ADP Reports First Fiscal Quarter Results; Revenues Grow 8%, EPS Increases 9% to $.35; Fiscal 2005 Revenue Guidance Raised to 7-8% Growth; Double-Digit EPS Guidance Remains Unchanged.ROSELAND, N.J. -- Automatic Data Processing Same as data processing. , Inc. (NYSE NYSE See: New York Stock Exchange :ADP (1) (Automatic Data Processing) Synonymous with data processing (DP), electronic data processing (EDP) and information processing. (2) (Automatic Data Processing, Inc., Roseland, NJ, www.adp. ) reported 8% revenue growth and $.35 earnings per share for the first quarter ended September September: see month. 30, 2004, Arthur Arthur, king of Britain: see Arthurian legend. Arthur king and hero of Scotland, Wales, and England. [Arthurian Legend: Parrinder, 28] See : Heroism F. Weinbach, chairman and chief executive officer, announced today. Revenues approximated $1.9 billion compared with $1.7 billion in fiscal 2004. Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern and net earnings grew 6% and 7%, respectively. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $.35 increased 9% from $.32 per share last year on fewer shares outstanding. Commenting on the results, Mr. Weinbach said, "I am pleased with our progress and improving results. We are ahead of our expectations in each of our businesses with positive key indicators for future growth in Employer and Brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. Services. Employer Services' revenues grew 6% in the quarter. New business sales grew 14%, continuing the momentum of double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. sales growth from the second half of fiscal 2004. Sales were particularly strong in our National Accounts segment and in TotalSource, our Professional Employer Organization A professional employer organization (PEO) provides outsourcing of payroll, workers' compensation, human resources and employee benefits administration. It does this by hiring a client company’s employees, thus becoming their employer of record. (PEO). The number of employees on our clients' payrolls, "pays per control," increased 1.8% in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . This employment metric represents over 125 thousand payrolls across a broad range of U.S. geographies ranging from small to very large businesses. Client retention was ahead of last year's record level which is a reflection of our continued investment and commitment to client service. "Brokerage Services' revenues grew 6% in the quarter. Back-office trades per day increased 10% over last year, while retail trades continued to be weaker than our plan. In September we successfully added a major new client, E*TRADE E*TRADE Financial Corporation (NASDAQ: ETFC) is a financial services company based in New York, NY, United States. It is a holding company, the major business of which is an online discount stock brokerage service for self-directed investors. FINANCIAL, to our back-office transaction processing Updating the appropriate database records as soon as a transaction (order, payment, etc.) is entered into the computer. It may also imply that confirmations are sent at the same time. Transaction processing systems are the backbone of an organization because they update constantly. business. Investor communications mailings increased 22% compared with last year, which was beyond our expectations, and reflects higher stock record growth and interim period mailings. Dealer Services' revenues grew 13% and Claims Services' revenues increased 8% in the quarter. Revenue growth in Dealer Services and Claims Services was favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by acquisitions made in fiscal 2004. "Our key metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. , with the exception of interest rates and brokerage retail trades, were strong compared to expectations in the first quarter and we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op looking forward. With first quarter revenue growth ahead of our plans and the continued strong sales momentum, we are raising our revenue guidance to 7-8% growth from mid-single digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1. digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus. revenue growth. We are also increasingly confident in our earnings per share guidance of double-digit growth based on our better than planned first quarter results. This confidence is despite lower than expected interest income and incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. anticipated dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. from our Brokerage Services' acquisition later in the year. Short-term interest rates Short-term interest rates Interest rates on loan contracts-or debt instruments such as Treasury bills, bank certificates of deposit or commerical paper-having maturities of less than one year. Often called money market rates. are in line with expectations; however, long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. rates have softened soft·en v. soft·ened, soft·en·ing, soft·ens v.tr. 1. To make soft or softer. 2. To undermine or reduce the strength, morale, or resistance of. 3. compared with our original plans. We expect to complete our previously announced acquisition of the U.S. Clearing and BrokerDealer Services division of Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. Corporation by early November November: see month. , a couple of months ahead of schedule, with about $.02 dilution in fiscal 2005. "We have continued to acquire ADP shares for treasury. During the first quarter of fiscal 2005, we acquired nearly 5.5 million shares for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $220 million. Our cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has balances were strong at $2.0 billion at September 30, 2004," Mr. Weinbach concluded. An analyst conference call to review the first quarter results will be held today, Monday Monday: see week. , October October: see month. 25 at 3:30 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . A live audio webcast of the call will be available to the public on a listen-only basis. To listen to the webcast go to www.adp.com and click on the webcast icon. ADP's news releases, current financial information, SEC filings and Investor Relations Investor relations The process by which the corporation communicates with its investors. presentations are accessible at the same website. ADP, with $7.8 billion in revenues and approximately 550,000 clients, is one of the largest independent computing computing - computer services firms in the world.
Automatic Data Processing, Inc. and Subsidiaries
Consolidated Statements of Earnings
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended September 30,
2004 2003
--------------------------------
Revenues, other than interest
on funds held for clients
and PEO revenues $1,644,533 $1,532,389
Interest on funds held for
Clients 84,663 82,934
PEO revenues (A) 125,486 104,954
---------- -----------
Total revenues 1,854,682 1,720,277
========== ===========
Operating expenses 867,020 794,241
Selling, general and
administrative expenses 446,158 426,878
Systems development and
programming costs 148,724 131,754
Depreciation and amortization 74,421 74,726
Other income, net (12,581) (18,592)
---------- -----------
Total expenses 1,523,742 1,409,007
---------- -----------
Earnings before income taxes 330,940 311,270
Provision for income taxes 122,779 116,420
---------- -----------
Net earnings $ 208,161 $ 194,850
========== ===========
Basic earnings per share $ 0.36 $ 0.33
========== ===========
Diluted earnings per share $ 0.35 $ 0.32
========== ===========
Dividends per common share $ 0.1400 $ 0.1200
========== ===========
(A) Net of pass-through costs of $1,149,487 and $911,569 for the
three months ended September 30, 2004 and 2003, respectively.
Automatic Data Processing, Inc. and Subsidiaries
Other Selected Financial Data
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended September 30,
2004 2003
--------------------------------
Revenues for select business
units (B)
Employer Services $1,176,000 $1,111,000
Brokerage Services $ 331,000 $ 314,000
Dealer Services $ 238,000 $ 211,000
Pre-tax earnings for select
business units (B)
Employer Services $ 219,000 $ 207,000
Brokerage Services $ 39,000 $ 20,000
Dealer Services $ 35,000 $ 32,000
(B) Prior year's segment results were restated to reflect fiscal year
2005 budgeted foreign exchange rates.
Components of Other Income, net:
--------------------------------
Interest income on corporate funds $ (25,870) $ (22,100)
Interest expense 8,108 4,651
Realized (gains) losses on
available-for-sale securities, net 5,181 (1,143)
----------- -----------
Total other income, net $ (12,581) $ (18,592)
=========== ==========
Earnings per share information:
-------------------------------
Net earnings $ 208,161 $ 194,850
Average shares outstanding 583,551 594,843
Basic earnings per share $ 0.36 $ 0.33
Diluted net earnings $ 208,426 $ 195,177
Diluted shares outstanding 589,952 600,849
Diluted earnings per share $ 0.35 $ 0.32
Automatic Data Processing, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
September 30, June 30,
2004 2004
-------------- -----------
(Unaudited)
Assets
------
Cash and cash equivalents/Short-term
marketable securities $ 1,436,860 $ 1,129,075
Other current assets 1,591,673 1,632,514
--------------- ------------
Total current assets 3,028,533 2,761,589
Long-term marketable securities 587,887 963,501
Property, plant and equipment, net 645,204 642,353
Other non-current assets 3,873,704 3,849,584
Funds held for clients 15,652,150 12,903,532
--------------- ------------
Total assets $ 23,787,478 $21,120,559
=============== ============
Liabilities and Stockholders' Equity
------------------------------------
Total current liabilities $ 1,659,933 $ 1,768,424
Long-term debt 76,508 76,200
Other non-current liabilities 1,103,328 1,018,040
Client funds obligations 15,534,175 12,840,225
--------------- ------------
Total liabilities 18,373,944 15,702,889
Total stockholders' equity 5,413,534 5,417,670
--------------- ------------
Total liabilities and stockholders'
equity $ 23,787,478 $21,120,559
=============== ============
Segment Information Employer Services, Brokerage Services and Dealer Services are ADP's largest business units. ADP evaluates performance of its business units based on operating results before interest on corporate funds, foreign currency gains and losses, and income taxes. Certain revenues and expenses are charged to business units at a standard rate for management reasons. Other costs are recorded based on management responsibility. The prior years' business unit revenues and earnings before income taxes have been adjusted to reflect updated fiscal year 2005 budgeted foreign exchange rates. Reconciling items include foreign exchange differences between the actual foreign exchange rates and the fiscal year 2005 budgeted foreign exchange rates and the adjustment for the difference between actual interest income earned on invested funds held for clients and interest credited to Employer Services at a standard rate of 4.5%. The business unit results also include an internal cost of capital charge related to the funding of acquisitions and other investments. This charge is eliminated in consolidation and as such represents a reconciling item to earnings before income taxes. The tables below show the adjusted quarterly segment revenues and earnings before income taxes and reconciling items for fiscal years 2002, 2003 and 2004, as well as the percentage difference between each period indicated and the same respective prior year period.
Automatic Data Processing, Inc. and Subsidiaries
Revenue by Business Unit
(In millions)
Fiscal
Year Employer Services Brokerage Services Dealer Services Other
------ ------------------- ------------------ --------------- --------
$ % $ % $ % $ %
- - - - - - - -
2002
Q1 972 9% 365 0% 181 6% 111 0%
Q2 1,028 5% 370 (1)% 181 3% 132 6%
Q3 1,172 4% 466 4% 183 1% 103 6%
Q4 1,009 5% 580 0% 187 3% 115 3%
------------------- ------------------ --------------- --------
Year 4,181 6% 1,781 1% 732 3% 461 4%
=================== ================== =============== ========
2003
Q1 1,009 4% 359 (2)% 195 8% 116 5%
Q2 1,065 4% 320 (14)% 201 11% 137 4%
Q3 1,241 6% 401 (14)% 209 14% 97 (6)%
Q4 1,078 7% 533 (8)% 208 11% 113 (2)%
------------------- ------------------ --------------- --------
Year 4,393 5% 1,613 (9)% 813 11% 463 0%
=================== ================== =============== ========
2004
Q1 1,111 0% 314 (13)% 211 8% 110 (5)%
Q2 1,160 9% 341 7% 218 8% 124 (9)%
Q3 1,367 0% 452 13% 226 8% 99 2%
Q4 1,175 9% 560 5% 235 13% 142 26%
------------------- ------------------ --------------- --------
Year 4,813 0% 1,667 3% 890 9% 475 3%
=================== ================== =============== ========
2005
Q1 1,176 6% 331 6% 238 13% 121 10%
Reconciling Items
-------------------
Fiscal Foreign Client Fund
Year Exchange Interest Total
------ ------------------- ------------------ ---------------
$ $ $ %
- - - -
2002
Q1 (47) 26 1,608 4%
Q2 (51) 21 1,681 3%
Q3 (56) 2 1,870 1%
Q4 (47) 1 1,845 2%
------------------- ------------------ ---------------
Year (201) 50 7,004 2%
=================== ================== ===============
2003
Q1 (34) 2 1,647 2%
Q2 (35) (5) 1,683 0%
Q3 (23) (19) 1,906 2%
Q4 (2) (19) 1,911 4%
------------------- ------------------ ---------------
Year (94) (41) 7,147 2%
=================== ================== ===============
2004
Q1 (5) (21) 1,720 4%
Q2 10 (26) 1,827 9%
Q3 28 (51) 2,121 11%
Q4 17 (42) 2,087 9%
------------------- ------------------ ---------------
Year 50 (140) 7,755 9%
=================== ================== ===============
2005
Q1 19 (30) 1,855 8%
Automatic Data Processing, Inc. and Subsidiaries
Pre-tax Earnings by Business Unit
(In millions)
Fiscal Employer Brokerage Dealer
Year Services Services Services
------ ------------------- ------------------ ------------------------
Pre-tax Pre-tax Pre-tax
$ % Margin $ % Margin $ % Margin
- - ------- - - ------- - - --------
2002
Q1 188 26% 19% 68 5% 19% 28 33% 15%
Q2 246 24% 24% 64 2% 17% 31 11% 17%
Q3 356 16% 30% 88 9% 19% 31 11% 17%
Q4 204 22% 20% 139 8% 24% 30 11% 16%
------------------- ------------------ ------------------------
Year 994 21% 24% 359 6% 20% 120 15% 16%
=================== ================== ========================
2003
Q1 213 13% 21% 56 (18)% 16% 30 7% 15%
Q2 268 9% 25% 33 (48)% 10% 35 12% 17%
Q3 411 15% 33% 45 (49)% 11% 36 16% 17%
Q4 178 (13)% 17% 98 (29)% 18% 36 20% 17%
------------------- ------------------ ------------------------
Year 1,070 8% 24% 232 (35)% 14% 137 14% 17%
=================== ================== ========================
2004
Q1 207 (3)% 19% 20 (64)% 6% 32 9% 15%
Q2 263 (2)% 23% 33 0% 10% 37 6% 17%
Q3 386 (6)% 28% 68 50% 15% 39 10% 17%
Q4 139 (22)% 12% 124 26% 22% 36 (1)% 15%
------------------- ------------------ ------------------------
Year 995 (7)% 21% 245 5% 15% 144 6% 16%
=================== ================== ========================
2005
Q1 219 6% 19% 39 94% 12% 35 8% 15%
Reconciling Items
-----------------
Fiscal Frgn Fund Capital
Year Other Exch. Int. Charge Total
------ ------------------- ------------------------- -----------------
Pre- Pre-
tax tax
$ % Margin $ $ $ $ % Margin
- - ------ - - - - - ------
2002
Q1 (13) (100)%+ (12)% (4) 26 27 320 11% 20%
Q2 47 100%+ 36% (7) 21 28 430 25% 26%
Q3 69 100%+ 67% (10) 2 36 572 20% 31%
Q4 66 14% 57% (6) 1 31 465 11% 25%
------------------- ------------------------- -----------------
Year 169 100%+ 37% (27) 50 122 1,787 17% 26%
=================== ========================= =================
2003
Q1 15 100%+ 13% (4) 2 28 340 6% 21%
Q2 67 43% 49% (5) (5) 30 423 (2)% 25%
Q3 39 (43)% 40% (5) (19) 26 533 (7)% 28%
Q4 31 (56)% 25% - (19) 25 349 (25)% 18%
------------------- ------------------------- -----------------
Year 152 (11)% 33% (14) (41) 109 1,645 (8)% 23%
=================== ========================= =================
2004
Q1 40 100%+ 36% - (21) 33 311 (9)% 18%
Q2 24 (64)% 19% 2 (26) 32 365 (14)% 20%
Q3 - (100)% 0% 4 (51) 34 480 (10)% 23%
Q4 45 45% 32% 2 (42) 35 339 (3)% 16%
------------------- ------------------------- -----------------
Year 109 (28)% 23% 8 (140) 134 1,495 (9)% 19%
=================== ========================= =================
2005
Q1 31 (23)% 26% 3 (30) 34 331 6% 18%
This release and other written or oral statements made from time to time by ADP may contain "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. payroll taxes Payroll Tax Tax an employer withholds and/or pays on behalf of their employees based on the wage or salary of the employee. In most countries, including the U.S., both state and federal authorities collect some form of payroll tax. , professional employer organizations and employee benefits; overall market and economic conditions, including interest rate and foreign currency trends; competitive conditions; stock market activity; auto sales Auto Sales The major producers of domestic automobiles report sales monthly. These numbers are seasonally adjusted by the U.S. Department of Commerce and are available to the public one to five business days after the end of each month. 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. |
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