ADP 2000 Annual Report Download - page 28

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[notes to consolidated financial stat em ents (continued)]
I. Restatement of Prior Financial Statements. Certain reclassifica-
tions and restatements, including the inclusion of funds held for
clients and client funds obligations on the Consolidated Balance
Sheets, have been made to previous years’ financial statements
to conform to current presentation.
[note 2 ] Acquisitions and Dispositions
During fiscal 2000, 1999, and 1998, the Company purchased sev-
eral businesses for approximately $200 million (including $25
million in common stock), $107 million and $351 million (includ-
ing $13 million in common stock), respectively, net of cash
acquired. The results of these acquired businesses are included
from the date of acquisition.
In March 1999 the Company issued 7.2 million shares of com-
mon stock to acquire The Vincam Group (Vincam), a leading
PEO providing a suite of human resource functions to small- and
medium-sized employers on an outsourced basis, in a pooling of
interests transaction. The Company also acquired several other
businesses in fiscal 1999 (subsequent to the Vincam acquisition)
and 1998 in pooling of interests transactions in exchange for
approximately 4.3 million and 0.9 million shares of common
stock, respectively.
Additionally, in fiscal 2000 and 1999, the Company sold several
businesses with annual revenues of approximately $27 million
and $270 million, respectively. As part of the 1999 business dis-
positions, the Company received $90 million of convertible pre-
ferred stock which is included in other assets. The $90 million
approximates fair value.
[note 3 ] Non-recurring Items
During fiscal 1999 the Company sold its Peachtree Software and
Brokerage Services front-office “market data” businesses and
decided to exit several other businesses and contracts. The com-
bination of these transactions and certain other non-recurring
charges resulted in a net pre-tax gain of approximately $37 mil-
lion and a $40 million provision for income taxes.
Additionally, 1999 also includes approximately $21 million of
transaction costs and other non-recurring adjustments ($14 mil-
lion after-tax) recorded by Vincam prior to the March 1999 pool-
ing transaction.
[note 4 ] Receivables
Accounts receivable is net of an allowance for doubtful accounts
of $48 million and $46 million at June 30, 2000 and 1999,
respectively.
The Company finances the sale of computer systems to certain
of its clients. These finance receivables, most of which are due
from automobile and truck dealerships, are reflected in the con-
solidated balance sheets as follows:
(In thousands)
June 30, 2000 1999
Current Long-term Current Long-term
Receivables $171,415 $293,489 $147,274 $259,585
Less:
Allowance for
doubtful accounts (13,063) (16,946) (14,196) (16,556)
Unearned income (29,980) (31,294) (26,776) (29,616)
$128,372 $245,249 $106,302 $213,413
Unearned income from finance receivables represents the
excess of gross receivables over the sales price of the computer
systems financed. Unearned income is amortized using the
interest method to maintain a constant rate of return on the net
investment over the term of each contract.
Long-term receivables at June 30, 2000 mature as follows:
(In thousands)
2002 $136,319
2003 91,997
2004 48,800
2005 15,280
2006 972
Thereafter 121
$293,489
[note 5 ] Intangible Assets
Components of intangible assets are as follows:
(In thousands)
June 30, 2000 1999
Goodwill $1,378,265 $1,215,179
Other 1,025,610 978,240
2,403,875 2,193,419
Less accumulated amortization (780,174) (661,045)
$1,623,701 $1,532,374
Other intangibles consist primarily of purchased rights
(acquired directly or through acquisitions) to provide data pro-
cessing services to various groups of clients (amortized over
periods from 5 to 36 years) and purchased software (amortized
over periods from 3 to 10 years). Amortization of intangibles
totaled $133 million for fiscal 2000, $126 million for 1999 and
$103 million for 1998.