Automatic Data Processing (ADP)
Ever wonder how your paycheck gets into your account every payday? It's thanks to companies like Automatic Data Processing. The New Jersey???based ADP helps companies handle HR, payroll, taxes, and benefits administration in one fell swoop.
ADP Reports Second Quarter Fiscal 2010 Results
Revenues Flat; EPS From Continuing Operations Increases 5%, or
2% Excluding$0.02 Per Share Benefit From a Favorable Tax Item
Updates Fiscal 2010 Guidance
Forecasting Fiscal 2010 Revenues Flat toSlightly Down and High -end of
EPS Forecast of$2.34 to $2.39 EPS
Second Quarter Discussion
Commenting on the results, Mr. Butler said, "Overall, ADP's second quarter results were consistent with our expectations. As anticipated, the comparison to a year ago continued to be difficult due to the cumulative impact of the economic downturn. Our key business metrics in Employer Services - pays per control, client retention, and new business sales - declined year-over-year, but the rate of decline has lessened. Dealer Services posted increased new business sales and continued to improve its share of a consolidating North American marketplace.
Employer Services
"Employer Services' revenues declined 2% for the second quarter. In
"Combined Employer Services and PEO Services worldwide new business sales declined 3% for the second quarter compared to the same period last year. The dollar value of new business sold during the quarter represents the expected new annual recurring revenues to be generated from each sale.
PEO Services
"PEO Services' revenues increased 9% for the second quarter due to higher benefits revenues that resulted from increases in benefit rates as well as the number of worksite employees. PEO Services' pretax margin declined slightly primarily due to higher benefits pass-through costs. Average worksite employees paid increased 4% to nearly 200,000.
Dealer Services
"Dealer Services' revenues declined 5%, nearly 8% organically, for the second quarter. Continued dealership closings, lower transactional revenues, and lower international software license fee revenues contributed to this decline. Dealer Services' pretax margin increased 60 basis points, benefiting from lower headcount levels resulting from the fourth quarter fiscal 2009 restructuring as well as other cost containment measures.
Interest on Funds Held for Clients, Interest Income on Corporate Funds, and Interest Expense
"The safety of principal, liquidity, and diversification 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 declined
Reserve Fund Update
"On
Fiscal 2010 Forecast
"As we move into the second half of the year we have increased visibility on our key metrics and, as such, have updated our forecasts for revenues and certain key metrics. We anticipate total revenues will be flat to slightly down, compared with our previous estimate of down 1% to 2%. Including the
"For Employer Services, we anticipate a decline in revenues of about 1% compared with our previous forecast of down 1% to 2%. We anticipate a decline of about 4% in pays per control for the full year, which is a slight improvement from our previous estimate of a decline of 4% to 5%. We continue to expect client revenue retention to be flat to down 1 percentage point. For PEO Services we anticipate high-single-digit revenue growth driven by increased benefits pass-through revenues. We anticipate flat to slightly positive combined Employer Services and PEO Services worldwide new business sales growth compared with our previous estimate of about flat new business sales. There is no change to Dealer Services' revenues forecast of a 3% to 6% decline. We continue to anticipate no improvement in segment pretax margins.
"Interest on funds held for clients is expected to decline about
"We expect interest expense to decline about
"Our results through the first six months were solid given the challenging economy. However, I remain cautious looking ahead to the coming months. Although the timing and pace of the recovery remains unclear, we are continuing to invest in ADP's future. ADP is positioned well to leverage the inevitable recovery and I remain optimistic about ADP's long-term opportunities for growth," Mr. Butler concluded.
Website Schedules
The schedules of quarterly and full-year revenues and pretax earnings by reportable segment for fiscal years 2008, 2009, and 2010 have been updated for the second quarter of fiscal 2010 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,
About ADP
Automatic Data Processing, Inc.
and Subsidiaries
Condensed Consolidated Balance
Sheets
(In millions)
(Unaudited)
December
31, June 30,
2009 2009
--------- -----------
Assets
---------------------------------
Cash and cash
equivalents/Short-term
marketable securities (A) $1,753.3 $2,296.1
Other current assets 1,797.7 1,988.6
--------- -----------
Total current assets before
funds held for clients 3,551.0 4,284.7
Funds held for clients 21,375.4 16,419.2
--------- -----------
Total current assets 24,926.4 20,703.9
Long-term marketable securities 90.6 92.4
Property, plant and equipment,
net 707.4 734.5
Other non-current assets 3,874.5 3,820.9
--------- -----------
Total assets $29,598.9 $25,351.7
========= ===========
Liabilities and Stockholders'
Equity
---------------------------------
Obligation under commercial paper
borrowing $-- $730.0
Other current liabilities 1,751.4 2,033.7
Client funds obligations 20,809.1 15,992.6
--------- -----------
Total current liabilities 22,560.5 18,756.3
Long-term debt 41.8 42.7
Other non-current liabilities 1,248.7 1,230.1
--------- -----------
Total liabilities 23,851.0 20,029.1
Total stockholders' equity 5,747.9 5,322.6
--------- -----------
Total liabilities and
stockholders' equity $29,598.9 $25,351.7
========= ===========
(A) As ofJune 30, 2009 , cash and cash
equivalents / short-term marketable
securities include
cash and cash equivalents related to a commercial paper
borrowing of$730.0 million , which was
repaid onJuly 1, 2009 .
Automatic Data Processing, Inc. and
Subsidiaries
Statements of Consolidated Earnings
(In millions, except per share amounts)
(Unaudited)
Six Months
Three Months Ended Ended
December 31, December 31,
2009 2008 2009 2008
-------- -------- -------- --------
REVENUES:
Revenues, other than interest on funds
held for clients and PEO revenues $1,767.8 $1,772.6 $3,448.8 $3,525.0
Interest on funds held for clients 127.7 147.3 255.6 299.2
PEO revenues (A) 308.9 283.4 602.8 560.5
-------- -------- -------- --------
TOTAL REVENUES 2,204.4 2,203.3 4,307.2 4,384.7
-------- -------- -------- --------
EXPENSES:
Costs of revenues:
Operating expenses 1,050.4 1,007.1 2,057.2 2,054.1
Systems development and programming
costs 121.0 123.1 247.1 253.4
Depreciation and amortization 59.9 57.3 120.4 116.7
-------- -------- -------- --------
TOTAL COSTS OF REVENUES 1,231.3 1,187.5 2,424.7 2,424.2
Selling, general and administrative
expenses 520.1 573.1 1,012.9 1,099.8
Interest expense 2.5 8.1 5.6 27.4
-------- -------- -------- --------
TOTAL EXPENSES 1,753.9 1,768.7 3,443.2 3,551.4
-------- -------- -------- --------
Other income, net (29.6) (38.6) (63.4) (81.2)
-------- -------- -------- --------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 480.1 473.2 927.4 914.5
Provision for income taxes 164.3 172.8 327.5 336.2
-------- -------- -------- --------
NET EARNINGS FROM CONTINUING OPERATIONS $315.8 $300.4 $599.9 $578.3
Earnings (loss) from discontinued
operations, net of (benefit) provision
for income taxes of$(0.1) for the
three months endedDecember 31, 2008
and$1.0 for the six months ended
December 31, 2008. -- 0.1 -- (1.0)
-------- -------- -------- --------
NET EARNINGS $315.8 $300.5 $599.9 $577.3
======== ======== ======== ========
Basic Earnings Per Share from
Continuing Operations $0.63 $0.60 $1.20 $1.14
Basic Earnings Per Share from
Discontinued Operations -- -- -- --
-------- -------- -------- --------
Basic Earnings Per Share $0.63 $0.60 $1.20 $1.14
======== ======== ======== ========
Diluted Earnings Per Share from
Continuing Operations $0.62 $0.59 $1.19 $1.14
Diluted Earnings Per Share from
Discontinued Operations -- -- -- --
-------- -------- -------- --------
DILUTED EARNINGS PER SHARE $0.62 $0.59 $1.19 $1.13
======== ======== ======== ========
Dividends declared per common share $0.3400 $0.3300 $0.6700 $0.6200
======== ======== ======== ========
(A)Professional Employer Organization
("PEO") revenues are net of direct
pass-through costs, primarily
consisting of payroll wages and
payroll taxes, of$3,814.5 and
$3,283.4 for the three months ended
December 31, 2009 and 2008,
respectively and$6,615.6 and$6,082.0
for the six months endedDecember 31, and 2008, respectively.
2009
Automatic Data
Processing, Inc.
and Subsidiaries
Other Selected
Financial Data
(Dollars in
millions, except
per share amounts)
(Unaudited)
Three Months Ended
December 31,
%
2009 2008 Change Change
-------- -------- ------- ------
Revenues (A)
--------------------
Employer Services $1,571.4 $1,609.1 $(37.7) (2)%
PEO Services 311.2 285.4 25.8 9%
Dealer Services 311.0 329.0 (18.0) (5)%
Other 10.8 (20.2) 31.0
-------- -------- ------- 100+%
$2,204.4 $2,203.3 $1.1
-------- -------- ------- 0%
Pre-tax earnings
from continuing
operations (A)
--------------------
Employer Services $416.9 $428.1 $(11.2) (3)%
PEO Services 32.2 29.9 2.3 8%
Dealer Services 54.8 55.9 (1.1) (2)%
Other (23.8) (40.7) 16.9
-------- -------- ------- 42%
$480.1 $473.2 $6.9
-------- -------- ------- 1%
Pre-tax margin (A)
--------------------
Employer Services 26.5% 26.6% (0.1)%
PEO Services 10.4% 10.5% (0.1)%
Dealer Services 17.6% 17.0% 0.6%
Other n/m n/m n/m
-------- -------- -------
21.8% 21.5% 0.3%
-------- -------- -------
Six Months Ended
December 31,
%
2009 2008 Change Change
-------- -------- ------- ------
Revenues (A)
--------------------
Employer Services $3,063.4 $3,141.2 $(77.8) (2)%
PEO Services 607.4 564.7 42.7 8%
Dealer Services 624.5 655.8 (31.3) (5)%
Other 11.9 23.0 (11.1)
-------- -------- ------- (48)%
$4,307.2 $4,384.7 $(77.5)
-------- -------- ------- (2)%
Pre-tax earnings
from continuing
operations (A)
--------------------
Employer Services $784.5 $795.5 $(11.0) (1)%
PEO Services 67.5 58.0 9.5 16%
Dealer Services 100.3 107.6 (7.3) (7)%
Other (24.9) (46.6) 21.7
-------- -------- ------- 47%
$927.4 $914.5 $12.9
-------- -------- ------- 1%
Pre-tax margin (A)
--------------------
Employer Services 25.6% 25.3% 0.3%
PEO Services 11.1% 10.3% 0.8%
Dealer Services 16.1% 16.4% (0.3)%
Other n/m n/m n/m
-------- -------- -------
21.5% 20.9% 0.7%
-------- -------- -------
(A) Prior year's segment results were adjusted to
reflect fiscal year 2010 budgeted foreign
exchange rates.
n/m - not meaningful
-------------------- -------- -------- ------- ------
Three Months Ended
December 31,
2009 2008 Change
-------- ------- ------
Components of other income, net:
---------------------------------------
Interest income on corporate funds $(31.2) $(43.3) $12.1
Realized gains on available-for-sale
securities (2.2) (1.5) (0.7)
Realized losses on available-for-sale
securities 4.8 9.0 (4.2)
Realized (gain) loss on investment in
Reserve Fund (0.4) -- (0.4)
Gain on sale of building -- (2.2) 2.2
Other, net (0.6) (0.6) --
-------- ------- ------
Total other income, net $(29.6) $(38.6) $9.0
======== ======= ======
Six Months Ended
December 31,
2009 2008 Change
-------- ------- ------
Components of other income, net:
---------------------------------------
Interest income on corporate funds $(67.5) $(89.5) $22.0
Realized gains on available-for-sale
securities (10.2) (2.6) (7.6)
Realized losses on available-for-sale
securities 12.1 10.9 1.2
Realized (gain) loss on investment in
Reserve Fund (0.4) 3.3 (3.7)
Impairment losses on available-for-sale
securities 5.3 -- 5.3
Gain on sale of building (1.5) (2.2) 0.7
Other, net (1.2) (1.1) (0.1)
-------- ------- ------
Total other income, net $(63.4) $(81.2) $17.8
======== ======= ======
Automatic Data Processing, Inc. and
Subsidiaries
Other Selected Financial Data, Continued
(Dollars in millions, except per share
amounts)
(Unaudited)
Three Months Ended
December 31,
%
2009 2008 Change Change
-------- ------ ------ ------
Earnings per share information:
---------------------------------------------
Net earnings from continuing operations $315.8 $300.4 $15.4 5%
Net earnings $315.8 $300.5 $15.3 5%
Basic weighted average shares outstanding 502.0 503.4 (1.4) 0%
Basic earnings per share from continuing
operations $0.63 $0.60 $0.03 5%
Basic earnings per share $0.63 $0.60 $0.03 5%
Diluted net earnings from continuing
operations $315.8 $300.4 $15.4 5%
Diluted net earnings $315.8 $300.5 $15.3 5%
Diluted weighted average shares outstanding 506.2 506.1 0.1 0%
Diluted earnings per share from continuing
operations $0.62 $0.59 $0.03 5%
Diluted earnings per share $0.62 $0.59 $0.03 5%
Six Months Ended
December 31,
%
2009 2008 Change Change
-------- ------ ------ ------
Earnings per share information:
---------------------------------------------
Net earnings from continuing operations $599.9 $578.3 $21.6 4%
Net earnings $599.9 $577.3 $22.6 4%
Basic weighted average shares outstanding 501.7 505.4 (3.7) (1)%
Basic earnings per share from continuing
operations $1.20 $1.14 $0.06 5%
Basic earnings per share $1.20 $1.14 $0.06 5%
Diluted net earnings from continuing
operations $599.9 $578.3 $21.6 4%
Diluted net earnings $599.9 $577.3 $22.6 4%
Diluted weighted average shares outstanding 504.8 509.4 (4.6) (1)%
Diluted earnings per share from continuing
operations $1.19 $1.14 $0.05 4%
Diluted earnings per share $1.19 $1.13 $0.06 5%
Three Months Ended
December 31,
2009 2008
--------- ---------
Key Statistics:
-----------------------------
Internal revenue growth:
Employer Services (2)% 6%
PEO Services 9% 14%
Dealer Services (8)% (1)%
Employer Services:
Change in pays per control -
AutoPay product (5.0)% (0.6)%
Change in client revenue
retention percentage -
worldwide (0.1) pts (0.3) pts
Employer Services/PEO new
business sales growth -
worldwide (3)% (13)%
PEO Services:
Paid PEO worksite employees
at end of period 201,000 193,000
Average paid PEO worksite
employees during the period 200,000 193,000
Six Months Ended
December 31,
2009 2008
--------- ---------
Key Statistics:
-----------------------------
Internal revenue growth:
Employer Services (2)% 7%
PEO Services 8% 16%
Dealer Services (7)% 0%
Employer Services:
Change in pays per control -
AutoPay product (5.7)% (0.1)%
Change in client revenue
retention percentage -
worldwide (0.6) pts (0.5) pts
Employer Services/PEO new
business sales growth -
worldwide (2)% (11)%
PEO Services:
Paid PEO worksite employees
at end of period 201,000 193,000
Average paid PEO worksite
employees during the period 198,000 191,000
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,
%
2009 2008 Change Change
-------- ------ ------- ------
Average investment balances at cost (in
billions):
Corporate, other than corporate
extended $1.6 $1.4 $0.2 17%
Corporate extended 2.7 3.1 (0.4) (13)%
-------- ------ ------- ------
Total corporate 4.3 4.5 (0.2) (4)%
Funds held for clients 13.4 14.1 (0.7) (5)%
-------- ------ ------- ------
Total $17.7 $18.6 $(0.9) (5)%
======== ====== ======= ======
Average interest rates earned exclusive
of
realized losses (gains) on:
Corporate, other than corporate
extended 0.8% 2.9%
Corporate extended 4.1% 4.3%
-------- ------
Total corporate 2.9% 3.9%
Funds held for clients 3.8% 4.2%
-------- ------
Total 3.6% 4.1%
======== ======
Net unrealized gain (loss) position at
end of period $580.6 $193.7
Average short-term financing (in
billions):
U.S. commercial paper borrowings $2.2 $2.5
U.S. & Canadian reverse repurchase
agreement borrowings 0.5 0.6
-------- ------
$2.7 $3.1
======== ======
Average interest rates paid on:
U.S. commercial paper borrowings 0.2% 0.7%
U.S. & Canadian reverse repurchase
agreement borrowings 0.2% 1.1%
Interest on funds held for clients $127.7 $147.3 $(19.6) (14)%
Corporate extended interest income (B) 27.7 33.4 (5.7) (17)%
Corporate interest expense-short-term
financing (B) (1.1) (6.0) 4.8
-------- ------ ------- 81%
$154.2 $174.7 $(20.5)
======== ====== =======
Six Months Ended
December 31,
%
2009 2008 Change Change
-------- ------ ------- ------
Average investment balances at cost (in
billions):
Corporate, other than corporate
extended $1.6 $1.5 $0.1 7%
Corporate extended 2.9 3.0 (0.1) (4)%
-------- ------ ------- ------
Total corporate 4.4 4.5 0.0 (1)%
Funds held for clients 13.0 14.1 (1.0) (7)%
-------- ------ ------- ------
Total $17.5 $18.5 $(1.1) (6)%
======== ====== ======= ======
Average interest rates earned exclusive
of
realized losses (gains) on:
Corporate, other than corporate
extended 0.9% 3.3%
Corporate extended 4.2% 4.3%
-------- ------
Total corporate 3.0% 4.0%
Funds held for clients 3.9% 4.3%
-------- ------
Total 3.7% 4.2%
======== ======
Net unrealized gain (loss) position at
end of period $580.6 $193.7
Average short-term financing (in
billions):
U.S. commercial paper borrowings $2.4 $2.4
U.S. & Canadian reverse repurchase
agreement borrowings 0.5 0.6
-------- ------
$2.9 $3.0
======== ======
Average interest rates paid on:
U.S. commercial paper borrowings 0.2% 1.4%
U.S. & Canadian reverse repurchase
agreement borrowings 0.2% 1.8%
Interest on funds held for clients $255.6 $299.2 $(43.6) (15)%
Corporate extended interest income (B) 60.3 65.4 (5.1) (8)%
Corporate interest expense-short-term
financing (B) (2.9) (23.1) 20.3
-------- ------ ------- 88%
$313.0 $341.5 $(28.4)
======== ====== =======
(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,
2009 2008
-------- -----
Corporate extended interest income $27.7 $33.4
All other interest income 3.5 9.9
-------- -----
Total interest income on corporate
funds $31.2 $43.3
======== =====
Corporate interest expense - short-term
financing $1.1 $6.0
All other interest expense 1.4 2.1
-------- -----
Total interest expense $2.5 $8.1
======== =====
Six Months Ended
December 31,
2009 2008
-------- -----
Corporate extended interest income $60.3 $65.4
All other interest income 7.2 24.1
-------- -----
Total interest income on corporate
funds $67.5 $89.5
======== =====
Corporate interest expense - short-term
financing $2.9 $23.1
All other interest expense 2.7 4.3
-------- -----
Total interest expense $5.6 $27.4
======== =====
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
CONTACT:Automatic Data Processing, Inc.
ADP Investor Relations
Elena Charles
973.974.4077
Debbie Morris
973.974.7821
Events
-
April252012Automatic Data Processing, Inc. expected to report Q3 2012 results on April 25, 2012. This event was calculated by Capital IQ (Created on January 26, 2012).
-
July292012Automatic Data Processing, Inc. expected to report Fiscal Year 2012 results on July 29, 2012. This event was calculated by Capital IQ (Created on January 27, 2012).
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Current price per share
Today's gain: $-0.25 (-0.46%)
