ADP Reports Second Fiscal Quarter Results; Revenues Rise 9%, EPS Increases 11%; Fiscal 2005 Forecasted Revenue Growth Raised to 7 - 9%; EPS Guidance Refined to 12 - 15% Growth.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 9% revenue growth, with revenues of $2.0 billion and $.42 earnings per share for the second fiscal quarter ended December December: see month. 31, 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. Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern and net earnings both increased 9% compared with the second quarter 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 11% from $.38 per share last year, the first double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. earnings per share increase in eight quarters. Commenting on the quarter, Mr. Weinbach said, "We are pleased with our results as there is positive momentum in each of our businesses. Revenues in Employer Services increased 7% based on solid growth in the new business started in the quarter, the number of employees on our clients' payrolls and client fund balances. New business sales growth was 8% in the second quarter and 11% for the first half compared with last year, and we remain confident in our double-digit sales growth forecast for the year. Although the critical year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. retention period is still ahead of us, we are very pleased with our results for the first half which are .7% ahead of last year's record levels. "Brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. Services' revenues grew 4% in the quarter compared with the second quarter last year. Our internal revenue growth rate was 10% after adjusting for last year's divestitures. Investor communications mailings increased 18% over last year driven by increased mutual fund meeting activity. Back-office average trades per day increased 18% over last year, while average revenue per trade declined 15% primarily due to mix changes. Our acquisition of the U.S. Clearing and BrokerDealer Services divisions 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. was completed on November November: see month. 1, 2004. Revenues for this new reportable segment, 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, were $15 million in the quarter and we anticipate about $.02 per share 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. in fiscal 2005 from this transaction. Dealer Services' revenues grew 11% and Claims Services' revenues grew 6% in the quarter compared with the second quarter last year. "Our results for the first half of the fiscal year have been positive. This quarter was the first in more than three years in which the yield on our investment portfolio exceeded the same quarter in the previous year. We are encouraged by our business momentum and product position coupled with the improving economic conditions, the trend in labor statistics and the increase in total brokerage trade volumes. Our revenue guidance has been increased to 7% to 9% growth and we are refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar our earnings estimate to between 12% and 15% earnings per share growth. We are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the market opportunities for future growth," Mr. Weinbach concluded. An analyst conference call to review the second quarter results will be held today, Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , January January: see month. 21 at 1:30 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. . 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 approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $8 billion in revenues and 550,000 clients, is one of the largest providers of a broad range of premier mission-critical, cost effective 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 in selected markets on a global basis.
Automatic Data Processing, Inc. and Subsidiaries
Consolidated Statements of Earnings
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
-------------------- ---------------------
2004 2003 2004 2003
---- ---- ---- ----
Revenues, other than
interest on funds held
for Employer Services
clients and PEO revenues $1,769,094 $1,636,333 $3,413,627 $3,168,722
Interest on funds held
for Employer Services
clients 91,129 82,202 175,792 165,136
PEO revenues (A) 133,361 108,865 258,847 213,819
---------- ---------- ---------- -----------
1,993,584 1,827,400 3,848,266 3,547,677
---------- ---------- ---------- -----------
Operating expenses 915,719 810,300 1,782,739 1,604,541
Selling, general and
administrative expenses 465,363 459,293 911,521 886,171
Systems development and
programming costs 150,070 133,125 298,794 264,879
Depreciation and
amortization 76,161 73,609 150,582 148,335
Other income, net (11,349) (14,067) (23,930) (32,659)
---------- ---------- ---------- -----------
Total expenses 1,595,964 1,462,260 3,119,706 2,871,267
---------- ---------- ---------- -----------
Earnings before income
taxes 397,620 365,140 728,560 676,410
Provision for income
taxes 147,517 136,560 270,296 252,980
---------- ---------- ---------- -----------
Net earnings $ 250,103 $ 228,580 $ 458,264 $ 423,430
========== ========== ========== ===========
Basic earnings per share $ 0.43 $ 0.39 $ 0.79 $ 0.71
========== ========== ========== ===========
Diluted earnings per
share $ 0.42 $ 0.38 $ 0.78 $ 0.71
========== ========== ========== ===========
Dividends per common
share $ 0.1550 $ 0.1400 $ 0.2950 $ 0.2600
========== ========== ========== ===========
(A) Net of pass-through costs of $1,352,004 and $1,037,864 for the
three months ended December 31, 2004 and 2003, respectively,
and $2,501,491 and $1,949,433 for the six months ended December
31, 2004 and 2003, respectively.
Automatic Data Processing, Inc. and Subsidiaries
Other Selected Financial Data
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
--------------------- ----------------------
2004 2003 2004 2003
---- ---- ---- ----
Revenues for select
business units (B)
Employer Services $1,235,000 $1,160,000 $2,412,000 $2,271,000
Brokerage Services 355,000 341,000 686,000 655,000
Dealer Services 243,000 218,000 481,000 429,000
Securities Clearing and
Outsourcing Services (C) 15,000 - 15,000 -
Pre-tax earnings for
select business units (B)
Employer Services $ 286,000 $ 263,000 $ 505,000 $ 470,000
Brokerage Services 49,000 33,000 88,000 53,000
Dealer Services 37,000 37,000 72,000 69,000
Securities Clearing and
Outsourcing Services (C) (5,000) - (5,000) -
(B) Prior year's segment results were adjusted to reflect fiscal
year 2005 budgeted foreign exchange rates.
(C) On November 1, 2004, the Company acquired the U.S. Clearing and
BrokerDealer Services divisions of Bank of America, which
provide third-party clearing operations. The Company has
determined that the acquired operations constitute a separate
reportable segment in accordance with Statement of Financial
Accounting Standards No. 131, "Disclosure About Segments of an
Enterprise and Related Information." The Company established
a reportable segment called Securities Clearing and Outsourcing
Services as of November 1, 2004 to report the results of the
acquired business.
With this acquisition, the Company has reported two additional
line items on the balance sheet, which are Securities Clearing
and Outsourcing Receivables and Securities Clearing and
Outsourcing Payables. Securities Clearing and Outsourcing
Receivables consists primarily of receivables from customers for
margin loans, as well as receivables from brokers, dealers and
clearing organizations as a result of securities clearing
transactions. Securities Clearing and Outsourcing Receivables
also includes receivables for cash payments to brokers and
dealers for securities that were borrowed by the Company.
Securities Clearing and Outsourcing Payables represent the
payables to customers for customer deposits and short sale
securities transactions, and payables to brokers, dealers and
clearing organizations as a result of the securities clearing
transactions. Securities Clearing and Outsourcing Payables also
includes payables to brokers and dealers for the cash that has
been received for securities that have been loaned.
Components of Other
Income, net:
-------------------
Interest income on
corporate funds $ (26,114)$ (23,642)$ (51,984)$ (45,742)
Interest expense 10,799 5,351 18,907 10,001
Realized losses on
available-for-sale
securities, net 3,966 4,224 9,147 3,082
---------- ---------- ---------- -----------
Total other income, net $ (11,349)$ (14,067)$ (23,930)$ (32,659)
========== ========== ========== ===========
Earnings per share
information:
------------------
Net earnings $ 250,103 $ 228,580 $ 458,264 $ 423,430
Average shares
outstanding 583,230 591,685 583,389 593,264
Basic earnings per share $ 0.43 $ 0.39 $ 0.79 $ 0.71
Diluted net earnings $ 250,367 $ 229,071 $ 458,793 $ 424,247
Diluted shares
outstanding 591,086 597,624 590,473 599,242
Diluted earnings per
share $ 0.42 $ 0.38 $ 0.78 $ 0.71
Automatic Data Processing, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
December 31, June 30,
2004 2004
------------- --------------
(Unaudited)
Assets
------
Cash and cash equivalents/
Short-term marketable
securities $ 1,556,471 $ 1,129,075
Securities clearing and
outsourcing receivables 947,011 -
Other current assets 1,690,391 1,632,514
------------- --------------
Total current assets 4,193,873 2,761,589
Long-term marketable
securities 442,991 963,501
Property, plant and
equipment, net 650,058 642,353
Other non-current assets 4,126,626 3,849,584
Funds held for clients 18,775,831 12,903,532
============= ==============
Total assets $ 28,189,379 $ 21,120,559
============= ==============
Liabilities and Stockholders' Equity
-------------------------------------
Securities clearing and
outsourcing payables $ 769,965 $ -
Other current liabilities 1,830,675 1,768,424
------------- --------------
Total current liabilities 2,600,640 1,768,424
============= ==============
Long-term debt 75,926 76,200
Other non-current liabilities 1,146,089 1,018,040
Client funds obligations 18,710,201 12,840,225
------------- --------------
Total liabilities 22,532,856 15,702,889
Total stockholders' equity 5,656,523 5,417,670
------------- --------------
Total liabilities and
stockholders' equity $ 28,189,379 $ 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. 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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