Skip to content
AnalystLens

AUTOMATIC DATA PROCESSING INC Annual Report, Year Ended Jun 30, 1999

Filing Date
Filed September 21, 1999
Period End
June 30, 1999
Security
ADP
In the record · 2016–202610-K1110-Q328-K103

ADP filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 103 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Sep ’16Sep ’16
  2. Leadership change8-K · May ’19May ’19
  3. Material agreement8-K · Jun ’21Jun ’21
  4. FY2025 annual report10-K · Aug ’25Aug ’25

01—Abstract

Summary

Summary of the 10-K filed September 21, 1999. Cited figures are marked; the original filing is the authoritative source.

Automatic Data Processing, Inc. (ADP) reported a strong fiscal 1999 (year ended June 30, 1999).

Revenues rose 12% to $5.54 billiona, and reported net earnings were $696.8 million, or $1.10 diluted EPS. Excluding roughly $17 million in after-tax non-recurring charges tied to acquisitions and dispositions, management says pretax earnings grew 20% and diluted EPS grew 15% to $1.13. Employer Services and Brokerage Services, the two largest segments, together make up over 75% of revenue, and Employer Services grew 15% while Brokerage Services grew only 5% after divestitures.

Management reports a 19.3% pretax margin before non-recurring items, up from 18.1% the prior year, helped by disposing of lower-margin businesses. The balance sheet is conservative. Cash and marketable securities were about $2.2 billionb, shareholders' equity exceeded $4.0 billion, and long-term debt was $146 million, or roughly 4% of equity.

Operating cash flow was $854 millionc. ADP spent $178 million on capital expenditures, $107 million on acquisitions, and $85 million repurchasing shares. Dividends were raised 18% to $.295 per share, the company's 25th consecutive annual increase.

Key strategic moves included the Vincam PEO acquisition, which made ADP the second-largest PEO in the U.S., and the Dealer Solutions and OMR Systems acquisitions. The filing flags several watch items. Revenue growth benefited from acquisitions, while dispositions removed about $270 milliond of annual revenue in fiscal 1999.

Management expects fewer dispositions going forward. Client retention in some businesses has not yet reflected service-quality improvements, and rising effective tax rates (35.7% reported, 33.2% excluding non-recurring items) are a headwind. Interest-rate sensitivity is also significant because ADP invests about $6 billion of client and corporate funds.

For fiscal 2000, management guided to about 10% revenue growth and 13% to 15% diluted EPS growth before non-recurring items. The company reported no material legal proceedings and noted that Year 2000 remediation costs were not expected to be material.

02—Key points

Key Highlights

  1. Revenue grew 12% to $5.54 billion in fiscal 1999; internal growth was about 13-14% excluding acquisitions and dispositions.
  2. Diluted EPS of $1.10 reported ($1.13 before about $17 million in non-recurring charges), up 15%; pretax earnings before non-recurring items rose 20%.
  3. Pretax margin before non-recurring items improved to 19.3% from 18.1%, aided by disposing of low-margin businesses.
  4. Strong balance sheet: about $2.2 billion in cash and marketable securities, over $4.0 billion in equity, and long-term debt of only about 4% of equity.
  5. Operating cash flow was $854 million, funding $178 million of capex, $107 million of acquisitions, and $85 million of share repurchases.
  6. Strategic expansion includes the Vincam acquisition (second-largest U.S. PEO, about 81,000 worksite employees), Dealer Solutions, and OMR Systems, plus 12 acquisitions with about $245 million of revenue in fiscal 1999.
  7. Fiscal 2000 guidance calls for roughly 10% revenue growth and 13-15% diluted EPS growth before non-recurring items.

03—Questions

Frequently Asked Questions

  1. How did ADP perform financially in fiscal 1999?

    Revenue rose 12% to $5.54 billion and reported net earnings were $696.8 million, or $1.10 per diluted share. Before about $17 million in after-tax non-recurring charges, diluted EPS was $1.13, up 15%, and pretax earnings rose 20%.

  2. What are ADP's main business segments and how are they performing?

    Employer Services is the largest segment at $3.31 billion of revenue, up 15%. Brokerage Services generated $1.15 billion, up 5% after divesting its front-office market data business, but about 20% excluding acquisitions and dispositions. Dealer Services generated $744 million, up 7%.

  3. Is ADP's balance sheet a concern for investors?

    No, the balance sheet is conservative. The company holds about $2.2 billion in cash and marketable securities against long-term debt of $146 million, and its debt-to-equity ratio is about 4%. Most of the debt is zero-coupon convertible notes, which are convertible into roughly 4.9 million shares.

  4. What risks or uncertainties does the filing identify?

    Key risks include interest-rate sensitivity on the roughly $6 billion of client and corporate funds ADP invests, Year 2000 dependence of third parties, client retention that has not yet improved as much as service quality, and a rising effective tax rate (33.2% excluding non-recurring items, up from 31.7%). Growth also depends partly on acquisitions, and management expects fewer business dispositions in future years.

  5. What does management expect for fiscal 2000?

    Management expects another record year, with double-digit revenue growth (about 10% in the shareholder letter, after the impact of 1999 dispositions) and diluted EPS growth of 13% to 15% over fiscal 1999 results before non-recurring items. Capital spending is expected to be about $215 million.

04—Continue

← View all 10-K filings