ADP Reports Fiscal 2006 Results, Provides Fiscal 2007 Guidance, Announces Plan to Spin-off Brokerage Services Business; Revenues Rise 11%, EPS from Continuing Operations Increases 25%.ROSELAND, N.J. -- Forecasting Revenue Growth of Approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 10%, and 17% - 20% EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. Growth for Fiscal 2007 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 11% revenue growth, to $8.9 billion, and $1.85 earnings per share from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the fiscal year ended June June: see month. 30, 2006 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. On an "as reported" basis, including stock compensation expense in fiscal 2006 and not in fiscal 2005, pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern and net earnings from continuing operations grew 9% and 7%, respectively, and 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 from continuing operations increased 9%, from $1.69 per share a year ago on fewer shares outstanding. On a comparable basis, including stock compensation expense in both fiscal 2006 and 2005, pretax and net earnings from continuing operations each grew 23%, and diluted earnings per share from continuing operations increased 25%, from $1.48 per share a year ago on fewer shares outstanding. Selling expenses related to the extraordinary Employer Services' fourth quarter new business sales growth decreased earnings per share by about $0.01. During the fiscal year ADP acquired over 29 million shares of its stock for treasury for approximately $1.3 billion. 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 $2.7 billion at June 30, 2006. Cash flows from operations reflect continued strength at over $1.8 billion for the year. For the fourth quarter of fiscal 2006, revenues were $2.5 billion, an increase of 14% compared with $2.2 billion for the fourth quarter of fiscal 2005, and earnings per share from continuing operations were $0.44. On an "as reported" basis, including stock compensation expense in the fiscal 2006 fourth quarter and not in the fiscal 2005 fourth quarter, pretax and net earnings from continuing operations grew 7% and 1%, respectively, and diluted earnings per share from continuing operations increased 5%, from $0.42 per share a year ago on fewer shares outstanding. On a comparable basis, including stock compensation expense in the fourth quarter of both fiscal 2006 and 2005, pretax and net earnings increased 19% and 15%, respectively. Diluted earnings per share increased 19% from $0.37 per share a year ago on fewer shares outstanding. As anticipated, during the fourth quarter, ADP increased its share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. , acquiring over 17 million shares of its stock for treasury for approximately $800 million. Commenting on the results, Mr. Weinbach said, "Our results this year were terrific. Employer Services' revenues increased 10% for both the fourth quarter and for the year. 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. , revenues from our traditional payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. and payroll tax 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. filing business grew 7%, and beyond payroll revenues grew 15% for both the fourth quarter and for the year. New business sales in the quarter, which reflect annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenues anticipated from new orders, grew 24% in the U.S. and 28% worldwide. Sales were particularly strong in Major Accounts Services, National Account Services, TotalSource(R), and GlobalView GlobalView was an integrated "desktop environment" including word-processing, desktop-publishing, and simple calculation (spreadsheet) and database functionality, developed at Xerox Parc as a way to run the software originally developed for their Xerox Alto and Xerox Star (SM). This sales growth exceeded our expectations and represented the strongest quarterly sales growth in nearly nine years. Based on this exceptionally strong sales growth, selling expenses were also higher than expected in the fourth quarter, resulting in pretax margin improvement of 90 basis points for the year, which is slightly lower than our previous expectation of a 100 basis point improvement. We ended the year with new business sales growth of nearly 13% in the U.S. and 13% worldwide. Client retention in the U.S. improved to a new record level for the year. The number of employees on our clients' payrolls in the U.S. increased 2.5% in the fourth quarter and 2.4% for the year. "Brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. Services' revenues increased 13% for the fourth quarter and 10% for the year driven primarily by our investor communications business. Beyond beneficial products' revenue growth of 27% in the quarter was driven primarily by increases in postage POSTAGE. The money charged by law for carrying letters, packets and documents by mail. By act of congress of March 3, 1851, Minot's Statute at Large, U. S. 587, it is enacted as follows: 2.-Sec. 1. , transaction reporting and fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. . Beneficial proxy See proxy server. (networking) proxy - A process that accepts requests for some service and passes them on to the real server. A proxy may run on dedicated hardware or may be purely software. and interim communications' revenues increased 8% for the fourth quarter primarily due to stock record growth and timing of mailings. Beyond beneficial products' revenues were strong with 21% growth for the year, and revenues from beneficial proxy and interim communications grew 7% for the year. Back office revenues grew 6% for the fourth quarter and 1% for the year. As anticipated, Brokerage Services' pretax margin improved 40 basis points for the year primarily from leveraging increased trade volumes as well as from cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. measures. Securities Clearing and 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' (SCOS SCOS Supply Chain Operating Services (i2) SCOS Standing Conference on Organizational Symbolism SCOS Spacecraft Operating System SCOS Scottish Chamber of Safety SCOS Service Center Organization Study ) revenues of $22.5 million and $80.6 million for the fourth quarter and for the year, respectively, were in line with our expectations. SCOS sales and sales pipeline continue to be strong and ahead of our expectations. "Dealer Services' revenues increased 21% for the quarter and 14% for the year, primarily due to the acquisition of UK-based Kerridge Kerridge is a village in Cheshire, England, part of the parish of Bollington. Kerridge borders the neighbouring parish of Rainow. It is named for the Kerridge hill – one of the western foothills of the Pennines – on which it stands. Computer Company Ltd. as internal revenue growth was 2% and 4% for the fourth quarter and for the year, respectively. Dealer Services' pretax margin declined 90 basis points for the year primarily due to the integration of Kerridge, including fourth quarter integration expenses of approximately $2 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc migrating clients to Kerridge's Autoline product and re-branding of marketing materials, and $2.8 million incurred in the fourth quarter to adjust our resource levels in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. as we streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid. our cost structure. "Interest on client funds grew 29% over last year's fourth quarter, to $156 million due to a 9% increase in average client funds balances and higher interest rates. For the year, client funds interest income increased 30% to $550 million due to nearly 11% growth in average balances and an improvement of 62 basis points to a portfolio yield of about 4.1%. "We exited fiscal 2006 with a position of strength and I am very proud of where ADP is today," concluded Mr. Weinbach. Sale of Claims Services: On April 13, 2006, ADP completed the sale of its Claims Services business with annual revenues of approximately $415 million. Net cash from the transaction was approximately $760 million. Claims Services' revenues and pretax earnings are not included in revenues or pretax earnings from continuing operations for all periods in fiscal 2006 and 2005. The results of operations for this business are reported within discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. in the current and prior year periods. Fiscal 2006 fourth quarter discontinued operations include the one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. pretax gain from this transaction of $561 million, or $453 million after tax, reflecting final closing adjustments. Fiscal 2007 guidance: "ADP moved into fiscal 2007 with continued momentum and good economic conditions," commented Gary Gary, city (1990 pop. 116,646), Lake co., NW Ind., a port of entry on Lake Michigan; inc. 1909. Gary was founded by the U.S. Steel Corporation, which purchased the land in 1905 and landscaped it for a city. C. Butler Butler, city (1990 pop. 15,714), seat of Butler co., W Pa.; inc. as a borough 1817, as a city 1917. It is located in an area with coal, natural gas, oil, and limestone resources. Glass and plastic products, machinery, and abrasives are made. , president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. and CEO-elect. "Our guidance for fiscal 2007 includes Brokerage Services Group for the full year, and does not include any one-time expenses anticipated in connection with the Brokerage Services Group spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. discussed below. Our guidance for fiscal 2007 is for approximately 10% revenue growth and 17% - 20% earnings per share growth, up from $1.85 earnings per share from continuing operations reported in fiscal 2006. We are anticipating pretax margin expansion of about 100 basis points in each of our businesses. Our plans reflect strong momentum in Employer Services, with about 11% revenue growth in the U.S. and 10% worldwide, double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. new business sales growth and continued improvement in client retention. We anticipate 4% - 5% revenue growth in Brokerage Services, and 12% - 13% revenue growth in Dealer Services for fiscal 2007. Interest income on client funds is anticipated to grow approximately 20% based on expected growth of nearly 10% in client funds balances and an improvement of 40 basis points in the overall average interest rate earned on our client funds portfolio to 4.5%. Our interest assumptions are based on current futures contracts Futures Contract An exchange traded agreement to buy or sell a particular type and grade of commodity for delivery at an agreed upon place and time in the future. Futures contracts are transferable between parties. and yield curves." Spin-off of Brokerage Services: ADP's Board of Directors has approved a plan to spin-off the Brokerage Services Group business, comprised of Brokerage Services and Securities Clearing and Outsourcing Services, into an independent publicly traded company publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. through a tax-free tax-free adj. Not subject to taxation; tax-exempt. tax-free Adjective not needing to have tax paid on it: a tax-free lump sum Adj. 1. spin-off of 100% of Brokerage Services Group to ADP shareholders. In conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the spin-off, the new Brokerage Services Group entity is expected to distribute approximately $500 - $700 million to ADP in the form of a tax-free dividend. The spin-off is subject to required regulatory 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. approvals and reviews. ADP expects to complete the spin-off before the end of fiscal 2007. Commenting on the transaction, Mr. Butler continued, "Fit and focus is the underlying theme of this transaction. The brokerage industry has changed in recent years, and while still attractive in terms of 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. growth opportunities, as part of ADP, the growth profile of Brokerage Services Group is below the potential that we believe exists in Employer Services and Dealer Services. We believe that ADP's shareholders, clients and associates will benefit from a more concentrated focus by each management team on its own core business, each with different operating models Operating Model is a term that is used in many contexts. In essence an operating model describes how an organization operates across both business and technology domains. The Operating Model describes what is important for the organization. , long-term strategic growth plans, and industry appropriate capital deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. . ADP's efforts and commitment will be concentrated on the Employer Services and Dealer Services businesses, and my focus will be on increasing shareholder value by accelerating revenue growth in conjunction with margin expansion. "Brokerage Services Group is a market leader in providing integrated outsourcing solutions to the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industry. With nearly $2 billion in revenues and good profitability, 4,000 associates, strong cash flows, a highly-recurring revenue model, good long-term growth prospects, an international presence, and deep relationships with the world's leading financial institutions, we expect Brokerage Services Group will be a strong and viable stand-alone (jargon) stand-alone - Capable of operating without other programs, libraries, computers, hardware, networks, etc. Exactly what is absent is presumed to be obvious from context. "We only run Windows on stand-alone PCs because it's too dangerous to run it on networked ones." public company. Art Weinbach, who as you know is retiring as CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of ADP on August 31, 2006, will assume the role of chairman of the new public company once the spin-off is complete. Both Rich Daly and John Hogan John Hogan is the name of more than one notable man:
An independent operating firm. For example, a large diversified firm may consider spinning off a subsidiary because, as a stand-alone company, the subsidiary would command a higher price-earnings ratio than the parent. . Rich will assume the role of CEO and John will become COO (Cell Of Origin) See mobile positioning. . Capital Allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as : "Over time, we anticipate returning an increased level of excess cash to shareholders, including the one-time cash dividend from Brokerage Services Group to ADP, by increasing dividends and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. share buybacks, depending on market conditions and acquisition funding requirements. We will make our recommendation for the 2007 dividend increase to the Board at the November November: see month. meeting, which is our normal timing to review the ADP dividend policy. We anticipate ADP's dividend increase before the spin-off to be in-line In-line Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations. with or higher than the 2006 increase of 19%. After the spin-off, ADP will maintain the 2007 dividend at the same dollar amount as before the spin-off. "This is an exciting time for ADP, and I am optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our future growth opportunities," Mr. Butler concluded. An analyst conference call will be held today, Wednesday Wednesday: see week. , August 2 at 10:00 a.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 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 www.adp.com and click on the webcast icon. The presentation will be available to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and print approximately 60 minutes before the webcast at the ADP Investor Information home page at http://www.investquest.com/iq/a/aud/index.htm. 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 nearly $9 billion in revenues and more than 570,000 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 millions, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
June 30, June 30,
2006 (B) 2005 (C) 2006 (B) 2005 (C)
--------- --------- --------- ---------
Revenues, other than interest
on funds held for Employer
Services' clients and PEO
revenues $2,130.8 $1,892.1 $7,628.0 $6,985.3
Interest on funds held for
Employer Services' clients 156.3 121.1 549.8 421.4
PEO revenues (A) 186.8 153.9 703.7 577.0
--------- --------- --------- ---------
Total revenues 2,473.9 2,167.1 8,881.5 7,983.7
--------- --------- --------- ---------
Operating expenses 1,253.2 1,062.9 4,289.5 3,764.8
Selling, general and
administrative expenses 602.6 493.3 2,035.1 1,832.8
Systems development and
programming costs 155.3 150.5 589.8 550.3
Depreciation and amortization 75.1 69.6 288.6 273.9
Other income, net (37.0) (7.1) (64.5) (31.2)
--------- --------- --------- ---------
Total expenses 2,049.2 1,769.2 7,138.5 6,390.6
--------- --------- --------- ---------
Earnings from continuing
operations before income
taxes 424.7 397.9 1,743.0 1,593.1
Provision for income taxes 171.5 148.2 670.6 594.8
--------- --------- --------- ---------
Net earnings from continuing
operations $ 253.2 $ 249.7 $1,072.4 $ 998.3
--------- --------- --------- ---------
Earnings from discontinued
operations, net of provision
for income taxes of $107.6 and
$4.4 for the three months
ended June 30, 2006 and 2005,
respectively, and $123.2 and
$27.7 for the twelve months
ended June 30, 2006 and 2005,
respectively 450.6 9.0 481.6 57.1
--------- --------- --------- ---------
Net earnings $ 703.8 $ 258.7 $1,554.0 $1,055.4
========= ========= ========= =========
Basic earnings per share from
continuing operations $ 0.45 $ 0.43 $ 1.87 $ 1.71
========= ========= ========= =========
Basic earnings per share from
discontinued operations $ 0.79 $ 0.02 $ 0.84 $ 0.10
========= ========= ========= =========
Basic earnings per share $ 1.24 $ 0.44 $ 2.70 $ 1.81
========= ========= ========= =========
Diluted earnings per share from
continuing operations $ 0.44 $ 0.42 $ 1.85 $ 1.69
========= ========= ========= =========
Diluted earnings per share from
discontinued operations $ 0.79 $ 0.02 $ 0.83 $ 0.10
========= ========= ========= =========
Diluted earnings per share $ 1.23 $ 0.44 $ 2.68 $ 1.79
========= ========= ========= =========
Dividends per common share $ 0.1850 $ 0.1550 $ 0.7100 $ 0.6050
========= ========= ========= =========
(A) Net of pass-through costs of $1,809.5 and $1,465.8 for the three
months ended June 30, 2006 and 2005, respectively, and $6,977.0
and $5,499.2 for the twelve months ended June 30, 2006 and 2005,
respectively.
(B) The Consolidated Statements of Earnings for the three and twelve
months ended June 30, 2006 reflect the results of the Company on
an "as reported" basis and include incremental stock compensation
expense relating to the Company's stock compensation plans of $7.3
and $30.9 in operating expenses, $24.1 and $85.9 in selling,
general and administrative expenses and $7.5 and $31.9 in systems
development and programming costs, respectively, as well as a
related tax benefit of $11.4 and $41.7 in provision for income
taxes for the three and twelve months ended June 30, 2006,
respectively, in accordance with SFAS No. 123R, "Share-Based
Payment," which the Company adopted as of July 1, 2005.
(C) The Consolidated Statements of Earnings for the three and twelve
months ended June 30, 2005 reflect the results of the Company on
an "as reported" basis and do not include incremental stock
compensation expense.
In order to show the results for the three and twelve months ended
June 30, 2006 and 2005 on a comparable basis, adjustments for
incremental stock compensation expense relating to the Company's stock
compensation plans are shown in the Consolidated Statements of
Earnings - Comparable Basis, as Adjusted for Stock Compensation
Expense for the Three & Twelve Months Ended June 30, 2005 that follow.
Automatic Data Processing, Inc. and Subsidiaries
Consolidated Statements of Earnings -
Comparable Basis, as Adjusted for Stock Compensation Expense
------------------------------------------------------------
for the Three & Twelve Months Ended June 30, 2005
-------------------------------------------------
(In millions, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
June 30, June 30,
2006 (B) 2005 (C) 2006 (B) 2005 (C)
--------- --------- --------- ---------
Revenues, other than interest
on funds held for Employer
Services' clients and PEO
revenues $2,130.8 $1,892.1 $7,628.0 $6,985.3
Interest on funds held for
Employer Services' clients 156.3 121.1 549.8 421.4
PEO revenues (A) 186.8 153.9 703.7 577.0
--------- --------- --------- ---------
Total revenues 2,473.9 2,167.1 8,881.5 7,983.7
--------- --------- --------- ---------
Operating expenses 1,253.2 1,071.9 4,289.5 3,803.6
Selling, general and
administrative expenses 602.6 516.8 2,035.1 1,925.6
Systems development and
programming costs 155.3 160.1 589.8 591.7
Depreciation and amortization 75.1 69.6 288.6 273.9
Other income, net (37.0) (7.1) (64.5) (31.2)
--------- --------- --------- ---------
Total expenses 2,049.2 1,811.3 7,138.5 6,563.6
--------- --------- --------- ---------
Earnings from continuing
operations before income taxes 424.7 355.8 1,743.0 1,420.1
Provision for income taxes 171.5 136.3 670.6 546.3
--------- --------- --------- ---------
Net earnings from continuing
operations $ 253.2 $ 219.5 $1,072.4 $ 873.8
--------- --------- --------- ---------
Earnings from discontinued
operations, net of provision
for income taxes of $107.6 and
$3.8 for the three months
ended June 30, 2006 and 2005,
respectively, and $123.2 and
$25.2 for the twelve months
ended June 30, 2006 and 2005,
respectively 450.6 7.3 481.6 50.0
--------- --------- --------- ---------
Net earnings $ 703.8 $ 226.8 $1,554.0 $ 923.8
========= ========= ========= =========
Basic earnings per share from
continuing operations $ 0.45 $ 0.38 $ 1.87 $ 1.50
========= ========= ========= =========
Basic earnings per share from
discontinued operations $ 0.79 $ 0.01 $ 0.84 $ 0.09
========= ========= ========= =========
Basic earnings per share $ 1.24 $ 0.39 $ 2.70 $ 1.58
========= ========= ========= =========
Diluted earnings per share from
continuing operations $ 0.44 $ 0.37 $ 1.85 $ 1.48
========= ========= ========= =========
Diluted earnings per share from
discontinued operations $ 0.79 $ 0.01 $ 0.83 $ 0.08
========= ========= ========= =========
Diluted earnings per share $ 1.23 $ 0.39 $ 2.68 $ 1.57
========= ========= ========= =========
Dividends per common share $ 0.1850 $ 0.1550 $ 0.7100 $ 0.6050
========= ========= ========= =========
(A) Net of pass-through costs of $1,809.5 and $1,465.8 for the three
months ended June 30, 2006 and 2005, respectively, and $6,977.0
and $5,499.2 for the twelve months ended June 30, 2006 and 2005,
respectively.
(B) The Consolidated Statements of Earnings for the three and twelve
months ended June 30, 2006 reflect the results of the Company on
an "as reported" basis and include incremental stock compensation
expense relating to the Company's stock compensation plans of $7.3
and $30.9 in operating expenses, $24.1 and $85.9 in selling,
general and administrative expenses and $7.5 and $31.9 in systems
development and programming costs, respectively, as well as a
related tax benefit of $11.4 and $41.7 in provision for income
taxes for the three and twelve months ended June 30, 2006,
respectively, in accordance with SFAS No. 123R, "Share-Based
Payment," which the Company adopted as of July 1, 2005.
(C) The adjusted Consolidated Statements of Earnings for the three and
twelve months ended June 30, 2005 include adjustments for
incremental stock compensation expense relating to the Company's
stock compensation plans of $9.0 and $38.8 in operating expenses,
$23.5 and $92.8 in selling, general and administrative expenses
and $9.6 and $41.4 in systems development and programming costs,
respectively, as well as a related tax benefit of $11.9 and $48.5
in provision for income taxes for the three and twelve months
ended June 30, 2005, respectively.
Tables showing fiscal 2005 quarterly detail, as adjusted for stock
compensation expense related to the Company's stock compensation
plans, are posted to the investor relations homepage of our website at
www.adp.com under "Financial Data."
Automatic Data Processing, Inc. and Subsidiaries
Other Selected Financial Data
(Dollars in millions, except per share amounts)
(Unaudited)
Three Months Ended
June 30,
2006 2005 (B) Change % Change
--------- --------- ------- ---------
Revenues (A)
Employer Services $1,439.4 $1,310.1 $129.3 10%
Brokerage Services 649.0 571.9 77.1 13%
Dealer Services 308.1 255.4 52.7 21%
Securities Clearing and
Outsourcing Services 22.5 24.3 (1.8) (7)%
Other (B) 54.9 5.4 49.5 100%+
--------- --------- -------
$2,473.9 $2,167.1 $306.8 14%
========= ========= =======
Pre-tax earnings from continuing
operations (A)
Employer Services $ 224.6 $ 191.3 $ 33.3 17%
Brokerage Services 168.4 137.5 30.9 22%
Dealer Services 41.7 37.1 4.6 12%
Securities Clearing and
Outsourcing Services (4.3) (9.1) 4.8 53%
Other (B) (5.7) (1.0) (4.7) (100%+)
--------- --------- -------
$ 424.7 $ 355.8 $ 68.9 19%
========= ========= =======
Pre-tax margin (A)
Employer Services 15.6% 14.6% 1.0%
Brokerage Services 25.9% 24.0% 1.9%
Dealer Services 13.5% 14.5% (1.0)%
Securities Clearing and
Outsourcing Services (19.1)% (37.5)% 18.4%
Other (B) n/m n/m n/m
--------- --------- -------
17.2% 16.4% 0.8%
========= ========= =======
Twelve Months Ended
June 30,
2006 2005 (B) Change % Change
--------- --------- ------- ---------
Revenues (A)
Employer Services $5,763.4 $5,261.3 $502.1 10%
Brokerage Services 1,852.8 1,678.9 173.9 10%
Dealer Services 1,132.4 990.6 141.8 14%
Securities Clearing and
Outsourcing Services 80.6 61.5 19.1 31%
Other (B) 52.3 (8.6) 60.9 100%+
--------- --------- -------
$8,881.5 $7,983.7 $897.8 11%
========= ========= =======
Pre-tax earnings from continuing
operations (A)
Employer Services $1,308.4 $1,149.3 $159.1 14%
Brokerage Services 339.5 301.1 38.4 13%
Dealer Services 161.1 149.8 11.3 7%
Securities Clearing and
Outsourcing Services (30.3) (23.6) (6.7) (28)%
Other (B) (35.7) (156.5) 120.8 77%
--------- --------- -------
$1,743.0 $1,420.1 $322.9 23%
========= ========= =======
Pre-tax margin (A)
Employer Services 22.7% 21.8% 0.9%
Brokerage Services 18.3% 17.9% 0.4%
Dealer Services 14.2% 15.1% (0.9)%
Securities Clearing and
Outsourcing Services (37.5)% (38.4)% 0.9%
Other (B) n/m n/m n/m
--------- --------- -------
19.6% 17.8% 1.8%
========= ========= =======
(A) Prior year's segment results were adjusted to reflect fiscal year
2006 budgeted foreign exchange rates.
(B) Fiscal year 2005 adjusted to include incremental stock
compensation expense of $42.1 and $173.0 for the three and twelve
months ended June 30, 2005, respectively.
n/m - not meaningful
Automatic Data Processing, Inc. and Subsidiaries
Other Selected Financial Data (Continued)
(Dollars in millions, except per share amounts)
(Unaudited)
Three Months Ended
June 30,
2006 2005 Change
--------- ------------ -------
Components of Other Income,
net:
------------------------------
Interest income on corporate
funds $ (46.3) $ (25.9) $(20.4)
Interest expense 21.5 9.8 11.7
Realized losses (gains) on
available-for-sale
securities, net (12.2) 9.0 (21.2)
--------- ------------ -------
Total other income, net $ (37.0) $ (7.1) $(29.9)
========= ============ =======
Twelve Months Ended
June 30,
2006 2005 Change
--------- ------------ -------
Components of Other Income,
net:
------------------------------
Interest income on corporate
funds $ (141.9) $ (92.0) $(49.9)
Interest expense 72.8 32.3 40.5
Realized losses (gains) on
available-for-sale
securities, net 4.6 28.5 (23.9)
--------- ------------ -------
Total other income, net $ (64.5) $ (31.2) $(33.3)
========= ============ =======
----------------------------------------------------------------------
Three Months Ended
June 30,
2006 2005 Change % Change
--------- ------------ ------- ---------
Earnings per share
information:
------------------------------
Net earnings from continuing
operations $ 253.2 $ 249.7 $ 3.5 1%
Net earnings $ 703.8 $ 258.7 $445.1 100%+
Basic weighted average shares
outstanding 568.1 582.0 (13.9)
Basic earnings per share from
continuing operations $ 0.45 $ 0.43 $ 0.02 5%
Basic earnings per share $ 1.24 $ 0.44 $ 0.80 100%+
Diluted net earnings from
continuing operations $ 253.4 $ 250.0 $ 3.4 1%
Diluted net earnings $ 704.0 $ 259.0 $445.0 100%+
Diluted weighted average
shares outstanding 572.9 588.6 (15.7)
Diluted earnings per share
from continuing operations $ 0.44 $ 0.42 $ 0.02 5%
Diluted earnings per share $ 1.23 $ 0.44 $ 0.79 100%+
Twelve Months Ended
June 30,
2006 2005 Change % Change
--------- ------------ ------- ---------
Earnings per share
information:
------------------------------
Net earnings from continuing
operations $1,072.4 $ 998.3 $ 74.1 7%
Net earnings $1,554.0 $ 1,055.4 $498.6 47%
Basic weighted average shares
outstanding 574.8 583.2 (8.4)
Basic earnings per share from
continuing operations $ 1.87 $ 1.71 $ 0.16 9%
Basic earnings per share $ 2.70 $ 1.81 $ 0.89 49%
Diluted net earnings from
continuing operations $1,073.4 $ 999.3 $ 74.1 7%
Diluted net earnings $1,555.0 $ 1,056.4 $498.6 47%
Diluted weighted average
shares outstanding 580.3 590.0 (9.7)
Diluted earnings per share
from continuing operations $ 1.85 $ 1.69 $ 0.16 9%
Diluted earnings per share $ 2.68 $ 1.79 $ 0.89 50%
Three
Months
Ended
June 30,
2005
Comparable
Three Basis, As
Months Adjusted
Ended for Stock
June 30, Compensation
2006 Expense Change % Change
------------------------------ ---------
Earnings per share
information:
------------------------------
Net earnings from continuing
operations $ 253.2 $ 219.5 $ 33.7 15%
Net earnings $ 703.8 $ 226.8 $477.0 100%+
Basic weighted average shares
outstanding 568.1 582.0 (13.9)
Basic earnings per share from
continuing operations $ 0.45 $ 0.38 $ 0.07 18%
Basic earnings per share $ 1.24 $ 0.39 $ 0.85 100%+
Diluted net earnings from
continuing operations $ 253.4 $ 219.8 $ 33.6 15%
Diluted net earnings $ 704.0 $ 227.1 $476.9 100%+
Diluted weighted average
shares outstanding 572.9 588.6 (15.7)
Diluted earnings per share
from continuing operations $ 0.44 $ 0.37 $ 0.07 19%
Diluted earnings per share $ 1.23 $ 0.39 $ 0.84 100%+
Twelve
Months
Ended
June 30,
2005
Comparable
Twelve Basis, As
Months Adjusted
Ended for Stock
June 30, Compensation
2006 Expense Change % Change
------------------------------ ---------
Earnings per share
information:
------------------------------
Net earnings from continuing
operations $1,072.4 $ 873.8 $198.6 23%
Net earnings $1,554.0 $ 923.8 $630.2 68%
Basic weighted average shares
outstanding 574.8 583.2 (8.4)
Basic earnings per share from
continuing operations $ 1.87 $ 1.50 $ 0.37 25%
Basic earnings per share $ 2.70 $ 1.58 $ 1.12 71%
Diluted net earnings from
continuing operations $1,073.4 $ 874.8 $198.6 23%
Diluted net earnings $1,555.0 $ 924.8 $630.2 68%
Diluted weighted average
shares outstanding 580.3 590.0 (9.7)
Diluted earnings per share
from continuing operations $ 1.85 $ 1.48 $ 0.37 25%
Diluted earnings per share $ 2.68 $ 1.57 $ 1.11 71%
Automatic Data Processing, Inc. and Subsidiaries
Other Selected Financial Data (Continued)
(Unaudited)
Three Months Ended
June 30,
2006 2005 Change % Change
--------- --------- ------ ---------
Key Statistics:
---------------
Internal revenue growth:
Total Company 14% 9%
Employer Services 10% 10%
Brokerage Services 13% 7%
Dealer Services 2% 5%
Average investment balances at
cost (in billions):
Corporate investments $ 4.2 $ 3.1 $ 1.1 36.4%
Funds held for clients 14.6 13.4 1.2 8.8%
--------- --------- ------ ---------
Total $ 18.8 $ 16.5 $ 2.3 14.0%
========= ========= ====== =========
Average interest rates earned
exclusive of realized losses
(gains) on:
Corporate investments 4.28% 3.27%
Funds held for clients 4.30% 3.64%
Total 4.30% 3.57%
Net unrealized gain/(loss)
position at end of period $ (312.9) $ 32.9
Employer Services:
Change in pays per control -
Majors AutoPay 2.5% 2.1%
New business sales growth -
worldwide 28% 16%
Change in client revenue
retention - U.S. 0.3 pts (0.4) pts
PEO worksite employees at end of
period 139,000 113,000
Twelve Months Ended
June 30,
2006 2005 Change % Change
--------- --------- ------ ---------
Key Statistics:
---------------
Internal revenue growth:
Total Company 10% 9%
Employer Services 10% 8%
Brokerage Services 11% 9%
Dealer Services 4% 5%
Average investment balances at
cost (in billions):
Corporate investments $ 3.6 $ 3.1 $ 0.4 14.1%
Funds held for clients 13.6 12.3 1.3 10.6%
--------- --------- ------ ---------
Total $ 17.2 $ 15.4 $ 1.7 11.3%
========= ========= ====== =========
Average interest rates earned
exclusive of realized losses
(gains) on:
Corporate investments 3.95% 2.93%
Funds held for clients 4.05% 3.44%
Total 4.03% 3.33%
Net unrealized gain/(loss)
position at end of period $ (312.9) $ 32.9
Employer Services:
Change in pays per control -
Majors AutoPay 2.4% 1.9%
New business sales growth -
worldwide 13% 13%
New business sales dollars -
worldwide (in millions) $ 950 $ 840 $ 110 13%
Change in client revenue
retention - U.S. 0.2 pts 0.5 pts
PEO worksite employees at end of
period 139,000 113,000
Automatic Data Processing, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In millions)
June 30, June 30,
2006 2005
---------- ----------
Assets
------
Cash and cash equivalents/Short-term
marketable securities $ 2,322.2 $ 1,549.4
Securities clearing receivables 836.8 965.2
Other current assets 1,626.8 1,693.1
Assets of discontinued operations - 662.2
---------- ----------
Total current assets 4,785.8 4,869.9
Long-term marketable securities 334.0 447.9
Property, plant and equipment, net 782.4 637.9
Other non-current assets 4,129.7 3,762.2
Funds held for clients 17,483.9 17,897.5
---------- ----------
Total assets $27,515.8 $27,615.4
========== ==========
Liabilities and Stockholders' Equity
------------------------------------
Securities clearing payables $ 613.6 $ 745.2
Other current liabilities 1,985.1 1,896.5
Liabilities of discontinued operations 19.7 220.1
---------- ----------
Total current liabilities 2,618.4 2,861.8
Long-term debt 74.3 75.7
Other non-current liabilities 1,024.1 1,034.8
Client funds obligations 17,787.4 17,859.2
---------- ----------
Total liabilities 21,504.2 21,831.5
Total stockholders' equity 6,011.6 5,783.9
---------- ----------
Total liabilities and stockholders' equity $27,515.8 $27,615.4
========== ==========
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, 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. In addition, the proposed spin-off of the Brokerage Services Group is subject to inherent risks and uncertainties, including: risks that the spin-off will not be consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. ; increased demands on our management team to accomplish the spin-off; significant transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). ; risks of changes in our credit rating and risks from changes in results of operations of our three principal business units. 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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