ADP Reports Record EPS for Second Fiscal Quarter; EPS Increases by 2%; Fiscal Year Guidance Changed to Low-single Digit Revenue and EPS Growth.Business Editors ROSELAND, N.J.--(BUSINESS WIRE)--January 15, 2003 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. ) achieved record earnings per share in its second quarter of fiscal 2003, 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. This represents ADP's 166th consecutive quarter of record highs in earnings per share since becoming a public company in 1961. Revenues approximated $1.7 billion in the quarter ended December December: see month. 31, 2002, flat with last year. Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern earnings declined 2% and net earnings declined 1% 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 , on fewer shares outstanding, increased 2% to $.43 from $.42 last year. Commenting on the quarter, Mr. Weinbach said, "Revenue growth was in line with our expectations for the second quarter. Employer Services, Dealer Services and Claims Services grew 4%, 12% and 1%, respectively. Brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. Services' revenue declined 14%. In the current economy Employer Services is holding up well, despite a 2% decline in new business sales in the quarter, which was slightly behind our expectation. We are anticipating stronger sales growth in the second half of the fiscal year due, in part, to easier comparisons. We had very good client retention improvement of about 1% compared with last year, and the number of employees on our clients' payrolls, or 'pays per control', were flat in the quarter, which is an improvement compared to the decline in the prior five quarters." "Our most difficult issue remains in Brokerage Services where our revenues and pretax earnings continue to be significantly impacted by the overall weakness in 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. Revenues in Brokerage's Processing Services Division declined 17% in the quarter reflecting the continuing impact of industry consolidation and lower retail trading activity and discretionary spending. Investor Communications Division revenues declined 11% as both the number of mailings and the 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. per mailing were down significantly from last year." "While our results for the first half of the year were close to our original plan, we are adjusting our guidance 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. to low-single digit revenue and earnings per share growth for fiscal 2003. Our original plans were based on higher interest rates than the current yield curve, and marginal (jargon) marginal - 1. Extremely small. "A marginal increase in core can decrease GC time drastically." In everyday terms, this means that it is a lot easier to clean off your desk if you have a spare place to put some of the junk while you sort through it. 2. growth in Brokerage Services compared to the declines in the current Brokerage Services environment. We are close to expectations in our Employer, Dealer and Claims Services' businesses. We are especially pleased with sales of our new products and with client retention in Employer Services and Dealer Services, both indicators of future growth. In Employer Services demand is exceeding our expectations for our new TotalChoice and PayXpert payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. products, both primarily in our Major Accounts market segment, and our Enterprise product in the National Accounts segment." "Our recently announced agreement to acquire ProBusiness Services should not have a meaningful impact on the current fiscal year 2003 revenue or earnings per share growth forecast. We expect that the transaction will be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $.01 per share dilutive in the first year after closing and accretive beginning in the second year." "Our accretive treasury share purchases have partially offset the lower results from declining interest rates and Brokerage activity. During the second quarter we invested about $80 million by acquiring over 2 million shares of ADP stock for treasury, bringing the total to about $720 million invested for 20.5 million shares year to date. 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 remain quite strong at approximately $2.5 billion." ADP, with over $7 billion in revenues and more than 500,000 clients, is one of the largest independent computing computing - computer services firms in the world.
Below is a summary of unaudited comparative results.
Three Months Ended Six Months Ended
December 31, December 31,
2002 2001 2002 2001
(000's omitted except (000's omitted except
per share data) per share data)
Revenues $ 1,682,995 $ 1,681,028 $ 3,329,680 $ 3,288,911
Earnings before
income taxes $ 423,450 $ 429,900 $ 763,850 $ 750,100
Provision for incomes
taxes $ 161,760 $ 165,300 $ 291,760 $ 288,900
Net Earnings $ 261,690 $ 264,600 $ 472,090 $ 461,200
Average shares
outstanding 598,064 617,335 602,418 618,957
Basic earnings per
share $ 0.44 $ 0.43 $ 0.78 $ 0.75
Diluted net earnings $ 261,992 $ 265,003 $ 472,705 $ 462,079
Diluted shares
outstanding 604,791 630,237 608,783 631,501
Diluted earnings per
share (R) $ 0.43 $ 0.42 $ 0.78 $ 0.73
Revenues by business
unit (A)
Employer Services $ 1,063,000 $ 1,025,000 $ 2,072,000 $ 1,996,000
Brokerage Services $ 315,000 $ 365,000 $ 669,000 $ 725,000
Dealer Services $ 195,000 $ 174,000 $ 385,000 $ 349,000
Pre-tax earnings by
business unit (A)
Employer Services $ 296,000 $ 274,000 $ 536,000 $ 489,000
Brokerage Services $ 33,000 $ 63,000 $ 89,000 $ 130,000
Dealer Services $ 34,000 $ 30,000 $ 63,000 $ 57,000
(A) Prior year's results were restated using FY '03 budgeted
foreign exchange rates.
(R) Record high
An analyst conference call to review the second-quarter results will be held at 3:30PM on Wednesday Wednesday: see week. January January: see month. 15th. 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. Automatic Data Processing, Inc. news releases, current financial information, related SEC filings and Investor Relations Investor relations The process by which the corporation communicates with its investors. presentations are accessible at the same Web site. Automatic Data Processing, Inc.'s unaudited Statements unaudited statement A financial statement prepared by an auditor but not in accordance with generally accepted auditing standards. Unaudited statements are prepared to less rigorous standards than audited statements. Compare audited statement. of Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Earnings for the three and six months ended December 31, 2002 and 2001 and its unaudited Consolidated Balance Sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. at December 31, 2002 will be posted to the website by January 22, 2003. This release contains "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. " based on management's expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ from those expressed. Factors that could cause differences 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. and employee benefits; overall economic trends, including interest rate and foreign currency trends; 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 levels; changes in technology; availability of skilled technical associates; and the impact of new acquisitions. ADP disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Quarterly Income Statement Information
(In thousands, except per share amounts)
------------------------------------
Quarters Ended Six Months
Ended
09/30/2002 12/31/2002 12/31/02
------------------------------------
Unaudited Unaudited
------------------------
Revenues, other than interest
on funds held for clients
and PEO revenues $1,476,424 $1,510,396 $2,986,820
Interest on funds held for
clients 89,865 87,762 177,627
PEO revenues 80,396 84,837 165,233
------------------------------------
Total revenues 1,646,685 1,682,995 3,329,680
------------------------------------
Operating expenses 708,468 702,716 1,411,184
General, administrative
and selling expense 447,953 402,005 849,958
Systems development and
programming costs 119,898 121,380 241,278
Depreciation and amortization 67,684 68,699 136,383
Interest income on corporate funds (39,704) (34,348) (74,052)
Realized (gains) losses on
investments (5,990) (8,385) (14,375)
Interest expense 7,976 7,478 15,454
------------------------------------
1,306,285 1,259,545 2,565,830
------------------------------------
Earnings before income taxes 340,400 423,450 763,850
Provision for income taxes 130,000 161,760 291,760
------------------------------------
Net earnings $210,400 $261,690 $472,090
====================================
Reported earnings per share:
Basic $0.35 $0.44 $0.78
Diluted $0.34 $0.43 $0.78
Dividends per share $0.1150 $0.1200 $0.2350
Automatic Data Processing, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands except per share amounts)
-------------------------
December 31, June 30,
2002 2002
-------------------------
Unaudited
-------------
Assets
---------------------------------------------
Cash and cash equivalents $971,482 $798,810
Short-term marketable securities 593,023 677,005
Accounts receivable 988,865 1,045,170
Other current assets 339,984 296,272
-------------------------
Total current assets 2,893,354 2,817,257
Long-term marketable securities 897,402 1,273,768
Long-term receivables 175,037 192,769
Land and buildings 456,510 458,478
Data processing equipment 734,789 696,829
Furniture, leaseholds and other 561,537 540,217
-------------------------
1,752,836 1,695,524
Less accumulated depreciation (1,183,728) (1,099,073)
-------------------------
Total property, plant and equipment 569,108 596,451
Other assets 432,808 293,808
Goodwill 1,444,615 1,375,654
Intangible assets 509,300 501,544
-------------------------
Total assets before funds held for clients 6,921,624 7,051,251
Funds held for clients 12,081,319 11,225,271
-------------------------
Total assets $19,002,943 $18,276,522
=========================
Liabilities and Shareholders' Equity
---------------------------------------------
Accounts payable $126,505 $148,694
Accrued expenses and other current
liabilities 1,039,919 1,035,389
Income taxes 170,456 227,019
-------------------------
Total current liabilities 1,336,880 1,411,102
Long-term debt 82,446 90,648
Other liabilities 262,216 233,671
Deferred income taxes 337,413 237,633
Deferred revenue 243,975 138,893
-------------------------
Total liabilities before client funds
obligations 2,262,930 2,111,947
Client funds obligations 11,760,904 11,050,370
-------------------------
Total liabilities 14,023,834 13,162,317
Shareholders' equity:
Common stock 63,870 63,870
Capital in excess of par value 254,001 333,371
Retained earnings 6,307,973 5,977,318
Treasury stock (1,664,463) (1,142,041)
Accumulated other comprehensive income 17,728 (118,313)
-------------------------
Total shareholders' equity 4,979,109 5,114,205
-------------------------
Total liabilities and shareholders' equity $19,002,943 $18,276,522
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