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Fiscal 2021 (unaudited) | July 28, 2021 Fiscal 2022 Outlook (a) | ||||||||||
| Total ADP | Revenues | $15,005M | 6 to 7% | ||||||||
| Adj. EBIT Margin | 22.6% | 25 to 50 bps | |||||||||
| Adj. Effective Tax Rate | 22.7% | ~22.5% | |||||||||
| Adj. Diluted EPS | $6.02 | 9 to 11% | |||||||||
| Employer Services | Revenues | $10,195M | 4 to 6% | ||||||||
| Margin | 29.9% | 50 to 75 bps | |||||||||
| ES New Business Bookings | $1.5B | 10 to 15% | |||||||||
| Client Revenue Retention | 92.2% | ~(75) bps | |||||||||
| U.S. Pays Per Control | (3)% | 4 to 5% | |||||||||
| PEO Services | Revenues | $4,818M | 9 to 11% | ||||||||
| Revenues Ex Pass-throughs | $1,726M | 10 to 12% | |||||||||
| Margin | 14.9% | (75) to (25) bps | |||||||||
| Average WSEs | 582,000 | 9 to 11% | |||||||||
| Client Funds Interest | Average Client Funds Balances | $27.4B | 8 to 10% | ||||||||
| Yield on Client Funds Portfolio | 1.5% | (10) bps, to 1.4% | |||||||||
| Client Funds Interest Revenue | $422M | $405 to $415M | |||||||||
| Extended Investment Strategy | $450M | $435 to $445M | |||||||||
| Automatic Data Processing, Inc. and Subsidiaries | ||||||||||||||||||||||||||||||||||||||
| Statements of Consolidated Earnings | ||||||||||||||||||||||||||||||||||||||
| (In millions, except per share amounts) | ||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||
| Revenues, other than interest on funds held for clients and PEO revenues | $ | 2,422.4 | $ | 2,181.4 | $ | 9,768.6 | $ | 9,538.1 | ||||||||||||||||||||||||||||||
| Interest on funds held for clients | 103.2 | 114.8 | 422.4 | 545.2 | ||||||||||||||||||||||||||||||||||
| PEO revenues (A) (B) (C) | 1,211.3 | 1,080.6 | 4,814.4 | 4,506.5 | ||||||||||||||||||||||||||||||||||
| Total revenues | 3,736.9 | 3,376.8 | 15,005.4 | 14,589.8 | ||||||||||||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||||||||||||||
| Costs of revenues: | ||||||||||||||||||||||||||||||||||||||
| Operating expenses (B) (C) | 1,911.1 | 1,806.4 | 7,520.7 | 7,404.1 | ||||||||||||||||||||||||||||||||||
| Systems development and programming costs | 194.9 | 165.1 | 716.6 | 674.1 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 99.5 | 95.7 | 403.0 | 366.9 | ||||||||||||||||||||||||||||||||||
| Total costs of revenues | 2,205.5 | 2,067.2 | 8,640.3 | 8,445.1 | ||||||||||||||||||||||||||||||||||
| Selling, general, and administrative expenses | 840.7 | 765.6 | 3,040.5 | 3,003.0 | ||||||||||||||||||||||||||||||||||
| Interest expense | 17.2 | 15.6 | 59.7 | 107.1 | ||||||||||||||||||||||||||||||||||
| Total expenses | 3,063.4 | 2,848.4 | 11,740.5 | 11,555.2 | ||||||||||||||||||||||||||||||||||
| Other (income)/expense, net | (23.6) | (2.9) | (96.3) | (148.0) | ||||||||||||||||||||||||||||||||||
| Earnings before income taxes | 697.1 | 531.3 | 3,361.2 | 3,182.6 | ||||||||||||||||||||||||||||||||||
| Provision for income taxes | 158.9 | 119.8 | 762.7 | 716.1 | ||||||||||||||||||||||||||||||||||
| Net earnings | $ | 538.2 | $ | 411.5 | $ | 2,598.5 | $ | 2,466.5 | ||||||||||||||||||||||||||||||
| Basic earnings per share | $ | 1.27 | $ | 0.96 | $ | 6.10 | $ | 5.73 | ||||||||||||||||||||||||||||||
| Diluted earnings per share | $ | 1.26 | $ | 0.96 | $ | 6.07 | $ | 5.70 | ||||||||||||||||||||||||||||||
| Components of Other (income)/expense, net: | ||||||||||||||||||||||||||||||||||||||
| Interest income on corporate funds | $ | (7.5) | $ | (14.5) | $ | (36.5) | $ | (84.5) | ||||||||||||||||||||||||||||||
| Realized (gains)/losses on available-for-sale securities, net | (3.6) | (1.0) | (11.3) | (12.9) | ||||||||||||||||||||||||||||||||||
| Impairment of assets | 12.2 | 29.9 | 19.9 | 29.9 | ||||||||||||||||||||||||||||||||||
| Gain on sale of assets | (6.4) | (3.9) | (8.1) | (5.8) | ||||||||||||||||||||||||||||||||||
| Gain on sale of investment | — | — | (1.7) | (0.2) | ||||||||||||||||||||||||||||||||||
| Non-service components of pension income, net (D) | (18.3) | (13.4) | (58.6) | (74.5) | ||||||||||||||||||||||||||||||||||
| Other (income)/expense, net | $ | (23.6) | $ | (2.9) | $ | (96.3) | $ | (148.0) | ||||||||||||||||||||||||||||||
| Automatic Data Processing, Inc. and Subsidiaries | |||||||||||
| Consolidated Balance Sheets | |||||||||||
| (In millions, except per share amounts) | |||||||||||
| (Unaudited) | |||||||||||
| June 30, | June 30, | ||||||||||
| 2021 | 2020 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 2,575.2 | $ | 1,908.5 | |||||||
Accounts receivable, net of allowance for doubtful accounts of $79.6 and $92.5, respectively | 2,727.4 | 2,441.3 | |||||||||
| Other current assets | 533.4 | 506.2 | |||||||||
| Total current assets before funds held for clients | 5,836.0 | 4,856.0 | |||||||||
| Funds held for clients | 34,905.8 | 26,708.1 | |||||||||
| Total current assets | 40,741.8 | 31,564.1 | |||||||||
| Long-term receivables, net of allowance for doubtful accounts of $0.3 and $0.5, respectively | 11.5 | 18.6 | |||||||||
| Property, plant and equipment, net | 684.5 | 703.9 | |||||||||
| Operating lease right-of-use asset | 462.2 | 493.7 | |||||||||
| Deferred contract costs | 2,498.2 | 2,401.6 | |||||||||
| Other assets | 825.8 | 458.4 | |||||||||
| Goodwill | 2,338.4 | 2,309.4 | |||||||||
| Intangible assets, net | 1,210.1 | 1,215.8 | |||||||||
| Total assets | $ | 48,772.5 | $ | 39,165.5 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 141.1 | $ | 102.0 | |||||||
| Accrued expenses and other current liabilities | 1,963.3 | 1,980.7 | |||||||||
| Accrued payroll and payroll-related expenses | 910.2 | 557.0 | |||||||||
| Dividends payable | 390.8 | 387.3 | |||||||||
| Short-term deferred revenues | 203.9 | 212.5 | |||||||||
| Obligations under reverse repurchase agreements (A) | 23.5 | 13.6 | |||||||||
| Short-term debt | — | 1,001.8 | |||||||||
| Income taxes payable | 58.2 | 40.1 | |||||||||
| Total current liabilities before client funds obligations | 3,691.0 | 4,295.0 | |||||||||
| Client funds obligations | 34,403.8 | 25,831.6 | |||||||||
| Total current liabilities | 38,094.8 | 30,126.6 | |||||||||
| Long-term debt | 2,985.0 | 1,002.8 | |||||||||
| Operating lease liabilities | 343.2 | 344.4 | |||||||||
| Other liabilities | 834.1 | 837.0 | |||||||||
| Deferred income taxes | 482.9 | 731.9 | |||||||||
| Long-term deferred revenues | 362.4 | 370.6 | |||||||||
| Total liabilities | 43,102.4 | 33,413.3 | |||||||||
| Stockholders' equity: | |||||||||||
| Preferred stock, $1.00 par value: authorized, 0.3 shares; issued, none | — | — | |||||||||
Common stock, $0.10 par value: authorized, 1,000.0 shares; issued, 638.7 shares at June 30, 2021 and June 30, 2020; outstanding, 423.7 and 429.9 shares at June 30, 2021 and June 30, 2020, respectively | 63.9 | 63.9 | |||||||||
| Capital in excess of par value | 1,531.3 | 1,333.8 | |||||||||
| Retained earnings | 19,451.1 | 18,436.3 | |||||||||
| Treasury stock - at cost: 215.0 and 208.9 shares at June 30, 2021 and June 30, 2020, respectively | (15,386.8) | (14,067.0) | |||||||||
| Accumulated other comprehensive income (loss) | 10.6 | (14.8) | |||||||||
| Total stockholders’ equity | 5,670.1 | 5,752.2 | |||||||||
| Total liabilities and stockholders’ equity | $ | 48,772.5 | $ | 39,165.5 | |||||||
| Automatic Data Processing, Inc. and Subsidiaries | |||||||||||
| Statements of Consolidated Cash Flows | |||||||||||
| (In millions) | |||||||||||
| (Unaudited) | Twelve Months Ended | ||||||||||
| June 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net earnings | $ | 2,598.5 | $ | 2,466.5 | |||||||
| Adjustments to reconcile net earnings to cash flows provided by operating activities: | |||||||||||
| Depreciation and amortization | 510.7 | 480.0 | |||||||||
| Amortization of deferred contract costs | 935.3 | 915.0 | |||||||||
| Deferred income taxes | (251.1) | 26.0 | |||||||||
| Stock-based compensation expense | 175.3 | 130.8 | |||||||||
| Net pension income | (52.8) | (11.6) | |||||||||
| Net amortization of premiums and accretion of discounts on available-for-sale securities | 69.5 | 50.2 | |||||||||
| Impairment of assets | 19.9 | 29.9 | |||||||||
| Gain on sale of assets | (9.8) | (6.0) | |||||||||
| Other | 35.2 | 65.4 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Increase in accounts receivable | (339.8) | (113.8) | |||||||||
| Increase in other assets | (1,029.4) | (910.4) | |||||||||
| Increase/(Decrease) in accounts payable | 36.9 | (18.3) | |||||||||
| Increase/(Decrease) in accrued expenses and other liabilities | 394.9 | (77.5) | |||||||||
| Net cash flows provided by operating activities | 3,093.3 | 3,026.2 | |||||||||
| Cash Flows from Investing Activities: | |||||||||||
| Purchases of corporate and client funds marketable securities | (9,266.3) | (3,905.1) | |||||||||
| Proceeds from the sales and maturities of corporate and client funds marketable securities | 6,238.4 | 7,648.4 | |||||||||
| Capital expenditures | (178.6) | (172.7) | |||||||||
| Additions to intangibles | (327.3) | (443.7) | |||||||||
| Proceeds from sale of property, plant, and equipment and other assets | 18.8 | 29.4 | |||||||||
| Net cash flows (used in)/provided by investing activities | (3,515.0) | 3,156.3 | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Net increase/(decrease) in client funds obligations | 8,336.2 | (3,213.2) | |||||||||
| Payments of debt | (1,001.8) | (2.2) | |||||||||
| Proceeds from the issuance of debt | 1,981.5 | — | |||||||||
| Settlement of cash flow hedges | (44.6) | — | |||||||||
| Repurchases of common stock | (1,372.3) | (1,006.3) | |||||||||
| Net proceeds from stock purchase plan and stock-based compensation plans | 104.1 | 50.0 | |||||||||
| Dividends paid | (1,575.5) | (1,470.5) | |||||||||
| Net proceeds/(payments) related to reverse repurchase agreements | 9.9 | (248.4) | |||||||||
| Net cash flows provided by/(used in) financing activities | 6,437.5 | (5,890.6) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents | 73.8 | (34.5) | |||||||||
| Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents | 6,089.6 | 257.4 | |||||||||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of year | 7,053.6 | 6,796.2 | |||||||||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of year | $ | 13,143.2 | $ | 7,053.6 | |||||||
| Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the Consolidated Balance Sheets | |||||||||||
| Cash and cash equivalents | 2,575.2 | 1,908.5 | |||||||||
| Restricted cash and restricted cash equivalents included in funds held for clients | 10,568.0 | 5,145.1 | |||||||||
| Total cash, cash equivalents, restricted cash, and restricted cash equivalents | $ | 13,143.2 | $ | 7,053.6 | |||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Cash paid for interest | $ | 53.1 | $ | 104.8 | |||||||
| Cash paid for income taxes, net of income tax refunds | $ | 973.7 | $ | 677.1 | |||||||
| Automatic Data Processing, Inc. and Subsidiaries | ||||||||||||||||||||||||||||||||||||||
| Other Selected Financial Data | ||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except per share amounts) | ||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||||||||||||||||||||||||||||
| Segment revenues | ||||||||||||||||||||||||||||||||||||||
Employer Services | $ | 2,527.8 | $ | 2,296.0 | 10 | % | $ | 10,195.2 | $ | 10,086.6 | 1 | % | ||||||||||||||||||||||||||
PEO Services | 1,212.3 | 1,081.7 | 12 | % | 4,818.3 | 4,511.5 | 7 | % | ||||||||||||||||||||||||||||||
Other | (3.2) | (0.9) | n/m | (8.1) | (8.3) | n/m | ||||||||||||||||||||||||||||||||
Total revenues | $ | 3,736.9 | $ | 3,376.8 | 11 | % | $ | 15,005.4 | $ | 14,589.8 | 3 | % | ||||||||||||||||||||||||||
| Segment earnings | ||||||||||||||||||||||||||||||||||||||
Employer Services | $ | 624.3 | $ | 588.8 | 6 | % | $ | 3,052.1 | $ | 3,058.2 | 0 | % | ||||||||||||||||||||||||||
PEO Services | 173.3 | 118.3 | 46 | % | 718.8 | 609.3 | 18 | % | ||||||||||||||||||||||||||||||
Other | (100.5) | (175.8) | n/m | (409.7) | (484.9) | n/m | ||||||||||||||||||||||||||||||||
Total pretax earnings | $ | 697.1 | $ | 531.3 | 31 | % | $ | 3,361.2 | $ | 3,182.6 | 6 | % | ||||||||||||||||||||||||||
| Segment margin | ||||||||||||||||||||||||||||||||||||||
Employer Services | 24.7 | % | 25.6 | % | (0.9) | % | 29.9 | % | 30.3 | % | (0.4) | % | ||||||||||||||||||||||||||
PEO Services | 14.3 | % | 10.9 | % | 3.4 | % | 14.9 | % | 13.5 | % | 1.4 | % | ||||||||||||||||||||||||||
Other | n/m | n/m | n/m | n/m | n/m | n/m | ||||||||||||||||||||||||||||||||
Total pretax margin | 18.7 | % | 15.7 | % | 2.9 | % | 22.4 | % | 21.8 | % | 0.6 | % | ||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||||||||||||||
| Earnings per share information: | 2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||||||||||||||||||||||||
| Net earnings | $ | 538.2 | $ | 411.5 | 31 | % | $ | 2,598.5 | $ | 2,466.5 | 5 | % | ||||||||||||||||||||||||||
| Basic weighted average shares outstanding | 423.5 | 429.1 | (1) | % | 426.3 | 430.8 | (1) | % | ||||||||||||||||||||||||||||||
| Basic earnings per share | $ | 1.27 | $ | 0.96 | 33 | % | $ | 6.10 | $ | 5.73 | 6 | % | ||||||||||||||||||||||||||
| Diluted weighted average shares outstanding | 425.9 | 430.6 | (1) | % | 428.1 | 432.7 | (1) | % | ||||||||||||||||||||||||||||||
| Diluted earnings per share | $ | 1.26 | $ | 0.96 | 31 | % | $ | 6.07 | $ | 5.70 | 6 | % | ||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Key Statistics: | |||||||||||||||||||||||
| Employer Services: | |||||||||||||||||||||||
Change in pays per control - U.S. (A) | 8 | % | (11) | % | (3) | % | (1) | % | |||||||||||||||
Employer Services New Business Bookings growth | 174 | % | (67) | % | 23 | % | (21) | % | |||||||||||||||
| PEO Services: | |||||||||||||||||||||||
Paid PEO Worksite Employees at end of period | 624,000 | 537,000 | 624,000 | 537,000 | |||||||||||||||||||
Average paid PEO Worksite Employees during the period | 616,000 | 548,000 | 582,000 | 571,000 | |||||||||||||||||||
Significant PEO expenses included within Operating expenses | |||||||||||||||||||||||
Zero-margin benefits pass-through costs | $ | 800.3 | $ | 738.3 | $ | 3,092.0 | $ | 2,907.7 | |||||||||||||||
Workers' compensation and state unemployment taxes | $ | 111.7 | $ | 72.7 | $ | 533.9 | $ | 474.1 | |||||||||||||||
| Automatic Data Processing, Inc. and Subsidiaries | |||||||||||||||||||||||||||||||||||
| Other Selected Financial Data, Continued | |||||||||||||||||||||||||||||||||||
| (Dollars in millions, except per share amounts or where otherwise stated) | |||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||||||||||||||
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||||||||||||||||||||||
| Average investment balances at cost (in billions): | |||||||||||||||||||||||||||||||||||
| Corporate, other than corporate extended | $ | 2.3 | $ | 1.6 | 44 | % | $ | 1.8 | $ | 1.6 | 18 | % | |||||||||||||||||||||||
| Corporate extended (A) | 1.5 | 2.5 | (38) | % | 1.7 | 3.0 | (44) | % | |||||||||||||||||||||||||||
| Total corporate | 3.8 | 4.1 | (6) | % | 3.5 | 4.6 | (23) | % | |||||||||||||||||||||||||||
| Funds held for clients | 29.3 | 24.0 | 22 | % | 27.4 | 26.0 | 5 | % | |||||||||||||||||||||||||||
| Total | $ | 33.2 | $ | 28.1 | 18 | % | $ | 30.9 | $ | 30.6 | 1 | % | |||||||||||||||||||||||
| Average interest rates earned exclusive of realized losses (gains) on: | |||||||||||||||||||||||||||||||||||
| Corporate, other than corporate extended | 0.3 | % | 0.4 | % | 0.4 | % | 1.3 | % | |||||||||||||||||||||||||||
| Corporate extended (A) | 1.6 | % | 2.1 | % | 1.8 | % | 2.1 | % | |||||||||||||||||||||||||||
| Total corporate | 0.8 | % | 1.4 | % | 1.0 | % | 1.9 | % | |||||||||||||||||||||||||||
| Funds held for clients | 1.4 | % | 1.9 | % | 1.5 | % | 2.1 | % | |||||||||||||||||||||||||||
| Total | 1.3 | % | 1.8 | % | 1.5 | % | 2.1 | % | |||||||||||||||||||||||||||
| Net unrealized gain position at end of period | $ | 502.2 | $ | 876.8 | $ | 502.2 | $ | 876.8 | |||||||||||||||||||||||||||
| Average short-term financing (in billions): | |||||||||||||||||||||||||||||||||||
| U.S. commercial paper borrowings | $ | 1.3 | $ | 2.3 | $ | 1.6 | $ | 2.7 | |||||||||||||||||||||||||||
| U.S., Canadian & U.K. reverse repurchase agreement borrowings | 0.3 | 0.2 | 0.1 | 0.3 | |||||||||||||||||||||||||||||||
| $ | 1.5 | $ | 2.5 | $ | 1.7 | $ | 3.0 | ||||||||||||||||||||||||||||
| Average interest rates paid on: | |||||||||||||||||||||||||||||||||||
| U.S. commercial paper borrowings | 0.1 | % | 0.1 | % | 0.1 | % | 1.6 | % | |||||||||||||||||||||||||||
| U.S., Canadian & U.K. reverse repurchase agreement borrowings | 0.2 | % | 0.3 | % | 0.2 | % | 1.6 | % | |||||||||||||||||||||||||||
| Interest on funds held for clients | $ | 103.2 | $ | 114.8 | (10) | % | $ | 422.4 | $ | 545.2 | (23) | % | |||||||||||||||||||||||
| Corporate extended interest income (B) | 6.0 | 12.8 | (53) | % | 30.0 | 64.0 | (53) | % | |||||||||||||||||||||||||||
| Corporate interest expense-short-term financing (B) | (0.4) | (0.8) | 50 | % | (2.4) | (47.9) | 95 | % | |||||||||||||||||||||||||||
| Net Impact from Client Fund Strategy | $ | 108.7 | $ | 126.8 | (14) | % | $ | 450.0 | $ | 561.3 | (20) | % | |||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Corporate extended interest income (B) | $ | 6.0 | $ | 12.8 | $ | 30.0 | $ | 64.0 | |||||||||||||||
| All other interest income | 1.5 | 1.6 | 6.5 | 20.5 | |||||||||||||||||||
| Total interest income on corporate funds (component of Other (income)/expense, net) | $ | 7.5 | $ | 14.5 | $ | 36.5 | $ | 84.5 | |||||||||||||||
| Corporate interest expense-short-term financing (B) | $ | 0.4 | $ | 0.8 | $ | 2.4 | $ | 47.9 | |||||||||||||||
| All other interest expense | 16.8 | 14.8 | 57.3 | 59.2 | |||||||||||||||||||
| Total interest expense | $ | 17.2 | $ | 15.6 | $ | 59.7 | $ | 107.1 | |||||||||||||||
| Automatic Data Processing, Inc. and Subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated Statement of Adjusted / Non-GAAP Financial Information | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except per share amounts) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| In addition to our GAAP results, we use the adjusted results and other non-GAAP metrics set forth in the table below to evaluate our operating performance in the absence of certain items and for planning and forecasting of future periods: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted Financial Measure | U.S. GAAP Measures | |||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBIT | Net earnings | |||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted provision for income taxes | Provision for income taxes | |||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted net earnings | Net earnings | |||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted diluted earnings per share | Diluted earnings per share | |||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted effective tax rate | Effective tax rate | |||||||||||||||||||||||||||||||||||||||||||||||||
| Organic constant currency | Revenues | |||||||||||||||||||||||||||||||||||||||||||||||||
Corporate extended interest income (see prior page) | Interest income | |||||||||||||||||||||||||||||||||||||||||||||||||
Corporate interest expense-short-term financing (see prior page) | Interest expense | |||||||||||||||||||||||||||||||||||||||||||||||||
| We believe that the exclusion of the identified items below helps us reflect the fundamentals of our underlying business model and analyze results against our expectations and against prior period, and to plan for future periods by focusing on our underlying operations. We believe that the adjusted results provide relevant and useful information for investors because it allows investors to view performance in a manner similar to the method used by management and improves their ability to understand and assess our operating performance. The nature of these exclusions is for specific items that are not fundamental to our underlying business operations. Since these adjusted financial measures and other non-GAAP metrics are not measures of performance calculated in accordance with U.S. GAAP, they should not be considered in isolation from, as a substitute for, or superior to their corresponding U.S. GAAP measures, and they may not be comparable to similarly titled measures at other companies. | ||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||||||
| June 30, | % Change | June 30, | % Change | |||||||||||||||||||||||||||||||||||
| 2021 | 2020 | As Reported | 2021 | 2020 | As Reported | |||||||||||||||||||||||||||||||||
| Net earnings | $ | 538.2 | $ | 411.5 | 31 | % | $ | 2,598.5 | $ | 2,466.5 | 5 | % | ||||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 158.9 | 119.8 | 762.7 | 716.1 | ||||||||||||||||||||||||||||||||||
| All other interest expense (a) | 16.8 | 14.8 | 57.3 | 59.2 | ||||||||||||||||||||||||||||||||||
| All other interest income (a) | (1.5) | (1.6) | (6.5) | (20.5) | ||||||||||||||||||||||||||||||||||
| Gain on sale of assets | — | — | — | (0.2) | ||||||||||||||||||||||||||||||||||
| Transformation initiatives (b) | (3.5) | 57.9 | — | 77.4 | ||||||||||||||||||||||||||||||||||
| Excess capacity severance charges (c) | — | 25.4 | 2.9 | 25.4 | ||||||||||||||||||||||||||||||||||
| Legal settlements (d) | (30.7) | 25.0 | (30.7) | 25.0 | ||||||||||||||||||||||||||||||||||
| Adjusted EBIT | $ | 678.2 | $ | 652.8 | 4 | % | $ | 3,384.2 | $ | 3,348.9 | 1 | % | ||||||||||||||||||||||||||
| Adjusted EBIT Margin | 18.1 | % | 19.3 | % | 22.6 | % | 23.0 | % | ||||||||||||||||||||||||||||||
| Provision for income taxes | $ | 158.9 | $ | 119.8 | 33 | % | $ | 762.7 | $ | 716.1 | 7 | % | ||||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||||
| Gain on sale of assets (e) | — | — | — | (0.1) | ||||||||||||||||||||||||||||||||||
| Transformation initiatives (e) | (0.9) | 14.3 | — | 19.2 | ||||||||||||||||||||||||||||||||||
| Excess capacity severance charges (e) | — | 6.3 | 0.5 | 6.3 | ||||||||||||||||||||||||||||||||||
| Legal settlements (e) | (7.5) | 6.2 | (7.5) | 6.2 | ||||||||||||||||||||||||||||||||||
| Adjusted provision for income taxes | $ | 150.5 | $ | 146.6 | 3 | % | $ | 755.7 | $ | 747.7 | 1 | % | ||||||||||||||||||||||||||
| Adjusted effective tax rate (f) | 22.7 | % | 22.9 | % | 22.7 | % | 22.6 | % | ||||||||||||||||||||||||||||||
| Net earnings | $ | 538.2 | $ | 411.5 | 31 | % | $ | 2,598.5 | $ | 2,466.5 | 5 | % | ||||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||||
| Gain on sale of assets | — | — | — | (0.2) | ||||||||||||||||||||||||||||||||||
| Income tax provision on gain on sale of assets (e) | — | — | — | 0.1 | ||||||||||||||||||||||||||||||||||
| Transformation initiatives (b) | (3.5) | 57.9 | — | 77.4 | ||||||||||||||||||||||||||||||||||
| Income tax provision/(benefit) for transformation initiatives (e) | 0.9 | (14.3) | — | (19.2) | ||||||||||||||||||||||||||||||||||
| Excess capacity severance charges (c) | — | 25.4 | 2.9 | 25.4 | ||||||||||||||||||||||||||||||||||
| Income tax benefit for excess capacity severance charges (e) | — | (6.3) | (0.5) | (6.3) | ||||||||||||||||||||||||||||||||||
| Legal settlements (d) | (30.7) | 25.0 | (30.7) | 25.0 | ||||||||||||||||||||||||||||||||||
| Income tax provision/(benefit) for legal settlements (e) | 7.5 | (6.2) | 7.5 | (6.2) | ||||||||||||||||||||||||||||||||||
| Adjusted net earnings | $ | 512.4 | $ | 493.0 | 4 | % | $ | 2,577.7 | $ | 2,562.5 | 1 | % | ||||||||||||||||||||||||||
| Diluted EPS | $ | 1.26 | $ | 0.96 | 31 | % | $ | 6.07 | $ | 5.70 | 6 | % | ||||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||||
| Gain on sale of assets (e) | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Transformation initiatives (b) (e) | (0.01) | 0.10 | — | 0.13 | ||||||||||||||||||||||||||||||||||
| Excess capacity severance charges (c) (e) | — | 0.04 | 0.01 | 0.04 | ||||||||||||||||||||||||||||||||||
| Legal settlements (d) (e) | (0.05) | 0.04 | (0.05) | 0.04 | ||||||||||||||||||||||||||||||||||
| Adjusted diluted EPS | $ | 1.20 | $ | 1.14 | 5 | % | $ | 6.02 | $ | 5.92 | 2 | % | ||||||||||||||||||||||||||
| (a) We include the interest income earned on investments associated with our client funds extended investment strategy and interest expense on borrowings related to our client funds extended investment strategy as we believe these amounts to be fundamental to the underlying operations of our business model. The adjustments in the table above represent the interest income and interest expense that are not related to our client funds extended investment strategy and are labeled as “All other interest expense” and “All other interest income.” | ||||||||||||||||||||||||||
| (b) In the three months ended June 30, 2021, transformation initiatives include gain on sale of assets and net reversals related to other transformation initiatives, including severance. This is partially offset by impairment charges of operating right-of-use assets and certain related fixed assets associated with the vacating of certain leased locations (“lease asset impairment”). In fiscal 2021,transformation initiatives include impairment charges as a result of recognizing certain owned facilities at fair value given intent to sell and accordingly classified as held for sale and lease asset impairment charges, offset by gain on sale of assets and net reversals of charges related to other transformation initiatives, including severance. Unlike other severance charges which are not included as an adjustment to get to adjusted results, these specific charges relate to actions taken as part of our broad-based, company-wide transformation initiative. | ||||||||||||||||||||||||||
| (c) Represents net severance cost related to excess capacity. Unlike certain other severance charges in prior periods that are not included as an adjustment to get to adjusted results, these specific charges relate to actions that are part of our broad-based, company-wide initiatives to address excess capacity across our business and functions, including charges in fiscal 2020 due to the COVID-19 pandemic. | ||||||||||||||||||||||||||
| (d) Represents legal settlements including an insurance recovery in fiscal 2021. | ||||||||||||||||||||||||||
(e) The income tax provision/(benefit) was calculated based on the marginal rate in effect for the year ended June 30, 2021. | ||||||||||||||||||||||||||
| (f) The Adjusted effective tax rate is calculated as our Adjusted provision for income taxes divided by the sum of our Adjusted net earnings plus our Adjusted provision for income taxes. | ||||||||||||||||||||||||||
| The following table reconciles our reported growth rates to the non-GAAP measure of organic revenue, which excludes the impact of acquisitions, the impact of dispositions, and the impact of foreign currency. The impact of acquisitions and dispositions is calculated by excluding the current year revenues of acquisitions until the one year anniversary of the transaction and by excluding the prior year revenues of divestitures for the one year period preceding the transaction. The impact of foreign currency is determined by calculating the current year result using foreign exchange rates consistent with the prior year. The PEO segment is not impacted by acquisitions, dispositions or foreign currency. | ||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||
| Revenue growth consolidated: | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Employer Services | 10 | % | (6) | % | 1 | % | 1 | % | ||||||||||||||||||
PEO Services | 12 | % | 4 | % | 7 | % | 8 | % | ||||||||||||||||||
| Consolidated revenue growth as reported | 11 | % | (3) | % | 3 | % | 3 | % | ||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||
Impact of acquisitions | — | % | — | % | — | % | — | % | ||||||||||||||||||
Impact of foreign currency | (2) | % | 1 | % | (1) | % | 1 | % | ||||||||||||||||||
| Consolidated revenue growth, organic constant currency | 9 | % | (2) | % | 2 | % | 4 | % | ||||||||||||||||||
| Segment: | ||||||||||||||||||||||||||
| Employer Services revenue growth as reported | 10 | % | (6) | % | 1 | % | 1 | % | ||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||
Impact of acquisitions | — | % | — | % | — | % | — | % | ||||||||||||||||||
Impact of foreign currency | (2) | % | 1 | % | (1) | % | 1 | % | ||||||||||||||||||
| Employer Services revenue growth, organic constant currency | 8 | % | (5) | % | — | % | 2 | % | ||||||||||||||||||
| Automatic Data Processing, Inc. and Subsidiaries | |||||||||||||||||
| Fiscal 2021 to Fiscal 2022 Non-GAAP Guidance Reconciliation | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Fiscal 2022 | |||||||||||||||||
| Fiscal 2021 | Outlook | ||||||||||||||||
| Earnings before income taxes / margin (GAAP) | $ | 3,361.2 | 22.4 | % | (10) to 15 bps | ||||||||||||
| All other interest expense (a) | 57.3 | 40 bps | 5 bps | ||||||||||||||
| All other interest income (a) | (6.5) | - | - | ||||||||||||||
| Transformation initiatives (b) - FY21 | 0.0 | - | - | ||||||||||||||
| Transformation initiatives - FY22 | - | - | 10 bps | ||||||||||||||
| Excess capacity severance charges - FY21 | 2.9 | - | - | ||||||||||||||
| Legal settlements - FY21 | (30.7) | (20) bps | 20 bps | ||||||||||||||
| Adjusted EBIT margin (Non-GAAP) | $ | 3,384.2 | 22.6 | % | 25 to 50 bps | ||||||||||||
| Effective tax rate (GAAP) | 22.7 | % | 22.5 | % | |||||||||||||
| Transformation initiatives (b) - FY21 | - | - | |||||||||||||||
| Transformation initiatives - FY22 | - | - | |||||||||||||||
| Excess capacity severance charges - FY21 | - | - | |||||||||||||||
| Legal settlements - FY21 | - | - | |||||||||||||||
| Adjusted effective tax rate (Non-GAAP) | 22.7 | % | 22.5 | % | |||||||||||||
| Diluted earnings per share (GAAP) | $ | 6.07 | 8% to 10% | ||||||||||||||
| Transformation initiatives (b) - FY21 | - | - | |||||||||||||||
| Transformation initiatives - FY22 | - | - | |||||||||||||||
| Excess capacity severance charges - FY21 | 0.01 | - | |||||||||||||||
| Legal settlements - FY21 | (0.05) | 1 | % | ||||||||||||||
| Adjusted diluted earnings per share (Non-GAAP) | $ | 6.02 | 9% to 11% | ||||||||||||||
| a) We include the interest income earned on investments associated with our client funds extended investment strategy and interest expense on borrowings related to our client funds extended investment strategy as we believe these amounts to be fundamental to the underlying operations of our business model. These adjustments in the table above represent the interest income and interest expense that is not related to our client funds extended investment strategy and are labeled as “All other interest expense” and “All other interest income.” | |||||||||||||||||
| (b) In fiscal 2021, transformation initiatives include impairment charges as a result of recognizing certain owned facilities at fair value given intent to sell and accordingly classified as held for sale and lease asset impairment charges, offset by gain on sale of assets and net reversals of charges related to other transformation initiatives, including severance. Unlike other severance charges which are not included as an adjustment to get to adjusted results, these specific charges relate to actions taken as part of our broad-based, company-wide transformation initiative. | |||||||||||||||||
