Automatic Data Processing, Inc. (Nasdaq:ADP) reported revenue
growth of 9%, 5% organic, to $2.4 billion for the second fiscal
quarter ended December 31, 2010, Gary C. Butler, president and
chief executive officer, announced today. Revenues were negatively
impacted nearly 1% from unfavorable foreign exchange rates during
the quarter compared with a year ago. Pretax earnings from
continuing operations increased 1% and net earnings from continuing
operations declined 2% from a year ago. Diluted earnings per
share from continuing operations of $0.62 were flat with a year ago
on fewer shares outstanding. Last year's second quarter
included a favorable tax item which reduced the provision for
income taxes $12.2 million and contributed approximately $0.02 to
earnings per share in that quarter. Excluding last year's
favorable tax item, net earnings and diluted earnings per share
from continuing operations increased 2% and 3%, respectively.
ADP acquired nearly 2.4 million shares of its stock for
treasury at a cost of about $102 million fiscal
year-to-date. Cash and marketable securities were $1.4 billion
at December 31, 2010.
Second Quarter Discussion
Commenting on the results, Mr. Butler said, "I am pleased with
ADP's second quarter results and that the trends in our key
business metrics continued to be positive. New business sales
for Employer Services and PEO Services grew 16% in the quarter;
client revenue retention, pays per control, PEO worksite employees,
and client funds balances all increased as well. We are
pleased with the first quarter acquisitions that we continue to
integrate, and we closed three additional transactions during the
second quarter. In Dealer Services, the automotive marketplace
continued to stabilize.
Employer Services
"Employer Services' revenues grew 7% for the second quarter, 4%
organically. In the United States, revenues from our
traditional payroll and payroll tax filing business were flat.
Beyond payroll revenues grew 16% for the quarter, assisted by
acquisitions. The number of employees on our clients' payrolls
in the United States grew 2.4% for the quarter, as measured on a
same-store-sales basis for our clients on our Auto Pay
platform. Worldwide client retention improved 0.8 percentage
points for the quarter. Employer Services' pretax margin
declined 80 basis points for the quarter. Higher selling
expenses from strong sales growth pressured the pretax margin year
over year. The pretax margin was also negatively impacted by
investments in sales and service headcount made during the second
half of last fiscal year. These items offset the scale benefit
of higher organic revenue growth in the quarter. Recent
acquisitions also negatively impacted the pretax margin.
"As stated above, combined Employer Services and PEO Services
worldwide new business sales grew 16% for the second quarter
compared with a year ago, with sales in most of our markets
increasing double-digits. We were particularly pleased with
strong double-digit growth in the large company market in the US,
which has been slower to recover as the economy
stabilizes. New business sales represent annualized recurring
revenues anticipated from new orders.
PEO Services
"PEO Services' revenues increased 15% for the second quarter,
all organic. PEO Services' pretax margin declined 40 basis
points from last year's second quarter. Higher pass-through
revenues continued to pressure the pretax
margin. Additionally, higher selling expenses from increased
sales, as well as increased headcount also pressured the pretax
margin. Average worksite employees paid by PEO Services
increased 11% for the second quarter, to approximately 221,000.
Dealer Services
"Dealer Services' revenues increased 26%, 4% organically for the
second quarter. The automotive marketplace in the U.S.
continued to stabilize and transaction revenues increased this
quarter compared to a year ago. Dealership closings continued
to subside, though revenues continued to be negatively impacted as
anticipated by the carry-forward effect of dealership closings.
Total revenues benefited primarily from the Cobalt
acquisition closed in the first quarter. Dealer Services'
pretax margin declined 260 basis points from a year ago, including
over 300 basis points from the negative impact of
acquisition-related costs. Dealer Services continued to gain
market share with strong competitive win rates.
Interest on Funds Held for Clients
"The safety and liquidity of our clients' funds are the foremost
objectives of our investment strategy. Client funds are invested in
accordance with ADP's prudent and conservative investment
guidelines and the credit quality of the investment portfolio is
predominantly AAA/AA.
"For the second quarter, interest on funds held for clients
increased $1.3 million, or 1.0%, from $127.7 million to $129.0
million, due to an increase of 9.0% in average client funds
balances, from $13.4 billion to $14.7 billion, partially offset by
a decline of 30 basis points in the average interest yield to
3.5%.
Fiscal 2011 Forecast
"We anticipate no changes in the current economic
environment. We continue to expect that the difficult expense
and earnings comparisons will ease through the second half of
fiscal 2011. Our current forecasts for fiscal 2011 have been
updated as follows, and include the three new acquisitions closed
in the quarter.
- Total revenues – excluding acquisitions closed to date during
fiscal 2011, we anticipate about 5% revenue growth, up from our
prior forecast of 3% to 5% growth, due to positive results achieved
during the second quarter. Including acquisitions closed to
date during fiscal 2011, we anticipate about 9% revenue growth for
the year, up from our prior forecast of 7% to 8% growth.
- Diluted earnings per share – we anticipate about 5% growth in
earnings per share from continuing operations, compared with $2.37
earnings per share from continuing operations in fiscal 2010, which
excludes favorable tax items. This is up from our prior
forecast of 3% to 5% growth. Acquisition-related costs are
anticipated to be dilutive to Employer Services' and Dealer
Services' pretax margins as the reportable segments' results
include a cost of capital charge related to the funding of
acquisitions. This charge is eliminated in consolidation, and
we therefore continue to anticipate no significant impact to
diluted earnings per share from the acquisitions closed to date
during fiscal 2011.
- Employer Services – excluding acquisitions closed to date
during fiscal 2011, we anticipate about 5% revenue growth, up from
our prior forecast of 4% growth, due to continued positive trends
in our key business metrics. Including acquisitions closed to
date during fiscal 2011, we anticipate 6% to 7% revenue growth, up
from our prior forecast of about 5% growth. Excluding
acquisitions closed to date during fiscal 2011, we continue to
anticipate up to 50 basis points of pretax margin
improvement. Including acquisitions closed to date during
fiscal 2011, we anticipate up to 20 basis points of pretax margin
improvement.
- Pays per control – up approximately 2.0% for the year, up from
our prior forecast of up at least 1.0%
- Client revenue retention – up over 0.5 percentage points, up
from our prior forecast of up approximately 0.5 percentage
points
- PEO Services – about 15% revenue growth driven by higher
benefits pass through revenues, compared with our prior forecast of
13% to 15% revenue growth. We continue to anticipate a
decline in pretax margin due to increased benefits pass through
revenues and the grow-over impact of last year's $9 million
favorable state unemployment tax settlement.
- Employer Services and PEO Services new business sales –
continue to anticipate high single-digit growth compared to $1.0
billion sold in fiscal 2010.
- Dealer Services – excluding acquisitions closed to date during
fiscal 2011, we anticipate 2% to 3% revenue growth, up from our
prior forecast of up to 2% growth due to the positive results
achieved during the second quarter. Excluding acquisitions, we
anticipate at least 50 basis points of pretax margin improvement,
up from our prior forecast of slight improvement in pretax
margin. Including acquisitions closed to date during fiscal
2011, we continue to anticipate revenue growth of over 20%. We
anticipate a decline in pretax margin of 150 to 200 basis points,
compared with our prior forecast of up to 200 basis points
decline.
"Interest on funds held for clients is expected to decline $15
to $20 million, or 3% to 4%, from $542.8 million in fiscal 2010.
This is based on an approximate 30 to 40 basis point decline in the
expected average interest yield to about 3.2% to 3.3%, partially
offset by 7% to 8% growth in average client funds balances.
This is updated from our previously forecasted decline of $20
to $25 million, or 4% to 5%, based on a 40 basis point decline in
the average interest yield and growth in average client funds
balances of 5% to 7%. The interest assumptions in our current
forecasts are based on Fed Funds futures contracts and forward
yield curves as of January 24, 2011. The Fed Funds futures
contracts do not anticipate any changes during the fiscal year in
the Fed Funds target rate. The three-and-a-half and five-year
U.S. government agency rates based on the forward yield curves as
of January 24, 2011 were used to forecast new purchase rates for
the client extended and client long portfolios, respectively.
"We remain keenly focused on executing against our 5-point
strategic growth program. The strength of ADP's business model
is evident in our results through the first half of fiscal
2011. We continue to make the right investments in new
solutions, in our salesforce and client service, all of which
support ADP's leading market position. I am pleased with our
results and am confident in our ability to deliver strong revenue
and earnings growth over our strategic planning horizon." Mr.
Butler concluded.
Website Schedules
The schedules of quarterly and full-year revenue and pretax
earnings by reportable segment for fiscal years 2009, 2010 and
fiscal 2011 have been updated for the second quarter of fiscal 2011
and have been posted to the Investor Relations home page
(http://www.investquest.com/iq/a/adp/index.htm) of our website
www.adp.com under Financial Data.
An analyst conference call will be held today, Wednesday,
January 26 at 8:30 a.m. EST. A live webcast of the call
will be available to the public on a listen-only basis. To
listen to the webcast and view the slide presentation, go to ADP's
home page, www.adp.com, or ADP's Investor Relations home page,
http://www.investquest.com/InvestQuest/a/adp/, and click on the
webcast icon. The presentation will be available to download
and print about 60 minutes before the webcast at the ADP Investor
Relations home page at
http://www.investquest.com/iq/a/adp/index.htm. ADP's news
releases, current financial information, SEC filings and Investor
Relations presentations are accessible at the same Web site.
About ADP
Automatic Data Processing, Inc. (Nasdaq:ADP), with nearly $9
billion in revenues and about 550,000 clients, is one of the
world's largest providers of business outsourcing
solutions. Leveraging over 60 years of experience, ADP offers
a wide range of HR, payroll, tax and benefits administration
solutions from a single source. ADP's easy-to-use,
cost-effective solutions for employers provide superior value to
companies of all types and sizes. ADP is also a leading
provider of integrated computing solutions to auto, truck,
motorcycle, marine and recreational vehicle dealers throughout the
world. For more information about ADP or to contact a
local ADP sales office, reach us at 1.800.225.5237 or visit the
company's Web site at www.ADP.com.
Automatic Data Processing, Inc. and
Subsidiaries |
|
|
Condensed Consolidated Balance
Sheets |
|
|
(In millions) |
|
|
(Unaudited) |
|
|
|
December 31, |
June 30, |
|
2010 |
2010 |
|
|
|
Assets |
|
|
Cash and cash equivalents/Short-term
marketable securities |
$ 1,342.0 |
$ 1,671.2 |
Other current assets |
1,811.0 |
1,812.9 |
Total current assets before funds
held for clients |
3,153.0 |
3,484.1 |
Funds held for clients |
24,218.5 |
18,832.6 |
Total current assets |
27,371.5 |
22,316.7 |
|
|
|
Long-term marketable securities |
99.3 |
104.3 |
Property, plant and equipment, net |
676.9 |
673.8 |
Other non-current assets |
4,512.6 |
3,767.4 |
Total assets |
$ 32,660.3 |
$ 26,862.2 |
|
|
|
Liabilities and Stockholders'
Equity |
|
|
Other current liabilities |
1,810.8 |
1,915.5 |
Client funds obligations |
23,682.1 |
18,136.7 |
Total current
liabilities |
25,492.9 |
20,052.2 |
|
|
|
Long-term debt |
35.1 |
39.8 |
Other non-current liabilities |
1,356.7 |
1,291.3 |
Total liabilities |
26,884.7 |
21,383.3 |
|
|
|
Total stockholders' equity |
5,775.6 |
5,478.9 |
Total liabilities and stockholders'
equity |
$ 32,660.3 |
$ 26,862.2 |
|
|
|
|
|
|
|
|
|
|
Automatic Data Processing, Inc. and
Subsidiaries |
|
|
|
|
Statements of Consolidated
Earnings |
|
|
|
|
(In millions, except per share
amounts) |
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Six Months Ended |
|
December 31, |
December 31, |
|
2010 |
2009 |
2010 |
2009 |
REVENUES: |
|
|
|
|
Revenues, other than interest on funds
held for clients and PEO revenues |
$ 1,921.0 |
$ 1,761.4 |
$ 3,684.8 |
$ 3,435.7 |
Interest on funds held for clients |
129.0 |
127.7 |
255.8 |
255.6 |
PEO revenues (note A) |
355.7 |
308.9 |
694.6 |
602.8 |
TOTAL REVENUES |
2,405.7 |
2,198.0 |
4,635.2 |
4,294.1 |
|
|
|
|
|
EXPENSES: |
|
|
|
|
Costs of revenues: |
|
|
|
|
Operating expenses |
1,173.6 |
1,046.9 |
2,290.3 |
2,050.4 |
Systems development and programming
costs |
142.1 |
120.5 |
277.0 |
246.2 |
Depreciation and amortization |
64.6 |
59.8 |
124.9 |
120.2 |
TOTAL COSTS OF REVENUES |
1,380.3 |
1,227.2 |
2,692.2 |
2,416.8 |
|
|
|
|
|
Selling, general and administrative
expenses |
570.1 |
518.9 |
1,085.7 |
1,010.5 |
Interest expense |
2.8 |
2.5 |
5.6 |
5.6 |
TOTAL EXPENSES |
1,953.2 |
1,748.6 |
3,783.5 |
3,432.9 |
|
|
|
|
|
Other income, net |
(32.1) |
(29.6) |
(69.3) |
(63.4) |
|
|
|
|
|
EARNINGS FROM CONTINUING OPERATIONS |
|
|
|
|
BEFORE INCOME TAXES |
484.6 |
479.0 |
921.0 |
924.6 |
|
|
|
|
|
Provision for income taxes |
174.5 |
164.0 |
332.4 |
326.6 |
|
|
|
|
|
NET EARNINGS FROM CONTINUING OPERATIONS |
$ 310.1 |
$ 315.0 |
$ 588.6 |
$ 598.0 |
|
|
|
|
|
Earnings from discontinued operations, net of
provision for income taxes of $0.3 and $0.8 for the three and
six months ended December 31, 2009. |
-- |
0.8 |
-- |
1.9 |
|
|
|
|
|
NET EARNINGS |
$ 310.1 |
$ 315.8 |
$ 588.6 |
$ 599.9 |
|
|
|
|
|
Basic Earnings Per Share from Continuing
Operations |
$ 0.63 |
$ 0.63 |
$ 1.20 |
$ 1.19 |
Basic Earnings Per Share from Discontinued
Operations |
-- |
-- |
-- |
-- |
Basic Earnings Per Share |
$ 0.63 |
$ 0.63 |
$ 1.20 |
$ 1.20 |
|
|
|
|
|
Diluted Earnings Per Share from Continuing
Operations |
$ 0.62 |
$ 0.62 |
$ 1.19 |
$ 1.18 |
Diluted Earnings Per Share from Discontinued
Operations |
-- |
-- |
-- |
-- |
DILUTED EARNINGS PER SHARE |
$ 0.62 |
$ 0.62 |
$ 1.19 |
$ 1.19 |
|
|
|
|
|
Dividends declared per common share |
$ 0.3600 |
$ 0.3400 |
$ 0.7000 |
$ 0.6700 |
|
|
|
|
|
|
|
|
|
|
(A) Professional Employer
Organization (PEO) revenues are net of direct pass-through costs,
primarily consisting of payroll wages and payroll taxes, of
$4,231.3 and $3,814.5 for the three months ended December 31, 2010
and 2009, respectively, and $7,582.7 and $6,615.6 for the six
months ended December 31, 2010 and 2009, respectively. |
|
|
|
|
|
|
|
|
|
|
Automatic Data Processing, Inc. and
Subsidiaries |
|
|
|
|
Other Selected Financial
Data |
|
|
|
|
(Dollars in millions, except per
share amounts) |
|
|
|
|
(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
|
|
December 31, |
|
|
|
2010 |
2009 |
Change |
% Change |
Revenues (A) |
|
|
|
|
Employer Services |
$ 1,663.0 |
$ 1,555.6 |
$ 107.4 |
7% |
PEO Services |
358.2 |
311.2 |
47.0 |
15% |
Dealer Services |
375.3 |
298.5 |
76.8 |
26% |
Other |
9.2 |
32.7 |
(23.5) |
(72)% |
|
$ 2,405.7 |
$ 2,198.0 |
$ 207.7 |
9% |
Pre-tax earnings from continuing
operations (A) |
|
|
|
|
Employer Services |
$ 431.5 |
$ 416.4 |
$ 15.1 |
4% |
PEO Services |
35.8 |
32.5 |
3.3 |
10% |
Dealer Services |
57.5 |
53.6 |
3.9 |
7% |
Other |
(40.2) |
(23.5) |
(16.7) |
71% |
|
$ 484.6 |
$ 479.0 |
$ 5.6 |
1% |
Pre-tax margin (A) |
|
|
|
|
Employer Services |
25.9% |
26.8% |
(0.8)% |
|
PEO Services |
10.0% |
10.4% |
(0.4)% |
|
Dealer Services |
15.3% |
18.0% |
(2.6)% |
|
Other |
n/m |
n/m |
n/m |
|
|
20.1% |
21.8% |
(1.6)% |
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
December 31, |
|
|
|
2010 |
2009 |
Change |
% Change |
Revenues (A) |
|
|
|
|
Employer Services |
$ 3,222.2 |
$ 3,032.2 |
$ 190.0 |
6% |
PEO Services |
699.5 |
607.4 |
92.1 |
15% |
Dealer Services |
711.7 |
600.0 |
111.7 |
19% |
Other |
1.8 |
54.5 |
(52.7) |
97% |
|
$ 4,635.2 |
$ 4,294.1 |
$ 341.1 |
8% |
Pre-tax earnings from continuing
operations (A) |
|
|
|
|
Employer Services |
$ 808.2 |
$ 784.5 |
$ 23.7 |
3% |
PEO Services |
64.1 |
67.9 |
(3.8) |
(6)% |
Dealer Services |
108.3 |
98.4 |
9.9 |
10% |
Other |
(59.6) |
(26.2) |
(33.4) |
(100)+% |
|
$ 921.0 |
$ 924.6 |
$ (3.6) |
0% |
Pre-tax margin (A) |
|
|
|
|
Employer Services |
25.1% |
25.9% |
(0.8)% |
|
PEO Services |
9.2% |
11.2% |
(2.0)% |
|
Dealer Services |
15.2% |
16.4% |
(1.2)% |
|
Other |
n/m |
n/m |
n/m |
|
|
19.9% |
21.5% |
(1.7)% |
|
|
|
|
|
|
(A) Prior year's segment results
were adjusted to reflect fiscal year 2011 budgeted foreign exchange
rates. |
|
|
|
|
|
|
n/m - not meaningful |
|
|
|
|
|
|
|
|
|
|
Three Months Ended December
31, |
|
|
|
2010 |
2009 |
Change in other income,
net |
|
Components of other income, net: |
|
|
|
|
Interest income on corporate funds |
$ (27.9) |
$ (31.2) |
$ (3.3) |
|
Realized gains on available-for-sale
securities |
(5.4) |
(2.2) |
3.2 |
|
Realized losses on available-for-sale
securities |
1.8 |
4.8 |
3.0 |
|
Realized gains on investment in Reserve
Fund |
-- |
(0.4) |
(0.4) |
|
Impairment losses on available-for-sale
securities |
-- |
-- |
-- |
|
Impairment loss on assets held for sale |
-- |
-- |
-- |
|
Gains on sales of buildings |
-- |
-- |
-- |
|
Other, net |
(0.6) |
(0.6) |
-- |
|
Total other income, net |
$ (32.1) |
$ (29.6) |
$ 2.5 |
|
|
|
|
|
|
|
Six Months Ended December
31, |
|
|
|
2010 |
2009 |
Change in other income,
net |
|
Components of other income, net: |
|
|
|
|
Interest income on corporate funds |
$ (58.7) |
$ (67.5) |
$ (8.8) |
|
Realized gains on available-for-sale
securities |
(17.6) |
(10.2) |
7.4 |
|
Realized losses on available-for-sale
securities |
2.2 |
12.1 |
9.9 |
|
Realized gains on investment in Reserve
Fund |
-- |
(0.4) |
(0.4) |
|
Impairment losses on available-for-sale
securities |
-- |
5.3 |
5.3 |
|
Impairment loss on assets held for sale |
8.6 |
-- |
(8.6) |
|
Gains on sales of buildings |
(1.8) |
(1.5) |
0.3 |
|
Other, net |
(2.0) |
(1.2) |
0.8 |
|
Total other income, net |
$ (69.3) |
$ (63.4) |
$ 5.9 |
|
|
|
|
|
|
|
|
|
|
|
Automatic Data Processing, Inc. and
Subsidiaries |
|
|
|
|
Other Selected Financial Data,
Continued |
|
|
|
|
(Dollars in millions,
except per share amounts or where otherwise stated) |
|
|
|
(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
|
|
December 31, |
|
|
|
2010 |
2009 |
Change |
% Change |
Earnings per share information: |
|
|
|
|
Net earnings from continuing operations |
$ 310.1 |
$ 315.0 |
$ (4.9) |
(2)% |
Net earnings |
$ 310.1 |
$ 315.8 |
$ (5.7) |
(2)% |
Basic weighted average shares
outstanding |
492.0 |
502.0 |
(10.0) |
(2)% |
Basic earnings per share from continuing
operations |
$ 0.63 |
$ 0.63 |
$ -- |
0% |
Basic earnings per share |
$ 0.63 |
$ 0.63 |
$ -- |
0% |
|
|
|
|
|
Diluted net earnings from continuing
operations |
$ 310.1 |
$ 315.0 |
$ (4.9) |
(2)% |
Diluted net earnings |
$ 310.1 |
$ 315.8 |
$ (5.7) |
(2)% |
Diluted weighted average shares
outstanding |
496.9 |
506.2 |
(9.3) |
(2)% |
Diluted earnings per share from continuing
operations |
$ 0.62 |
$ 0.62 |
$ -- |
0% |
Diluted earnings per share |
$ 0.62 |
$ 0.62 |
$ -- |
0% |
|
|
|
|
|
|
Six Months Ended |
|
|
|
December 31, |
|
|
|
2010 |
2009 |
Change |
% Change |
Earnings per share information: |
|
|
|
|
Net earnings from continuing operations |
$ 588.6 |
$ 598.0 |
$ (9.4) |
(2)% |
Net earnings |
$ 588.6 |
$ 599.9 |
$ (11.3) |
(2)% |
Basic weighted average shares
outstanding |
491.7 |
501.7 |
(10.0) |
(2)% |
Basic earnings per share from continuing
operations |
$ 1.20 |
$ 1.19 |
$ 0.01 |
1% |
Basic earnings per share |
$ 1.20 |
$ 1.20 |
$ -- |
0% |
|
|
|
|
|
Diluted net earnings from continuing
operations |
$ 588.6 |
$ 598.0 |
$ (9.4) |
(2)% |
Diluted net earnings |
$ 588.6 |
$ 599.9 |
$ (11.3) |
(2)% |
Diluted weighted average shares
outstanding |
495.9 |
504.8 |
(8.9) |
(2)% |
Diluted earnings per share from continuing
operations |
$ 1.19 |
$ 1.18 |
$ 0.01 |
1% |
Diluted earnings per share |
$ 1.19 |
$ 1.19 |
$ -- |
0% |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
December 31, |
|
|
|
2010 |
2009 |
|
|
Key Statistics: |
|
|
|
|
Internal revenue growth: |
|
|
|
|
Employer Services |
4% |
(2)% |
|
|
PEO Services |
15% |
9% |
|
|
Dealer Services |
4% |
(7)% |
|
|
|
|
|
|
|
Employer Services: |
|
|
|
|
Change in pays per control -
AutoPay product |
2.4% |
(5.0)% |
|
|
Change in client revenue retention
percentage - worldwide |
0.8 pts |
(0.1) pts |
|
|
Employer Services/PEO new business
sales growth - worldwide |
16% |
(3)% |
|
|
|
|
|
|
|
PEO Services: |
|
|
|
|
Paid PEO worksite employees at end
of period |
224,000 |
201,000 |
|
|
Average paid PEO worksite employees
during the period |
221,000 |
200,000 |
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
December 31, |
|
|
|
2010 |
2009 |
|
|
Key Statistics: |
|
|
|
|
Internal revenue growth: |
|
|
|
|
Employer Services |
4% |
(2)% |
|
|
PEO Services |
15% |
8% |
|
|
Dealer Services |
2% |
(6)% |
|
|
|
|
|
|
|
Employer Services: |
|
|
|
|
Change in pays per control -
AutoPay product |
2.1% |
(5.7)% |
|
|
Change in client revenue retention
percentage - worldwide |
1.2 pts |
(0.6) pts |
|
|
Employer Services/PEO new business
sales growth - worldwide |
8% |
(2)% |
|
|
|
|
|
|
|
PEO Services: |
|
|
|
|
Paid PEO worksite employees at end
of period |
224,000 |
201,000 |
|
|
Average paid PEO worksite employees
during the period |
218,000 |
198,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Automatic Data Processing, Inc. and
Subsidiaries |
|
|
|
|
Other Selected Financial Data,
Continued |
|
|
|
|
(Dollars in millions,
except per share amounts or where otherwise stated) |
|
|
|
(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
|
|
December 31, |
|
|
|
2010 |
2009 |
Change |
% Change |
Average investment balances at cost (in
billions): |
|
|
|
|
Corporate, other than corporate
extended |
$ 1.1 |
$ 1.6 |
$ (0.5) |
(29)% |
Corporate extended |
2.9 |
2.7 |
0.2 |
9% |
Total corporate |
4.0 |
4.3 |
(0.2) |
(6)% |
Funds held for clients |
14.7 |
13.4 |
1.2 |
9% |
Total |
$ 18.7 |
$ 17.7 |
$ 1.0 |
6% |
|
|
|
|
|
Average interest rates earned exclusive of
realized losses (gains) on: |
|
|
|
|
Corporate, other than corporate
extended |
1.0% |
0.8% |
|
|
Corporate extended |
3.3% |
4.1% |
|
|
Total corporate |
2.8% |
2.9% |
|
|
Funds held for clients |
3.5% |
3.8% |
|
|
Total |
3.4% |
3.6% |
|
|
|
|
|
|
|
Net unrealized gain position at end of
period |
$ 557.9 |
$ 580.6 |
|
|
|
|
|
|
|
Average short-term financing (in
billions): |
|
|
|
|
U.S. commercial paper
borrowings |
$ 2.4 |
$ 2.2 |
|
|
U.S. & Canadian reverse
repurchase agreement borrowings |
0.5 |
0.5 |
|
|
|
$ 2.9 |
$ 2.7 |
|
|
|
|
|
|
|
Average interest rates paid on: |
|
|
|
|
U.S. commercial paper
borrowings |
0.2% |
0.2% |
|
|
U.S. & Canadian reverse
repurchase agreement borrowings |
0.5% |
0.2% |
|
|
|
|
|
|
|
|
|
|
|
|
Interest on funds held for clients |
$ 129.0 |
$ 127.7 |
$ 1.3 |
1% |
Corporate extended interest income (B) |
24.6 |
27.7 |
(3.1) |
(11)% |
Corporate interest expense-short-term
financing (B) |
(2.1) |
(1.1) |
(0.9) |
(83)% |
|
$ 151.5 |
$ 154.2 |
$ (2.7) |
(2)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended |
|
|
|
December 31, |
|
|
|
2010 |
2009 |
Change |
% Change |
Average investment balances at cost (in
billions): |
|
|
|
|
Corporate, other than corporate
extended |
$ 1.3 |
$ 1.6 |
(0.3) |
(19)% |
Corporate extended |
2.9 |
2.9 |
-- |
(1)% |
Total corporate |
4.1 |
4.4 |
(0.3) |
(7)% |
Funds held for clients |
14.2 |
13.0 |
1.2 |
9% |
Total |
$ 18.4 |
$ 17.5 |
$ 0.9 |
5% |
|
|
|
|
|
Average interest rates earned exclusive of
realized losses (gains) on: |
|
|
|
|
Corporate, other than corporate
extended |
1.0% |
0.9% |
|
|
Corporate extended |
3.6% |
4.2% |
|
|
Total corporate |
2.8% |
3.0% |
|
|
Funds held for clients |
3.6% |
3.9% |
|
|
Total |
3.4% |
3.7% |
|
|
|
|
|
|
|
Net unrealized gain position at end of
period |
$ 557.9 |
$ 580.6 |
|
|
|
|
|
|
|
Average short-term financing (in
billions): |
|
|
|
|
U.S. commercial paper
borrowings |
$ 2.3 |
$ 2.4 |
|
|
U.S. & Canadian reverse
repurchase agreement borrowings |
0.6 |
0.5 |
|
|
|
$ 2.9 |
$ 2.9 |
|
|
|
|
|
|
|
Average interest rates paid on: |
|
|
|
|
U.S. commercial paper
borrowings |
0.3% |
0.2% |
|
|
U.S. & Canadian reverse
repurchase agreement borrowings |
0.4% |
0.2% |
|
|
|
|
|
|
|
|
|
|
|
|
Interest on funds held for clients |
$ 255.8 |
$ 255.6 |
$ 0.2 |
0% |
Corporate extended interest income (B) |
51.9 |
60.3 |
(8.4) |
(14)% |
Corporate interest expense-short-term
financing (B) |
(4.1) |
(2.9) |
(1.2) |
(43)% |
|
$ 303.6 |
$ 313.0 |
$ (9.5) |
(3)% |
|
|
|
|
|
(B) While "Corporate
extended interest income" and "Corporate interest expense
-short-term financing" are non-GAAP disclosures, management
believes this information is beneficial to reviewing the financial
statements of ADP. Management believes this information is
beneficial as it allows the reader to understand the extended
investment strategy for ADP's client funds assets, corporate
investments and short-term borrowings. A reconciliation of the
non-GAAP measures to GAAP measures is as follows: |
|
|
|
|
|
Automatic Data Processing, Inc. and
Subsidiaries |
|
|
|
|
Other Selected Financial Data,
Continued |
|
|
|
|
(Dollars in millions,
except per share amounts or where otherwise stated) |
|
|
|
(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
|
|
December 31, |
|
|
|
2010 |
2009 |
|
|
|
|
|
|
|
Corporate extended interest income |
$ 24.6 |
$ 27.7 |
|
|
All other interest income |
3.3 |
3.5 |
|
|
Total interest income on corporate
funds |
$ 27.9 |
$ 31.2 |
|
|
|
|
|
|
|
Corporate interest expense - short-term
financing |
$ 2.1 |
$ 1.1 |
|
|
All other interest expense |
0.7 |
1.4 |
|
|
Total interest expense |
$ 2.8 |
$ 2.5 |
|
|
|
|
|
|
|
|
Six Months
Ended |
|
|
|
December 31, |
|
|
|
2010 |
2009 |
|
|
|
|
|
|
|
Corporate extended interest income |
$ 51.9 |
$ 60.3 |
|
|
All other interest income |
6.8 |
7.2 |
|
|
Total interest income on corporate
funds |
$ 58.7 |
$ 67.5 |
|
|
|
|
|
|
|
Corporate interest expense - short-term
financing |
$ 4.1 |
$ 2.9 |
|
|
All other interest expense |
1.5 |
2.7 |
|
|
Total interest expense |
$ 5.6 |
$ 5.6 |
|
|
|
|
|
|
|
|
|
|
Automatic Data
Processing, Inc. and Subsidiaries |
|
|
|
Consolidated Statements
of Adjusted / Non-GAAP Financial Information |
|
|
(In millions, except per
share amounts) |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
The following table reconciles
the Company's results for the three and six months ended December
31, 2009 and for the twelve months ended June 30, 2010 to adjusted
results that exclude the impact of favorable tax items. The Company
uses certain adjusted results, among other measures, to evaluate
the Company's operating performance in the absence of certain items
and for planning and forecasting of future periods. The
Company believes 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 the
Company's management, improves their ability to understand the
Company's operating performance and makes it easier to compare the
Company's results with other companies. Since adjusted
earnings from continuing operations and adjusted diluted EPS are
not measures of performance calculated in accordance with U.S.
GAAP, they should not be considered in isolation of, or as a
substitute for, earnings from continuing operations and diluted EPS
from continuing operations and they may not be comparable to
similarly titled measures employed by other companies. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31, 2009 |
|
Earnings from
continuing operations before income taxes |
Provision for income
taxes |
Net earnings from
continuing operations |
Diluted EPS from continuing
operations |
|
|
|
|
|
As Reported |
$ 479.0 |
$ 164.0 |
$ 315.0 |
$ 0.62 |
|
|
|
|
|
Adjustments: |
|
|
|
|
Favorable tax items |
-- |
12.2 |
12.2 |
0.02 |
|
|
|
|
|
As Adjusted |
$ 479.0 |
$ 176.2 |
$ 302.8 |
$ 0.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended December
31, 2009 |
|
Earnings from
continuing operations before income taxes |
Provision for income
taxes |
Net earnings from
continuing operations |
Diluted EPS from continuing
operations |
|
|
|
|
|
As Reported |
$ 924.6 |
$ 326.6 |
$ 598.0 |
$ 1.18 |
|
|
|
|
|
Adjustments: |
|
|
|
|
Favorable tax items |
-- |
12.2 |
12.2 |
0.02 |
|
|
|
|
|
As Adjusted |
$ 924.6 |
$ 338.8 |
$ 585.8 |
$ 1.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended June
30, 2010 |
|
Earnings from
continuing operations before income taxes |
Provision for income
taxes |
Net earnings from
continuing operations |
Diluted EPS from continuing
operations |
|
|
|
|
|
As Reported |
$ 1,863.2 |
$ 655.9 |
$ 1,207.3 |
$ 2.40 |
|
|
|
|
|
Adjustments: |
|
|
|
|
Favorable tax items |
-- |
12.2 |
12.2 |
0.02 |
|
|
|
|
|
As Adjusted |
$ 1,863.2 |
$ 668.1 |
$ 1,195.1 |
$ 2.37 |
This document and other written or oral statements made from
time to time by ADP 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 be"
and other words of similar meaning, are forward-looking statements.
These statements are based on management's expectations and
assumptions 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 include: ADP's
success in obtaining, retaining and selling additional services to
clients; the pricing of products and services; changes in laws
regulating payroll taxes, professional employer organizations and
employee benefits; overall market and economic conditions,
including interest rate and foreign currency trends; competitive
conditions; auto sales and related industry changes; employment and
wage levels; changes in technology; availability of skilled
technical associates and the impact of new acquisitions and
divestitures. ADP disclaims any obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise. These risks and uncertainties, along
with the risk factors discussed under "Item 1A. - Risk Factors" in
our Annual Report on Form 10-K for the fiscal year ended June 30,
2010, should be considered in evaluating any forward-looking
statements contained herein.
CONTACT: ADP Investor Relations
Elena Charles, 973.974.4077
Debbie Morris, 973.974.7821
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