Name: Automatic Data Processing Inc. (NASDAQ:ADP) | Cash Flow Statement
Creator: Stock Analysis on Net

Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Download chart

Automatic Data Processing Inc., consolidated cash flow statement

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	2,598,500)	2,466,500)	2,292,800)	1,620,800)	1,733,400)	1,492,500)
Depreciation and amortization	510,700)	480,000)	409,000)	377,600)	316,100)	288,600)
Amortization of deferred contract costs	935,300)	915,000)	874,000)	—)	—)	—)
Deferred income taxes	(251,100)	26,000)	9,300)	500)	10,000)	700)
Stock-based compensation expense	175,300)	130,800)	167,300)	175,400)	138,900)	137,600)
Excess tax benefit related to exercise of stock options and restricted stock	—)	—)	—)	—)	—)	(37,400)
Net pension (income) expense	(52,800)	(11,600)	55,400)	330,400)	24,200)	17,700)
Net amortization of premiums and accretion of discounts on available-for-sale securities	69,500)	50,200)	50,100)	71,500)	85,900)	94,100)
Impairment of assets	19,900)	29,900)	12,100)	—)	—)	—)
Gain on sale of assets	(9,800)	(6,000)	(19,800)	(400)	—)	(13,900)
Gain on sale of divested businesses, net of tax	—)	—)	—)	—)	(121,400)	(21,800)
Other	35,200)	65,400)	43,900)	31,900)	37,100)	30,700)
(Increase) decrease in accounts receivable	(339,800)	(113,800)	(473,900)	(291,800)	23,400)	(224,600)
(Increase) decrease in other assets	(1,029,400)	(910,400)	(987,200)	93,500)	(269,100)	(108,900)
Increase (decrease) in accounts payable	36,900)	(18,300)	(10,700)	(1,900)	(11,600)	(15,900)
Increase (decrease) in accrued expenses and other liabilities	394,900)	(77,500)	266,000)	107,700)	159,000)	220,500)
Changes in operating assets and liabilities	(937,400)	(1,120,000)	(1,205,800)	(92,500)	(98,300)	(128,900)
Adjustments to reconcile net earnings to cash flows provided by operating activities	494,800)	559,700)	395,500)	894,400)	392,500)	367,400)
Net cash flows provided by operating activities	3,093,300)	3,026,200)	2,688,300)	2,515,200)	2,125,900)	1,859,900)
Purchases of corporate and client funds marketable securities	(9,266,300)	(3,905,100)	(4,422,600)	(4,876,800)	(4,382,800)	(5,876,300)
Proceeds from the sales and maturities of corporate and client funds marketable securities	6,238,400)	7,648,400)	2,909,000)	3,455,000)	3,593,600)	5,215,400)
Net (increase) decrease in restricted cash and cash equivalents held to satisfy client funds obligations	—)	—)	—)	—)	6,843,600)	(8,218,200)
Capital expenditures	(178,600)	(172,700)	(162,000)	(206,100)	(240,200)	(168,500)
Additions to intangibles	(327,300)	(443,700)	(404,500)	(264,700)	(230,400)	(217,500)
Acquisitions of businesses, net of cash acquired	—)	—)	(125,500)	(612,400)	(87,400)	—)
Proceeds from the sale of property, plant, and equipment and other assets	18,800)	29,400)	7,900)	400)	—)	15,700)
Proceeds from the sale of divested businesses	—)	—)	—)	—)	234,000)	162,200)
Net cash flows (used in) provided by investing activities	(3,515,000)	3,156,300)	(2,197,700)	(2,504,600)	5,730,400)	(9,087,200)
Net increase (decrease) in client funds obligations	8,336,200)	(3,213,200)	1,696,000)	340,400)	(6,120,600)	8,803,300)
Payments of debt	(1,001,800)	(2,200)	(2,100)	(7,300)	(2,000)	(1,500)
Proceeds from the issuance of debt	1,981,500)	—)	—)	—)	—)	1,998,300)
Settlement of cash flow hedges	(44,600)	—)	—)	—)	—)	—)
Repurchases of common stock	(1,372,300)	(1,006,300)	(937,700)	(989,300)	(1,259,600)	(1,155,700)
Net proceeds from stock purchase plan and stock-based compensation plans	104,100)	50,000)	72,900)	69,300)	95,700)	75,300)
Excess tax benefit related to exercise of stock options and restricted stock	—)	—)	—)	—)	—)	37,400)
Dividends paid	(1,575,500)	(1,470,500)	(1,293,000)	(1,063,700)	(995,200)	(943,600)
Net proceeds (payments) related to reverse repurchase agreements	9,900)	(248,400)	262,000)	—)	—)	—)
Other	—)	—)	(5,800)	(5,300)	—)	(23,400)
Net cash flows provided by (used in) financing activities	6,437,500)	(5,890,600)	(207,700)	(1,655,900)	(8,281,700)	8,790,100)
Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents	73,800)	(34,500)	(28,800)	5,800)	14,700)	(11,000)
Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents	6,089,600)	257,400)	254,100)	(1,639,500)	(410,700)	1,551,800)
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of year	7,053,600)	6,796,200)	6,542,100)	8,181,600)	3,191,100)	1,639,300)
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of year	13,143,200)	7,053,600)	6,796,200)	6,542,100)	2,780,400)	3,191,100)

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).

Operating cash flow demonstrates a consistent upward trajectory over the six-year period, growing from 1.86 billion US dollars in 2016 to 3.09 billion US dollars in 2021. This growth is primarily supported by a steady increase in net earnings, which rose from 1.49 billion US dollars to 2.60 billion US dollars during the same interval. The reconciliation of net earnings to operating cash is characterized by rising depreciation and amortization expenses and the introduction of significant amortization of deferred contract costs starting in 2019, which consistently added over 870 million US dollars annually to cash flow from operations.

Operating Efficiency and Working Capital: A recurring pattern of volatility is observed in changes to operating assets and liabilities. Substantial outflows related to the increase in other assets and accounts receivable often offset the cash provided by net earnings. For instance, changes in operating assets and liabilities resulted in a significant cash drag of 1.21 billion US dollars in 2019 and 1.12 billion US dollars in 2020, indicating aggressive investment in operating assets or timing differences in collections.
Investment Activity and Capital Expenditure: Investing activities are dominated by the management of corporate and client funds marketable securities, leading to high volatility in net investing cash flows. Capital expenditures remained relatively stable, fluctuating between 162 million and 240 million US dollars. Investment in intangibles showed a growth trend, peaking at 443.7 million US dollars in 2020. Strategic business acquisitions were most prominent between 2017 and 2019, with a peak expenditure of 612.4 million US dollars in 2018.
Capital Allocation and Shareholder Returns: A disciplined and increasing commitment to shareholder returns is evident. Dividend payments grew steadily every year, rising from 943.6 million US dollars in 2016 to 1.58 billion US dollars in 2021. Simultaneously, the company maintained a consistent share repurchase program, typically spending between 937 million and 1.37 billion US dollars annually to reduce outstanding common stock.
Financing and Liquidity Management: Financing cash flows are heavily influenced by fluctuations in client funds obligations, which saw a massive increase of 8.34 billion US dollars in 2021. Debt management remained conservative until 2021, when a payment of 1.00 billion US dollars was offset by the issuance of 1.98 billion US dollars in new debt. This activity, combined with operating inflows, contributed to a significant increase in the year-end cash position, which reached 13.14 billion US dollars in 2021, nearly doubling the previous year's balance.

AI Ask an analyst for more

My previous chats

Add tokens

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?