ADP 2013 Annual Report Download - page 13

Political and economic factors may adversely affect our business and financial results
Trade, monetary and fiscal policies, and political and economic conditions may substantially change, and credit markets may
experience periods of constriction and volatility. When there is a slowdown in the economy, employment levels and interest rates may decrease
with a corresponding impact on our businesses. Clients may react to worsening conditions by reducing their spending on payroll and other
outsourcing services or renegotiating their contracts with us. In addition, a reduction in availability of financing during such conditions, even to
borrowers with the highest credit ratings, may limit our access to short-term debt markets to meet liquidity needs required by our Employer
Services business.
We invest our client funds in liquid, investment-grade marketable securities, money market securities, and other cash equivalents.
Nevertheless, our client fund assets are subject to general market, interest rate, credit, and liquidity risks. These risks may be exacerbated,
individually or in unison, during periods of unusual financial market volatility.
We are dependent upon various large banks to execute Automated Clearing House and wire transfers as part of our client payroll and
tax services. While we have contingency plans in place for bank failures, a systemic shutdown of the banking industry would impede our ability
to process funds on behalf of our payroll and tax services clients and could have an adverse impact on our financial results and liquidity.
We derive a significant portion of our revenues and operating income outside of the United States and, as a result, we are exposed to
market risk from changes in foreign currency exchange rates that could impact our consolidated results of operations, financial position or cash
flows.
Change in our credit ratings could adversely impact our operations and lower our profitability
The major credit rating agencies periodically evaluate our creditworthiness and have consistently given us their highest long-term debt
and commercial paper ratings. Failure to maintain high credit ratings on long-term and short-term debt could increase our cost of borrowing,
reduce our ability to obtain intra-day borrowing required by our Employer Services business, and ultimately reduce our client interest revenue.
We may be unable to attract and retain qualified personnel
Our ability to grow and provide our clients with competitive services is partially dependent on our ability to attract and retain highly
motivated people with the skills to serve our clients. Competition for skilled employees in the outsourcing and other markets in which we
operate is intense and, if we are unable to attract and retain highly skilled and motivated personnel, results of our operations may suffer.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
ADP owns 12 of its processing/print centers, and 23 other operational offices, sales offices, and its corporate headquarters in Roseland,
New Jersey, which aggregate approximately 3,620,235 square feet. None of ADP's owned facilities is subject to any material encumbrances.
ADP leases space for some of its processing centers, other operational offices, and sales offices. All of these leases, which aggregate
approximately 6,496,743 square feet in North America, Europe, South America, Asia, Australia and Africa, expire at various times up to the year
2036. ADP believes its facilities are currently adequate for their intended purposes and are adequately maintained.
Item 3. Legal Proceedings
In the normal course of business, ADP is subject to various claims and litigation. While the outcome of any litigation is inherently
unpredictable, ADP believes that it has valid defenses with respect to the legal matters pending against it and that the ultimate resolution of these
matters will not have a material adverse impact on its financial condition, results of operations, or cash flows.
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