ADP 2004 Annual Report Download - page 42

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Automatic Data Processing, Inc. and Subsidiaries
NOTE 9 Funds Held for Clients and Client Funds Obligations
As part of its integrated payroll and payroll tax filing services, the
Company impounds funds for federal, state and local employment
taxes from approximately 379,000 clients; handles regulatory
payroll tax filings, correspondence, amendments, and penalty and
interest disputes; remits the funds to the appropriate tax agencies;
and handles other employer-related services. 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 instru-
ments. The amount of collected but not yet remitted funds for the
Company’s payroll and payroll tax filing and other services varies
significantly during the year, and averaged approximately $11.1
billion in fiscal 2004, $8.9 billion in fiscal 2003 and $8.4 billion
in fiscal 2002.
Number of Options Weighted Average Price
(In thousands) (In dollars)
Years ended June 30, 2004 2003 2002 2004 2003 2002
Options outstanding, beginning of year 60,958 50,843 47,496 $41 $41 $37
Options granted 18,080 15,867 12,325 $41 $37 $49
Options exercised (4,557) (2,588) (6,481) $24 $19 $22
Options canceled (4,322) (3,164) (2,497) $46 $48 $47
Options outstanding, end of year 70,159 60,958 50,843 $42 $41 $41
Options exercisable, end of year 32,140 27,617 21,626 $40 $36 $31
Shares available for future grants, end of year 22,431 1,189 13,892
Shares reserved for issuance under stock option plans 92,590 62,147 64,735
Summarized information about stock options outstanding as of June 30, 2004 is as follows:
Outstanding Exercisable
Exercise Number Remaining Weighted Number Weighted
Price of Options Life Average Price of Options Average Price
Range (In thousands) (In years) (In dollars) (In thousands) (In dollars)
Under $15 589 0.5 $14 589 $14
$15 to $25 4,243 2.0 $20 4,227 $20
$25 to $35 11,757 6.6 $32 6,741 $30
$35 to $45 29,411 7.6 $41 10,745 $42
$45 to $55 18,942 7.8 $49 6,867 $51
Over $55 5,217 6.2 $60 2,971 $60
NOTE 10 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, 2004, there were
9,096 participants in the plans. The aggregate purchase price
for options outstanding at June 30, 2004 was approximately $2.9
billion. The options expire at various points beginning in fiscal
2005 through fiscal 2014.
A summary of changes in the stock option plans for the three
years ended June 30, 2004, is as follows:
Notes to Consolidated Financial Statements