ADP 2011 Annual Report Download - page 28

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2011, cash and marketable securities were $1,523.7 million, stockholders
’ equity was $6,010.4 million, and the ratio of
long
- term debt - to - equity was 0.6%. Working capital before funds held for clients and client funds obligations was $1,252.2 million, as
compared to $1,568.6 million at June 30, 2010. The decrease was primarily due to a decrease in cash and cash equivalents and other
current assets together with the net effect of an increase in accounts receivable, accrued expenses and other, and accrued payroll
and payroll related expenses.
Our principal sources of liquidity for operations are derived from cash generated through operations and through corporate cash and
marketable securities on hand. We continued to generate positive cash flows from operations during fiscal 2011, and we held
approximately $1.5 billion of cash and marketable securities at June 30, 2011. We also have the ability to generate cash through our
financing arrangements under our U.S. short
- term commercial paper program and our U.S. and Canadian short - term repurchase
agreements to meet short
- term funding requirements related to client funds obligations.
Net cash flows provided by operating activities were $1,705.8 million in fiscal 2011, as compared to $1,682.1 million in fiscal 2010. The
increase in net cash flows provided by operating activities was due to a positive year over year variance in the timing of our tax
related estimated cash payments and receipts of $118.4 million, offset by an increase in bonus payments of $47.0 million, and an
increase in pension plan contributions of $45.8 million. The balance of the increase was due to timing of cash collections related to
trade accounts receivable partially offset by the timing of cash payments related to accounts payable.
Net cash flows used in investing activities were $7,340.6 million in fiscal 2011 as compared to $2,379.5 million in fiscal 2010. The
increase in net cash flows used in investing activities was due to the increase of spend relating to acquisitions of businesses, net of
cash acquired, which resulted in a net decrease to cash flows of $676.0 million, the timing of purchases of and proceeds from the
sales or maturities of corporate and client funds marketable securities which resulted in a net decrease to cash flows of $1,026.0
million, and the increase in restricted cash and cash equivalents held to satisfy client funds obligations which resulted in a net
decrease to cash flows of $3,197.7 million.
Net cash flows provided by financing activities were $5,339.3 million in fiscal 2011 as compared to $89.0 million in fiscal 2010. The
increase was due to the net change in client funds obligations of $4,270.5 million as a result of the timing of cash received and
payments made related to client funds, a $730.0 million decrease in repayments of previously issued commercial paper and a $237.2
million increase primarily due to higher cash proceeds from the exercises of stock options. We issued 11.4 million and 6.2 million
treasury shares, respectively, related to option exercises in fiscal 2011 and 2010.
Our U.S. short
- term funding requirements related to client funds are sometimes obtained through a short - term commercial paper
program. In August 2011, the Company increased the U.S. short
- term commercial paper program to provide for the issuance of up to
$6.75 billion in aggregate maturity value, up from $6.25 billion in fiscal 2011. Our commercial paper program is rated A
- 1+ by Standard
and Poor
’ s and Prime - 1 by Moody ’ s. These ratings denote the highest quality commercial paper securities. Maturities of commercial
paper can range from overnight to up to 364 days. In both fiscal 2011 and 2010, our average borrowings were $1.6 billion, at weighted
average interest rates of 0.2%. The weighted average maturity of our commercial paper was less than two days in both fiscal 2011
and fiscal 2010. Throughout fiscal 2011, we had full access to our U.S. short
- term funding requirements related to client funds
obligations. At June 30, 2011 and June 30, 2010, there was no commercial paper outstanding.
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