AUTOMATIC DATA PROCESSING INCADP

AUTOMATIC DATA PROCESSING INC Debt Disclosure

10-KFiled Aug 6, 20253 min read
DEBT
The Company issued four series of fixed-rate notes with staggered maturities of 7 and 10-years totaling $4.0 billion (collectively the “Notes”). The Notes are senior unsecured obligations, and interest is payable in arrears, semi-annually.

During the first quarter ended September 30, 2024, the Company issued $1.0 billion of senior notes due in 2034 bearing a fixed interest rate of 4.450%. In connection with the senior notes issuance, the Company terminated several derivative contracts in place to hedge exposure in changes in benchmark interest rates for the senior notes issued with an aggregate notional amount totaling $1.0 billion (of which $400.0 million were executed during the first quarter ended September 30, 2024 and $600.0 million were executed on the day of issuance). Since these derivative contracts were classified as cash flow hedges, the unamortized loss of $12.5 million was deferred in accumulated other comprehensive (loss)/income and will be amortized to earnings over the life of the respective issued Note as the interest payments are made.

During the fourth quarter ended June 30, 2025, the Company issued $1.0 billion of senior notes due in 2032 bearing a fixed interest rate of 4.750%. In connection with the senior notes issuance, the Company also terminated several derivative contracts in place to hedge exposure in changes in benchmark interest rates for the senior notes issued with an aggregate notional amount totaling $1.0 billion (of which $300.0 million were entered into during the third quarter ended March 31, 2025, $100.0 million were entered into during the fourth quarter ended June 30, 2025, and $600.0 million were entered into on the day of issuance). Since these derivative contracts were classified as cash flow hedges, the unamortized loss of $3.0 million was deferred in accumulated other comprehensive (loss)/income and will be amortized to earnings over the life of the respective issued Note as the interest payments are made.

During the fourth quarter ended June 30, 2025, the Company redeemed $1.0 billion of senior notes which were due to mature on September 15, 2025 and were bearing a fixed interest rate of 3.375%.
The principal amounts and associated effective interest rates of the Notes and other debt as of June 30, 2025 and 2024 are as follows:
Debt instrumentEffective Interest RateJune 30, 2025June 30, 2024
Fixed-rate 3.375% notes due September 15, 2025
3.47%$— $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 
Fixed-rate 4.750% notes due May 8, 2032
4.95%1,000.0 — 
Fixed-rate 4.450% notes due September 9, 2034
4.75%1,000.0 — 
Other2.9 4.1 
4,002.9 3,004.1 
Less: current portion (a)(1.0)(1.1)
Less: unamortized discount and debt issuance costs(27.2)(11.7)
Total long-term debt$3,974.7 $2,991.3 

(a) - Current portion of long-term debt as of June 30, 2025 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 June 30, 2025, the fair value of the Notes, based on Level 2 inputs, was $3,801.5 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 of Significant Accounting Policies."

Historical Timeline

Fiscal YearFiled
2025Aug 6, 2025Showing above
2024Aug 7, 2024
2023Aug 3, 2023
2022Aug 3, 2022
2021Aug 4, 2021
2020Aug 5, 2020
2019Aug 9, 2019
2018Aug 3, 2018
2017Aug 4, 2017
2016Aug 5, 2016

About Debt Disclosures

Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.

Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.

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