ADP Reports Fiscal 2005 Results and Provides Fiscal 2006 Revenue and EPS Guidance; Fiscal 2005 Revenues Rise 10%; EPS Increases 15%; High Single-Digit Revenue Growth and 15% - 20% EPS Growth Projected for Fiscal 2006.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 10% revenue growth, to $8.5 billion, and 15% earnings per share growth for the fiscal year ended June June: see month. 30, 2005, 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. Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern earnings grew 12% and net earnings grew 13% compared with last year. 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 $1.79 increased 15% from $1.56 per share a year ago on fewer shares outstanding. In fiscal 2005, ADP acquired over 14 million shares of its stock for treasury for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $600 million. 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 $2.1 billion at June 30, 2005. Operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. reflect continued strength at $1.4 billion for the year. Revenues for the fourth quarter of fiscal 2005 were $2.3 billion, an increase of 10% compared with $2.1 billion in the fourth quarter of fiscal 2004. Pretax and net earnings both increased 22%. Diluted earnings per share of $0.44, on fewer shares outstanding, increased 22% compared with last year's fourth quarter. Earnings per share growth in the fourth quarter of fiscal 2005 was impacted by lower severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and facility exit charges. Commenting on the results, Mr. Weinbach said, "Overall, ADP had an excellent year surpassing our expectations. The 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. in Employer Services were the strongest they have been in five years. Employer Services' revenues increased 10% for the quarter and 8% for the year. New business sales growth was 16% in the quarter on top of a strong fourth quarter a year ago. For the year, new business sales growth was 13% and all market segments achieved double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. growth. We are particularly pleased that our stronger sales performance spans all segments and reflects the investment in our sales organization and new products. The number of employees on our clients' payrolls increased in all market segments 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. , with nearly 2% overall growth compared with last year, and client retention improved 0.5% over last year's record level. Growth in average client balances during the year was strong at about 11%. We continue to build momentum in Employer Services with acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. in Comprehensive Outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. Services, continued improvements in our beyond payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. category, such as Time and Labor Management, and with features like the employee portal. "Brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. Services' revenues grew 5% for both the quarter and the year compared with last year. Pretax earnings improved 9% for the quarter and 20% for the year compared with last year. Revenue growth for the year was primarily from our investor communications business as the volume of pieces delivered increased 15%, driven by an increase in mutual fund meetings and special communications, as well as 6% stock record growth. Back-office average trades per day decreased 1% for the quarter compared with last year and increased 7% for the year. The decline in the quarter was primarily in institutional volume. Securities Clearing and Outsourcing Services' revenues were $61 million since its acquisition in November November: see month. 2004 through June 30, 2005 and the pretax loss pretax loss A loss reported before tax benefits are considered. for the same period of $24 million was in line with our expectations. "Dealer Services' revenues grew 7% for the quarter and 10% for the year, and Claims Services' revenues were flat for the quarter and grew 4% for the year. "As of July July: see month. 1, 2005, using the modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. prospective method, we adopted Statement of Financial Accounting Standards (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ) No. 123R, which requires the expensing of our stock compensation programs. The impact of adopting SFAS No. 123R is expected to lower earnings per share by $0.18 - $0.19 in fiscal 2006 and would have lowered earnings per share in fiscal 2005 by $0.22. This additional expense will be reflected in our "Other" Segment and not within the business segment results in our quarterly and annual SEC filings. The lower 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. anticipated in fiscal 2006 is primarily driven by the reduction in the number of options granted to associates beginning in fiscal 2005. "Our fiscal 2006 guidance is high single-digit revenue growth and earnings per share growth of 15% - 20%, assuming stock compensation was expensed in fiscal 2005. Excluding stock compensation expense in both periods, we anticipate growth in earnings per share would have been 12% - 15%. Our plans reflect strong momentum in Employer Services, with about 10% revenue growth in the United States and 9% worldwide, double-digit new business sales growth and continued improvement in client retention. Interest income on client funds is anticipated to grow over 20% based on expected growth of 9% in client fund balances and an improvement of over 30 basis points in the overall yield in the client funds portfolio. "Our revenue growth forecast is strongest in Employer Services, and ranges from mid- mid- pref. Middle: midbrain. to high-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. growth in our other segments. In fiscal 2005 we had over 1% of revenue growth from the impact of foreign currency exchange, which we are not anticipating will repeat in fiscal 2006. We are anticipating at least 1% margin improvement in each of our businesses. Our earnings growth is expected to be slightly lower in the first half of the fiscal year and improve steadily throughout the year. "We are very pleased with the results for the year and our forecast for fiscal 2006 and look with confidence to the future," Mr. Weinbach concluded. An analyst conference call to review the fourth quarter results will be held today, Tuesday Tuesday: see week. , July 26 at 1:30 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 $8.5 billion in revenues and approximately 590,000 clients worldwide, is one of the largest providers of a broad range of premier, mission-critical, cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. 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. and information-based business solutions.
Automatic Data Processing, Inc. and Subsidiaries
Consolidated Statements of Earnings
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
June 30, June 30,
2005 2004 2005 2004
---------- ---------- ---------- ----------
Revenues, other than
interest on funds held
for Employer Services
clients and PEO
revenues $2,026,787 $1,869,164 $7,500,715 $6,932,558
Interest on funds held
for Employer Services
clients 121,178 93,743 421,395 355,410
PEO revenues (A) 153,882 122,923 576,966 466,974
---------- ---------- ---------- ----------
2,301,847 2,085,830 8,499,076 7,754,942
---------- ---------- ---------- ----------
Operating expenses 1,118,751 976,499 3,969,563 3,525,413
Selling, general and
administrative
expenses 532,699 529,775 1,957,106 1,903,356
Systems development and
programming costs 170,915 171,462 624,071 581,165
Depreciation and
amortization 76,029 81,252 304,368 306,772
Other income, net (7,927) (11,638) (33,922) (56,294)
---------- ---------- ---------- ----------
Total expenses 1,890,467 1,747,350 6,821,186 6,260,412
---------- ---------- ---------- ----------
Earnings before income
taxes 411,380 338,480 1,677,890 1,494,530
Provision for income
taxes 152,622 126,590 622,497 558,960
----------- ----------- ----------- -----------
Net earnings $ 258,758 $ 211,890 $1,055,393 $ 935,570
----------- ----------- ----------- -----------
Basic earnings per
share $ 0.44 $ 0.36 $ 1.81 $ 1.58
========== ========== ========== ==========
Diluted earnings per
share $ 0.44 $ 0.36 $ 1.79 $ 1.56
========== ========== ========== ==========
Dividends per common
share $ 0.1550 $ 0.1400 $ 0.6050 $ 0.5400
========== ========== ========== ==========
(A) Net of pass-through costs of $1,465,787 and $1,150,752 for the
three months ended June 30, 2005 and 2004, respectively, and
$5,499,161 and $4,237,017 for the twelve months ended June 30,
2005 and 2004, respectively.
Automatic Data Processing, Inc. and Subsidiaries
Other Selected Financial Data
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
June 30, June 30,
2005 2004 2005 2004
---------- ---------- --------- ----------
Revenues for select
business units (B)
Employer
Services $1,294,000 $1,175,000 $5,200,000 $4,813,000
Brokerage
Services 589,000 560,000 1,750,000 1,667,000
Dealer Services 253,000 235,000 980,000 890,000
Securities Clearing
and Outsourcing
Services 24,000 - 61,000 -
Pre-tax earnings for
select business
units (B)
Employer
Services $ 190,000 $ 139,000 $1,144,000 $ 995,000
Brokerage
Services 136,000 124,000 294,000 245,000
Dealer Services 35,000 36,000 143,000 144,000
Securities Clearing
and Outsourcing
Services (10,000) - (24,000) -
(B) Prior year's segment results were adjusted to reflect fiscal year
2005 budgeted foreign exchange rates.
Components of Other
Income, net:
-------------------
Interest income on
corporate funds $ (26,775) $ (20,678) $ (94,735) $ (79,941)
Interest expense 9,827 4,027 32,303 15,993
Realized losses
(gains) on
available-for-sale
securities, net 9,021 5,013 28,510 7,654
----------- ------------ ----------- -----------
Total other income,
net $ (7,927) $ (11,638) $ (33,922) $ (56,294)
=========== ============ =========== ===========
Earnings per share
information:
-------------------
Net earnings $ 258,758 $ 211,890 $1,055,393 $ 935,570
Average shares
outstanding 582,032 589,075 583,191 591,697
Basic earnings
per share $ 0.44 $ 0.36 $ 1.81 $ 1.58
Diluted net
earnings $ 259,020 $ 212,171 $1,056,446 $ 936,991
Diluted shares
outstanding 588,580 597,653 590,014 598,749
Diluted earnings
per share $ 0.44 $ 0.36 $ 1.79 $ 1.56
Key Statistics:
---------------
Internal revenue
growth:
Employer
Services 10% 5% 8% 5%
Brokerage
Services 7% 7% 9% 4%
Dealer Services 5% 9% 5% 8%
Average investment
balances at cost
(in billions):
Corporate
investments $ 3.2 $ 3.4 $ 3.2 $ 3.2
Funds held for
clients 13.4 12.1 12.3 11.1
----------- ------------ ----------- -----------
Total $ 16.6 $ 15.5 $ 15.5 $ 14.3
=========== ============ =========== ===========
Average interest
rates earned
exclusive of
realized losses
(gains) on:
Corporate
investments 3.2% 2.4% 2.9% 2.4%
Funds held for
clients 3.7% 3.1% 3.5% 3.2%
Total 3.6% 3.0% 3.4% 3.1%
Stock Compensation
Impact on Diluted
EPS:
------------------
Fiscal Fiscal Year-Over-Year
2005 2006 (F) Growth (F)
----------- --------------- --------------
Diluted EPS, as
reported $ 1.79
Less: Proforma stock
compensation expense 0.22
Diluted EPS,
assuming stock
compensation
expensing in both
periods $ 1.57(P) $1.81 - $1.88 15% - 20%
=========== ============== ==============
Diluted EPS,
assuming stock
compensation not
expensed in
either period $ 1.79 $2.00 - $2.06(P) 12% - 15%
=========== =============== ==============
(F) Forecast
(P) Proforma
Automatic Data Processing, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, June 30,
2005 2004
----------- -----------
Assets
------
Cash and cash equivalents/Short-term
marketable securities $ 1,671,188 $ 1,129,075
Securities clearing and
outsourcing receivables 965,205 -
Other current assets 1,804,698 1,632,514
----------- -----------
Total current assets 4,441,091 2,761,589
Long-term marketable securities 447,940 963,501
Property, plant and equipment, net 684,756 642,353
Other non-current assets 4,144,136 3,849,584
Funds held for clients 17,897,471 12,903,532
----------- -----------
Total assets $27,615,394 $21,120,559
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Securities clearing and
outsourcing payables $ 745,228 $ -
Other current liabilities 2,055,459 1,768,424
----------- -----------
Total current liabilities 2,800,687 1,768,424
Long-term debt 75,826 76,200
Other non-current liabilities 1,095,921 1,018,040
Client funds obligations 17,859,150 12,840,225
----------- -----------
Total liabilities 21,831,584 15,702,889
Total stockholders' equity 5,783,810 5,417,670
----------- -----------
Total liabilities and stockholders'
equity $27,615,394 $21,120,559
=========== ===========
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 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. , employee benefits and registered clearing agencies and broker-dealers; 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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