ADP 2011 Annual Report Download - page 68

NOTE 16. CONTRACTUAL COMMITMENTS, CONTINGENCIES AND OFF - BALANCE SHEET ARRANGEMENTS
The Company has obligations under various facilities and equipment leases and software license agreements. Total expense under
these agreements was approximately $159.2 million, $175.4 million, and $194.2 million in fiscal 2011, 2010, and 2009, respectively, with
minimum commitments at June 30, 2011 as follows:
In addition to fixed rentals, certain leases require payment of maintenance and real estate taxes and contain escalation provisions
based on future adjustments in price indices.
As of June 30, 2011, the Company has purchase commitments of approximately $520.8 million relating to software and equipment
purchases and maintenance contracts, of which $194.6 million relates to the fiscal year ending June 30, 2012, $143.3 million relates to
the fiscal year ending June 30, 2013 and the remaining $182.9 million relates to fiscal years ending June 30, 2014 through fiscal 2016.
In September 2010, a purported class action lawsuit was filed against the Company in the Superior Court of the State of California,
County of Los Angeles. The lawsuit was subsequently removed to the United States District Court, Central District of California,
Western Division. The complaint alleges that the Company unlawfully handled certain client calls and seeks statutory damages. The
services at issue were performed by an independent third
- party vendor, and the Company believes that it has the contractual right to
full indemnification from this vendor for any potential losses it might incur with respect to the matter. In April 2011, the Company and
the third
- party vendor entered into a class action settlement agreement with the plaintiff to settle the matter subject to court
approval. As part of the settlement, the Company was to be dismissed from the action, and the third
- party vendor will pay all
settlement amounts. The third
- party vendor is also paying all of the Company ’ s legal fees and costs associated with the defense of
the matter. The Company was dismissed from the action on May 2, 2011. On July 20, 2011 the court granted preliminary approval to
the class action settlement and provisionally certified the settlement class. A hearing on final approval is scheduled for November
28, 2011.
On July 18, 2011, athenahealth, Inc. filed a complaint against ADP AdvancedMD, Inc., a subsidiary of the Company. The complaint
alleges that ADP AdvancedMD ’ s activities in providing medical practice management and billing and revenue management software
and associated services to physicians and medical practice managers infringe two patents owned by athenahealth, Inc. The
complaint seeks monetary damages, injunctive relief, and costs. The Company is currently investigating the merits of the claims and
intends to vigorously defend itself.
In June of 2011, the Company received a Commissioner
’ s Charge from the U.S. Equal Employment Opportunity Commission
( “ EEOC ” ) alleging that the Company has violated Title VII of the Civil Rights Act of 1964 by refusing to recruit, hire, transfer and
promote certain persons on the basis of their race, in the State of Illinois from at least the period of January 1, 2007 to the present.
The Company is investigating the allegations set forth in the Commissioner ’ s Charge and intends to cooperate with the EEOC ’ s
investigation.
The Company is subject to various claims and litigation in the normal course of business. When a loss is considered probable and
reasonably estimable, the Company records a liability in the amount of its best estimate for the ultimate loss. At this time the
Company is unable to estimate any possible loss, or range of possible loss, with respect to the matters described above. This is
primarily because these matters are still in early stages and involve complex issues subject to inherent uncertainty. There can be no
assurance that these matters will be resolved in a manner that is not adverse to the Company.
It is not the Company
’ s business practice to enter into off - balance sheet arrangements. However, the Company is exposed to market
risk from changes in foreign currency exchange rates that could impact its financial position, results of operations and cash flows.
The Company manages its exposure to these market risks through its regular operating and financing activities and, when deemed
appropriate, through the use of derivative financial instruments. The Company uses derivative financial instruments as risk
management tools and not for trading purposes. In the normal course of business, the Company also enters into contracts in which it
makes representations and warranties that relate to the performance of the Company
’ s services and products. The Company does
not expect any material losses related to such representations and warranties.
68
Years ending June 30,
2012
$
131.0
2013
106.7
2014
80.6
2015
61.7
2016
29.2
Thereafter
31.3
$
440.5