Automatic Data Processing (ADP) 10-K risk factor changes: FY2019 vs FY2018

Health care reform under the Affordable Care Act, related state laws, and the regulations thereunder, as well as the uncertainty surrounding the Affordable Care Act, have the potential to [removed: further impact the health insurance market for our PEO business and the demand for our health care compliance solutions.]

Failure to comply with anti-corruption laws and regulations, [added: economic and trade sanctions,] anti-money laundering laws and regulations, [removed: economic] and [removed: trade sanctions, and] similar laws could have a materially adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences

Such heightened scrutiny has resulted in more aggressive investigations and enforcement of such laws and more burdensome regulations, any of which could [added: materially] adversely impact our business.

We are also subject to economic and trade sanctions programs, including those administered by the U.S. Treasury Department’s Office of Foreign Assets Control, which prohibit or restrict transactions or dealings with specified countries, their [removed: governments, and] [added: governments and,] in certain circumstances, their nationals, and with individuals and entities that are specially designated, including narcotics traffickers and terrorists or terrorist organizations, among others.

[removed: Among other things, the BSA] requires certain financial institutions, including banks and money services businesses (such as money transmitters and providers of prepaid access), to develop and implement risk-based anti-money laundering programs, report large cash transactions and suspicious activity, and maintain transaction records.

Any violations of applicable anti-corruption, economic and trade sanctions or anti-money laundering laws or regulations could limit certain of our [added: business activities until they are satisfactorily remediated and could result in civil and criminal penalties, including fines, which could damage our reputation and have a materially adverse effect on our results of operation or financial condition.]

These regulatory restrictions on banks and changes to banks’ internal risk-based policies and procedures may result in a decrease in the number of banks that may do business with us, may require us to change the manner in which we conduct some aspects of our business, may decrease our revenues and earnings and could have a materially adverse effect on our results of [removed: operation] [added: operations] or financial condition.

The collection, [added: storage,] hosting, transfer, [added: processing,] disclosure, use, [removed: storage and] security [added: and retention and destruction] of personal information required to provide our services is subject to federal, state and foreign privacy, data protection and cyber security laws.

These laws, which are not uniform, [added: generally] do one or more of the following: regulate the collection, [added: storage, hosting,] transfer (including in some cases, the transfer outside the country of collection), processing, [removed: storage, security,] [added: disclosure,] use, [removed: disclosure] [added: security] and [removed: disposal] [added: retention and destruction] of personal information; require notice to individuals of privacy practices; give individuals certain access and correction rights with respect to their personal information; and [removed: prevent] [added: regulate] the use or disclosure of personal information for secondary [removed: purposes such as marketing.]

The European Union (the “EU”) General Data Protection Regulation (the “GDPR”), which became effective in May [removed: 2018, is one of] [added: 2018 and] the [added: California Consumer Protection Act (the “CCPA”), which will become effective on January 1, 2020, are among the] most comprehensive of these laws.

As part of our overall data protection compliance [removed: program,] [added: program] in [removed: February 2018] [added: connection with the GDPR,] we [removed: obtained approval from all 28 EU Data Protection Authorities to implement] [added: implemented] Binding Corporate Rules (“BCRs”) as both a data processor and data controller, which permits us to process and transfer personal data across borders in compliance with EU data protection laws.

Complying with these laws and requirements, including the enhanced obligations imposed by the [removed: GDPR and] [added: GDPR,] our [removed: BCRs,] [added: BCRs and the CCPA,] may result in significant costs to our business and require us to amend certain of our business practices.

The future enactment of more restrictive laws, rules or regulations and/or future enforcement actions or investigations could have a materially adverse impact on us through increased costs or restrictions on our businesses and noncompliance could result in significant regulatory penalties and legal [removed: liability.][added: liability and damage our reputation.]

Our businesses collect, host, [added: store,] transfer, [added: process,] disclose, use, [removed: store and] secure [added: and dispose of] personal and business information, and collect, [removed: store] [added: hold] and transmit client funds, and a security or privacy breach may damage or disrupt our businesses, result in the disclosure of confidential information, damage our reputation, increase our costs, cause losses and adversely affect our results of operations

In connection with our business, we collect, host, [added: store,] transfer, [added: process,] disclose, use, [removed: store and] secure [added: and dispose of] large amounts of personal and business information about our clients, employees of our clients, our vendors and our employees, contractors and temporary staff, including payroll information, health care information, personal and business financial data, social security numbers and their foreign equivalents, bank account numbers, tax information and other sensitive personal and business information.

We are focused on ensuring that we safeguard and protect personal and business information and client funds, and we devote significant resources to maintain and regularly update [removed: our systems and processes.]

Nonetheless, [removed: globally,] [added: the global environment grows increasingly hostile as] attacks on information technology systems continue to grow in frequency, complexity and sophistication, and we are regularly targeted by unauthorized parties using malicious tactics, code and viruses.

Although this is a global problem, it may affect our businesses more than other businesses because malevolent [removed: third] parties [added: (including our personnel)] may focus on the amount and type of personal and business information that our businesses collect, host, [added: store, transfer, process, disclose,] use, [removed: transmit] [added: secure] and [removed: store,] [added: dispose of,] and the [removed: clients] [added: client] funds that we collect and transmit.

We have programs [added: and processes] in place to prevent, detect and respond to data or cyber security incidents.

In addition, hardware, software or applications we develop or procure from third parties may contain defects in design or manufacture or other [added: problems that could compromise the confidentiality, integrity or availability of data or our systems.]

Unauthorized parties [removed: may] also attempt to gain access to our systems or facilities, or those of third parties with whom we do business, through fraud, trickery, or other methods of deceiving these third parties or our [removed: employees, contractors,] [added: personnel, including phishing] and [removed: temporary staff.][added: other social engineering techniques whereby attackers use end-user behaviors to distribute computer viruses and malware into our systems.]

In addition, while our operating environments are designed to safeguard and protect personal and business information, we do not have the ability to monitor the implementation or effectiveness of any safeguards by our clients, vendors or [removed: partners,] [added: partners] and, in any event, third parties may be able to circumvent those security measures.

Any cyberattack, unauthorized intrusion, malicious software infiltration, network disruption, denial of service, corruption of data, theft of non-public or other sensitive information, or similar act by a malevolent [removed: party,] [added: party (including our personnel),] or inadvertent acts or inactions by our [removed: employees, contractors] [added: vendors, partners] or [removed: temporary staff,] [added: personnel,] could result in the disclosure or misuse of confidential personal or business information or the theft of client funds, and could have a materially adverse effect on our business or results of [removed: operations,] [added: operations] or that of our clients, result in liability, litigation, regulatory investigations and sanctions or a loss of confidence in our ability to serve clients, [removed: or cause current or potential clients to choose another service provider.]

Our [removed: systems] [added: systems, applications, solutions and services] may be subject to disruptions that could have a materially adverse effect on our business and reputation

If any of these [removed: systems] [added: systems, applications or solutions] fails to operate properly or becomes disabled even for a brief period of time, [added: whether due to malevolent acts, errors, defects or any other factor(s),] we could suffer financial loss, a disruption of our businesses, liability to clients, loss of clients, regulatory [removed: intervention,] [added: intervention] or damage to our reputation, any of which could have a materially adverse effect on our results of operation or financial condition.

Despite our preparations, our plans [added: and procedures] may not be successful in preventing or mitigating the loss of client data, service interruptions, disruptions to our operations, or damage to our important facilities.

[removed: If any of our or our third-party vendors' data centers fail or become disabled, even for a limited period of time, our businesses could be disrupted] and we could suffer financial loss, liability to clients, loss of clients, regulatory intervention, or damage to our reputation, any of which could have a material adverse effect on our results of operation or financial condition.

Our ability to compete and [added: our] success depend, in part, upon our intellectual property.

Our intellectual property could be wrongfully acquired as a result of a cyber-attack or other wrongful conduct by [removed: employees or] third [removed: parties.][added: parties or our personnel.]

Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property [removed: rights] [added: rights,] which may be successful.

We may be sued by third parties for infringement of their proprietary [removed: rights][added: rights, which could have a materially adverse effect on our business, financial condition or results of operations]

Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against [removed: us,] [added: us or if we decide to settle,] could require that we pay substantial damages or ongoing royalty payments, obtain licenses, modify applications, prevent us from offering our services, or require that we comply with other unfavorable terms.

In order to remain competitive and responsive to client demands, we continually upgrade, enhance, and expand our [removed: existing] [added: technology,] solutions and services.

We may not realize [added: or sustain] the expected benefits from our business transformation initiatives, and these efforts could have a materially adverse effect on our business, operations, financial [added: condition,] results [added: of operations] and competitive position

If we do not successfully manage and execute these initiatives, or if they are inadequate or ineffective, we may fail to meet our financial goals and achieve anticipated benefits, improvements may be [removed: delayed] [added: delayed, not sustained] or not realized and our business, operations and competitive position could be adversely affected.

[removed: Clients may react to worsening conditions by reducing their spending on HCM services or] renegotiating their contracts with us, which may adversely affect our business and financial results.

These risks may be exacerbated, individually or [removed: in unison,] [added: together,] during periods of unusual financial market volatility.

Activist stockholders may create perceived uncertainties as to the future direction of our business or [removed: strategy] [added: strategy,] which may be exploited by our competitors and may make it more difficult to attract and retain qualified personnel, potential customers and business partners and may affect our relationships with current customers, vendors, investors and other third parties.

In addition, actions of activist stockholders may cause periods of fluctuation in our stock price based on temporary or speculative market perceptions or other factors [removed: that do not necessarily reflect the underlying fundamentals and prospects of our business.]

further impact the health insurance market for our PEO business and the demand for our health care compliance solutions.

Among other things, the BSA

purposes such as marketing.

In addition, data security events and concerns about privacy abuses by other companies are changing consumer and social expectations for enhanced privacy and data protection.

As a result, even the perception of noncompliance, whether or not valid, may damage our reputation.

our systems and processes.

Certain of these malicious parties may be state-sponsored and supported by significant financial and technological resources.

or cause current or potential clients to choose another service provider.

As the global environment grows increasingly hostile, the security of our operating environment is ever more important to our clients and potential clients.

As a result, the breach or perceived breach of our security systems could result in a loss of confidence by our clients or potential clients and cause them to choose another service provider, which could have a materially adverse effect on our business.

We need to properly manage our systems, applications and solutions, and any upgrades, enhancements and expansions we may undertake from time to time, in order to ensure they properly support our businesses.

If any of our or our third-party vendors' data centers fails, becomes disabled or is disrupted, even for a limited period of time, our businesses could be disrupted

In addition, investment in product development often involves a long return on investment cycle.

We have made and expect to continue to make significant investments in product development.

We must continue to dedicate a significant amount of resources to our development efforts before knowing to what extent our investments will result in products the market will accept.

In addition, our business could be adversely affected in periods surrounding our new product introductions if customers delay purchasing decisions to evaluate the new product offerings.

Furthermore, we may not execute successfully on our product development strategy, including because of challenges with regard to product planning and timing and technical hurdles that we fail to overcome in a timely fashion.

Clients may react to worsening conditions by reducing their spending on HCM services or

that do not necessarily reflect the underlying fundamentals and prospects of our business.

business activities until they are satisfactorily remediated and could result in civil and criminal penalties, including fines, which could damage our reputation and have a materially adverse effect on our results of operation or financial condition.

problems that could compromise the confidentiality, integrity or availability of data or our systems.

If the distribution of CDK Global® common stock to ADP’s stockholders does not qualify as a tax-free spinoff, we could incur substantial liabilities and may not be fully indemnified for such liabilities

On September 30, 2014, the Company completed the tax-free spinoff of its former Dealer Services business through the distribution of all of the issued and outstanding common stock of CDK Global, Inc. (“CDK Global”) to ADP’s stockholders.

CDK Global was formed to hold ADP’s former Dealer Services business and, as a result of the distribution, became an independent public company trading under the symbol “CDK” on the NASDAQ Global Select Market.

Prior to completing the spinoff of CDK Global, ADP received an opinion from Paul, Weiss, Rifkind, Wharton & Garrison LLP, its counsel, to the effect that, based on certain facts, assumptions, representations and undertakings set forth in the opinion, the distribution qualified as a transaction that is tax-free under Section 355 and other related provisions of the Internal Revenue Code.

ADP also received a private letter ruling from the IRS with respect to certain discrete and significant issues arising in connection with the transactions effected in connection with the separation and distribution.

The opinion and the ruling were based upon various factual representations and assumptions, as well as certain undertakings made by ADP and CDK Global.

If any of those factual representations or assumptions was untrue or incomplete in any material respect, any undertaking is not complied with, or the facts upon which the opinion and the ruling were based were materially different from the facts at the time of the distribution, the distribution may not qualify for tax-free treatment.

Although a private letter ruling from the IRS generally is binding on the IRS, the IRS did not rule that the distribution satisfies every requirement for a tax-free distribution.

Opinions of counsel are not binding on the IRS or the courts.

As a result, the conclusions expressed in an opinion of counsel could be challenged by the IRS, and if the IRS prevails in such challenge, the tax consequences to ADP’s stockholders that received CDK Global common stock pursuant to the distribution could be materially less favorable.

If the distribution were determined not to qualify as a tax-free transaction under Section 355 of the Code, each United States holder of ADP common stock that received CDK Global common stock pursuant to the distribution generally would be treated as receiving a distribution taxable as a dividend in an amount equal to the fair market value of the shares of CDK Global common stock received by such holder.

In addition, ADP generally would recognize gain with respect to the distribution and certain related transactions, and CDK Global could be required to indemnify ADP for any resulting taxes and related expenses, which could be material.

The distribution and certain related transactions could be taxable to ADP if CDK Global or its stockholders were to engage in certain transactions after the distribution.

In such cases, ADP or its stockholders that received CDK Global common stock pursuant to the spinoff could incur significant U.S. federal income tax liabilities, and CDK Global could be required to indemnify ADP for any resulting taxes and related expenses, which could be material.

CDK Global may be unable to indemnify us fully for any such taxes and related expenses.

We are [removed: one of the largest providers] [added: a leading global provider] of cloud-based Human Capital Management [removed: ("HCM")] [added: (“HCM”)] technology solutions - including payroll, talent management, Human Resources [removed: and] [added: management,] benefits administration, and [removed: time and attendance] [added: workforce] management - to employers around the world.

[removed: As a leader in this industry, we deliver on our global HCM strategy and make investments in highly strategic] areas and technology in order to strengthen our underlying business model and prospects for continued growth.

Highlights from the year ended June 30, [removed: 2018 ("fiscal 2018")] [added: 2019 (“fiscal 2019”)] include:

| • | [removed: Worldwide new business bookings] [added: Employer Services New Business Bookings] increased 8% [removed: to $1.8 billion] |

| • | Our shareholder friendly actions continued as we [removed: raised our quarterly declared cash dividend by 21% and] returned approximately [removed: $2.1] [added: $1.3] billion [removed: to shareholders] via dividends and [added: approximately $940 million via] share repurchases |

At [removed: ADP] [added: ADP,] we [added: are always designing for people and we continue to] innovate by anticipating [removed: how] [added: our clients' evolving needs as] the world of work [removed: is transforming and how trends, such as the rising of the gig economy, impact the needs of our clients and the evolving workforce.][added: changes.]

With these [removed: investments] [added: investments,] we are enhancing our position as [removed: the only] [added: a leading] global HCM provider that can help businesses address the entire worker spectrum from full-time to freelancer [removed: and] [added: through] hire to retire.

Through our investments in technology, service, and distribution, we [removed: intend to continue] [added: are positioned] to [removed: build on] [added: maintain] our [added: positive] momentum [removed: heading] into fiscal [removed: 2019.][added: 2020.]

We continue to [removed: maintain] [added: generate] a high percentage of recurring [removed: revenues and] [added: revenues,] healthy [added: and improving] margins, and [removed: retain our ability to generate] consistent [removed: healthy] [added: strong] cash flows.

Our financial condition and balance sheet remain solid at June 30, [removed: 2018, with cash and cash equivalents and marketable securities of approximately $2.2 billion.][added: 2019.]

Prior period amounts have been [removed: adjusted to exclude discontinued operations] [added: restated for the impact of certain accounting standards adopted] (refer to Note 1 of our Consolidated Financial Statements for additional information).

| | | June 30, | | | | | | | | | | | | [removed: As Reported] | | | | | | Constant Currency Basis | | | | |

| | | [removed: 2018] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2018] | | | [removed: 2017] [added: 2018] | | | [removed: 2018] | | | [removed: 2017] [added: 2018] | |

| Systems development and programming costs | | [removed: 630.2] [added: 636.3] | | | | [removed: 627.5] [added: 635.4] | | | | [removed: 603.7] [added: 632.1] | | | | — | % | | [removed: 4] [added: 1] | % | | [removed: (1] [added: 2] | [removed: )%] [added: %] | | [removed: 4] [added: (1] | [removed: %] [added: )%] |

| Depreciation and amortization | | [removed: 274.5] [added: 304.4] | | | | [removed: 226.2] [added: 274.5] | | | | [removed: 211.6] [added: 226.2] | | | | [removed: 21] [added: 11] | % | | [removed: 7] [added: 21] | % | | [removed: 20] [added: 12] | % | | [removed: 7] [added: 20] | % |

| Selling, general and administrative costs | | [removed: 2,971.5] [added: 3,064.2] | | | | [removed: 2,783.2] [added: 2,959.4] | | | | [removed: 2,637.0] [added: 2,773.8] | | | | [removed: 7] [added: 4] | % | | [removed: 6] [added: 7] | % | | [removed: 6] [added: 4] | % | | 6 | % |

| Interest expense | | [removed: 102.7] [added: 129.9] | | | | [removed: 80.0] [added: 102.7] | | | | [removed: 56.2] [added: 80.0] | | | | n/m | | | n/m | | | n/m | | | n/m | |

[removed: |] Other [removed: expense/(income),] [added: (Income)/Expense,] net [removed: | | 237.9 | | | | (284.3 | | ) | | (100.4 | | ) | | n/m | | | n/m | | | n/m | | | n/m | |]

[removed: |] Earnings [removed: from continuing operations] before [removed: income taxes | | $ | 2,171.1 | | | $ | 2,531.1 | | | $ | 2,234.7 | | | (14 | )% | | 13 | % | | (15 | )% | | 13 | % |][added: Income Taxes]

| [removed: Provision] [added: Adjusted provision] for income taxes | [removed: | $ | 550.3 | | | $ | 797.7 | | | $ | 741.3 | | | (31 | )% | | 8 | % | | (32 | )% | | 7 | %] [added: Provision for income taxes] |

| [removed: Effective] [added: Adjusted effective] tax rate | [removed: | 25.3 | | % | | 31.5 | | % | | 33.2 | | % | | | | | | | | | | | |] [added: Effective tax rate] |

| Adjusted Financial [removed: Measure] [added: Measures] | U.S. GAAP Measures | [removed: Adjustments/Explanation - as applicable in the periods |]

| Adjusted effective tax rate [added: (g)] | [removed: Effective tax rate] | [removed: See footnote (g)] [added: 23.8] | [added: | % | | 26.2 | | % | | 31.1 | | % | | | | | | | | | | | | |]

| Constant Currency Basis | U.S. GAAP P&L line items | [removed: See footnote (h) |]

| | | June 30, | | | | | | | | | | | | [removed: As Reported] | | | | | | Constant Currency Basis (h) | | | | |

| | | [removed: 2018] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2018] | | | [removed: 2017] [added: 2018] | | | [removed: 2018] | | | [removed: 2017] [added: 2018] | |

| Provision for income taxes | | [removed: 550.3] [added: $] | [added: 712.8] | | | [removed: 797.7] [added: $] | [added: 397.7] | | | [removed: 741.3] [added: $] | [added: 829.1] | | | [added: 79] | [added: %] | | [added: (52] | [added: )%] | | [added: 80] | [added: %] | | [added: (53] | [added: )%] |

| All other interest expense (a) | | [removed: 59.4] [added: 59.9] | | | | [removed: 59.3] [added: 59.4] | | | | [removed: 47.9] [added: 59.3] | | | | | | | | | | | | | | |

| All other interest income (a) | | [removed: (25.5] [added: (32.4] | | ) | | [removed: (22.4] [added: (25.5] | | ) | | [removed: (13.6] [added: (22.4] | | ) | | | | | | | | | | | | |

| Gain on sale of businesses | | — | | | | [removed: (205.4] [added: —] | | [removed: )] | | [removed: (29.1] [added: (205.4] | | ) | | | | | | | | | | | | |

| Gain on sale of assets | | [removed: —] [added: (15.7] | | [added: )] | | — | | | | [removed: (13.9] [added: —] | | [removed: )] | | | | | | | | | | | | |

| Transformation initiatives (b) | | [removed: 404.8] [added: 138.3] | | | | [removed: 85.0] [added: 404.8] | | | | [removed: 48.2] [added: 85.0] | | | | | | | | | | | | | | |

| Proxy contest matters (c) | | [removed: 33.3] [added: —] | | | | [removed: —] [added: 33.3] | | | | — | | | | | | | | | | | | | | |

| Provision for income taxes | | [removed: $] [added: 712.8] | [removed: 550.3] | | | [removed: $] [added: 397.7] | [removed: 797.7] | | | [removed: $] [added: 829.1] | [removed: 741.3] | | | [removed: (31] | [removed: )%] | | [removed: 8] | [removed: %] | | [removed: (32] | [removed: )%] | | [removed: 7] | [removed: %] |

| Gain on sale of businesses (d) | | — | | | | [removed: (84.0] [added: —] | | [removed: )] | | [removed: (7.3] [added: (84.0] | | ) | | | | | | | | | | | | |

| Gain on sale of assets (e) | | [removed: —] [added: (3.9] | | [added: )] | | — | | | | [removed: (5.3] [added: —] | | [removed: )] | | | | | | | | | | | | |

| Transformation initiatives (e) | | [removed: 122.1] [added: 34.5] | | | | [removed: 32.0] [added: 122.1] | | | | [removed: 16.4] [added: 32.0] | | | | | | | | | | | | | | |

| Proxy contest matters [removed: (c)] [added: (e)] | | [removed: 10.4] [added: —] | | | | [removed: —] [added: 10.4] | | | | — | | | | | | | | | | | | | | |

| Tax Cuts and Jobs Act (f) | | [removed: (1.7] [added: —] | | [removed: )] | | [removed: —] [added: (0.41] | | [added: )] | | — | | | | | | | | | | | | | | |

| Adjusted provision for income taxes | | $ | [removed: 681.1] [added: 743.9] | | | $ | [removed: 745.7] [added: 713.4] | | | $ | [removed: 745.1 | | | (9] [added: 777.1] | [removed: )%] | | [removed: —] [added: 4] | % | | [removed: (10] [added: (8] | )% | | [removed: —] [added: 4] | % | [added: | (9 | )% |]

As a leader in this industry, we deliver on our global HCM strategy and invest in highly strategic

| • | Average number of Worksite Employees increased 8% to 547,000 |

| • | Revenue increased 6% |

| • | EBIT Margin improved 410 basis points to 21.2% and Adjusted EBIT Margin improved 160 basis points to 22.3% |

| • | Diluted earnings per share (“EPS”) increased 23% to $5.24; adjusted diluted EPS increased 20% to $5.45 |

In fiscal 2019, we launched our new brand platform which represents an evolution in our journey to enhance the employee experience through innovation and insights designed with the worker as a central theme.

We are reshaping the HCM industry with leading innovations like our next gen platforms and driving growth through our strategic cloud-based HCM solutions.

We are further enabling these solutions through strategic acquisitions such as Global Cash Card, Work Market and Celergo, which we supplement with organic, differentiated investments such as the ADP Marketplace and ADP Datacloud, and through our compliance expertise.

As the HCM market continues to evolve rapidly, we remain focused on rethinking a better, more personalized world at work and helping our clients and their workers achieve their full potential.

As we continue our transformation journey, our Voluntary Early Retirement Program (“VERP”) and Workforce Optimization initiatives are yielding operating efficiencies in conjunction with our Service Alignment Initiatve, which is focused on changing how we work.

Through our transformation initiatives, we remain on track to continue to deliver balanced revenue growth, profit growth and margin expansion, and ultimately drive long-term shareholder value.

We are pleased with our progress and execution on these initiatives while also delivering improvements in our client satisfaction scores yielding an improvement in Employer Services revenue retention of 40 basis points to 90.8%.

Also, our Employer Services New Business Bookings increased 8% in fiscal 2019, as compared to fiscal 2018, and our PEO Services' average number of Worksite Employees increased 8% to 547,000 in fiscal 2019, as compared to fiscal 2018.

| | | 2019 | | | | *As Restated | | | | *As Restated | | | | 2019 | | | *As Restated | | | 2019 | | | *As Restated | |

| Total revenues | | $ | 14,175.2 | | | $ | 13,327.7 | | | $ | 12,372.0 | | | 6 | % | | 8 | % | | 7 | % | | 7 | % |

| Operating expenses | | 7,145.9 | | | | 6,901.0 | | | | 6,386.2 | | | | 4 | % | | 8 | % | | 5 | % | | 7 | % |

| Total costs of revenues | | 8,086.6 | | | | 7,810.9 | | | | 7,244.5 | | | | 4 | % | | 8 | % | | 5 | % | | 7 | % |

| Total expenses | | 11,280.7 | | | | 10,873.0 | | | | 10,098.3 | | | | 4 | % | | 8 | % | | 5 | % | | 7 | % |

| Margin | | 21.2 | | % | | 17.1 | | % | | 21.2 | | % | | | | | | | | | | | | |

| Effective tax rate | | 23.7 | | % | | 17.4 | | % | | 31.7 | | % | | | | | | | | | | | | |

| Net earnings | | $ | 2,292.8 | | | $ | 1,884.9 | | | $ | 1,787.8 | | | 22 | % | | 5 | % | | 22 | % | | 4 | % |

| Diluted earnings per share | | $ | 5.24 | | | $ | 4.25 | | | $ | 3.97 | | | 23 | % | | 7 | % | | 24 | % | | 6 | % |

| Adjusted EBIT | Net earnings |

| Adjusted net earnings | Net earnings |

| | | 2019 | | | | *As Restated | | | | *As Restated | | | | 2019 | | | *As Restated | | | 2019 | | | *As Restated | |

| Net earnings | | $ | 2,292.8 | | | $ | 1,884.9 | | | $ | 1,787.8 | | | 22 | % | | 5 | % | | 22 | % | | 4 | % |

| Adjusted EBIT | | $ | 3,155.7 | | | $ | 2,754.6 | | | $ | 2,533.4 | | | 15 | % | | 9 | % | | 15 | % | | 7 | % |

| Adjusted EBIT Margin | | 22.3 | | % | | 20.7 | | % | | 20.5 | | % | | | | | | | | | | | | |

| Provision for income taxes | | $ | 712.8 | | | $ | 397.7 | | | $ | 829.1 | | | 79 | % | | (52 | )% | | 80 | % | | (53 | )% |

| Net earnings | | $ | 2,292.8 | | | $ | 1,884.9 | | | $ | 1,787.8 | | | 22 | % | | 5 | % | | 22 | % | | 4 | % |

| Adjusted net earnings | | $ | 2,384.3 | | | $ | 2,007.3 | | | $ | 1,719.4 | | | 19 | % | | 17 | % | | 19 | % | | 15 | % |

| Diluted EPS | | $ | 5.24 | | | $ | 4.25 | | | $ | 3.97 | | | 23 | % | | 7 | % | | 24 | % | | 6 | % |

| Adjusted diluted EPS | | $ | 5.45 | | | $ | 4.53 | | | $ | 3.82 | | | 20 | % | | 19 | % | | 21 | % | | 17 | % |

fundamental to the underlying operations of our business model.

Charges related to our VERP in fiscal 2019 include $48.2 million for non-cash pension settlement charges and special termination benefits, and $23.6 million of expenses related to the continuing health coverage, respectively.

We also recorded severance charges in accordance with ASC 712 totaling $33.6 million primarily relating to our Workforce Optimization initiative to reduce management layers and increase spans of controls and $56.8 million related to our other transformation initiatives during fiscal 2019.

These charges were partially offset by net reversals of charges and gain on sale of assets related to our Service Alignment Initiative totaling $23.9 million for fiscal 2019.

Refer to Note 13 of our Consolidated Financial Statements for additional detail.

Fiscal 2019 Compared to Fiscal 2018

Our revenue growth includes one percentage point of pressure from foreign currency partially offset by benefits from acquisitions.

| • | Revenue grew 8% in fiscal 2018; Diluted earnings per share ("EPS") decreased 5% to $3.66, while adjusted diluted EPS increased 18% to $4.35 |

| • | Completed migrations of our mid-market clients to latest version of Workforce Now |

| • | Executed on a VERP and created a Transformation Office to continue driving broad-based transformation initiatives |

We are reshaping the HCM industry through organic innovative development such as our next-gen platforms and our strategic acquisitions such as Global Cash Card, WorkMarket, and more recently, Celergo, Inc., a leading provider of international payroll management services.

As the payroll market continues to rapidly evolve, we continue to be focused on staying ahead of the curve.

Our new business bookings increased 8% during fiscal 2018, as compared to fiscal 2017, validating the renewed momentum in our sales force following fiscal 2017.

We are confident that the investments in our sales force and products will continue to drive solid results.

We remain optimistic in our ability to deliver innovative and competitive products, as well as our sales force's ability to distribute our products heading into the year ending June 30, 2019 ("fiscal 2019").

During fiscal 2018, we continued to migrate clients to our strategic platforms while making investments in R&D to provide best-in-class cloud-based HCM technology solutions to our clients.

Employer Services retention was positively impacted by our focus on improving the client experience and was positively impacted by the loss of a large client within our former Consumer Health Spending Account ("CHSA") business during the fiscal year ended June 30, 2017 ("fiscal 2017").

This focus translated into strong retention on our strategic platforms and as a result, we saw Employer Services revenue retention improve 50 basis points during fiscal 2018 as compared to fiscal 2017.

Simultaneously, we continue to streamline our service organization.

We remain focused on delivering results and executing on our strategy to transform our business for continued success within the competitive global HCM environment.

During fiscal 2018, we incurred $20.5 million in charges for a previously announced multi-year Service Alignment Initiative intended to align our client service operations to our strategic platforms.

Building upon our Service Alignment Initiative in support of our transformation goals, we are executing upon a voluntary early retirement program and have also identified additional operational improvement initiatives through the formation of our Transformation Office.

These transformation initiatives support ADP’s ongoing strategy which is aimed at streamlining our operations and extending our world class distribution while leveraging our talent and culture.

We have benefited from the Tax Cuts and Jobs Act (the "Act") signed into law in late December 2017.

With this increased operating cash flow and greater access to our cash worldwide, we will continue our disciplined approach to capital allocation decisions, including assessing reinvestments into the business, potential acquisitions, and/or returning cash to shareholders through dividends and share buybacks, among other potential uses.

| Total revenues | | $ | 13,325.8 | | | $ | 12,379.8 | | | $ | 11,667.8 | | | 8 | % | | 6 | % | | 7 | % | | 6 | % |

| Operating expenses | | 6,937.9 | | | | 6,416.1 | | | | 6,025.0 | | | | 8 | % | | 6 | % | | 7 | % | | 7 | % |

| Total costs of revenues | | 7,842.6 | | | | 7,269.8 | | | | 6,840.3 | | | | 8 | % | | 6 | % | | 7 | % | | 7 | % |

| Total expenses | | 10,916.8 | | | | 10,133.0 | | | | 9,533.5 | | | | 8 | % | | 6 | % | | 7 | % | | 7 | % |

| Margin | | 16.3 | | % | | 20.4 | | % | | 19.2 | | % | | | | | | | | | | | | |

| Net earnings from continuing operations | | $ | 1,620.8 | | | $ | 1,733.4 | | | $ | 1,493.4 | | | (6 | )% | | 16 | % | | (8 | )% | | 16 | % |

| Diluted earnings per share from continuing operations | | $ | 3.66 | | | $ | 3.85 | | | $ | 3.25 | | | (5 | )% | | 18 | % | | (6 | )% | | 18 | % |

| | | |

| --- | --- | --- |

| | | |

| Adjusted EBIT from continuing operations | Net earnings from continuing operations | \- Provision for income taxes \- Gains/losses on sales of businesses and assets \- All other interest expense and income \- Transformation initiatives \- Non-operational costs related to proxy contest matters See footnotes (a), (b), and (c) |

| Adjusted net earnings from continuing operations | Net earnings from continuing operations | Pre-tax and tax impacts of: \- Gains/losses on sales of businesses and assets \- Transformation initiatives \- Non-operational costs related to proxy contest matters \- Tax Cuts and Jobs Act See footnotes (b), (c), (d), (e) and (f) |

| Adjusted provision for income taxes | Provision for income taxes | Tax impacts of: \- Gains/losses on sales of businesses and assets \- Transformation initiatives \- Non-operational costs related to proxy contest matters \- Tax Cuts and Jobs Act See footnotes (c), (d), (e), and (f) |

| Adjusted diluted earnings per share from continuing operations | Diluted earnings per share | EPS impacts of: \- Gains/losses on sales of businesses and assets \- Transformation initiatives \- Non-operational costs related to proxy contest matters \- Tax Cuts and Jobs Act See footnotes (b), (c), and (f) |

| Net earnings from continuing operations | | $ | 1,620.8 | | | $ | 1,733.4 | | | $ | 1,493.4 | | | (6 | )% | | 16 | % | | (8 | )% | | 16 | % |

| Adjusted EBIT from continuing operations | | $ | 2,643.1 | | | $ | 2,447.6 | | | $ | 2,274.2 | | | 8 | % | | 8 | % | | 7 | % | | 7 | % |

| Adjusted EBIT Margin | | 19.8 | | % | | 19.8 | | % | | 19.5 | | % | | | | | | | | | | | | |

| Adjusted effective tax rate (g) | | 26.1 | | % | | 30.9 | | % | | 33.3 | | % | | | | | | | | | | | | |

| Net earnings from continuing operations | | $ | 1,620.8 | | | $ | 1,733.4 | | | $ | 1,493.4 | | | (6 | )% | | 16 | % | | (8 | )% | | 16 | % |

| Adjusted net earnings from continuing operations | | $ | 1,928.1 | | | $ | 1,665.0 | | | $ | 1,494.8 | | | 16 | % | | 11 | % | | 15 | % | | 11 | % |

| Diluted earnings per share from continuing operations | | $ | 3.66 | | | $ | 3.85 | | | $ | 3.25 | | | (5 | )% | | 18 | % | | (6 | )% | | 18 | % |

The

[removed: ADP was] [added: We were] founded in 1949 on an innovative idea: to help business owners focus on core business activities by [removed: relieving] [added: freeing] them [removed: of] [added: up from] certain non-core tasks such as payroll.

[removed: A pioneer in business process outsourcing, today] [added: Today] we are one of the world’s leading providers of cloud-based human capital management [removed: (“HCM”)] [added: (HCM)] solutions to employers, offering solutions to businesses of all sizes, whether they have simple or complex needs.

We serve over [removed: 740,000] [added: 810,000] clients in [removed: more than 110] [added: 140] countries and territories.

ADP’s Mission [removed: and Strategy]

[removed: ADP’s mission is to power organizations with insightful solutions for clients and their employees, as] [added: As] digital technology, globalization and new business models reshape the way people [removed: work.][added: work, our mission is to power organizations with insightful solutions that meet the changing needs of our clients and their employees.]

[removed: As the world of work evolves, our] [added: Our] technology, [added: industry and compliance] expertise and data insights deliver measurable results, peace-of-mind and an enabled, productive workforce.

Our business strategy is based on [removed: the following] three strategic pillars, which are designed to position [removed: ADP] [added: us] as the global market leader in HCM technology and services:

[removed: | • |] [added: -] Grow a complete suite of cloud-based HCM [removed: solutions; |][added: solutions (HCM Solutions).]

[removed: | • |] [added: -] Grow and scale our market-leading HR Outsourcing [removed: (“HRO”)] solutions by leveraging our platforms and [removed: processes; and |][added: processes (HRO Solutions).]

[removed: | • |] [added: -] Leverage our global presence to offer clients HCM solutions [removed: where ever] [added: wherever] they do [removed: business. |][added: business (Global Solutions).]

[removed: ADP’s] [added: Our] two reportable business segments are Employer Services and Professional Employer Organization [removed: (“PEO”) Services.][added: (“PEO”).]

For financial data by segment and by geographic area, see Note [removed: 15] [added: 16] to the “Consolidated Financial Statements” contained in this Annual Report on Form 10-K.

Our Employer Services segment serves clients ranging from single-employee small businesses to large enterprises with tens of thousands of employees around the world, offering a comprehensive range of [removed: HRO and] technology-based HCM solutions, including our strategic, cloud-based [removed: platforms.][added: platforms, and HRO (other than PEO) solutions.]

These solutions address critical client needs and include: [added: Payroll Services, Benefits Administration, Talent Management, HR Management, Workforce Management, Compliance Services, Insurance Services and Retirement Services.]

Professional Employer [removed: Organization Services.][added: Organization.]

[removed: ADP’s] [added: Our] PEO business, called ADP TotalSource®, [removed: serves more than 12,000] [added: provides] clients with comprehensive employment administration outsourcing solutions through a relationship in which employees who work for a client (referred to as “worksite employees”) are co-employed by us and the client.

ADP TotalSource is the largest PEO [removed: in] [added: certified by] the [removed: United States based on] [added: Internal Revenue Service as meeting] the [removed: number of worksite employees, serving more than 530,000 worksite employees in all 50 states, and operates] [added: requirements to operate] as a Certified Professional Employer Organization under the [removed: United States] Internal Revenue Code.

PRODUCTS AND [removed: SERVICES][added: SOLUTIONS]

In order to serve the unique needs of diverse types of businesses and workforce models, [removed: ADP provides] [added: we provide] a range of solutions which businesses of all [removed: types] [added: types, sizes,] and [removed: sizes] [added: across geographies] can use to [removed: activate talent and lead organizational change as they] recruit, pay, manage, and retain their workforce.

As a leader in the growing HR Outsourcing market, we [removed: offer seamless solutions that enable] [added: partner with] our clients to [removed: outsource their HR, time] [added: offer a full range of seamless technology] and [removed: attendance, payroll,] [added: service solutions for HR administration, workforce management, payroll services,] benefits administration and talent [removed: management functions to ADP.][added: management.]

[removed: For example,] ADP’s Pay Equity Explorer combines analytics and benchmarking to help employers [removed: gain a] better [removed: understanding of] [added: understand] potential [removed: gender or race] pay gaps and provide them with real, [added: up-to-date,] aggregated and anonymized market data to understand how their compensation for a particular job compares to other [added: similar] employers.

Wisely by [removed: ADP™] [added: ADP®] is our latest advancement in the future of pay.

[removed: Following our acquisition of Global Cash Card, we launched the] [added: The] Wisely Pay by [removed: ADP] [added: ADP™] payroll [removed: card,] [added: card is] a network-branded payroll card and digital account that enables employers to [removed: disburse payroll to] [added: pay] their employees, and enables employees to access their payroll funds immediately, including via a network member bank or an ATM, make purchases or pay bills, load additional funds onto the card, such as tax refunds and military pensions, and transfer funds to a bank account in the United States.

We also launched Wisely Direct by [removed: ADP,] [added: ADP®,] a network-branded general purpose reloadable card and digital account, [removed: that offers] [added: which provides] similar features and functionality as Wisely Pay by ADP but is offered directly to consumers.

Our digital card offerings are true banking alternatives that feature innovative services such as savings, [added: budgeting,] digital wallet and other [added: personal] financial management features.

Through our acquisition of [removed: WorkMarket®,] [added: WorkMarket,] a cloud-based workforce management [removed: solutions provider, ADP] [added: solution, we] became the first HCM provider with robust freelancer management functionality and reporting insights, enabling clients to [removed: effectively] manage their extended [removed: workforce.][added: workforce effectively.]

In addition, our mobile [removed: applications enable businesses] [added: apps simplify how work gets done by enabling clients] to process their payroll, and [removed: give approximately 17 million] [added: giving millions] of [removed: our clients’] [added: their] employees [removed: and freelancers] convenient access to their payroll and HR information [removed: through a variety of mobile device platforms,] around the world and in [removed: more than 27] [added: 29] languages.

[removed: ADP has] [added: We have] also opened access for developers and system integrators to [removed: certain] [added: some] of our platforms’ [removed: Application Programming Interface] [added: application programming interface] libraries through [removed: the] ADP Marketplace.

With ADP Marketplace, clients can integrate employee data from [removed: ADP] [added: our] core services across their other business [removed: systems, providers] [added: systems] or platforms.

This access enables the exchange of client data housed in [removed: ADP's] [added: our] databases, and creates a unified HCM ecosystem for clients informed by a single, comprehensive repository of their workforce data.

Our premier suite of HCM products offers complete solutions that assist employers of all types and sizes in all stages of the employment cycle, from recruitment to [removed: retirement:][added: retirement.]

[removed: | • |] [added: -] RUN Powered by [removed: ADP® is used by more than 570,000 small businesses in the United States. It] [added: ADP] combines a software platform for managing small business payroll, HR management and tax compliance administration, with 24/7 service and support from our team of small business experts. [removed: RUN Powered by ADP also integrates with other ADP solutions, such as time and attendance management, workers’ compensation insurance premium payment plans, and retirement plan administration systems. |]

[removed: | • | ADP Workforce Now® is a flexible HCM solution used by more than 60,000 mid-sized and large businesses in North America to manage their employees.] More businesses use ADP Workforce Now [added: in North America] than any other HCM solution designed for both mid-sized and large businesses. [removed: |]

[removed: | • | ADP Vantage HCM® is a solution for large enterprises in the United States.] It offers a comprehensive set of HCM capabilities within a single solution that unifies the five major areas of HCM: HR management, benefits administration, payroll services, time and attendance management, and talent management. [removed: |]

[removed: | • | ADP GlobalView® HCM is a solution for multinational organizations of all sizes.] As [removed: an integrated] [added: a highly scalable] and flexible [removed: infrastructure] [added: suite of products] supported by a team of experts, ADP [removed: GlobalView HCM] [added: Global Payroll] allows [removed: companies of all sizes – from those with] small and mid-sized [removed: operations to] [added: companies, as well as] the largest [removed: multinational corporations –] [added: multinationals,] to standardize their HCM strategies globally (including payroll, HR, talent, time and labor, and benefits management) and adapt to changing local needs, while helping to drive overall organizational agility and engagement. [removed: |]

[removed: | • | Outside the United States, ADP offers comprehensive HCM solutions on local, country-specific platforms.] These suites of services offer various combinations of payroll services, HR management, time and attendance management, talent management and benefits management, depending on the country in which the solution is provided. [removed: |]

[removed: ADP pays] [added: We pay] approximately 26 million (approximately 1 out of every 6) workers in the United [removed: States, and approximately 14 million workers outside the United] States.

[removed: ADP provides] [added: We provide] flexible payroll services to employers of all sizes, including the preparation of employee paychecks, pay statements, supporting journals, summaries, and management reports.

[removed: ADP provides] [added: We provide] employers with a wide range of payroll options, including [removed: entering their payroll data online with an Internet-based solution,] using [removed: a] mobile [removed: device] [added: technology, connecting their major enterprise resource planning (“ERP”) applications with ADP’s payroll services] or outsourcing their entire payroll process to [removed: ADP.][added: us.]

On behalf of our clients in the United States, [removed: ADP prepares] [added: we prepare] and [removed: files] [added: file] federal, state and local payroll tax returns and quarterly and annual Social Security, Medicare, and federal, state and local income tax withholding [removed: reports, and prepares and files similar reports internationally.][added: reports.]



We are constantly designing better ways to work through cutting-edge products, premium services and exceptional experiences that enable people to reach their full potential.

ADP’s Strategy

Our Strategic Pillars.


We develop cloud-based software and offer comprehensive solutions that assist employers of all types and sizes in managing the entire worker spectrum and employment cycle - from full-time to freelancer and from hire to retire.

We offer comprehensive HRO solutions in which we provide complete management solutions for HR administration, payroll administration, talent management, employee benefits, benefits administration, employer liability management, and other HCM and employee benefits functions.

We are expanding our international HCM and HRO businesses, comprised of our established local, in-country software solutions and our market-leading, cloud-based multi-country solutions.


With a large and growing addressable market, we are strongly positioned to continue delivering sustainable long-term value across our strategic pillars.

We are doing this by successfully executing on product and technology innovation, providing industry-leading service and compliance expertise, and enhancing our world-class distribution.

We are focused on, and investing in, our world-class and next-gen platforms that are built for the future of work, and on providing market-leading product and technology solutions that solve the needs of our clients today, and anticipate the needs of our clients tomorrow.

Our world-class platforms and multi-national solutions provide our clients with comprehensive HR and payroll capabilities that drive productivity and enable compliance globally.

Our cloud-based next-gen platforms are built to be person-centric, serve all worker types and support flexible work and on-demand pay, and to deliver seamless global capabilities to dynamic, team-based organizations.

Digital technology is transforming today's workplace and workforce.

We are accelerating our own digital transformation and leveraging digital technology to change how we engage with our clients and how their workers engage with us - and an important part of this includes delivering solutions wherever they are, whether at work or on the go.

We offer the broadest suite of complete HRO solutions coupled with dedicated and strategic HR services and deep local expertise.

These offerings can be tailored to meet the increasingly complex and sophisticated needs of our clients and their workers.

Our global footprint in the HCM industry is unmatched and, together with world-class technology and deep in-country compliance expertise, we are strongly positioned to continue to drive growth by delivering solutions to clients of all sizes wherever they do business.

Innovation at ADP

Innovation is in our DNA.

For 70 years, we have reimagined the world of work by designing cutting-edge products, robust services and exceptional experiences that touch millions of people’s lives daily.

We pioneered automation in HCM, HCM in the cloud, mobile HCM and the establishment of an HCM marketplace.

As the business and digital technology landscape rapidly evolves, what ‘work’ means, ‘how’ and ‘where’ it gets done, and ‘how’ workers are paid is changing as well.

We innovate by anticipating the future of work, the future of HCM and the future of pay in order to meet the evolving and unique needs of our clients and their workers.

Our next-gen platforms are built for the ever-changing world of work.

Designed from the ground up to be cloud-native, global, scalable and secure, our next-generation platforms provide our clients with the flexibility they need to address today’s and tomorrow’s workplace challenges, regardless of their size and complexity.

Our next-generation HCM platform enables our clients to personalize their experience based on their needs.

Built for dynamic teams, our next-gen HCM platform provides our clients with visibility into where work actually happens rather than into rigid organizational hierarchies and worker types.

With our “HR your way” approach, clients can easily tailor the solution to their needs by deploying low-code applications.

Our next-generation payroll solution supports workers of all types and enables real-time, transparent, continuous payroll calculations.

Our next-gen payroll solution also unlocks flexible pay choices for our clients so they can provide the best pay experience for their workers.

Compliance capabilities are built-in, enabling our clients to focus on managing their business.

Our next-gen platforms are designed to meet the needs of our clients in an ever-changing world of work.

Today, harnessing big data for use in artificial intelligence (AI) is a real competitive advantage.

That is why we are accelerating the deployment of AI - driven by big data based on our unmatched HCM dataset - into our solutions and into the hands of our clients and their decision-makers.

This is the same HCM dataset that drives our renowned ADP National Employment Report®.

We are leading this innovation effort with ADP® DataCloud, a workforce intelligence engine which provides clients with in-depth workforce and business insights driven by unmatched big data that enables critical HR decisions.

Powered by ADP Datacloud, ADP’s Executive and Manager Insights solution continually sifts through wage, time, location, industry and other client data, to spot meaningful trends and patterns, such as which departments have the highest overtime or the locations where turnover might be spiking, and compares those trends and patterns to those in the client's industry.

Automatic Data Processing, Inc. was incorporated in the State of Delaware in June 1961 and completed its initial public offering in September 1961.

We are constantly innovating to help our clients leverage HCM solutions in order to streamline and simplify their human resources (“HR”) processes, drive better business results and manage their most important investment – their people.

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| • | Payroll Services |

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| --- | --- |

| • | Benefits Administration |

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| --- | --- |

| • | Talent Management |

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| --- | --- |

| • | HR Management |

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| --- | --- |

| • | Time and Attendance Management |

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| --- | --- |

| • | Insurance Services |

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| --- | --- |

| • | Retirement Services |

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| --- | --- |

| • | Compliance Services |

Employer Services’ Products and Services

Human Capital Management.

We serve more than 630,000 clients via ADP’s cloud-based strategic software as a service (“SaaS”) offerings, which reduce complexity through simplicity, scale and flexibility.

Through innovative offerings like the ADP® DataCloud we provide clients with in-depth, workforce and business insights driven by big data.

Through the ADP DataCloud, we also provide clients with a workforce intelligence engine that enables critical HR decisions that power workforce and business productivity, performance and alignment.

Our innovative payment offerings support employers’ need for flexible payment solutions due to macro trends, including the rise of the contingent workforce or “gig economy,” that are reshaping the employment landscape.

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| --- | --- |

| For the fiscal year ended June 30, [removed: 2018] [added: 2019] | | |

| Securities registered pursuant to Section 12(b) of the Act: | | [added: |]

| Title of each class | [added: Trading Symbol(s) |] Name of each exchange on which registered |

| Common Stock, $0.10 Par Value (voting) | [added: ADP |] NASDAQ Global Select Market |

Indicate by check mark whether the [removed: registrant] [added: Registrant] has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the [removed: registrant] [added: Registrant] was required to submit [removed: and post] such files).

| Non-accelerated filer \[ \] | [removed: (Do not check if a smaller reporting company)] | Smaller reporting company \[ \] |

| [added: | |] Emerging growth company \[ \] | [removed: | |]

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant as of the last business day of the Registrant’s most recently completed second fiscal quarter was approximately [removed: $51,688,560,196.][added: $56,967,135,372.]

On July 31, [removed: 2018] [added: 2019] there were [removed: 438,082,756] [added: 433,942,837] shares of Common Stock outstanding.

| Portions of the Registrant's Proxy Statement for its [removed: 2018] [added: 2019] Annual Meeting of Stockholders. | Part III |

| Item 1. | [removed: Business] [added: [Business](#s53446DD071DE59C8B3BD889D39708766)] | [removed: [3](#s6110EADD16395943AECC887F0C7E3FC3)] [added: [3](#s53446DD071DE59C8B3BD889D39708766)] |

| Item 1A. | [removed: Risk Factors] [added: [Risk Factors](#s60BD0D6A68B05B438C47E88A7AD3851A)] | [removed: [10](#sE411633B630C5C8797E31937AC535D56)] [added: [13](#s60BD0D6A68B05B438C47E88A7AD3851A)] |

| Item 1B. | [removed: Unresolved] [added: [Unresolved] Staff [removed: Comments] [added: Comments](#s85E282ABE21E5E909A517195F7C06103)] | [removed: [16](#s0EAACF2E9D385C84970ADEDDAC73184C)] [added: [18](#s85E282ABE21E5E909A517195F7C06103)] |

| Item 2. | [removed: Properties] [added: [Properties](#sE55BEA7B215B57CB88D2B8579E27DAF4)] | [removed: [16](#s7FEB0D917FD455E0B03255A1F318E3B9)] [added: [18](#sE55BEA7B215B57CB88D2B8579E27DAF4)] |

| Item 3. | [removed: Legal Proceedings] [added: [Legal Proceedings](#sE040D103593E5D39B55B2D597BB8D2B4)] | [removed: [16](#s3B16FA42670453179E9368EE8B514640)] [added: [18](#sE040D103593E5D39B55B2D597BB8D2B4)] |

| Item 4. | [removed: Mine] [added: [Mine] Safety [removed: Disclosures] [added: Disclosures](#sBFE002A940C45885BB7BE18D521375BF)] | [removed: [16](#s69C4221B0D2C5679A7C1713678F60094)] [added: [18](#sBFE002A940C45885BB7BE18D521375BF)] |

| Item 5. | [removed: Market] [added: [Market] for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity [removed: Securities] [added: Securities](#sA79DE999BE49585A8DE6C57FFEE43CFD)] | [removed: [17](#s5BA24AE26F155E8A926B23D8686E1E10)] [added: [19](#sA79DE999BE49585A8DE6C57FFEE43CFD)] |

| Item 6. | [removed: Selected] [added: [Selected] Financial [removed: Data] [added: Data](#sEF9871AB9D8C5783B4B759B47438B15B)] | [removed: [20](#s769E227CF6255ECBAAEADBA0CFE0F095)] [added: [21](#sEF9871AB9D8C5783B4B759B47438B15B)] |

| Item 7. | [removed: Management's] [added: [Management's] Discussion and Analysis of Financial Condition and Results of [removed: Operations] [added: Operations](#s4070D41B1D2A5CF8A8178CB84BB3BCAF)] | [removed: [23](#s974124E196685A5494AB9271356AAB71)] [added: [23](#s4070D41B1D2A5CF8A8178CB84BB3BCAF)] |

| Item 7A. | [removed: Quantitative] [added: [Quantitative] and Qualitative Disclosures About Market [removed: Risk] [added: Risk](#s6831E8939DEB51789964BF304C1FBD34)] | [removed: [41](#sE425C63B7F485D99990D724FDDDB68B6)] [added: [41](#s6831E8939DEB51789964BF304C1FBD34)] |

| Item 8. | [removed: Financial] [added: [Financial] Statements and Supplementary [removed: Data] [added: Data](#sF7469CA190735A4792F8EB0BC3A5A595)] | [removed: [42](#s9148FD324A645352AAC80509643D2DED)] [added: [42](#sF7469CA190735A4792F8EB0BC3A5A595)] |

| Item 9. | [removed: Changes] [added: [Changes] in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure] [added: Disclosure](#sF3B207DEF9B85417B0A15A2736A59AC3)] | [removed: [82](#s0E938521CB745E3D84D9B166D4D01405)] [added: [84](#sF3B207DEF9B85417B0A15A2736A59AC3)] |

| Item 9A. | [removed: Controls] [added: [Controls] and [removed: Procedures] [added: Procedures](#sCBAE0A2D904B58A58E9716CB347F12D5)] | [removed: [82](#s875677977E9752D08CD84B59359DACFF)] [added: [84](#sCBAE0A2D904B58A58E9716CB347F12D5)] |

| Item 9B. | [removed: Other Information] [added: [Other Information](#sF69BAC465E21538DAD641E6617CB4E5D)] | [removed: [86](#sE02D5D9A8A195C5CB8F70BDBE5207E0D)] [added: [88](#sF69BAC465E21538DAD641E6617CB4E5D)] |

| Item 10. | [removed: Directors,] [added: [Directors,] Executive Officers and Corporate [removed: Governance] [added: Governance](#sEE5B4E5AD6FC58DC99B0112BAB7941E6)] | [removed: [87](#sDD9D3B6B9BFA5536978955F0B3660C37)] [added: [89](#sEE5B4E5AD6FC58DC99B0112BAB7941E6)] |

| Item 11. | [removed: Executive Compensation] [added: [Executive Compensation](#sB5ED2E4C1AC850C4A44F2E79A85441A5)] | [removed: [89](#sCABE3A69CA0F5ABFA6CB02B0AC4CE4C9)] [added: [91](#sB5ED2E4C1AC850C4A44F2E79A85441A5)] |

| Item 12. | [removed: Security] [added: [Security] Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters] [added: Matters](#s505DB84B4B1B5C6080BF7A3689CE4E3D)] | [removed: [89](#s82539D8508F75866BCF6372CB601246E)] [added: [91](#s505DB84B4B1B5C6080BF7A3689CE4E3D)] |

| Item 13. | [removed: Certain] [added: [Certain] Relationships and Related Transactions, and Director [removed: Independence] [added: Independence](#s55C6A09C7AD551C1B18A0C9CCA877F98)] | [removed: [89](#sE4170B0156825D84B091BFDE353D39A8)] [added: [91](#s55C6A09C7AD551C1B18A0C9CCA877F98)] |

| Item 14. | [removed: Principal] [added: [Principal] Accounting Fees and [removed: Services] [added: Services](#s1025772973AB5407B48592AF9CB343EA)] | [removed: [89](#s52FE4DF5D32F544D86E3CE8734838B05)] [added: [91](#s1025772973AB5407B48592AF9CB343EA)] |

| Item 15. | [removed: Exhibits,] [added: [Exhibits,] Financial Statement [removed: Schedules] [added: Schedules](#s85977FD158CB5DFB90B5F271E9872F94)] | [removed: [89](#s04897ED00F345CB0B91222591E39B628)] [added: [91](#s85977FD158CB5DFB90B5F271E9872F94)] |

10-K 1 q4fy1910k.htm 10-K

| --- | --- | --- |

| Signatures | | [96](#s9770A259DD605C4DBAD74A464D052141) |

| | | |

| | | |

10-K 1 q4fy1810k.htm 10-K

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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

\[x\]

| Signatures | | [94](#s692EAAE9DA925EEE80CF946CC130F5BC) |

ADP owns [removed: 8] [added: 7] of its processing/print centers, and [removed: 18] [added: 16] other operational offices, sales offices, and its corporate headquarters in Roseland, New Jersey, which aggregate approximately [removed: 3,512,155] [added: 3,361,473] square feet.

All of these leases, which aggregate approximately [removed: 6,401,280] [added: 6,205,945] square feet worldwide, expire at various times up to the year 2029.

As of June 30, [removed: 2018,] [added: 2019,] there were [removed: 39,613] [added: 37,578] holders of record of the Company’s common stock.

As of such date, [removed: 562,262] [added: 903,187] additional holders held their common stock in “street name.”

| (1) | | Pursuant to the terms of the Company’s restricted stock program, the Company purchased [removed: 14,587] [added: 3,930] shares at the then market value of the shares in connection with the exercise by employees of their option under such program to satisfy certain tax withholding requirements through the delivery of shares to the Company instead of cash. |

The following graph compares the cumulative return on the Company’s common stock(a) for the most recent five years with the cumulative return on the S&P 500 Index and the Peer Group Index,(b) assuming an initial investment of $100 on June 30, [removed: 2013,] [added: 2014,] with all dividends reinvested.

[removed: ][added: ]

| April 1, 2019 to April 30, 2019 | 85,061 | $160.17 | 84,184 | 10,987,717 |

| May 1, 2019 to May 31, 2019 | 606,392 | $160.33 | 605,059 | 10,382,658 |

| June 1, 2019 to June 30, 2019 | 431,403 | $164.45 | 429,683 | 9,952,975 |

| Total | 1,122,856 | | 1,118,926 | |

For equity compensation plan information, please refer to Item 12 in Part III of this Annual Report or Form 10-K.

The following table sets forth the reported high and low sales prices of the Company’s common stock reported on the NASDAQ Global Select Market and the cash dividends per share of common stock declared during each quarter for the two most recent fiscal years.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

| | Price Per Share | | | | Dividends |

| | High | | Low | | Per Share |

| Fiscal 2018 quarter ended | | | | | |

| | | | | | |

| June 30 | $141.52 | | $111.78 | | $0.690 |

| March 31 | $125.24 | | $107.61 | | $0.630 |

| December 31 | $119.39 | | $108.53 | | $0.630 |

| September 30 | $121.77 | | $100.51 | | $0.570 |

| | | | | | |

| Fiscal 2017 quarter ended | | | | | |

| | | | | | |

| June 30 | $105.68 | | $95.50 | | $0.570 |

| March 31 | $104.61 | | $93.07 | | $0.570 |

| December 31 | $102.73 | | $84.03 | | $0.570 |

| September 30 | $93.82 | | $84.75 | | $0.530 |

| April 1, 2018 to April 30, 2018 | 1,263,686 | $116.50 | 1,262,037 | 18,346,131 |

| May 1, 2018 to May 31, 2018 | 1,048,326 | $126.92 | 1,048,045 | 17,298,086 |

| June 1, 2018 to June 30, 2018 | 828,868 | $135.98 | 816,211 | 16,481,875 |

| Total | 3,140,880 | | 3,126,293 | |

The following selected financial data is derived from our Consolidated Financial Statements and should be read in conjunction with the Consolidated Financial Statements and [removed: related notes,] [added: Notes to Consolidated Financial Statements,] Management's Discussion and Analysis of Financial Condition and Results of Operations, and Quantitative and Qualitative Disclosures About Market Risk included in this Annual Report on Form 10-K.

Refer to [added: note] (A) below for additional information about our non-GAAP financial measures and our reconciliations to reported results.

| Years ended June 30, | | [removed: 2018] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Total revenues | | $ | [removed: 13,325.8] [added: 14,175.2] | | | $ | [removed: 12,379.8] [added: 13,327.7] | | | $ | [removed: 11,667.8] [added: 12,372.0] | | | $ | [removed: 10,938.5] [added: 11,667.8] | | | $ | [removed: 10,226.4] [added: 10,938.5] | |

| Earnings from continuing operations before income taxes | | $ | [removed: 2,171.1] [added: 3,005.6] | | | $ | [removed: 2,531.1] [added: 2,282.6] | | | $ | [removed: 2,234.7] [added: 2,616.9] | | | $ | [removed: 2,070.7] [added: 2,234.7] | | | $ | [removed: 1,879.2] [added: 2,070.7] | |

| Net earnings from continuing operations | | $ | [removed: 1,620.8] [added: 2,292.8] | | | $ | [removed: 1,733.4] [added: 1,884.9] | | | $ | [removed: 1,493.4] [added: 1,787.8] | | | $ | [removed: 1,376.5] [added: 1,493.4] | | | $ | [removed: 1,242.6] [added: 1,376.5] | |

| Adjusted earnings from continuing operations before interest and income taxes (A) | | $ | [removed: 2,643.1] [added: 3,155.7] | | | $ | [removed: 2,447.6] [added: 2,754.6] | | | $ | [removed: 2,274.2] [added: 2,533.4] | | | $ | [removed: 2,061.5] [added: 2,274.2] | | | $ | [removed: 1,870.3] [added: 2,061.5] | |

| Adjusted net earnings from continuing operations (A) | | $ | [removed: 1,928.1] [added: 2,384.3] | | | $ | [removed: 1,665.0] [added: 2,007.3] | | | $ | [removed: 1,494.8] [added: 1,719.4] | | | $ | [removed: 1,376.5] [added: 1,494.8] | | | $ | [removed: 1,242.6] [added: 1,376.5] | |

| Basic earnings per share from continuing operations | | $ | [removed: 3.68] [added: 5.27] | | | $ | [removed: 3.87] [added: 4.28] | | | $ | [removed: 3.27] [added: 3.99] | | | $ | [removed: 2.91] [added: 3.27] | | | $ | [removed: 2.59] [added: 2.91] | |

| Diluted earnings per share from continuing operations | | $ | [removed: 3.66] [added: 5.24] | | | $ | [removed: 3.85] [added: 4.25] | | | $ | [removed: 3.25] [added: 3.97] | | | $ | [removed: 2.89] [added: 3.25] | | | $ | [removed: 2.57] [added: 2.89] | |

| Adjusted diluted earnings per share from continuing operations (A) | | $ | [removed: 4.35] [added: 5.45] | | | $ | [removed: 3.70] [added: 4.53] | | | $ | [removed: 3.26] [added: 3.82] | | | $ | [removed: 2.89] [added: 3.26] | | | $ | [removed: 2.57] [added: 2.89] | |

| Basic weighted average shares outstanding | | [removed: 440.6] [added: 435.0] | | | | [removed: 447.8] [added: 440.6] | | | | [removed: 457.0] [added: 447.8] | | | | [removed: 472.6] [added: 457.0] | | | | [removed: 478.9] [added: 472.6] | | |

| Diluted weighted average shares outstanding | | [removed: 443.3] [added: 437.6] | | | | [removed: 450.3] [added: 443.3] | | | | [removed: 459.1] [added: 450.3] | | | | [removed: 475.8] [added: 459.1] | | | | [removed: 483.1] [added: 475.8] | | |

| Cash dividends declared per share | | $ | [removed: 2.52] [added: 3.06] | | | $ | [removed: 2.24] [added: 2.52] | | | $ | [removed: 2.08] [added: 2.24] | | | $ | [removed: 1.95] [added: 2.08] | | | $ | [removed: 1.88] [added: 1.95] | |

| Cash, cash equivalents and marketable securities of continuing operations | | $ | [removed: 2,180.5] [added: 2,221.1] | | | $ | [removed: 2,791.2] [added: 2,180.5] | | | $ | [removed: 3,222.4] [added: 2,791.2] | | | $ | [removed: 1,694.8] [added: 3,222.4] | | | $ | [removed: 3,670.3] [added: 1,694.8] | |

| Total assets | | $ | [removed: 37,088.7] [added: 41,887.7] | | | $ | [removed: 37,180.0] [added: 38,849.1] | | | $ | [removed: 43,670.0] [added: 38,886.8] | | | $ | [removed: 33,110.5] [added: 43,670.0] | | | $ | [removed: 32,059.8] [added: 33,110.5] | |

| Long-term debt | | $ | [removed: 2,002.4] [added: 2,002.2] | | | $ | 2,002.4 | | | $ | [removed: 2,007.7] [added: 2,002.4] | | | $ | [removed: 9.2] [added: 2,007.7] | | | $ | [removed: 11.5] [added: 9.2] | |

| Stockholders’ equity | | $ | [removed: 3,459.6] [added: 5,399.9] | | | $ | [removed: 3,977.0] [added: 4,735.9] | | | $ | [removed: 4,481.6] [added: 4,984.1] | | | $ | [removed: 4,808.5] [added: 4,481.6] | | | $ | [removed: 6,670.2] [added: 4,808.5] | |

| Adjusted Financial [removed: Measure] [added: Measures] | U.S. GAAP Measures | [removed: Adjustments/Explanation - as applicable in the periods |]

| Adjusted effective tax rate | Effective tax rate | [removed: See footnote (g) |]

| Constant Currency Basis | U.S. GAAP P&L line items | [removed: See footnote (h) |]

The nature of these exclusions [removed: are] [added: is] for specific items that are not fundamental to our underlying business operations.

| [removed: Years ended June 30,] | | [removed: 2018] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Net earnings from continuing operations | | $ | [removed: 1,620.8] [added: 2,292.8] | | | $ | [removed: 1,733.4] [added: 1,884.9] | | | $ | [removed: 1,493.4] [added: 1,787.8] | | | $ | [removed: 1,376.5] [added: 1,493.4] | | | $ | [removed: 1,242.6] [added: 1,376.5] | |

| Provision for income taxes | | [removed: 550.3] [added: 712.8] | | | | [removed: 797.7] [added: 397.7] | | | | [removed: 741.3] [added: 829.1] | | | | [removed: 694.2] [added: 741.3] | | | | [removed: 636.6] [added: 694.2] | | |

| All other interest expense (a) | | [removed: 59.4] [added: 59.9] | | | | [removed: 59.3] [added: 59.4] | | | | [removed: 47.9] [added: 59.3] | | | | [removed: 1.5] [added: 47.9] | | | | [removed: 1.6] [added: 1.5] | | |

| All other interest income (a) | | [removed: (25.5] [added: (32.4] | | ) | | [removed: (22.4] [added: (25.5] | | ) | | [removed: (13.6] [added: (22.4] | | ) | | [removed: (10.7] [added: (13.6] | | ) | | [removed: (10.5] [added: (10.7] | | ) |

| Gain on sale of businesses | | — | | | | [removed: (205.4] [added: —] | | [removed: )] | | [removed: (29.1] [added: (205.4] | | ) | | [removed: —] [added: (29.1] | | [added: )] | | — | | |

| Gain on sale of assets | | [removed: —] [added: (15.7] | | [added: )] | | — | | | | [removed: (13.9] [added: —] | | [removed: )] | | [removed: —] [added: (13.9] | | [added: )] | | — | | |

| Transformation initiatives (b) | | [removed: 404.8] [added: 138.3] | | | | [removed: 85.0] [added: 404.8] | | | | [removed: 48.2] [added: 85.0] | | | | [removed: —] [added: 48.2] | | | | — | | |

| Proxy contest matters (c) | | [removed: 33.3] [added: —] | | | | [removed: —] [added: 33.3] | | | | — | | | | — | | | | — | | |

| Adjusted EBIT from continuing operations | | $ | [removed: 2,643.1] [added: 3,155.7] | | | $ | [removed: 2,447.6] [added: 2,754.6] | | | $ | [removed: 2,274.2] [added: 2,533.4] | | | $ | [removed: 2,061.5] [added: 2,274.2] | | | $ | [removed: 1,870.3] [added: 2,061.5] | |

| Net earnings from continuing operations | | $ | [removed: 1,620.8] [added: 2,292.8] | | | $ | [removed: 1,733.4] [added: 1,884.9] | | | $ | [removed: 1,493.4] [added: 1,787.8] | | | $ | [removed: 1,376.5] [added: 1,493.4] | | | $ | [removed: 1,242.6] [added: 1,376.5] | |

| Gain on sale of businesses | | — | | | | [removed: (205.4] [added: —] | | [removed: )] | | [removed: (29.1] [added: (205.4] | | ) | | [removed: —] [added: (29.1] | | [added: )] | | — | | |

| Provision for income taxes on gain on sale of [removed: business] [added: businesses] (d) | | — | | | | [removed: 84.0] [added: —] | | | | [removed: 7.3] [added: 84.0] | | | | [removed: —] [added: 7.3] | | | | — | | |

| Gain on sale of assets | | [removed: —] [added: (15.7] | | [added: )] | | — | | | | [removed: (13.9] [added: —] | | [removed: )] | | [removed: —] [added: (13.9] | | [added: )] | | — | | |

| Provision for income taxes on gain on sale of assets (e) | | [removed: —] [added: 3.9] | | | | — | | | | [removed: 5.3] [added: —] | | | | [removed: —] [added: 5.3] | | | | — | | |

| Transformation initiatives (b) | | [removed: 404.8] [added: 138.3] | | | | [removed: 85.0] [added: 404.8] | | | | [removed: 48.2] [added: 85.0] | | | | [removed: —] [added: 48.2] | | | | — | | |

| Income tax benefit for transformation initiatives (e) | | [removed: (122.1] [added: (34.5] | | ) | | [removed: (32.0] [added: (122.1] | | ) | | [removed: (16.4] [added: (32.0] | | ) | | [removed: —] [added: (16.4] | | [added: )] | | — | | |

| Proxy contest matters (c) | | [removed: 33.3] [added: —] | | | | [removed: —] [added: 33.3] | | | | — | | | | — | | | | — | | |

Additionally, prior period amounts have been adjusted to exclude discontinued operations and were restated for the adoption of Accounting Standards Update (“ASU”) 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Costs and Net Periodic Post-retirement Benefit Cost.”

| Years ended June 30, | | 2019 | | | | As Restated* | | | | As Restated* | | | | As Restated | | | | As Restated | | |

| Total costs of revenues | | $ | 8,086.6 | | | $ | 7,810.9 | | | $ | 7,244.5 | | | $ | 6,876.1 | | | $ | 6,459.6 | |

| Obligations under reverse repurchase agreements | | $ | 262.0 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |

*Note fiscal 2018 and 2017 were restated for the adoption of Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.”

| | |

| --- | --- |

| | |

| Adjusted EBIT from continuing operations | Net earnings from continuing operations |

| Adjusted provision for income taxes | Provision for income taxes |

| Adjusted net earnings from continuing operations | Net earnings from continuing operations |

| Adjusted diluted earnings per share from continuing operations | Diluted earnings per share from continuing operations |

| | | 2019 | | | | As Restated* | | | | As Restated* | | | | As Restated | | | | As Restated | | |

*Note fiscal 2018 and 2017 were restated for the adoption of Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.”

Charges related to our VERP in fiscal 2019 include $48.2 million for non-cash pension settlement charges and special termination benefits, and $23.6 million of expenses related to the continuing health coverage.

We also recorded severance charges in accordance with ASC 712 totaling $33.6 million primarily relating to our Workforce Optimization initiative to reduce management layers and increase spans of controls and $56.8 million related to our other transformation initiatives during fiscal 2019.

These charges were partially offset by net reversals of charges and gain on sale of assets related to our Service Alignment Initiative totaling $23.9 million for fiscal 2019.

Refer to Note 13 of our Consolidated Financial Statements for additional detail.

Additionally, prior period amounts have been adjusted to exclude discontinued operations.

| Total costs of revenues | | $ | 7,842.6 | | | $ | 7,269.8 | | | $ | 6,840.3 | | | $ | 6,427.6 | | | $ | 6,041.0 | |

| Total assets of continuing operations | | $ | 37,088.7 | | | $ | 37,180.0 | | | $ | 43,670.0 | | | $ | 33,110.5 | | | $ | 29,629.6 | |

| Obligations under commercial paper borrowings | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 2,173.0 | |

| | | |

| --- | --- | --- |

| | | |

| Adjusted EBIT from continuing operations | Net earnings from continuing operations | \- Provision for income taxes \- Gains/losses on sales of businesses and assets \- All other interest expense and income \- Transformation initiatives \- Non-operational costs related to proxy contest matters See footnotes (a), (b), and (c) |

| Adjusted net earnings from continuing operations | Net earnings from continuing operations | Pre-tax and tax impacts of: \- Gains/losses on sales of businesses and assets \- Transformation initiatives \- Non-operational costs related to proxy contest matters \- Tax Cuts and Jobs Act See footnotes (b), (c), (d), (e) and (f) |

| Adjusted provision for income taxes | Provision for income taxes | Tax impacts of: \- Gains/losses on sales of businesses and assets \- Transformation initiatives \- Non-operational costs related to proxy contest matters \- Tax Cuts and Jobs Act See footnotes (c), (d), (e), and (f) |

| Adjusted diluted earnings per share from continuing operations | Diluted earnings per share | EPS impacts of: \- Gains/losses on sales of businesses and assets \- Transformation initiatives \- Non-operational costs related to proxy contest matters \- Tax Cuts and Jobs Act See footnotes (b), (c), and (f) |

Charges for transformation initiatives for periods prior to fiscal 2018 primarily represent severance charges related to our Service Alignment Initiative and Workforce Optimization Effort.

due to the derecognition of goodwill upon the sale of the business and for the year ended June 30, 2016 due to a previously recorded non tax-deductible goodwill impairment charge.

We are still analyzing certain aspects of the Act and refining calculations, which could potentially result in the re-measurement of these balances or potentially give rise to future adjustments.

We have audited the accompanying consolidated balance sheets of Automatic Data Processing, Inc. and subsidiaries (the "Company") as of June 30, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the related consolidated statements of [removed: income,] [added: earnings,] comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended June 30, [removed: 2018,] [added: 2019,] and the related notes and the schedule listed in the Index at Item 15(a) 2 (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the three years in the period ended June 30, [removed: 2018,] [added: 2019,] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of June 30, [removed: 2018,] [added: 2019,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August [removed: 3, 2018,] [added: 9, 2019,] expressed an unqualified opinion on the Company’s internal control over financial reporting.

Our audits included performing procedures to assess the [removed: risks] [added: risk] of material [removed: misstatement] [added: misstatements] of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

| Years ended June 30, | | [removed: 2018] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | |

| Revenues, other than interest on funds held for clients and PEO revenues | | $ | [removed: 8,985.2] [added: 9,375.8] | | | $ | [removed: 8,518.1] [added: 8,983.4] | | | $ | [removed: 8,234.0] [added: 8,510.1] | |

| Interest on funds held for clients | | [removed: 466.5] [added: 561.9] | | | | [removed: 397.4] [added: 466.5] | | | | [removed: 377.3] [added: 397.4] | | |

| PEO revenues [removed: (A)] | [removed: |] 3,874.1 | | | | [removed: 3,464.3] [added: 3.7] | | | | [removed: 3,056.5] [added: —] | | | [added: | 3,877.8 | | |]

| TOTAL REVENUES | [removed: |] 13,325.8 | | | | [removed: 12,379.8] [added: 1.9] | | | | [removed: 11,667.8] [added: —] | | | [added: | 13,327.7 | | |]

| Systems development and programming costs | [removed: |] 630.2 | | | | [removed: 627.5] [added: —] | | | | [removed: 603.7] [added: 5.2] | | | [added: | 635.4 | | |]

| Depreciation and amortization | | [removed: 274.5] [added: 304.4] | | | | [removed: 226.2] [added: 274.5] | | | | [removed: 211.6] [added: 226.2] | | |

| Selling, general, and administrative expenses | [removed: |] 2,971.5 | | | | [removed: 2,783.2] [added: (35.6] | | [added: )] | | [removed: 2,637.0] [added: 23.5] | | | [added: | 2,959.4 | | |]

| Interest expense | | [removed: 102.7] [added: 129.9] | | | | [removed: 80.0] [added: 102.7] | | | | [removed: 56.2] [added: 80.0] | | |

[removed: | Other expense/(income), net | | 237.9 | | | | (284.3 | | ) | | (100.4 | | ) |][added: OTHER (INCOME)/EXPENSE, NET]

| EARNINGS [removed: FROM CONTINUING OPERATIONS] BEFORE INCOME TAXES | [removed: |] 2,171.1 | | | | [removed: 2,531.1] [added: 111.5] | | | | [removed: 2,234.7] [added: —] | | | [added: | 2,282.6 | | |]

| Provision for income taxes | [removed: |] 550.3 | | | | [removed: 797.7] [added: (152.6] | | [added: )] | | [removed: 741.3] [added: —] | | | [added: | 397.7 | | |]

| Provision for income taxes | | [removed: —] [added: 712.8] | | | | [removed: —] [added: 397.7] | | | | [removed: (0.5] [added: 829.1] | | [removed: )] |

| NET EARNINGS | [removed: |] $ | 1,620.8 | | | $ | [removed: 1,733.4] [added: 264.1] | | | $ | [removed: 1,492.5] [added: —] | | [added: | $ | 1,884.9 | |]

| [removed: Basic Earnings Per Share from Discontinued Operations] [added: BASIC EARNINGS PER SHARE] | | [removed: —] [added: $] | [added: 5.27] | | | [removed: —] [added: $] | [added: 4.28] | | | [removed: —] [added: $] | [added: 3.99] | |

| [removed: Diluted Earnings Per Share from Discontinued Operations] [added: DILUTED EARNINGS PER SHARE] | | [removed: —] [added: $] | [added: 5.24] | | | [removed: —] [added: $] | [added: 4.25] | | | [removed: —] [added: $] | [added: 3.97] | |

| Basic weighted average shares outstanding | | [removed: 440.6] [added: 435.0] | | | | [removed: 447.8] [added: 440.6] | | | | [removed: 457.0] [added: 447.8] | | |

| Diluted weighted average shares outstanding | | [removed: 443.3] [added: 437.6] | | | | [removed: 450.3] [added: 443.3] | | | | [removed: 459.1] [added: 450.3] | | |

(A) For the years ended June 30, [removed: 2018] [added: 2019] ("fiscal [removed: 2018"),] [added: 2019"),] June 30, [removed: 2017] [added: 2018] ("fiscal [removed: 2017"),] [added: 2018"),] and June 30, [removed: 2016] [added: 2017] ("fiscal [removed: 2016"),] [added: 2017"),] Professional Employer Organization ("PEO") revenues are net of direct pass-through costs, primarily consisting of payroll wages and payroll taxes, of [removed: $39,140.9] [added: $42,688.8] million, [removed: $34,567.4] [added: $39,140.9] million, and [removed: $30,928.6] [added: $34,567.4] million, respectively.

| Years ended June 30, | | [removed: 2018] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | |

| [removed: Net earnings] [added: NET EARNINGS] | [added: $] | [added: 1,733.4 | | |] $ | [removed: 1,620.8] [added: 54.4] | | | $ | [removed: 1,733.4] [added: —] | | | $ | [removed: 1,492.5] [added: 1,787.8] | |

| Currency translation adjustments | [removed: | 2.8] [added: (14.8] | | [added: )] | | [removed: 23.0] [added: —] | | | | [removed: (25.5] [added: (14.8] | | ) |

| Unrealized net [removed: (losses)/gains] [added: gains/(losses)] on available-for-sale securities | | [removed: (460.7] [added: 642.4] | | [removed: )] | | [removed: (405.7] [added: (460.7] | | ) | | [removed: 288.8] [added: (405.7] | | [added: )] |

| Tax effect | | [removed: 123.4] [added: (144.4] | | [added: )] | | [removed: 141.6] [added: 123.4] | | | | [removed: (102.2] [added: 141.6] | | [removed: )] |

| Reclassification of net losses/(gains) on available-for-sale securities to net earnings | | [removed: 2.7] [added: 0.9] | | | | [removed: (2.2] [added: 2.7] | | [removed: )] | | [removed: 5.0] [added: (2.2] | | [added: )] |

| Tax effect | | [removed: (0.6] [added: (0.3] | | ) | | [removed: 0.8] [added: (0.6] | | [added: )] | | [removed: (1.7] [added: 0.8] | | [removed: )] |

| Pension net [removed: gains/(losses)] [added: (losses)/gains] arising during the year | | [removed: 87.0] [added: (84.7] | | [added: )] | | [removed: 109.6] [added: 87.0] | | | | [removed: (199.4] [added: 109.6] | | [removed: )] |

| Tax effect | | [removed: (18.7] [added: 20.0] | | [removed: )] | | [removed: (43.6] [added: (18.7] | | ) | | [removed: 72.9] [added: (43.6] | | [added: )] |

| Reclassification of pension liability adjustment to net earnings | | [removed: 9.3] [added: 40.3] | | | | [removed: 20.6] [added: 9.3] | | | | [removed: 12.0] [added: 20.6] | | |

| Tax effect | | [removed: (4.5] [added: (9.5] | | ) | | [removed: (8.2] [added: (4.5] | | ) | | [removed: (4.4] [added: (8.2] | | ) |

| Other comprehensive [removed: (loss)/income,] [added: income/(loss),] net of tax | | [removed: (259.3] [added: 422.5] | | [removed: )] | | [removed: (164.1] [added: (254.3] | | ) | | [removed: 45.5] [added: (168.1] | | [added: )] |

| June 30, | | [removed: 2018] | | | | [removed: 2017] [added: 2018] | | |

| Cash and cash equivalents | | $ | [added: 1,949.2 | | | $ |] 2,170.0 | | | $ | 2,780.4 | |

| Accounts receivable, net of allowance for doubtful accounts of [removed: $51.3] [added: $54.9] and [removed: $49.6,] [added: $51.3,] respectively | | [removed: 1,984.2] [added: 2,439.3] | | | | [removed: 1,703.6] [added: 1,984.2] | | |

| Other current assets | | [added: $ |] 758.0 | | | [added: $] | [removed: 883.2] [added: (226.7] | [added: )] | | [added: $ | 531.3 | |]

| Total current assets before funds held for clients | | [removed: 4,912.2] [added: 4,908.1] | | | | [removed: 5,367.2] [added: 4,685.5] | | |

Change in Accounting Principle

As discussed in Note 1 to the financial statements, effective July 1, 2018, the Company adopted FASB Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASC 606), on a retrospective basis.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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| Goodwill - Employer Services Reportable Segment - Refer to Notes 1 and 9 to the financial statements | | | | |

| Critical Audit Matter Description | | | | |

| The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The Company uses the discounted cash flow model to estimate fair value, which requires management to make significant estimates and assumptions related to forecasts of future revenue and operating margins. Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both. The Company's new next-gen platform for which there is limited historical data and for which the forecasted future revenue and operating margin contribute significantly to the fair value of a reporting unit with approximately $678 million of goodwill within the Employer Services reportable segment as of June 30, 2019. Given the significant judgments made by management to estimate the fair value contributed by the next-gen platform for which there is limited historical data, including management’s judgments in selecting significant business assumptions to forecast future revenue and operating margin for the next-gen platform, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists. | | | | |

How the Critical Audit Matter Was Addressed in the Audit