Company: ADP
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0000008670-25-000015
Chunk: 107

Company: AUTOMATIC DATA PROCESSING INC
Filing Date: 2025-05-01
Form: 10-Q
Item: Part I, Item 8
Chunk 107
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 cash-flow hedges and will be terminated upon completion of the refinancing. Changes in the derivatives’ fair value are recorded each period in other comprehensive income with a corresponding current asset or liability and, upon settlement, the aggregate amount in accumulated other comprehensive income will be amortized into net income over the term of the future debt instrument. Refer to Note 16 for the impact to accumulated other comprehensive income. There are no cash flows associated with the derivatives until settlement occurs with the counter-parties. The treasury rate lock derivatives are classified as Level 2 in the fair value hierarchy as their value is determined using observable inputs such as forward treasury rates.

Note 12. Employee Benefit Plans

A.  Stock-based Compensation PlansThe 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 

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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 units. From time to time, the Company may repurchase shares of its common stock under its authorized share repurchase program. The Company repurchased 1.0 million and 1.2 million shares in the three months ended March 31, 2025 and 2024, respectively, and repurchased 3.4 million and 3.3 million shares in the nine months ended March 31, 2025 and 2024, 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 nine months ended March 31, 2025 and 2024, respectively:Three Months EndedNine Months EndedMarch 31,March 31,2025202420252024Operating expenses