We invest our ~~client~~ funds held for clients in liquid, investment-grade marketable securities, money market securities, and other cash equivalents. Nevertheless, ~~our client fund assets~~such investments are subject to general market, interest rate, credit and liquidity risks. These risks may be exacerbated, individually or ~~in unison,~~together, during periods of unusual financial market volatility.

In addition, as part of our client funds investment strategy, we extend the maturities of our investment portfolio for client funds and utilize short-term financing arrangements to satisfy our short-term funding requirements related to client funds obligations. In order to satisfy these short-term funding requirements, we maintain access to various sources of liquidity, including borrowings under our commercial paper program and our committed credit facilities, our ability to execute reverse repurchase transactions and corporate cash balances. A reduction in the availability of any such financing during periods of disruption in the financial markets or otherwise may increase our borrowing costs and/or require us to sell ~~client fund assets~~available-for-sale securities in our funds held for clients to satisfy our short-term funding ~~requirements, which~~requirements. When there is a reduction in employment levels due to a slowdown in the economy, the Company may experience a decline in client fund obligations and may also sell available-for-sale securities in our funds held for clients in order to reduce the size of the funds held for clients to correspond to client fund obligations. A sale of such available-for-sale securities may result in the recognition of losses and reduce the interest income earned on funds held for clients, either or both of which may adversely impact our results of operations, financial condition and cash flow.

We are dependent upon various large banks to execute electronic payments and wire transfers as part of our client payroll, tax and other money movement 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, tax and other money movement 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 results of operations, financial position and cash flows.

We publicly share certain information about our environmental, social and governance (“ESG”) initiatives. We may face increased scrutiny related to our ESG initiatives and any related targets, including from the investment community. In addition, our ability to achieve certain ESG initiatives and targets may depend on the actions or continuing requirements of governmental entities (e.g., our paperless initiatives may depend on whether certain states continue to require employers to offer employees to be paid via paper check or to obtain

employee consent to be paid electronically instead of via paper check). Our failure to achieve progress in these and other ESG areas on a timely basis, or at all, could impact our reputation, business, including employee retention, and growth.

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 given us strong, investment-grade long-term debt ratings and high 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 adversely impact our results of operations.

Our business could be negatively impacted as a result of actions by activist stockholders or others

We may be subject to actions or proposals from activist stockholders or others that may not align with our business strategies or the interests of our other stockholders. Responding to such actions could be costly and time-consuming, disrupt our business and operations, and divert the attention of our Board of Directors and senior management from the pursuit of our business strategies. Activist stockholders may create perceived uncertainties as to the future direction of our business or strategy, including with respect to our ESG efforts, which may be exploited by our competitors and may make it more difficult to attract and retain qualified personnel, potential customers and business partners and may affect our relationships with current customers, vendors, investors and other third parties. In addition, actions of activist stockholders may cause periods of fluctuation in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

~~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 given us very strong, investment-grade long-term debt ratings and the highest 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 adversely impact our results of operations.

If the distribution of CDK Global® common stock to ADP’s stockholders does not qualify as a tax-free spinoff, we could incur substantial liabilities and may not be fully indemnified for such liabilities

On September 30, 2014, the Company completed the tax-free spinoff of its former Dealer Services business through the distribution of all of the issued and outstanding common stock of CDK Global, Inc. (“CDK Global”) to ADP’s stockholders. CDK Global was formed to hold ADP’s former Dealer Services business and, as a result of the distribution, became an independent public company trading under the symbol “CDK” on the NASDAQ Global Select Market. Prior to completing the spinoff of CDK Global, ADP received an opinion from Paul, Weiss, Rifkind, Wharton & Garrison LLP, its counsel, to the effect that, based on certain facts, assumptions, representations and undertakings set forth in the opinion, the distribution qualified as a transaction that is tax-free under Section 355 and other related provisions of the Internal Revenue Code. ADP also received a private letter ruling from the IRS with respect to certain discrete and significant issues arising in connection with the transactions effected in connection with the separation and distribution. The opinion and the ruling were based upon various factual representations and assumptions, as well as certain undertakings made by ADP and CDK Global. If any of those factual representations or assumptions was untrue or incomplete in any material respect, any undertaking is not complied with, or the facts upon which the opinion and the ruling were based were materially different from the facts at the time of the distribution, the distribution may not qualify for tax-free treatment. Although a private letter ruling from the IRS generally is binding on the IRS, the IRS did not rule that the distribution satisfies every requirement for a tax-free distribution. Opinions of counsel are not binding on the IRS or the courts. As a result, the conclusions expressed in an opinion of counsel could be challenged by the IRS, and if the IRS prevails in such challenge, the tax consequences to ADP’s stockholders that received CDK Global common stock pursuant to the distribution could be materially less favorable.

If the distribution were determined not to qualify as a tax-free transaction under Section 355 of the Code, each United States holder of ADP common stock that received CDK Global common stock pursuant to the distribution generally would be treated as receiving a distribution taxable as a dividend in an amount equal to the fair market value of the shares of CDK Global common stock received by such holder. In addition, ADP generally would recognize gain with respect to the distribution and certain related transactions, and CDK Global could be required to indemnify ADP for any resulting taxes and related expenses, which could be material. The distribution and certain related transactions could be taxable to ADP if CDK Global or its stockholders were to engage in certain transactions after the distribution. In such cases, ADP or its stockholders that received CDK Global common stock pursuant to the spinoff could incur significant U.S. federal income tax liabilities, and CDK Global could be required to indemnify ADP for any resulting taxes and related expenses, which could be material. CDK Global may be unable to indemnify us fully for any such taxes and related expenses.

We may be unable to attract and retain qualified personnel

Our ability to grow and provide our clients with competitive services is, ~~partially~~to an important degree, dependent on our ability to attract and retain highly skilled and motivated people ~~with~~reflecting diverse perspectives and the ~~skills to serve~~diversity of our communities and clients. Competition for skilled employees in the outsourcing and other markets in which we operate is increasingly intense, making it more difficult and ifexpensive to attract and retain highly skilled, motivated and diverse personnel. If we are unable to attract and retain highly skilled, motivated and ~~motivated~~diverse personnel, results of our operations and culture may suffer.

•Stock Options. Stock options are granted to employees at exercise prices equal to the fair market value of the Company's common stock on the dates of grant. Stock options ~~are issued under a graded vesting schedule~~generally vest ratably over 4 years and have a term of 10 ~~years. Options granted after July 1, 2008 generally vest ratably over four~~ years. Compensation expense is measured based on the fair value of the stock option on the grant date and recognized on a straight-line basis over the ~~requisite service period for each separately~~ vesting ~~portion of the stock option award.~~period. Stock options are generally forfeited if the employee ceases to be employed by the Company prior to vesting.The Company determines the fair value of stock options issued using a binomial option-pricing model. The binomial option-pricing model considers a range of assumptions

related to volatility, dividend yield, risk-free interest rate, and employee exercise behavior. Expected volatilities utilized in the binomial option-pricing model are based on a combination of implied market volatilities, historical volatility of the Company's stock price, and other factors. Similarly, the dividend yield is based on historical experience and expected future changes. The risk-free rate is derived from the U.S. Treasury yield curve in effect at the time of grant. The binomial option-pricing model also incorporates exercise and forfeiture assumptions based on an analysis of historical data. The expected life of a stock option grant is derived from the output of the binomial model and represents the period of time that options granted are expected to be outstanding.

•Restricted Stock.

•Time-Based Restricted Stock and Time-Based Restricted Stock Units. Time-based restricted stock and time-based restricted stock units ~~granted are~~ generally ~~subject to a vesting period of~~ ~~two years~~.vest ratably over 3 years. Awards are forfeited if the employee ceases to be employed by the Company prior to vesting.

Time-based restricted stock cannot be transferred during the vesting period. Compensation expense relating to the issuance of time-based restricted stock is measured based on the fair value of the award on the grant date and recognized on a straight-line basis over the vesting period. Dividends are paid on shares awarded under the time-based restricted stock program.

Time-based restricted stock units are settled in cash and cannot be transferred during the vesting period. Compensation expense relating to the issuance of time-based restricted stock units is recorded over the

vesting period and is initially based on the fair value of the award on the grant date and is subsequently remeasured at each reporting date during the vesting period based on the change in the ADP stock price. No dividend equivalents are paid on units awarded under the time-based restricted stock unit program.

•Performance-Based Restricted Stock and Performance-Based Restricted Stock Units. Performance-based restricted stock and performance-based restricted stock units generally vest over a one to three year performance period and a subsequent service period of up to ~~26 months~~.38 months. Under these programs, the Company communicates ~~"target awards"~~“target awards” at the beginning of the performance period with possible payouts at the end of the performance period ranging from 0% to 150% of the ~~"target~~“target awards."” Awards are generally forfeited if the employee ceases to be employed by the Company prior to vesting.

Performance-based restricted stock cannot be transferred during the vesting period. Compensation expense relating to the issuance of performance-based restricted stock is recognized over the vesting period based on the fair value of the award on the grant date with subsequent adjustments to the number of shares awarded during the performance period based on probable and actual performance against targets. After the performance period, if the performance targets are achieved, employees are eligible to receive dividends during the remaining vesting period on shares awarded under the performance-based restricted stock program.

Performance-based restricted stock units cannot be transferred and are settled in either cash or stock, depending on the employee's home country. Compensation expense relating to the issuance of performance-based restricted stock units settled in cash is recognized over the vesting period initially based on the fair value of the award on the grant date with subsequent adjustments to the number of units awarded during the performance period based on probable and actual performance against targets. In addition, compensation expense is remeasured at each reporting period during the vesting period based on the change in the ADP stock price. Compensation expense relating to the issuance of performance-based restricted stock units settled in stock is recorded over the vesting period based on the fair value of the award on the grant date with subsequent adjustments to the number of units awarded based on the probable and actual performance against targets. Dividend equivalents are paid on awards under the performance-based restricted stock unit program.

•Employee Stock Purchase Plan. The Company offers an employee stock purchase plan that allows eligible employees to purchase shares of common stock at a price equal to 95% of the market value for the Company's common stock on the last day of the offering period. This plan has been deemed non-compensatory and, therefore, no compensation expense has been recorded.

The Company currently utilizes treasury stock to satisfy stock option exercises, issuances under the Company's employee stock purchase plan, and restricted stock awards. From time to time, the Company may repurchase shares of its common stock under its authorized share repurchase ~~programs.~~program. The Company repurchased ~~13.5~~9.2 million shares in fiscal ~~2017~~2022 as compared to ~~13.8~~8.2 million shares repurchased in fiscal ~~2016.~~2021. The Company considers several factors in determining when to execute share repurchases, including, among other things, actual and potential acquisition activity, cash balances and cash flows, issuances due to

employee benefit plan activity, and market conditions. Cash payments related to the settlement of vested time-based restricted stock units and performance-based restricted stock units were approximately ~~$24.5~~22.1 million, ~~$25.2~~10.7 million, and ~~$25.2~~34.6 million during fiscal years ~~2017, 2016,~~2022, 2021, and ~~2015,~~2020, respectively.

The following table represents stock-based compensation expense and related income tax benefits in each of fiscal ~~2017, 2016,~~2022, 2021, and ~~2015,~~2020, respectively:


Years ended June 30,	2022		2021		2020
Operating expenses	$	19.7	$	17.9	$	13.7
Selling, general and administrative expenses	155.7		133.9		99.1
System development and programming costs	26.3		23.5		18.0
Total pretax stock-based compensation expense	$	201.7	$	175.3	$	130.8

Income tax benefit	$	49.1	$	43.0	$	32.2

Years ended June 30, 2017 2016 2015
Operating expenses $ 21.5
$ 23.1
$ 27.0
Selling, general and administrative expenses 99.2
97.4
95.8
System development and programming costs 18.2
17.1
20.4
Total pretax stock-based compensation expense $ 138.9
$ 137.6
$ 143.2

Income tax benefit $ 49.9
$ 49.6
$ 51.1

Stock-based compensation expense attributable to employees of the discontinued operations are included in discontinued operations on the Statements of Consolidated Earnings and therefore not presented in the table above. For fiscal 2015 such stock-based compensation expense was $5.5 million.

As a result of the spin-off of CDK, the number of vested and unvested ADP stock options, their strike price, and the number of unvested performance-based and time-based restricted shares and units were adjusted to preserve the intrinsic value of the awards immediately prior to the spin-off using an adjustment ratio based on the market close price of ADP stock prior to the spin-off and the market open price of ADP stock subsequent to the spin-off. Since these adjustments were considered to be a modification of the awards in accordance to ASC 718, "Stock Compensation," the Company compared the fair value of the awards immediately prior to the spin-off to the fair value immediately after the spin-off to measure potential incremental stock-based compensation expense, if any. The adjustments did not result in an increase in the fair value of the awards and, accordingly, the Company did not record incremental stock-based compensation expense. Unvested ADP stock options, unvested restricted stock, and unvested restricted stock units held by CDK employees were replaced by CDK awards immediately following the spin-off. The stock-based compensation expense associated with the original grant of ADP awards to remaining ADP employees will continue to be recognized within earnings from continuing operations in the Company's Statements of Consolidated Earnings.

As of June 30, ~~2017,~~2022, the total remaining unrecognized compensation cost related to non-vested stock options, restricted stock units, and restricted stock awards amounted to ~~$12.6~~$18.9 million, ~~$27.9~~$53.9 million, and ~~$60.7~~$116.2 million, respectively, which will be amortized over the weighted-average remaining requisite service periods of ~~2.3~~2.2 years, ~~1.3~~1.5 years, and ~~1.1~~1.7 years, respectively.

In fiscal ~~2017,~~2022, the following activity occurred under the Company’s existing plans.

Stock Options:


	Number of Options (in thousands)	Weighted Average Price (in dollars)
Options outstanding at July 1, 2021	3,705	$	135
Options granted	792	$	207
Options exercised	(860)	$	127
Options forfeited/cancelled	(163)	$	166
Options outstanding at June 30, 2022	3,474	$	152
Options exercisable at June 30, 2022	1,553	$	128
Shares available for future grants, end of year	21,862
Shares reserved for issuance under stock option plans, end of year	25,336

Number
of Options
(in thousands)

Weighted
Average Price
(in dollars)
Options outstanding at July 1, 2016 4,869
$ 65
Options granted 1,234
$ 91
Options exercised (1,702 ) $ 56
Options canceled (229 ) $ 80
Options outstanding at June 30, 2017 4,172
$ 75
Options exercisable at June 30, 2017 1,519
$ 62
Shares available for future grants, end of year 18,548

Shares reserved for issuance under stock option plans, end of year 22,720

Time-Based Restricted Stock and Time-Based Restricted Stock Units:


	Number of Shares (in thousands)	Number of Units (in thousands)
Restricted shares/units outstanding at July 1, 2021	1,141	200
Restricted shares/units granted	504	89
Restricted shares/units vested	(511)	(101)
Restricted shares/units forfeited	(113)	(15)
Restricted shares/units outstanding at June 30, 2022	1,021	173

Number of Shares
(in thousands)

Number of Units
(in thousands)
Restricted shares/units outstanding at July 1, 2016 1,889
434
Restricted shares/units granted 888
204
Restricted shares/units vested (868 ) (203 )
Restricted shares/units forfeited (148 ) (49 )
Restricted shares/units outstanding at June 30, 2017 1,761
386

Performance-Based Restricted Stock and Performance-Based Restricted Stock Units:


	Number of Shares (in thousands)	Number of Units (in thousands)
Restricted shares/units outstanding at July 1, 2021	247	700
Restricted shares/units granted	114	386
Restricted shares/units vested	(114)	(263)
Restricted shares/units forfeited	(25)	(66)
Restricted shares/units outstanding at June 30, 2022	222	757

Number of Shares
(in thousands)

Number of Units
(in thousands)
Restricted shares/units outstanding at July 1, 2016 574
811
Restricted shares/units granted 172
317
Restricted shares/units vested (311 ) (272 )
Restricted shares/units forfeited (31 ) (87 )
Restricted shares/units outstanding at June 30, 2017 404
769

The aggregate intrinsic value of outstanding stock options and exercisable stock options as of June 30, ~~2017~~2022 was ~~$112.6~~$203.1 million and ~~$61.2~~$127.0 million,, respectively, which have a remaining life of ~~7.2~~7 years and ~~5.4~~6 years, respectively. The aggregate intrinsic value for stock options exercised in fiscal ~~2017, 2016,~~2022, 2021, and ~~2015~~2020 was ~~$70.9~~$80.8 million,, ~~$85.4~~ $58.6 million,, and ~~$125.3~~$78.0 million, respectively.

The fair value for stock options granted was estimated at the date of grant using the following assumptions:


	2022			2021			2020
Risk-free interest rate	0.0		%	0.1		%	1.4		%
Dividend yield	1.8		%	2.6		%	1.9		%
Weighted average volatility factor	22.7		%	25.8		%	19.3		%
Weighted average expected life (in years)	4.9			5.4			5.4
Weighted average fair value (in dollars)	$	33.03		$	21.66		$	24.40

2017 2016 2015
Risk-free interest rate 1.2 % 1.6 % 1.5 %
Dividend yield 2.3 % 2.6 % 2.3 %
Weighted average volatility factor 23.2 % 25.6 % 23.4 %
Weighted average expected life (in years) 5.4
5.4
5.4
Weighted average fair value (in dollars) (A) $ 14.36
$ 13.16
$ 14.29

The weighted average fair values of shares granted were as follows:


Year ended June 30,	2022		2021		2020
(in dollars)
Performance-based restricted stock	$	206.86	$	138.53	$	169.84
Time-based restricted stock	$	208.08	$	141.52	$	167.16

Year ended June 30, 2017 2016 2015

Performance-based restricted stock (A) $ 90.63
$ 75.95
$ 64.91
Time-based restricted stock (A) $ 90.99
$ 76.09
$ 73.83

~~(A) The weighted average fair values of grants before September 30, 2014 were adjusted to reflect the impact of the spin-off of CDK.~~

B. Pension Plans

The Company has a defined benefit cash balance pension plan. The U.S. pension plan, ~~under~~ which ~~employees are credited with a percentage~~is currently closed to new entrants, was frozen effective July 1, 2020. As of ~~base~~July 1, 2020 and onward, participants will retain their accrued benefits and will not accrue any future benefits due to pay ~~plus interest. Effective January 1, 2015, associates hired on~~ and/or after this date are not eligible to participate in this pension plan. In addition, associates rehired on or after January 1, 2015 will no longer be eligible to earn additional contributions but will continue to earn interest on any balance that remains in the pension plan.service. The plan interest credit rate varies from year-to-year based on the ten-year U.S. Treasury rate. ~~Employees are fully vested upon completion of three years of service.~~ The Company's policy is to make contributions within the range determined by generally accepted actuarial principles.

The Company also has various retirement plans for its non-U.S. employees and maintains a Supplemental Officers Retirement Plan (“SORP”). The SORP is a defined benefit plan pursuant to which the Company pays supplemental pension benefits to certain corporate officers upon retirement based upon the officers' years of service and compensation. The SORP, which is currently closed to new entrants, ~~will be~~was frozen effective July 1, ~~2019. Benefits under the plan will continue to accrue through June 30,~~ 2019, ~~and as of July 1, 2019 and onward, participants will retain their accrued benefits~~ with no future accruals due to pay and/or service.

A June 30 measurement date was used in determining the Company's benefit obligations and fair value of plan assets.

The Company is required to (a) recognize in its Consolidated Balance Sheets an asset for a plan's net overfunded status or a liability for a plan's net underfunded status, (b) measure a plan's assets and its obligations that determine its funded status as of the end of the employer's fiscal year, and (c) recognize changes in the funded status of a defined benefit plan in the year in which the changes occur in accumulated other comprehensive income (loss).

The Company's pension plans' funded status as of June 30, ~~2017~~2022 and ~~2016~~2021 is as follows:


June 30,	2022		2021

Change in plan assets:
Fair value of plan assets at beginning of year	$	2,306.3	$	1,988.8
Actual return on plan assets	(406.7)		385.2
Employer contributions	10.7		10.9
Currency translation adjustments	(16.4)		21.8
Benefits paid	(93.4)		(100.4)
Fair value of plan assets at end of year	$	1,800.5	$	2,306.3

Change in benefit obligation:
Benefit obligation at beginning of year	$	2,149.3	$	2,180.1
Service cost	5.7		4.9
Interest cost	52.3		51.4
Actuarial loss (a)	(319.2)		(11.8)
Currency translation adjustments	(22.5)		25.1
Plan changes	6.8		—

Benefits paid	(93.4)		(100.4)
Projected benefit obligation at end of year	$	1,779.0	$	2,149.3

Funded status - plan assets less benefit obligations	$	21.5	$	157.0

(a) The actuarial loss for fiscal 2022 was primarily due to lower than expected return on assets.

June 30, 2017 2016

Change in plan assets:
Fair value of plan assets at beginning of year $ 2,006.3
$ 2,009.8
Actual return on plan assets 195.2
61.2
Employer contributions 11.9
11.0
Currency translation adjustments (3.2 ) (8.7 )
Benefits paid (71.8 ) (67.0 )
Fair value of plan assets at end of year $ 2,138.4
$ 2,006.3

Change in benefit obligation:
Benefit obligation at beginning of year $ 1,843.9
$ 1,661.0
Service cost 80.8
70.4
Interest cost 60.0
67.4
Actuarial (gain)/losses (44.5 ) 145.3
Currency translation adjustments 2.7
(7.6 )
Plan changes —
(25.6 )
Curtailments and special termination benefits (4.4 ) —
Benefits paid (71.8 ) (67.0 )
Projected benefit obligation at end of year $ 1,866.7
$ 1,843.9

Funded status - plan assets less benefit obligations $ 271.7
$ 162.4

The amounts recognized on the Consolidated Balance Sheets as of June 30, ~~2017~~2022 and ~~2016~~2021 consisted of:


June 30,	2022		2021

Noncurrent assets	$	148.5	$	320.5
Current liabilities	(5.3)		(6.0)
Noncurrent liabilities	(121.7)		(157.5)
Net amount recognized	$	21.5	$	157.0

June 30, 2017 2016

Noncurrent assets $ 413.8
$ 306.5
Current liabilities (5.0 ) (6.9 )
Noncurrent liabilities (137.1 ) (137.2 )
Net amount recognized $ 271.7
$ 162.4

The accumulated benefit obligation for all defined benefit pension plans was ~~$1,852.5~~$1,765.3 million and ~~$1,825.1~~$2,135.0 millionat June 30, ~~2017~~2022 and ~~2016,~~2021, respectively.

The Company's pension plans with projected benefit obligations in excess of plan assets as of June 30, 2022 and 2021 had the following projected benefit obligation and fair value of plan assets:


June 30,	2022		2021

Projected benefit obligation	$	145.5	$	182.2

Fair value of plan assets	$	18.5	$	18.7

The Company's pension plans with accumulated benefit obligations in excess of plan assets as of June 30, ~~2017~~2022 and ~~2016~~2021 had the following ~~projected benefit obligation,~~ accumulated benefit obligation and fair value of plan assets:


June 30,	2022		2021

Accumulated benefit obligation	$	132.0	$	168.3
Fair value of plan assets	$	18.5	$	18.7

June 30, 2017 2016

Projected benefit obligation $ 241.0
$ 165.7
Accumulated benefit obligation $ 227.9
$ 148.2
Fair value of plan assets $ 98.9
$ 21.6

The components of net pension (income)/ expense were as follows:


	2022		2021		2020
Service cost – benefits earned during the period	$	5.7	$	4.9	$	59.7
Interest cost on projected benefits	52.3		51.4		61.8
Expected return on plan assets	(127.9)		(121.3)		(117.9)
Net amortization and deferral	7.5		9.3		6.8
Special termination benefits, plan curtailments, and settlement charges	9.0		2.9		(22.0)
Net pension (income)/expense	$	(53.4)	$	(52.8)	$	(11.6)

2017 2016 2015
Service cost – benefits earned during the period $ 80.8
$ 70.4
$ 68.4
Interest cost on projected benefits 60.0
67.4
62.8
Expected return on plan assets (135.8 ) (131.2 ) (129.7 )
Net amortization and deferral 19.1
11.0
17.2
Special termination benefits and plan curtailments 0.1
0.1
3.2
Net pension expense $ 24.2
$ 17.7
$ 21.9
As a result of the freeze of the U.S. pension plan, described above, the Company recognized $17.0 million of prior service credits during fiscal 2020 within Other (income)/expense, net, which were previously recognized within accumulated other comprehensive income (loss) (see Note 13).

Net pension expense for fiscal 2015 includes $4.3 million reported within earnings from discontinued operations on the Statements of Consolidated Earnings. Included within pension expense related to discontinued operations for fiscal 2015 were total one-time charges of $3.2 million for curtailment charges and special termination benefits directly attributable to the spin-off of CDK.

The net actuarial loss and prior service ~~credit~~cost for the defined benefit pension plans that are included in accumulated other comprehensive income (loss) that have not yet been recognized as components of net periodic benefit cost are ~~$330.5~~$340.9 million and ~~$21.3~~$7.4 million, respectively, at June 30, ~~2017.~~2022. There is no remaining transition obligation for the defined benefit pension plans included in accumulated other comprehensive ~~income. The estimated net actuarial loss and prior service credit for the defined benefit pension plans that will be amortized from accumulated other comprehensive~~ income (loss) ~~into net periodic pension cost in fiscal 2018 are $10.5 million and $2.2 million, respectively.~~.

Assumptions used to determine the actuarial present value of benefit obligations were:


Years ended June 30,	2022		2021

Discount rate	4.60	%	2.55	%
Interest crediting rate	3.25	%	3.25	%
Increase in compensation levels	N/A		N/A

Years ended June 30, 2017 2016

Discount rate 3.70 % 3.40 %
Increase in compensation levels 4.00 % 4.00 %

Assumptions used to determine the net pension expense generally were:


Years ended June 30,	2022		2021		2020

Discount rate	2.55	%	2.45	%	3.40	%
Interest crediting rate	3.25	%	3.25	%	3.25	%
Expected long-term rate of return on assets	6.75	%	6.75	%	6.75	%
Increase in compensation levels	N/A		4.00	%	4.00	%

Years ended June 30, 2017 2016 2015

Discount rate 3.40 % 4.25 % 4.05 %
Expected long-term rate of return on assets 7.00 % 7.00 % 7.25 %
Increase in compensation levels 4.00 % 4.00 % 4.00 %

The discount rate is based upon published rates for high-quality fixed-income investments that produce cash flows that approximate the timing and amount of expected future benefit payments.

The interest crediting rate is based on the current and expected future ten-year U.S. Treasury rates and a minimum of 3.25%.

The expected long-term rate of return on assets is determined based on historical and expected future rates of return on plan assets considering the target asset mix and the long-term investment strategy.

Plan Assets

The Company's pension plans' asset allocations at June 30, ~~2017~~2022 and ~~2016~~2021 by asset category were as follows:


	2022		2021

Cash and cash equivalents	2	%	1	%
Fixed income securities	39	%	38	%
U.S. equity securities	19	%	19	%
International equity securities	15	%	15	%
Global equity securities	25	%	27	%
	100	%	100	%

2017 2016

Cash and cash equivalents 1 % 3 %
Fixed income securities 36 % 42 %
U.S. equity securities 19 % 18 %
International equity securities 16 % 14 %
Global equity securities 28 % 23 %
100 % 100 %

The Company's pension plans' asset investment strategy is designed to ensure prudent management of assets, consistent with long-term return objectives and the prompt fulfillment of all pension plan obligations. The investment strategy and asset mix were developed in coordination with an asset liability study conducted by external consultants to maximize the funded ratio with the least amount of volatility.

The pension plans' assets are currently invested in various asset classes with differing expected rates of return, correlations, and volatilities, including large capitalization and small capitalization U.S. equities, international equities, U.S. fixed income securities, and cash.

The target asset allocation ranges for the U.S. plan are generally as follows:



U.S. fixed income securities			35% - 45%
U.S. equity securities			14% - 24%
International equity securities			11% - 21%
Global equity securities			20% - 30%

As of June 30, 2022 and June 30, 2021, the U.S. pension plan asset allocation is within the target ranges.

The pension plans' fixed income portfolio is designed to match the duration and liquidity characteristics of the pension plans' liabilities. In addition, the pension plans invest only in investment-grade debt securities to ensure preservation of capital. The pension plans' equity portfolios are subject to diversification guidelines to reduce the impact of losses in single investments. Investment managers are prohibited from buying or selling commodities and from the short selling of securities.

None of the pension plans' assets are directly invested in the Company's stock, although the pension plans may hold a minimal amount of Company stock to the extent of the Company's participation in equity indices.

The pension plans' investments included in Level 1 are valued using closing prices for identical instruments that are traded on active exchanges. The pension plans' investments included in Level 2 are valued utilizing inputs obtained from an independent pricing service, which are reviewed by the Company for reasonableness. To determine the fair value of our Level 2 plan assets, a variety of inputs are utilized, including benchmark yields, reported trades, non-binding broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, new issue data, and monthly payment information. The pension plans have no Level 3 investments at June 30, ~~2017.~~2022.

The following table presents the investments of the pension plans measured at fair value at June 30, ~~2017:~~2022:


	Level 1		Level 2		Level 3		Total

Commingled trusts	$	—	$	798.2	$	—	$	798.2
Government securities	—		350.7		—		350.7
Mutual funds	11.0		252.6		—		263.6
Corporate and municipal bonds	—		322.4		—		322.4
Mortgage-backed security bonds	—		32.8		—		32.8
Total pension asset investments	$	11.0	$	1,756.7	$	—	$	1,767.7

Level 1 Level 2 Level 3 Total

Commingled trusts $ —
$ 1,338.5
$ —
$ 1,338.5
Government securities —
337.7
—
337.7
Mutual funds 4.8
—
—
4.8
Corporate and municipal bonds —
409.3
—
409.3
Mortgage-backed security bonds —
32.9
—
32.9
Total pension asset investments $ 4.8
$ 2,118.4
$ —
$ 2,123.2

In addition to the investments in the above table, the pension plans also held cash and cash equivalents of ~~$15.2~~$32.8 million as of June 30, ~~2017,~~2022, which have been classified as Level 1 in the fair value hierarchy.

The following table presents the investments of the pension plans measured at fair value at June 30, ~~2016:~~2021:


	Level 1		Level 2		Level 3		Total

Commingled trusts	$	—	$	1,060.2	$	—	$	1,060.2
U.S. government securities	—		426.2		—		426.2
Mutual funds	10.2		345.7		—		355.9
Corporate and municipal bonds	—		417.2		—		417.2
Mortgage-backed security bonds	—		38.6		—		38.6
Total pension asset investments	$	10.2	$	2,287.9	$	—	$	2,298.1

Level 1 Level 2 Level 3 Total

Commingled trusts $ —
$ 1,029.2
$ —
$ 1,029.2
U.S. government securities —
371.5
—
371.5
Mutual funds 76.6
—
—
76.6
Corporate and municipal bonds —
433.4
—
433.4
Mortgage-backed security bonds —
35.3
—
35.3
Total pension asset investments $ 76.6
$ 1,869.4
$ —
$ 1,946.0

In addition to the investments in the above table, the pension plans also held cash and cash equivalents of ~~$60.3~~$8.2 million as of June 30, ~~2016,~~2021, which have been classified as Level 1 in the fair value hierarchy.

Contributions

During fiscal ~~2017,~~2022, the Company contributed ~~$11.9~~$10.7 million to the pension plans. The Company expects to contribute ~~$9.5~~$9.7 million to the pension plans during fiscal ~~2018.~~2023.

Estimated Future Benefit Payments

The benefits expected to be paid in each year from fiscal ~~2018~~2023 to the year ended June 30, ~~2022~~2027 are ~~$85.9~~$122.3 million,, ~~$89.8~~ $128.6 million,, ~~$97.1~~ $135.2 million,, ~~$107.7~~ $115.9 million,, and ~~$119.2~~$126.0 million,, respectively. The aggregate benefits expected to be paid in the five fiscal years from the year ended June 30, ~~2023~~2028 to the year ended June 30, ~~2027~~2032 are ~~$718.3 million~~.$644.1 million. The expected benefits to be paid are based on the same assumptions used to measure the Company's pension plans' benefit obligations at June 30, ~~2017~~2022 and includes estimated future employee service.

C. Retirement and Savings Plan. The Company has a 401(k) retirement and savings plan, which allows eligible employees to contribute up to 50% of their compensation annually and allows highly compensated employees to contribute up to 12% of their compensation annually. The Company matches a portion of employee contributions, which amounted to approximately ~~$87.9~~$153.1 million, ~~$81.9~~$130.8 million,, and ~~$69.7~~$112.7 million for the calendar years ended December 31, ~~2016, 2015,~~2021, 2020, and ~~2014,~~2019, respectively.

NOTE ~~12.~~11. INCOME TAXES

Earnings ~~from continuing operations~~ before income taxes shown below are based on the geographic location to which such earnings are attributable.


Years ended June 30,	2022		2021		2020

Earnings before income taxes:
United States	$	3,461.8	$	3,010.9	$	2,815.4
Foreign	342.3		350.3		367.2
	$	3,804.1	$	3,361.2	$	3,182.6

Years ended June 30, 2017 2016 2015

Earnings from continuing operations before income taxes:
United States $ 2,232.8
$ 2,028.5
$ 1,895.3
Foreign 298.3
206.2
175.4
$ 2,531.1
$ 2,234.7
$ 2,070.7

The provision (benefit) for income taxes consists of the following components:


Years ended June 30,	2022		2021		2020

Current:
Federal	$	620.7	$	749.3	$	468.3
Foreign	97.5		121.9		119.5
State	100.4		142.6		102.3
Total current	818.6		1,013.8		690.1

Deferred:
Federal	20.7		(182.6)		23.7
Foreign	(12.9)		(19.1)		(5.4)
State	28.8		(49.4)		7.7
Total deferred	36.6		(251.1)		26.0
Total provision for income taxes	$	855.2	$	762.7	$	716.1

Years ended June 30, 2017 2016 2015

Current:
Federal $ 615.3
$ 579.0
$ 576.3
Foreign 91.6
85.0
93.1
State 82.7
76.6
40.1
Total current 789.6
740.6
709.5

Deferred:
Federal 6.2
17.7
(1.3 )
Foreign 7.2
(15.7 ) (17.0 )
State (5.3 ) (1.3 ) 3.0
Total deferred 8.1
0.7
(15.3 )
Total provision for income taxes $ 797.7
$ 741.3
$ 694.2

A reconciliation between the Company's effective tax rate and the U.S. federal statutory rate is as follows:


Years ended June 30,	2022		%	2021		%	2020		%

Provision for taxes at U.S. statutory rate	$	798.9	21.0	$	705.9	21.0	$	668.4	21.0

Increase/(decrease) in provision from:

State taxes, net of federal tax benefit	91.8		2.4	67.2		2.0	85.6		2.7
Valuation allowance release on foreign tax credits	—		—	—		—	(20.3)		(0.6)







Foreign rate differential	41.3		1.1	34.0		1.0	44.9		1.4
Excess tax benefit - Stock-based compensation	(19.9)		(0.5)	(8.8)		(0.2)	(26.9)		(0.8)
Other	(56.9)		(1.5)	(35.6)		(1.1)	(35.6)		(1.2)
	$	855.2	22.5	$	762.7	22.7	$	716.1	22.5

The effective tax rate in fiscal 2022 and 2021 was 22.5% and 22.7%, respectively. The decrease in the effective tax rate is primarily due to a favorable earnings mix, lower reserves for uncertain tax positions, and an intercompany transfer of certain assets in fiscal 2022, partially offset by favorable adjustments to prior year tax liabilities and a foreign tax election in fiscal 2021.

The effective tax rate for fiscal 2021 and 2020 was 22.7% and 22.5%, respectively. The increase in the effective tax rate is primarily due to combined benefits from a valuation allowance release related to foreign tax credit carryforwards and a foreign tax law change during fiscal 2020 as well as a decrease in the excess tax benefit on stock-based compensation, partially offset by favorable adjustments to prior year tax liabilities during fiscal 2021.

Years ended June 30, 2017 % 2016 % 2015 %

Provision for taxes at U.S. statutory rate $ 885.9
35.0
$ 782.1
35.0
$ 724.8
35.0

Increase (decrease) in provision from:
State taxes, net of federal tax benefit 52.2
2.1
47.2
2.1
34.8
1.7
U.S. tax on foreign income 66.1
2.6
122.6
5.5
155.3
7.5
Utilization of foreign tax credits (76.0 ) (3.0 ) (155.4 ) (7.0 ) (177.1 ) (8.6 )
Section 199 - Qualified production activities (33.2 ) (1.3 ) (31.9 ) (1.4 ) (28.9 ) (1.4 )
Section 199 - Qualified production activities and research tax credit refund claim - net of reserves

(51.8 ) (2.1 ) —
—
—
—
Excess tax benefit - Stock-based compensation (32.1 ) (1.3 ) —
—
—
—
Other (13.4 ) (0.5 ) (23.3 ) (1.0 ) (14.7 ) (0.7 )
$ 797.7
31.5
$ 741.3
33.2
$ 694.2
33.5

The significant components of deferred income tax assets and liabilities and their balance sheet classifications are as follows:


Years ended June 30,	2022		2021

Deferred tax assets:
Accrued expenses not currently deductible	$	212.1	$	244.2
Stock-based compensation expense	43.5		38.4
Foreign tax credits	5.9		21.3

Net operating losses	34.1		46.3
Prepaid royalty	33.7		—
Unrealized investment losses, net	407.2		—

Other	38.3		34.7
	774.8		384.9
Less: valuation allowances	(18.9)		(13.4)
Deferred tax assets, net	$	755.9	$	371.5

Deferred tax liabilities:
Deferred revenue	$	529.9	$	494.5
Fixed and intangible assets	6.5		119.4
Prepaid expenses	94.8		27.9
Prepaid retirement benefits	4.6		37.7
Unrealized investment gains, net	—		101.7
Tax on unrepatriated earnings	11.5		11.4
Other	18.2		13.6
Deferred tax liabilities	665.5		806.2
Net deferred tax (assets)/liabilities	$	(90.4)	$	434.7

Years ended June 30, 2017 2016

Deferred tax assets:
Accrued expenses not currently deductible $ 294.5
$ 262.8
Stock-based compensation expense 75.5
74.6
Foreign Tax Credits 49.5
47.1
Net operating losses 49.5
46.0
Other 18.7
23.7
487.7
454.2
Less: valuation allowances (9.4 ) (15.4 )
Deferred tax assets, net $ 478.3
$ 438.8

Deferred tax liabilities:
Prepaid retirement benefits $ 125.1
$ 77.2
Deferred revenue 35.5
43.2
Fixed and intangible assets 226.3
171.4
Prepaid expenses 122.5
118.0
Unrealized investment gains, net 33.4
176.2
Other 5.2
3.6
Deferred tax liabilities $ 548.0
$ 589.6
Net deferred tax liabilities $ 69.7
$ 150.8

There are $~~93.4~~157.4 million and ~~$100.3~~$48.3 million of long-term deferred tax assets included in other assets on the Consolidated Balance Sheets at June 30, ~~2017~~2022 and ~~2016,~~2021, respectively.

Income taxes have not been provided on undistributed earnings of certain foreign subsidiaries in an aggregate amount of approximately $~~469.5~~53.0 million ~~as of June 30, 2017,~~ as the Company considers such earnings to be permanently reinvested outside of the United States. ~~The additional U.S. income tax that would arise on repatriation~~As of ~~the remaining undistributed earnings could be offset, in part, by foreign tax credits on such repatriation. However,~~June 30, 2022, it is ~~impracticable~~not practicable to estimate the ~~amount of net income~~unrecognized tax liability that ~~might be payable.~~would occur upon distribution.

The Company has estimated foreign net operating loss carry-forwards of approximately $~~71.7~~55.1 million as of June 30, ~~2017,~~2022, of which ~~$17.3~~$1.5 million expire ~~through~~ ~~2025~~through June 2032 and ~~$54.4~~$53.6 million ~~have~~ have an indefinite utilization period. As of June 30, ~~2017,~~2022, the Company has approximately $~~35.4~~23.8 million of federal net operating loss carry-forwards from acquired companies. The net operating losses have an annual utilization limitation pursuant to section 382 of the Internal Revenue Code and expire through ~~2031.~~June 2036.

The Company has state net operating loss carry-forwards of approximately $~~271.4~~204.2 million as of June 30, ~~2017,~~2022, which expire through ~~2036.~~

June 2041. The Company has recorded valuation allowances of ~~$9.4~~$18.9 million and ~~$15.4~~$13.4 million at June 30, ~~2017~~2022 and ~~2016,~~2021, respectively, to reflect the estimated amount of domestic and foreign deferred tax assets that may not be realized.

Income tax payments were approximately $~~817.1~~856.8 million, $~~651.6~~973.7 million,, and ~~$773.3~~$677.1 million for fiscal ~~2017, 2016,~~2022, 2021, and ~~2015,~~2020, respectively.

As of June 30, ~~2017, 2016,~~2022, 2021, and ~~2015~~2020 the Company's liabilities for unrecognized tax benefits, which include interest and penalties, were $~~74.6~~98.1 million, ~~$27.4~~$99.9 million,, and ~~$27.1~~$62.3 million respectively. The amount that, if recognized, would impact the effective tax rate is $~~61.0~~68.1 million, ~~$18.7~~$68.5 million,, and ~~$16.9~~$49.9 million,, respectively. The remainder, if recognized, would principally impact deferred taxes.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:


	2022		2021		2020

Unrecognized tax benefits at beginning of the year	$	99.9	$	62.3	$	54.2
Additions for tax positions	8.0		18.8		13.2

Additions for tax positions of prior periods	11.6		32.5		6.3
Reductions for tax positions of prior periods	(8.5)		(11.0)		(4.3)
Settlement with tax authorities	(2.0)		(1.3)		(4.0)
Expiration of the statute of limitations	(9.2)		(1.5)		(2.8)
Impact of foreign exchange rate fluctuations	(1.7)		0.1		(0.3)
Unrecognized tax benefit at end of year	$	98.1	$	99.9	$	62.3

2017 2016 2015

Unrecognized tax benefits at beginning of the year $ 27.4
$ 27.1
$ 56.5
Additions for tax positions 7.5
3.8
2.4
Additions for tax positions of prior periods 41.9
3.5
3.1
Reductions for tax positions of prior periods (0.5 ) (0.1 ) (6.5 )
Settlement with tax authorities (0.9 ) (1.7 ) (12.2 )
Expiration of the statute of limitations (0.9 ) (4.9 ) (14.0 )
Impact of foreign exchange rate fluctuations 0.1
(0.3 ) (2.2 )
Unrecognized tax benefit at end of year $ 74.6
$ 27.4
$ 27.1

Interest expense and penalties associated with uncertain tax positions have been recorded in the provision for income taxes on the Statements of Consolidated Earnings. During the fiscal years ~~2017, 2016,~~2022, 2021, and ~~2015,~~2020, the Company recorded interest expense ~~(benefit)~~ of ~~$3.0~~$3.5 million,, ~~$1.1~~ $10.8 million,, and ~~$(2.7)~~$1.6 million,, respectively. Penalties ~~incurred~~recorded during fiscal years ~~2017, 2016,~~2022 and ~~2015~~2020 were notnot significant. During fiscal year 2021, the Company recorded penalties of $0.3 million.

At June 30, ~~2017,~~2022, the Company had accrued interest of ~~$6.9~~$21.9 million recorded on the Consolidated Balance Sheets, of which ~~$0.1~~$4.5 million was recorded within income taxes payable, and the remainder was recorded within other liabilities. At June 30, ~~2016,~~2021, the Company had accrued interest of ~~$4.0~~$19.2 million recorded on the Consolidated Balance Sheets, of which ~~$0.1~~$3.9 million was recorded within income taxes payable, and the remainder was recorded within other liabilities. At June 30, ~~2017,~~2022 and June 30, 2021, the ~~Company had~~Company’s accrued penalties of ~~$0.2~~$0.3 million and $0.3 million, respectively, were recorded on the Consolidated Balance Sheets within ~~other liabilities. At June 30, 2016, the Company had accrued penalties of~~ ~~$0.2 million~~ ~~recorded on the Consolidated Balance Sheets within other liabilities.~~income taxes payable.

The Company is routinely examined by the IRS and tax authorities in foreign countries in which it conducts business, as well as tax authorities in states in which it has significant business operations. The tax years currently under examination vary by jurisdiction. Examinations in progress in which the Company has significant business operations are as follows:


Taxing Jurisdiction		Fiscal Years under Examination
Illinois		2019 - 2020
Arizona		2018 - 2020
Massachusetts		2013 - 2014, 2016 - 2018

~~Taxing Jurisdiction~~	~~Fiscal Years under Examination~~
~~U.S. (IRS)~~New York State		~~2016-2017~~2016 - 2018
~~California~~New York City		~~2012-2014~~2016 - 2018
~~Illinois~~		~~2007-2013~~
~~New York~~		~~2010-2015~~
~~Canada~~		~~2012-2014~~
India		2011, 2014 - 2020	~~2004-2011, 2013-2015~~
~~Germany~~		~~2010-2014~~

The Company regularly considers the likelihood of assessments resulting from examinations in each of the jurisdictions. The resolution of tax matters is not expected to have a material effect on the consolidated financial condition of the Company, although a resolution could have a material impact on the Company's Statements of Consolidated Earnings for a particular future period and on the Company's effective tax rate.

If certain pending tax matters settle within the next twelve months, the total amount of unrecognized tax benefits may increase or decrease for all open tax years and jurisdictions. Based on current estimates, settlements related to various jurisdictions and tax periods could increase earnings up to ~~$35~~$2 million and expected cash payments could be up to $15 million in the next twelve months. The liability related to cash payments expected to be paid within the next 12 months has been reclassified from other liabilities to current liabilities on the Consolidated Balance Sheets. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. We continually assess the likelihood and amount of potential adjustments and adjust the income tax provision, the current tax liability and deferred taxes in the period in which the facts that give rise to a revision become known.

~~In fiscal 2017, the IRS completed its review of the examination of the Company's tax return for the year ended June~~

~~30, 2015, which did not have a material impact to the Consolidated Financial Statements of the Company.~~

NOTE ~~13.~~12. COMMITMENTS AND CONTINGENCIES

~~The Company has obligations under various facilities and equipment leases. Minimum commitments under these obligations with a future life~~As of ~~greater than one year at~~ June 30, ~~2017 are as follows:~~

Years ending June 30,

2018 $ 105.4
2019 96.9
2020 73.8
2021 52.1
2022 35.0
Thereafter 110.5
$ 473.7

~~In addition to fixed rentals, certain leases require payment of maintenance and real estate taxes and contain escalation provisions based on future adjustments in price indices.~~

~~As of~~ ~~June 30, 2017~~2022, the Company has purchase ~~commitments~~commitments of ~~approximately $644.9~~approximately $796.7 million, including a reinsurance premium with Chubb for the fiscal ~~2018~~2023 policy year, as well as obligations related to software license agreements and purchase and maintenance agreements on our software, equipment, and other assets, of which ~~$368.7~~$455.0 million relates to fiscal ~~2018, $116.4~~2023, $282.2 million relates to the fiscal ~~year~~years ending June 30, ~~2019,~~2024 through fiscal 2025 and the remaining ~~$159.8 million~~ relates to fiscal years ending June 30, ~~2020~~2026 through fiscal ~~2022.~~2027.

In ~~July 2016, Uniloc USA, Inc.~~May 2020, 2 potential class action complaints were filed against ADP, TotalSource and ~~Uniloc Luxembourg, S.A. (“Uniloc”) filed a lawsuit against the Company~~related defendants in the ~~United States~~U.S. District Court, ~~for the Eastern~~ District of ~~Texas alleging that Company products~~New Jersey. The complaints assert violations of the Employee Retirement Income Security Act of 1974 (“ERISA”) in connection with the ADP TotalSource Retirement Savings Plan’s fiduciary administrative and services infringe four patents. Uniloc alleges infringement of its patents concerning centralized management of application programs on a network, distribution of application programs to a target station on a network, management of configurable application programs on a network,investment decision-making. The complaints seek statutory and ~~license use management on a network. The complaint seeks~~other unspecified monetary damages, ~~costs,~~injunctive relief and ~~injunctive relief. The~~attorney’s fees. These claims are still in their early stages and the Company is unable to estimate any reasonably possible loss, or range of loss, with respect to ~~this matter.~~these matters. The Company ~~continues~~intends to vigorously defend against ~~this lawsuit.~~these lawsuits.

The Company is subject to various claims, litigation, and ~~litigation~~regulatory compliance matters in the normal course of business. When a loss is considered probable and reasonably estimable, the Company records a liability in the amount of its best estimate for the ultimate loss. Management currently believes that the resolution of these claims, litigation and ~~litigation~~regulatory compliance matters against us, individually or in the aggregate, will not have a material adverse impact on our consolidated results of operations, financial condition or cash flows. These matters are subject to inherent uncertainties and management's view of these matters may change in the future.

It is not the Company’s business practice to enter into off-balance sheet arrangements. In the normal course of business, the Company may enter into contracts in which it makes representations and warranties that relate to the performance of the Company’s services and products. The Company does not expect any material losses related to such representations and warranties.

NOTE ~~14.~~13. RECLASSIFICATION OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME ("AOCI")

Comprehensive income is a measure of income that includes both net earnings and other comprehensive income (loss). Other comprehensive (loss)/income ~~(loss)~~ results from items deferred on the Consolidated Balance Sheets in stockholders' equity. Other comprehensive (loss)/income was ~~$(164.1)~~$(2,004.3) million,, ~~$45.5~~ $25.4 million,, and ~~$(350.6)~~$242.5 million in fiscal ~~2017, 2016,~~2022, 2021, and ~~2015,~~2020, respectively. Changes in Accumulated Other Comprehensive Income ~~("AOCI"~~(“AOCI”) by component are as follows:


	Currency Translation Adjustment		Net Gains/(Losses) on Available-for-sale Securities			Cash Flow Hedging Activities			Pension Liability			Accumulated Other Comprehensive (Loss) /Income

Balance at June 30, 2019	$	(269.2)	$	224.6		$	—		$	(212.7)		$	(257.3)
Other comprehensive income/(loss) before reclassification adjustments	(53.0)		602.2			(40.3)			(160.8)			348.1
Tax effect	—		(136.4)			10.0			39.5			(86.9)
Reclassification adjustments to net earnings	—		(12.9)		(A)	—			(11.8)		(B)	(24.7)
Tax effect	—		2.9			—			3.1			6.0

Balance at June 30, 2020	$	(322.2)	$	680.4		$	(30.3)		$	(342.7)		$	(14.8)
Other comprehensive income/(loss) before reclassification adjustments	95.4		(363.3)			(3.3)			281.5			10.3
Tax effect	—		82.6			0.8			(69.0)			14.4
Reclassification adjustments to net earnings	—		(11.3)		(A)	3.8		(C)	9.3		(B)	1.8
Tax effect	—		2.5			(0.9)			(2.7)			(1.1)

Balance at June 30, 2021	$	(226.8)	$	390.9		$	(29.9)		$	(123.6)		$	10.6
Other comprehensive income/(loss) before reclassification adjustments	(127.4)		(2,228.0)			—			(229.8)			(2,585.2)
Tax effect	—		503.7			—			57.3			561.0
Reclassification adjustments to net earnings	—		4.4		(A)	4.4		(C)	18.1		(B)	26.9
Tax effect	—		(1.0)			(1.1)			(4.9)			(7.0)

Balance at June 30, 2022	$	(354.2)	$	(1,330.0)		$	(26.6)		$	(282.9)		$	(1,993.7)

Currency Translation Adjustment Net Gains on Available-for-sale Securities Pension Liability Accumulated Other Comprehensive Income / (Loss)

Balance at June 30, 2014 $ 99.5
$ 211.6
$ (132.9 ) $ 178.2
Other comprehensive loss before
reclassification adjustments (240.8 ) (103.0 ) (87.4 ) (431.2 )
Tax effect —
38.6
32.7
71.3
Reclassification adjustments to
net earnings 1.2
(A) (4.9 ) (B) 17.9
(C) 14.2
Tax effect —
1.6
(6.5 ) (4.9 )
Reclassification adjustments to
    retained earnings
(88.2 ) (D) —
—
(88.2 )
Balance at June 30, 2015 $ (228.3 ) $ 143.9
$ (176.2 ) $ (260.6 )
Other comprehensive (loss)/income before
reclassification adjustments (25.5 ) 288.8
(199.4 ) 63.9
Tax effect —
(102.2 ) 72.9
(29.3 )
Reclassification adjustments to net earnings —
5.0
(B) 12.0
(C) 17.0
Tax effect —
(1.7 ) (4.4 ) (6.1 )
Balance at June 30, 2016 $ (253.8 ) $ 333.8
$ (295.1 ) $ (215.1 )
Other comprehensive income/(loss) before
     reclassification adjustments
23.0
(405.7 ) 109.6
(273.1 )
Tax effect —
141.6
(43.6 ) 98.0
Reclassification adjustments to
    net earnings
—

(2.2 ) (B) 20.6
(C) 18.4
Tax effect —
0.8
(8.2 ) (7.4 )
Balance at June 30, 2017 $ (230.8 ) $ 68.3
$ (216.7 ) $ (379.2 )

(A) Reclassification adjustments out of AOCI are included within Other (income)/expense, net, ~~earnings from discontinued operations~~ on the Statements of Consolidated Earnings.

(B) Reclassification adjustments out of AOCI are included ~~within Other income,~~in net onpension (income)/expense (see Note 10). In fiscal 2020, reclassification includes $17.0 million of prior service credits which were recognized as a component of net pension (income)/expense as a result of the ~~Statements of Consolidated Earnings.~~U.S. pension plan freeze.

(C) Reclassification adjustments out of AOCI are included in ~~net pension~~Interest expense on the Statements of Consolidated Earnings (see Note ~~11)~~9).

~~(D) Reclassification adjustment out of AOCI is related to the CDK spin-off and included in retained earnings on the Consolidated Balance Sheets.~~

NOTE ~~15.~~14. FINANCIAL DATA BY SEGMENT AND GEOGRAPHIC AREA

Based upon similar economic and operational characteristics, the Company’s strategic business units have been aggregated into the following ~~two~~2 reportable segments: Employer Services and PEO Services. The primary components of the “Other” segment are non-recurring gains and losses, miscellaneous processing services, the elimination of intercompany transactions, interest expense, the results of operations of ADP Indemnity (a wholly-owned captive insurance company that provides workers’ compensation and employee’s liability deductible reimbursement insurance protection for PEO Services’ worksite employees), certain corporate overhead charges and expenses that have not been allocated to the reportable segments, including corporate functions, costs related to our transformation office, legal settlements, severance costs, non-recurring gains and losses, the ~~historical results~~elimination of the AMD business. Beginning in the first quarter of fiscal 2017, the Company's chief operating decision maker began reviewing the Company's results with stock-based compensation included in the Company's operating segments. This change, as well as changes to the allocation methodology for certain allocations, has been adjusted in both the current periodintercompany transactions, and ~~the prior period in the table below,~~interest income and did not materially affect reportable segment results. The Company also adjusted the segment results to reflect the historical results of AMD in Other, which also did not materially affect reportable segment results.

expense. Certain revenues and expenses are charged to the reportable segments at a standard rate for management reasons. Other costs are recorded based on management responsibility. ~~There is a reconciling item for the difference between actual interest income earned on invested funds held for clients and interest credited to Employer Services and PEO Services~~The Company's Chief Operating Decision Maker does not review assets at ~~a standard rate of 4.5%. This allocation is made for management reasons so that~~ the reportable ~~segments' results are presented on a consistent basis without the impact of fluctuations in interest rates. This reconciling adjustment~~segment level, hence segment disclosure relating to ~~the reportable segments' revenues and earnings from continuing operations before income taxes is eliminated in consolidation.~~total assets has not been provided.


	Employer Services		PEO Services		Other		Total
Year ended June 30, 2022
Revenues	$	10,967.7	$	5,545.7	$	(15.1)	$	16,498.3
Earnings before income taxes	3,406.3		871.2		(473.4)		3,804.1

Capital expenditures	125.4		—		51.7		177.1
Depreciation and amortization	428.5		8.3		78.3		515.1

Year ended June 30, 2021
Revenues	$	10,195.2	$	4,818.3	$	(8.1)	$	15,005.4
Earnings before income taxes	3,052.1		718.8		(409.7)		3,361.2

Capital expenditures	116.7		—		61.6		178.3
Depreciation and amortization	421.7		7.4		81.6		510.7

Year ended June 30, 2020
Revenues	$	10,086.6	$	4,511.5	$	(8.3)	$	14,589.8
Earnings before income taxes	3,058.2		609.3		(484.9)		3,182.6

Capital expenditures	115.7		—		52.6		168.3
Depreciation and amortization	388.0		3.4		88.6		480.0


	United States		Europe		Canada		Other		Total
Year ended June 30, 2022
Revenues	$	14,503.3	$	1,304.2	$	389.3	$	301.5	$	16,498.3
Assets	$	56,856.2	$	2,452.9	$	2,987.9	$	771.2	$	63,068.2

Year ended June 30, 2021
Revenues	$	13,081.7	$	1,307.9	$	337.3	$	278.5	$	15,005.4
Assets	$	42,137.1	$	2,425.1	$	3,360.5	$	849.8	$	48,772.5

Year ended June 30, 2020
Revenues	$	12,740.1	$	1,236.3	$	329.8	$	283.6	$	14,589.8
Assets	$	33,891.0	$	2,162.7	$	2,435.3	$	676.5	$	39,165.5

Employer Services PEO Services Other Client Fund Interest Total
Year ended June 30, 2017
Revenues from continuing operations $ 9,535.2
$ 3,483.6
$ (10.6 ) $ (628.4 ) $ 12,379.8
Earnings from continuing operations before income taxes 2,921.3
448.6
(210.4 ) (628.4 ) 2,531.1
Assets from continuing operations 30,107.7
586.8
6,485.5
—
37,180.0
Capital expenditures from continuing operations 83.0
0.2
165.8
—
249.0
Depreciation and amortization 247.3
1.3
67.5
—
316.1

Year ended June 30, 2016
Revenues from continuing operations $ 9,211.9
$ 3,073.1
$ 1.9
$ (619.1 ) $ 11,667.8
Earnings from continuing operations before income taxes 2,800.4
371.2
(317.8 ) (619.1 ) 2,234.7
Assets from continuing operations 36,637.5
534.6
6,497.9
—
43,670.0
Capital expenditures from continuing operations 71.1
1.0
93.6
—
165.7
Depreciation and amortization 230.7
1.5
56.4
—
288.6

Year ended June 30, 2015
Revenues from continuing operations $ 8,815.1
$ 2,647.2
$ 69.8
$ (593.6 ) $ 10,938.5
Earnings from continuing operations before income taxes 2,595.4
301.8
(232.9 ) (593.6 ) 2,070.7
Assets from continuing operations 27,507.3
377.7
5,225.5
—
33,110.5
Capital expenditures from continuing operations 94.8
1.3
75.1
—
171.2
Depreciation and amortization 221.2
1.2
55.5
—
277.9

United States Europe Canada Other Total
Year ended June 30, 2017
Revenues from continuing operations $ 10,537.4
$ 1,086.0
$ 291.1
$ 465.3
$ 12,379.8
Assets from continuing operations $ 32,401.0
$ 2,252.3
$ 2,018.1
$ 508.6
$ 37,180.0

Year ended June 30, 2016
Revenues from continuing operations $ 9,870.0
$ 1,063.7
$ 284.1
$ 450.0
$ 11,667.8
Assets from continuing operations $ 39,194.2
$ 2,064.3
$ 1,949.4
$ 462.1
$ 43,670.0

Year ended June 30, 2015
Revenues from continuing operations $ 9,101.8
$ 1,086.6
$ 320.8
$ 429.3
$ 10,938.5
Assets from continuing operations $ 28,138.1
$ 2,059.5
$ 2,488.9
$ 424.0
$ 33,110.5

~~NOTE 16. QUARTERLY FINANCIAL RESULTS (UNAUDITED)~~

~~Summarized quarterly results of our operations for the fiscal years ended June 30, 2017 and June 30, 2016 are as follows:~~

Year ended June 30, 2017
First
Quarter (A)
Second Quarter (B)
Third
Quarter (C)

Fourth
Quarter (D)

Revenues from continuing operations $ 2,916.9
$ 2,987.3
$ 3,410.8
$ 3,064.8
Gross profit from continuing operations $ 1,173.3
$ 1,219.5
$ 1,499.8
$ 1,217.6
Earnings from continuing operations before income taxes $ 528.7
$ 786.2
$ 827.9
$ 388.4
Net earnings from continuing operations $ 368.7
$ 510.9
$ 587.7
$ 265.8
Net earnings $ 368.7
$ 510.9
$ 587.9
$ 265.8
Basic per common share amounts:
Basic earnings per share from continuing operations $ 0.82
$ 1.14
$ 1.32
$ 0.60
Diluted per common share amounts:
Diluted earnings per share from continuing operations $ 0.81
$ 1.13
$ 1.31
$ 0.59

Year ended June 30, 2016
First
Quarter (E)
Second Quarter (F)
Third
Quarter

Fourth
Quarter (G)

Revenues from continuing operations $ 2,714.0
$ 2,807.0
$ 3,248.6
$ 2,898.2
Gross profit from continuing operations $ 1,067.5
$ 1,124.5
$ 1,435.9
$ 1,199.7
Earnings from continuing operations before income taxes $ 505.0
$ 507.9
$ 794.8
$ 427.0
Net earnings from continuing operations $ 337.5
$ 341.4
$ 532.5
$ 282.0
Net loss from discontinued operations $ (0.9 ) $ —
$ —
$ —
Net earnings $ 336.6
$ 341.4
$ 532.5
$ 282.0
Basic per common share amounts:
Basic earnings per share from continuing operations $ 0.73
$ 0.75
$ 1.17
$ 0.62
Diluted per common share amounts:
Diluted earnings per share from continuing operations $ 0.72
$ 0.74
$ 1.17
$ 0.62

(A) Earnings from continuing operations before income taxes; net earnings from continuing operations; and basic and diluted EPS from continuing operations include the charge for the Service Alignment Initiative. This decreased earnings from continuing operations before income taxes by $39.9 million, net earnings from continuing operations by $24.8 million and

~~basic and diluted earnings per share from continuing operations by $0.05~~.

(B) Earnings from continuing operations before income taxes; net earnings from continuing operations; and basic and diluted EPS from continuing operations include the gain on the sale of the COBRA and CHSA businesses. This increased earnings from continuing operations before income taxes by $205.4 million, net earnings from continuing operations and net earnings by $121.4 million, and basic and diluted earnings per share from continuing operations by $0.27.

(C) Earnings from continuing operations before income taxes; net earnings from continuing operations; and basic and diluted EPS from continuing operations include charges for the Service Alignment Initiative. This decreased earnings from continuing operations before income taxes by $0.6 million, and net earnings from continuing operations and net earnings by $0.4 million, and had no impact on basic and diluted earnings per share from continuing operations.

(D) Earnings from continuing operations before income taxes; net earnings from continuing operations; and basic and diluted EPS from continuing operations include charges for the Workforce Optimization Effort and Service Alignment Initiative. The combined impact decreased earnings from continuing operations before income taxes by $43.5 million and, net earnings from continuing operations and net earnings by $27.1 million and basic and diluted earnings per share from continuing operations by $0.06.

(E) Earnings from continuing operations before income taxes; net earnings from continuing operations; net earnings; and basic and diluted EPS from continuing operations include the gain on the sale of AMD. This increased earnings from continuing operations before income taxes by $29.1 million, net earnings from continuing operations and net earnings by $21.8 million, and basic and diluted earnings per share from continuing operations by $0.05

(F) Earnings from continuing operations before income taxes; net earnings from continuing operations; net earnings; and basic and diluted EPS from continuing operations include the gain on sale of a building. This increased earnings from continuing operations before income taxes by $13.9 million net earnings from continuing operations and net earnings by $8.6 million and basic and diluted earnings per share from continuing operations by $0.02.

(G) Earnings from continuing operations before income taxes; net earnings from continuing operations; net earnings; and basic and diluted EPS from continuing operations include the charge for the Workforce Optimization Effort. This decreased earnings from continuing operations before income taxes by $48.2 million net earnings from continuing operations and net earnings by $31.8 million and basic and diluted earnings per share from continuing operations by $0.07.

~~NOTE 17. SUBSEQUENT EVENTS~~

The Company's subsidiary captive insurance company, ADP Indemnity, paid a premium of $235.0 million in July 2017 to enter into a reinsurance arrangement with Chubb to cover substantially all losses for the fiscal 2018 policy year on terms substantially similar to the fiscal 2017 reinsurance policy to cover losses up to $1 million per occurrence related to the workers' compensation and employer's liability deductible reimbursement insurance protection for PEO Services worksite employees.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Attached as Exhibits 31.1 and 31.2 to this Annual Report on Form 10-K are certifications of ADP's Chief Executive Officer and Chief Financial Officer, which are required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended (the ~~“Exchange~~

“Exchange Act”). This “Controls and Procedures” section should be read in conjunction with the report of Deloitte & Touche LLP that appears in this Annual Report on Form 10-K and is hereby incorporated herein by reference.

Management's Evaluation of Disclosure Controls and Procedures

The Company carried out an evaluation (the “evaluation”), under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective as of June 30, ~~2017~~2022 in ensuring that (i) information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure and (ii) such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

Management's Report on Internal Control over Financial Reporting

It is the responsibility of Automatic Data Processing, Inc.'s (“ADP”) management to establish and maintain effective internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Internal control over financial reporting is designed to provide reasonable assurance to ADP's management and board of directors regarding the preparation of reliable financial statements for external purposes in accordance with generally accepted accounting principles.

ADP's internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of ADP; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of ADP are being made only in accordance with authorizations of management and directors of ADP; and (iii) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of ADP's assets that could have a material effect on the financial statements of ADP.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management has performed an assessment of the effectiveness of ADP’s internal control over financial reporting as of June 30, ~~2017~~2022 based upon criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management determined that ADP’s internal control over financial reporting was effective as of June 30, ~~2017.~~

2022.

Deloitte & Touche LLP, the independent registered public accounting firm that audited and reported on the consolidated financial statements of ADP included in this Annual Report on Form 10-K, has issued an attestation report on the operating effectiveness of ADP's internal control over financial reporting. The Deloitte & Touche LLP attestation report is set forth below.



/s/ Carlos A. Rodriguez
Carlos A. Rodriguez
~~President and~~ Chief Executive Officer

/s/ ~~Jan Siegmund~~Don McGuire
~~Jan Siegmund~~Don McGuire
Chief Financial Officer

Roseland, New Jersey

August ~~4, 2017~~3, 2022



Delaware			22-1467904
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

One ADP Boulevard ~~Roseland, New Jersey~~	~~07068~~
Roseland,		NJ	07068
(Address of principal executive offices)			(Zip Code)

~~Registrant's telephone number, including area code:~~ ~~973-974-5000~~


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.10 Par Value (voting)	ADP	NASDAQ Global Select Market



					Page
Part I
Item 1.			Business		3
Item 1A.			Risk Factors		17
Item 1B.			Unresolved Staff Comments		23
Item 2.			Properties		23
Item 3.			Legal Proceedings		23
Item 4.			Mine Safety Disclosures		23

Part II
				~~Page~~
~~Part I~~
Item 1.	~~Business~~5.	3
~~Item 1A.~~	~~Risk Factors~~	9
~~Item 1B.~~	~~Unresolved Staff Comments~~	15
~~Item 2.~~	~~Properties~~	15
~~Item 3.~~	~~Legal Proceedings~~	15
~~Item 4.~~	~~Mine Safety Disclosures~~	15

~~Part II~~
~~Item 5.~~	Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	1624
Item 6.			Selected Financial Data		1925
Item 7.			Management's Discussion and Analysis of Financial Condition and Results of Operations		2225
Item 7A.			Quantitative and Qualitative Disclosures About Market Risk		4144
Item 8.			Financial Statements and Supplementary Data		4245
Item 9.			Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		8081
Item 9A.			Controls and Procedures		8081
Item 9B.			Other Information		8485
Item 9C.			Disclosure Regarding Foreign Jurisdictions that Prevent Inspections		85
~~Part III~~
Part III
Item 10.			Directors, Executive Officers and Corporate Governance		8586
Item 11.			Executive Compensation		8788
Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		8788
Item 13.			Certain Relationships and Related Transactions, and Director Independence		8788
Item 14.			Principal Accounting Fees and Services		8788

Part IV.
Item 15.			Exhibits, Financial Statement Schedules		8788
Signatures					9294



	Price Per Share		Dividends
	High	Low	Per Share
Fiscal 2017 quarter ended

June 30	$105.68	$95.50	$0.570
March 31	$104.61	$93.07	$0.570
December 31	$102.73	$84.03	$0.570
September 30	$93.82	$84.75	$0.530

Fiscal 2016 quarter ended

June 30	$91.87	$84.36	$0.530
March 31	$90.00	$76.65	$0.530
December 31	$90.67	$78.74	$0.530
September 30	$85.21	$64.29	$0.490



Period	Total Number of Shares Purchased (1)	Average Price Paid per Share	Total Number of Shares Purchased as Part of the Publicly Announced Common Stock Repurchase Plan (2)	Maximum Number of Shares that may yet be Purchased under the Common Stock Repurchase Plan (2)
April 1, 2017 to April 30, 2017	571,842	$102.72	570,000	27,470,048
May 1, 2017 to May 31, 2017	1,200,846	$99.10	1,200,000	26,270,048
June 1, 2017 to June 30, 2017	1,321,843	$101.87	1,320,000	24,950,048
Total	3,094,531		3,090,000



Portions of the Registrant's Proxy Statement for its ~~2017~~2022 Annual Meeting of Stockholders.			Part III



(1)						~~Pursuant~~During the three months ended June 30, 2022, pursuant to the terms of the Company’s restricted stock program, the Company purchased ~~4,531~~5,703 shares at the ~~then market~~then-market value of the shares ~~in connection with the exercise by employees of their option under such program~~ to satisfy certain tax withholding requirements ~~through~~for employees upon the ~~delivery~~vesting of ~~shares to the Company instead of cash.~~their restricted shares.

(2)						The Company received the Board of Directors' approval to repurchase shares of the Company's common stock as follows:



Date of Approval		~~Shares~~
~~August 2014~~November 2019		~~30 million~~
~~August 2015~~	~~25 million~~$5 billion


~~(a)~~	On September 30, 2014, the Company completed the spinoff of its former Dealer Services business into an independent publicly traded company called CDK Global, Inc. The cumulative returns of the Company’s common stock have been adjusted to reflect the spinoff.


~~(b)~~	~~We use the S&P 500 Information Technology Index as our Peer Group Index. The S&P 500 Information Technology Index is a broad index that includes the Company and several competitors.~~



(Dollars and shares in millions, except per share amounts)
Years ended June 30,	2017		2016		2015		2014		2013

Total revenues	$	12,379.8	$	11,667.8	$	10,938.5	$	10,226.4	$	9,442.0
Total costs of revenues	$	7,269.8	$	6,840.3	$	6,427.6	$	6,041.0	$	5,574.1
Earnings from continuing operations before income taxes	$	2,531.1	$	2,234.7	$	2,070.7	$	1,879.2	$	1,710.1
Net earnings from continuing operations	$	1,733.4	$	1,493.4	$	1,376.5	$	1,242.6	$	1,122.2
Adjusted earnings from continuing operations before interest and income taxes (A)	$	2,447.6	$	2,274.2	$	2,061.5	$	1,870.3	$	1,746.5
Adjusted net earnings from continuing operations (A)	$	1,665.0	$	1,494.8	$	1,376.5	$	1,242.6	$	1,164.9

Basic earnings per share from continuing operations	$	3.87	$	3.27	$	2.91	$	2.59	$	2.32
Diluted earnings per share from continuing operations	$	3.85	$	3.25	$	2.89	$	2.57	$	2.30
Adjusted diluted earnings per share from continuing operations (A)	$	3.70	$	3.26	$	2.89	$	2.57	$	2.39
Basic weighted average shares outstanding	447.8		457.0		472.6		478.9		482.7
Diluted weighted average shares outstanding	450.3		459.1		475.8		483.1		487.1
Cash dividends declared per share	$	2.24	$	2.08	$	1.95	$	1.88	$	1.70

At year end:
Cash, cash equivalents and marketable securities of continuing operations	$	2,791.2	$	3,222.4	$	1,694.8	$	3,670.3	$	1,746.2
Total assets of continuing operations	$	37,180.0	$	43,670.0	$	33,110.5	$	29,629.6	$	30,041.7
Total assets	$	37,180.0	$	43,670.0	$	33,110.5	$	32,059.8	$	32,268.1
Obligations under reverse repurchase agreements	$	—	$	—	$	—	$	—	$	245.9
Obligations under commercial paper borrowings	$	—	$	—	$	—	$	2,173.0	$	—
Long-term debt	$	2,002.4	$	2,007.7	$	9.2	$	11.5	$	14.7
Stockholders’ equity	$	3,977.0	$	4,481.6	$	4,808.5	$	6,670.2	$	6,189.9



~~Adjusted Financial Measure~~	~~U.S. GAAP Measures~~	~~Adjustments/Explanation~~
~~Adjusted EBIT~~	~~Net earnings from continuing operations~~	~~- Provision for income taxes~~ ~~- Gains/losses on non-operational transactions such as sales of businesses and assets~~ ~~- All other interest expense and income~~ ~~- Certain restructuring charges~~ ~~See footnotes (a) and (b)~~
~~Adjusted net earnings from continuing operations~~	~~Net earnings from continuing operations~~	~~Pre-tax and tax impacts of:~~ ~~- Gains/losses on non-operational transactions such as sales of businesses and assets~~ ~~- Certain restructuring charges~~ ~~See footnotes (b), (c), and (d)~~
~~Adjusted provision for income taxes~~	~~Provision for income taxes~~	~~Tax impacts of:~~ ~~- Gains/losses on non-operational transactions such as sales of businesses and assets~~ ~~- Certain restructuring charges~~ ~~See footnotes (c) and (d)~~
~~Adjusted diluted earnings per share from continuing operations~~	~~Diluted earnings per share~~	~~EPS impacts of:~~ ~~- Gains/losses on non-operational transactions such as sales of businesses and assets~~ ~~- Certain restructuring charges~~ ~~See footnote (b)~~
~~Adjusted effective tax rate~~	~~Effective tax rate~~	~~See footnote (e)~~
~~Constant Dollar Basis~~	~~U.S. GAAP P&L line items~~	~~See footnote (f)~~


•Total Revenues
~~We continued our shareholder friendly actions by returning $1.3 billion via share repurchases, and approximately $1 billion via dividends, which increased on a per-share basis for the 42~~^nd ~~consecutive year. We have fully distributed the proceeds from our fiscal 2016 debt issuance.~~
10% YoY Growth
10% YoY Growth, Organic Constant Currency


		Years Ended
	June 30,
			2022		2021		% Change

Costs of revenues:
Operating expenses			$	8,252.6	$	7,520.7	10	%
Systems development and programming costs			798.6		716.6		11	%
Depreciation and amortization			410.7		403.0		2	%
Total costs of revenues			9,461.9		8,640.3		10	%
Selling, general and administrative expenses			3,233.2		3,040.5		6	%
Interest expense			81.9		59.7		37	%
Total expenses			$	12,777.0	$	11,740.5	9	%


(In millions)
Years ended June 30,	2022		2021		$ Change
Interest income on corporate funds	$	(41.0)	$	(36.5)	$	4.5


Realized losses/(gains) on available-for-sale securities, net	4.4		(11.3)		(15.7)
Impairment of assets	23.0		19.9		(3.1)


Gain on sale of assets	(7.5)		(9.8)		(2.3)

Non-service components of pension income, net	(61.7)		(58.6)		3.1
Other (income)/expense, net	$	(82.8)	$	(96.3)	$	(13.5)



	Years Ended									% Change
	June 30,									As Reported				Constant Dollar Basis
	2017			2016			2015			2017		2016		2017		2016

Total revenues from continuing operations	$	12,379.8		$	11,667.8		$	10,938.5		6	%	7	%	6	%	8	%

Costs of revenues:
Operating expenses	6,416.1			6,025.0			5,625.3			6	%	7	%	7	%	9	%
Systems development and programming costs	627.5			603.7			595.4			4	%	1	%	4	%	4	%
Depreciation and amortization	226.2			211.6			206.9			7	%	2	%	7	%	5	%
Total costs of revenues	7,269.8			6,840.3			6,427.6			6	%	6	%	7	%	8	%

Selling, general and administrative costs	2,783.2			2,637.0			2,496.9			6	%	6	%	6	%	7	%
Interest expense	80.0			56.2			6.5			n/m		n/m		n/m		n/m
Total expenses	10,133.0			9,533.5			8,931.0			6	%	7	%	7	%	8	%

Other income, net	(284.3		)	(100.4		)	(63.2		)	n/m		n/m		n/m		n/m

Earnings from continuing operations before income taxes	$	2,531.1		$	2,234.7		$	2,070.7		13	%	8	%	13	%	9	%
Margin	20.4		%	19.2		%	18.9		%

Provision for income taxes	$	797.7		$	741.3		$	694.2		8	%	7	%	7	%	8	%
Effective tax rate	31.5		%	33.2		%	33.5		%

Net earnings from continuing operations	$	1,733.4		$	1,493.4		$	1,376.5		16	%	8	%	16	%	10	%

Diluted earnings per share ("EPS") from continuing operations	$	3.85		$	3.25		$	2.89		18	%	12	%	18	%	13	%


	Revenues
	Years Ended June 30,				% Change
	2022		2021			As Reported		Organic Constant Currency
Employer Services	$	10,967.7	$	10,195.2		8	%	8	%
PEO Services	5,545.7		4,818.3			15	%	15	%
Other	(15.1)		(8.1)			n/m		n/m


	$	16,498.3	$	15,005.4		10	%	10	%


			PEO Revenues
		Years Ended	Change
	June 30,
			2022		2021		$		%
PEO Services' revenues			$	5,545.7	$	4,818.3	$	727.4	15	%
Less: PEO zero-margin benefits pass-throughs			3,514.4		3,092.0		422.4		14	%
PEO Services' revenues excluding zero-margin benefits pass-throughs			$	2,031.3	$	1,726.3	$	305.0	18	%


Adjusted Financial Measures			U.S. GAAP Measures
Adjusted EBIT			Net earnings
Adjusted provision for income taxes			Provision for income taxes
Adjusted net earnings			Net earnings

~~Adjusted Financial Measure~~			~~U.S. GAAP Measures~~	~~Adjustments/Explanation~~
~~Adjusted EBIT~~	~~Net earnings from continuing operations~~	~~- Provision for income taxes~~ ~~- Gains/losses on non-operational transactions such as sales of businesses and assets~~ ~~- All other interest expense and income~~ ~~- Certain restructuring charges~~ ~~See footnotes (a) and (b)~~
~~Adjusted net earnings from continuing operations~~	~~Net earnings from continuing operations~~	~~Pre-tax and tax impacts of:~~ ~~- Gains/losses on non-operational transactions such as sales of businesses and assets~~ ~~- Certain restructuring charges~~ ~~See footnotes (b), (c), and (d)~~
~~Adjusted provision for income taxes~~	~~Provision for income taxes~~	~~Tax impacts of:~~ ~~- Gains/losses on non-operational transactions such as sales of businesses and assets~~ ~~- Certain restructuring charges~~ ~~See footnotes (c) and (d)~~
Adjusted diluted earnings per share ~~from continuing operations~~	Diluted earnings per share			~~EPS impacts of:~~ ~~- Gains/losses on non-operational transactions such as sales of businesses and assets~~ ~~- Certain restructuring charges~~ ~~See footnote (b)~~
Adjusted effective tax rate			Effective tax rate		~~See footnote (e)~~
~~Constant Dollar Basis~~			~~U.S. GAAP P&L line items~~		~~See footnote (f)~~
Organic constant currency			Revenues


	Year Ended
	June 30,
	2022
Consolidated revenue growth as reported	10	%
Adjustments:
Impact of acquisitions	—	%

Impact of foreign currency	—	%
Consolidated revenue growth, organic constant currency	10	%

Employer Services revenue growth as reported	8	%
Adjustments:
Impact of acquisitions	—	%

Impact of foreign currency	—	%
Employer Services revenue growth, organic constant currency	8	%



(In millions)	Payments due by period
Contractual Obligations	Less than 1 year		1-3 years		3-5 years		More than 5 years		Unknown		Total

Debt Obligations (1)	$	63.6	$	116.8	$	1,081.5	$	1,124.1	$	—	$	2,386.0
Operating Lease Obligations (2)	$	105.4	$	170.7	$	87.1	$	110.5	$	—	$	473.7
Purchase Obligations (3)	$	368.7	$	225.5	$	50.5	$	0.2	$	—	$	644.9
Obligations Related to Unrecognized Tax Benefits (4)	$	—	$	—	$	—	$	—	$	74.6	$	74.6
Other Long-Term Liabilities Reflected on our Consolidated Balance Sheets:
Compensation and Benefits (5)	$	3.8	$	250.1	$	123.1	$	273.0	$	93.7	$	743.7
Acquisition-related obligations (6)	$	2.6	$	8.1	$	—	$	—	$	—	$	10.7
Total	$	544.1	$	771.2	$	1,342.2	$	1,507.8	$	168.3	$	4,333.6


~~(1)~~	~~These amounts represent the principal and interest payments of our debt.~~


~~(3)~~	Purchase obligations are comprised of a $235.0 million reinsurance premium with Chubb for the fiscal 2018 policy year, as well as obligations related to software subscription licenses and purchase and maintenance agreements on our software, equipment, and other assets.


~~(4)~~	~~We are unable to make reasonably reliable estimates as to the period in which cash payments related to unrecognized tax benefits are expected to be paid.~~


~~(5)~~	Compensation and benefits primarily relates to amounts associated with our employee benefit plans and other compensation arrangements. These amounts exclude the estimated contributions to our defined benefit plans, which are expected to be $9.5 million in fiscal 2018.


~~(6)~~	Acquisition-related obligations relate to contingent consideration for a business acquisition for which the amount of contingent consideration was determinable at the date of acquisition and therefore included on the Consolidated Balance Sheet as a liability.


As of June 30:
Net unrealized pre-tax (losses)/gains on available-for-sale securities	$	(1,721.4)	$	502.2

Total available-for-sale securities at fair value	$	28,391.6	$	24,371.7



As of June 30:

Net unrealized pre-tax gains on available-for-sale securities	$	102.5	$	510.2	$	216.5

Total available-for-sale securities at fair value	$	21,901.1	$	21,605.0	$	20,873.8


	Common Stock			Capital in Excess of Par Value		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income/(Loss)
	Shares	Amount

Balance at June 30, 2019	638.7	$	63.9	$	1,183.2	$	17,500.6	$	(13,090.5)	$	(257.3)
Net earnings	—	—		—		2,466.5		—		—



Other comprehensive income	—	—		—		—		—		242.5
Stock-based compensation expense	—	—		117.8		—		—		—
Issuances relating to stock compensation plans	—	—		32.8		—		112.9		—

Treasury stock acquired (6.2 million shares repurchased)	—	—		—		—		(1,089.4)		—

Dividends ($3.52 per share)	—	—		—		(1,523.9)		—		—
Other	—	—		—		(6.9)		—		—

Balance at June 30, 2020	638.7	$	63.9	$	1,333.8	$	18,436.3	$	(14,067.0)	$	(14.8)
Net earnings	—	—		—		2,598.5		—		—



Other comprehensive income	—	—		—		—		—		25.4
Stock-based compensation expense	—	—		156.3		—		—		—
Issuances relating to stock compensation plans	—	—		41.2		—		111.4		—

Treasury stock acquired (8.2 million shares repurchased)	—	—		—		—		(1,431.2)		—
Dividends ($3.70 per share)	—	—		—		(1,583.7)		—		—


Balance at June 30, 2021	638.7	$	63.9	$	1,531.3	$	19,451.1	$	(15,386.8)	$	10.6
Net earnings	—	—		—		2,948.9		—		—



Other comprehensive loss	—	—		—		—		—		(2,004.3)
Stock-based compensation expense	—	—		180.4		—		—		—
Issuances relating to stock compensation plans	—	—		82.5		—		95.0		—

Treasury stock acquired (9.2 million shares repurchased)	—	—		—		—		(2,043.6)		—


Dividends ($4.05 per share)	—	—		—		(1,703.7)		—		—

Balance at June 30, 2022	638.7	$	63.9	$	1,794.2	$	20,696.3	$	(17,335.4)	$	(1,993.7)



Data processing equipment			25 to 510 years
Buildings			20 to 40 years
Furniture and fixtures			4 to 7 years


Years ended June 30,	Basic		Effect of Employee Stock Option Shares	Effect of Employee Restricted Stock Shares	Diluted
2022
Net earnings	$	2,948.9			$	2,948.9
Weighted average shares (in millions)	418.8		1.1	1.2	421.1
EPS	$	7.04			$	7.00

2021
Net earnings	$	2,598.5			$	2,598.5
Weighted average shares (in millions)	426.3		0.8	1.0	428.1
EPS	$	6.10			$	6.07

2020
Net earnings	$	2,466.5			$	2,466.5
Weighted average shares (in millions)	430.8		0.9	1.0	432.7
EPS	$	5.73			$	5.70



	Years Ended
	June 30,
Types of Revenues		2022		2021		2020
HCM		$	7,174.9	$	6,655.2	$	6,563.5
HRO, excluding PEO zero-margin benefits pass-throughs		3,116.3		2,690.9		2,538.9
PEO zero-margin benefits pass-throughs		3,514.4		3,092.0		2,907.7
Global		2,240.9		2,144.9		2,034.5
Interest on funds held for clients		451.8		422.4		545.2
Total Revenues		$	16,498.3	$	15,005.4	$	14,589.8



	Year Ended		Cumulative amount from inception through
	June 30,		June 30,
	2017		2017
Employee separation benefits (a)	$	84.1	$	84.1
Other initiative costs (b)	5.9		5.9
Total (c)	$	90.0	$	90.0


Contract Liability
Contract liability, July 1, 2021	$	516.1
Recognition of revenue included in beginning of year contract liability	(147.6)
Contract liability, net of revenue recognized on contracts during the period	133.0
Currency translation adjustments	(33.3)
Contract liability, June 30, 2022	$	468.2



	Employee separation benefits			Other initiative costs			Total
Balance at June 30, 2016	$	—		$	—		$	—
Charged to expense	85.6			5.9			91.5
Reversals	(1.5		)	—			(1.5		)
Cash payments	(10.2		)	(3.4		)	(13.6		)
Non-cash utilization	—			(2.0		)	(2.0		)
Balance at June 30, 2017	$	73.9		$	0.5		$	74.4