Automatic Data Processing Inc., adjustment to net earnings

US$ in thousands

12 months ended:	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
Net earnings (as reported)	2,598,500)	2,466,500)	2,292,800)	1,620,800)	1,733,400)	1,492,500)
Add: Unrealized net gains (losses) on available-for-sale securities, net of tax	(280,700)	465,800)	498,000)	(337,300)	(264,100)	186,600)
Less: Reclassification of net (gains) losses on available-for-sale securities to net earnings, net of tax	(8,800)	(10,000)	600)	2,100)	(1,400)	3,300)
Net earnings (adjusted)	2,309,000)	2,922,300)	2,791,400)	1,285,600)	1,467,900)	1,682,400)

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Automatic Data Processing Inc., adjusted profitability 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	15.39%	20.03%	19.69%	9.65%	11.86%	14.42%
Return on Equity (ROE)
Reported ROE	45.83%	42.88%	42.46%	46.85%	43.59%	33.30%
Adjusted ROE	40.72%	50.80%	51.69%	37.16%	36.91%	37.54%
Return on Assets (ROA)
Reported ROA	5.33%	6.30%	5.47%	4.37%	4.66%	3.42%
Adjusted ROA	4.73%	7.46%	6.66%	3.47%	3.95%	3.85%

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

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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: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in thousands)
Adjusted net earnings	2,309,000)	2,922,300)	2,791,400)	1,285,600)	1,467,900)	1,682,400)
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	15.39%	20.03%	19.69%	9.65%	11.86%	14.42%

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 × 2,309,000 ÷ 15,005,400 = 15.39%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by 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)
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: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in thousands)
Adjusted net earnings	2,309,000)	2,922,300)	2,791,400)	1,285,600)	1,467,900)	1,682,400)
Stockholders’ equity	5,670,100)	5,752,200)	5,399,900)	3,459,600)	3,977,000)	4,481,600)
Profitability Ratio
Adjusted ROE²	40.72%	50.80%	51.69%	37.16%	36.91%	37.54%

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 ÷ Stockholders’ equity
= 100 × 2,309,000 ÷ 5,670,100 = 40.72%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by shareholders’ equity.	Automatic Data Processing Inc. adjusted ROE deteriorated from 2019 to 2020 and 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)
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: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in thousands)
Adjusted net earnings	2,309,000)	2,922,300)	2,791,400)	1,285,600)	1,467,900)	1,682,400)
Total assets	48,772,500)	39,165,500)	41,887,700)	37,088,700)	37,180,000)	43,670,000)
Profitability Ratio
Adjusted ROA²	4.73%	7.46%	6.66%	3.47%	3.95%	3.85%

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 ÷ Total assets
= 100 × 2,309,000 ÷ 48,772,500 = 4.73%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by 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)

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