ADP 2000 Annual Report Download - page 31

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The Company has a restricted stock plan under which shares
of common stock have been sold for nominal consideration to
certain key employees. These shares are restricted as to transfer
and in certain circumstances must be resold to the Company at
the original purchase price. The restrictions lapse over periods
of up to six years. During the years ended June 30, 2000, 1999
and 1998 the Company issued 171,900, 121,400 and 261,000
restricted shares, respectively.
B. Pension Plans. The Company has a defined benefit cash bal-
ance pension plan covering substantially all U.S. employees,
under which employees are credited with a percentage of base
pay plus 7% interest. Employees are fully vested on completion
of five years’ service. The Company’s policy is to make contribu-
tions within the range determined by generally accepted actuar-
ial principles. In addition, the Company has various retirement
plans for its non-U.S. employees.
The plans’ funded status as of June 30, 2000 and 1999 follows:
(In thousands)
June 30, 2000 1999
Change in plan assets:
Funded plan assets at market
value at beginning of year $354,500 $306,900
Plans of acquired employers 17,300 —
Actual return on plan assets 78,300 34,600
Employer contributions 43,000 19,200
Benefits paid (7,400) (6,200)
Funded plan assets at market
value at end of year $485,700 $354,500
Change in benefit obligation:
Benefit obligation at
beginning of year $256,400 $231,300
Plans of acquired employers 20,900 —
Service cost 29,600 23,400
Interest cost 20,000 16,400
Actuarial and other gains (2,900) (8,500)
Benefits paid (7,400) (6,200)
Projected benefit obligation
end of year $316,600 $256,400
Plan assets in excess of
projected benefits $169,100 $ 98,100
Prior service cost —(700)
Transition obligation 500 700
Unrecognized net actuarial
gains due to different
experience than assumed (58,200) (14,900)
Prepaid pension cost $111,400 $ 83,200
The components of net pension expense were
as follows:
(In thousands)
Years ended June 30, 2000 1999 1998
Service cost — benefits earned
during the period $ 29,600 $ 23,400 $ 18,000
Interest cost on
projected benefits 20,200 16,400 14,500
Expected return on plan assets (32,900) (24,500) (21,300)
Net amortization and deferral (100) (700) (700)
$ 16,800 $ 14,600 $ 10,500
Assumptions used to develop the actuarial present value of
benefit obligations generally were:
Years ended June 30, 2000 1999
Discount rate 7.75% 7.50%
Expected long-term rate on assets 8.75% 8.75%
Increase in compensation levels 6.0% 6.0%
C. Retirement and Savings Plan. The Company has a 401(k)
retirement and savings plan which allows eligible employees to
contribute up to 16% of their compensation annually. The Com-
pany matches a portion of this contribution which amounted to
approximately $27 million, $26 million and $22 million for calen-
dar years 1999, 1998 and 1997, respectively.
[note 9 ] Income Taxes
The Company accounts for its income taxes using the asset and
liability approach. Deferred taxes reflect the tax consequences
on future years of differences between the financial reporting
and tax bases of assets and liabilities.