UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
______________
FORM 8-K
CURRENT
REPORT
Pursuant to Section 13 or 15 (d) of The
Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported):
May
1, 2008
|
AUTOMATIC DATA PROCESSING, INC. |
||
|
(Exact name of registrant as specified in its charter) |
||
|
Delaware |
1-5397 |
22-1467904 |
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
|
One ADP Boulevard, Roseland, New Jersey |
07068 |
|
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code:
(973)
974-5000
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N/A |
|
(Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item
2.02. Results of Operations and Financial Condition.
On May 1, 2008 the Registrant issued a press release announcing the Registrant’s financial results for the second fiscal quarter ended March 31, 2008. A copy of the Registrant’s press release is attached hereto as Exhibit 99 and is hereby incorporated by reference.
Item
9.01. Financial Statements and Exhibits.
(c) Exhibit 99. Press Release dated May 1, 2008, issued by
Automatic Data Processing, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: |
May 1, 2008 |
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AUTOMATIC DATA PROCESSING, INC. |
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|
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By: |
/s/ Christopher R. Reidy |
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| Name: |
Christopher R. Reidy |
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| Title: |
Chief Financial Officer |
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Exhibit
Index
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Exhibit Number |
Description |
||
| 99 |
Press Release dated May 1, 2008, issued by
|
Exhibit 99
ADP Reports Third Quarter Fiscal 2008 Results; Confirms Fiscal 2008 Revenue and EPS from Continuing Operations Growth Forecasts
ADP delivered 12% revenue growth and 18% diluted earnings per share from continuing operations growth in its fiscal third quarter. Segment operating results, including improved margins, and the benefit of fewer shares outstanding, resulted in strong EPS growth.
ROSELAND, N.J.--(BUSINESS WIRE)--Automatic Data Processing, Inc. (NYSE:ADP) announced 12% revenue growth to $2.4 billion for the third fiscal quarter ended March 31, 2008, Gary C. Butler, president and chief executive officer, announced today. Revenue growth benefited over 2% from favorable foreign exchange rates during the quarter. Pretax and net earnings from continuing operations grew 11% and 12%, respectively, compared with last year’s third quarter. Diluted earnings per share from continuing operations of $0.77 increased 18% from $0.65 a year ago on fewer average shares outstanding.
Fiscal year to date, ADP acquired nearly 24 million shares of its stock for treasury at a cost of almost $1.1 billion. At March 31, 2008, cash and marketable securities balances were $1.7 billion.
“I am pleased with the solid results ADP achieved for the third quarter,” Mr. Butler commented. “We are in the midst of a challenging economy, and as a result, growth in both new business sales and the number of employees on our clients’ payrolls moderated in the quarter. We have seen a lengthening of the sales cycle in the high-end of the market in National Accounts Services and GlobalView. Therefore, we have revised our forecast for the year to high single-digit new business sales growth, which is within our original forecast of high single-digit to low double-digit growth.”
Employer Services
“Employer Services’ revenues increased 9% for the third quarter, 8% organically, compared with a year ago. In the United States, revenues from our traditional payroll and payroll tax filing business grew 8%, and our beyond payroll revenues, excluding PEO Services revenues, grew 13%. The number of employees on our clients' payrolls in the United States increased 1.1% as measured on a same store sales basis for our Major Accounts Auto Pay clients. Pay growth in Europe continued to be positive compared with last year. During this critical year-end retention period, worldwide client retention increased 90 basis points over the prior year’s third quarter. Employer Services’ pretax margin improved 90 basis points as a result of continued operating leverage.”
“Combined new business sales for Employer Services and PEO Services grew over 4% worldwide. New business sales represent annualized recurring revenues anticipated from new orders. The quarter’s new business sales were strong in Small Business Services, Major Accounts Services, and in our International in-country business. Sales at the high-end of the market in National Accounts Services and GlobalView have moderated, reflecting a lengthening of the sales cycle, as evidenced by sales that we anticipated closing in the third quarter that instead closed in April.”
PEO Services
“PEO Services’ revenues increased 20% for the third quarter, all organic, compared with a year ago. PEO Services’ pretax margin improved 70 basis points. Average worksite employees paid by PEO Services increased 17% to approximately 181,000 compared with the third quarter of fiscal 2007.”
Dealer Services
“Dealer Services’ revenues increased 8% for the third quarter, over 5% organically, compared with a year ago. Overall new business sales growth slowed with strong sales in beyond the core Dealer Management Systems (DMS) solutions offsetting slower growth in the core DMS. Dealer Services’ pretax margin expanded 40 basis points in the quarter compared with a year ago from increased operating leverage, partially offset by costs relating to the acquisitions of three Autoline distributors that were completed earlier in the year.”
Client Funds
"Interest on funds held for clients was flat compared to last year's third quarter, at $198.5 million, due to a 6.2% increase in average client funds balances to $18.7 billion, offset by a lower average interest yield of nearly 30 basis points to 4.2% from an average interest yield of 4.5% last year, excluding gains and losses.”
Fiscal 2008 Forecast
“Although ADP has been somewhat impacted by the slowing economy, we continue to anticipate strong revenue and earnings per share growth for fiscal 2008. We remain confident in attaining our revenue growth forecast of 12% to 13%, which includes approximately two percentage points from foreign exchange rates. We are equally confident in achieving the high end of our earnings per share growth forecast of 18% to 21% in diluted earnings per share from continuing operations, up from $1.80 in fiscal 2007, which excludes the net one-time gain recorded in the first quarter of fiscal 2007.”
“For Employer Services, we anticipate revenue growth of nearly 10%. We are narrowing our forecasted pretax margin expansion for Employer Services to 80 to 100 basis points from our previous forecast of 70 to 110 basis points. For PEO Services, we continue to anticipate 19% to 20% revenue growth and pretax margin expansion of 50 to 90 basis points. We are forecasting high single-digit new business sales growth worldwide for Employer Services and PEO Services on a combined basis, which is slightly lower than our previous forecast of high single-digit to low double-digit growth. For Dealer Services, we anticipate nearly 9% revenue growth. We are lowering our forecasted pretax margin expansion for Dealer Services to about 70 basis points from our previous forecast of 70 to 90 basis points improvement.”
“Interest on funds held for clients is still anticipated to grow 3% to 4% based on expected growth of 6% to 7% in average client funds balances and a full-year average interest yield of nearly 4.4%, compared with the fiscal 2007 average interest yield of nearly 4.5%, excluding gains and losses. The interest assumptions in our current forecasts are based on Fed Funds futures contracts and forward yield curves as of April 30, 2008. The Fed Funds futures contracts do not anticipate any further changes in the Fed Funds rate through June 30, 2008, the end of our fiscal year, thus exiting the fiscal year with a Fed Funds rate of 2.00%. The forward yield curves as of April 30, 2008 indicate fixed income rates in line with our last guidance update on March 25, 2008.”
“I am pleased with ADP’s performance through our first nine months of fiscal 2008 with revenue growth of 13% and an increase in diluted earnings per share from continuing operations of 20%. We remain on target to deliver strong forecasted results for the year. ADP’s market leading solutions are exceptionally strong. We intend to continue with our commitment to invest in new products, salesforce expansion, and implementation and client service resources while remaining diligent around pretax margin expansion. We believe that our continued focus on our five-point strategic growth program will enable us to continue to deliver both strong revenue growth and margin improvement over our strategic planning horizon.” Mr. Butler concluded.
Website Schedules
The schedules of quarterly and full-year revenue and pretax earnings by reportable segment for fiscal years 2006, 2007, and 2008 have been updated for the third quarter fiscal 2008 results and posted to the Investor Relations home page ( http://www.investquest.com/iq/a/adp/index.htm ) of our website www.adp.com under Financial Data along with the quarterly and full-year statements of earnings for fiscal 2006 and fiscal 2007.
An analyst conference call will be held today, Thursday, May 1 at 5:00 p.m. 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 ADP’s home page, www.adp.com , or ADP’s Investor Relations home page, http://www.investquest.com/InvestQuest/a/adp/ , and click on the webcast icon. The presentation will be available to download and print approximately 60 minutes before the webcast at the ADP Investor Relations home page at http://www.investquest.com/iq/a/adp/index.htm . ADP’s news releases, current financial information, SEC filings and Investor Relations presentations are accessible at the same Web site.
About ADP
Automatic Data Processing, Inc. (NYSE: ADP), with nearly $8 billion in revenues and over 600,000 clients, is one of the world's largest providers of business outsourcing solutions. Leveraging more than 55 years of experience, ADP offers a wide range of HR, payroll, tax and benefits administration solutions from a single source. ADP's easy-to-use, cost-effective solutions for employers provide superior value to companies of all types and sizes. ADP is also a leading provider of integrated computing solutions to auto, truck, motorcycle, marine and recreational vehicle dealers throughout the world. For more information about ADP or to contact a local ADP sales office, reach us at 1.800.225.5237 or visit the company's Web site at www.ADP.com .
| Automatic Data Processing, Inc. and Subsidiaries | ||||||
| Condensed Consolidated Balance Sheets | ||||||
| (In millions) | ||||||
| (Unaudited) | ||||||
| March 31, | June 30, | |||||
| 2008 | 2007 | |||||
|
Assets |
||||||
|
Cash and cash equivalents/Short-term marketable securities |
$ | 1,676.3 | $ | 1,816.5 | ||
| Other current assets | 1,771.6 | 1,490.0 | ||||
| Assets of discontinued operations | - | 57.7 | ||||
| Total current assets before funds held for clients | 3,447.9 | 3,364.2 | ||||
| Funds held for clients | 24,372.1 | 18,489.2 | ||||
| Total current assets | 27,820.0 | 21,853.4 | ||||
| Long-term marketable securities | 59.1 | 68.1 | ||||
| Property, plant and equipment, net | 732.6 | 723.8 | ||||
| Other non-current assets | 4,163.8 | 4,003.6 | ||||
| Total assets | $ | 32,775.5 | $ | 26,648.9 | ||
|
Liabilities and Stockholders' Equity |
||||||
| Other current liabilities | $ | 1,904.7 | $ | 1,771.7 | ||
| Liabilities of discontinued operations | - | 19.1 | ||||
| Total current liabilities before client funds obligations | 1,904.7 | 1,790.8 | ||||
| Client funds obligations | 23,958.1 | 18,673.0 | ||||
| Total current liabilities | 25,862.8 | 20,463.8 | ||||
| Long-term debt | 52.5 | 43.5 | ||||
| Other non-current liabilities | 1,361.4 | 993.7 | ||||
| Total liabilities | 27,276.7 | 21,501.0 | ||||
| Total stockholders' equity | 5,498.8 | 5,147.9 | ||||
| Total liabilities and stockholders' equity | $ | 32,775.5 | $ | 26,648.9 | ||
| Automatic Data Processing, Inc. and Subsidiaries | ||||||||||||||||
| Consolidated Statements of Earnings | ||||||||||||||||
| (In millions, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| REVENUES: | ||||||||||||||||
|
Revenues, other than interest on funds held for clients and PEO revenues |
$ | 1,931.0 | $ | 1,725.1 | $ | 5,273.4 | $ | 4,679.6 | ||||||||
| Interest on funds held for clients | 198.5 | 198.3 | 515.0 | 475.3 | ||||||||||||
| PEO revenues (A) | 297.7 | 247.6 | 780.9 | 645.2 | ||||||||||||
| Total revenues | 2,427.2 | 2,171.0 | 6,569.3 | 5,800.1 | ||||||||||||
| EXPENSES: | ||||||||||||||||
| Costs of revenues: | ||||||||||||||||
| Operating expenses | 1,033.5 | 891.4 | 2,921.6 | 2,516.4 | ||||||||||||
| Systems development and programming costs | 132.0 | 122.2 | 385.1 | 355.7 | ||||||||||||
| Depreciation and amortization | 58.9 | 53.5 | 177.9 | 154.4 | ||||||||||||
| Total costs of revenues | 1,224.4 | 1,067.1 | 3,484.6 | 3,026.5 | ||||||||||||
| Selling, general and administrative expenses | 585.3 | 549.8 | 1,673.4 | 1,557.0 | ||||||||||||
| Interest expense | 7.9 | 7.0 | 68.0 | 74.7 | ||||||||||||
| Total expenses | 1,817.6 | 1,623.9 | 5,226.0 | 4,658.2 | ||||||||||||
| Other income, net | (25.9 | ) | (24.3 | ) | (114.2 | ) | (174.2 | ) | ||||||||
|
Earnings from continuing operations before income taxes |
635.5 | 571.4 | 1,457.5 | 1,316.1 | ||||||||||||
| Provision for income taxes | 231.9 | 211.3 | 521.8 | 488.9 | ||||||||||||
| Net earnings from continuing operations | $ | 403.6 | $ | 360.1 | $ | 935.7 | $ | 827.2 | ||||||||
|
Earnings from discontinued operations, net of provision for income taxes of $0.9 and $53.6 for the three months ended March 31, 2008 and 2007, respectively, and $31.7 and $103.8 for the nine months ended March 31, 2008 and March 31,2007, respectively |
10.0 | 28.8 | 66.5 | 116.8 | ||||||||||||
| Net earnings | $ | 413.6 | $ | 388.9 | $ | 1,002.2 | $ | 944.0 | ||||||||
| Basic earnings per share from continuing operations | $ | 0.78 | $ | 0.65 | $ | 1.79 | $ | 1.50 | ||||||||
| Basic earnings per share from discontinued operations | 0.02 | 0.05 | 0.13 | 0.21 | ||||||||||||
| Basic earnings per share | $ | 0.80 | $ | 0.70 | $ | 1.91 | $ | 1.71 | ||||||||
| Diluted earnings per share from continuing operations | $ | 0.77 | $ | 0.65 | $ | 1.77 | $ | 1.48 | ||||||||
| Diluted earnings per share from discontinued operations | 0.02 | 0.05 | 0.13 | 0.21 | ||||||||||||
| Diluted earnings per share | $ | 0.79 | $ | 0.70 | $ | 1.89 | $ | 1.69 | ||||||||
| Dividends per common share | $ | 0.2900 | $ | 0.2300 | $ | 0.8100 | $ | 0.6450 | ||||||||
| Detail of diluted earnings per share from discontinued operations: | ||||||||||||||||
| Brokerage Services Group (BSG) Business | $ | - | $ | 0.03 | $ | - | $ | 0.14 | ||||||||
| Travel Clearing (B) | 0.02 | 0.01 | 0.12 | 0.02 | ||||||||||||
| All Other Discontinued Operations | - | 0.01 | - | 0.04 | ||||||||||||
| Total diluted earnings per share from discontinued operations | $ | 0.02 | $ | 0.05 | $ | 0.13 | $ | 0.21 | ||||||||
| (A) Professional Employer Organization ("PEO") revenues are net of direct pass-through costs, primarily consisting of payroll wages and payroll taxes, of $3,043.9 and $2,417.8 for the three months ended March 31, 2008 and 2007, respectively, and $8,413.0 and $6,763.1 for the nine months ended March 31, 2008 and 2007, respectively. | ||||||||||||||||
| (B) The $0.12 in diluted EPS for the nine months ended March 31, 2008 primarily represents the gain on the sale of the Travel Clearing business. | ||||||||||||||||
| Automatic Data Processing, Inc. and Subsidiaries | |||||||||||||||
| Other Selected Financial Data | |||||||||||||||
| (Dollars in millions, except per share amounts) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| March 31, | |||||||||||||||
| 2008 | 2007 | Change | % Change | ||||||||||||
|
Revenues (A) |
|||||||||||||||
| Employer Services | $ | 1,758.5 | $ | 1,615.0 | $ | 143.5 | 9 | % | |||||||
| PEO Services | 299.6 | 249.1 | 50.5 | 20 | % | ||||||||||
| Dealer Services | 343.8 | 318.7 | 25.1 | 8 | % | ||||||||||
| Other | 25.3 | (11.8 | ) | 37.1 | 100+ | % | |||||||||
| $ | 2,427.2 | $ | 2,171.0 | $ | 256.2 | 12 | % | ||||||||
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Pre-tax earnings from continuing operations (A) |
|||||||||||||||
| Employer Services | $ | 577.9 | $ | 516.2 | $ | 61.7 | 12 | % | |||||||
| PEO Services | 27.9 | 21.5 | 6.4 | 30 | % | ||||||||||
| Dealer Services | 58.1 | 52.5 | 5.6 | 11 | % | ||||||||||
| Other | (28.4 | ) | (18.8 | ) | (9.6 | ) | (51 | )% | |||||||
| $ | 635.5 | $ | 571.4 | $ | 64.1 | 11 | % | ||||||||
|
Pre-tax margin (A) |
|||||||||||||||
| Employer Services | 32.9 | % | 32.0 | % | 0.9 | % | |||||||||
| PEO Services | 9.3 | % | 8.6 | % | 0.7 | % | |||||||||
| Dealer Services | 16.9 | % | 16.5 | % | 0.4 | % | |||||||||
| Other | n/m | n/m | n/m | ||||||||||||
| 26.2 | % | 26.3 | % | (0.1 | )% | ||||||||||
| Nine Months Ended | |||||||||||||||
| March 31, | |||||||||||||||
| 2008 | 2007 | Change | % Change | ||||||||||||
|
Revenues (A) |
|||||||||||||||
| Employer Services | $ | 4,705.7 | $ | 4,272.9 | $ | 432.8 | 10 | % | |||||||
| PEO Services | 786.4 | 649.5 | 136.9 | 21 | % | ||||||||||
| Dealer Services | 1,009.8 | 931.2 | 78.6 | 8 | % | ||||||||||
| Other | 67.4 | (53.5 | ) | 120.9 | 100+ | % | |||||||||
| $ | 6,569.3 | $ | 5,800.1 | $ | 769.2 | 13 | % | ||||||||
|
Pre-tax earnings from continuing operations (A) |
|||||||||||||||
| Employer Services | $ | 1,276.0 | $ | 1,129.9 | $ | 146.1 | 13 | % | |||||||
| PEO Services | 79.3 | 59.3 | 20.0 | 34 | % | ||||||||||
| Dealer Services | 165.1 | 146.2 | 18.9 | 13 | % | ||||||||||
| Other | (62.9 | ) | (19.3 | ) | (43.6 | ) | (100 | )+% | |||||||
| $ | 1,457.5 | $ | 1,316.1 | $ | 141.4 | 11 | % | ||||||||
|
Pre-tax margin (A) |
|||||||||||||||
| Employer Services | 27.1 | % | 26.4 | % | 0.7 | % | |||||||||
| PEO Services | 10.1 | % | 9.1 | % | 1.0 | % | |||||||||
| Dealer Services | 16.3 | % | 15.7 | % | 0.6 | % | |||||||||
| Other | n/m | n/m | n/m | ||||||||||||
| 22.2 | % | 22.7 | % | (0.5 | )% | ||||||||||
| (A) Prior year's segment results were adjusted to reflect fiscal year 2008 budgeted foreign exchange rates. | |||||||||||||||
| n/m - not meaningful | |||||||||||||||
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2008 | 2007 | Change | ||||||||||
|
Components of other income, net: |
||||||||||||
| Interest income on corporate funds | $ | (25.0 | ) | $ | (24.8 | ) | $ | (0.2 | ) | |||
| Realized gains on available-for-sale securities | (3.4 | ) | (0.4 | ) | (3.0 | ) | ||||||
| Realized losses on available-for-sale securities | 3.0 | 0.9 | 2.1 | |||||||||
| Other | (0.5 | ) | - | (0.5 | ) | |||||||
| Total other income, net | $ | (25.9 | ) | $ | (24.3 | ) | $ | (1.6 | ) | |||
| Nine Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2008 | 2007 | Change | ||||||||||
|
Components of other income, net: |
||||||||||||
| Interest income on corporate funds | $ | (112.0 | ) | $ | (118.3 | ) | $ | 6.3 | ||||
| Gain on sale of investment | - | (38.6 | ) | 38.6 | ||||||||
| Realized gains on available-for-sale securities | (8.8 | ) | (20.5 | ) | 11.7 | |||||||
| Realized losses on available-for-sale securities | 8.3 | 3.2 | 5.1 | |||||||||
| Other | (1.7 | ) | - | (1.7 | ) | |||||||
| Total other income, net | $ | (114.2 | ) | |||||||||