Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities, Classification
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Automatic Data Processing Inc., income tax expense (benefit), continuing operations

US$ in thousands

12 months ended:	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
Federal	749,300)	468,300)	464,300)	366,700)	615,300)	579,000)
Foreign	121,900)	119,500)	129,100)	105,500)	91,600)	85,000)
State	142,600)	102,300)	110,100)	77,600)	82,700)	76,600)
Current	1,013,800)	690,100)	703,500)	549,800)	789,600)	740,600)
Federal	(182,600)	23,700)	7,900)	(24,800)	6,200)	17,700)
Foreign	(19,100)	(5,400)	12,800)	19,700)	7,200)	(15,700)
State	(49,400)	7,700)	(11,400)	5,600)	(5,300)	(1,300)
Deferred	(251,100)	26,000)	9,300)	500)	8,100)	700)
Provision for income taxes	762,700)	716,100)	712,800)	550,300)	797,700)	741,300)

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

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Item	Description	The company
Current	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Automatic Data Processing Inc. current decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.
Deferred	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Automatic Data Processing Inc. deferred increased from 2019 to 2020 but then decreased significantly from 2020 to 2021.
Provision for income taxes	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Automatic Data Processing Inc. provision for income taxes increased from 2019 to 2020 and from 2020 to 2021.

Automatic Data Processing Inc., effective income tax rate (EITR) reconciliation

	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
U.S. federal statutory tax rate	21.00%	21.00%	21.00%	28.10%	35.00%	35.00%
State taxes, net of federal tax benefit	2.00%	2.70%	2.70%	2.40%	2.10%	2.10%
Valuation allowance release on foreign tax credits	0.00%	-0.60%	0.00%	0.00%	0.00%	0.00%
U.S. tax on foreign income	0.00%	0.00%	0.00%	0.50%	2.60%	5.50%
Utilization of foreign tax credits	0.00%	0.00%	0.00%	-0.90%	-3.00%	-7.00%
Section 199, Qualified production activities	0.00%	0.00%	0.00%	-1.50%	-1.30%	-1.40%
Section 199, Qualified production activities and research tax credit refund claim, net of reserves	0.00%	0.00%	0.00%	0.00%	-2.10%	0.00%
Resolution of tax matters, Section 199 Qualified production activities and research tax credit refund claim	0.00%	0.00%	0.00%	-1.60%	0.00%	0.00%
Foreign rate differential	1.00%	1.40%	1.60%	0.00%	0.00%	0.00%
Excess tax benefit, Stock-based compensation	-0.20%	-0.80%	-1.00%	-1.20%	-1.30%	0.00%
Other	-1.10%	-1.20%	-0.60%	-0.50%	-0.50%	-1.00%
Effective tax rate	22.70%	22.50%	23.70%	25.30%	31.50%	33.20%

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

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Item	Description	The company
Effective tax rate	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Automatic Data Processing Inc. effective tax rate decreased from 2019 to 2020 but then slightly increased from 2020 to 2021.

Automatic Data Processing Inc., components of deferred tax assets and liabilities

US$ in thousands

	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
Accrued expenses not currently deductible	244,200)	203,000)	228,900)	178,300)	294,500)	262,800)
Stock-based compensation expense	38,400)	33,800)	45,300)	49,600)	75,500)	74,600)
Foreign tax credits	21,300)	20,100)	25,100)	40,000)	49,500)	47,100)
Net operating losses	46,300)	52,000)	54,000)	44,600)	49,500)	46,000)
Unrealized investment losses, net	—)	—)	—)	83,600)	—)	—)
Retirement benefits	—)	46,000)	5,600)	—)	—)	—)
Other	34,700)	25,900)	20,200)	20,400)	18,700)	23,700)
Deferred tax assets	384,900)	380,800)	379,100)	416,500)	487,700)	454,200)
Valuation allowances	(13,400)	(12,000)	(31,600)	(46,000)	(9,400)	(15,400)
Deferred tax assets, net	371,500)	368,800)	347,500)	370,500)	478,300)	438,800)
Prepaid retirement benefits	—)	—)	—)	(19,300)	(125,100)	(77,200)
Deferred revenue	(494,500)	(475,000)	(475,900)	(16,500)	(35,500)	(43,200)
Fixed and intangible assets	(119,400)	(288,200)	(279,500)	(242,400)	(226,300)	(171,400)
Prepaid expenses	(27,900)	(82,300)	(86,200)	(71,800)	(122,500)	(118,000)
Prepaid retirement benefits	(37,700)	—)	—)	—)	—)	—)
Unrealized investment gains, net	(101,700)	(187,900)	(63,000)	—)	(33,400)	(176,200)
Tax on unrepatriated earnings	(11,400)	(22,200)	(31,600)	(28,300)	—)	—)
Other	(13,600)	(6,400)	(7,200)	(9,400)	(5,200)	(3,600)
Deferred tax liabilities	(806,200)	(1,062,000)	(943,400)	(387,700)	(548,000)	(589,600)
Net deferred tax assets (liabilities)	(434,700)	(693,200)	(595,900)	(17,200)	(69,700)	(150,800)

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

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Item	Description	The company
Deferred tax assets	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Automatic Data Processing Inc. deferred tax assets increased from 2019 to 2020 and from 2020 to 2021.
Deferred tax assets, net	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Automatic Data Processing Inc. deferred tax assets, net increased from 2019 to 2020 and from 2020 to 2021.
Net deferred tax assets (liabilities)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Automatic Data Processing Inc. net deferred tax assets (liabilities) decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Automatic Data Processing Inc., deferred tax assets and liabilities, classification

US$ in thousands

		Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
	Long-term deferred tax assets (included in Other assets)	48,300)	38,800)	64,000)	90,100)	93,400)	100,300)
	Long-term deferred tax liabilities	482,900)	731,900)	659,900)	107,300)	163,100)	251,100)

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

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Item	Description	The company
Long-term deferred tax assets (included in Other assets)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent.	Automatic Data Processing Inc. long-term deferred tax assets (included in Other assets) decreased from 2019 to 2020 but then slightly increased from 2020 to 2021.
Long-term deferred tax liabilities	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.	Automatic Data Processing Inc. long-term deferred tax liabilities increased from 2019 to 2020 but then decreased significantly from 2020 to 2021.

Automatic Data Processing Inc., adjustments to financial statements

US$ in thousands

	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
Adjustment to Total Assets
Total assets (as reported)	48,772,500)	39,165,500)	41,887,700)	37,088,700)	37,180,000)	43,670,000)
Less: Noncurrent deferred tax assets, net	48,300)	38,800)	64,000)	90,100)	93,400)	100,300)
Total assets (adjusted)	48,724,200)	39,126,700)	41,823,700)	36,998,600)	37,086,600)	43,569,700)
Adjustment to Total Liabilities
Total liabilities (as reported)	43,102,400)	33,413,300)	36,487,800)	33,629,100)	33,203,000)	39,188,400)
Less: Noncurrent deferred tax liabilities, net	482,900)	731,900)	659,900)	107,300)	163,100)	251,100)
Total liabilities (adjusted)	42,619,500)	32,681,400)	35,827,900)	33,521,800)	33,039,900)	38,937,300)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	5,670,100)	5,752,200)	5,399,900)	3,459,600)	3,977,000)	4,481,600)
Less: Net deferred tax assets (liabilities)	(434,700)	(693,200)	(595,900)	(17,200)	(69,700)	(150,800)
Stockholders’ equity (adjusted)	6,104,800)	6,445,400)	5,995,800)	3,476,800)	4,046,700)	4,632,400)
Adjustment to Net Earnings
Net earnings (as reported)	2,598,500)	2,466,500)	2,292,800)	1,620,800)	1,733,400)	1,492,500)
Add: Deferred income tax expense (benefit)	(251,100)	26,000)	9,300)	500)	8,100)	700)
Net earnings (adjusted)	2,347,400)	2,492,500)	2,302,100)	1,621,300)	1,741,500)	1,493,200)

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

Automatic Data Processing Inc., Financial Data: Reported vs. Adjusted

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Automatic Data Processing Inc., adjusted financial ratios

	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
Net Profit Margin
Reported net profit margin	17.32%	16.91%	16.17%	12.16%	14.00%	12.79%
Adjusted net profit margin	15.64%	17.08%	16.24%	12.17%	14.07%	12.80%
Total Asset Turnover
Reported total asset turnover	0.31	0.37	0.34	0.36	0.33	0.27
Adjusted total asset turnover	0.31	0.37	0.34	0.36	0.33	0.27
Financial Leverage
Reported financial leverage	8.60	6.81	7.76	10.72	9.35	9.74
Adjusted financial leverage	7.98	6.07	6.98	10.64	9.16	9.41
Return on Equity (ROE)
Reported ROE	45.83%	42.88%	42.46%	46.85%	43.59%	33.30%
Adjusted ROE	38.45%	38.67%	38.40%	46.63%	43.04%	32.23%
Return on Assets (ROA)
Reported ROA	5.33%	6.30%	5.47%	4.37%	4.66%	3.42%
Adjusted ROA	4.82%	6.37%	5.50%	4.38%	4.70%	3.43%

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Automatic Data Processing Inc. adjusted net profit margin ratio improved from 2019 to 2020 but then deteriorated significantly from 2020 to 2021.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Automatic Data Processing Inc. adjusted total asset turnover ratio improved from 2019 to 2020 but then deteriorated significantly from 2020 to 2021.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Automatic Data Processing Inc. adjusted financial leverage ratio decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Automatic Data Processing Inc. adjusted ROE improved from 2019 to 2020 but then slightly deteriorated from 2020 to 2021 not reaching 2019 level.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Automatic Data Processing Inc. adjusted ROA improved from 2019 to 2020 but then deteriorated significantly from 2020 to 2021.

Automatic Data Processing Inc., Financial Ratios: Reported vs. Adjusted

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	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
As Reported
Selected Financial Data (US$ in thousands)
Net earnings	2,598,500)	2,466,500)	2,292,800)	1,620,800)	1,733,400)	1,492,500)
Revenues	15,005,400)	14,589,800)	14,175,200)	13,325,800)	12,379,800)	11,667,800)
Profitability Ratio
Net profit margin¹	17.32%	16.91%	16.17%	12.16%	14.00%	12.79%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net earnings	2,347,400)	2,492,500)	2,302,100)	1,621,300)	1,741,500)	1,493,200)
Revenues	15,005,400)	14,589,800)	14,175,200)	13,325,800)	12,379,800)	11,667,800)
Profitability Ratio
Adjusted net profit margin²	15.64%	17.08%	16.24%	12.17%	14.07%	12.80%

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

2021 Calculations

¹ Net profit margin = 100 × Net earnings ÷ Revenues
= 100 × 2,598,500 ÷ 15,005,400 = 17.32%

² Adjusted net profit margin = 100 × Adjusted net earnings ÷ Revenues
= 100 × 2,347,400 ÷ 15,005,400 = 15.64%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Automatic Data Processing Inc. adjusted net profit margin ratio improved from 2019 to 2020 but then deteriorated significantly from 2020 to 2021.

	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
As Reported
Selected Financial Data (US$ in thousands)
Revenues	15,005,400)	14,589,800)	14,175,200)	13,325,800)	12,379,800)	11,667,800)
Total assets	48,772,500)	39,165,500)	41,887,700)	37,088,700)	37,180,000)	43,670,000)
Activity Ratio
Total asset turnover¹	0.31	0.37	0.34	0.36	0.33	0.27
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Revenues	15,005,400)	14,589,800)	14,175,200)	13,325,800)	12,379,800)	11,667,800)
Adjusted total assets	48,724,200)	39,126,700)	41,823,700)	36,998,600)	37,086,600)	43,569,700)
Activity Ratio
Adjusted total asset turnover²	0.31	0.37	0.34	0.36	0.33	0.27

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

2021 Calculations

¹ Total asset turnover = Revenues ÷ Total assets
= 15,005,400 ÷ 48,772,500 = 0.31

² Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 15,005,400 ÷ 48,724,200 = 0.31

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Automatic Data Processing Inc. adjusted total asset turnover ratio improved from 2019 to 2020 but then deteriorated significantly from 2020 to 2021.

	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
As Reported
Selected Financial Data (US$ in thousands)
Total assets	48,772,500)	39,165,500)	41,887,700)	37,088,700)	37,180,000)	43,670,000)
Stockholders’ equity	5,670,100)	5,752,200)	5,399,900)	3,459,600)	3,977,000)	4,481,600)
Solvency Ratio
Financial leverage¹	8.60	6.81	7.76	10.72	9.35	9.74
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets	48,724,200)	39,126,700)	41,823,700)	36,998,600)	37,086,600)	43,569,700)
Adjusted stockholders’ equity	6,104,800)	6,445,400)	5,995,800)	3,476,800)	4,046,700)	4,632,400)
Solvency Ratio
Adjusted financial leverage²	7.98	6.07	6.98	10.64	9.16	9.41

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

2021 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity
= 48,772,500 ÷ 5,670,100 = 8.60

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 48,724,200 ÷ 6,104,800 = 7.98

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Automatic Data Processing Inc. adjusted financial leverage ratio decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
As Reported
Selected Financial Data (US$ in thousands)
Net earnings	2,598,500)	2,466,500)	2,292,800)	1,620,800)	1,733,400)	1,492,500)
Stockholders’ equity	5,670,100)	5,752,200)	5,399,900)	3,459,600)	3,977,000)	4,481,600)
Profitability Ratio
ROE¹	45.83%	42.88%	42.46%	46.85%	43.59%	33.30%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net earnings	2,347,400)	2,492,500)	2,302,100)	1,621,300)	1,741,500)	1,493,200)
Adjusted stockholders’ equity	6,104,800)	6,445,400)	5,995,800)	3,476,800)	4,046,700)	4,632,400)
Profitability Ratio
Adjusted ROE²	38.45%	38.67%	38.40%	46.63%	43.04%	32.23%

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

2021 Calculations

¹ ROE = 100 × Net earnings ÷ Stockholders’ equity
= 100 × 2,598,500 ÷ 5,670,100 = 45.83%

² Adjusted ROE = 100 × Adjusted net earnings ÷ Adjusted stockholders’ equity
= 100 × 2,347,400 ÷ 6,104,800 = 38.45%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Automatic Data Processing Inc. adjusted ROE improved from 2019 to 2020 but then slightly deteriorated from 2020 to 2021 not reaching 2019 level.

	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
As Reported
Selected Financial Data (US$ in thousands)
Net earnings	2,598,500)	2,466,500)	2,292,800)	1,620,800)	1,733,400)	1,492,500)
Total assets	48,772,500)	39,165,500)	41,887,700)	37,088,700)	37,180,000)	43,670,000)
Profitability Ratio
ROA¹	5.33%	6.30%	5.47%	4.37%	4.66%	3.42%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net earnings	2,347,400)	2,492,500)	2,302,100)	1,621,300)	1,741,500)	1,493,200)
Adjusted total assets	48,724,200)	39,126,700)	41,823,700)	36,998,600)	37,086,600)	43,569,700)
Profitability Ratio
Adjusted ROA²	4.82%	6.37%	5.50%	4.38%	4.70%	3.43%

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

2021 Calculations

¹ ROA = 100 × Net earnings ÷ Total assets
= 100 × 2,598,500 ÷ 48,772,500 = 5.33%

² Adjusted ROA = 100 × Adjusted net earnings ÷ Adjusted total assets
= 100 × 2,347,400 ÷ 48,724,200 = 4.82%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Automatic Data Processing Inc. adjusted ROA improved from 2019 to 2020 but then deteriorated significantly from 2020 to 2021.

Automatic Data Processing Inc. (NASDAQ:ADP)

Analysis of Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities, Classification

Adjustments to Financial Statements: Removal of Deferred Taxes

Automatic Data Processing Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Automatic Data Processing Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)