Automatic Data Processing (ADP) 10-K risk factor changes: FY2020 vs FY2019

[removed: Our] [added: *Our] businesses routinely encounter and address risks, some of which may cause our future results to be different than we currently anticipate.

The level of importance of each of the following risks may vary from time to time, and any of these risks may have a materially adverse effect on our business, results of [removed: operations or] [added: operations,] financial [removed: condition.][added: condition or reputation.*]

[removed: Failure] [added: Failure] to comply with, or changes in, laws and regulations applicable to our businesses could have a materially adverse effect on our reputation, results of operations or financial condition, or have other adverse [removed: consequences][added: consequences]

For example, a change in regulations either decreasing the amount of taxes to be withheld or allowing less time to remit taxes to government authorities would adversely impact average client balances and, [removed: thereby] [added: thereby,] adversely impact interest income from investing client funds before such funds are remitted to the applicable taxing authorities.

Changes in laws that govern the co-employment arrangement between a professional employer organization and its worksite employees may require us to change the manner in which we conduct some aspects of [removed: our PEO business.]

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

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

In addition, some of our businesses [added: and entities] in the U.S. and a number of [added: other] countries in which we operate are subject to anti-money laundering laws and regulations, including, for example, The Bank Secrecy Act of 1970, as amended by the USA PATRIOT Act of 2000 (the “BSA”).

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

We have registered our payroll card [removed: business with the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”)] [added: business,] as a provider of prepaid access pursuant to [removed: a FinCEN regulation.][added: applicable regulation, and our ADP Trust Bank with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).]

Further, bank [removed: regulators] [added: regulators, including the OCC which regulates the ADP Trust Bank,] are imposing additional and stricter requirements on banks to ensure they are meeting their BSA obligations, and banks are increasingly viewing money services businesses, as a class, to be higher risk customers for money laundering.

As a result, our banking partners [added: that assist in processing our money movement transactions] may limit the scope of services they provide to us or may impose additional [added: material] requirements on us.

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 [added: materially] 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 operations or financial condition.

[removed: Failure] [added: Failure] to comply with privacy, data protection and cyber security laws and regulations could have a materially adverse effect on our reputation, results of operations or financial condition, or have other adverse [removed: consequences][added: consequences]

These laws, which are not uniform, generally do one or more of the following: regulate the collection, storage, hosting, transfer (including in some cases, the transfer outside the country of collection), processing, disclosure, use, security and 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 regulate the use or disclosure of personal information for secondary [added: purposes such as marketing.]

In many cases, these laws apply not only to third-party transactions, but [removed: also to transfers of information among the Company and its subsidiaries.]

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

[removed: Our] [added: Our] businesses collect, host, store, transfer, process, disclose, use, secure and [added: retain and] dispose of personal and business information, and collect, 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 [added: materially] adversely affect our results of [removed: operations][added: operations]

In connection with our business, we collect, host, store, transfer, process, disclose, use, secure and [added: retain 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 [added: our systems and processes.]

[removed: Nonetheless, 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 parties (including our personnel) may focus on the amount and type of personal and business information that our businesses collect, host, store, transfer, process, disclose, use, secure and [added: retain and] dispose of, and the client funds that we collect and transmit.

[removed: In addition, hardware,] [added: Hardware,] software or applications we develop or procure from third [added: parties, or are required by third] parties [added: such as foreign governments to install on our systems,] may contain defects in design or manufacture or other problems that could [added: (or, in respect of third party software, may be designed to)] compromise the confidentiality, integrity or availability of data or our systems.

In addition, while our operating environments are designed to safeguard and protect personal and business information, we [removed: do] [added: may] not have the ability to monitor the implementation or effectiveness of any safeguards by our clients, vendors or 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 party (including our personnel), or inadvertent acts or inactions by our vendors, partners or personnel, could result in the [added: loss,] 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 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: Our] [added: Our] systems, applications, solutions and services may be subject to disruptions that could have a materially adverse effect on our business and [removed: reputation][added: reputation]

[removed: A] [added: A] disruption of [removed: our] [added: the] data centers [added: or cloud-computing services that we utilize] could have a materially adverse effect on our [removed: business][added: business]

We host our applications and serve our clients [removed: from] [added: with] data centers that we [removed: operate] [added: operate,] and [removed: from] [added: with] data centers [removed: operated] [added: that are operated, and cloud-computing services that are provided,] by third-party vendors.

[added: If any of these data centers or cloud-computing services fails, becomes disabled or is disrupted, 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 [removed: intervention,] [added: intervention] or damage to our reputation, any of which could have a material adverse effect on our results of operation or financial condition.

In addition, our third-party vendors may cease providing data center facilities or [added: cloud-computing] services, elect to not renew their agreements with us on commercially reasonable terms or at all, breach their agreements with us or fail to satisfy our expectations, which could disrupt our operations and require us to incur costs which could materially adversely affect our results of operation or financial condition.

[removed: If] [added: If] we fail to protect our intellectual property rights, it could materially adversely affect our business and our [removed: brand][added: brand]

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

[removed: Any claims or] litigation could cause us to incur significant expenses and, if successfully asserted against 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.

[removed: If] [added: If] we fail to upgrade, enhance and expand our technology and services to meet client needs and preferences, the demand for our solutions and services may [removed: diminish][added: materially diminish]

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

[removed: These initiatives, or our failure to successfully manage them, could result in] unintended consequences or unforeseen costs, including distraction of our management and employees, attrition, inability to attract or retain key personnel, and reduced employee productivity, which could adversely affect our business, financial condition, and results of operations.

[removed: Political] [added: Political] and economic factors may [added: materially] adversely affect our business and financial [removed: results][added: results]

When there is a slowdown in the economy, employment levels and interest rates may decrease with a [removed: corresponding impact on our businesses.]

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

We invest our [removed: client] funds [added: held for clients] in liquid, investment-grade marketable securities, money market securities, and other cash equivalents.

our PEO business.

also to transfers of information among the Company and its subsidiaries.

Nonetheless, the global environment grows increasingly hostile as attacks on information technology systems continue to grow in

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

Any claims or

These initiatives, or our failure to successfully manage them, could result in

A major natural disaster or catastrophic event could have a materially adverse effect on our business, financial condition and results of operations, or have other adverse consequences

Our business, financial condition, results of operations, access to capital markets and borrowing costs may be adversely affected by a major natural disaster or catastrophic event, including civil unrest, geopolitical instability, war, terrorist attack, or pandemics or other public health emergencies such as the recent COVID-19 outbreak, and measures taken in response thereto.

The COVID-19 outbreak has created, and such other events may create, significant volatility and uncertainty and economic and financial market disruption.

The extent of any such impact depends on developments which are highly uncertain and cannot be predicted, including the duration and scope of the event; the governmental and business actions taken in response thereto; actions taken by the Company in response thereto and the related costs; the impact on economic activity and employment levels; the effect on our clients, prospects, suppliers and partners; our ability to sell and provide our solutions and services, including due to travel restrictions, business and facility closures, and employee remote working arrangements; the ability of our clients or prospects to pay for our services and solutions; and how quickly and to what extent normal economic and operating conditions can resume.

In addition, clients or prospects may delay decision making, demand pricing and other concessions, reduce the value or duration of their orders, delay planned work or seek to terminate existing agreements.

Our business is also impacted by employment levels across our clients, as we have varied contracts throughout our business that blend base fees and per-employee fees.

To date, the COVID-19 outbreak has had a significant impact on our clients and, as a result, our revenue and new business bookings have been and, we expect, will continue to be negatively impacted.

Our bookings have also been adversely affected by the impact of the outbreak on the buying behavior of our clients and prospects, coupled with the inability of our sales force to engage with clients and prospects on an in-person basis and instead primarily leveraging virtual interactions.

corresponding impact on our businesses.

When there is a reduction in employment levels due to a slowdown in the economy, the Company may experience a decline in client fund obligations and may also sell available-for-sale securities in our funds held for clients in order to reduce the size of the funds held for clients to correspond to client fund obligations.

A sale of such available-for-sale securities may result in the recognition of losses and reduce the interest income earned on funds held for clients, either or both of which may adversely impact our results of operations, financial condition and cash flow.

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

Amendments to money transmitter statutes have required us to obtain licenses in some jurisdictions.

The adoption of new money transmitter statutes in other jurisdictions, changes in regulators’ interpretation of existing state and federal money transmitter or money services business statutes or regulations, or disagreement by a regulatory authority with our interpretation of such statutes or regulations, could require additional registration or licensing, limit certain of our business activities until they are appropriately licensed, and expose us to financial penalties.

These occurrences could also require changes to the manner in which we conduct some aspects of our money movement business or client funds investment strategy, which could adversely impact interest income from investing client funds before such funds are remitted.

Among other things, the BSA

purposes such as marketing.

our systems and processes.

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

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

renegotiating their contracts with us, which may adversely affect our business and financial results.

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

[removed: FORWARD-LOOKING STATEMENTS][added: FORWARD-LOOKING STATEMENTS]

Factors that could cause actual results to differ materially from those contemplated by the forward-looking statements or that could contribute to such difference include: ADP's success in obtaining, and retaining clients, and selling additional services to clients; the pricing of products and services; the success of our new solutions; compliance with existing or new legislation or regulations; changes in, or interpretations of, existing legislation or regulations; overall market, political and economic conditions, including interest rate and foreign currency trends; competitive conditions; our ability to maintain our current credit ratings and the impact on our funding costs and profitability; security or cyber breaches, fraudulent acts, and system interruptions and failures; employment and wage levels; changes in technology; availability of skilled technical associates; the impact of new acquisitions and divestitures; and the adequacy, effectiveness and success of our business transformation [removed: initiatives.][added: initiatives; and the impact of and uncertainties related to major natural disasters or catastrophic events, including the coronavirus (“COVID-19”) pandemic.]

[removed: EXECUTIVE OVERVIEW][added: EXECUTIVE OVERVIEW]

[removed: We are] [added: As] a leading global provider of cloud-based Human Capital Management (“HCM”) technology solutions [removed: - including payroll, talent management, Human Resources management, benefits administration, and workforce management -] to employers around the [removed: world.][added: world, we have continued to process payroll and tax obligations and provide other HCM services to our clients, despite the unexpected challenges that our clients and their employees around the world are facing.]

Highlights from the year ended June 30, [removed: 2019 (“fiscal 2019”)] [added: 2020] include:

[removed: | • | Average] [added: The PEO average] number of Worksite Employees increased [removed: 8% to 547,000 |][added: 4% for fiscal 2020.]

| [removed: •] [added: Adjusted diluted earnings per share] | [added: | |] Diluted earnings per share [removed: (“EPS”) increased 23% to $5.24; adjusted diluted EPS increased 20% to $5.45] | [added: | | | | |]

Our financial condition [removed: and balance sheet remain] [added: remains] solid at June 30, [removed: 2019.][added: 2020 and we remain well positioned to support our associates and our clients.]

[removed: RESULTS] [added: RESULTS AND ANALYSIS] OF [removed: OPERATIONS][added: CONSOLIDATED OPERATIONS]

[removed: (In] [added: (Tabular dollars are presented in] millions, except per share amounts)

| | | [added: | | | | | | | | | | | | | | | | | | | | | | | | |] Years Ended | | | | | | | | | | | | [removed: %] [added: | | | | | |] Change | | | | | | | | | | | [added: | | | | | | | | | |]

| [removed: | | June 30, | | | | | | | | | | | | | |] [added: Organic constant currency:] | | | [added: á] | [removed: Constant Currency Basis] | | [added: 4%] | | |

[removed: | Total revenues | | $ | 14,175.2 | | | $ | 13,327.7 | | | $ | 12,372.0 | | | 6 | % | | 8 | % | | 7 | % | | 7 | % |][added: Total Revenues]

| Costs of revenues: | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Systems development and programming costs | | [removed: 636.3] | | | | [removed: 635.4] | | | | [removed: 632.1] | | | | [removed: —] | [removed: %] | | [removed: 1] | [removed: %] | | [removed: 2] | [added: | | | | | | 674.1 | | | | | | 636.3 | | | | | | 6 | |] % | | [removed: (1] | [removed: )%] | [added: | | | | | | | | |]

| Depreciation and amortization | | [removed: 304.4] | | | | [removed: 274.5] | | | | [removed: 226.2] | | | | [removed: 11] | [removed: %] | | [added: | | | | | | | | | | 366.9 | | | | | | 304.4 | | | | | |] 21 | [added: |] % | | [removed: 12] | [removed: %] | | [removed: 20] | [removed: %] | [added: | | | | | |]

| Selling, general and administrative [removed: costs] [added: expenses] | | [removed: 3,064.2] | | | | [removed: 2,959.4] | | | | [removed: 2,773.8] | | | | [removed: 4] | [removed: %] | | [removed: 7] | [removed: %] | | [removed: 4] | [removed: %] | | [removed: 6] | [added: | | | 3,003.0 | | | | | | 3,064.2 | | | | | | (2) | |] % | [added: | | | | | | | | | | | |]

| Interest expense | | [removed: 129.9] | | | | [removed: 102.7] | | | | [removed: 80.0] | | | | [removed: n/m] | | | [removed: n/m] | | | [removed: n/m] | | | [added: | | | | 107.1 | | | | | | 129.9 | | | | | |] n/m | | [added: | | | | | | | | | | | | |]

[removed: | Total expenses | | 11,280.7 | | | | 10,873.0 | | | | 10,098.3 | | | | 4 | % | | 8 | % | | 5 | % | | 7 | % |][added: Total Expenses]

| Other [removed: (income)/expense,] [added: income,] net | | [removed: (111.1] | | [removed: )] | | [removed: 172.1 | | | | (343.2] [added: $] | [added: (148.0)] | [removed: )] | | [removed: n/m] | | [added: $] | [removed: n/m] [added: (111.1)] | | | [removed: n/m] | | [added: $] | [removed: n/m] [added: 36.9] | |

| [removed: Earnings] [added: | | | | | | Earnings] before [removed: income taxes] [added: Income Taxes] | | [removed: $] | [removed: 3,005.6] | | | [removed: $] | [removed: 2,282.6] | | | [removed: $] | [removed: 2,616.9] | | | [removed: 32] | [removed: %] | | [removed: (13] | [removed: )%] | | [removed: 32] | [removed: %] | | [removed: (14] | [removed: )%] | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Provision for income taxes | | [removed: $] | [added: | | | 716.1 | | | | | |] 712.8 | | | [removed: $] | [removed: 397.7] | | | [removed: $] | [removed: 829.1] | | | [removed: 79] | [removed: %] | | [removed: (52] | [removed: )%] | | [removed: 80] | [removed: %] | | [removed: (53] | [removed: )%] | [added: | | | | | | | | | | | | | | | | |]

| [removed: Effective] [added: Adjusted effective] tax rate | | [removed: 23.7] | [removed: | % | | 17.4 | | % | | 31.7 | | % | | | | | | |] [added: Effective tax rate] | | | | | |

| Net earnings | | [removed: $] | [removed: 2,292.8] | | | $ | [removed: 1,884.9] [added: 2,466.5] | | | [added: | |] $ | [removed: 1,787.8] [added: 2,292.8] | | | [removed: 22] | [removed: %] | | [removed: 5] | [removed: %] | | [removed: 22] | [removed: %] | [added: 8] | [removed: 4] | % | [added: | | | | | | | | | | | | | | | | | | | | | | | |]

[removed: |] [added: Net Earnings and] Diluted [removed: earnings] [added: Earnings] per [removed: share | | $ | 5.24 | | | $ | 4.25 | | | $ | 3.97 | | | 23 | % | | 7 | % | | 24 | % | | 6 | % |][added: Share]

[removed: *See] [added: See] Note [removed: 1] [added: 9] of [removed: the] [added: our] Consolidated Financial Statements for a [removed: summary] [added: description] of [removed: adjustments.][added: our notes.]

[removed: Non-GAAP measures][added: NON-GAAP FINANCIAL MEASURES]

| [removed: Adjusted] [added: Adjusted] Financial [removed: Measures] [added: Measures] | [removed: U.S.] [added: | | U.S.] GAAP [removed: Measures] [added: Measures] | [added: | | | | |]

| Adjusted EBIT | [added: | |] Net earnings | [added: | | | | |]

| Adjusted provision for income taxes | [added: | |] Provision for income taxes | [added: | | | | |]

| Adjusted net earnings | [added: | |] Net earnings | [added: | | | | |]

[removed: |] [added: Adjusted Net Earnings and] Adjusted [removed: diluted earnings per share |] Diluted [removed: earnings] [added: Earnings] per [removed: share |][added: Share]

| [removed: Adjusted] [added: *Adjusted] effective tax rate [added: (g)*] | [removed: Effective tax rate] | [added: | | | | *22.6* | | *%* | | | | *23.8* | | *%* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

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

| | | [added: | | | |] Years Ended [added: June 30,] | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | |] % Change | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | |]

| Net earnings | | [removed: $] | [removed: 2,292.8] | | | $ | [removed: 1,884.9] [added: 2,466.5] | | | [added: | |] $ | [removed: 1,787.8] [added: 2,292.8] | | | [removed: 22] | [removed: %] | | [removed: 5] | [removed: %] | | [removed: 22] | [removed: %] | [added: 8] | [removed: 4] | % | [added: | | | | | | | | | | | | | | | | | | | | | | | |]

| Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Provision for income taxes | | [added: | | | | $ | 716.1 | | | | | $ |] 712.8 | | | | [removed: 397.7] | | | | [removed: 829.1] | | | [added: —] | | [added: %] | | | | | | | | | | [added: | | | | | | | | | | | | | | |]

| All other interest expense (a) | | [added: | | | | 59.2 | | | | | |] 59.9 | | | | [removed: 59.4] | | | | [removed: 59.3] | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | |]

| All other interest income (a) | | [removed: (32.4] | | [removed: )] | | [removed: (25.5] [added: (20.5)] | | [removed: )] | | [removed: (22.4] | | [removed: )] [added: (32.4)] | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | |]

Prior period total revenues and total costs of revenues reflect the impact of the revision to PEO revenues for comparability.

Refer to Note 1 to our Consolidated Financial Statements for more information on this revision.

The following section discusses our year ended June 30, 2020 (“fiscal 2020”), as compared to year ended June 30, 2019 (“fiscal 2019”).

A detailed review of our fiscal 2019 performance compared to our fiscal 2018 performance is set forth in Part II, Item 7 of our Form 10-K for the fiscal year ended June 30, 2019.

In addition to our U.S. GAAP results, we use adjusted results and other non-GAAP metrics to evaluate our operating performance in the absence of certain items and for planning and forecasting of future periods.

Adjusted EBIT, adjusted EBIT margin, adjusted net earnings, adjusted diluted earnings per share, adjusted effective tax rate and organic constant currency are all non-GAAP financial measures.

Please refer to the accompanying financial tables in the “Non-GAAP Financial Measures” section for a discussion of why ADP believes these measures are important and for a reconciliation of non-GAAP financial measures to their comparable GAAP financial measures.

The global COVID-19 pandemic has continued to evolve and our priority has been and continues to be the safety of our associates and the needs of our clients.

In March 2020, we implemented our Business Continuity Plan and took steps to shift over 98% of our workforce to work from home or off-site locations to ensure uninterrupted service to our clients across our solutions.

While we are well-prepared to continue operating this way, we are in the early stages of bringing back a small portion of our workforce to the office on a volunteer-only basis.

Our sales force will continue to primarily engage with prospects and clients virtually; however, we are beginning to conduct face-to-face meetings in certain geographies to the extent our employees, clients, and prospects are ready to do so.

We announced for our employees, excluding corporate officers, a one-time global associate assistance payment of $1,000 (or equivalent, based on the average wage parity in each country) in response to COVID-19, totaling $50.4 million.

We are also deeply embedded in our local communities and continue to support COVID-19 relief efforts through financial donations and donations of medical supplies for hospital workers globally.

ADP's efforts have been focused on providing information and tools to help clients understand and navigate the governmental relief that has been adopted globally.

For example, the federal government in the United States enacted the Families First Coronavirus Response Act (“FFCRA”) and the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.

ADP has been working to provide support to all employers on the relief available under both laws.

This includes an Employer Preparedness Toolkit that helps explain the federal and state government relief, as well as a website dedicated to providing critical information about the Small Business Administration Paycheck Protection Program (“PPP”).

During the second half of fiscal 2020, we rolled out a range of tools and reports to help our clients through the crisis and prepare for the recovery.

We implemented over 1,000 feature changes to our products in response to 2,000 legislative updates in 60 countries, and we also had approximately 400,000 clients run over 2 million PPP reports for total loan values up to $115 billion dollars.

Many of those clients have also now run the necessary payroll reports to apply for their loans to be forgiven.

As the global economy and landscape continues to evolve for our clients, whether due to legislative changes or other factors, ADP is committed to supporting our clients to help them navigate these challenges.

The significant impact the COVID-19 pandemic is having on our clients and the broader economy is in turn having an effect on our reported metrics.

Despite the fact that we have seen improvement as countries and states are in various stages of reopening and businesses gradually begin to bring a portion of their workers back, we've seen the impact on our full year fiscal 2020 results.

Employer Services New Business Bookings was down 21% for fiscal 2020 as we saw bookings decline significantly and rapidly in mid-March due to the global social distancing guidelines coupled with the delayed decision making of our clients and prospects which continued into the fourth quarter.

We also adjusted gross bookings as a result of client delays on implementation and the expectation that fewer client employees would come on board compared to when the business was originally signed.

Our pays per control metric, which represents growth of the employee base for a large portion of our client base, showed a decline in the fourth quarter

resulting in annual growth of negative 1.0% for fiscal 2020.

In addition, we saw deterioration in Employer Services retention in fiscal 2020 of 20 basis points to 90.5% due to an increase in out-of-business losses.

While the challenges presented by COVID-19 may affect the timing of our execution of parts of our strategy, we remain on a transformation journey, and our initiatives are yielding efficiencies and are focused on changing how we work.

In fiscal 2020, we executed on our Workforce Optimization program and Procurement Transformation initiatives.

For fiscal 2021, we are moving forward with a digital implementation and servicing initiative that leverages many of the capabilities we highlighted at our February 2020 Innovation Day.

Despite a challenging end to fiscal 2020, we continued to deliver profit growth during the year ended June 30, 2020.

We will continue to monitor macro trends based on externally and internally available data and are using these indicators to drive real-time decisions as we remain committed to our long-term strategy.

We have a strong business model, a highly cash generative business with low capital intensity, and offer a suite of products that provide critical support to our clients’ HCM functions.

We generate sufficient free cash flow to satisfy our cash dividend and our modest debt obligations, which enables us to absorb the impact of downturns and remain steadfast in our reinvestments, our longer term strategy, and our commitments to shareholder friendly actions.

We are committed to building upon our past successes by investing in our business through enhancements in research and development and by driving meaningful transformation in the way we operate.

For the year ended June 30, respectively:

| | | | | | | | | |

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

| Growth: | | | á | | | 3% | | |

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

areas and technology in order to strengthen our underlying business model and prospects for continued growth.

| | |

| --- | --- |

| • | Employer Services New Business Bookings increased 8% |

| | |

| --- | --- |

| | |

| --- | --- |

| • | Revenue increased 6% |

| | |

| --- | --- |

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

| | |

| --- | --- |

| | |

| --- | --- |

| • | Our shareholder friendly actions continued as we returned approximately $1.3 billion via dividends and approximately $940 million via share repurchases |

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.

At ADP, we are always designing for people and we continue to innovate by anticipating our clients' evolving needs as the world of work changes.

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.

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

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.

We have a strong business model and operate in a growing global market.

We continue to generate a high percentage of recurring revenues, healthy and improving margins, and consistent strong cash flows.

Through our investments in technology, service, and distribution, we are positioned to maintain our positive momentum into fiscal 2020.

ANALYSIS OF CONSOLIDATED OPERATIONS

Prior period amounts have been restated for the impact of certain accounting standards adopted (refer to Note 1 of our Consolidated Financial Statements for additional information).

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| | | | | | | 2018 | | | | 2017 | | | | | | | 2018 | | | | | | 2018 | |

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

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[removed: CORPORATE BACKGROUND][added: CORPORATE BACKGROUND]

[removed: General][added: General]

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

We serve over [removed: 810,000] [added: 860,000] clients in 140 countries and territories.

[removed: BUSINESS OVERVIEW][added: BUSINESS OVERVIEW]

[removed: ADP’s Mission][added: ADP’s Mission]

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

Our [added: HCM] technology, industry and compliance expertise and data insights deliver measurable results, peace-of-mind and an [removed: enabled,] [added: engaged,] productive workforce.

[removed: ADP’s Strategy][added: ADP’s Strategy]

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

[added: - Grow a complete suite of cloud-based HCM solutions (HCM Solutions).] 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 [removed: -] [added: —] from full-time to freelancer and from hire to retire.

[added: - Grow and scale our market-leading HR Outsourcing solutions (HRO Solutions).] 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.

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

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 [added: HCM] product and technology solutions that solve the needs of our clients today, and anticipate the needs of our clients tomorrow.

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 [removed: to] deliver seamless global capabilities to dynamic, team-based organizations.

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 [removed: -] [added: —] and an important part of this includes delivering solutions wherever they are, whether at work or on the go.

[removed: Innovation] [added: Innovation] at [removed: ADP][added: ADP]

For [added: over] 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.

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

Designed from the ground up to be cloud-native, global, scalable and secure, our [removed: next-generation] [added: next-gen] 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 [removed: next-generation] [added: next-gen] HCM platform enables our clients to personalize their experience based on their needs.

Our [removed: next-generation] [added: next-gen] payroll solution supports workers of all types and enables real-time, transparent, continuous payroll calculations.

Today, [removed: harnessing] big data [removed: for use in artificial intelligence (AI) is] [added: provides] a real competitive advantage.

[removed: This] [added: That] is [added: why we are accelerating] the [added: deployment of machine learning (ML) against our unmatched HCM dataset – the] same HCM dataset that drives our renowned ADP National Employment Report®.

We are leading this innovation effort with ADP® DataCloud, [removed: a] [added: an award-winning] workforce [removed: intelligence engine which] [added: analytics solution that] provides clients with in-depth workforce and business insights [removed: driven by unmatched big data] that enables critical HR decisions.

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

[added: These innovative] offerings combine HR expertise and data transparency in a way that connects HR to the bottom line.

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

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

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

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

With [removed: Wisely by ADP,] [added: our next-gen HCM platform,] we received the “Awesome New Tech” award at the [removed: 2018] [added: 2019] HR Technology Conference for a record-breaking [removed: fourth] [added: fifth] straight year.

In addition, our mobile apps simplify how work gets done by enabling clients to process their payroll, and giving millions of their employees convenient access to their payroll and HR information around the world and in [removed: 29] [added: 28] languages.

Clients can choose from [removed: over 370] [added: 445] apps and integrations, allowing them to choose solutions that are tailored to their needs, industry requirements and preferences.

[removed: Reportable Segments][added: Reportable Segments]

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

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

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

We address these broad market needs with our cloud-based strategic platforms: RUN Powered by ADP®, serving over [removed: 640,000] [added: 690,000] small businesses; ADP Workforce Now®, serving [removed: over 70,000] [added: approximately 75,000] mid-sized and large businesses across our strategic pillars; and ADP Vantage HCM®, serving over 500 large enterprise businesses.

ADP’s Skills Graph is ADP’s proprietary data structure that is based on more than 30 million employee records, 50 million resumes and 5 million job postings across more than 20 industries and 500 geographic areas.

Skills Graph extracts, aligns and normalizes key information such as skills, job titles, job levels, education and qualifications from non-structured data and infers missing skills and qualifications from context.

Skills Graph powers ADP’s candidate relevancy tool to help score, assess and predict candidates that are the

best fit for a job opening, as well as our new Organizational Benchmarking tool that assesses organizational structure and workforce investments.

In addition, we have extended our award-winning HR and compensation benchmarks to include non-traditional elements such as tips, commissions and benefits plans.

With the new capability of ADP’s Model-Based Benchmarks powered by Skills Graph, we also extend benchmarks to include compensation for up to 150 million working people.

Model-Based Benchmarks are driven by a set of deep learning models that extract patterns and knowledge from millions of payroll records and job profiles to provide accurate information that reflects the reality of the position being shown.

In harnessing the power of big data through ML, ADP recognizes the importance of accountability, transparency, privacy, explainability and governance, and in furtherance of those goals has established an active AI & Data Ethics Committee, comprised of both industry leaders and ADP experts, which advises on emerging industry trends and concerns and provides guidance with respect to compliance with the principles that ADP should follow while developing products, systems and applications that involve artificial intelligence, ML and big data.

as savings, budgeting, digital wallet and other personal financial management features.

Meeting the Needs of Clients and their Employees during the COVID-19 Global Pandemic

The COVID-19 global pandemic has created extremely challenging circumstances for our clients and their employees, and our priority has been to provide support that aligns to their key challenges – business continuity, compliance and a careful and safe return to the workplace.

We quickly developed and provided – at no charge – reporting capabilities designed to provide clients around the world with data they needed to benefit from legislation providing financial assistance to enable them to stay in business.

The Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security (CARES) Act provided forgivable loans to assist employers in continuing their businesses.

We were one of the first HCM companies to provide tools and reports that would have enabled our clients to apply for loans of more than $115 billion – ultimately helping approximately 400,000

employers apply for this essential assistance.

We also provided tools and support to over 47,000 employers in applying for approximately $1.2 billion in tax credits in the U.S. We enabled over 52,000 employers in the U.S. to defer over $27.5 billion in federal employer taxes, and enabled thousands of employers in Canada to reduce payroll federal income tax obligations by more than C$100 million, helping critical funds stay in their hands to keep their people on payroll and their businesses running.

To help employers confidently manage compliance, our teams analyzed more than 2,000 legislative updates associated with COVID-19 across the globe in order to provide them with easy to understand and actionable guidance and updated reporting tools.

As many employers start to develop strategies for returning to the workplace, we are supporting their efforts by providing our clients – at no charge – a Return to Work toolkit that includes the following:

Ÿ A Return to Workplace guide that provides worker readiness surveys to assess sentiment toward returning to the workplace and worker health attestations.

Ÿ A Return to Work dashboard powered by ADP DataCloud that uses data analytics to allow clients to monitor workforce trends based on survey results; identify and schedule workers based on availability, location, job title and other attributes; and facilitate contact tracing to help them keep their workforce healthy.

Ÿ The new ADP Time Kiosk that will help employers manage safe levels of occupancy by equipping workers with time & attendance tracking without touching a device.

As COVID-19 reshapes the way people work and the needs of our clients and their employees change, our teams have swiftly adapted and adjusted workflows to deliver the content, resources and support that employers and their workforce need, when they need it.

Our expertise and innovative technology, as well as established financial relationships with our clients, financial institutions and employees, ensure ADP is well positioned to support employers and their workforce through these challenging times – and we fully embrace that role.

*Employer Services*.

In addition, ADP benefits administration solutions offer employers a simple and flexible cloud-

managers with optimizing schedules to boost productivity and minimize under- and over-staffing.

This improves visibility, control and operational efficiency, giving organizations the insight and confidence to adapt to changing local needs, while helping to drive overall organizational agility and engagement.

In September 2019, the Office of the Comptroller of Currency (the “OCC”) authorized us to open ADP Trust Company, National Association (the “ADP Trust Bank”), via a national trust bank charter pursuant to the National Bank Act.

The ADP Trust Bank is the sole trustee of ADP Client Trust, our grantor trust which holds client funds, and is responsible for the oversight and management of those client funds.

The ADP Trust Bank, and all of its fiduciary activities including the U.S. money movement it oversees and manages via ADP Client Trust, is subject to comprehensive ongoing oversight and regulation by the OCC.

We have surrendered all state money transmitter

licenses that we historically maintained as the activity previously managed through those state money transmission licenses was moved into the ADP Client Trust managed by ADP Trust Bank, which is federally exempt from state money transmitter regulation with respect to the client money movement activity that ADP Trust Bank manages.

ADP Broker-Dealer, Inc., which supports our Retirement Services business, is a registered broker-dealer regulated by the SEC and the Financial Industry Regulatory Authority (FINRA).

on our reputation, results of operations or financial condition or have other adverse consequences.



Our Strategic Pillars.


- Grow a complete suite of cloud-based HCM solutions (HCM Solutions).

- Grow and scale our market-leading HR Outsourcing solutions by leveraging our platforms and processes (HRO Solutions).

- Leverage our global presence to offer clients HCM solutions wherever they do business (Global Solutions).


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.

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.

These innovative


Employer Services.


Integrated HCM Solutions.

Payroll Services.



Benefits Administration.

Talent Management.

Workforce Management.

off, attendance policy and leave case modules.

Compliance Solutions.

- ADP SmartCompliance.

- ADP SmartCompliance Employment Tax.


- ADP SmartCompliance Wage Payments.


Human Resources Management.

Insurance Services.

Retirement Services.


Professional Employer Organization.

We give clients

ADP Comprehensive Services.

ADP Comprehensive Outsourcing Services (ADP COS).

ADP Recruitment Process Outsourcing Services (ADP RPO).

As a highly scalable and flexible suite of products supported by a team of experts, ADP Global Payroll allows small and mid-sized companies, as well as the largest 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.


While concentrations of clients exist in specific

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

| [removed: \[X\]] [added: ☒] | | [removed: ANNUAL] [added: | ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE [added: SECURITIES EXCHANGE ACT OF 1934] | [added: | | | | | | | | | | | | | | | | | | | |]

| [added: ☐] | | [added: | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE] SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] | [added: | | | | | | | | | | | | | | | | | | | |]

[removed: | For] [added: For] the [removed: fiscal year ended] [added: Year Ended] June 30, [removed: 2019 | | |][added: 2020]

[removed: | Commission] [added: Commission] File Number [removed: 1-5397 | | |][added: 1-5397]

[removed: AUTOMATIC] [added: AUTOMATIC] DATA PROCESSING, [removed: INC.][added: INC.]

| [removed: Delaware] [added: Delaware] | [removed: 22-1467904] | [added: | | | | | | | 22-1467904 | | |]

| (State or other jurisdiction of incorporation or organization) | [added: | | | | | | | |] (IRS Employer Identification No.) | [added: | |]

| [removed: One] [added: One] ADP [removed: Boulevard, Roseland, New Jersey] [added: Boulevard] | [removed: 07068] | [added: | | | | | | | | | |]

| (Address of principal executive offices) | [added: | | | | | | | |] (Zip Code) | [added: | |]

[removed: | Registrant's] [added: Registrant's] telephone number, including area code: [removed: 973-974-5000 | |][added: (973)-974-5000]

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

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

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

Securities registered pursuant to Section 12(g) of the Act: [removed: None][added: None]

Yes [removed: \[x\]] [added: ý] No [removed: \[ \]][added: ☐]

Yes [removed: \[ \]] [added: ☐] No [removed: \[x\]][added: ý]

Yes [removed: \[x\]] [added: ý] No [removed: \[ \]][added: ☐]

Yes [removed: \[x\]] [added: ý] No [removed: \[ \]][added: ☐]

| Large [removed: accelerated filer \[x\]] [added: Accelerated Filer] | | [added: | ☒ | | |] Accelerated filer [removed: \[ \]] | [added: | | ☐ | | |]

| Non-accelerated filer [removed: \[ \]] | | [added: | ☐ | | |] Smaller reporting company [removed: \[ \]] | [added: | | ☐ | | |]

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

[added: |] Indicate by check mark whether the [removed: Registrant] [added: registrant] is a shell company (as defined in Rule 12b-2 of the [added: Exchange] Act). [added: | | | Yes | | | ☐ | | | No | | | ☒ | | |]

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: $56,967,135,372.][added: $73,532,680,590.]

On July 31, [removed: 2019] [added: 2020] there were [removed: 433,942,837] [added: 429,965,405] shares of Common Stock outstanding.

| Portions of the Registrant's Proxy Statement for its [removed: 2019] [added: 2020] Annual Meeting of Stockholders. | [added: | |] Part III | [added: | |]

[removed: Table] [added: Table] of [removed: Contents][added: Contents]

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| [removed: Part I] [added: Part I] | | | [added: | | | | | |]

| Item 1. | [removed: [Business](#s53446DD071DE59C8B3BD889D39708766)] | [removed: [3](#s53446DD071DE59C8B3BD889D39708766)] | [added: [Business](#i4bcc095a580f4f7aaf04dadd1797c86d_13) | | | [3](#i4bcc095a580f4f7aaf04dadd1797c86d_13) | | |]

| Item 1A. | [added: | |] [Risk [removed: Factors](#s60BD0D6A68B05B438C47E88A7AD3851A)] [added: Factors](#i4bcc095a580f4f7aaf04dadd1797c86d_16)] | [removed: [13](#s60BD0D6A68B05B438C47E88A7AD3851A)] | [added: | [15](#i4bcc095a580f4f7aaf04dadd1797c86d_16) | | |]

| Item 1B. | [added: | |] [Unresolved Staff [removed: Comments](#s85E282ABE21E5E909A517195F7C06103)] [added: Comments](#i4bcc095a580f4f7aaf04dadd1797c86d_19)] | [removed: [18](#s85E282ABE21E5E909A517195F7C06103)] | [added: | [21](#i4bcc095a580f4f7aaf04dadd1797c86d_19) | | |]

| Item 2. | [removed: [Properties](#sE55BEA7B215B57CB88D2B8579E27DAF4)] | [removed: [18](#sE55BEA7B215B57CB88D2B8579E27DAF4)] | [added: [Properties](#i4bcc095a580f4f7aaf04dadd1797c86d_22) | | | [21](#i4bcc095a580f4f7aaf04dadd1797c86d_22) | | |]

| Item 3. | [added: | |] [Legal [removed: Proceedings](#sE040D103593E5D39B55B2D597BB8D2B4)] [added: Proceedings](#i4bcc095a580f4f7aaf04dadd1797c86d_25)] | [removed: [18](#sE040D103593E5D39B55B2D597BB8D2B4)] | [added: | [21](#i4bcc095a580f4f7aaf04dadd1797c86d_25) | | |]

| Item 4. | [added: | |] [Mine Safety [removed: Disclosures](#sBFE002A940C45885BB7BE18D521375BF)] [added: Disclosures](#i4bcc095a580f4f7aaf04dadd1797c86d_28)] | [removed: [18](#sBFE002A940C45885BB7BE18D521375BF)] | [added: | [21](#i4bcc095a580f4f7aaf04dadd1797c86d_28) | | |]

| [removed: Part II] [added: Part II] | | | [added: | | | | | |]

| Item 5. | [added: | |] [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity [removed: Securities](#sA79DE999BE49585A8DE6C57FFEE43CFD)] [added: Securities](#i4bcc095a580f4f7aaf04dadd1797c86d_34)] | [removed: [19](#sA79DE999BE49585A8DE6C57FFEE43CFD)] | [added: | [22](#i4bcc095a580f4f7aaf04dadd1797c86d_34) | | |]

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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

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10-K 1 q4fy1910k.htm 10-K

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\[ \]

Yes \[ \] No \[x\]

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

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ADP owns 7 of its processing/print centers, and [removed: 16] [added: 15] other operational offices, sales offices, and its corporate headquarters in Roseland, New Jersey, which aggregate approximately [removed: 3,361,473] [added: 3,302,645] square feet.

All of these leases, which aggregate approximately [removed: 6,205,945] [added: 6,266,759] square feet worldwide, expire at various times up to the year [removed: 2029.][added: 2030.]

[removed: Part II][added: Part II]

[removed: Market] [added: Market] for Registrant's Common [removed: Equity][added: Equity]

As of June 30, [removed: 2019,] [added: 2020,] there were [removed: 37,578] [added: 36,378] holders of record of the Company’s common stock.

As of such date, [removed: 903,187] [added: 1,017,256] additional holders held their common stock in “street name.”

[removed: Issuer] [added: Issuer] Purchases of Equity [removed: Securities][added: Securities]

| Period | [added: | |] Total Number of Shares Purchased (1) | [added: | |] Average Price Paid per Share | [added: | |] Total Number of Shares Purchased as Part of the Publicly Announced Common Stock Repurchase Plan (2) | [added: | |] Maximum [removed: Number] [added: Approximate Dollar Value] of Shares that may yet be Purchased under the Common Stock Repurchase Plan (2) | [added: | |]

| (1) | | [added: | | | |] Pursuant to the terms of the Company’s restricted stock program, the Company purchased [removed: 3,930] [added: 3,521] shares at the then market value of the shares in connection with the exercise by employees [removed: of their option] under such program to satisfy certain tax withholding requirements through the delivery of shares to the Company instead of cash. | [added: | | | | | | | |]

| (2) | | [added: | | | |] The Company received the Board of Directors' approval to repurchase shares of the Company's common stock as follows: | [added: | | | | | | | |]

| Date of Approval | | [removed: Shares] | [added: | | | | | |]

[removed: Performance Graph][added: Performance Graph]

The following graph compares the cumulative return on the Company’s common [removed: stock(a)] [added: stock] for the most recent five years with the cumulative return on the S&P 500 Index and the Peer Group [removed: Index,(b)] [added: Index,(a)] assuming an initial investment of $100 on June 30, [removed: 2014,] [added: 2015,] with all dividends reinvested.

[removed: | (b) | We use the S&P 500 Information Technology Index as our Peer Group Index.] The S&P 500 Information Technology Index is a broad index that includes the Company and several competitors. [removed: |]

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| April 1, 2020 to April 30, 2020 | | | 2,377 | | | $146.69 | | | — | | | 4,463,426,975 | | |

| May 1, 2020 to May 31, 2020 | | | 205 | | | $146.49 | | | — | | | 4,463,426,975 | | |

| June 1, 2020 to June 30, 2020 | | | 939 | | | $148.89 | | | — | | | 4,463,426,975 | | |

| Total | | | 3,521 | | | | | | — | | | | | |

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| November 2019 | | | | | | $5 billion | | |

(a) We use the S&P 500 Information Technology Index as our Peer Group Index.

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| 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 | |

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| August 2015 | | 25 million |


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| (a) | On September 30, 2014, the Company completed the spinoff of its former Dealer Services business into an independent publicly traded company called CDK Global, Inc. The cumulative returns of the Company’s common stock have been adjusted to reflect the spinoff. |

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

| (Dollars and shares in millions, except per share amounts) | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| Years ended June 30, | | [added: | | | | 2020 | | | | | |] 2019 | | | | [removed: As Restated*] | | [added: 2018] | | [removed: As Restated*] | | | | [removed: As Restated] [added: 2017] | | | | [removed: As Restated] | | [added: 2016] | [added: | |]

| Earnings from continuing operations before income taxes | | [added: | | | |] $ | [removed: 3,005.6] [added: 3,182.6] | | | [added: | |] $ | [removed: 2,282.6] [added: 3,005.6] | | | [added: | |] $ | [removed: 2,616.9] [added: 2,282.6] | | | [added: | |] $ | [removed: 2,234.7] [added: 2,616.9] | | | [added: | |] $ | [removed: 2,070.7] [added: 2,234.7] | |

| Net earnings from continuing operations | | [added: | | | |] $ | [removed: 2,292.8] [added: 2,466.5] | | | [added: | |] $ | [removed: 1,884.9] [added: 2,292.8] | | | [added: | |] $ | [removed: 1,787.8] [added: 1,884.9] | | | [added: | |] $ | [removed: 1,493.4] [added: 1,787.8] | | | [added: | |] $ | [removed: 1,376.5] [added: 1,493.4] | |

| Basic earnings per share from continuing operations | | [added: | | | |] $ | [removed: 5.27] [added: 5.73] | | | [added: | |] $ | [removed: 4.28] [added: 5.27] | | | [added: | |] $ | [removed: 3.99] [added: 4.28] | | | [added: | |] $ | [removed: 3.27] [added: 3.99] | | | [added: | |] $ | [removed: 2.91] [added: 3.27] | |

| Diluted earnings per share from continuing operations | | [added: | | | |] $ | [removed: 5.24] [added: 5.70] | | | [added: | |] $ | [removed: 4.25] [added: 5.24] | | | [added: | |] $ | [removed: 3.97] [added: 4.25] | | | [added: | |] $ | [removed: 3.25] [added: 3.97] | | | [added: | |] $ | [removed: 2.89] [added: 3.25] | |

| Basic weighted average shares outstanding | | [added: | | | | 430.8 | | | | | |] 435.0 | | | | [added: | |] 440.6 | | | | [removed: 447.8] | | [added: 447.8] | | [removed: 457.0] | | | | [removed: 472.6] [added: 457.0] | | |

| Diluted weighted average shares outstanding | | [added: | | | | 432.7 | | | | | |] 437.6 | | | | [added: | |] 443.3 | | | | [removed: 450.3] | | [added: 450.3] | | [removed: 459.1] | | | | [removed: 475.8] [added: 459.1] | | |

| Cash dividends declared per share | | [added: | | | |] $ | [removed: 3.06] [added: 3.52] | | | [added: | |] $ | [removed: 2.52] [added: 3.06] | | | [added: | |] $ | [removed: 2.24] [added: 2.52] | | | [added: | |] $ | [removed: 2.08] [added: 2.24] | | | [added: | |] $ | [removed: 1.95] [added: 2.08] | |

| At year end: | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| Cash, cash equivalents and marketable securities of continuing operations | | [added: | | | |] $ | [removed: 2,221.1] [added: 1,922.1] | | | [added: | |] $ | [removed: 2,180.5] [added: 2,221.1] | | | [added: | |] $ | [removed: 2,791.2] [added: 2,180.5] | | | [added: | |] $ | [removed: 3,222.4] [added: 2,791.2] | | | [added: | |] $ | [removed: 1,694.8] [added: 3,222.4] | |

| Total assets | | [added: | | | |] $ | [removed: 41,887.7] [added: 39,165.5] | | | [added: | |] $ | [removed: 38,849.1] [added: 41,887.7] | | | [added: | |] $ | [removed: 38,886.8] [added: 38,849.1] | | | [added: | |] $ | [removed: 43,670.0] [added: 38,886.8] | | | [added: | |] $ | [removed: 33,110.5] [added: 43,670.0] | |

| Obligations under reverse repurchase agreements | | [added: | | | |] $ | [removed: 262.0] [added: 13.6] | | | [added: | |] $ | [removed: —] [added: 262.0] | | | [added: | |] $ | — | | | [added: | |] $ | — | | | [added: | |] $ | — | |

| Long-term debt | | [added: | | | |] $ | [removed: 2,002.2] [added: 1,002.8] | | | [added: | |] $ | [removed: 2,002.4] [added: 2,002.2] | | | [added: | |] $ | 2,002.4 | | | [added: | |] $ | [removed: 2,007.7] [added: 2,002.4] | | | [added: | |] $ | [removed: 9.2] [added: 2,007.7] | |

| Stockholders’ equity | | [added: | | | |] $ | [removed: 5,399.9] [added: 5,752.2] | | | [added: | |] $ | [removed: 4,735.9] [added: 5,399.9] | | | [added: | |] $ | [removed: 4,984.1] [added: 4,735.9] | | | [added: | |] $ | [removed: 4,481.6] [added: 4,984.1] | | | [added: | |] $ | [removed: 4,808.5] [added: 4,481.6] | |

Refer to Note [removed: 13 of] [added: 1 to] our Consolidated Financial Statements for [removed: additional detail.][added: more information on this revision.]

The information set forth below should be read in conjunction with “Item 7.

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| Total revenues* | | | | | | $ | 14,589.8 | | | | | $ | 14,110.2 | | | | | $ | 13,274.2 | | | | | $ | 12,328.6 | | | | | $ | 11,632.1 | |

| Total costs of revenues* | | | | | | $ | 8,445.1 | | | | | $ | 8,021.6 | | | | | $ | 7,757.4 | | | | | $ | 7,201.1 | | | | | $ | 6,840.4 | |

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*Prior period total revenues and total costs of revenues reflect the impact of the revision to PEO revenues for comparability.

The Company uses certain non-GAAP financial measures that we believe better reflect the underlying operations of our business model, allow investors to assess our performance in a manner similar to the method used by management, and improve our ability to understand and assess our operating performance against prior periods.

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

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.”

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| | | | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | |

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| Total revenues | | $ | 14,175.2 | | | $ | 13,327.7 | | | $ | 12,372.0 | | | $ | 11,667.8 | | | $ | 10,938.5 | |

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

| Adjusted earnings from continuing operations before interest and income taxes (A) | | $ | 3,155.7 | | | $ | 2,754.6 | | | $ | 2,533.4 | | | $ | 2,274.2 | | | $ | 2,061.5 | |

| Adjusted net earnings from continuing operations (A) | | $ | 2,384.3 | | | $ | 2,007.3 | | | $ | 1,719.4 | | | $ | 1,494.8 | | | $ | 1,376.5 | |

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| Adjusted diluted earnings per share from continuing operations (A) | | $ | 5.45 | | | $ | 4.53 | | | $ | 3.82 | | | $ | 3.26 | | | $ | 2.89 | |

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

(A) Non-GAAP Financial Measures

In addition to our GAAP results, we use the adjusted results and other non-GAAP metrics set forth in the table below to evaluate our operating performance in the absence of certain items and for planning and forecasting of future periods:

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| Adjusted Financial Measures | U.S. GAAP Measures |

| 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 |

| Adjusted effective tax rate | Effective tax rate |

| Constant Currency Basis | U.S. GAAP P&L line items |

We believe that the exclusion of the identified items helps us reflect the fundamentals of our underlying business model and analyze results against our expectations, against prior period, and to plan for future periods by focusing on our underlying operations.

We believe that the adjusted results provide relevant and useful information for investors because it allows investors to view performance in a manner similar to the method used by management and improves their ability to understand and assess our operating performance.

The nature of these exclusions is for specific items that are not fundamental to our underlying business operations.

Since these adjusted financial measures and other non-GAAP metrics are not measures of performance calculated in accordance with U.S. GAAP, they should not be considered in isolation from, as a substitute for, or superior to their U.S. GAAP measures, and they may not be comparable to similarly titled measures at other companies.

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| (Dollars and shares in millions, except per share amounts) | | | | | | | | | | | | | | | | | | | | |

| Years ended June 30, | | | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | |

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

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| Net earnings from continuing operations | | $ | 2,292.8 | | | $ | 1,884.9 | | | $ | 1,787.8 | | | $ | 1,493.4 | | | $ | 1,376.5 | |

[removed: REPORT] [added: REPORT] OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING [removed: FIRM][added: FIRM]

[removed: Opinion] [added: Opinion] on the Financial [removed: Statements][added: Statements]

We have audited the accompanying consolidated balance sheets of Automatic Data Processing, Inc. and subsidiaries (the "Company") as of June 30, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the related consolidated statements of earnings, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended June 30, [removed: 2019,] [added: 2020,] 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: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of its operations and its cash flows for each of the three years in the period ended June 30, [removed: 2019,] [added: 2020,] 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: 2019,] [added: 2020,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August [removed: 9, 2019,] [added: 5, 2020,] expressed an unqualified opinion on the Company’s internal control over financial reporting.

[removed: Change] [added: Change] in Accounting [removed: Principle][added: Principle]

As discussed in Note 1 to the financial statements, effective July 1, [removed: 2018,] [added: 2019,] the Company adopted FASB Accounting Standards Update [removed: 2014-09, Revenue from Contracts with Customers] [added: 2016-02, Leases] (ASC [removed: 606), on a retrospective basis.][added: 842), under the optional transition method.]

[removed: Basis] [added: Basis] for [removed: Opinion][added: Opinion]

[removed: Critical] [added: Critical] Audit [removed: Matters][added: Matters]

The critical audit matters communicated below are matters arising from the [removed: current period] [added: 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.

[removed: | Goodwill -] [added: Goodwill –] Employer Services Reportable [removed: Segment -] [added: Segment—] Refer to Notes 1 and [removed: 9] [added: 7] to the financial [removed: statements | | | | |][added: statements]

[removed: | Critical] [added: *Critical] Audit Matter [removed: Description | | | | |][added: Description*]

[removed: How] [added: *How] the Critical Audit Matter Was Addressed in the [removed: Audit][added: Audit*]

Our audit procedures related to the [removed: determination of] forecasts of future revenue and operating margin [added: and the selection of the weighted average cost of capital] used by management to estimate the fair value contributed by the next-gen platform included the following, among others:

[removed: | • |] [added: -] We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of the reporting [removed: units] [added: unit] within the Employer Services reportable segment, such as controls related to management’s [removed: determination of] forecasts of future revenue and operating [removed: margin. |][added: margin and the selection of the weighted average cost of capital.]

[removed: | • |] [added: -] With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation [added: models,] methodology, [removed: including testing] [added: and significant assumptions used by] the [removed: mathematical accuracy of] [added: Company, specifically] the [removed: calculation. |][added: weighted average cost of capital including:]

[removed: | • | We evaluated management’s ability to accurately forecast future revenue and operating margin by comparing actual results to management’s historical forecasts.] Due to the limited historical data for the next-gen platform, we evaluated the reasonableness of management’s revenue and operating margin forecasts by comparing the forecasts to (1) the historical operating results of the Company’s similar existing platforms, (2) the limited operating results to date of the next-gen platform, (3) internal communications to management and the board of directors, [added: and] (4) external communications made by management to analysts and [removed: investors, and (5) industry reports containing analyses of the Company’s and its competitor’s platforms. |][added: investors.]

[removed: | Client] [added: Client] Fund Obligations - Refer to Note [removed: 7] [added: 4] to the financial [removed: statements | | | | |][added: statements]

[removed: | Critical] [added: *Critical] Audit Matter [removed: Description | | | | |][added: Description*]

[removed: How] [added: *How] the Critical Audit Matter Was Addressed in the [removed: Audit][added: Audit*]

[removed: | • |] [added: -] We tested the effectiveness of general information technology controls over the applications relevant to the money movement reconciliation process. [removed: |]

[removed: | • |] [added: -] We tested the effectiveness of (1) [removed: management's] [added: management’s] controls over the client funds obligation data reconciliation and (2) [removed: management's] [added: management’s] control to reconcile the consolidated client funds obligations to the corresponding consolidated funds held for clients balance. [removed: |]

[removed: | • |] [added: -] We involved data specialists to (1) independently reperform [removed: management's] [added: management’s] client funds obligation reconciliation and (2) perform data analyses to identify and evaluate recurring and new adjustments [added: to the data extracts] in the current [removed: period as well as significant fluctuations from prior periods. |][added: period.]

[removed: | • |] [added: -] For a selection of client funds obligations transactions, we evaluated whether the funds were impounded prior to June 30, [removed: 2019,] [added: 2020,] agreed the liability to the corresponding asset balance, and evaluated whether the funds were properly included or excluded from the client funds obligations. [removed: |]

[removed: | • |] [added: -] We made a selection of disbursements to [removed: third-parties] [added: third parties] subsequent to the balance sheet date to evaluate whether they were properly included or excluded from client funds obligations. [removed: |]

[removed: | • |] [added: -] We tested the Company’s reconciliation of the consolidated client funds obligations to funds held for clients. [removed: |]

| /s/ Deloitte & Touche LLP | [added: | |]

[removed: August 9,] [added: |] 2019 [added: | | | | | | | | | | | | | | | | | | | | | | | | | | |]

[removed: Statements] [added: Statements] of Consolidated [removed: Earnings][added: Earnings]

| Years ended June 30, | | | | | | [removed: 2018] [added: 2020] | | | | [removed: 2017] | | [added: 2019] | [added: | | | | | 2018 | | |]

| REVENUES: | | | | | | | | | | | | | [added: | | | | | | | |]

| Revenues, other than interest on funds held for clients and PEO revenues | | [added: | | | |] $ | [removed: 9,375.8] [added: 9,538.1] | | | [added: | |] $ | [removed: 8,983.4] [added: 9,375.8] | | | [added: | |] $ | [removed: 8,510.1] [added: 8,983.4] | |

| Interest on funds held for clients | | [removed: 561.9] | | | | [removed: 466.5] [added: 545.2] | | | | [removed: 397.4] | | [added: 561.9] | [added: | | | | | 466.5 | | |]

| PEO revenues [removed: (A)] | | [added: | $ |] 4,237.5 | | | | [removed: 3,877.8] | [added: (65.0)] | | | [removed: 3,464.5] | | | [added: $ | 4,172.5 | | | | | | | | | | | | | |]

| TOTAL REVENUES | | [added: |] 14,175.2 | | | | [removed: 13,327.7] | | [added: (65.0)] | | [removed: 12,372.0] | | | [added: | 14,110.2 | | | | | | | | | | | | | | |]

| EXPENSES: | | | | | | | | | | | | | [added: | | | | | | | |]

| Costs of revenues: | | | | | | | | | | | | | [added: | | | | | | | |]

| Operating expenses | | [added: |] 7,145.9 | | | | [removed: 6,901.0] | | [added: (65.0)] | | [removed: 6,386.2] | | | [added: | 7,080.9 | | | | | | | | | | | | | | |]

| Systems development and programming costs | | [removed: 636.3] | | | | [removed: 635.4] [added: 674.1] | | | | [removed: 632.1] | | [added: 636.3] | [added: | | | | | 635.4 | | |]

| Depreciation and amortization | | [removed: 304.4] | | | | [removed: 274.5] [added: 366.9] | | | | [removed: 226.2] | | [added: 304.4] | [added: | | | | | 274.5 | | |]

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 margin.

In addition, the discounted cash flow model requires the Company to select an appropriate weighted average cost of capital based on current market conditions as of June 30, 2020.

Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both.

Forecasts of future revenue and operating margin from the Company’s next-gen platform for which there is limited historical data, contribute significantly to the estimate of fair value of a reporting unit within the Employer Services reportable segment, with approximately $678 million of goodwill, as of June 30, 2020.

Given the limited historical data associated with the Company’s next-gen platform, significant management judgment was required to forecast future revenue and operating margin to estimate the fair value of the reporting unit.

In addition, there is inherent uncertainty related to the timing of economic recovery and this condition could impact the Company’s forecasts of future revenue and operating margin, and its selection of an appropriate weighted average cost of capital as of June 30, 2020, for the reporting unit.

In turn, a high degree of auditor judgment and an increased extent of audit effort were required when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions, related to the forecasts of revenue and operating margin and selection of the weighted average cost of capital, including the involvement of our fair value specialists.

◦Testing the mathematical accuracy of the Company’s calculation of the weighted average cost of capital.

◦Developing a range of independent estimates and compared to the weighted average cost of capital selected by management.

◦Evaluating management’s selection of the company-specific risk premium by comparing to the revenue growth and operating margins of peer companies.

- We evaluated management’s ability to accurately forecast future revenue and operating margin by comparing actual results to management’s historical forecasts.

- Given the inherent uncertainty related to the timing of economic recovery and the resulting adverse impacts associated with the COVID-19 outbreak on the reporting unit, we evaluated the reasonableness of management’s assumptions related to the severity of business disruption associated with the COVID-19 outbreak on the reporting unit and timing of economic recovery by:

◦Comparing management’s analysis of the expected business disruption from the COVID-19 outbreak on the reporting unit to the business impacts observed since the outbreak during the Company’s fiscal year 2020.

◦Comparing management’s analysis of the timing of economic recovery to external economic recovery and industry forecasts to evaluate contradictory evidence related to management’s assumptions regarding the expected impact of the COVID-19 business disruption and timing of recovery.

◦Evaluating the impact of various alternative scenarios on the discounted cash flow and fair value.

Client funds obligations represent the Company's contractual obligations to remit funds to satisfy clients' payroll, tax and other payee payment obligations and are recorded as a liability at the time that the Company impounds funds from clients (i.e., money movement).

The Company has reported client funds obligations as a current liability in the consolidated financial statements totaling $25,831.6 million as of June 30, 2020.

This money movement activity involves significant amounts of client funds being impounded and remitted to third parties and results in a high volume of transactions.

To validate the accuracy and completeness of the client funds obligations reported as of period end, the Company performs complex data extracts in order to reconcile the transactional data to the client funds obligations and funds held for clients balances reported at period end.

Given the significant volume of data used in the reconciliation, the complexity of the data extraction, and the reconciliation of the data extracts to the client funds obligations balance reported, auditing the client funds obligations is complex and requires the involvement of data specialists to independently reperform the reconciliation and assist with testing of the completeness and accuracy of client funds obligations reported as of period end, including identifying the manual adjustments identified in management’s reconciliation process.

- We made a selection of adjustments identified by management’s reconciliation of the transactional data to the client funds obligations balance reported at period end and evaluated whether the adjustments were supported and appropriate to reconcile and validate the client funds obligations balance reported at period end.

August 5, 2020

| PEO revenues (A) | | | | | | 4,506.5 | | | | | | 4,172.5 | | | | | | 3,824.3 | | |

| TOTAL REVENUES | | | | | | 14,589.8 | | | | | | 14,110.2 | | | | | | 13,274.2 | | |

| Operating expenses | | | | | | 7,404.1 | | | | | | 7,080.9 | | | | | | 6,847.5 | | |

| TOTAL COSTS OF REVENUES | | | | | | 8,445.1 | | | | | | 8,021.6 | | | | | | 7,757.4 | | |

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| TOTAL EXPENSES | | | | | | 11,555.2 | | | | | | 11,215.7 | | | | | | 10,819.5 | | |

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| 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. | | | | |

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| The liability for client funds obligations represents the Company’s contractual obligations primarily to remit funds to satisfy clients' payroll and tax payment obligations and are recorded at the time the Company impounds funds from clients (i.e., money movement). This money movement activity involves significant amounts of client funds being impounded and remitted to third parties and results in a high volume of transactions and a current liability of $29,144.5 million as of June 30, 2019. The Company performs complex data extracts in order to reconcile the client funds obligations to funds held for clients and records a high volume of material manual adjustments in order to properly reflect the client funds obligations’ as of period end. Given the significant volume of data extraction required, complexity of the reconciliation process, and the process used by management to extract the relevant data, auditing the client funds obligations is complex and requires the involvement of data specialists to independently reperform the reconciliation and test the completeness and accuracy of the manual adjustments recorded by management. | | | | |

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| • | We made a selection of manual adjustments recorded by management to properly reflect the client funds obligations balance and tested the accuracy of the selected adjustments. |

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

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| TOTAL COSTS OF REVENUES | | 8,086.6 | | | | 7,810.9 | | | | 7,244.5 | | |

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[removed: Management's] [added: Management's] Evaluation of Disclosure Controls and [removed: Procedures][added: Procedures]

Based on the evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective as of June 30, [removed: 2019] [added: 2020] in ensuring that (i) information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure and (ii) such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

[removed: Management's] [added: Management's] Report on Internal Control over Financial [removed: Reporting][added: Reporting]

Management has performed an assessment of the effectiveness of ADP’s internal control over financial reporting as of June 30, [removed: 2019] [added: 2020] based upon criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management determined that ADP’s internal control over financial reporting was effective as of June 30, [removed: 2019.][added: 2020.]

| /s/ Carlos A. Rodriguez | [added: | |]

| Carlos A. Rodriguez | [added: | |]

| President and Chief Executive Officer | [added: | |]

| /s/ Kathleen A. Winters | [added: | |]

| Kathleen A. Winters | [added: | |]

| Chief Financial Officer | [added: | |]

[removed: Changes] [added: Changes] in Internal Control over Financial [removed: Reporting][added: Reporting]

There were no changes in ADP's internal control over financial reporting that occurred during the quarter ended June 30, [removed: 2019] [added: 2020] that have materially affected, or are reasonably likely to materially affect, ADP's internal control over financial reporting.

[removed: REPORT] [added: REPORT] OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING [removed: FIRM][added: FIRM]

[removed: Opinion] [added: Opinion] on Internal Control over Financial [removed: Reporting][added: Reporting]

We have audited the internal control over financial reporting of Automatic Data Processing, Inc. and subsidiaries (the “Company”) as of June 30, [removed: 2019,] [added: 2020,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, [removed: 2019,] [added: 2020,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated Framework [removed: (2013)] [added: (2013)*] issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended June 30, [removed: 2019,] [added: 2020,] of the Company and our report dated August [removed: 9, 2019,] [added: 5, 2020,] expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s adoption of a new accounting standard.

[removed: Basis] [added: Basis] for [removed: Opinion][added: Opinion]

[removed: Definition] [added: Definition] and Limitations of Internal Control over Financial [removed: Reporting][added: Reporting]

| /s/ Deloitte & Touche LLP | [added: | |]

| Parsippany, New Jersey | [added: | |]

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August 5, 2020

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August 5, 2020

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August 9, 2019

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August 9, 2019

[removed: Part III][added: Part III]

| | | | | | | [added: | | | | | | | | | | | |] Employed by | [added: | |]

| Name | | [added: | | | |] Age | | [added: | | | |] Position | | [added: | | | |] ADP Since | [added: | |]

| Brock Albinson | | [removed: 44] | | [removed: Corporate] [added: | | 45 | | | | | | *Corporate] Controller and Principal Accounting [removed: Officer] [added: Officer*] | | [added: | | | |] 2007 | [added: | |]

| [removed: John Ayala] [added: Laura Brown] | | [removed: 52] | | [removed: President,] [added: | | 48 | | | | | | *President,] Major Account Services and ADP [removed: Canada] [added: Canada*] | | [removed: 2002] | [added: | | | 2000 | | |]

| Michael A. Bonarti | | [removed: 53] | | [removed: Corporate] [added: | | 54 | | | | | | *Corporate] Vice President, General Counsel and [removed: Secretary] [added: Secretary*] | | [added: | | | |] 1997 | [added: | |]

| Deborah L. Dyson | | [removed: 53] | | [removed: President,] [added: | | 54 | | | | | | *President,] National Accounts [removed: Services] [added: Services*] | | [added: | | | |] 1988 | [added: | |]

| Michael C. Eberhard | | [removed: 57] | | [removed: Vice] [added: | | 58 | | | | | | *Vice] President and [removed: Treasurer] [added: Treasurer*] | | [added: | | | |] 1998 | [added: | |]