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Item 5. Market for Registrant’s Common Equity

2020-08-05 compared with 2019-08-09 · 18 added, 85 removed, 34 unchanged (75% of the section changed)

5 unchanged sentences

Issuer Purchases of Equity Securities

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 Total Number of Shares Purchased as Part of the Publicly Announced Common Stock Repurchase Plan (2) Maximum Approximate Dollar Value

of Shares that

Purchased under

the Common Stock

Repurchase Plan (2)

April 1, 2020 to

April 30, 2020

2,377 $146.69 — 4,463,426,975

May 1, 2020 to

205 $146.49 — 4,463,426,975

June 1, 2020 to

June 30, 2020

Pursuant to the terms of the Company’s restricted stock program, the Company purchased 3,930 shares at the then market value of the shares in connection with the exercise by employees of their option under such program to satisfy certain tax withholding requirements through the delivery of shares to the Company instead of cash.

939 $148.89 — 4,463,426,975

Total 3,521 —

(1) Pursuant to the terms of the Company’s restricted stock program, the Company purchased 3,521 shares at the then market value of the shares in connection with the exercise by employees under such program to satisfy certain tax withholding requirements through the delivery of shares to the Company instead of cash.

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

Date of Approval

November 2019 $5 billion

There is no expiration date for the common stock repurchase plan.

1 unchanged sentence

Performance Graph

The following graph compares the cumulative return on the Company’s common stock (a) for the most recent five years with the cumulative return on the S&P 500 Index and the Peer Group Index, (b) assuming an initial investment of $100 on June 30, 2014, with all dividends reinvested.

The following graph compares the cumulative return on the Company’s common stock for the most recent five years with the cumulative return on the S&P 500 Index and the Peer Group Index, (a) assuming an initial investment of $100 on June 30, 2015, with all dividends reinvested.

The stock price performance shown on this graph may not be indicative of future performance.

On September 30, 2014, the Company completed the spinoff of its former Dealer Services business into an independent publicly traded company called CDK Global, Inc.

The cumulative returns of the Company’s common stock have been adjusted to reflect the spinoff.

We use the S&P 500 Information Technology Index as our Peer Group Index.

(a) We use the S&P 500 Information Technology Index as our Peer Group Index.

The S&P 500 Information Technology Index is a broad index that includes the Company and several competitors.

Selected Financial Data

The following selected financial data is derived from our Consolidated Financial Statements and should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements, Management's Discussion and Analysis of Financial Condition and Results of Operations, and Quantitative and Qualitative Disclosures About Market Risk included in this Annual Report on Form 10-K.

The Company uses certain non-GAAP financial measures that we believe better reflect the underlying operations of our business model, allow investors to assess our performance in a manner similar to the method used by management, and improve our ability to understand and assess our operating performance against prior periods.

Refer to note (A) below for additional information about our non-GAAP financial measures and our reconciliations to reported results.

Additionally, prior period amounts have been adjusted to exclude discontinued operations and were restated for the adoption of Accounting Standards Update (“ASU”) 2017-07, “Compensation - Retirement Benefits (Topic 715):

Improving the Presentation of Net Periodic Pension Costs and Net Periodic Post-retirement Benefit Cost.”

The information set forth below should be read in conjunction with “Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and related notes included in this Annual Report on Form 10-K.

(Dollars and shares in millions, except per share amounts)

4 unchanged sentences

Net earnings from continuing operations $ 2,466.5 $ 2,292.8 $ 1,884.9 $ 1,787.8 $ 1,493.4

Adjusted earnings from continuing operations before interest and income taxes (A)

Adjusted net earnings from continuing operations (A)

Basic earnings per share from continuing operations $ 5.73 $ 5.27 $ 4.28 $ 3.99 $ 3.27

Diluted earnings per share from continuing operations $ 5.70 $ 5.24 $ 4.25 $ 3.97 $ 3.25

Adjusted diluted earnings per share from continuing operations (A)

Basic weighted average shares outstanding 430.8 435.0 440.6 447.8 457.0

2 unchanged sentences

Cash, cash equivalents and marketable securities of continuing operations $ 1,922.1 $ 2,221.1 $ 2,180.5 $ 2,791.2 $ 3,222.4

Total assets $ 39,165.5 $ 41,887.7 $ 38,849.1 $ 38,886.8 $ 43,670.0

Obligations under reverse repurchase agreements $ 13.6 $ 262.0 $ — $ — $ —

1 unchanged sentence

Stockholders’ equity $ 5,752.2 $ 5,399.9 $ 4,735.9 $ 4,984.1 $ 4,481.6

*Note fiscal 2018 and 2017 were restated for the adoption of Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.”

(A) Non-GAAP Financial Measures

In addition to our 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 Measures

GAAP Measures

Adjusted EBIT from continuing operations

Net earnings from continuing operations

Adjusted provision for income taxes

Provision for income taxes

Adjusted net earnings from continuing operations

Net earnings from continuing operations

Adjusted diluted earnings per share from continuing operations

Diluted earnings per share from continuing operations

Adjusted effective tax rate

Effective tax rate

Constant Currency Basis

GAAP P&L line items

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, 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 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 U.S.

GAAP measures, and they may not be comparable to similarly titled measures at other companies.

(Dollars and shares in millions, except per share amounts)

Years ended June 30,

Net earnings from continuing operations

Provision for income taxes

All other interest expense (a)

All other interest income (a)

Gain on sale of businesses

Gain on sale of assets

Transformation initiatives (b)

Proxy contest matters (c)

Adjusted EBIT from continuing operations

Net earnings from continuing operations

Gain on sale of businesses

Provision for income taxes on gain on sale of businesses (d)

Gain on sale of assets

Provision for income taxes on gain on sale of assets (e)

Transformation initiatives (b)

Income tax benefit for transformation initiatives (e)

Proxy contest matters (c)

Income tax benefit for proxy contest matters (e)

Tax Cuts and Jobs Act (f)

Adjusted net earnings from continuing operations

Diluted earnings per share from continuing operations

Gain on sale of businesses (d)

Gain on sale of assets (e)

Transformation initiatives (b) (e)

Proxy contest matters (c) (e)

Tax Cuts and Jobs Act (f)

Adjusted diluted earnings per share from continuing operations

*Note fiscal 2018 and 2017 were restated for the adoption of Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.”

(a) 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 is not related to our client funds extended investment strategy and are labeled as “All other interest expense” and “All other interest income.”

(b) The charges within transformation initiatives are comprised of charges related to our Voluntary Early Retirement Program (“VERP”), Service Alignment Initiative, Workforce Optimization and other transformation initiatives.

Charges related to our VERP in fiscal 2019 include $48.2 million for non-cash pension settlement charges and special termination benefits, and $23.6 million of expenses related to the continuing health coverage.

We also recorded severance charges in accordance with ASC 712 totaling $33.6 million primarily relating to our Workforce Optimization initiative to reduce management layers and increase spans of controls and $56.8 million related to our other transformation initiatives during fiscal 2019.

These charges were partially offset by net reversals of charges and gain on sale of assets related to our Service Alignment Initiative totaling $23.9 million for fiscal 2019.

Unlike certain other severance charges in prior periods which are not included as an adjustment to get to adjusted results, these specific charges relate to actions that are part of our broad-based, company-wide transformation initiatives.

Refer to Note 5 and 12 of the Consolidated Financial Statements for a description of charges associated with Service Alignment Initiative and VERP.

(d) The taxes on the gains on the sale of the businesses were calculated based on the annualized marginal rate in effect during the quarter of the adjustment.

The tax amount was adjusted for a book vs.

tax basis difference for the year ended June 30, 2017 due to the derecognition of goodwill upon the sale of the business and for the year ended June 30, 2016 due to a previously recorded non tax-deductible goodwill impairment charge.

(e) The tax benefit/provision on the transformation initiatives, the gain on the sale of the assets, and non-operational charges related to proxy contest matters was calculated based on the annualized marginal rate in effect during the quarter of the adjustment.

(f) The net benefit for fiscal 2018 is comprised of the re-measurement of deferred tax balances resulting in a one-time benefit, primarily as a result of ASC 606, using the lower tax rates enacted under the Tax Cuts and Jobs Act (“Act”), adjustments to the one-time transition tax on the earnings and profits of our foreign subsidiaries, foreign withholding taxes, and a valuation allowance against our foreign tax credits which may not be realized under the Act.

Refer to Note 13 of our Consolidated Financial Statements for additional detail.

*Prior period total revenues and total costs of revenue s reflect the impact of the revision to PEO revenues for comparability.

Refer to Note 1 to our Consolidated Financial Statements for more information on this revision.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity