SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

ý~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

o~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-5397

__________________________

AUTOMATIC DATA PROCESSING, INC.

(Exact name of registrant as specified in its charter)

~~Registrant’s~~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

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the

Exchange Act). Yes o☐ No ý

The number of shares outstanding of the registrant’s common stock as of January ~~26, 2018~~29, 2024 was ~~443,269,657.~~

Automatic Data Processing, Inc. and Subsidiaries

Statements of Consolidated Earnings

(In millions, except per share amounts)


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2023		2022		2023		2022

REVENUES:
Revenues, other than interest on funds held for clients and PEO revenues	$	2,898.6	$	2,702.2	$	5,741.4	$	5,348.6
Interest on funds held for clients	225.3		187.2		427.1		328.3
PEO revenues (A)	1,544.1		1,501.6		3,011.8		2,929.7
TOTAL REVENUES	4,668.0		4,391.0		9,180.3		8,606.6

EXPENSES:
Costs of revenues:
Operating expenses	2,213.3		2,134.5		4,370.9		4,209.0
Research and development	228.7		204.2		465.1		413.9
Depreciation and amortization	119.6		112.0		240.9		221.4
TOTAL COSTS OF REVENUES	2,561.6		2,450.7		5,076.9		4,844.3

Selling, general, and administrative expenses	922.5		855.7		1,802.8		1,656.1
Interest expense	104.9		57.0		196.5		108.1
TOTAL EXPENSES	3,589.0		3,363.4		7,076.2		6,608.5

Other (income)/expense, net	(64.8)		(30.5)		(132.5)		(70.0)

EARNINGS BEFORE INCOME TAXES	1,143.8		1,058.1		2,236.6		2,068.1

Provision for income taxes	265.4		245.0		498.8		475.9






NET EARNINGS	$	878.4	$	813.1	$	1,737.8	$	1,592.2



BASIC EARNINGS PER SHARE	$	2.14	$	1.96	$	4.22	$	3.84



DILUTED EARNINGS PER SHARE	$	2.13	$	1.95	$	4.20	$	3.82

Basic weighted average shares outstanding	411.1		414.3		411.4		414.4
Diluted weighted average shares outstanding	412.5		416.2		414.0		416.6

Three Months Ended Six Months Ended
December 31, December 31,
2017 2016 2017 2016
REVENUES:
Revenues, other than interest on funds held
for clients and PEO revenues
$ 2,188.8
$ 2,077.4
$ 4,269.8
$ 4,114.8
Interest on funds held for clients 106.7
91.8
206.1
181.0
PEO revenues (A) 939.9
818.1
1,838.3
1,608.4
TOTAL REVENUES 3,235.4
2,987.3
6,314.2
5,904.2

EXPENSES:

Costs of revenues:

Operating expenses 1,719.3
1,560.4
3,366.0
3,091.9
Systems development and programming costs 158.1
152.5
315.1
307.4
Depreciation and amortization 69.3
54.9
131.9
112.2
TOTAL COSTS OF REVENUES 1,946.7
1,767.8
3,813.0
3,511.5

Selling, general, and administrative expenses 717.2
640.8
1,379.6
1,288.6
Interest expense 27.5
20.5
55.5
40.4
TOTAL EXPENSES 2,691.4
2,429.1
5,248.1
4,840.5

Other income, net (21.7 ) (228.0 ) (47.8 ) (251.1 )

EARNINGS BEFORE INCOME TAXES 565.7
786.2
1,113.9
1,314.8

Provision for income taxes 98.2
275.3
244.9
435.2

NET EARNINGS $ 467.5
$ 510.9
$ 869.0
$ 879.6

BASIC EARNINGS PER SHARE $ 1.06
$ 1.14
$ 1.97
$ 1.95

DILUTED EARNINGS PER SHARE $ 1.05
$ 1.13
$ 1.96
$ 1.94

Basic weighted average shares outstanding 441.3
447.9
441.8
450.1
Diluted weighted average shares outstanding 443.7
450.3
444.4
452.7

Dividends declared per common share $ 0.630
$ 0.570
$ 1.200
$ 1.100

(A) Professional Employer Organization (“PEO”) revenues are net of direct pass-through costs, primarily consisting of payroll wages and payroll taxes of ~~$10,632.3~~$18,379.2 million and ~~$9,145.5~~$17,852.4 million for the three months ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively, and ~~$19,370.8~~$34,373.8 million and ~~$16,833.1~~$33,386.6 million for the six months endedDecember 31, ~~2017~~2023 and ~~2016,~~2022, respectively.

See notes to the Consolidated Financial Statements.

Automatic Data Processing, Inc. and Subsidiaries

Statements of Consolidated Comprehensive Income


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2023		2022		2023		2022

Net earnings	$	878.4	$	813.1	$	1,737.8	$	1,592.2

Other comprehensive income/(losses):
Currency translation adjustments	53.9		71.1		9.3		(13.6)

Unrealized net gains/(losses) on available-for-sale securities	860.5		242.2		709.9		(592.9)
Tax effect	(194.9)		(51.2)		(164.8)		134.5
Reclassification of realized net losses/(gains) on available-for-sale securities to net earnings	2.0		11.5		4.0		13.0
Tax effect	(0.5)		(2.7)		(1.0)		(2.9)



Amortization of unrealized losses on cash flow hedging activities	1.1		1.1		2.2		2.2
Tax effect	(0.2)		(0.2)		(0.5)		(0.5)



Reclassification of pension liability adjustment to net earnings	0.9		1.5		1.9		3.6
Tax effect	(0.2)		(0.1)		(0.4)		(0.6)




Other comprehensive income/(loss), net of tax	722.6		273.2		560.6		(457.2)
Comprehensive income	$	1,601.0	$	1,086.3	$	2,298.4	$	1,135.0

Three Months Ended Six Months Ended
December 31, December 31,
2017 2016 2017 2016
Net earnings $ 467.5
$ 510.9
$ 869.0
$ 879.6

Other comprehensive income/loss:
Currency translation adjustments 4.1
(55.0 ) 46.6
(44.2 )

Unrealized net losses on available-for-sale securities (147.3 ) (413.3 ) (160.2 ) (484.7 )
Tax effect 53.1
145.4
56.6
171.6
Reclassification of net losses/(gains) on available-for-sale securities to net earnings 1.0
(1.3 ) 1.1
(1.4 )
Tax effect (0.4 ) 0.6
(0.4 ) 0.6

Reclassification of pension liability adjustment to net earnings 2.3
5.1
4.6
10.2
Tax effect (0.8 ) (1.8 ) (1.7 ) (3.7 )

Other comprehensive loss, net of tax (88.0 ) (320.3 ) (53.4 ) (351.6 )
Comprehensive income $ 379.5
$ 190.6
$ 815.6
$ 528.0

See notes to the Consolidated Financial Statements.

Automatic Data Processing, Inc. and Subsidiaries

Consolidated Balance Sheets

(In millions, except per share amounts)

(Unaudited)


	December 31,		June 30,
	2023		2023
Assets
Current assets:
Cash and cash equivalents	$	1,641.3	$	2,083.5

Accounts receivable, net of allowance for doubtful accounts of $48.6 and $53.0, respectively	3,372.4		3,009.6
Other current assets	1,020.6		743.9


Total current assets before funds held for clients	6,034.3		5,837.0
Funds held for clients	42,509.1		36,333.6
Total current assets	48,543.4		42,170.6

Long-term receivables, net of allowance for doubtful accounts of $0.1 and $0.1, respectively	7.6		8.5
Property, plant and equipment, net	671.0		681.4
Operating lease right-of-use asset	372.0		402.4
Deferred contract costs	2,794.7		2,769.7
Other assets	995.8		1,255.4
Goodwill	2,369.8		2,339.4
Intangible assets, net	1,315.1		1,343.6
Total assets	$	57,069.4	$	50,971.0
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	76.8	$	96.8
Accrued expenses and other current liabilities	2,634.9		2,342.6
Accrued payroll and payroll-related expenses	603.2		941.4
Dividends payable	569.7		510.0
Short-term deferred revenues	188.3		188.6
Obligations under reverse repurchase agreements (A)	21.6		105.4



Income taxes payable	1.1		44.2

Total current liabilities before client funds obligations	4,095.6		4,229.0
Client funds obligations	44,002.1		38,538.6
Total current liabilities	48,097.7		42,767.6
Long-term debt	2,990.2		2,989.0
Operating lease liabilities	326.8		349.9
Other liabilities	918.9		933.7
Deferred income taxes	68.3		73.6
Long-term deferred revenues	347.9		348.1
Total liabilities	52,749.8		47,461.9

Commitments and contingencies (Note 13)

Stockholders' equity:
Preferred stock, $1.00 par value: authorized, 0.3 shares; issued, none	—		—
Common stock, $0.10 par value: authorized, 1,000.0 shares; issued, 638.7 shares at December 31, 2023 and June 30, 2023; outstanding, 410.7 and 412.1 shares at December 31, 2023 and June 30, 2023, respectively	63.9		63.9
Capital in excess of par value	2,262.9		2,102.3
Retained earnings	22,757.1		22,118.0
Treasury stock - at cost: 228.0 and 226.6 shares at December 31, 2023 and June 30, 2023, respectively	(19,019.1)		(18,469.3)
Accumulated other comprehensive (loss)/ income	(1,745.2)		(2,305.8)
Total stockholders’ equity	4,319.6		3,509.1
Total liabilities and stockholders’ equity	$	57,069.4	$	50,971.0

December 31, June 30,
2017 2017
Assets
Current assets:
Cash and cash equivalents $ 1,773.4
$ 2,780.4
Accounts receivable, net of allowance for doubtful accounts of $52.8 and $49.6, respectively 2,045.5
1,703.6
Other current assets 1,079.8
883.2
Total current assets before funds held for clients 4,898.7
5,367.2
Funds held for clients 34,451.3
27,291.5
Total current assets 39,350.0
32,658.7
Long-term receivables, net of allowance for doubtful accounts of $0.7 and $0.8, respectively 27.4
28.0
Property, plant and equipment, net 799.9
779.9
Other assets 1,371.2
1,352.2
Goodwill 2,164.3
1,741.0
Intangible assets, net 832.7
620.2
Total assets $ 44,545.5
$ 37,180.0

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ 136.8
$ 149.7
Accrued expenses and other current liabilities 1,583.9
1,381.9
Accrued payroll and payroll-related expenses 496.6
562.5
Dividends payable 275.2
250.5
Short-term deferred revenues 227.5
232.9
Income taxes payable 22.8
49.0
Total current liabilities before client funds obligations 2,742.8
2,626.5
Client funds obligations 34,508.1
27,189.4
Total current liabilities 37,250.9
29,815.9
Long-term debt 2,002.4
2,002.4
Other liabilities 824.8
830.2
Deferred income taxes 148.6
163.1
Long-term deferred revenues 387.6
391.4
Total liabilities 40,614.3
33,203.0

Commitments and contingencies (Note 14)

Stockholders' equity:

Preferred stock, $1.00 par value: Authorized, 0.3 shares; issued, none —
—
Common stock, $0.10 par value: authorized, 1,000.0 shares; issued, 638.7 shares at December 31, 2017 and June 30, 2017;
outstanding, 442.7 and 445.0 shares at December 31, 2017 and June 30, 2017, respectively 63.9
63.9
Capital in excess of par value 903.5
867.8
Retained earnings 15,060.1
14,728.2
Treasury stock - at cost: 196.0 and 193.7 shares at December 31, 2017 and June 30, 2017, respectively (11,663.7 ) (11,303.7 )
Accumulated other comprehensive loss (432.6 ) (379.2 )
Total stockholders’ equity 3,931.2
3,977.0
Total liabilities and stockholders’ equity $ 44,545.5
$ 37,180.0
(A) As of December 31, 2023, $21.5 million of short-term marketable securities and $0.1 million of cash and cash equivalents have been pledged as collateral under the Company's reverse repurchase agreements. As of June 30, 2023, $104.6 million of long-term marketable securities and $0.8 million of cash and cash equivalents have been pledged as collateral under the Company's reverse repurchase agreements (see Note 9).

See notes to the Consolidated Financial Statements.

Automatic Data Processing, Inc. and Subsidiaries

Statements of Consolidated Cash Flows

(In millions)

(Unaudited)


	Six Months Ended
	December 31,
	2023		2022

Cash Flows from Operating Activities:
Net earnings	$	1,737.8	$	1,592.2
Adjustments to reconcile net earnings to cash flows provided by operating activities:
Depreciation and amortization	281.6		271.9
Amortization of deferred contract costs	526.7		488.6

Deferred income taxes	22.5		9.9
Stock-based compensation expense	132.4		109.0

Net pension income	(11.6)		(20.0)

Net accretion of discounts and amortization of premiums on available-for-sale securities	(17.4)		23.6





Other	16.9		30.8
Changes in operating assets and liabilities:
Increase in accounts receivable	(382.3)		(1.1)
Increase in deferred contract costs	(538.0)		(503.3)
Increase in other assets	(313.6)		(284.6)
Decrease in accounts payable	(19.0)		(20.5)
Decrease in accrued expenses and other liabilities	(77.1)		(78.7)


Net cash flows provided by operating activities	1,358.9		1,617.8

Cash Flows from Investing Activities:
Purchases of corporate and client funds marketable securities	(1,305.5)		(3,707.1)
Proceeds from the sales and maturities of corporate and client funds marketable securities	1,503.2		2,525.6

Capital expenditures	(94.1)		(95.1)
Additions to intangibles	(165.7)		(178.4)
Acquisitions of businesses, net of cash acquired	(33.6)		(14.4)
Proceeds from sale of property, plant, and equipment and other assets	26.4		—
Other	(8.5)		—





Net cash flows used in investing activities	(77.8)		(1,469.4)

Cash Flows from Financing Activities:
Net increase/(decrease) in client funds obligations	5,421.9		(8,096.8)

Payments of debt	(0.5)		(0.5)


Repurchases of common stock	(504.7)		(553.5)
Net proceeds from stock purchase plan and stock-based compensation plans	(17.5)		24.8

Dividends paid	(1,032.1)		(865.5)
Net payments related to reverse repurchase agreements	(51.0)		(132.8)




Net cash flows provided by/(used in) financing activities	3,816.1		(9,624.3)

Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents	10.6		(24.6)

Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents	5,107.8		(9,500.5)

Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period	8,771.5		22,783.0
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period	$	13,879.3	$	13,282.5



Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the Consolidated Balance Sheets
Cash and cash equivalents	$	1,641.3	$	1,345.0
Restricted cash and restricted cash equivalents included in funds held for clients (A)	12,238.0		11,937.5
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	13,879.3	$	13,282.5

Supplemental disclosures of cash flow information:
Cash paid for interest	$	192.8	$	104.5
Cash paid for income taxes, net of income tax refunds	$	590.4	$	537.1

*(A) See Note ~~2 for a summary of adjustments.~~

~~(A) See~~ ~~Note 8~~6 for a reconciliation of restricted cash and restricted cash equivalents in funds held for clients on the Consolidated Balance Sheets.

See notes to the Consolidated Financial Statements.

Automatic Data Processing, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

(Tabular dollars in millions, except per share ~~amounts)~~amounts or where otherwise stated)

The accompanying Consolidated Financial Statements and footnotes thereto of Automatic Data Processing, Inc., its subsidiaries and ~~its subsidiaries~~variable interest entity (“ADP” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Consolidated Financial Statements and footnotes thereto are unaudited. In the opinion of the Company’s management, the Consolidated Financial Statements reflect all adjustments, which are of a normal recurring nature, that are necessary for a fair presentation of the Company’s interim financial results.

The Company has a grantor trust, which holds the majority of the funds provided by its clients pending remittance to employees of those clients, tax authorities, and other payees. The Company is the sole beneficial owner of the trust. The trust meets the criteria in Accounting Standards Codification (“ASC”) 810, “Consolidation” to be characterized as a variable interest entity (“VIE”). The Company has determined that it has a controlling financial interest in the trust because it has both (1) the power to direct the activities that most significantly impact the economic performance of the trust (including the power to make all investment decisions for the trust) and (2) the right to receive benefits that could potentially be significant to the trust (in the form of investment returns) and, therefore, consolidates the trust. Further information on these funds and the Company’s obligations to remit to its clients’ employees, tax authorities, and other payees is provided in Note 6, “Corporate Investments and Funds Held for Clients.”

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the assets, liabilities, revenue, expenses, and accumulated other comprehensive income that are reported in the Consolidated Financial Statements and footnotes thereto. Actual results may differ from those estimates. The Interim Financial Data by Segment footnote reflects changes to the allocation methodology for certain allocations and has been adjusted in both the current period and the prior period and did not materially affect reportable segment results. Refer to ~~Note 16~~ ~~for further information.~~

Interim financial results are not necessarily indicative of financial results for a full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2017~~2023 (“fiscal ~~2017”~~2023”).

Certain amounts from the prior year's financial statements have been reclassified in order to conform to the current year's presentation. We also updated the description of "Systems development and programming costs" to "Research and development" within the Statement of Consolidated Earnings, this change did not result in changes to current or previously reported amounts.

Recently Adopted Accounting Pronouncements

Effective July 1, 2017, the Company adopted Accounting Standards Update ("ASU") 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash." ASU 2016-18 requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and restricted cash. The Company retrospectively adopted the new standard, and as a result included restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts presented on the Statements of Consolidated Cash Flows. Accordingly, the statement of cash flows has been revised to include restricted cash and restricted cash equivalents associated with funds held to satisfy client obligations, as a component of cash, cash equivalents, restricted cash and restricted cash equivalents.

~~As a result of this adoption, the Company adjusted the Statements of Consolidated Cash Flows from previously reported amounts as follows:~~

Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents

Effective July 1, 2017, the Company adopted ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairments.” ASU 2017-04 establishes a one-step process for testing goodwill for a decrease in value, requiring a goodwill impairment loss to be measured as the excess of the reporting unit’s carrying amount over its fair value. The guidance eliminates the second step of the current two-step process that requires the impairment to be measured as the difference between the implied value of a reporting unit’s goodwill with the goodwill’s carrying amount. The adoption of ASU

~~2017-04 is not expected to have an impact on the Company’s consolidated results of operations, financial condition, or cash flows.~~

In July 2017, the Company adopted ASU 2017-01, "Business Combinations (Topic 805) - Clarifying the Definition of a Business." ASU 2017-01 clarifies the definition of a business in order to allow for the evaluation of whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The adoption of ASU 2017-01 did not have a material impact on the Company's consolidated results of operations, financial condition, or cash flows.

Recently Issued Accounting Pronouncements

The following table summarizes recent ASU's issued by the Financial Accounting Standards Board ("FASB") that could have a material impact on the Company's consolidated results of operations, financial condition, or cash flows.

Standard

Description

~~Standard~~

~~Description~~

Effective Date

Effect on Financial Statements or Other Significant Matters

ASU ~~2017-07~~ ~~Compensation - Retirement Benefits~~2023-09 Income Taxes (Topic ~~715)~~740): ~~Improving~~Improvements to Income Tax Disclosures

This update enhances the ~~Presentation~~transparency and decision usefulness of ~~Net Periodic Pension Cost~~income tax disclosures to better assess how an entity’s operations and ~~Net Periodic Post-retirement Benefit Cost~~related tax risks, tax planning and operational opportunities affect its tax rate and prospects for future cash flows.

This standard requires reporting the service cost component in the same line item or items as other compensation costs arising during the period in the Statements of Consolidated Earnings. The other components of net periodic pension cost are required to be presented in the Statements of Consolidated Earnings separately from the service cost component. Such changes are to be applied retrospectively from the date of adoption. The ASU also allows only the service cost component to be eligible for capitalization, when applicable, prospectively from the date of adoption.June 30, 2026
(Fiscal 2026)

~~For fiscal years beginning after December 15, 2017. Early adoption is permitted.~~

The Company is assessing this guidance. The adoption will ~~adopt ASU 2017-07 beginning on July 1, 2018. This ASU~~modify disclosures but will be applied retrospectively and will require the reclassification of the non-service cost components of the net periodic benefit cost from within the respective line items of our Statements of Consolidated Earnings to Other income, net. Also, the requirement set forth under this ASU only allows the service cost component of net periodic benefit cost to be capitalized. The Company does not ~~expect the adoption of the new accounting rules to~~ have ~~a material~~an impact on the ~~Company’s~~Company's consolidated results of operations, financial condition, orand cash flows.

ASU ~~2016-02~~

~~Leases~~2023-07 Segment Reporting (Topic ~~842)~~

280): Improvements to Reportable Segment Disclosures

This update ~~amends the existing accounting standards for lease accounting,~~improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and ~~requires lessees to recognize most lease assets and lease liabilities~~certain quantitative disclosures.

June 30, 2025
(Fiscal 2025)

The Company is assessing this guidance. The adoption will modify disclosures but will not have an impact on the balance sheet and to disclose key information about leasing arrangements. This ASU requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application.

~~For fiscal years beginning after December 15, 2018. Early adoption is permitted.~~

~~The Company will adopt ASU 2016-02 beginning on July 1, 2019. The Company has not yet determined the impact of this ASU on its~~Company's consolidated results of operations financial condition, orand cash flows.



~~Standard~~	~~Description~~	~~Effective Date~~	~~Effect on Financial Statements or Other Significant Matters~~
~~ASU 2014-09~~ ~~Revenue from Contracts with Customers (Topic 606)~~	This standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance, and has since issued additional amendments to ASU 2014-09. These new standards require an entity to recognize revenue depicting the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standards will also result in enhanced revenue related disclosures. Entities have the option to apply the new guidance under a retrospective approach to each prior reporting period presented or a modified retrospective approach with the cumulative effect of initially applying the new guidance recognized at the date of initial application within the Statements of Consolidated Financial Position.	~~For fiscal years beginning after December 15, 2017. Early adoption is permitted.~~	The Company had been assessing the impact of the new revenue recognition standard on its relationships with its clients. In fiscal 2017, the Company determined it would not early adopt the standard, and instead would adopt the new standard in its fiscal year beginning on July 1, 2018. Further, the Company anticipates applying the guidance under the full retrospective approach. The Company is nearly complete with its comprehensive diagnostic of the measurement and recognition provisions of the new standard and is in the process of finalizing its conclusions and policies. The Company expects the provisions of the new standard to primarily impact the manner in which it treats certain costs to fulfill contracts (i.e., implementation costs) and costs to acquire new contracts (i.e., selling costs). The provisions of the new standard will require the Company to capitalize and amortize additional implementation costs than those capitalized and amortized under current U.S. GAAP. Further, under current U.S. GAAP, the Company immediately expenses all selling expenses. The provisions of the new standard will require that the Company capitalize incremental selling expenses such as commissions and bonuses paid to the sales force for obtaining contracts with new clients and/or selling additional business to current clients. These capitalized expenses will be amortized over the expected client life. While the Company grows, the impact of deferring and amortizing additional costs creates higher overall pre-tax income, net earnings, and earnings per share, when compared to current U.S. GAAP. The Company does not expect the provisions of the new standard to materially impact the timing or amount of revenue it recognizes. The Company has not yet determined the impacts of all the disclosure requirements and specifically is assessing the manner in which it will disaggregate its revenue to illustrate how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Additionally, while the Company is in the process of assessing its accounting and forecasting processes to ensure its ability to record, report, forecast, and analyze results under the new standard, it is not expecting significant changes to its business processes or systems.

~~In October 2017, the Company acquired 100% of the outstanding shares of Global Cash Card, Inc. ("GCC"), a leader in digital payments, including paycards~~Based upon similar operational and other electronic accounts, for approximately $490 million in cash, net of cash acquired. The acquisition of GCC makes ADP the only human capital management provider with a proprietary digital payments processing platform. The results of GCC are reported withineconomic characteristics, the Company’s ~~Employer Services segment. Pro forma information has not been presented because~~revenues are disaggregated by its three business pillars: Human Capital Management (“HCM”), HR Outsourcing (“HRO”), and Global Solutions (“Global”), with separate disaggregation for PEO zero-margin benefits pass-through revenues and client funds interest revenues. The Company believes these revenue categories depict how the ~~effect~~nature, amount, timing, and uncertainty of ~~the acquisition is not material~~its revenue and cash flows are affected by economic factors.

The following tables provide details of revenue by our business pillars, and include a reconciliation to the ~~Company's consolidated financial results.~~Company’s reportable segments:



	Three Months Ended				Six Months Ended
	December 31,				December 31,
Types of Revenues	2023		2022		2023		2022
HCM	$	1,975.2	$	1,861.8	$	3,889.4	$	3,672.8
HRO, excluding PEO zero-margin benefits pass-throughs	888.7		853.9		1,700.4		1,631.2
PEO zero-margin benefits pass-throughs	970.7		944.2		1,947.5		1,890.0
Global	608.1		543.9		1,215.9		1,084.3
Interest on funds held for clients	225.3		187.2		427.1		328.3
Total Revenues	$	4,668.0	$	4,391.0	$	9,180.3	$	8,606.6

~~The preliminary allocation~~

Reconciliation of ~~the purchase price is based upon estimates and assumptions that are subject~~disaggregated revenue to change within the purchase price allocation period, which is generally one year from the acquisition date. The primary areas of the purchase price allocation that are not yet finalized relate to the measurement of certain assets and liabilities, including identifiable intangible assets, and the finalization of net working capital items included in the purchase price allocation. Accordingly, the

~~measurement period for such purchase price allocations will end when the information becomes available but will not exceed twelve months from the date of acquisition.~~

~~The preliminary purchase price allocation for GCC is as follows:~~

The Company determined the purchase price allocations for this acquisition based on estimates of the fair value of tangible and intangible assets acquired and liabilities assumed, utilizing recognized valuation techniques, including the income and market approaches. The goodwill recorded as a result of the GCC transaction represents future economic benefits we expect to achieve as a result of the acquisition and expected cost synergies. None of the goodwill resulting from the acquisition is tax deductible.

Intangible assets for GCC, which totaled $132.2 million, included technology and software, and customer contracts and lists which are being amortized over a weighted average life of approximately 8 years.

~~Note 4. Divestitures~~

In November 2016, the Company completed the sale of its Consumer Health Spending Account ("CHSA") and Consolidated Omnibus Reconciliation Act ("COBRA") businesses for a pre-tax gain of $205.4 million, and recorded such gain within Other income, net on the Statements of Consolidated Earnings. The historical results of operations of these businesses are included in the Employer Services segment.

The Company determined that the CHSA and COBRA divestitures did not meet the criteria for reporting discontinued operations under ASU 2014-08 as the disposition of these businesses does not represent a strategic shift that has a major effect on the Company's operations or financial results.

~~Note 5. Service Alignment Initiative~~

On July 28, 2016, the Company announced a Service Alignment Initiative that is intended to simplify the Company's service organization by aligning the Company's service operations to its strategic platforms and locations. In the fiscal year ended June 30, 2016 ("fiscal 2016"), the Company entered into leases in Norfolk, Virginia and Maitland, Florida, and in fiscal 2017, the Company entered into a lease in Tempe, Arizona as part of this effort. The Company began incurring charges for this initiative during the first quarter of fiscal 2017 and expects to continue to incur charges throughout the fiscal year ending June 30, 2018 ("fiscal 2018") as the initiative is executed. The charges primarily relate to employee separation benefits recognized under Accounting Standards Codification ("ASC") 712, and also include chargesour reportable segments for the ~~relocation~~three months ended December 31, 2023:


Types of Revenues	Employer Services		PEO		Other		Total
HCM	$	1,977.4	$	—	$	(2.2)	$	1,975.2
HRO, excluding PEO zero-margin benefits pass-throughs	316.4		573.4		(1.1)		888.7
PEO zero-margin benefits pass-throughs	—		970.7		—		970.7
Global	608.1		—		—		608.1
Interest on funds held for clients	223.3		2.0		—		225.3
Total Segment Revenues	$	3,125.2	$	1,546.1	$	(3.3)	$	4,668.0

Reconciliation of ~~certain current Company employees, lease termination costs, and accelerated depreciation of fixed assets. The Company expects~~disaggregated revenue to ~~recognize pre-tax restructuring charges of about $25 million~~our reportable segments for the ~~remainder~~three months ended December 31, 2022:


Types of Revenues	Employer Services		PEO		Other		Total
HCM	$	1,864.1	$	—	$	(2.3)	$	1,861.8
HRO, excluding PEO zero-margin benefits pass-throughs	298.4		557.4		(1.9)		853.9
PEO zero-margin benefits pass-throughs	—		944.2		—		944.2
Global	543.9		—		—		543.9
Interest on funds held for clients	185.5		1.7		—		187.2
Total Segment Revenues	$	2,891.9	$	1,503.3	$	(4.2)	$	4,391.0

Reconciliation of ~~fiscal 2018, consisting primarily of cash expenditures for employee separation benefits.~~

~~The table below summarizes the composition of the Company's Service Alignment Initiative charges/(reversals):~~

~~Activity for the Service Alignment Initiative liability~~disaggregated revenue to our reportable segments for the six months ended December 31, ~~2017 was as follows:~~2023:


Types of Revenues	Employer Services		PEO		Other		Total
HCM	$	3,894.0	$	—	$	(4.6)	$	3,889.4
HRO, excluding PEO zero-margin benefits pass-throughs	638.5		1,064.3		(2.4)		1,700.4
PEO zero-margin benefits pass-throughs	—		1,947.5		—		1,947.5
Global	1,215.9		—		—		1,215.9
Interest on funds held for clients	423.2		3.9		—		427.1
Total Segment Revenues	$	6,171.6	$	3,015.7	$	(7.0)	$	9,180.3

Employee
separation benefits
Other initiative costs Total
Balance at June 30, 2017 $ 73.9
$ 0.5
$ 74.4
Charged to expense 7.9
2.9
10.8
Reversals (10.8 ) —
(10.8 )
Cash payments (18.0 ) (2.2 ) (20.2 )
Non-cash utilization —
(0.6 ) (0.6 )
Balance at December 31, 2017 $ 53.0

$ 0.6

$ 53.6

~~(a) - Charges/(reversals) are recorded in selling, general and administrative expenses on the Statements~~Reconciliation of ~~Consolidated Earnings.~~

~~(b) - Other initiative costs include costs~~disaggregated revenue to relocate certain current Company employees to new locations, lease termination charges (both included within selling, general and administrative expenses on the Statements of Consolidated Earnings), and accelerated depreciation on fixed assets (included within depreciation and amortization on the Statements of Consolidated Earnings).

~~(c) - All charges are included within the Other segment.~~

~~Note 6. Earnings per Share (“EPS”)~~

~~Options to purchase 1.1 million and 1.2 million shares of common stock for the three months ended December 31, 2017 and 2016, respectively, and 0.8 million shares of common stock~~our reportable segments for the six months ended December 31, ~~2017~~2022:


Types of Revenues	Employer Services		PEO		Other		Total
HCM	$	3,677.4	$	—	$	(4.6)	$	3,672.8
HRO, excluding PEO zero-margin benefits pass-throughs	595.2		1,039.7		(3.7)		1,631.2
PEO zero-margin benefits pass-throughs	—		1,890.0		—		1,890.0
Global	1,084.3		—		—		1,084.3
Interest on funds held for clients	325.3		3.0		—		328.3
Total Segment Revenues	$	5,682.2	$	2,932.7	$	(8.3)	$	8,606.6

The timing of revenue recognition for HCM, HRO and ~~2016,~~Global Solutions is consistent with the invoicing of clients, as invoicing occurs in the period the services are provided. Therefore, the Company does not recognize a contract asset or liability resulting from the timing of revenue recognition and invoicing.

Changes in deferred revenues related to set up fees for the six months ended December 31, 2023 were as follows:


Contract Liability
Contract liability, July 1, 2023	$	464.8
Recognition of revenue included in beginning of year contract liability	(33.8)
Contract liability, net of revenue recognized on contracts during the period	35.5
Currency translation adjustments	5.0
Contract liability, December 31, 2023	$	471.5

Note 4. Earnings per Share (“EPS”)


	Basic		Effect of Employee Stock Option Shares	Effect of Employee Restricted Stock Shares	Diluted
Three Months Ended December 31, 2023
Net earnings	$	878.4			$	878.4
Weighted average shares (in millions)	411.1		0.8	0.6	412.5
EPS	$	2.14			$	2.13
Three Months Ended December 31, 2022
Net earnings	$	813.1			$	813.1
Weighted average shares (in millions)	414.3		1.0	0.9	416.2
EPS	$	1.96			$	1.95

Six Months Ended December 31, 2023
Net earnings	$	1,737.8			$	1,737.8
Weighted average shares (in millions)	411.4		0.9	1.7	414.0
EPS	$	4.22			$	4.20
Six Months Ended December 31, 2022
Net earnings	$	1,592.2			$	1,592.2
Weighted average shares (in millions)	414.4		1.1	1.1	416.6
EPS	$	3.84			$	3.82

For the three months ended December 31, 2023, there were 0.1 million stock options excluded from the calculation of diluted earnings per share ~~because their inclusion would have been anti-dilutive.~~

~~Note 7. Other Income, Net~~due to anti-dilution. For the six months ended December 31, 2023, there were no stock options excluded

Three Months Ended Six Months Ended
December 31, December 31,
2017 2016 2017 2016
Interest income on corporate funds $ (22.7 ) $ (21.3 ) $ (48.5 ) $ (44.3 )
Realized gains on available-for-sale securities (0.2 ) (2.0 ) (0.5 ) (2.5 )
Realized losses on available-for-sale securities 1.2
0.7
1.6
1.1
Gain on sale of assets —
—
(0.4 ) —
Gain on sale of businesses (see Note 4) —
(205.4 ) —
(205.4 )
Other income, net $ (21.7 ) $ (228.0 ) $ (47.8 ) $ (251.1 )
from the calculation of diluted earnings per share due to anti-dilution. For the three and six months ended December 31, 2022, there were no stock options excluded from the calculation of diluted earnings per share due to anti-dilution.

Note 5. Other (Income)/Expense, Net


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2023		2022		2023		2022
Interest income on corporate funds	$	(56.9)	$	(28.9)	$	(103.4)	$	(58.6)


Realized losses/(gains) on available-for-sale securities, net	2.0		11.5		4.0		13.0

Gain on sale of assets	(1.4)		—		(16.0)		—

Impairment of assets	—		—		—		0.3


Non-service components of pension income, net (see Note 11)	(8.5)		(13.1)		(17.1)		(24.7)
Other (income)/expense, net	$	(64.8)	$	(30.5)	$	(132.5)	$	(70.0)

Corporate investments and funds held for clients at December 31, ~~2017~~2023 and June 30, ~~2017~~2023 were as follows:


	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value (A)
Type of issue:
Money market securities, cash and other cash equivalents	$	13,879.3	$	—	$	—	$	13,879.3
Available-for-sale securities:
Corporate bonds	15,872.1		28.9		(934.8)		14,966.2
U.S. Treasury securities	8,030.1		17.8		(174.7)		7,873.2
Canadian government obligations and Canadian government agency obligations	2,109.2		2.1		(101.6)		2,009.7
U.S. government agency securities	1,661.1		0.3		(144.6)		1,516.8
Asset-backed securities	1,152.4		6.2		(46.5)		1,112.1
Canadian provincial bonds	992.5		4.7		(55.8)		941.4
Commercial mortgage-backed securities	603.5		—		(34.7)		568.8
Other securities	1,367.7		7.7		(68.1)		1,307.3

Total available-for-sale securities	31,788.6		67.7		(1,560.8)		30,295.5

Total corporate investments and funds held for clients	$	45,667.9	$	67.7	$	(1,560.8)	$	44,174.8

(A) Included within available-for-sale securities are corporate investments with fair values of $24.4 million and funds held for clients with fair values of $30,271.1 million. All available-for-sale securities were included in Level 2 of the fair value

December 31, 2017

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses
Fair Market Value (A)
Type of issue:
Money market securities, cash and other cash equivalents $ 13,859.8
$ —
$ —
$ 13,859.8
Available-for-sale securities:
Corporate bonds 9,435.9
57.7
(39.7 ) 9,453.9
Asset-backed securities 4,445.0
4.7
(22.0 ) 4,427.7
U.S. government agency securities 2,913.6
10.6
(22.8 ) 2,901.4
U.S. Treasury securities 2,481.4
1.0
(38.6 ) 2,443.8
Canadian government obligations and
Canadian government agency obligations 1,148.3
0.9
(20.1 ) 1,129.1
Canadian provincial bonds 760.8
8.3
(3.3 ) 765.8
Municipal bonds 586.0
6.3
(2.0 ) 590.3
Other securities 661.2
5.0
(2.7 ) 663.5

Total available-for-sale securities 22,432.2
94.5
(151.2 ) 22,375.5

Total corporate investments and funds held for clients $ 36,292.0
$ 94.5
$ (151.2 ) $ 36,235.3


	June 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value (B)
Type of issue:
Money market securities, cash and other cash equivalents	$	8,771.5	$	—	$	—	$	8,771.5
Available-for-sale securities:
Corporate bonds	15,870.7		4.7		(1,308.3)		14,567.1
U.S. Treasury securities	8,054.7		0.7		(290.4)		7,765.0
Canadian government obligations and Canadian government agency obligations	2,070.4		—		(145.0)		1,925.4
U.S. government agency securities	1,670.0		0.2		(179.8)		1,490.4
Asset-backed securities	1,234.7		—		(69.7)		1,165.0
Canadian provincial bonds	1,000.5		0.2		(78.1)		922.6
Commercial mortgage-backed securities	679.2		—		(46.7)		632.5
Other securities	1,391.6		1.7		(96.4)		1,296.9

Total available-for-sale securities	31,971.8		7.5		(2,214.4)		29,764.9

Total corporate investments and funds held for clients	$	40,743.3	$	7.5	$	(2,214.4)	$	38,536.4

(B) Included within available-for-sale securities are corporate investments with fair values of ~~$10.6~~$119.3 million and funds held for clients with fair values of ~~$22,364.9~~$29,645.6 million. All available-for-sale securities were included in Level 2 of the fair value hierarchy.

(B) Included within available-for-sale securities are corporate investments with fair values of $10.8 million and funds held for clients with fair values of $21,890.3 million. All available-for-sale securities were included in Level 2 of the fair value hierarchy.

For a description of the fair value hierarchy and the Company's fair value methodologies, including the use of an independent third-party pricing service, see Note 1 ~~"Summary~~“Summary of Significant Accounting ~~Policies"~~Policies” in the Company's Annual Report on Form 10-K for fiscal ~~2017.~~2023. The ~~Company did not transfer any assets between Levels during the six months ended December 31, 2017 or fiscal 2017. In addition, the~~ Company concurred with and did not adjust the prices obtained from the independent pricing service. The Company ~~has~~had no available-for-sale securities included in Level 1 or Level 3 at December 31, ~~2017.~~2023.

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, ~~2017,~~2023, are as follows:


	December 31, 2023
	Securities in Unrealized Loss Position Less Than 12 Months				Securities in Unrealized Loss Position Greater Than 12 Months				Total
	Gross Unrealized Losses		Fair Market Value		Gross Unrealized Losses		Fair Market Value		Gross Unrealized Losses		Fair Market Value
Corporate bonds	$	(3.6)	$	247.4	$	(931.2)	$	13,349.4	$	(934.8)	$	13,596.8
U.S. Treasury securities	(13.3)		1,231.1		(161.4)		5,589.2		(174.7)		6,820.3
Canadian government obligations and Canadian government agency obligations	(0.3)		17.1		(101.3)		1,772.8		(101.6)		1,789.9
U.S. government agency securities	(0.1)		18.8		(144.5)		1,477.8		(144.6)		1,496.6
Asset-backed securities	(0.5)		56.7		(46.0)		765.5		(46.5)		822.2
Canadian provincial bonds	(0.2)		32.1		(55.6)		764.5		(55.8)		796.6
Commercial mortgage-backed securities	(0.4)		11.3		(34.3)		557.5		(34.7)		568.8
Other securities	(8.0)		227.1		(60.1)		780.1		(68.1)		1,007.2
	$	(26.4)	$	1,841.6	$	(1,534.4)	$	25,056.8	$	(1,560.8)	$	26,898.4

December 31, 2017
Securities in Unrealized Loss Position Less Than 12 Months Securities in Unrealized Loss Position Greater Than 12 Months Total
Gross
Unrealized
Losses
Fair Market
Value
Gross
Unrealized
Losses
Fair Market
Value

Gross
Unrealized
Losses

Fair
Market Value
Corporate bonds $ (18.3 ) $ 3,437.6
$ (21.4 ) $ 1,186.2
$ (39.7 ) $ 4,623.8
Asset-backed securities (10.8 ) 2,463.5
(11.2 ) 1,065.1
(22.0 ) 3,528.6
U.S. government agency securities (9.6 ) 1,390.0
(13.2 ) 656.1
(22.8 ) 2,046.1
U.S. Treasury securities (17.1 ) 1,412.9
(21.5 ) 982.1
(38.6 ) 2,395.0
Canadian government obligations and
Canadian government agency obligations (20.1 ) 895.3
—
—
(20.1 ) 895.3
Canadian provincial bonds (2.7 ) 315.1
(0.6 ) 55.4
(3.3 ) 370.5
Municipal bonds (1.4 ) 189.2
(0.6 ) 17.8
(2.0 ) 207.0
Other securities (1.9 ) 269.2
(0.8 ) 41.6
(2.7 ) 310.8
$ (81.9 ) $ 10,372.8
$ (69.3 ) $ 4,004.3
$ (151.2 ) $ 14,377.1

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of June 30, ~~2017,~~2023, are as follows:


	June 30, 2023
	Securities in Unrealized Loss Position Less Than 12 Months				Securities in Unrealized Loss Position Greater Than 12 Months				Total
	Gross Unrealized Losses		Fair Market Value		Gross Unrealized Losses		Fair Market Value		Gross Unrealized Losses		Fair Market Value
Corporate bonds	$	(62.0)	$	2,255.9	$	(1,246.3)	$	12,050.5	$	(1,308.3)	$	14,306.4
U.S. Treasury securities	(85.5)		4,629.4		(204.9)		2,876.3		(290.4)		7,505.7
Canadian government obligations and Canadian government agency obligations	(5.8)		333.9		(139.2)		1,588.0		(145.0)		1,921.9
U.S. government agency securities	(0.6)		28.2		(179.2)		1,432.2		(179.8)		1,460.4
Asset-backed securities	(2.0)		159.7		(67.7)		975.6		(69.7)		1,135.3
Canadian provincial bonds	(2.7)		127.0		(75.4)		757.3		(78.1)		884.3
Commercial mortgage-backed securities	(6.7)		126.9		(40.0)		505.6		(46.7)		632.5
Other securities	(14.5)		574.0		(81.9)		629.0		(96.4)		1,203.0
	$	(179.8)	$	8,235.0	$	(2,034.6)	$	20,814.5	$	(2,214.4)	$	29,049.5

June 30, 2017
Securities in Unrealized Loss Position Less Than 12 Months Securities in Unrealized Loss Position Greater Than 12 Months Total
Gross
Unrealized
Losses
Fair Market
Value
Gross
Unrealized
Losses
Fair Market
Value

Gross
Unrealized
Losses

Fair
Market Value
Corporate bonds $ (22.0 ) $ 2,619.9
$ —
$ 7.4
$ (22.0 ) $ 2,627.3
Asset-backed securities (8.5 ) 1,916.1
(0.1 ) 11.3
(8.6 ) 1,927.4
U.S. government agency securities (13.4 ) 1,935.3
—
—
(13.4 ) 1,935.3
U.S. Treasury securities (14.3 ) 1,317.8
—
1.0
(14.3 ) 1,318.8
Canadian government obligations and
Canadian government agency obligations (11.4 ) 699.6
—
—
(11.4 ) 699.6
Canadian provincial bonds (1.4 ) 179.8
—
—
(1.4 ) 179.8
Municipal bonds (1.2 ) 98.8
(0.1 ) 1.2
(1.3 ) 100.0
Other securities (1.3 ) 148.0
(0.1 ) 8.9
(1.4 ) 156.9
$ (73.5 ) $ 8,915.3
$ (0.3 ) $ 29.8
$ (73.8 ) $ 8,945.1

At December 31, ~~2017,~~2023, corporate bonds include investment-grade debt securities ~~which include~~with a wide variety of issuers, industries, and sectors, primarily ~~carry~~carrying credit ratings of A and above, and have maturities ~~ranging~~ranging from January ~~2018~~2024 through ~~March 2026.~~November 2033.

At December 31, ~~2017,~~2023, asset-backed securities include ~~AAA rated~~AAA-rated senior tranches of securities with ~~predominantly~~predominantly prime collateral of fixed-rate auto loan, credit card, ~~auto loan,~~and equipment lease ~~and rate reduction~~ receivables with fair values of ~~$2,183.6~~$552.4 million, ~~$1,581.6 million, $439.6~~$377.7 million, and ~~$222.9~~$157.3 million, respectively. These securities are collateralized by the ~~cash~~cash flows of the underlying pools of receivables. The primary risk associated with these securities is the collection risk of the underlying receivables. All collateral on such asset-backed securities has performed as expected through December 31, ~~2017.~~2023.

At December 31, ~~2017,~~2023, U.S. government ~~agency~~agency securities primarily include debt directly issued by Federal ~~Home Loan~~Farm Credit Banks and Federal ~~Farm Credit~~Home Loan Banks with fair values of ~~$2,058.8~~$990.5 million and ~~$603.0~~$447.1 million, respectively. U.S. government agency securities represent senior, unsecured, non-callable debt that primarily carry ratings of Aaa by Moody's, and AA+ by Standard & Poor's, with maturities ranging from ~~June 2018~~February 2024 through ~~November 2025.~~March 2033.

At December 31, ~~2017, other securities and their fair value primarily represent: AAA and AA rated supranational bonds of $154.1 million,~~2023, U.S. government agency commercial mortgage-backed securities of ~~$147.0~~$568.8 million include those issued by ~~Federal National Mortgage Association ("Fannie Mae") and~~ Federal Home Loan Mortgage Corporation ~~Aa2 rated~~and Federal National Mortgage Association.

At December 31, 2023, other securities primarily include municipal bonds, diversified with a variety of issuers, with credit ratings of A and above with fair values of $534.3 million, AA-rated United Kingdom Gilt securities of ~~$137.8~~$399.5 million, ~~AAA~~ and ~~AA rated sovereign~~AAA-rated supranational bonds of ~~$110.8 million, and AA rated mortgage-backed securities of $87.2~~$211.9 million. The Company's mortgage-backed securities represent an undivided beneficial ownership interest in a group or pool of one or more residential mortgages. These securities are collateralized by the cash flows of 15-year and 30-year residential mortgages and are primarily guaranteed by Fannie Mae as to the timely payment of principal and interest.

Classification of corporate investments on the Consolidated Balance Sheets is as follows:

(a) - Short-term marketable securities are included within Other current assets on the Consolidated Balance Sheets.

(b) - Long-term marketable securities are included within Other assets on the Consolidated Balance Sheets.

Funds held for clients represent assets that, based upon the Company's intent, are restricted for use solely for the purposes of satisfying the obligations to remit funds relating to the Company’s payroll and payroll tax filing services, which are classified as client funds obligations on our Consolidated Balance Sheets.

Funds held for clients have been invested in the following categories:


	December 31,		June 30,
	2023		2023
Funds held for clients:
Restricted cash and cash equivalents held to satisfy client funds obligations	$	12,238.0	$	6,688.0
Restricted short-term marketable securities held to satisfy client funds obligations	6,479.6		5,601.9
Restricted long-term marketable securities held to satisfy client funds obligations	23,791.5		24,043.7
Total funds held for clients	$	42,509.1	$	36,333.6

December 31, June 30,
2017 2017
Funds held for clients:
Restricted cash and cash equivalents held to satisfy client funds obligations $ 12,086.4
$ 5,401.2
Restricted short-term marketable securities held to satisfy client funds obligations 2,285.3
2,918.5
Restricted long-term marketable securities held to satisfy client funds obligations 20,079.6
18,971.8
Total funds held for clients $ 34,451.3
$ 27,291.5

Client funds obligations represent the Company's contractual obligations to remit funds to satisfy clients' payroll, tax, and ~~tax~~other payee payment obligations and are recorded on the Consolidated Balance Sheets at the time that the Company impounds funds from clients. The client funds obligations represent liabilities that will be repaid within one year of the balance sheet date. The Company has reported client funds obligations as a current liability on the Consolidated Balance Sheets totaling ~~$34,508.1~~ $44,002.1 million and ~~$27,189.4~~$38,538.6 million at December 31, ~~2017~~2023 and June 30, ~~2017,~~2023, respectively. The Company has classified funds held for clients as a current asset since these funds are held solely for the ~~purposes~~purpose of satisfying the client funds obligations. Of the Company’s funds held for clients at December 31, 2023 and June 30, 2023, $39,005.9 million and $32,758.1 million, respectively, are held in the grantor trust. The liabilities held within the trust are intercompany liabilities to other Company subsidiaries and are eliminated in consolidation.

The Company has reported the cash flows related to the purchases of corporate and client funds marketable securities and related to the proceeds from the sales and maturities of corporate and client funds marketable securities on a gross basis in the investing section of the Statements of Consolidated Cash Flows. ~~Beginning September 30, 2017, as a result of the adoption of ASU 2016-18 (see Note 2), the~~The Company has reported the cash and cash equivalents related to client funds investments with original maturities of ninety days or less, within the beginning and ending balances of cash, cash equivalents, restricted cash, and restricted cash equivalents. These amounts have been reconciled to the Consolidated Balance Sheets on the Statements of Consolidated Cash Flows. Refer to Note 2 for a summary of the change in presentation as a result of the adoption of ASU 2016-18. The Company has reported the cash flows related to the cash received from and paid on behalf of clients on a net basis within net increase / (decrease) in client funds obligations in the financing activities section of the Statements of Consolidated Cash Flows.

Approximately 80% of the available-for-sale securities held a AAA or AA rating at December 31, 2017, as rated by Moody's, Standard & Poor's, DBRS for Canadian denominated securities, and Fitch for asset-backed and commercial mortgage backed securities. All available-for-sale securities were rated as investment grade at December 31, ~~2017.~~2023.

Expected maturities of available-for-sale securities at December 31, ~~2017~~2023 are as follows:


One year or less	$	6,504.0
One year to two years	6,799.5
Two years to three years	7,078.7
Three years to four years	2,336.7
After four years	7,576.6
Total available-for-sale securities	$	30,295.5

The Company records leases on the Consolidated Balance Sheets as operating lease right-of-use (“ROU”) assets, records the current portion of operating lease liabilities within accrued expenses and other current liabilities and, separately, records long-term operating lease liabilities. The difference between total ROU assets and total lease liabilities is primarily attributable to prepayments of our obligations and the recognition of various lease incentives.

The Company has entered into operating lease agreements for facilities and equipment. The Company's leases have remaining lease terms of up to approximately eleven years.

One year or less $ 2,288.5
One year to two years 4,112.2
Two years to three years 5,290.8
Three years to four years 4,556.3
After four years 6,127.7
Total available-for-sale securities $ 22,375.5
The components of operating lease expense were as follows:


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2023		2022		2023		2022
Operating lease cost	$	32.2	$	32.1	$	66.2	$	67.8
Short-term lease cost	0.4		0.4		0.9		0.7
Variable lease cost	4.8		3.9		8.0		6.8
Total operating lease cost	$	37.4	$	36.4	$	75.1	$	75.3

The following table provides supplemental cash flow information related to the Company's leases:


	Six Months Ended
	December 31,
	2023		2022
Cash paid for operating lease liabilities	$	63.6	$	65.3
Operating lease ROU assets obtained in exchange for new operating lease liabilities	$	45.8	$	18.7

Other information related to our operating lease liabilities is as follows:


	December 31,			June 30,
	2023			2023
Weighted-average remaining lease term (in years)	5			6
Weighted-average discount rate	3.0		%	2.7		%
Current operating lease liability	$	96.5		$	95.5

As of December 31, 2023, maturities of operating lease liabilities are as follows:


Six months ending June 30, 2024	$	56.9
Twelve months ending June 30, 2025	100.4
Twelve months ending June 30, 2026	86.7
Twelve months ending June 30, 2027	75.7
Twelve months ending June 30, 2028	56.0
Thereafter	81.0
Total undiscounted lease obligations	456.7
Less: Imputed interest	(33.4)
Net lease obligations	$	423.3

Changes in goodwill for the six months ended December 31, ~~2017~~2023 are as follows:


	Employer Services		PEO Services		Total
Balance at June 30, 2023	$	2,334.6	$	4.8	$	2,339.4
Additions and other adjustments	27.5		—		27.5
Currency translation adjustments	2.9		—		2.9

Balance at December 31, 2023	$	2,365.0	$	4.8	$	2,369.8

Employer
Services

PEO
Services
Total
Balance at June 30, 2017 $ 1,736.2
$ 4.8
$ 1,741.0
Additions and other adjustments, net 403.8
—
403.8
Currency translation adjustments 19.5
—
19.5
Balance at December 31, 2017 $ 2,159.5
$ 4.8
$ 2,164.3

Components of intangible assets, net, are as follows:


	December 31,		June 30,
	2023		2023
Intangible assets:
Software and software licenses	$	3,673.4	$	3,548.9
Customer contracts and lists	1,162.6		1,140.6
Other intangibles	242.0		241.9
	5,078.0		4,931.4
Less accumulated amortization:
Software and software licenses	(2,559.0)		(2,442.6)
Customer contracts and lists	(964.1)		(907.5)
Other intangibles	(239.8)		(237.7)
	(3,762.9)		(3,587.8)
Intangible assets, net	$	1,315.1	$	1,343.6

Other intangibles consist primarily of purchased rights, ~~purchased content,~~ trademarks and trade names (acquired directly or through acquisitions). All intangible assets have finite lives and, as such, are subject to amortization. The weighted average remaining useful life of the intangible assets is 56 years (4(6 years for software and software licenses, 93 years for customer contracts and lists, and ~~6 years~~1 year for other intangibles). Amortization of intangible assets was ~~$51.8~~$94.5 million and ~~$42.8~~$93.7 million for the three months ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively, and ~~$98.4~~$190.2 million and ~~$85.4~~$186.1 million for the six months ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively.

Estimated future amortization expenses of the Company's existing intangible assets are as follows:


	Amount
Six months ending June 30, 2024	$	210.2
Twelve months ending June 30, 2025	$	313.9
Twelve months ending June 30, 2026	$	204.7
Twelve months ending June 30, 2027	$	163.2
Twelve months ending June 30, 2028	$	125.0
Twelve months ending June 30, 2029	$	95.3

Amount
Six months ending June 30, 2018 $ 98.9
Twelve months ending June 30, 2019 $ 206.9
Twelve months ending June 30, 2020 $ 178.3
Twelve months ending June 30, 2021 $ 130.0
Twelve months ending June 30, 2022 $ 96.9
Twelve months ending June 30, 2023 $ 58.5

Note ~~10.~~9. Short-term Financing

The Company has a ~~$3.5~~$4.25 billion, 364-day credit agreement that matures in June ~~2018~~2024 with a one year term-out option. The Company also has a ~~$2.25~~five year, $3.2 billion ~~five-year~~ credit facility ~~that matures~~maturing in June ~~2022~~2026 that ~~also~~ contains an accordion feature under which the aggregate commitment can be increased by $500 million, subject to the availability of additional commitments. In addition, the Company also has a ~~five-year $3.75~~$2.25 billion, five year credit facility ~~maturing~~that matures in June ~~2021~~2028 that contains an accordion feature under which the aggregate commitment can be increased by $500 million, subject to the availability of additional commitments. The interest rate applicable to committed borrowings is tied to ~~LIBOR,~~SOFR, the effective federal funds rate, or the prime rate depending on the notification provided by the Company to the syndicated financial institutions prior to borrowing. The Company is also required to pay facility fees on the credit agreements. The primary uses of the credit facilities are to provide liquidity to the commercial paper program and funding for general corporate purposes, if necessary. The Company had no borrowings through December 31, ~~2017~~2023 under the credit agreements.

The Company's U.S. short-term funding requirements primarily related to client funds are sometimes obtained on an unsecured basis through the issuance of commercial paper, rather than liquidating previously-collected client funds that have already been invested in available-for-sale securities. This commercial paper program provides for the issuance of up to ~~$9.5~~$9.7 billion in aggregate maturity value. The Company’s commercial paper program is rated A-1+ by Standard & Poor’s, Prime-1 (“P-1”) by Moody’s and ~~Prime-1~~F1+ by ~~Moody’s.~~Fitch. These ratings denote the highest quality commercial paper securities. Maturities of commercial paper can range from overnight to up to 364 days. At December 31, ~~2017~~2023 and June 30, ~~2017,~~2023, the Company had no commercial paper borrowing outstanding. For the three months ended December 31, 2017 and 2016, the Company had average daily borrowings of $3.5 billion and $4.2 billion, respectively, at weighted average interest rates of 1.2% and 0.5%, respectively. For the six months ended December 31, 2017 and 2016, the Company had average daily borrowings of $3.7 billion and $4.2 billion, respectively, at weighted average interest rates of 1.2% and 0.5%, respectively. The weighted average maturityDetails of the ~~Company’s~~borrowings under the commercial paper ~~during the three and six months ended December 31, 2017 was approximately two days.~~program are as follows:


	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2023			2022			2023			2022
Average daily borrowings (in billions)	$	3.9		$	3.4		$	4.0		$	4.0
Weighted average interest rates	5.4		%	3.5		%	5.3		%	2.8		%
Weighted average maturity (approximately in days)	2 days			2 days			2 days			2 days

The Company’s U.S., Canadian and ~~Canadian~~United Kingdom short-term funding requirements related to client funds obligations are sometimes obtained on a secured basis through the use of reverse repurchase agreements, which are collateralized principally by government and government agency securities, rather than liquidating previously-collected client funds that have already been invested in available-for-sale securities. These agreements generally have terms ranging from overnight to up to five business days. At December 31, ~~2017~~2023 and June 30, ~~2017, there were no~~2023, the Company had $21.6 million and $105.4 million, respectively, of outstanding obligations related to reverse repurchase agreements. Details of the reverse repurchase ~~agreements. For the three months ended December 31, 2017 and 2016, the Company had average outstanding balances under reverse repurchase~~ agreements of $537.0 million and $267.6 million, respectively, at weighted average interest rates of 1.2% and 0.5%, respectively. For the six months ended December 31, 2017 and 2016, the Company had average outstanding balances under reverse repurchase agreements of $531.6 million and $313.4 million, respectively, at weighted average interest rates of 1.1% and 0.5%, respectively.are as follows:


	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2023			2022			2023			2022
Average outstanding balances	$	2,423.3		$	960.8		$	1,901.1		$	1,040.1
Weighted average interest rates	5.4		%	3.4		%	5.4		%	2.9		%

Note ~~11. Long-term~~10. Debt

The Company ~~has~~issued three series of fixed-rate notes with ~~5-year~~staggered maturities of 7 and ~~10-year maturities for an aggregate principal amount of $2.0~~10-years totaling $3.0 billion (collectively the “Notes”). The Notes are senior unsecured obligations, and interest is payable in arrears, semi-annually.

The principal amounts and associated effective interest rates of the Notes and other debt as of December 31, ~~2017~~2023 and June 30, ~~2017,~~2023, are as follows:


Debt instrument	Effective Interest Rate	December 31, 2023		June 30, 2023

Fixed-rate 3.375% notes due September 15, 2025	3.47%	$	1,000.0	$	1,000.0
Fixed-rate 1.700% notes due May 15, 2028	1.85%	1,000.0		1,000.0
Fixed-rate 1.250% notes due September 1, 2030	1.83%	1,000.0		1,000.0
Other		4.5		4.9
		3,004.5		3,004.9
Less: current portion (a)		(1.1)		(1.2)
Less: unamortized discount and debt issuance costs		(13.2)		(14.7)
Total long-term debt		$	2,990.2	$	2,989.0

Debt instrument Effective Interest Rate December 31, 2017
June 30,
2017
Fixed-rate 2.250% notes due September 15, 2020 2.37% $ 1,000.0
$ 1,000.0
Fixed-rate 3.375% notes due September 15, 2025 3.47% 1,000.0
1,000.0
Other 14.0
20.3
2,014.0
2,020.3
Less: current portion (2.5 ) (7.8 )
Less: unamortized discount and debt issuance costs (9.1 ) (10.1 )
Total long-term debt $ 2,002.4
$ 2,002.4
(a) - Current portion of long-term debt as of December 31, 2023 is included within accrued expenses and other current liabilities on the Consolidated Balance Sheets.

The effective interest rates for the Notes include the interest on the Notes and amortization of the discount and debt issuance costs.

As of December 31, ~~2017,~~2023, the fair value of the Notes, based on Level 2 inputs, was ~~$2,034.7~~$2,716.4 million. For a description of the fair value hierarchy and the Company's fair value methodologies, including the use of an independent third-party pricing service, see Note 1 ~~"Summary~~“Summary of Significant Accounting ~~Policies"~~Policies” in the Company's Annual Report on Form 10-K for fiscal ~~2017.~~2023.

Note ~~12.~~11. Employee Benefit Plans

A. Stock-based Compensation ~~Plans~~Plans. Stock-based compensation consists of the following:

The Company's share-based compensation consists of stock options, time-based restricted stock, time-based restricted stock units, performance-based restricted stock, and performance-based restricted stock units. The Company also offers an employee stock purchase plan for eligible employees. Beginning in September 2022, the Company discontinued granting stock options, time-based restricted stock and performance-based restricted stock. Any such future awards will be grants of time-based restricted stock units and/or performance-based restricted stock units, depending on employee eligibility. Time-based restricted stock unit awards and performance-based restricted stock unit awards granted to employees with a home country of the United States are settled in stock, and for awards granted to employees with a home country outside the United States are generally settled in cash.

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 1.4~~repurchased 1.1 million and ~~4.6~~0.9 million shares in the three months ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively, and repurchased ~~3.6~~2.1 million and ~~8.6~~2.3 million shares in the six months ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively. 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.

The following table represents pre-tax stock-based compensation expense for the three and six months ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively:


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2023		2022		2023		2022
Operating expenses	$	7.4	$	6.5	$	14.8	$	12.5
Selling, general and administrative expenses	57.6		44.4		100.4		81.5
Research and development	8.6		7.5		17.2		15.0
Total stock-based compensation expense	$	73.6	$	58.4	$	132.4	$	109.0

Three Months Ended Six Months Ended
December 31, December 31,
2017 2016 2017 2016
Operating expenses $ 5.4
$ 6.3
$ 10.6
$ 11.8
Selling, general and administrative expenses 27.5
24.3
56.1
45.9
System development and programming costs 5.8
5.2
11.0
9.2
Total stock-based compensation expense $ 38.7
$ 35.8
$ 77.7
$ 66.9

The methods and assumptions used in the determination of the fair value of stock-based awards are consistent with those described in the Company's fiscal 2017 Form 10-K. See the Company's Annual Report on Form 10-K for fiscal 2017 for a detailed description of the Company's stock-based compensation awards and employee stock purchase plan, including information related to vesting terms, service and performance conditions, payout percentages, and process for estimating the fair value of stock options granted.

B. Pension Plans

The components of net pension ~~expense~~income were as follows:


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2023		2022			2023		2022
Service cost – benefits earned during the period	$	1.3	$	1.2		$	2.6	$	2.3
Interest cost on projected benefits	21.1		19.5			42.3		39.0
Expected return on plan assets	(29.0)		(31.8)			(58.0)		(63.7)
Net amortization and deferral	0.8		0.4			1.5		1.0
Settlement charges and special termination benefits	—		—			—		1.4
Net pension (income)/expense	$	(5.8)	$	(10.7)		$	(11.6)	$	(20.0)

Three Months Ended Six Months Ended
December 31, December 31,
2017 2016 2017 2016
Service cost – benefits earned during the period $ 18.6
$ 20.2
$ 37.3
$ 40.4
Interest cost on projected benefits 16.3
14.9
32.6
30.0
Expected return on plan assets (34.3 ) (33.9 ) (68.6 ) (67.9 )
Net amortization and deferral 2.1
4.8
4.2
9.6
Net pension expense $ 2.7
$ 6.0
$ 5.5
$ 12.1

Note ~~13.~~12. Income Taxes

The effective tax rate for the three months ended December 31, ~~2017~~2023 and ~~2016~~2022 was ~~17.4%~~23.2%. The rate remained flat due to a lower state income tax rate and ~~35.0%, respectively, and~~a lower benefit for adjustments to prior year tax liabilities in the three months ended December 31, 2023.

The effective tax rate for the six months ended December 31, ~~2017~~2023 and ~~2016~~2022 was ~~22.0%~~22.3% and ~~33.1%~~23.0%, respectively. The ~~decreases in the effective tax rates are~~decrease is primarily due to ~~the Tax Cuts~~lower reserves for uncertain tax positions and ~~Jobs Act (the “Act”) enacted~~a valuation allowance release offset by a lower excess tax benefit on ~~December 22, 2017 and the impact of sale of the CHSA and COBRA businesses~~stock-based compensation in the ~~three months ended December 31, 2016.~~

The Act reduces the U.S. federal corporate income tax rate from 35% to 21%. In accordance with ASC 740 companies are required to re-measure deferred tax balances using the new enacted tax rates. The Act requires companies to pay a one-time transition tax on earnings of the Company's foreign subsidiaries that were previously tax deferred for U.S. income taxes and creates new taxes on the Company's foreign sourced earnings. The rate change is administratively effective at the beginning of the Company's fiscal year resulting in a blended rate for fiscal 2018 of 28.1%.

~~Income tax expense reported for the three and~~ six months ended December 31, 2017 was adjusted to reflect the effects of the Act and resulted in a decrease in income tax expense of approximately $98.0 million which includes a one-time net benefit of $45.7 million. The $45.7 million is comprised of the application of the newly enacted rates to the Company's U.S. deferred tax balances partially offset by the one-time transition tax and the recording of a valuation allowance against the Company's foreign tax credits which may not be realized. The Act’s foreign tax credit provisions may limit the Company’s ability to utilize existing foreign tax credits in future periods, accordingly we have estimated that approximately $23.1 million will expire unutilized.2023.

The accounting for the effects of the rate change on deferred tax balances is not complete and provisional amounts were recorded for these items. The Company re-measured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future. The benefit recorded relating to the re-measurement of the Company's deferred tax balances was $84.7 million. The Company is still analyzing certain aspects of the Act and refining calculations, which could potentially affect the re-measurement of these balances or potentially give rise to new deferred tax amounts.

The one-time transition tax is based on the total post-1986 earnings and profits ("E&P") that was previously deferred from US income taxes. The Company recorded a provisional amount for the one-time transition tax liability of $15.9 million for the Company's foreign subsidiaries. The Company has not yet completed the calculation of the total post-1986 E&P for these foreign subsidiaries. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when the Company finalizes the calculation of post-1986 foreign E&P previously deferred from US federal taxation and finalizes the amounts held in cash or other specified assets.

Note ~~14.~~13. Commitments and Contingencies

In ~~July 2016, Uniloc USA, Inc.~~May 2020, a putative class action complaint was 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 (the "Court") alleging that Company products and services infringe four patents. Uniloc alleged 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, and license use management on a network.New Jersey. The complaint ~~sought~~asserts violations of the Employee Retirement Income Security Act of 1974 (“ERISA”) in connection with the ADP TotalSource Retirement Savings Plan’s fiduciary administrative and investment decision-making. The complaint seeks statutory and other unspecified monetary damages, ~~costs,~~injunctive relief and injunctive relief. On September 28, 2017, the Court granted ADP’s motion to dismiss the complaint on the grounds that all asserted claims of the four patents are invalid and dismissed the case with prejudice.

attorney’s fees. The Company ~~has acquired a license~~is unable to ~~the four patents and a release for~~estimate any ~~potential past infringement liability. Despite the Company being licensed and released, Uniloc appealed the Court's invalidity determination~~reasonably possible loss, or range of loss, with respect to ~~the U.S. Court of Appeals for the Federal Circuit.~~this matter. The Company ~~has moved to dismiss Uniloc's appeal on the ground that the license and release have removed any justiciable dispute between the parties concerning the patents; the Company's motion~~ is pending. Even though the Company's motion is pending, as a result of the license and release the Company does not believe the result of Uniloc’s appeal will have a material adverse impact on the Company.vigorously defending against this lawsuit.

The Company is subject to various claims, litigation, and 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 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. Stockholders' Equity

Changes in stockholders' equity by component are as follows:


	Three Months Ended
	December 31, 2023
	Common Stock		Capital in Excess of Par Value		Retained Earnings		Treasury Stock		AOCI		Total
Balance at September 30, 2023	$	63.9	$	2,188.7	$	22,455.4	$	(18,767.4)	$	(2,467.8)	$	3,472.8
Net earnings	—		—		878.4		—		—		878.4
Other comprehensive income	—		—		—		—		722.6		722.6
Stock-based compensation expense	—		67.6		—		—		—		67.6
Issuances relating to stock compensation plans	—		6.6		—		0.3		—		6.9
Treasury stock acquired (1.1 million shares repurchased)	—		—		—		(252.0)		—		(252.0)
Dividends declared ($1.40 per share)	—		—		(576.7)		—		—		(576.7)

Balance at December 31, 2023	$	63.9	$	2,262.9	$	22,757.1	$	(19,019.1)	$	(1,745.2)	$	4,319.6


	Three Months Ended
	December 31, 2022
	Common Stock		Capital in Excess of Par Value		Retained Earnings		Treasury Stock		AOCI		Total
Balance at September 30, 2022	$	63.9	$	1,893.1	$	21,039.0	$	(17,695.4)	$	(2,724.1)	$	2,576.5
Net earnings	—		—		813.1		—		—		813.1
Other comprehensive income	—		—		—		—		273.2		273.2
Stock-based compensation expense	—		51.0		—		—		—		51.0
Issuances relating to stock compensation plans	—		10.1		—		6.2		—		16.3
Treasury stock acquired (0.9 million shares repurchased)	—		—		—		(224.3)		—		(224.3)
Dividends declared ($1.25 per share)	—		—		(519.1)		—		—		(519.1)

Balance at December 31, 2022	$	63.9	$	1,954.2	$	21,333.0	$	(17,913.5)	$	(2,450.9)	$	2,986.7


	Six Months Ended
	December 31, 2023
	Common Stock		Capital in Excess of Par Value		Retained Earnings		Treasury Stock		AOCI		Total
Balance at June 30, 2023	$	63.9	$	2,102.3	$	22,118.0	$	(18,469.3)	$	(2,305.8)	$	3,509.1
Net earnings	—		—		1,737.8		—		—		1,737.8
Other comprehensive income	—		—		—		—		560.6		560.6
Stock-based compensation expense	—		121.7		—		—		—		121.7
Issuances relating to stock compensation plans	—		38.9		—		49.7		—		88.6
Treasury stock acquired (2.1 million shares repurchased)	—		—		—		(599.5)		—		(599.5)
Dividends declared ($2.65 per share)	—		—		(1,098.7)		—		—		(1,098.7)

Balance at December 31, 2023	$	63.9	$	2,262.9	$	22,757.1	$	(19,019.1)	$	(1,745.2)	$	4,319.6


	Six Months Ended
	December 31, 2022
	Common Stock		Capital in Excess of Par Value		Retained Earnings		Treasury Stock		AOCI		Total
Balance at June 30, 2022	$	63.9	$	1,794.2	$	20,696.3	$	(17,335.4)	$	(1,993.7)	$	3,225.3
Net earnings	—				1,592.2		—		—		1,592.2
Other comprehensive income	—				—		—		(457.2)		(457.2)
Stock-based compensation expense	—		97.0		—		—		—		97.0
Issuances relating to stock compensation plans	—		63.0		—		46.5		—		109.5
Treasury stock acquired (2.3 million shares repurchased)	—		—		—		(624.6)		—		(624.6)
Dividends declared ($2.29 per share)	—		—		(955.5)		—		—		(955.5)

Balance at December 31, 2022	$	63.9	$	1,954.2	$	21,333.0	$	(17,913.5)	$	(2,450.9)	$	2,986.7

Note 15. Reclassifications out of Accumulated Other Comprehensive Income ~~("AOCI"~~(“AOCI”)

Changes in AOCI by component are as follows:


	Three Months Ended
	December 31, 2023
	Currency Translation Adjustment		Net Gains/Losses on Available-for-sale Securities			Cash Flow Hedging Activities			Pension Liability			Accumulated Other Comprehensive (Loss) /Income
Balance at September 30, 2023	$	(385.4)	$	(1,824.6)		$	(22.5)		$	(235.3)		$	(2,467.8)
Other comprehensive income/(loss) before reclassification adjustments	53.9		860.5			—			—			914.4
Tax effect	—		(194.9)			—			—			(194.9)
Reclassification adjustments to net earnings	—		2.0		(A)	1.1		(C)	0.9		(B)	4.0
Tax effect	—		(0.5)			(0.2)			(0.2)			(0.9)

Balance at December 31, 2023	$	(331.5)	$	(1,157.5)		$	(21.6)		$	(234.6)		$	(1,745.2)


	Three Months Ended
	December 31, 2022
	Currency Translation Adjustment		Net Gains/Losses on Available-for-sale Securities			Cash Flow Hedging Activities			Pension Liability			Accumulated Other Comprehensive (Loss) /Income
Balance at September 30, 2022	$	(438.9)	$	(1,978.1)		$	(25.8)		$	(281.3)		$	(2,724.1)
Other comprehensive (loss)/income before reclassification adjustments	71.1		242.2			—			—			313.3
Tax effect	—		(51.2)			—			—			(51.2)
Reclassification adjustments to net earnings	—		11.5		(A)	1.1		(C)	1.5		(B)	14.1
Tax effect	—		(2.7)			(0.2)			(0.1)			(3.0)

Balance at December 31, 2022	$	(367.8)	$	(1,778.3)		$	(24.9)		$	(279.9)		$	(2,450.9)


	Six Months Ended
	December 31, 2023
	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, 2023	$	(340.8)	$	(1,705.6)		$	(23.3)		$	(236.1)		$	(2,305.8)
Other comprehensive (loss)/income before reclassification adjustments	9.3		709.9			—			—			719.2
Tax effect	—		(164.8)			—			—			(164.8)
Reclassification adjustments to net earnings	—		4.0		(A)	2.2		(C)	1.9		(B)	8.1
Tax effect	—		(1.0)			(0.5)			(0.4)			(1.9)

Balance at December 31, 2023	$	(331.5)	$	(1,157.5)		$	(21.6)		$	(234.6)		$	(1,745.2)

Three Months Ended
December 31, 2017
Currency Translation Adjustment Net Gains/Losses on Available-for-sale Securities Pension Liability Accumulated Other Comprehensive Loss
Balance at September 30, 2017 $ (188.3 ) $ 59.0
$ (215.3 ) $ (344.6 )
Other comprehensive income/(loss)
before reclassification adjustments 4.1
(147.3 ) —
(143.2 )
Tax effect —
53.1
—
53.1
Reclassification adjustments to
net earnings —
1.0
(A) 2.3
(B) 3.3
Tax effect —
(0.4 ) (0.8 ) (1.2 )
Balance at December 31, 2017 $ (184.2 ) $ (34.6 ) $ (213.8 ) $ (432.6 )


	Six Months Ended
	December 31, 2022
	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, 2022	$	(354.2)	$	(1,330.0)		$	(26.6)		$	(282.9)		$	(1,993.7)
Other comprehensive (loss)/income before reclassification adjustments	(13.6)		(592.9)			—			—			(606.5)
Tax effect	—		134.5			—			—			134.5
Reclassification adjustments to net earnings	—		13.0		(A)	2.2		(C)	3.6		(B)	18.8
Tax effect	—		(2.9)			(0.5)			(0.6)			(4.0)

Balance at December 31, 2022	$	(367.8)	$	(1,778.3)		$	(24.9)		$	(279.9)		$	(2,450.9)

Three Months Ended
December 31, 2016
Currency Translation Adjustment Net Gains/Losses on Available-for-sale Securities Pension Liability Accumulated Other Comprehensive Loss
Balance at September 30, 2016 $ (243.0 ) $ 288.5
$ (291.9 ) $ (246.4 )
Other comprehensive loss
before reclassification adjustments (55.0 ) (413.3 ) —
(468.3 )
Tax effect —
145.4
—
145.4
Reclassification adjustments to
net earnings —
(1.3 ) (A) 5.1
(B) 3.8
Tax effect —
0.6
(1.8 ) (1.2 )
Balance at December 31, 2016 $ (298.0 ) $ 19.9
$ (288.6 ) $ (566.7 )

Six Months Ended

December 31, 2017

Currency Translation Adjustment
Net Gains/Losses on Available-for-sale Securities
Pension Liability
Accumulated Other Comprehensive Loss
Balance at June 30, 2017 $ (230.8 ) $ 68.3
$ (216.7 ) $ (379.2 )
Other comprehensive income/(loss)
before reclassification adjustments 46.6
(160.2 ) —
(113.6 )
Tax effect —
56.6
—
56.6
Reclassification adjustments to
net earnings —
1.1
(A) 4.6
(B) 5.7
Tax effect —
(0.4 ) (1.7 ) (2.1 )
Balance at December 31, 2017 $ (184.2 ) $ (34.6 ) $ (213.8 ) $ (432.6 )

Six Months Ended
December 31, 2016
Currency Translation Adjustment Net Gains/Losses on Available-for-sale Securities Pension Liability Accumulated Other Comprehensive Loss
Balance at June 30, 2016 $ (253.8 ) $ 333.8
$ (295.1 ) $ (215.1 )
Other comprehensive loss
before reclassification adjustments (44.2 ) (484.7 ) —
(528.9 )
Tax effect —
171.6
—
171.6
Reclassification adjustments to
net earnings —
(1.4 ) (A) 10.2
(B) 8.8
Tax effect —
0.6
(3.7 ) (3.1 )
Balance at December 31, 2016 $ (298.0 ) $ 19.9
$ (288.6 ) $ (566.7 )

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

(B) Reclassification adjustments out of AOCI are included in net pension (income)/expense (see Note 12)11).

(C) Reclassification adjustments out of AOCI are included in Interest expense on the Statements of Consolidated Earnings (see Note 10).

Note 16. Interim Financial Data by Segment

Based upon similar economic and operational characteristics, the Company’s strategic business units have been aggregated into the following two 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), and certain corporate overhead charges and expenses that have not been allocated to the reportable ~~segments. Changes~~segments, including corporate functions, costs related to transformation, severance costs, non-recurring gains and losses, the ~~allocation methodology for certain allocations have been adjusted in both the current period~~elimination of intercompany transactions, and ~~the prior period in the table below and did not materially affect reportable segment results.~~

interest 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 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 to the reportable segments' revenues and earnings before income taxes is eliminated in consolidation.

Segment Results:


	Revenues
	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2023		2022		2023		2022
Employer Services	$	3,125.2	$	2,891.9	$	6,171.6	$	5,682.2
PEO Services	1,546.1		1,503.3		3,015.7		2,932.7
Other	(3.3)		(4.2)		(7.0)		(8.3)
	$	4,668.0	$	4,391.0	$	9,180.3	$	8,606.6


	Earnings before Income Taxes
	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2023		2022		2023		2022
Employer Services	$	1,061.9	$	934.6	$	2,070.4	$	1,798.1
PEO Services	255.0		255.6		477.9		485.9
Other	(173.1)		(132.1)		(311.7)		(215.9)
	$	1,143.8	$	1,058.1	$	2,236.6	$	2,068.1

Revenues
Three Months Ended Six Months Ended
December 31, December 31,
2017 2016 2017 2016
Employer Services $ 2,437.6
$ 2,309.3
$ 4,754.0
$ 4,570.6
PEO Services 945.3
822.9
1,848.8
1,617.6
Other (1.9 ) (2.3 ) (3.9 ) (6.0 )
Reconciling item:
Client fund interest (145.6 ) (142.6 ) (284.7 ) (278.0 )
$ 3,235.4
$ 2,987.3
$ 6,314.2
$ 5,904.2

Earnings before Income Taxes
Three Months Ended Six Months Ended
December 31, December 31,
2017 2016 2017 2016
Employer Services $ 706.4
$ 681.1
$ 1,353.0
$ 1,337.1
PEO Services 128.2
114.5
245.0
221.6
Other (123.3 ) 133.2
(199.4 ) 34.1
Reconciling item:
Client fund interest (145.6 ) (142.6 ) (284.7 ) (278.0 )
$ 565.7
$ 786.2
$ 1,113.9
$ 1,314.8

~~Note 17. Subsequent Events~~

In January 2018, the Company acquired 100% of the outstanding shares of Work Market, Inc., a leading provider of cloud-based freelance management solutions, for approximately $125 million in cash. The results of Work Market, Inc. will be reported within the Company’s Employer Services segment. The acquisition will be accounted for using the acquisition method of business combination under ASC 805, ~~Business Combinations.~~

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

(Tabular dollars are presented in millions, except per share amounts)

FORWARD-LOOKING STATEMENTS

This document and other written or oral statements made from time to time by Automatic Data Processing, Inc. ~~and~~, its subsidiaries ~~("ADP"~~and variable interest entity (“ADP” or ~~"the Company"~~the “Company”) may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature and which may be identified by the use of words like “expects,” “assumes,” “projects,” “anticipates,” “estimates,” “we believe,” ~~“could”~~“could,” "is designed to" and other words of similar meaning, are forward-looking statements. These statements are based on management’s expectations and assumptions and depend upon or refer to future events or conditions and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed. Factors that could cause actual results to differ materially from those contemplated by the forward-looking statements or that could contribute to such difference include: ADP's success in obtaining and retaining clients, and selling additional services to clients; the pricing of products and services; the success of our new solutions; our ability to respond successfully to changes in technology, including artificial intelligence; compliance with existing or new legislation or regulations; changes in, or interpretations of, existing legislation or regulations; overall market, political and economic conditions, including interest rate and foreign currency ~~trends;~~trends and inflation; competitive conditions; our ability to maintain our current credit ratings and the impact on our funding costs and profitability; security or ~~privacy~~cyber breaches, fraudulent acts, and system interruptions and failures; employment and wage levels; ~~changes in technology;~~ availability of skilled ~~technical~~ associates; ~~and~~ the impact of new acquisitions and ~~divestitures.~~divestitures; the adequacy, effectiveness and success of our business transformation initiatives and the impact of any uncertainties related to major natural disasters or catastrophic events; and supply-chain disruptions. ADP disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. These risks and uncertainties, along with the risk factors discussed under “Item 1A. - Risk Factors” in our Annual Report on Form ~~10‑K~~10-K for the fiscal year ended June 30, ~~2017 ("~~2023 (“fiscal ~~2017"~~2023”), and in other written or oral statements made from time to time by ADP, should be considered in evaluating any forward-looking statements contained herein.

NON-GAAP FINANCIAL MEASURES

~~CRITICAL ACCOUNTING POLICIES~~

~~Our Consolidated Financial Statements~~In addition to our U.S. GAAP results, we use adjusted results and ~~accompanying notes have been prepared in accordance with accounting principles generally accepted~~other non-GAAP metrics to evaluate our operating performance in the ~~United States~~absence of ~~America (“U.S. GAAP”). The preparation~~certain items and for planning and forecasting of ~~these~~future periods. Adjusted EBIT, adjusted EBIT margin, adjusted net earnings, adjusted diluted earnings per share, adjusted effective tax rate and organic constant currency are all non-GAAP financial ~~statements requires management~~measures. Please refer to ~~make estimates, judgments, and assumptions that affect reported amounts of assets, liabilities, revenues, expenses, and other comprehensive income. We continually evaluate~~ the accounting policies and estimates used to prepare the Consolidated Financial Statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations oraccompanying financial ~~position are discussed in our Annual Report on Form 10-K for fiscal 2017~~tables in the ~~Critical Accounting Policies~~“Non-GAAP Financial Measures” section for a discussion of ~~Management's Discussion~~why ADP believes these measures are important and ~~Analysis~~for a reconciliation of ~~Financial Condition and Results of Operations.~~non-GAAP financial measures to their comparable GAAP financial measures.

~~RESULTS OF OPERATIONS~~

~~Executive Overview~~ EXECUTIVE OVERVIEW

We are ~~one~~a leading global provider of ~~the largest providers of global~~ cloud-based Human Capital Management ~~("HCM"~~(“HCM”) technology solutions ~~- including payroll, talent management, human resources and benefits administration, and time and attendance management -~~ to employers around the world. AsOur HCM solutions, which include both software and outsourcing services, are designed to help our clients manage their workforce through a ~~leader in this industry,~~dynamic business and regulatory landscape and the changing world of work. We continuously seek to enhance our leading HCM solutions to further support our clients. We see tremendous opportunity ahead as we ~~deliver~~focus on our ~~global~~three key Strategic Priorities: Leading with Best-in-Class HCM ~~strategy~~technology, Providing Unmatched Expertise and ~~make investments~~Outsourcing Solutions, and Leveraging our Global Scale for the Benefit of our Clients. Executing on our Strategic Priorities will be critical to enabling our growth in ~~highly strategic areas in order to strengthen our underlying business model and prospects for continued growth.~~the years ahead.

Highlights from the six months ended December 31, ~~2017~~2023 include:

•Revenue growth of 7% to $9,180.3 million; 6% organic constant currency

•Earnings before income taxes margin expansion of 30 bps, and adjusted EBIT margin expansion of 20 bps

•Diluted and adjusted diluted earnings per share ("EPS") growth of 10% to $4.20, respectively.

•Cash returned via shareholder friendly actions of $1.5B, including $1.0B of dividends and $0.5B share repurchases

During the second quarter we made continued progress on our strategy with several product enhancements and partnership expansions aimed at improving the overall experience for our clients. We continued the rollout of ADP Assist, which utilizes generative AI (GenAI) technology to proactively surface insights that enhance HR productivity, aid decision-making with data-driven insights, and streamline day-to-day tasks for our clients and their employees. We also extended GenAI powered capabilities to a greater portion of our service associates to support greater client engagement. Additionally, we expanded on partnerships with other leading technology providers to further simplify the payroll experience and drive more personalized interactions.

For the six months ended December 31, 2023, we delivered solid revenue growth of 7%, 6% organic constant currency. Our pays per control metric, which represents the number of employees on ADP clients' payrolls in the United States when measured on a same-store-sales basis for a subset of clients ranging from small to large businesses, grew 7%2% for the six months ended December 31, ~~2017~~

~~Diluted earnings per share ("EPS") increased from $1.94 to $1.96; adjusted diluted earnings per share increased from $1.73 to $1.90~~

~~Continued our shareholder friendly actions by returning over $400 million via share repurchases and approximately $500 million via dividends~~

During the six months ended December 31, 2017, we continued to migrate clients to our strategic platforms while making investments in R&D to provide best-in-class cloud-based HCM solutions to our clients. Simultaneously, we continued to streamline our service organization. These actions are improving client satisfaction and retention. We remain focused on

~~delivering results and executing on our strategy to transform our business for continued success within the competitive global HCM environment.~~

~~Our new business bookings increased 2% in the six months ended December 31, 2017,~~2023 as compared to the six months ended December 31, ~~2016.~~ 2022. PEO average worksite employees increased 2% for the six months ended December 31, 2023, as compared to the six months ended December 31, 2022.

We ~~see growth~~have a strong business model, generating significant cash flows with low capital intensity, and offer a suite of products that provide critical support to our clients’ HCM functions. We generate sufficient free cash flow to satisfy our cash dividend and our modest debt obligations, which enables us to absorb the impact of downturns and remain steadfast in our re-investments, longer term strategy, and commitments to shareholder friendly actions. We are committed to building upon our past successes by investing in our business through enhancements in research and development and by driving meaningful transformation in the ~~business as~~way we ~~continue to build momentum going into the second half of fiscal year ending June 30, 2018 ("fiscal 2018")~~operate. Our financial condition remains solid at December 31, 2023 and we ~~are confident that~~remain well positioned to support our clients and our associates.

RESULTS AND ANALYSIS OF CONSOLIDATED OPERATIONS

Total Revenues

For the three and six months ended December 31, respectively:


	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2023			2022			2023			2022

Total Revenues	$	4,668.0		$	4,391.0		$	9,180.3		$	8,606.6
YoY Growth	6		%	9		%	7		%	10		%
YoY Growth, Organic Constant Currency	6		%	10		%	6		%	11		%

Revenues for the three months ended December 31, 2023 increased due to new business started from New Business Bookings, strong client retention, an increase in pricing, an increase in our pays per control, and an increase in zero-margin benefits pass-throughs.

Revenues for the six months ended December 31, 2023 increased due to new business started from New Business Bookings, strong client retention, an increase in pricing, an increase in our pays per control, an increase in zero-margin benefits pass-throughs, and a favorable impact of one percentage point from foreign currency.

Total revenues for the three months ended December 31, 2023 include interest on funds held for clients of $225.3 million, as compared to $187.2 million for the three months ended December 31, 2022. The increase in the interest earned on funds held for clients resulted from an increase in our average interest rate earned to 2.8% for the three months ended December 31, 2023, as compared to 2.2% for the three months ended December 31, 2022, partially offset by a decrease in our average client funds balances of 2.3% to $32.6 billion for the three months ended December 31, 2023.

Total revenues for the six months ended December 31, 2023 include interest on funds held for clients of $427.1 million, as compared to $328.3 million for the six months ended December 31, 2022. The increase in the interest earned on funds held for clients resulted from an increase in our average interest rate earned to 2.7% for the six months ended December 31, 2023, as compared to 2.1% for the six months ended December 31, 2022, and an increase in our average client funds balances of 1.6% to $31.9 billion for the six months ended December 31, 2023.

Total Expenses


	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2023		2022		% Change		2023		2022		% Change

Costs of revenues:
Operating expenses	$	2,213.3	$	2,134.5	4	%	$	4,370.9	$	4,209.0	4	%
Research and development	228.7		204.2		12	%	465.1		413.9		12	%
Depreciation and amortization	119.6		112.0		7	%	240.9		221.4		9	%
Total costs of revenues	2,561.6		2,450.7		5	%	5,076.9		4,844.3		5	%
Selling, general and administrative expenses	922.5		855.7		8	%	1,802.8		1,656.1		9	%
Interest expense	104.9		57.0		84	%	196.5		108.1		82	%
Total expenses	$	3,589.0	$	3,363.4	7	%	$	7,076.2	$	6,608.5	7	%

For the three and six months ended December 31, 2023, operating expenses increased due to an increase in our PEO Services zero-margin benefits pass-through costs of $944.2 million to $970.7 million for the three months ended December 31, 2023, and an increase of $1,890.0 million to $1,947.5 million for the six months ended December 31, 2023. Additionally, for the three and six months ended December 31, 2023 operating expenses increased by $26.4 million and $47.1 million, respectively, due to increased service and implementation costs in support of our growing revenue.

Research and development expenses increased for the three and six months ended December 31, 2023 due to increased investments and costs to develop, support, and maintain our new and existing products, and increased investments for integration of generative AI (gen AI) in our existing products.

Depreciation and amortization expenses increased for the three months ended December 31, 2023 due to the amortization of new investments in purchased software.

Depreciation and amortization expenses increased for the six months ended December 31, 2023 due to the amortization of internally developed software products and new investments in purchased software.

Selling, general and administrative expenses increased for the three and six months ended December 31, 2023 due to increased selling expenses as a result of investments in our sales ~~force~~organization.

Interest expense increased for the three months ended December 31, 2023 due to the increase in average interest rates on commercial paper issuances and reverse repurchases to 5.4% and 5.4%, respectively, for the three months ended December 31, 2023, as compared to 3.5% and 3.4%, respectively, for the three months ended December 31, 2022, coupled with a higher volume of average commercial paper and reverse repurchases borrowings, as compared to the three months ended December 31, 2022.

Interest expense increased for the six months ended December 31, 2023 due to the increase in average interest rates on commercial paper issuances and reverse repurchases to 5.3% and 5.4%, respectively, for the six months ended December 31, 2023, as compared to 2.8% and 2.9%, respectively, for the six months ended December 31, 2022, coupled with a higher volume of average reverse repurchases borrowings, as compared to the six months ended December 31, 2022.

Other (Income)/Expense, net


	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2023		2022		$ Change		2023		2022		$ Change
Interest income on corporate funds	$	(56.9)	$	(28.9)	$	28.0	$	(103.4)	$	(58.6)	$	44.8


Realized losses/(gains) on available-for-sale securities, net	2.0		11.5		9.5		4.0		13.0		9.0

Gain on sale of assets	(1.4)		—		1.4		(16.0)		—		16.0
Impairment of assets	—		—		—		—		0.3		0.3

Non-service components of pension income, net	(8.5)		(13.1)		(4.6)		(17.1)		(24.7)		(7.6)
Other (income)/expense, net	$	(64.8)	$	(30.5)	$	34.3	$	(132.5)	$	(70.0)	$	62.5

Interest income on corporate funds increased due to higher average interest rates of 2.9% and 2.8% for the three and six months ended December 31, 2023, respectively, as compared to 2.0% and 1.8% for the three and six months ended December 31, 2022, respectively, coupled with higher average investment balances of $7.8 billion and $7.5 billion for the three and six months ended December 31, 2023, respectively, as compared to $5.7 billion and $6.4 billion for the three and six months ended December 31, 2022, respectively.

In the three months ended December 31, 2023, the Company recognized a gain of $1.4 million in relation to the sale of land. In the six months ended December 31, 2023, the Company recognized a gain of $16.0 million in relation to the sale of a building and land. See Note 10 of our Consolidated Financial Statements for further details on non-service components of pension income, net.

Earnings Before Income Taxes ("EBIT") and Adjusted EBIT

For the three and six months ended December 31:


	Three Months Ended								Six Months Ended
	December 31,								December 31,
	2023			2022			YoY Growth		2023			2022			YoY Growth
EBIT	$	1,143.8		$	1,058.1		8	%	$	2,236.6		$	2,068.1		8	%
EBIT Margin	24.5		%	24.1		%	40 bps		24.4		%	24.0		%	30 bps
Adjusted EBIT	$	1,147.1		$	1,069.0		7	%	$	2,240.4		$	2,086.4		7	%
Adjusted EBIT Margin	24.6		%	24.3		%	20 bps		24.4		%	24.2		%	20 bps

Earnings before income taxes increased for the three and six months ended December 31, 2023, due to the components discussed above.

Margin increased for the three months ended December 31, 2023, due to contributions from client funds interest revenues discussed above, operating efficiencies for costs of servicing our clients on growing revenue, partially offset by increased interest expense, increased investments and costs to develop, support and maintain our new and existing products, ~~will drive results~~and increased selling expense.

Margin increased for the six months ended December 31, 2023, due to contributions from client funds interest revenues discussed above, operating efficiencies for costs of servicing our clients on growing revenue, and a gain on sale of assets, partially offset by increased interest expense, increased investments and costs to develop, support and maintain our new and existing products, and increased selling expense.

Adjusted EBIT and Adjusted EBIT margin exclude interest income and interest expense that are not related to our client funds extended investment strategy, legal settlements, and net charges related to our broad-based transformation initiatives and the impact of net severance charges, as applicable, in ~~line with~~the respective periods.

Provision for Income Taxes

The effective tax rate for the three months ended December 31, 2023 and 2022 was 23.2%. The rate remained flat due to a lower state income tax rate and a lower benefit for adjustments to prior year tax liabilities in the three months ended December 31, 2023.

The effective tax rate for the six months ended December 31, 2023 and 2022 was 22.3% and 23.0%, respectively. The decrease is primarily due to lower reserves for uncertain tax positions and a valuation allowance release offset by a lower excess tax benefit on stock-based compensation in the six months ended December 31, 2023.

Adjusted Provision for Income Taxes

The adjusted effective tax rate for the three months ended December 31, 2023 and 2022 was 23.2%. The drivers of the adjusted effective tax rate are the same as the drivers of the effective tax rate discussed above.

The adjusted effective tax rate for the six months ended December 31, 2023 and 2022 was 22.3% and 23.0%, respectively. The drivers of the adjusted effective tax rate are the same as the drivers of the effective tax rate discussed above.

Net Earnings and Diluted EPS, Unadjusted and Adjusted

For the three and six months ended December 31:


	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2023		2022		YoY Growth		2023		2022		YoY Growth

Net earnings	$	878.4	$	813.1	8	%	$	1,737.8	$	1,592.2	9	%
Diluted EPS	$	2.13	$	1.95	9	%	$	4.20	$	3.82	10	%
Adjusted net earnings	$	880.5	$	814.9	8	%	$	1,740.4	$	1,590.4	9	%
Adjusted diluted EPS	$	2.13	$	1.96	9	%	$	4.20	$	3.82	10	%

For the three and six months ended December 31, 2023, net earnings reflect the changes described above in our ~~expectations.~~earnings before income taxes and our effective tax rate.

~~Overall revenue retention improved 70 basis points across~~For the three months ended December 31, 2023, in addition to the increase in net earnings, diluted EPS increased as a result of the impact of fewer shares outstanding resulting from the repurchase of approximately 1.1 million shares during the three months ended December 31, 2023, and 0.9 million shares during the three months ended December 31, 2022, partially offset by the issuances of shares under our ~~businesses~~employee benefit plans.

For the six months ended December 31, 2023, in addition to the increase in net earnings, diluted EPS increased as a result of the impact of fewer shares outstanding resulting from the repurchase of approximately 2.1 million shares during the six months ended December 31, ~~2017. This improvement was driven by the upgrades of our clients from legacy platforms to our new cloud-based solutions, our focus on improving the client experience,~~2023, and ~~the loss of a large client within our former Consumer Health Spending Account ("CHSA") business~~2.3 million shares during the six months ended December 31, ~~2016. This focus is translating well~~2022, partially offset by the issuances of shares under our employee benefit plans.

ANALYSIS OF REPORTABLE SEGMENTS


	Revenues
	Three Months Ended				% Change				Six Months Ended				% Change
	December 31,								December 31,
	2023		2022		As Reported		Organic constant currency		2023		2022		As Reported		Organic constant currency
Employer Services	$	3,125.2	$	2,891.9	8	%	7	%	$	6,171.6	$	5,682.2	9	%	8	%
PEO Services	1,546.1		1,503.3		3	%	3	%	3,015.7		2,932.7		3	%	3	%
Other	(3.3)		(4.2)		n/m		n/m		(7.0)		(8.3)		n/m		n/m


	$	4,668.0	$	4,391.0	6	%	6	%	$	9,180.3	$	8,606.6	7	%	6	%


	Earnings before Income Taxes
	Three Months Ended				% Change		Six Months Ended				% Change
	December 31,						December 31,
	2023		2022		As Reported		2023		2022		As Reported
Employer Services	$	1,061.9	$	934.6	14	%	$	2,070.4	$	1,798.1	15	%
PEO Services	255.0		255.6		—	%	477.9		485.9		(2)	%
Other	(173.1)		(132.1)		n/m		(311.7)		(215.9)		n/m


	$	1,143.8	$	1,058.1	8	%	$	2,236.6	$	2,068.1	8	%


	Margin
	Three Months Ended					Six Months Ended
	December 31,					December 31,
	2023		2022		YoY Growth	2023		2022		YoY Growth
Employer Services	34.0	%	32.3	%	170 bps	33.5	%	31.6	%	190 bps
PEO Services	16.5	%	17.0	%	(50) bps	15.8	%	16.6	%	(70) bps

n/m - not meaningful

Employer Services

Revenues

Revenues increased for the three and six months ended December 31, 2023 due to new business started from New Business Bookings, strong client retention, an increase in pricing, an increase in interest earned on funds held for clients, an increase in our pays per control of 2%, respectively, and a favorable impact of one percentage point from foreign currency.

Earnings before Income Taxes

Employer Services' earnings before income taxes increased 14% and 15% for the three and six months ended December 31, 2023, respectively, due to contributions from client funds interest revenues discussed above, and operating efficiencies for costs of servicing our clients on growing revenue, partially offset by increased investments and costs to develop, support, and maintain our new and existing products, and increased selling expenses.

Margin

Employer Services' margin increased for the three and six months ended December 31, 2023 due to contributions from client funds interest revenues discussed above, and operating efficiencies for costs of servicing our clients on growing revenue, partially offset by increased investments and costs to develop, support and maintain our new and existing products, and increased selling expenses.

PEO Services

Revenues


	PEO Revenues
	Three Months Ended				Change				Six Months Ended				Change
	December 31,								December 31,
	2023		2022		$		%		2023		2022		$		%
PEO Services' revenues	$	1,546.1	$	1,503.3	$	42.8	3	%	$	3,015.7	$	2,932.7	$	83.0	3	%
Less: PEO zero-margin benefits pass-throughs	970.7		944.2		26.5		3	%	1,947.5		1,890.0		57.5		3	%
PEO Services' revenues excluding zero-margin benefits pass-throughs	$	575.4	$	559.1	$	16.3	3	%	$	1,068.2	$	1,042.7	$	25.5	2	%

PEO Services' revenue increased for the three and six months ended December 31, 2023, due to increases in zero-margin benefits pass-throughs, and increases in average worksite employees of 2%, as ~~we are seeing strong retention on~~compared to the three and six months ended December 31, 2022.

Earnings before Income Taxes

PEO Services' earnings before income taxes remained flat for the three months ended December 31, 2023 due to a change of $(2.3) million in our ~~strategic platforms.~~estimated losses related to ADP Indemnity compared to prior year, increases in zero-margin benefits pass-through costs of $26.5 million, and increases in selling expenses for the three months ended December 31, 2023, partially offset by increased revenues discussed above.

~~Our implementation team's ability to implement our services as well as our sales force's ability to sell to clients and prospects drove revenue growth during~~PEO Services' earnings before income taxes decreased 2% for the six months ended December 31, ~~2017. Our revenue growth also benefited from the continued increase~~2023 due to a change of $(10.7) million in our ~~pays per control metric, which we measure as~~estimated losses related to ADP Indemnity compared to prior year, increases in zero-margin benefits pass-through costs of $57.5 million, and increases in selling expenses for the number of employees on our clients' payrolls as measured on a same-store-sales basis utilizing a representative subset of payrolls ranging from small to large businesses that are reflective of a broad range of U.S. geographic regions.

In October 2017, we acquired Global Cash Card, Inc. ("GCC"), a leader in digital payments, allowing us to differentiate ADP’s leadership position in employee payments and makes ADP the only human capital management provider with a proprietary digital payments processing platform. The acquisition of this established company helps us innovate around the essential service of delivering pay, enabling us to provide new tools to consumers that help them manage their finances.

Also, in January 2018, we acquired Work Market, Inc. ("Work Market"), a leading provider of cloud-based freelance management solutions, for approximately $125 million in cash. As the composition of work is increasingly moving toward the contingent, or "gig" worker, this acquisition will allow us to expand our market opportunities while building on our current portfolio of industry-leading payroll and human capital management solutions.

We have a strong business model and operate in a large, growing market. We continue to maintain a high percentage of recurring revenues, healthy margins, and retain our ability to generate consistent healthy cash flows. Our financial condition and balance sheet remain solid atsix months ended December 31, ~~2017,~~2023, partially offset by increased revenues discussed above.

Margin

PEO Services' margin decreased for the three and six months ended December 31, 2023 due to increases in selling expenses, and changes in our estimated losses related to ADP Indemnity, partially offset by increased revenues discussed above.

ADP Indemnity provides workers’ compensation and employer’s liability deductible reimbursement insurance protection for PEO Services’ worksite employees up to $1 million per occurrence. PEO Services has secured a workers’ compensation and employer’s liability insurance policy that caps the exposure for each claim at $1 million per occurrence and has also secured aggregate stop loss insurance that caps aggregate losses at a certain level in fiscal years 2012 and prior from an admitted and licensed insurance company of AIG. We utilize historical loss experience and actuarial judgment to determine the estimated claim liability, and changes in estimated ultimate incurred losses are included in the PEO segment.

Additionally, starting in fiscal year 2013, ADP Indemnity paid premiums to enter into reinsurance arrangements with ~~cash~~ACE American Insurance Company, a wholly-owned subsidiary of Chubb Limited (“Chubb”), to cover substantially all losses incurred by the Company up to the $1 million per occurrence related to the workers' compensation and ~~cash equivalents and marketable securities~~employer's liability deductible reimbursement insurance protection for PEO Services' worksite employees. Each of these reinsurance arrangements limits our overall exposure incurred up to a certain limit. The Company believes the likelihood of ultimate losses exceeding this limit is remote.ADP Indemnity recorded a pre-tax (loss)/benefit of approximately ~~$1.8 billion. We will benefit from~~$(1.7) million and $4.5 million for the ~~Tax Cuts~~three and ~~Jobs Act (the "Act") signed~~six months ended December 31, 2023, respectively, as compared to approximately $0.6 million and $15.2 million for the three and six months ended December 31, 2022, respectively, which was primarily a result of changes in our estimated actuarial losses. In July 2023, ADP Indemnity paid a premium of $269 million to enter into ~~law in late December 2017 which offers us additional flexibility~~a reinsurance arrangement with Chubb

Limited to cover substantially all losses incurred by ADP Indemnity for the fiscal 2024 policy year on terms substantially similar to the fiscal 2023 reinsurance policy.

Other

The primary components of “Other” are certain corporate overhead charges and ~~greater access~~expenses that have not been allocated to cash world-wide. Our estimated fiscal 2018 adjusted effective tax rate is 26.9% and we anticipate a future adjusted effective tax rate, excluding one time items, of 25% to 26% beyond fiscal 2018. With this increased operating cash flow and greater accessthe reportable segments, including corporate functions, costs related to our ~~cash worldwide, we will continue our disciplined approach to capital allocation decisions, including assessing reinvestments into~~transformation office, severance costs, non-recurring gains and losses, the ~~business, potential acquisitions, and/or returning cash to shareholders through dividends~~elimination of intercompany transactions, and ~~sharebacks, among~~ other ~~potential uses.~~interest income and expense.

~~Analysis of Consolidated Operations~~

Three Months Ended Six Months Ended
December 31, % Change December 31, % Change
2017 2016 As Reported
Constant Dollar Basis
(Note 1)
2017 2016 As Reported
Constant Dollar Basis
(Note 1)
Total revenues $ 3,235.4
$ 2,987.3
8 % 7 % $ 6,314.2
$ 5,904.2
7 % 6 %

Costs of revenues:

Operating expenses 1,719.3
1,560.4
10 % 9 % 3,366.0
3,091.9
9 % 8 %
Systems development and programming costs 158.1
152.5
4 % 2 % 315.1
307.4
3 % 1 %
Depreciation and amortization 69.3
54.9
26 % 25 % 131.9
112.2
18 % 17 %
Total costs of revenues 1,946.7
1,767.8
10 % 9 % 3,813.0
3,511.5
9 % 8 %

Selling, general and administrative costs 717.2
640.8
12 % 11 % 1,379.6
1,288.6
7 % 7 %
Interest expense 27.5
20.5
n/m
n/m
55.5
40.4
n/m
n/m
Total expenses 2,691.4
2,429.1
11 % 10 % 5,248.1
4,840.5
8 % 8 %

Other income, net (21.7 ) (228.0 ) n/m
n/m
(47.8 ) (251.1 ) n/m
n/m

Earnings before income taxes $ 565.7
$ 786.2
(28 )% (29 )% $ 1,113.9
$ 1,314.8
(15 )% (16 )%
Margin 17.5 % 26.3 % 17.6 % 22.3 %

Provision for income taxes $ 98.2
$ 275.3
(64 )% (65 )% $ 244.9
$ 435.2
(44 )% (44 )%
Effective tax rate 17.4 % 35.0 % 22.0 % 33.1 %

Net earnings $ 467.5
$ 510.9
(8 )% (9 )% $ 869.0
$ 879.6
(1 )% (2 )%

Diluted earnings per share $ 1.05
$ 1.13
(7 )% (7 )% $ 1.96
$ 1.94
1 % — %

~~n/m - not meaningful~~

~~Note 1 - Non GAAP~~Non-GAAP Financial Measures

In addition to our U.S. GAAP results, we use the adjusted results and other non-GAAP metrics set forth in the table below to evaluate our operating performance in the absence of certain items and for planning and forecasting of future periods:



Adjusted Financial Measure	U.S. GAAP Measures		~~Adjustments/Explanation - as applicable in the periods~~
Adjusted EBIT		Net earnings		~~- Provision for income taxes~~ ~~- All other interest expense and income~~ ~~- Certain restructuring charges~~ ~~- Gains/losses on sales of businesses and assets~~ ~~- Non-operational costs related to proxy contest matters~~ ~~See footnotes (a), (b), and (f)~~
Adjusted provision for income taxes		Provision for income taxes		~~Tax impacts of:~~ ~~- Gains/losses on sales of businesses and assets~~ ~~- Certain restructuring charges~~ ~~- Non-operational costs related to proxy contest matters~~ ~~- Tax Cuts and Jobs Act~~ ~~See footnotes (c), (d), (f), and (g)~~
Adjusted net earnings		Net earnings		~~Pre-tax and tax impacts of:~~ ~~- Certain restructuring charges~~ ~~- Gains/losses on sales of businesses and assets~~ ~~- Non-operational costs related to proxy contest matters~~ ~~- Tax Cuts and Jobs Act~~ ~~See footnotes (b), (c), (d), (f), and (g)~~

Adjusted diluted earnings per share		Diluted earnings per share		~~EPS impacts of:~~ ~~- Gains/losses on sales of businesses and assets~~ ~~- Certain restructuring charges~~ ~~- Non-operational costs related to proxy contest matters~~ ~~- Tax Cuts and Jobs Act~~ ~~See footnotes (b), (c), (f), and (g)~~
Adjusted effective tax rate		Effective tax rate		~~See footnote (e)~~
~~Constant Dollar Basis~~
Organic constant currency		~~U.S. GAAP P&L line items~~Revenues		~~See footnote (h)~~

We believe that the exclusion of the identified items helps us reflect the fundamentals of our underlying business model and analyze results against our expectations and against prior period, and to plan for future periods by focusing on our underlying operations. We believe that the adjusted results provide relevant and useful information for investors because it allows investors to view performance in a manner similar to the method used by management and improves their ability to understand and assess our operating performance. The nature of these exclusions ~~are~~is for specific items that are not fundamental to our underlying business operations. Since these adjusted financial measures and other non-GAAP metrics are not measures of performance calculated in accordance with U.S. GAAP, they should not be considered in isolation from, as a substitute for, or superior to their corresponding U.S. GAAP measures, and they may not be comparable to similarly titled measures at other companies.

Three Months Ended Six Months Ended
December 31, % Change December 31, % Change
2017 2016 As Reported Constant Dollar Basis
(h) 2017 2016 As Reported
Constant Dollar Basis
(h)
Net earnings $ 467.5
$ 510.9
(8 )% (9 )% $ 869.0
$ 879.6
(1 )% (2 )%
Adjustments:
Provision for income taxes 98.2
275.3
244.9
435.2

All other interest expense (a) 15.0
14.9
30.0
29.9

All other interest income (a) (4.4 ) (4.4 ) (10.7 ) (9.2 )
Gain on sale of business —
(205.4 ) —
(205.4 )
Service Alignment Initiative (b) 3.3
1.2
—
41.1

Proxy contest matters (f) 22.9
—
33.3
—

Adjusted EBIT $ 602.5
$ 592.5
2 % 1 % $ 1,166.5
$ 1,171.2
— % (1 )%
Adjusted EBIT Margin 18.6 % 19.8 % 18.5 % 19.8 %

Provision for income taxes $ 98.2
$ 275.3
(64 )% (65 )% $ 244.9
$ 435.2
(44 )% (44 )%
Adjustments:
Gain on sale of business (c) —
(84.0 ) —
(84.0 )
Service Alignment Initiative (d) 1.3
0.4
—
15.5

Proxy contest matters (f) 6.3
—
10.3
—

Tax Cuts and Jobs Act (g) 45.7
—
45.7
—

Adjusted provision for income taxes $ 151.5
$ 191.7
(21 )% (22 )% $ 300.9
$ 366.7
(18 )% (19 )%
Adjusted effective tax rate (e) 25.6 % 32.9 % 26.2 % 31.9 %

Net earnings $ 467.5
$ 510.9
(8 )% (9 )% $ 869.0
$ 879.6
(1 )% (2 )%
Adjustments:
Gain on sale of business —
(205.4 ) —
(205.4 )
Provision for income taxes on gain on sale of business (c) —
84.0
—
84.0

Service Alignment Initiative (b) 3.3
1.2
—
41.1

Income tax benefit for Service Alignment Initiative (d) (1.3 ) (0.4 ) —
(15.5 )
Proxy contest matters (f) 22.9
—
33.3
—

Income tax benefit for proxy contest matters (f) (6.3 ) —
(10.3 ) —

Income tax benefit from Tax Cuts and Jobs Act (g) (45.7 ) —
(45.7 ) —

Adjusted net earnings $ 440.4
$ 390.3
13 % 12 % $ 846.3
$ 783.8
8 % 7 %

Diluted EPS $ 1.05
$ 1.13
(7 )% (7 )% $ 1.96
$ 1.94
1 % — %
Adjustments:
Gain on sale of business (c) —
(0.27 ) —
(0.27 )
Service Alignment Initiative (b) —
—
—
0.06

Proxy contest matters (f) 0.04
—
0.05
—

Tax Cuts and Jobs Act (g) (0.10 ) —
(0.10 ) —

Adjusted diluted EPS $ 0.99
$ 0.87
14 % 13 % $ 1.90
$ 1.73
10 % 9 %


	Three Months Ended						% Change		Six Months Ended						% Change
	December 31,								December 31,
	2023			2022			As Reported		2023			2022			As Reported

Net earnings	$	878.4		$	813.1		8	%	$	1,737.8		$	1,592.2		9	%
Adjustments:
Provision for income taxes	265.4			245.0					498.8			475.9
All other interest expense (a)	17.8			17.7					35.8			35.5
All other interest income (a)	(17.2)			(9.2)					(35.4)			(14.8)



Transformation initiatives (b)	2.7			2.4					3.4			1.4

Legal settlements	—			—					—			(3.8)
Adjusted EBIT	$	1,147.1		$	1,069.0		7	%	$	2,240.4		$	2,086.4		7	%
Adjusted EBIT Margin	24.6		%	24.3		%			24.4		%	24.2		%

Provision for income taxes	$	265.4		$	245.0		8	%	$	498.8		$	475.9		5	%
Adjustments:



Transformation initiatives (c)	0.6			0.6					0.8			0.4

Legal settlements (c)	—			—					—			(1.0)

Adjusted provision for income taxes	$	266.0		$	245.6		8	%	$	499.6		$	475.3		5	%
Adjusted effective tax rate (d)	23.2		%	23.2		%			22.3		%	23.0		%

Net earnings	$	878.4		$	813.1		8	%	$	1,737.8		$	1,592.2		9	%
Adjustments:






Transformation initiatives (b)	2.7			2.4					3.4			1.4
Income tax (benefit)/provision for transformation initiatives (c)	(0.6)			(0.6)					(0.8)			(0.4)




Legal settlements	—			—					—			(3.8)
Income tax (benefit)/provision for legal settlements (c)	—			—					—			1.0

Adjusted net earnings	$	880.5		$	814.9		8	%	$	1,740.4		$	1,590.4		9	%

Diluted EPS	$	2.13		$	1.95		9	%	$	4.20		$	3.82		10	%
Adjustments:



Transformation initiatives (b) (c)	0.01			—					0.01			—

Legal settlements (c)	—			—					—			(0.01)

Adjusted diluted EPS	$	2.13		$	1.96		9	%	$	4.20		$	3.82		10	%

(a) ~~We continue to~~In Adjusted EBIT, we include the interest income earned on investments associated with our client funds extended investment strategy and interest expense on borrowings related to our client funds extended investment strategy as we believe these amounts to be fundamental to the underlying operations of our business model. The adjustments in the table above represent the interest income and interest expense that isare not related to our client funds extended investment strategy and are labeled as ~~"All~~“All other interest ~~expense"~~expense” and ~~"All~~“All other interest income."”

(b) ~~The majority of charges~~In the three and six months ended December 31, 2023, transformation initiatives include consulting costs relating to our Service Alignment Initiative represent severance charges. Severance charges have been taken in the past and not included as an adjustment to get to adjusted results. Unlike severance charges in prior periods, these specific charges relate to our broad-based, company-wide Service Alignment Initiative.company wide transformation initiatives.

(c) The ~~taxes on the gain on sale of the business were calculated based on the annualized marginal rate in effect during the quarter of the adjustment. The~~income tax ~~amount was adjusted for a book vs. tax basis difference for the period ended December 31, 2016 due to the derecognition of goodwill upon the sale of the business.~~

~~(d) The tax benefit on the Service Alignment Initiative~~(benefit)/provision was calculated based on the annualized marginal rate in effect during the quarter of the adjustment.

~~(e)~~(d) The Adjusted effective tax rate is calculated as our Adjusted provision for income taxes divided by the sum of our Adjusted net earnings plus our Adjusted provision for income taxes.

~~(f) Represents non-operational costs relating~~The following table reconciles our reported growth rates to ~~proxy contest matters.~~the non-GAAP measure of organic constant currency, which excludes the impact of acquisitions, the impact of dispositions, and the impact of foreign currency. The ~~tax benefit on~~impact of acquisitions and dispositions is calculated by excluding the ~~non-operational charges related to proxy contest matters was calculated based on~~current year revenues of acquisitions until the ~~annualized marginal rate in effect during the quarter~~one-year anniversary of the ~~adjustment.~~transaction and by excluding the prior year revenues of divestitures for the one-year period preceding the transaction. The

~~(g) The one-time net benefit from the enactment~~impact of the Act is comprised of the application of the newly enacted U.S. corporate tax rates to our U.S. deferred tax balances partially offset by the one-time transition tax on the earnings and profits of our foreign ~~subsidiaries and the recording of a valuation allowance against our foreign tax credits which may not be realized.~~

~~(h) “Constant dollar basis” provides information that isolates the actual growth of our operations. “Constant dollar basis”~~currency is determined by calculating the current year result using foreign exchange rates consistent with the prior year.

Our revenues, as reported, increased 8% and 7% for the three and six months ended December 31, 2017. Our revenue growth includes one percentage point of benefit from foreign currency and the net impact of the acquisition of GCC offset The PEO segment is not impacted by the disposition of our CHSA and Consolidated Omnibus Reconciliation Act ("COBRA") businesses. Revenues increased primarily due to new business started from new business bookings. Refer to “Analysis of Reportable Segments” for additional discussion of the increases in revenue for both of our reportable segments, Employer Services and Professional Employer Organization ("PEO").

Total revenues for the three months ended December 31, 2017 include interest on funds held for clients of $106.7 million, as compared to $91.8 million for the three months ended December 31, 2016. The increase in the consolidated interest earned on funds held for clients resulted from an increase in the average interest rate earned to 1.9% during the three months ended December 31, 2017, as compared to 1.8% during the three months ended December 31, 2016, coupled with an increase in our average client funds balance of 7.4% to $22.5 billion for the three months ended December 31, 2017, as compared to the three months ended December 31, 2016.

Total revenues for the six months ended December 31, 2017 include interest on funds held for clients of $206.1 million, as compared to $181.0 million for the six months ended December 31, 2016. The increase in the consolidated interest earned on funds held for clients resulted from an increase in the average interest rate earned to 1.9% during the six months ended December 31, 2017, as compared to 1.8% during the six months ended December 31, 2016, coupled with an increase in our average client funds balance of 6.6% to $21.8 billion for the six months ended December 31, 2017, as compared to the six months ended December 31, 2016.

Our total expenses, as reported, increased 11% for the three months ended December 31, 2017, as compared to the same period in the prior year. The increase is primarily due to an increase in PEO services pass-through costs, increased costs to service our client base in support of our growing revenue, and investments in our sales force. Total expenses also increased due to the impact of foreign currency and costs related to proxy contest matters in ~~the three~~ ~~months ended December 31, 2017.~~

Our total expenses, as reported, increased 8% for the six months ended December 31, 2017, as compared to the same period in the prior year. The increase is primarily due to an increase in PEO services pass-through costs, increased costs to service our client base in support of our growing revenue, and investments in our sales force. Total expenses also increased due to the

~~impact of foreign currency and costs related to proxy contest matters in~~ ~~the~~ ~~six months ended December 31, 2017 offset by a decrease in costs related to our Service Alignment Initiative as compared to the six months ended December 31, 2016.~~

Operating expenses, as reported, increased 10% for the three months ended December 31, 2017, as compared to the three months ended December 31, 2016. Operating expenses include the costs directly attributable to servicing our clients and implementing new business. Also, operating expenses include PEO Services pass-through costs that are re-billable and which include costs for benefits coverage, workers’ compensation coverage, and state unemployment taxes for worksite employees. These pass-through costs were $705.2 million for the three months ended December 31, 2017, which included costs for benefits coverage of $607.1 million and costs for workers' compensation and payment of state unemployment taxes of $98.1 million. These pass-through costs were $610.0 million for the three months ended December 31, 2016, which included costs for benefits coverage of $527.5 million and costs for workers' compensation and payment of state unemployment taxes of $82.5 million. Additionally, operating expenses increased due to higher costs to service our client base in support of our growing revenue as well as the impact ofacquisitions, dispositions or foreign currency.

Operating expenses, as reported, increased 9% for the six months ended December 31, 2017, as compared to the six months ended December 31, 2016. PEO Services pass-through costs were $1,391.7 million for the six months ended December 31, 2017, which included costs for benefits coverage of $1,202.3 million and costs for workers' compensation and payment of state unemployment taxes of $189.4 million. These pass-through costs were $1,207.8 million for the six months ended December 31, 2016, which included costs for benefits coverage of $1,043.5 million and costs for workers' compensation and payment of state unemployment taxes of $164.3 million. Additionally, operating expenses increased due to higher costs to service our client base in support of our growing revenue as well as the impact of foreign currency.


	Three Months Ended		Six Months Ended
	December 31,		December 31,
	2023		2023
Consolidated revenue growth as reported	6	%	7	%
Adjustments:
Impact of acquisitions	—	%	—	%

Impact of foreign currency	—	%	(1)	%
Consolidated revenue growth, organic constant currency	6	%	6	%

Employer Services revenue growth as reported	8	%	9	%
Adjustments:
Impact of acquisitions	—	%	—	%

Impact of foreign currency	(1)	%	(1)	%
Employer Services revenue growth, organic constant currency	7	%	8	%

Systems development and programming costs, as reported, increased 4% and 3%, respectively, for the three and six months ended December 31, 2017, when compared to the same period in the prior year, due to increased investments in product innovation and costs to support and maintain our products.

~~Selling, general and administrative expenses, as reported, increased 12% and 7% for the three and~~ six months ended December 31, 2017, as compared to the three and six months ended December 31, 2016. The increase was primarily due to investments in our sales force and costs related to proxy contest matters in ~~the three~~ ~~and six months ended December 31, 2017 offset by the charges related to our Service Alignment Initiative in the six months ended December 31, 2016.~~

~~Other Income, net~~

Other income, net, decreased $206.3 million and $203.3 million for the three and six months ended December 31, 2017, as compared to the three and six months ended months ended December 31, 2016 due to the gain on the sale of the CHSA and COBRA businesses in the three and six months ended December 31, 2016.

~~Earnings before Income Taxes~~

Earnings before income taxes, as reported, decreased 28% for the three months ended December 31, 2017 primarily due to the gain on the sale of the CHSA and COBRA businesses in the three months ended December 31, 2016 offset by the increases in revenues and increases in expenses discussed above. Overall margin decreased from 26.3% in the three months ended December 31, 2016 to 17.5% in the three months ended December 31, 2017 primarily due to the gain on the sale of the CHSA and COBRA businesses in the three months ended December 31, 2016, the impact of our acquisitions and incremental pressure from growth in our pass-through revenues in the three months ended December 31, 2017.

Earnings before income taxes, as reported, decreased 15% for the six months ended December 31, 2017 primarily due to the gain on the sale of the CHSA and COBRA businesses in the six months ended December 31, 2016 offset by the increases in revenues and increases in expenses discussed above. Overall margin decreased from 22.3% in the six months ended December 31, 2016 to 17.6% in the six months ended December 31, 2017 primarily due to the gain on the sale of the CHSA and COBRA businesses partially offset by the impact of the charges related to the Service Alignment Initiative in the six months ended December 31, 2016 combined with the impact of our acquisitions and incremental pressure from growth in our pass-through revenues in the six months ended December 31, 2017.

Adjusted EBIT excludes the impact of the charges related to the Service Alignment Initiative and non-operational costs related to proxy contest matters during the three and six months ended December 31, 2017, and charges related to the Service Alignment Initiative and the gain on the sale of the CHSA and COBRA businesses in the three and six months ended December 31, 2016.

For the three months ended December 31, 2017, adjusted EBIT increased 2% due to the increases in revenues and expenses discussed above. Overall adjusted EBIT margin decreased from 19.8% in the three months ended December 31, 2016 to 18.6% in the three months ended December 31, 2017 due to the impact of our acquisitions and incremental pressure from growth in our pass-through revenues.

For the six months ended December 31, 2017, adjusted EBIT remained flat due to the increases in revenues offset by the increases in expenses discussed above. Overall adjusted EBIT margin decreased from 19.8% in the six months ended December 31, 2016 to 18.5% in the six months ended December 31, 2017 due to the impact of our acquisitions and incremental pressure from growth in our pass-through revenues.

~~Provision for Income Taxes~~

The effective tax rate for the three months ended December 31, 2017 and 2016 was 17.4% and 35.0%, respectively and for the six months ended December 31, 2017 and 2016 was 22.0% and 33.1%, respectively. The decreases in the effective tax rates are primarily due to the Tax Cuts and Jobs Act enacted on December 22, 2017 and impact of the sale of the CHSA and COBRA businesses in the three months ended December 31, 2016. Refer to Note 13, Income Taxes, within the Notes to the Consolidated Financial Statements for further discussion.

~~Adjusted Provision for Income Taxes~~

Adjusted provision for income taxes excludes the impact of the one-time net benefit as a result of the Act, the tax effects of the charges related to the Service Alignment Initiative and non-operational costs related to proxy contest matters during the three and six months ended December 31, 2017, and the tax effects of the charges related to the Service Alignment Initiative and the gain on the sale of the CHSA and COBRA businesses in the three and six months ended December 31, 2016.

The adjusted effective tax rate for the three months ended December 31, 2017 and 2016 was 25.6% and 32.9%, respectively. The decrease in the adjusted effective tax rate is due to the reduction in the blended federal corporate statutory tax rate to 28.1% from 35% as a result of the Act in the three months ended December 31, 2017, partially offset by a decrease in excess tax benefits on stock-based compensation and a lower benefit related to the usage of foreign tax credits in the three months ended December 31, 2017.

The adjusted effective tax rate for the six months ended December 31, 2017 and 2016 was 26.2% and 31.9%, respectively. The decrease in the adjusted effective tax rate is due to the reduction in the blended federal corporate statutory tax rate to 28.1% from 35% as a result of the Act in the six months ended December 31, 2017. Our estimated fiscal 2018 adjusted effective tax

~~rate is 26.9% and we anticipate a future adjusted effective tax rate, excluding one time items, of 25% to 26% beyond fiscal 2018.~~

~~Net Earnings and Diluted Earnings per Share~~

Net earnings, as reported, decreased 8% and 1% for the three and six months ended December 31, 2017, respectively, due to the decrease in earnings before income taxes during the three and six months ended December 31, 2017 partially offset by the reduction in our effective tax rate described above when compared to the three and six months ended December 31, 2016.

For the three and six months ended December 31, 2017, diluted earnings per share reflects the decrease in net earnings and the impact of fewer shares outstanding as a result of the repurchase of 3.6 million shares during the six months ended December 31, 2017 and the repurchase of 13.5 million shares in fiscal 2017, offset by shares issued under our employee benefit plans.

~~Adjusted Net Earnings and Adjusted Diluted Earnings per Share~~

Adjusted net earnings increased 13% for the three months ended December 31, 2017 due to the increase in adjusted EBIT combined with the reduction in our adjusted effective tax rate described above when compared to the three months ended December 31, 2016.

Adjusted net earnings increased 8% for the six months ended December 31, 2017 due to adjusted EBIT remaining flat combined with the reduction in our adjusted effective tax rate described above when compared to the six months ended December 31, 2016.

For the three and six months ended December 31, 2017, adjusted diluted earnings per share reflects the increase in adjusted net earnings and the impact of fewer shares outstanding as a result of the repurchase of 3.6 million shares during the six months ended December 31, 2017 and the repurchase of 13.5 million shares in fiscal 2017, offset by shares issued under our employee benefit plans.

~~Analysis of Reportable Segments~~

~~n/m - not meaningful~~

~~Employer Services~~

Employer Services' revenues, as reported, increased 6% for the three months ended December 31, 2017, as compared to the three months ended December 31, 2016. Revenues increased primarily due to new business started from new business bookings. Our revenue growth includes one percentage point of benefit from foreign currency and one percentage point of benefit from the net impact of the acquisition of GCC offset by the disposition of our CHSA and COBRA businesses. Our revenues also benefited from the impact of an increase in the number of employees on our clients’ payrolls as our pays per control increased 2.6% for the three months ended December 31, 2017 as compared to the three months ended December 31, 2016. Our worldwide client revenue retention rate for the three months ended December 31, 2017 decreased 20 basis points as we continued to experience pressure from losses on our legacy platforms.

Employer Services' revenues, as reported, increased 4% for the six months ended December 31, 2017, as compared to the six months ended December 31, 2016. Revenues increased primarily due to new business started from new business bookings. Our revenue growth includes one percentage point of benefit from foreign currency and the net impact of the acquisition of GCC offset by the disposition of our CHSA and COBRA businesses. Our revenues also benefited from the impact of an increase in the number of employees on our clients’ payrolls as our pays per control increased 2.5% for the six months ended December 31, 2017 as compared to the six months ended December 31, 2016. Our worldwide client revenue retention rate for the six months ended December 31, 2017 increased 70 basis points. This improvement was driven by strong retention with clients who we have upgraded from legacy platforms to our new cloud-based solutions, our focus on improving the client experience, and the loss of a large client within our former CHSA business during the six months ended December 31, 2016.

~~Earnings before Income Taxes~~

Employer Services’ earnings before income taxes, as reported, increased 4% for the three months ended December 31, 2017, as compared to the three months ended December 31, 2016. This increase was due to increased revenues discussed above partially offset by an increase in expenses of $103.0 million, primarily due to investments in implementation and operational resources to support our revenue growth coupled with investments in our sales force in ~~the three~~ ~~months ended December 31, 2017.~~

Employer Services' overall margin decreased from 29.5% to 29.0% for the three months ended December 31, 2017, as compared to the three months ended December 31, 2016. This decrease is due to the impact of our acquisitions and foreign currency in the three months ended December 31, 2017.


Delaware			22-1467904

~~Delaware~~	~~22-1467904~~
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
One ADP Boulevard ~~Roseland, New Jersey~~
Roseland,		NJ	07068
(Address of principal executive offices)			(Zip Code)



		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Statements of Consolidated Earnings Three and six months ended ~~December 31, 2017~~Dec ember 3 1 , 2023 and ~~2016~~2022	3

	Statements of Consolidated Comprehensive Income Three and six months ended December ~~31, 2017~~ 3 1 , 2023 and ~~2016~~2022	4

	Consolidated Balance Sheets At December 31 ~~2017~~, 2023 and June 30, ~~2017~~2023	5

	Statements of Consolidated Cash Flows Six ~~Months Ended~~ months ended December 31 ~~2017~~, 2023 and ~~2016~~2022	6

	Notes to the Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2423

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3937

Item 4.	Controls and Procedures	3937

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	3937

Item 1A.	Risk Factors	3938

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4038



Item 6.	Exhibits	~~Exhibits~~39	41

	Signatures	4240



	Six Months Ended
	December 31, 2016 (unaudited)
	As previously reported			Adjustments			As adjusted
Cash Flows from Investing Activities:
Net decrease / (increase) in restricted cash and cash equivalents held to satisfy client funds obligations	$	3,213.0		$	(3,213.0	)	$	—
Net cash flows provided by / (used in) investing activities	2,719.2			(3,213.0		)	(493.8		)
Effect of exchange rate changes on cash, cash equivalents, restricted cash, and restricted cash equivalents	(16.9		)	(38.2		)	(55.1		)
Net change in cash, cash equivalents, restricted cash, and restricted cash equivalents	(485.9		)	(3,251.2		)	(3,737.1		)
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period	$	2,705.2		$	9,016.3		$	11,721.5



Goodwill	$	404.3
Identifiable intangible assets	132.2
Other assets	3.2
Total assets acquired	$	539.7

Total liabilities acquired	$	48.7



	December 31,			June 30,
	2017			2017
Assets
Current assets:
Cash and cash equivalents	$	1,773.4		$	2,780.4
Accounts receivable, net of allowance for doubtful accounts of $52.8 and $49.6, respectively	2,045.5			1,703.6
Other current assets	1,079.8			883.2
Total current assets before funds held for clients	4,898.7			5,367.2
Funds held for clients	34,451.3			27,291.5
Total current assets	39,350.0			32,658.7
Long-term receivables, net of allowance for doubtful accounts of $0.7 and $0.8, respectively	27.4			28.0
Property, plant and equipment, net	799.9			779.9
Other assets	1,371.2			1,352.2
Goodwill	2,164.3			1,741.0
Intangible assets, net	832.7			620.2
Total assets	$	44,545.5		$	37,180.0

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	136.8		$	149.7
Accrued expenses and other current liabilities	1,583.9			1,381.9
Accrued payroll and payroll-related expenses	496.6			562.5
Dividends payable	275.2			250.5
Short-term deferred revenues	227.5			232.9
Income taxes payable	22.8			49.0
Total current liabilities before client funds obligations	2,742.8			2,626.5
Client funds obligations	34,508.1			27,189.4
Total current liabilities	37,250.9			29,815.9
Long-term debt	2,002.4			2,002.4
Other liabilities	824.8			830.2
Deferred income taxes	148.6			163.1
Long-term deferred revenues	387.6			391.4
Total liabilities	40,614.3			33,203.0

Commitments and contingencies (Note 14)

Stockholders' equity:
Preferred stock, $1.00 par value: Authorized, 0.3 shares; issued, none	—			—
Common stock, $0.10 par value: authorized, 1,000.0 shares; issued, 638.7 shares at December 31, 2017 and June 30, 2017; outstanding, 442.7 and 445.0 shares at December 31, 2017 and June 30, 2017, respectively	63.9			63.9
Capital in excess of par value	903.5			867.8
Retained earnings	15,060.1			14,728.2
Treasury stock - at cost: 196.0 and 193.7 shares at December 31, 2017 and June 30, 2017, respectively	(11,663.7		)	(11,303.7		)
Accumulated other comprehensive loss	(432.6		)	(379.2		)
Total stockholders’ equity	3,931.2			3,977.0
Total liabilities and stockholders’ equity	$	44,545.5		$	37,180.0



	Three Months Ended				Six Months Ended					Cumulative amount from inception through
	December 31,				December 31,					December 31,
	2017		2016		2017			2016		2017
Employee separation benefits (a)	$	2.3	$	—	$	(2.9	)	$	37.3	$	81.2
Other initiative costs (b)	1.0		1.2		2.9			3.8		8.8
Total (c)	$	3.3	$	1.2	$	—		$	41.1	$	90.0



	Employee separation benefits			Other initiative costs			Total
Balance at June 30, 2017	$	73.9		$	0.5		$	74.4
Charged to expense	7.9			2.9			10.8
Reversals	(10.8		)	—			(10.8		)
Cash payments	(18.0		)	(2.2		)	(20.2		)
Non-cash utilization	—			(0.6		)	(0.6		)
Balance at December 31, 2017	$	53.0		$	0.6		$	53.6



	December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Market Value (A)
Type of issue:
Money market securities, cash and other cash equivalents	$	13,859.8	$	—	$	—		$	13,859.8
Available-for-sale securities:
Corporate bonds	9,435.9		57.7		(39.7		)	9,453.9
Asset-backed securities	4,445.0		4.7		(22.0		)	4,427.7
U.S. government agency securities	2,913.6		10.6		(22.8		)	2,901.4
U.S. Treasury securities	2,481.4		1.0		(38.6		)	2,443.8
Canadian government obligations and Canadian government agency obligations	1,148.3		0.9		(20.1		)	1,129.1
Canadian provincial bonds	760.8		8.3		(3.3		)	765.8
Municipal bonds	586.0		6.3		(2.0		)	590.3
Other securities	661.2		5.0		(2.7		)	663.5

Total available-for-sale securities	22,432.2		94.5		(151.2		)	22,375.5

Total corporate investments and funds held for clients	$	36,292.0	$	94.5	$	(151.2	)	$	36,235.3



	June 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Market Value (B)
Type of issue:
Money market securities, cash and other cash equivalents	$	8,181.6	$	—	$	—		$	8,181.6
Available-for-sale securities:
Corporate bonds	9,325.3		98.8		(22.0		)	9,402.1
Asset-backed securities	4,453.1		16.9		(8.6		)	4,461.4
U.S. government agency securities	3,557.7		22.2		(13.4		)	3,566.5
U.S. Treasury securities	1,585.9		2.6		(14.3		)	1,574.2
Canadian government obligations and Canadian government agency obligations	1,053.6		2.9		(11.4		)	1,045.1
Canadian provincial bonds	746.9		14.3		(1.4		)	759.8
Municipal bonds	582.5		11.3		(1.3		)	592.5
Other securities	493.6		7.3		(1.4		)	499.5

Total available-for-sale securities	21,798.6		176.3		(73.8		)	21,901.1

Total corporate investments and funds held for clients	$	29,980.2	$	176.3	$	(73.8	)	$	30,082.7



One year or less	$	2,288.5
One year to two years	4,112.2
Two years to three years	5,290.8
Three years to four years	4,556.3
After four years	6,127.7
Total available-for-sale securities	$	22,375.5



	Amount
Six months ending June 30, 2018	$	98.9
Twelve months ending June 30, 2019	$	206.9
Twelve months ending June 30, 2020	$	178.3
Twelve months ending June 30, 2021	$	130.0
Twelve months ending June 30, 2022	$	96.9
Twelve months ending June 30, 2023	$	58.5



	Three Months Ended
	December 31, 2016
	Currency Translation Adjustment			Net Gains/Losses on Available-for-sale Securities				Pension Liability				Accumulated Other Comprehensive Loss
Balance at September 30, 2016	$	(243.0	)	$	288.5			$	(291.9	)		$	(246.4	)
Other comprehensive loss before reclassification adjustments	(55.0		)	(413.3		)		—				(468.3		)
Tax effect	—			145.4				—				145.4
Reclassification adjustments to net earnings	—			(1.3		)	(A)	5.1			(B)	3.8
Tax effect	—			0.6				(1.8		)		(1.2		)
Balance at December 31, 2016	$	(298.0	)	$	19.9			$	(288.6	)		$	(566.7	)


	December 31, 2023		June 30, 2023
Net unrealized pre-tax (losses)/gains on available-for-sale securities	$	(1,493.1)	$	(2,206.9)

Total available-for-sale securities at fair value	$	30,295.5	$	29,764.9



	December 31, 2017			June 30, 2017
Net unrealized pre-tax (losses)/gains on available-for-sale securities	$	(56.7	)	$	102.5

Total available-for-sale securities at fair value	$	22,375.5		$	21,901.1


	Total Number of Shares Purchased (1)	Average Price Paid per Share (3)		Total Number of Shares Purchased as Part of the Publicly Announced Common Stock Repurchase Plan (2)	Maximum Approximate Dollar Value of Shares that may yet be Purchased under the Common Stock Repurchase Plan (2) (3)
Period
October 1 to 31, 2023	471,060	$	238.18	465,592	$	3,954,527,496

November 1 to 30, 2023	403,380	$	225.12	401,309	$	3,864,193,487

December 1 to 31, 2023	206,533	$	232.38	203,710	$	3,814,508,318
Total	1,080,973			1,070,611



	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)
Period	Total Number of Shares Purchased (1)	Average Price Paid per Share
October 1 to 31, 2017	552,197	$	113.85	540,293	22,162,980

November 1 to 30, 2017	563,653	$	111.81	563,549	21,599,431

December 1 to 31, 2017	264,706	$	116.04	259,427	21,340,004
Total	1,380,556			1,363,269



Date of Approval	~~Shares~~
~~August 2015~~November 2022		~~25 million~~	$5 billion


(3)			Inclusive of the impact of the one-percent excise tax under the Inflation Reduction Act of 2022.



Exhibit Number	Exhibit





2110.1		~~Subsidiaries~~Automatic Data Processing, Inc. 2018 Omnibus Award Plan, as amended and restated as of ~~the Company~~ December 1, 2023 (the "2018 Omnibus Award Plan") (Management Compensatory Plan)
10.2		Form of Restricted Stock Unit Award Agreement under the 2018 Omnibus Award Plan (three-year vesting schedule) (Management Compensatory Plan)
10.3		Form of Restricted Stock Unit Award Agreement under the 2018 Omnibus Award Plan (non-three-year vesting schedule) (Management Compensatory Plan)
10.4		Form of Performance Stock Unit Award Agreement under the 2018 Omnibus Award Plan (Management Compensatory Plan)
31.1		Certification by ~~Carlos A. Rodriguez~~Maria Black pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
31.2		Certification by ~~Jan Siegmund~~Don McGuire pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
32.1		Certification by ~~Carlos A. Rodriguez~~Maria Black pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification by ~~Jan Siegmund~~Don McGuire pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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101.PRE		Inline XBRL ~~taxonomy extension presentation linkbase document~~ Taxonomy Extension Presentation Linkbase
101.DEF		Inline XBRL ~~taxonomy extension definition linkbase~~Taxonomy Extension Definition Document
104		Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document



	AUTOMATIC DATA PROCESSING, INC. (Registrant)

Date:		February 1, ~~2018~~2024	/s/ ~~Jan Siegmund~~Don McGuire ~~Jan Siegmund~~Don McGuire

			Chief Financial Officer (Title)