating committee), on an annual
basis, to waive, or continue to waive, the mandatory retirement of such person
as a director of the Corporation.
The Audit Committee shall have the power and authority of the Board of
Directors to perform the following duties:
(a) Review the recommendation of senior management of the
Corporation as to the selection,retention or discharge of the
independent certified public accountants to serve as the independent
auditors of the Corporation for each fiscal year of the Corporation
and report to the full Board of Directors the agreement or
disagreement by the Committee with such recommendation;
(b) Review with the independent auditors and the Corporate Audit
Department of the Corporation the scope of the separate audits to be
performed by such auditors and such Department for each fiscal year of
the Corporation and report to the full Board of Directors the
agreement or disagreement by the Committee with the scope of each
audit;
(c) Review with the independent auditors and senior management of
the Corporation significant proposed changes in the accounting
policies of the Corporation;
(d) Review with the independent auditors and senior management of
the Corporation the annual financial statements of the Corporation and
report on the same to the full Board of Directors;
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(e) Review with the independent auditors, senior management and
Corporate Audit Department of the Corporation the adequacy of the
financial and administrative controls, procedures and practices of
the Corporation;
(f) Review the fees of the independent auditors of the Corporation
and the scope of management advisory services to be performed by such
auditors;
(g) Perform such other duties as may otherwise be related to the
foregoing duties or as may be established from time to time by the
Board of Directors.
The Compensation Committee shall have the power and authority of the Board
of Directors to perform the following duties:
(a) Develop guidelines and review the compensation and performance
of officers of the Corporation and review and approve the compensation
for the Chief Executive Officer on behalf of the Board of Directors;
(b) Serve as the Option Committee for the Board of Directors with
the power and authority to establish criteria for the granting of
options to the officers and other employees of the Corporation and to
review and approve the granting of options in accordance with such
criteria;
(c) Develop plans for managerial succession for the Corporation;
(d) Review major organizational and staffing matters; and
(e) Perform such other duties as may otherwise be related to the
foregoing duties or as may be established from time to time by the
Board of Directors.
Each Committee, other than the Executive Committee, Audit Committee and
Compensation Committee, except as otherwise provided in this section, shall have
and may exercise such powers of the Board of Directors as may be provided by
resolution or resolutions of the Board of Directors. Neither the Executive
Committee, the Audit Committee or the Compensation Committee nor any such other
Committee shall have the power or authority:
(a) to amend the Certificate of Incorporation (except that a
Committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by
the Board of Directors as provided in Section 151(a) of the General
Corporation Law, fix the designations and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution,
any distribution of assets of the Corporation or the conversion into,
or the exchange of such shares for, shares of any other class or
classes or any other series of the same or any other class or classes
of stock of the Corporation or fix the number of shares of any series
of stock or authorize the increase or decrease of the shares of any
series);
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(b) to adopt an agreement of merger or consolidation;
(c) to recommend to the stockholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets;
(d) to recommend to the stockholders a dissolution of the
Corporation or a revocation of dissolution; or
(e) to amend the By-Laws of the Corporation. [Section 141(c).]
Section 3.03. Proceedings. The Chairman of each Committee shall be
-----------
designated by the Board of Directors. Each Committee may fix its own rules of
procedure and may meet at such place (within or without the State of Delaware),
at such time and upon such notice, if any, as it shall determine from time to
time or as may be required by the Board of Directors. Each Committee shall keep
minutes of its proceedings and shall report such proceedings to the Board of
Directors at the meeting of the Board of Directors next following any such
proceedings.
Section 3.04. Quorum and Manner of Acting. Except as may be otherwise
-----------------------------
provided in the resolution creating such Committee, at all meetings of any
Committee the presence of members (or alternate members) constituting a majority
of the total authorized membership of such Committee shall constitute a quorum
for the transaction of business. The act of the majority of the members present
at any meeting at which a quorum is present shall be the act of such Committee.
Any action required or permitted to be taken at any meeting of any such
Committee may be taken without a meeting, if all members of such Committee shall
consent to such action in writing and such writing or writings are filed with
the minutes of the proceedings of the Committee. The members of any such
Committee shall act only as a Committee, and the individual members of such
Committee shall have no power as such. [Section 141(c), (f).]
Section 3.05. Action by Telephonic Communications. Except as otherwise
-------------------------------------
provided by the applicable Committee or by the Board of Directors, members of
any Committee may participate in a meeting of such Committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting. [Section 141(i).]
Section 3.06. Absent or Disqualified Members. In the absence or
----------------------------------
disqualification of a member of any Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he, she
or they constitute a quorum, may unanimously appoint another qualified member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member. [Section 141(c).]
Section 3.07. Resignations. Any member (and any alternate member) of any
------------
Committee may resign at any time by delivering a written notice of resignation,
signed by such member, to the Chairman or the Chief Executive Officer. Unless
otherwise specified therein, such resignation shall take effect upon delivery.
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Section 3.08. Removal. Any member (and any alternate member) of any
-------
Committee may be removed from his or her position as a member (or alternate
member, as the case may be) of such Committee at any time, either for or without
cause, by the Board of Directors.
Section 3.09. Vacancies. If any vacancy shall occur in any Committee, by
---------
reason of disqualification, death, resignation, removal or otherwise, the
remaining members (and any alternate members) shall continue to act, and any
such vacancy may be filled by the Board of Directors.
ARTICLE IV
OFFICERS
Section 4.01. Number. The officers of the Corporation shall be a Chairman
------
of the Board, a President, a Secretary, a Treasurer and such other officers as
the Board of Directors may appoint, including one or more Vice Presidents and
one or more Assistant Secretaries and Assistant Treasurers, who shall exercise
such powers and perform such duties and have such titles as shall be determined
from time to time by the Board of Directors or as otherwise provided in the
By-Laws. The Board of Directors shall designate an officer to be the Chief
Executive Officer of the Corporation and may designate any officer to be the
Chief Operating Officer or Chief Financial Officer of the Corporation. Any
number of offices may be held by the same person unless the Certificate of
Incorporation or these By-Laws provide otherwise. [Section 142 (a) , (b).]
Section 4.02. Election. Unless otherwise determined by the Board of
--------
Directors, the officers of the Corporation shall be elected by the Board of
Directors at the annual meeting of the Board of Directors, and shall be elected
to hold office until the next succeeding annual meeting of the Board of
Directors. In the event of the failure to elect officers at such annual meeting,
officers may be elected at any regular or special meeting of the Board of
Directors. Each officer shall hold office until his or her successor has been
elected and qualified, or until his or her earlier death, resignation or
removal. [Section 142(b).]
Section 4.03. Salaries. The salaries of all officers and agents of the
--------
Corporation shall be fixed by the Board of Directors, the Chief Executive
Officer or such other persons to whom the authority to fix such salaries shall
be delegated by the Board of Directors or the Chief Executive Officer. No
officer shall be prevented from receiving a salary or other compensation by
reason of the fact that the officer is also a director of the Corporation.
Section 4.04. Removal and Resignation; Vacancies. Any officer may be
-------------------------------------
removed for or without cause at any time by the Board of Directors or by the
Chief Executive Officer. Any officer may resign at any time by delivering a
written notice of resignation, signed by such officer, to the Board of Directors
or the Chief Executive Officer. Unless otherwise specified therein, such
resignation shall take effect upon delivery. Any vacancy occurring in any office
of
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the Corporation by death, resignation, removal or otherwise, shall be filled
by the Board of Directors or by the Chief Executive Officer. [Section 142(b),
(e).]
Section 4.05. Authority and Duties of Officers. The officers of the
-----------------------------------
Corporation shall have such authority and shall exercise such powers and perform
such duties as may be specified in these By-Laws, except that in any event each
officer shall exercise such powers and perform such duties as may be required by
law. [Section 142(a).]
Section 4.06. Chairman. The Chairman shall preside at all meetings of the
--------
stockholders and the Board of Directors and shall exercise such powers and
perform such other duties as shall be determined from time to time by the Board
of Directors.
Section 4.07. President. The President shall have general supervision over
---------
the business of the Corporation, subject, however, to the control of the Board
of Directors, any duly authorized Committee designated by the Board of Directors
and the Chief Executive Officer (if not the President). The President may sign
and execute in the name of the Corporation deeds, mortgages, bonds, contracts
and other instruments except in cases in which the signing and execution thereof
shall be expressly delegated by the Board of Directors or by these By-Laws to
some other officer or agent of the Corporation or shall be required by statute
otherwise to be signed or executed and, in general, the President shall perform
all duties incident to the office of President of a corporation and such other
duties as may from time to time be assigned to the President by the Board of
Directors and the Chief Executive Officer (if not the President).
Section 4.08. Vice Presidents. At the request of the Chief Executive
----------------
Officer, or, in the Chief Executive Officer's absence, at the request of the
Board of Directors, the Vice Presidents shall (in such order as may be
designated by the Chief Executive Officer or the Board of Directors or, in the
absence of any such designation, the most senior Vice President based on title)
perform all of the duties of the President and, in so performing, shall have all
the powers of, and be subject to all restrictions upon, the President. Any Vice
President may sign and execute in the name of the Corporation deeds, mortgages,
bonds, contracts or other instruments, except in cases in which the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
these By-Laws to some other officer or agent of the Corporation, or shall be
required by statute otherwise to be signed or executed, and each Vice President
shall perform such other duties as from time to time may be assigned to such
Vice President by the Board of Directors or by the Chief Executive Officer.
Section 4.09. Secretary. The Secretary shall attend all meetings of the
---------
stockholders and the Board of Directors and shall record all the proceedings of
such meetings in a book or books to be kept for that purpose, and shall perform
like duties for the Committees of the Board of Directors, when required. The
Secretary shall give, or cause to be given, all notices to be given in
accordance with these By-Laws or as required by law and shall perform such other
duties as may be prescribed by the Board of Directors or by the Chief Executive
Officer. The Secretary or an Assistant Secretary, if any, may attest all
instruments signed by the Chairman, the Chief Executive Officer, the President,
any Vice President or any other authorized officers of the Corporation. The
Secretary shall have charge of the stock books and ledgers of the Corporation
12
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and all the books, records and papers of the Corporation relating to its
organization and management, shall see that the reports, statements and other
documents required by statute are properly kept and filed and, in general, shall
perform all duties incident to the office of Secretary of a corporation and such
other duties as may from time to time be assigned to the Secretary by the Board
of Directors or by the Chief Executive Officer.
4.10. Treasurer. The Treasurer shall have charge and custody of, and be
---------
responsible for, all funds, securities and notes of the Corporation; receive and
give receipts for moneys due and payable to the Corporation from any sources
whatsoever; deposit all such moneys and valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors, the Chief Executive Officer, the Treasurer or by any person to
whom such power to designate is delegated by the Board of Directors, the Chief
Executive Officer or the Treasurer; against proper vouchers, cause such funds to
be disbursed by checks or drafts on the authorized depositories of the
Corporation signed in such manner as shall be determined by the Board of
Directors or the Chief Executive Officer and be responsible for the accuracy of
the amounts of all moneys so disbursed; regularly enter or cause to be entered
in books or other records maintained for the purpose full and adequate account
of all moneys received or paid for the account of the Corporation; have the
right to require from time to time reports or statements giving such information
as the Treasurer may desire with respect to any and all financial transactions
of the Corporation from the officers or agents transacting the same; render to
the Chief Executive Officer or the Board of Directors, whenever the Chief
Executive Officer or the Board of Directors shall require the Treasurer so to
do, an account of the financial condition of the Corporation and of all
financial transactions of the Corporation; exhibit at all reasonable times the
records and books of account to any of the directors upon application at the
office of the Corporation where such records and books are kept; disburse the
funds of the Corporation as ordered by the Board of Directors and the Chief
Executive Officer; and, in general, perform all duties incident to the office of
Treasurer of a corporation and such other duties as may from time to time be
assigned to the Treasurer by the Board of Directors or the Chief Executive
Officer.
Section 4.11. Assistant Secretaries and Assistant Treasurers. Assistant
------------------------------------------------
Secretaries and Assistant Treasurers shall perform such duties as shall be
assigned to them by the Secretary or by the Treasurer, respectively, or by the
Board of Directors or by the Chief Executive Officer.
Section 4.12. Security. The Board of Directors may require any officer,
--------
agent or employee of the Corporation to provide security for the faithful
performance of his or her duties, in such amount and of such character as may be
determined from time to time by the Board of Directors. [Section 142(c).]
ARTICLE V
CAPITAL STOCK
Section 5.01. Certificates of Stock; Uncertificated Shares. The shares of
---------------------------------------------
the Corporation shall be represented by certificates, provided that the Board of
Directors may provide by
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resolution or resolutions that some or all of any or all classes or series of
the stock of the Corporation shall be uncertificated shares. Any such resolution
shall not apply to shares represented by a certificate until each certificate is
surrendered to the Corporation. Notwithstanding the adoption of such a
resolution by the Board of Directors, every holder of stock in the Corporation
represented by certificates and upon request every holder of uncertificated
shares shall be entitled to have a certificate signed by, or in the name of the
Corporation, by the Chairman, the President or a Vice President, and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary,
representing the number of shares registered in certificate form. Such
certificate shall be in such form as the Board of Directors may determine, to
the extent consistent with applicable law, the Certificate of Incorporation and
these By-Laws. [Section 158.]
Section 5.02. Signatures; Facsimile. All of such signatures on the
----------------------
certificate referred to in Section 5.01 of these By-Laws may be a facsimile,
engraved or printed, to the extent permitted by law. In case any officer,
transfer agent or registrar who has signed, or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he or she were such officer, transfer
agent or registrar at the date of issue. [Section 158.]
Section 5.03. Lost, Stolen or Destroyed Certificates. The Board of
------------------------------------------
Directors may direct that a new certificate be issued in place of any
certificate theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon delivery to the Board of Directors of proof
satisfactory to the Board of Directors of such loss, theft or destruction. The
Board of Directors may require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise such loss, theft or
destruction in such manner as the Board of Directors may require and to give the
Corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of any such new certificate. [Section 167.]
Section 5.04. Transfer of Stock. Upon surrender to the Corporation or the
-----------------
transfer agent of the Corporation of a certificate for shares, duly endorsed or
accompanied by appropriate evidence of succession, assignment or authority to
transfer, the Corporation shall issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Subject to the provisions of the Certificate of Incorporation and these By-Laws,
the Board of Directors may prescribe such additional rules and regulations as it
may deem appropriate relating to the issue, transfer and registration of shares
of the Corporation. [Section 151(f).]
Section 5.05. Record Date. In order to determine the stockholders entitled
-----------
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, the Board of Directors may fix, in advance, a record date, which record
date shall not precede the date on which the resolution fixing the record date
is adopted by the Board of Directors, and which shall not be more than sixty nor
less than ten days before the date of such meeting. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to
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any adjournment of the meeting, provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
In order that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
of the stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. [Section 213.]
Section 5.06. Registered Stockholders. Prior to due surrender of a
------------------------
certificate for registration of transfer, the Corporation may treat the
registered owner as the person exclusively entitled to receive dividends and
other distributions, to vote, to receive notice and otherwise to exercise all
the rights and powers of the owner of the shares represented by such
certificate, and the Corporation shall not be bound to recognize any equitable
or legal claim to or interest in such shares on the part of any other person,
whether or not the Corporation shall have notice of such claim or interests.
Whenever any transfer of shares shall be made for collateral security, and not
absolutely, it shall be so expressed in the entry of the transfer if, when the
certificates are presented to the Corporation for transfer or uncertificated
shares are requested to be transferred, both the transferor and transferee
request the Corporation to do so. [Section 159.]
Section 5.07. Transfer Agent and Registrar. The Board of Directors may
------------------------------
appoint one or more transfer agents and one or more registrars, and may require
all certificates representing shares to bear the signature of any such transfer
agents or registrars.
ARTICLE VI
INDEMNIFICATION
Section 6.01. Nature of Indemnity. The Corporation shall indemnify any
-------------------
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was or has agreed to become a director or officer of the Corporation, or
is or was serving or has agreed to serve at the request of the Corporation as a
director or officer, of another corporation, partnership, joint venture, trust
or other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, and may indemnify any person who was or is a party or
is threatened to be made a party to such an action, suit or proceeding by reason
of the fact that he or she is or was or has agreed to become an employee or
agent of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her or on his or her behalf in
connection with such
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action, suit or proceeding and any appeal therefrom, if he or she (x) acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the Corporation and, in the case of any such employee
or agent, in a manner he or she reasonably believed to be not in violation of
any policies or directives of the Corporation, and (y) with respect to any
criminal action or proceeding had no reasonable cause to believe his or her
conduct was unlawful; except that in the case of an action or suit by or in the
right of the Corporation to procure a judgment in its favor (i) such
indemnification shall be limited to expenses (including attorneys' fees)
actually and reasonably incurred by such person in the defense or settlement of
such action or suit, and (ii) no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Delaware Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Delaware Court of Chancery or
such other court shall deem proper. The indemnification under this Section 6.01
shall apply to all directors and officers of the Corporation who sit on the
boards of directors of non-profit corporations in keeping with the Corporation's
philosophy.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
Section 6.02. Successful Defense. To the extent that a director, officer,
------------------
employee or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section
6.01 of these By-Laws or in defense of any claim, issue or matter therein, he or
she shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection therewith.
Section 6.03. Determination That Indemnification Is Proper. Any
---------------------------------------------------
indemnification of a director or officer of the Corporation under Section 6.01
of these By-Laws (unless ordered by a court) shall be made by the Corporation
unless a determination is made that indemnification of the director or officer
is not proper in the circumstances because he or she has not met the applicable
standard of conduct set forth in Section 6.01 of these By-Laws. Any
indemnification of an employee or agent of the Corporation under Section 6.01 of
these By-Laws (unless ordered by a court) may be made by the Corporation upon a
determination that indemnification of the employee or agent is proper in the
circumstances because he or she has met the applicable standard of conduct set
forth in Section 6.01 of these By-Laws. Any such determination shall be made (i)
by a majority vote of the directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (ii) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (iii) by the stockholders.
Section 6.04. Advance Payment of Expenses. Expenses (including attorneys'
---------------------------
fees) incurred by a director or officer in defending any civil, criminal,
administrative or investigative
16
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action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the Corporation as authorized in this Article. Such expenses
(including attorneys' fees) incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the Board of Directors deems
appropriate. The Board of Directors may authorize the Corporation's counsel to
represent such director, officer, employee or agent in any action, suit or
proceeding, whether or not the Corporation is a party to such action, suit or
proceeding.
Section 6.05. Procedure for Indemnification of Directors and Officers. Any
-------------------------------------------------------
indemnification of a director or officer of the Corporation under Sections 6.01
and 6.02 of these By-Laws, or advance of costs, charges and expenses to a
director or officer under Section 6.04 of these By-Laws, shall be made promptly,
and in any event within thirty days, upon the written request of the director or
officer. If a determination by the Corporation that the director or officer is
entitled to indemnification pursuant to this Article is required, and the
Corporation fails to respond within sixty days to a written request for
indemnity, the Corporation shall be deemed to have approved such request. If the
Corporation denies a written request for indemnity or advancement of expenses,
in whole or in part, or if payment in full pursuant to such request is not made
within thirty days, the right to indemnification or advances as granted by this
Article shall be enforceable by the director or officer in any court of
competent jurisdiction. Such person's costs and expenses incurred in connection
with successfully establishing his right to indemnification, in whole or in
part, in any such action shall also be indemnified by the Corporation. It shall
be a defense to any such action (other than an action brought to enforce a claim
for the advance of costs, charges and expenses under Section 6.04 of these
By-Laws where the required undertaking, if any, has been received by or tendered
to the Corporation) that the claimant has not met the standard of conduct set
forth in Section 6.01 of these By-Laws, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the Corporation (including
its Board of Directors, its independent legal counsel, and its stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he has
met the applicable standard of conduct set forth in Section 6.01 of these
By-Laws, nor the fact that there has been an actual determination by the
Corporation (including its Board of Directors, its independent legal counsel,
and its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 6.06. Survival; Preservation of Other Rights. The foregoing
------------------------------------------
indemnification provisions shall be deemed to be a contract between the
Corporation and each director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the General Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or obligation then existing with
respect to any state of facts then or previously existing or any action, suit or
proceeding previously or thereafter brought or threatened based in whole or in
part upon any such state of facts. Such a "contract
17
<PAGE>
right" may not be modified retroactively without the consent of such director,
officer, employee or agent.
The indemnification provided by this Article VI shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-Law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
Section 6.07. Insurance. The Corporation may purchase and maintain
---------
insurance on behalf of any person who is or was or has agreed to become a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him or her and incurred by him or her or on his or her behalf in any such
capacity, or arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify him or her against such liability
under the provisions of this Article, provided that such insurance is available
on acceptable terms, which determination shall be made by a vote of a majority
of the entire Board of Directors.
Section 6.08. Severability. If this Article or any portion hereof shall be
------------
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director or officer and may
indemnify each employee or agent of the Corporation as to costs, charges and
expenses (including attorneys' fees) judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the fullest extent permitted by any applicable
portion of this Article that shall not have been invalidated and to the fullest
extent permitted by applicable law.
ARTICLE VII
GENERAL PROVISIONS
Section 7.01. Dividends. Subject to any applicable provisions of law and
---------
the Certificate of Incorporation, dividends upon the shares of the Corporation
may be declared by the Board of Directors at any regular or special meeting of
the Board of Directors and any such dividend may be paid in cash, property, or
shares of the Corporation's capital stock.
A member of the Board of Directors, or a member of any Committee designated
by the Board of Directors shall be fully protected in relying in good faith upon
the records of the Corporation and upon such information, opinions, reports or
statements presented to the Corporation by any of its officers or employees, or
Committees of the Board of Directors, or by any other person as to matters the
director reasonably believes are within such other person's professional or
expert competence and who has been selected with reasonable care by or on
18
<PAGE>
behalf of the Corporation, as to the value and amount of the assets, liabilities
and/or net profits of the Corporation, or any other facts pertinent to the
existence and amount of surplus or other funds from which dividends might
properly be declared and paid. [Sections 172, 173.]
Section 7.02. Reserves. There may be set aside out of any funds of the
--------
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in its absolute discretion, thinks proper as a reserve or
reserves to meet contingencies or for repairing or maintaining any property of
the Corporation or for such other purpose as the Board of Directors shall think
conducive to the interest of the Corporation, and the Board of Directors may
similarly modify or abolish any such reserve. [Section 171.]
Section 7.03. Execution of Instruments. The Board of Directors, except as
------------------------
otherwise provided in these By-Laws, may prospectively or retroactively
authorize any officer or officers, employee or employees or agent or agents, in
the name and on behalf of the Corporation, to enter into any contract or
agreement or execute and deliver any instrument, including checks, drafts and
other orders for the payment of moneys out of the funds of the Corporation,
promissory notes, bonds or other evidences of indebtedness of the Corporation,
endorsements, assignments, transfers, stock powers or other instruments of
transfer of stock or other securities belonging to and/or standing in the name
of the Corporation, and any other documents requiring the execution by or in the
name of the Corporation, and any such authority may be general or confined to
specific instances, or otherwise limited.
Section 7.04. Corporate Indebtedness. The Board of Directors may
------------------------
prospectively or retroactively authorize the Chief Executive Officer or any
other officer, employee or agent of the Corporation to effect loans and advances
at any time for the Corporation from any banks, trust company or other
institution, or from any firm, corporation or individual, and, when authorized
by the Board of Directors so to do, may pledge and hypothecate or transfer any
securities or other property of the Corporation as security for any such loans
or advances. Such authority conferred by the Board of Directors may be general
or confined to specific instances, or otherwise limited.
Section 7.05. Fiscal Year. The Board of Directors may determine the fiscal
-----------
year of the Corporation and may from time to time change the same.
Section 7.06. Seal. The seal of the Corporation shall be circular in form
----
and shall contain the name of the Corporation, the year of its incorporation and
the words "Corporate Seal" and "Delaware". The form of such seal shall be
subject to alteration by the Board of Directors. The seal may be used by causing
it or a facsimile thereof to be impressed, affixed or reproduced, or may be used
in any other lawful manner.
Section 7.07. Books and Records; Inspection. Except to the extent otherwise
-----------------------------
required by law, the books and records of the Corporation shall be kept at such
place or places within or without the State of Delaware as may be determined
from time to time by the Board of Directors. Subject to the General Corporation
Law, the Board of Directors from time to time may determine whether, to what
extent, at what times and places, and under what conditions and regulations, the
accounts, books and papers of the Corporation, or any of them, shall be open to
19
<PAGE>
the inspection of stockholders; and no stockholder shall have any right to
inspect any account, book or paper of the Corporation except as expressly
conferred by the General Corporation Law or authorized by the Board of
Directors.
ARTICLE VIII
AMENDMENT OF BY-LAWS
Section 8.01. Amendment. Subject to the provisions of the Certificate of
---------
Incorporation, these By-Laws may be amended, altered or repealed:
(a) by resolution adopted by a majority of the Board of Directors
at any special or regular meeting of the Board of Directors if, in the
case of such special meeting only, notice of such amendment,
alteration or repeal is contained in the notice or waiver of notice of
such meeting; or
(b) at any regular or special meeting of the stockholders if, in
the case of such special meeting only, notice of such amendment,
alteration or repeal is contained in the notice or waiver of notice of
such meeting. [Section 109(a).]
ARTICLE IX
CONSTRUCTION
Section 9.01. Construction. Whenever in these By-Laws references are made
------------
to the Certificate of Incorporation, such references shall be deemed to be
references to the Certificate of Incorporation, as the same, at the time of the
adoption of these By-Laws, may have been amended and as the same, subsequent to
such time, may be amended; and wherever in these By-Laws references are made to
the By-Laws of the Corporation, such references shall be deemed to be references
to these By-Laws, and to the same as they from time to time may be amended.
Wherever in these By-Laws references are made to the General Corporation Law,
such references shall be deemed to be references to the General Corporation Law
of the State of Delaware.
20
<PAGE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-11
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>EXHIBIT 11 TO FORM 10-K
<TEXT>
EXHIBIT 11
AUTOMATIC DATA PROCESSING, INC.
AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
<TABLE>
Year ended June 30,
-----------------------------------------------------------------
2000 1999 1998 1997 1996
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE:
Net earnings applicable to common shares $840,800 $696,840 $608,262 $515,244 $454,747
======== ======== ======== ======== ========
Average number of common shares outstanding 626,766 615,630 600,803 588,112 582,861
======== ======== ======== ======== ========
Basic earnings per share $ 1.34 $ 1.13 $ 1.01 $ 0.88 $ 0.78
======== ======== ======== ======== ========
DILUTED EARNINGS PER SHARE:
Net earnings used in basic earnings per share $840,800 $696,840 $608,262 $515,244 $454,747
Adjustment for interest (net of tax) - zero coupon
convertible subordinated notes (5 1/4% yield) 2,912 3,607 7,833 11,302 11,703
-------- -------- ------- -------- --------
Net earnings used for diluted earnings per share $843,712 $700,447 $616,095 $526,546 $466,450
======== ======== ======== ======== ========
Average number of shares outstanding on a
diluted basis:
Shares used in calculating basic earnings per share 626,766 615,630 600,803 588,112 582,861
Diluted effect of all stock options outstanding
after application of treasury stock method 14,823 15,306 13,363 12,633 12,317
Shares assumed to be issued upon conversion of
Debentures-Zero coupon convertible
subordinated notes (5 1/4% yield) 4,509 5,956 14,030 19,372 20,720
------------ ------------ ------------- ------------ -----------
Average number of shares outstanding on a
diluted basis 646,098 636,892 628,196 620,117 615,898
============= ============= =========== ============ ============
Diluted earnings per share $ 1.31 $ 1.10 $ 0.98 $ 0.85 $ 0.76
======== ======== ======= ======== ========
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>ANNUAL REPORT
<TEXT>
Exhibit 13
<TABLE>
<CAPTION>
Selected Financial Data
Automatic Data Processing, Inc. and Subsidiaries
- -----------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts)
Years ended June 30, 2000 1999 1998 1997 1996
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Total revenues $ 6,287,512 $ 5,540,141 $ 4,925,956 $ 4,193,447 $3,613,014
Earnings before income taxes $ 1,289,600 $ 1,084,500 $ 890,717 $ 726,439 $ 635,321
Net earnings $ 840,800 $ 696,840 $ 608,262 $ 515,244 $ 454,747
----------- ----------- ----------- ----------- ----------
----------- ----------- ----------- ----------- ----------
Basic earnings per share $ 1.34 $ 1.13 $ 1.01 $ .88 $ .78
Diluted earnings per share $ 1.31 $ 1.10 $ .98 $ .85 $ .76
Basic shares outstanding 626,766 615,630 600,803 588,112 582,861
Diluted shares outstanding 646,098 636,892 628,196 620,117 615,898
Cash dividends per share $ .33875 $ .295 $ .25625 $ .2225 $ .19375
Return on equity 19.7% 18.7% 20.0% 20.6% 20.3%
----------- ----------- ----------- ----------- ----------
At year end:
Cash, cash equivalents and
marketable securities $ 2,452,549 $ 2,169,040 $ 1,673,271 $ 1,516,450 $1,107,323
Working capital $ 1,767,784 $ 907,864 $ 626,063 $ 805,797 $ 618,409
Total assets before funds held
for clients $ 6,429,927 $ 5,824,820 $ 5,242,867 $ 4,439,293 $3,862,009
Total assets* $16,850,816 $12,839,553 $11,787,685 $10,249,089 $8,884,138
Long-term debt $ 132,017 $ 145,765 $ 192,063 $ 402,088 $ 405,157
Shareholders' equity $ 4,582,818 $ 4,007,941 $ 3,439,447 $ 2,689,415 $2,309,468
----------- ----------- ----------- ----------- ----------
----------- ----------- ----------- ----------- ----------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
1999 data includes non-recurring charges totaling approximately $17 million
(after-tax), or $.03 per share, associated with certain acquisitions and
dispositions.
*Prior years' data has been restated.
<PAGE>
Management's Discussion and Analysis
Operating Results
Revenues and earnings reached record levels during each of the past three fiscal
years. During fiscal '00 revenues increased 13% to almost $6.3 billion. Prior to
non-recurring charges in '99, pre-tax earnings increased 21% and diluted
earnings per share increased 16% to $1.31. During fiscal '99 the Company sold
several businesses and decided to exit several other businesses and contracts.
The Company also recorded transaction costs and other adjustments related to
Employer Services' acquisition of Vincam. The combination of these transactions
resulted in non-recurring charges of $0.03 in fiscal '99. Fiscal '00 was ADP's
39th 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
- -------------------------------------------------------------------------------
Years Ended June 30, Years Ended June 30,
----------------------------------------------------------
(In Millions) 2000 1999 1998 2000 1999 1998
----------------------------- --------------------------
Employer Services $3,620 $3,269 $2,830 11% 16% 21%
Brokerage Services 1,479 1,150 1,096 29 5 23
Dealer Services 736 733 688 - 7 10
Other 453 388 312 17 24 (9)
----------------------------- --------------------------
Consolidated $6,288 $5,540 $4,926 13% 12% 17%
----------------------------- --------------------------
----------------------------- --------------------------
- -------------------------------------------------------------------------------
Consolidated revenues grew 13% in fiscal '00 primarily from increased
market penetration, from an expanded array of products and services, and from
increased transaction volume, with relatively minor contributions from price
increases. Prior to acquisitions and dispositions, revenues increased
approximately 15%.
The consolidated pre-tax margin was 20.5% in '00, 19.3% in '99 (prior to
non-recurring charges) and 18.1% in '98. Pre-tax margin improved over the
previous year as continued automation and operating efficiencies enabled the
Company to offset accelerated investments in new products, increased spending on
systems development and programming, and the impact of transitioning the
investment portfolio from tax-exempt to taxable instruments.
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 2000 budgeted foreign exchange rates.
<PAGE>
Employer Services
Employer Services' revenues grew 11% in fiscal '00, and in the absence of
acquisitions and dispositions revenue growth would have been about 12% in '00,
and 15% in both '99 and '98.
Employer Services' operating margin was 21.4% in '00, 20.6% in '99 and
20.2% in `98. Employer Services' operating margin improved due to operating
efficiencies and the prior year dispositions of several businesses, 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 of 29% was impacted by the prior year
dispositions of the front-office business and several other small, non-strategic
businesses. In the absence of acquisitions and dispositions, revenue growth
would have been about 31% in '00 aided by record brokerage trade volumes,
compared to 21% in '99 and 22% in '98.
Brokerage Services' operating margin was 23% in '00 compared to 19% in '99
and 15% in '98. The improved margin resulted from the prior year dispositions of
several unprofitable businesses and strong trade processing activity.
In '99 the Company divested the $150 million revenue front-office "market
data" business and as part of the agreement took a minority investment in the
acquiring company.
Dealer Services
Dealer Services' revenues were roughly flat in '00. In the absence of
acquisitions and dispositions, '00 revenue growth would have been 3%, compared
to 7% in '99 and 8% in '98. Dealer Services' operating margin increased to 16%
in fiscal '00 compared to 15% in '99 and 14% in '98. Dealer Services' operating
margin improved primarily from operating efficiencies in North America and the
dispositions of several small businesses in '00 and '99.
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 $119 million, $84 million, and $82 million
in '00, '99 and '98, 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 '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, which will benefit future periods.
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 of transaction costs
and other adjustments in general, administrative and selling expenses, ($14
million after-tax) 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 agreed to
transition to the Euro as a new common legal currency. The costs of this
transition are not expected to have a material effect on ADP.
In '00 the Company's effective tax rate was 34.8%. Excluding the impact
of non-recurring charges associated with certain acquisitions, dispositions and
other activities, the effective tax rate was 33.2% in '99, and 31.7% in '98. The
increased rate is primarily a result of non-taxable investment income declining
as a percentage of pre-tax income. The transition, referred to above, of a
portion of the Company's investment portfolio to taxable investments will
continue to increase the Company's effective tax rate in fiscal '01.
For '01 ADP is planning another record year with revenue growth of about
13% to 15% and diluted earnings per share growth of 16% to 18% over '00 results.
Financial Condition
ADP's financial condition and balance sheet remain exceptionally strong. At June
30, 2000, cash and marketable securities approximated $2.5 billion.
Shareholders' equity was almost $4.6 billion, and return on average equity for
the year was about 20%. The ratio of long-term debt to equity at June 30, 2000
was 3%.
Cash flow from operating activities approximated $1.1 billion in '00 with
another excellent year expected in '01.
In '00 4.6 million shares of common stock were purchased at an average
price of approximately $43 as part of an ongoing program to fund equity-related
employee benefits. The Board of Directors has authorized the purchase of up to
19.9 million additional shares.
In '00 zero coupon convertible subordinated notes were converted to about
0.8 million shares of common stock.
During '00 the Company purchased several businesses for approximately $200
million in cash and common stock. The cost of acquisitions in '99 and '98
aggregated $107 million and $351 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) and '98 in pooling of interests
transactions in exchange for approximately 4 million, and 1 million shares of
common stock, respectively. The Company's consolidated financial statements were
not restated because in the aggregate these transactions were not material.
Capital expenditures during '00 were $166 million following investments of
$178 million in '99 and $202 million in '98. Capital spending in fiscal '01
should approximate $225 million.
Approximately half 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 half of the Company's
investment portfolio is invested in fixed-income securities, with maturities up
to five and a half years, which are also subject to interest rate risk,
including reinvestment risk. 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.
<PAGE>
Market Price, Dividend Data and Other
The market price of the Company's common stock (symbol: AUD) based on New York
Stock Exchange composite transactions and cash dividends per share declared
during the past two years have been:
- ------------------------------------------------------------------
Price Per Share
---------------------- Dividends
Fiscal 2000 quarter ended High Low Per Share
---------------------- ---------
June 30 $57 15/16 $44 11/16 $.08750
March 31 55 7/16 40 .08750
December 31 54 13/16 43 .08750
September 30 44 7/8 37 3/8 .07625
- ------------------------------------------------------------------
Fiscal 1999 quarter ended
June 30 $46 7/8 $39 1/16 $.07625
March 31 42 5/8 36 1/4 .07625
December 31 42 5/32 32 23/32 .07625
September 30 40 7/32 31 3/4 .06625
- ------------------------------------------------------------------
As of June 30, 2000 there were approximately 34,000 holders of record of
the Company's common stock. Approximately 257,000 additional holders have their
stock in "street name."
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; 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.
<PAGE>
<TABLE>
<CAPTION>
Statements of Consolidated Earnings
Automatic Data Processing, Inc. and Subsidiaries
- --------------------------------------------------------------------------------------------
(In thousands, except per share amounts)
Years ended June 30, 2000 1999 1998
---------- ---------- ----------
<S> <C> <C> <C>
Revenues other than interest on funds held for clients
and PEO revenues $5,729,042 $5,110,262 $4,543,335
Interest on funds held for clients 348,596 269,496 245,901
PEO revenues (net of pass-through costs of $2,197,323,
$1,748,841 and $1,293,866, respectively) 209,874 160,383 136,720
---------- ---------- ----------
Total revenues 6,287,512 5,540,141 4,925,956
---------- ---------- ----------
Operating expenses 2,564,496 2,376,172 2,149,343
General, administrative and selling expenses 1,643,360 1,379,026 1,239,464
Systems development and programming costs 460,275 412,380 376,485
Depreciation and amortization 284,282 272,807 247,625
Interest expense 13,140 19,090 24,383
Realized (gains)/losses on sale of investments 32,359 (3,834) (2,061)
---------- ---------- ----------
4,997,912 4,455,641 4,035,239
---------- ---------- ----------
Earnings before income taxes 1,289,600 1,084,500 890,717
Provision for income taxes 448,800 387,660 282,455
---------- ---------- ----------
Net earnings $ 840,800 $ 696,840 $ 608,262
---------- ---------- ----------
---------- ---------- ----------
Basic earnings per share $ 1.34 $ 1.13 $ 1.01
---------- ---------- ----------
Diluted earnings per share $ 1.31 $ 1.10 $ .98
---------- ---------- ----------
Basic shares outstanding 626,766 615,630 600,803
---------- ---------- ----------
Diluted shares outstanding 646,098 636,892 628,196
---------- ---------- ----------
---------- ---------- ----------
- --------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
Automatic Data Processing, Inc. and Subsidiaries
- ----------------------------------------------------------------------------------------------
(In thousands, except per share amounts)
Years ended June 30, 2000 1999
----------- -----------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,227,637 $ 861,280
Short-term marketable securities 596,792 231,214
Accounts receivable 899,314 860,836
Other current assets 340,709 240,927
----------- -----------
Total current assets 3,064,452 2,194,257
Long-term marketable securities 628,120 1,076,546
Long-term receivables 245,249 213,413
Property, plant and equipment:
Land and buildings 439,022 400,189
Data processing equipment 612,608 550,757
Furniture, leaseholds and other 498,354 449,862
----------- -----------
1,549,984 1,400,808
Less accumulated depreciation (952,715) (821,514)
----------- -----------
597,269 579,294
Other assets 271,136 228,936
Intangibles 1,623,701 1,532,374
----------- -----------
Total assets before funds held for clients 6,429,927 5,824,820
Funds held for clients 10,420,889 7,014,733
----------- -----------
Total assets $16,850,816 $12,839,553
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 21,523 $ 66,952
Accounts payable 129,436 130,456
Accrued expenses and other current liabilities 1,044,002 952,326
Income taxes 101,707 136,659
----------- -----------
Total current liabilities 1,296,668 1,286,393
Long-term debt 132,017 145,765
Other liabilities 171,843 132,081
Deferred income taxes 151,337 138,236
Deferred revenue 95,361 114,404
----------- -----------
Total liabilities before client funds obligations 1,847,226 1,816,879
Client fund obligations 10,420,772 7,014,733
----------- -----------
Total Liabilities 12,267,998 8,831,612
----------- -----------
Shareholders' equity:
Preferred stock, $1.00 par value:
Authorized, 300 shares; issued, none -- --
Common stock, $.10 par value:
Authorized, 1,000,000 shares; issued, 631,443 shares at
June 30, 2000 and 628,576 at June 30, 1999 63,144 62,858
Capital in excess of par value 402,767 421,333
Retained earnings 4,477,141 3,848,421
Treasury stock -- at cost 2,697 and 4,949 shares, respectively (130,800) (189,204)
Accumulated other comprehensive income (229,434) (135,467)
----------- -----------
Total shareholders' equity 4,582,818 4,007,941
----------- -----------
Total liabilities and shareholders' equity $16,850,816 $12,839,553
----------- -----------
----------- -----------
- ----------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
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
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, July 1, 1997 628,576 $62,858 $359,345 $2,917,915 $(577,164) $ (73,539)
Net earnings -- -- -- 608,262 -- $ 608,262 --
Currency translation (26,531) (26,531)
Unrealized loss on securities (1,550) (1,550)
---------
Comprehensive income $ 580,181
---------
---------
Employee stock plans and
related tax benefits -- -- 68,050 -- 61,714
Treasury stock acquired (1,792 shares) -- -- -- -- (40,907)
Acquisitions (1,911 shares) -- -- (15,841) (1,004) 29,431
Debt conversion (11,850 shares) -- -- 64,583 -- 156,202
Dividends ($.25625 per share) -- -- -- (152,888) --
Other transactions -- -- 549 (38) --
--------------------------------------------------------------------------------------------
Balance, June 30, 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
---------
Comprehensive income $ 662,993
---------
---------
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) --
--------------------------------------------------------------------------------------------
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)
---------
Comprehensive income $ 746,833
---------
---------
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) --
- -----------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 2000 631,443 $63,144 $402,767 $4,477,141 $(130,800) $(229,434)
------------------- --------- ---------- ---------- ---------
------------------- --------- ---------- ---------- ---------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Statements of Consolidated Cash Flows
Automatic Data Processing, Inc. and Subsidiaries
- ------------------------------------------------------------------------------------------------------
(In thousands)
Years ended June 30, 2000 1999 1998
-------------------------------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net earnings $ 840,800 $ 696,840 $ 608,262
Adjustments to reconcile net earnings to net cash flows
provided by operating activities:
Depreciation and amortization 284,282 272,807 247,625
Deferred income taxes 8,885 (23,235) (3,020)
Increase in receivables and other assets (149,913) (155,132) (207,819)
Increase in accounts payable and accrued expenses 39,339 100,057 103,028
Other 46,708 (37,476) 35,277
--------- --------- ---------
Net cash flows provided by operating activities 1,070,101 853,861 783,353
--------- --------- ---------
Cash Flows From Investing Activities
Purchases of marketable securities (7,372,892) (1,882,411) (2,622,477)
Proceeds from sale of marketable securities 4,001,848 1,064,810 1,836,569
Net change in client fund obligations 3,406,039 486,293 718,644
Capital expenditures (166,012) (177,700) (202,169)
Additions to intangibles (67,303) (62,360) (95,797)
Acquisitions of businesses, net of cash acquired (175,248) (107,317) (338,436)
Disposals of businesses 14,634 276,035 59,171
Other (11,664) 10,590 13,634
--------- --------- ---------
Net cash flows used in investing activities (370,598) (392,060) (630,861)
--------- --------- ---------
Cash Flows From Financing Activities
Payments of debt (106,090) (289,141) (7,681)
Proceeds from issuance of notes 13,940 91,696 120,986
Repurchases of common stock (201,007) (85,365) (40,907)
Proceeds from issuance of common stock 172,589 100,359 81,111
Dividends paid (212,578) (181,133) (152,888)
Other -- -- (1,845)
--------- --------- ---------
Net cash flows used in financing activities (333,146) (363,584) (1,224)
--------- --------- ---------
Net change in cash and cash equivalents 366,357 98,217 151,268
Cash and cash equivalents, at beginning of period 861,280 763,063 611,795
--------- --------- ---------
Cash and cash equivalents, at end of period $1,227,637 $ 861,280 $ 763,063
--------- --------- ---------
--------- --------- ---------
- ------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
<PAGE>
Notes to Consolidated Financial Statements
Years ended June 30, 2000, 1999 and 1998
Note 1. Summary of Significant Accounting Policies
A. Consolidation and Basis of Preparation. The consolidated financial
statements include the financial results of Automatic Data Processing, Inc. and
its majority-owned subsidiaries. Intercompany balances and transactions have
been eliminated in consolidation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from these
estimates.
B. Revenue Recognition. Service revenues, including monthly license, maintenance
and other fees, are recognized as services are provided. Prepaid software
licenses and the gross profit on the sale of hardware is recognized in revenue
primarily at installation and client acceptance with a portion deferred and
recognized on the straight-line basis over the initial contract period. Interest
earnings on collected but not yet remitted funds held for clients are an
integral part of certain of the Employer Services product offerings and are
recognized in revenues as earned. Professional Employer Organization (PEO)
revenues are net of pass-through costs, which include wages and taxes.
C. Cash and Cash Equivalents. Highly-liquid investments with a maturity of
ninety days or less at the time of purchase are considered cash equivalents.
D. Investments. Short-term and long-term marketable securities and funds held
for clients are primarily invested in high-grade fixed-income instruments. All
of the Company's marketable securities, including $3,363 million of funds held
for clients, are considered to be "available-for-sale" at June 30, 2000 and,
accordingly, are carried on the balance sheet at fair market value. The
remainder of the funds held for clients are cash equivalents. Approximately
$1,702 million of the "available-for-sale" investments mature in less than one
year, $1,058 million in 1-2 years, $1,060 million in 2-3 years, $284 million in
3-4 years, and $484 million in 5-6 years.
E. Property, Plant and Equipment. Property, plant and equipment is stated
at cost and depreciated over the estimated useful lives of the assets by the
straight-line method. Leasehold improvements are amortized over the shorter of
the term of the lease or the estimated useful lives of the improvements.
The estimated useful lives of assets are primarily as follows:
- --------------------------------------------------------------------------------
Data processing equipment 2 to 3 years
- --------------------------------------------------------------------------------
Buildings 20 to 40 years
- --------------------------------------------------------------------------------
Furniture and fixtures 3 to 7 years
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
F. Intangibles. Intangible assets are recorded at cost and are amortized
primarily on the straight-line basis. Goodwill is amortized over periods from 10
to 40 years, and is periodically reviewed for impairment by comparing carrying
value to undiscounted expected future cash flows. If impairment is indicated, a
write-down to fair value (normally measured by discounting estimated future cash
flows) is taken.
G. Foreign Currency Translation. The net assets of the Company's foreign
subsidiaries are translated into U.S. dollars based on exchange rates in effect
at the end of each period, and revenues and expenses are translated at average
exchange rates during the periods. Currency transaction gains or losses, which
are included in the results of operations, are immaterial for all periods
presented. Gains or losses from balance sheet translation are included in other
comprehensive income on the balance sheet.
<PAGE>
H. Earnings Per Share (EPS). The calculation of basic and diluted EPS is as
follows:
- --------------------------------------------------------------------------------
(In thousands, except EPS)
Effect of
Zero Coupon Effect of
Subordinated Stock
Basic Notes Options Diluted
-------- -------- -------- --------
2000
Net earnings $840,800 $ 2,912 $ -- $843,712
Average shares 626,766 4,509 14,823 646,098
EPS $ 1.34 $ 1.31
-------- -------- -------- --------
1999
Net earnings $696,840 $ 3,607 $ -- $700,447
Average shares 615,630 5,956 15,306 636,892
EPS $ 1.13 $ 1.10
-------- -------- -------- --------
1998
Net earnings $608,262 $ 7,833 $ -- $616,095
Average shares 600,803 14,030 13,363 628,196
EPS $ 1.01 $ .98
-------- -------- -------- --------
- --------------------------------------------------------------------------------
I. Restatement of Prior Financial Statements. Certain reclassifications and
restatements, including the inclusion of funds held for clients and client funds
obligations on the Consolidated Balance Sheets, have been made to previous
years' financial statements to conform to current presentation.
Note 2. Acquisitions and Dispositions
During fiscal 2000, 1999, and 1998, the Company purchased several
businesses for approximately $200 million (including $25 million in common
stock), $107 million and $351 million (including $13 million in common stock),
respectively, net of cash acquired. The results of these acquired businesses are
included from the date of acquisition.
In March 1999 the Company issued 7.2 million shares of common stock to
acquire The Vincam Group (Vincam), a leading PEO providing a suite of human
resource functions to small- and medium-sized employers on an outsourced basis,
in a pooling of interests transaction. The Company also acquired several other
businesses in fiscal 1999 (subsequent to the Vincam acquisition) and 1998 in
pooling of interests transactions in exchange for approximately 4.3 million and
0.9 million shares of common stock, respectively.
Additionally, in fiscal 2000 and 1999, the Company sold several businesses
with annual revenues of approximately $27 million and $270 million,
respectively. As part of the 1999 business dispositions, the Company received
$90 million of convertible preferred stock which is included in other assets.
The $90 million approximates fair value.
Note 3. Non-recurring Items
<PAGE>
During fiscal 1999 the Company sold its Peachtree Software and Brokerage
Services front-office "market data" businesses and decided to exit several other
businesses and contracts. The combination of these transactions and certain
other non-recurring charges resulted in a net pre-tax gain of approximately $37
million and a $40 million provision for income taxes.
Additionally, 1999 also includes approximately $21 million of transaction
costs and other non-recurring adjustments ($14 million after-tax) recorded by
Vincam prior to the March 1999 pooling transaction.
Note 4. Receivables
Accounts receivable is net of an allowance for doubtful accounts of $48 million
and $46 million at June 30, 2000 and 1999, respectively.
The Company finances the sale of computer systems to certain of its
clients. These finance receivables, most of which are due from automobile and
truck dealerships, are reflected in the consolidated balance sheets as follows:
- --------------------------------------------------------------------------------
(In thousands)
June 30, 2000 1999
----------------------- -----------------------
Current Long-term Current Long-term
----------------------- -----------------------
Receivables $171,415 $293,489 $147,274 $259,585
Less:
Allowance for
doubtful accounts (13,063) (16,946) (14,196) (16,556)
Unearned income (29,980) (31,294) (26,776) (29,616)
----------------------- -----------------------
$128,372 $245,249 $106,302 $213,413
----------------------- -----------------------
----------------------- -----------------------
- --------------------------------------------------------------------------------
Unearned income from finance receivables represents the excess of gross
receivables over the sales price of the computer systems financed. Unearned
income is amortized using the interest method to maintain a constant rate of
return on the net investment over the term of each contract.
Long-term receivables at June 30, 2000 mature as follows:
- --------------------------------------------------------------------------------
(In thousands)
2002 $136,319
2003 91,997
2004 48,800
2005 15,280
2006 972
Thereafter 121
--------
$293,489
--------
--------
- --------------------------------------------------------------------------------
<PAGE>
Note 5. Intangible Assets
Components of intangible assets are as follows:
- --------------------------------------------------------------------------------
(In thousands)
June 30, 2000 1999
----------- -----------
Goodwill $ 1,378,265 $ 1,215,179
Other 1,025,610 978,240
----------- -----------
2,403,875 2,193,419
Less accumulated amortization (780,174) (661,045)
----------- -----------
$ 1,623,701 $ 1,532,374
----------- -----------
----------- -----------
- --------------------------------------------------------------------------------
Other intangibles consist primarily of purchased rights (acquired directly
or through acquisitions) to provide data processing services to various groups
of clients (amortized over periods from 5 to 36 years) and purchased software
(amortized over periods from 3 to 10 years). Amortization of intangibles totaled
$133 million for fiscal 2000, $126 million for 1999 and $103 million for 1998.
Note 6. Debt
Components of long-term debt are as follows:
- --------------------------------------------------------------------------------
(In thousands)
June 30, 2000 1999
--------- ---------
Zero coupon convertible subordinated
notes (5 1/4% yield) $ 86,639 $ 97,705
Industrial revenue bonds
(with fixed and variable interest rates
from 3.3% to 6.3%) 36,858 37,267
Other 11,713 11,876
--------- ---------
135,210 146,848
Less current portion (3,193) (1,083)
--------- ---------
$ 132,017 $ 145,765
--------- ---------
--------- ---------
- --------------------------------------------------------------------------------
The zero coupon convertible subordinated notes have a face value of
approximately $159 million at June 30, 2000 and mature February 20, 2012, unless
converted or redeemed earlier. At June 30, 2000, the notes were convertible into
approximately 4.1 million shares of the Company's common stock. The notes are
callable at the option of the Company, and the holders of the notes can convert
into common stock at any time or require redemption in 2002 and 2007. During
fiscal 2000 and 1999, approximately $31 million and $101 million face value of
notes were converted or redeemed. <PAGE>
As of June 30, 2000 and 1999, the quoted market prices for the zero coupon
notes were approximately $208 million and $197 million, respectively. The fair
value of the other debt, included above, approximates its carrying value.
Long-term debt repayments at June 30, 2000 are due as follows:
- --------------------------------------------------------------------------------
(In thousands)
2002 $ 245
2003 248
2004 268
2005 763
2006 165
Thereafter 130,328
--------
$132,017
--------
--------
- --------------------------------------------------------------------------------
During fiscal 2000 and 1999, the average interest rate for notes payable
was 5.0% and 4.3%, respectively.
Interest payments were approximately $10 million in fiscal 2000 and $12
million in both fiscal 1999 and 1998.
Note 7. Funds Held for Clients and Client Funds Obligations
As part of its integrated payroll and payroll tax filing services, the Company
impounds funds for federal, state and local employment taxes from approximately
350,000 clients; files annually over 17 million returns; handles all regulatory
correspondence, amendments, and penalty and interest disputes; remits the funds
to the appropriate tax agencies; and handles other employer-related services. In
addition to fees paid by clients for these services, the Company receives
interest during the interval between the receipt and disbursement of these funds
by investing the funds primarily in fixed-income instruments. The amount of
collected but not yet remitted funds for the Company's payroll and tax filing
and certain other services varies significantly during the year and averaged
approximately $6.9 billion in fiscal 2000, $5.9 billion in fiscal 1999, and $5.2
billion in fiscal 1998.
Note 8. Employee Benefit Plans
A. Stock Plans. The Company has stock option plans which provide for the
issuance to eligible employees of incentive and non-qualified stock options,
which may expire as much as 10 years from the date of grant, at prices not less
than the fair market value on the date of grant. At June 30, 2000 there were
9,400 participants in the plans. The aggregate purchase price for options
outstanding at June 30, 2000 was approximately $1.3 billion. The options expire
at various points between 2000 and 2010.
A summary of changes in the stock option plans for the three years
ended June 30, 2000 is as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
(In thousands, except per share amounts)
Number of Options Weighted Average Price
---------------------------------- ----------------------
Years ended June 30, 2000 1999 1998 2000 1999 1998
---------------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding,
beginning of year 47,467 45,596 43,176 $24 $18 $15
Options granted 9,646 11,616 11,377 $46 $38 $29
Options exercised (6,736) (6,154) (5,970) $16 $12 $10
Options canceled (3,683) (3,591) (2,987) $32 $24 $18
----------------------------------
Options outstanding,
end of year 46,694 47,467 45,596 $29 $24 $18
----------------------------------
Options exercisable,
end of year 18,719 16,898 14,820 $19 $15 $11
----------------------------------
Shares available for
future grants,
end of year 10,478 1,691 9,358
----------------------------------
Shares reserved for
issuance under
stock option plans 57,172 49,158 54,954
----------------------------------
----------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Summarized information about stock options outstanding as of June 30, 2000
is as follows:
- ---------------------------------------------------------------------------------------------
Outstanding Exercisable
- ---------------------------------------------------------------------------------------------
Exercise Number Remaining Average Number Average
Price of Options Life Exercise of Options Exercise
Range (In thousands) (In years) Price (In thousands) Price
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Under $15 8,898 2.9 $11 7,820 $11
$15 to $20 6,670 5.3 $18 4,264 $18
$20 to $25 4,786 6.5 $23 1,921 $23
$25 to $30 5,595 7.4 $27 2,021 $27
$30 to $35 2,533 7.9 $32 757 $32
$35 to $40 6,573 8.3 $38 1,277 $38
$40 to $45 8,360 9.1 $44 526 $44
Over $45 3,279 9.7 $51 133 $51
- ---------------------------------------------------------------------------------------------
</TABLE>
The Company has stock purchase plans under which eligible employees have
the ability to purchase shares of common stock at 85% of the lower of market
value as of the date of purchase election or as of the end of the plans.
Approximately 2.8 million and 2.6 million shares are scheduled for issuance on
December 31, 2001 and 2000, respectively. Approximately 3.1 million and 3.2
million shares were issued during the years ended June 30, 2000 and 1999,
respectively. At June 30, 2000 and 1999, there were approximately 7.2 million
and 9.5 million shares, respectively, reserved for purchase under the plans.
Included in liabilities as of June 30, 2000 and 1999 are employee stock purchase
plan withholdings of approximately $86 million and $72 million, respectively.
The Company follows APB 25 to account for its stock plans. The pro forma
net income impact of options and stock purchase plan rights granted subsequent
to July 1, 1995 is shown below. The fair value for these instruments was
estimated at the date of grant using a Black-Scholes option pricing model with
the following weighted average assumptions:
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Years ended June 30, 2000 1999 1998
--------- --------- ---------
<S> <C> <C> <C>
Risk-free interest rate 6.0-6.7% 4.5-5.7% 5.4-6.3%
Dividend yield .8-.9% 1.0% 1.0%
Volatility factor 22.0-26.7% 19.7-21.8% 13.9-17.4%
Expected life:
Options 6.4 6.3 6.2
Purchase rights 2.0 2.0 2.0
Weighted average fair value:
Options $16.89 $11.63 $ 7.99
Purchase rights $19.73 $12.29 $10.72
--------- --------- ---------
--------- --------- ---------
- --------------------------------------------------------------------------------
</TABLE>
The Company's pro forma information, amortizing the fair value of the
stock options and stock purchase plan rights issued subsequent to July 1, 1995
over their vesting period, is as follows:
- --------------------------------------------------------------------------------
(In millions, except per share amounts)
Years ended June 30, 2000 1999 1998
-------- -------- --------
Pro forma net earnings $ 762 $ 638 $ 569
Pro forma basic earnings per share $ 1.22 $ 1.04 $ .95
Pro forma diluted earnings per share $ 1.18 $ 1.01 $ .92
-------- -------- --------
-------- -------- --------
- --------------------------------------------------------------------------------
The Company has a restricted stock plan under which shares of common stock
have been sold for nominal consideration to certain key employees. These shares
are restricted as to transfer and in certain circumstances must be resold to the
Company at the original purchase price. The restrictions lapse over periods of
up to six years. During the years ended June 30, 2000, 1999 and 1998 the Company
issued 171,900, 121,400 and 261,000 restricted shares, respectively.
B. Pension Plans. The Company has a defined benefit cash balance pension
plan covering substantially all U.S. employees, under which employees are
credited with a percentage of base pay plus 7% interest. Employees are fully
vested on completion of five years' service. The Company's policy is to make
contributions within the range determined by generally accepted actuarial
principles. In addition, the Company has various retirement plans for its
non-U.S. employees.
<PAGE>
The plans' funded status as of June 30, 2000 and 1999 follows:
- --------------------------------------------------------------------------------
(In thousands)
June 30, 2000 1999
--------- ---------
Change in plan assets:
Funded plan assets at market value at
beginning of year $ 354,500 $ 306,900
Plans of acquired employers 17,300 --
Actual return on plan assets 78,300 34,600
Employer contributions 43,000 19,200
Benefits paid (7,400) (6,200)
--------- ---------
Funded plan assets at market value at
end of year $ 485,700 $ 354,500
--------- ---------
--------- ---------
Change in benefit obligation:
Benefit obligation at beginning of year $ 256,400 $ 231,300
Plans of acquired employers 20,900 --
Service cost 29,600 23,400
Interest cost 20,000 16,400
Actuarial and other gains (2,900) (8,500)
Benefits paid (7,400) (6,200)
--------- ---------
Projected benefit obligation end of year $ 316,600 $ 256,400
--------- ---------
--------- ---------
Plan assets in excess of projected benefits $ 169,100 $ 98,100
Prior service cost -- (700)
Transition obligation 500 700
Unrecognized net actuarial gain due to
different experience than assumed (58,200) (14,900)
--------- ---------
Prepaid pension cost $ 111,400 $ 83,200
--------- ---------
--------- ---------
- --------------------------------------------------------------------------------
The components of net pension expense were as follows:
- --------------------------------------------------------------------------------
(In thousands)
Years ended June 30, 2000 1999 1998
-------- -------- --------
Service cost - benefits earned
during the period $ 29,600 $ 23,400 $ 18,000
Interest cost on projected benefits 20,200 16,400 14,500
Expected return on plan assets (32,900) (24,500) (21,300)
Net amortization and deferral (100) (700) (700)
-------- -------- --------
$ 16,800 $ 14,600 $ 10,500
-------- -------- --------
-------- -------- --------
- --------------------------------------------------------------------------------
Assumptions used to develop the actuarial present value of benefit
obligations generally were:
- --------------------------------------------------------------------------------
Years ended June 30, 2000 1999
---- ----
Discount rate 7.75% 7.50%
Expected long-term rate on assets 8.75% 8.75%
Increase in compensation levels 6.0% 6.0%
---- ----
---- ----
- --------------------------------------------------------------------------------
<PAGE>
C. Retirement and Savings Plan. The Company has a 401(k) retirement and savings
plan which allows eligible employees to contribute up to 16% of their
compensation annually. The Company matches a portion of this contribution which
amounted to approximately $27 million, $26 million and $22 million for calendar
years 1999, 1998 and 1997, respectively.
Note 9. Income Taxes
The Company accounts for its income taxes using the asset and liability
approach. Deferred taxes reflect the tax consequences on future years of
differences between the financial reporting and tax bases of assets and
liabilities.
The provision for income taxes consists of the following components:
- --------------------------------------------------------------------------------
(In thousands)
Years ended June 30, 2000 1999 1998
--------- --------- ---------
Current:
Federal $ 326,875 $ 296,397 $ 198,932
Non-U.S. 56,505 66,440 41,209
State 56,535 48,058 45,334
--------- --------- ---------
Total current 439,915 410,895 285,475
Deferred:
Federal 5,750 (6,045) (4,145)
Non-U.S. 1,220 (15,175) 3,115
State 1,915 (2,015) (1,990)
--------- --------- ---------
Total deferred 8,885 (23,235) (3,020)
--------- --------- ---------
$ 448,800 $ 387,660 $ 282,455
--------- --------- ---------
--------- --------- ---------
- --------------------------------------------------------------------------------
At June 30, 2000 and 1999, the Company had gross deferred tax assets of
approximately $188 million and $168 million, respectively, consisting primarily
of operating expenses not currently deductible for tax return purposes.
Valuation allowances approximated $23 million as of June 30, 2000 and 1999.
Gross deferred tax liabilities approximated $294 million and $277 million, as of
June 30, 2000 and June 30, 1999, respectively, consisting primarily of
differences in the accounting and tax values of certain fixed and intangible
assets.
Income tax payments were approximately $375 million in 2000, $270 million
in 1999, and $247 million in 1998.
<TABLE>
<CAPTION>
A reconciliation between the Company's effective tax rate and the U.S.
federal statutory rate is as follows:
- --------------------------------------------------------------------------------------------------------
(In thousands, except percentages)
Years ended June 30, 2000 % 1999 % 1998 %
------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Provision for taxes
at U.S. statutory rate $ 451,400 35.0 $ 379,600 35.0 $ 311,800 35.0
Increase (decrease)
in provision from:
Investments in
municipals (68,180) (5.3) (68,360) (6.3) (68,670) (7.7)
State taxes, net
of federal tax
benefit 37,990 2.9 29,930 2.8 28,119 3.2
Other* 27,590 2.2 46,490 4.2 11,206 1.2
------------------ ------------------ ------------------
$ 448,800 34.8 $ 387,660 35.7 $ 282,455 31.7
------------------ ------------------ ------------------
------------------ ------------------ ------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
* Includes impact of certain fiscal '99 acquisitions, dispositions and other
non-recurring adjustments.
Note 10. Commitments and Contingencies
The Company has obligations under various facilities and equipment leases, and
software license agreements. Total expense under these agreements was
approximately $243 million in 2000, $202 million in 1999 and $174 million in
1998, with minimum commitments at June 30, 2000 as follows:
- --------------------------------------------------------------------------------
(In millions)
Years ending June 30,
2001 $228
2002 179
2003 121
2004 69
2005 44
Thereafter 103
----
$744
----
----
- --------------------------------------------------------------------------------
In addition to fixed rentals, certain leases require payment of
maintenance and real estate taxes and contain escalation provisions based on
future adjustments in price indices.
In the normal course of business, the Company is subject to various claims
and litigation. The Company does not believe that the resolution of these
matters will have a material impact on the consolidated financial statements.
Note 11. Financial Data By Segment
Employer Services, Brokerage Services and Dealer Services are the Company's
largest business units. ADP evaluates performance of its business units based on
recurring operating results before interest on corporate funds, income taxes and
foreign currency gains and losses. 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.
Goodwill amortization is charged to business units at an accelerated rate to act
as a surrogate for the cost of capital for acquisitions. Interest on invested
funds held for clients are recorded in Employer Services revenues at a standard
rate of 6%, with the adjustment to actual revenues included in "Other". Prior
years' business unit revenues and pre-tax earnings have been restated to reflect
fiscal year 2000 budgeted foreign exchange rates. Business unit assets include
funds held for clients but exclude corporate cash, marketable securities and
goodwill. "Other" consists primarily of Claims Services, corporate expenses,
non-recurring items and the reconciling items referred to above.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
(In millions) Employer Brokerage Dealer
Year ended June 30, 2000 Services Services Services Other Total
-------- --------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Revenues $ 3,620 $ 1,479 $ 736 $ 453 $ 6,288
Pre-tax earnings $ 776 $ 334 $ 115 $ 65 $ 1,290
Assets $11,264 $ 522 $ 202 $ 4,863 $16,851
Capital expenditures $ 94 $ 27 $ 24 $ 21 $ 166
Depreciation and amortization $ 177 $ 81 $ 38 $ (12) $ 284
------- ------- ------- ------- -------
Year ended June 30, 1999
------- ------- ------- ------- -------
Revenues $ 3,269 $ 1,150 $ 733 $ 388 $ 5,540
Pre-tax earnings $ 674 $ 222 $ 107 $ 82 $ 1,085
Assets $ 7,813 $ 412 $ 242 $ 4,373 $12,840
Capital expenditures $ 92 $ 35 $ 25 $ 26 $ 178
Depreciation and amortization $ 175 $ 73 $ 40 $ (15) $ 273
------- ------- ------- ------- -------
Year ended June 30, 1998
------- ------- ------- ------- -------
Revenues $ 2,830 $ 1,096 $ 688 $ 312 $ 4,926
Pre-tax earnings $ 570 $ 163 $ 94 $ 64 $ 891
Assets $ 7,333 $ 400 $ 224 $ 3,831 $11,788
Capital expenditures $ 108 $ 49 $ 24 $ 21 $ 202
Depreciation and amortization $ 158 $ 80 $ 39 $ (29) $ 248
------- ------- ------- ------- -------
------- ------- ------- ------- -------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Revenues and assets by geographic area are as follows:
- --------------------------------------------------------------------------------
(In millions) United
Year ended June 30, 2000 States Europe Canada Other Total
------- ------ ------ ------ -------
Revenues $ 5,330 $ 645 $ 259 $ 54 $ 6,288
Assets $14,640 $1,126 $1,014 $ 71 $16,851
------- ------ ------ ------ -------
Year ended June 30, 1999
------- ------ ------ ------ -------
Revenues $ 4,564 $ 704 $ 212 $ 60 $ 5,540
Assets $10,498 $1,216 $1,043 $ 83 $12,840
------- ------ ------ ------ -------
Year ended June 30, 1998
------- ------ ------ ------ -------
Revenues $ 4,172 $ 493 $ 194 $ 67 $ 4,926
Assets $ 9,670 $1,248 $ 794 $ 76 $11,788
------- ------ ------ ------ -------
------- ------ ------ ------ -------
- --------------------------------------------------------------------------------
Note 12. Quarterly Financial Results
(Unaudited)
Summarized quarterly results of operations for the two years ended June 30, 2000
are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
(In thousands, except per share amounts)
First Second Third Fourth
Year ended June 30, 2000 Quarter Quarter Quarter Quarter
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $1,351,095 $1,492,486 $1,719,730 $1,724,201
Net earnings $ 146,200 $ 199,500 $ 271,310 $ 223,790
Basic earnings per share $ .23 $ .32 $ .43 $ .36
Diluted earnings per share $ .23 $ .31 $ .42 $ .35
---------- ---------- ---------- ----------
Year ended June 30, 1999 *
---------- ---------- ---------- ----------
Revenues $1,245,126 $1,310,196 $1,514,132 $1,470,687
Net earnings $ 125,424 $ 153,977 $ 225,650 $ 191,789
Basic earnings per share $ .20 $ .25 $ .37 $ .31
Diluted earnings per share $ .20 $ .24 $ .36 $ .30
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
- ------------------------------------------------------------------------------------------
</TABLE>
*After impact of non-recurring items. See note 3 to the consolidated financial
statements.
<PAGE>
REPORT OF MANAGEMENT
Management is responsible for the preparation of the accompanying financial
statements. The financial statements, which include amounts based on the
application of business judgments, have been prepared in conformity with
generally accepted accounting principles. Deloitte & Touche LLP, independent
certified public accountants, have audited our consolidated financial statements
as described in their report.
The Company maintains financial control systems designed to provide
reasonable assurance that assets are safeguarded and that transactions are
executed and recorded in accordance with management authorization. The control
systems are supported by written policies and the control environment is
regularly evaluated by both the Company's internal auditors and Deloitte &
Touche.
The Board of Directors has an Audit Committee comprised of four outside
directors. The Audit Committee meets with both Deloitte & Touche and the
internal auditors with and without management's presence. It monitors and
reviews the Company's financial statements and internal controls, and the scope
of the internal auditors' and Deloitte & Touche's audits. Deloitte & Touche and
the internal auditors have free access to the Audit Committee.
/s/ Arthur F. Weinbach
Arthur F. Weinbach
Chairman and Chief Executive Officer
/s/ Richard J. Haviland
Richard J. Haviland
Chief Financial Officer
/s/ Karen E. Dykstra
Karen E. Dykstra
Controller
Roseland, New Jersey
August 14, 2000
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Automatic Data Processing, Inc.
Roseland, New Jersey
We have audited the accompanying consolidated balance sheets of Automatic
Data Processing, Inc. and subsidiaries as of June 30, 2000 and 1999, and the
related consolidated statements of earnings, shareholders' equity, and cash
flows for each of the three years in the period ended June 30, 2000. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Automatic Data Processing, Inc.
and subsidiaries as of June 30, 2000 and 1999, and the results of its operations
and its cash flows for each of the three years in the period ended June 30,
2000, in conformity with accounting principles generally accepted in the United
States of America.
/s/ Deloitte & Touche LLP
New York, New York
August 14, 2000
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>EXHIBIT 21 TO FORM 10-K
<TEXT>
EXHIBIT 21
<TABLE>
Jurisdiction of
Name of Subsidiary Incorporation
- ------------------ ----------------
<S> <C>
ADP Atlantic, Inc. Delaware
ADP Belgium CVA Belgium
ADP Brasil Ltda. Brazil
ADP Broker-Dealer, Inc. New Jersey
ADP Brokerage International Limited United Kingdom
ADP Central, Inc. Delaware
ADP Claims Solutions Group, Inc. Delaware
ADP Credit Corp. Delaware
ADP Dealer Services Ltd. Canada (Federal)
ADP Dealer Services Deutschland GmbH Germany
ADP Dealer Services Italia s.r.l. Italy
ADP East, Inc. Delaware
ADP Employer Services GmbH Germany
ADP Europe S.A. France
ADP Financial Information Services, Inc. Delaware
ADP GSI S.A. France
ADP Hollander, Inc. Delaware
ADP, Inc. Delaware
ADP Integrated Medical Solutions, Inc. Delaware
ADP Nederland B.V. The Netherlands
ADP Network Services International, Inc. Delaware
ADP Network Services Limited United Kingdom
ADP of North America, Inc. Delaware
ADP of Roseland, Inc. Delaware
ADP Pacific, Inc. Delaware
ADP Savings Association Pennsylvania
ADP Tax Services, Inc. Delaware
ADP TotalSource Group, Inc. Florida
Audatex GmbH Switzerland
Audatex Holding GmbH Switzerland
Audatex Deutchland Datenverarbeitungs GmbH Germany
Automatic Data Processing Limited United Kingdom
Automatic Data Processing SPRL Belgium
Business Management Software Limited United Kingdom
Canadian-Automatic Data Processing Services Ltd. Canada (Federal)
Cunningham Graphics International, Inc. New Jersey
Cunningham Graphics International, S.A. British Virgin Islands
GSI Transport Tourisme S.A. France
Health Benefits America Utah
Informex S.A. Belgium
OMR Systems Corporation New Jersey
Wilco International Limited United Kingdom
</TABLE>
In accordance with Item 601(b)(21) of Regulation S-K, the Registrant has
omitted the names of particular subsidiaries because the unnamed
subsidiaries, considered in the aggregate as a single subsidiary, would not
have constituted a significant subsidiary as of June 30, 2000.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>EXHIBIT 23 TO FORM 10-K
<TEXT>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Automatic Data Processing,
Inc.'s Registration Statement Nos. 33-45150, 33-52876, 33-55909, 33-57207,
33-58165, 33-61629, 333-01839, 333-02331, 333-12767, 333-15103, 333-29713,
333-48493, 333-57075, 333-80237, 333-79749, 333-72497, 333-31058 and
333-42294 on Form S-3, Registration Statement No. 333-72023 on Form S-4, and
Registration Statement Nos. 33-24987, 33-25290, 33-38338, 2-75287,
33-38366, 33-38365, 33-46168, 33-51979, 33-51977, 33-52629, 33-56419,
33-56463, 333-10281, 333-10279, 333-10277, 333-13945, 333-50123, 333-84647,
333-81725, 333-74265 and 333-33258 on Form S-8 of our reports dated August
14, 2000, included in and incorporated by reference in this Annual Report
on Form 10-K of Automatic Data Processing, Inc. for the year ended
June 30, 2000.
/s/ Deloitte & Touche LLP
-------------------------
New York, New York
September 12, 2000
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>FDS --
<TEXT>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000008670
<NAME> Automatic Data Processing, Inc.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> JUN-30-2000
<EXCHANGE-RATE> 1.000
<CASH> 1,227,637
<SECURITIES> 1,224,912
<RECEIVABLES> 947,762
<ALLOWANCES> 48,448
<INVENTORY> 44,169
<CURRENT-ASSETS> 3,064,452
<PP&E> 1,549,985
<DEPRECIATION> 952,715
<TOTAL-ASSETS> 16,850,816
<CURRENT-LIABILITIES> 1,296,668
<BONDS> 132,017
<PREFERRED-MANDATORY> 0
<PREFERRED> 0
<COMMON> 63,144
<OTHER-SE> 4,519,674
<TOTAL-LIABILITY-AND-EQUITY> 16,850,816
<SALES> 0
<TOTAL-REVENUES> 6,287,512
<CGS> 0
<TOTAL-COSTS> 4,959,752
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 25,020
<INTEREST-EXPENSE> 13,140
<INCOME-PRETAX> 1,289,600
<INCOME-TAX> 448,800
<INCOME-CONTINUING> 840,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 840,800
<EPS-BASIC> 1.34
<EPS-DILUTED> 1.31
</TABLE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----