ADP 2001 Annual Report Download - page 32

Notes to Consolidated Financial Statements (continued)
software (amortized over periods from 3 to 10 years).
Amortization of intangibles totaled $157 million for fiscal
2001, $133 million for 2000 and $126 million for 1999.
Note 6. Short-term Financing
In October 2000, the Company entered into an unsecured
revolving credit agreement with certain financial institu-
tions, which provides for borrowings up to $2.5 billion.
Borrowings under the agreement bear interest tied to
LIBOR or prime rate depending on the number of days
the borrowings are outstanding. The agreement, which
expires in October 2001, has no borrowings to date.
The Company’s short-term financing is sometimes
obtained on a secured basis through the use of repur-
chase agreements, which are collateralized principally by
U.S. government securities. These agreements generally
have terms ranging from overnight to up to three days.
There were no outstanding repurchase agreements at
June 30, 2001 and 2000. For the fiscal year ended June 30,
2001, the Company had an average outstanding balance
of $41 million at an average interest rate of 4.3%.
Note 7. Debt
Components of long-term debt are as follows:
(In thousands)
June 30, 2001 2000
Zero coupon convertible subordinated
notes (5.25% yield) $ 62,312 $ 86,639
Industrial revenue bonds (with fixed
and variable interest rates
from 2.85% to 3.5%) 36,449 36,858
Other 12,681 11,713
111,442 135,210
Less current portion (1,215) (3,193)
$110,227 $132,017
The zero coupon convertible subordinated notes have
a face value of approximately $108 million at June 30,
2001 and mature February 20, 2012, unless converted or
redeemed earlier. At June 30, 2001, the notes were con-
vertible into approximately 2.8 million shares of the Com-
pany’s common stock. The notes are callable at the option
of the Company, and the holders of the notes can convert
into common stock at any time or require redemption in
certain years. During fiscal 2001 and 2000, approximately
$50 million and $31 million face value of notes were con-
verted, respectively. As of June 30, 2001 and 2000, the
quoted market prices for the zero coupon notes were
approximately $139 million and $208 million, respectively.
The fair value of the other debt, included above, approxi-
mates its carrying value.
Long-term debt repayments at June 30, 2001 are due
as follows:
(In thousands)
2003 $ 1,485
2004 290
2005 281
2006 822
2007 173
Thereafter 107,176
$110,227
During fiscal 2001 and 2000, the average interest rate
for notes payable was 5.9% and 5.0%, respectively.
Interest payments were approximately $10 million in
fiscal 2001, $10 million in fiscal 2000 and $12 million in
fiscal 1999.
Note 8. Funds Held for Clients and
Client Funds Obligations
As part of its integrated payroll and payroll tax filing ser-
vices, the Company impounds funds for federal, state
and local employment taxes from approximately 351,000
clients; files annually over 18 million returns; handles all
regulatory correspondence, amendments, and penalty
and interest disputes; remits the funds to the appropriate
tax agencies; and handles other employer-related ser-
vices. In addition to fees paid by clients for these services,
the Company receives interest during the interval between
the receipt and disbursement of these funds by investing
the funds primarily in fixed-income instruments. The
amount of collected but not yet remitted funds for the
Company’s payroll and tax filing and certain other services
varies significantly during the year and averaged approxi-
mately $8.2 billion in fiscal 2001, $6.9 billion in fiscal 2000,
and $5.9 billion in fiscal 1999.
Note 9. Employee Benefit Plans
A. Stock Plans. The Company has stock option plans
which provide for the issuance to eligible employees of
incentive and non-qualified stock options, which may
expire as much as 10 years from the date of grant, at
prices not less than the fair market value on the date of
grant. At June 30, 2001 there were 10,817 participants
in the plans. The aggregate purchase price for options
outstanding at June 30, 2001 was approximately $1.7 bil-
lion. The options expire at various points between 2001
and 2011.
30