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):  July 31, 2007
 
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
 
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 July 31, 2007 the Registrant issued a press release announcing the Registrant’s financial results for the third fiscal quarter ended June 30, 2007.  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 July 31, 2007, 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.
 
 
Date: July 31, 2007      
       
    AUTOMATIC DATA PROCESSING, INC.
       
       
   
By:
 
      Name: Christopher R. Reidy
     
Title: Chief Financial Officer
 
 

 
Exhibit Index
 
 
Exhibit Number
 
Description
99
 
Press Release dated July 31, 2007, issued by Automatic Data Processing, Inc
 
 

Exhibit 99

 

    ADP REPORTS FISCAL 2007 RESULTS; PROVIDES FISCAL 2008 GUIDANCE;
Revenues Rise 14%; EPS from Continuing Operations Increases 24% Excluding the Net One-time Gain Recorded in the First Quarter;
Forecasting Fiscal 2008 Revenue Growth of Approximately 12% and EPS Growth of 18% to 21%
 
ROSELAND, New Jersey, July 31, 2007 - Automatic Data Processing, Inc. (NYSE:ADP) reported 14% revenue growth to $7.8 billion for the fiscal year ended June 30, 2007, Gary C. Butler, president and chief executive officer, announced today.  Pretax and net earnings from continuing operations grew 19% and 21%, respectively.  Diluted earnings per share from continuing operations of $1.83 increased 26%, from $1.45 per share a year ago on fewer shares outstanding, including the fiscal 2007 first quarter net one-time gain primarily from the sale of a Dealer Services’ non-core minority investment.  Excluding the net one-time gain, diluted earnings per share from continuing operations were $1.80, an increase of 24% over last year.  Current year revenue growth benefited approximately 1% from acquisitions made during the year as well as 1% from favorable foreign exchange rates during the year.  During the fiscal year ADP acquired over 40 million shares of its stock for treasury for over $1.9 billion.  Cash and marketable securities balances were also $1.9 billion at June 30, 2007.
 
For the fourth quarter of fiscal 2007, revenues were $2.0 billion, an increase of 13% compared with the fourth quarter of fiscal 2006.  Pretax and net earnings from continuing operations grew 29% and 38%, respectively, and diluted earnings per share from continuing operations of $0.35 increased 40%, from $0.25 per share a year ago on fewer shares outstanding.  As anticipated, during the fourth quarter, ADP increased its share repurchases, acquiring over 22 million shares of its stock for treasury for approximately $1.1 billion.
 
Discontinued Operations
 
On July 6, 2007, ADP completed the sale of its Travel Clearing business, an airline ticket clearing business based in Spain, which has historically been reported in the “Other” segment.  Travel clearing revenues were $74 million and $76 million in fiscal 2007 and 2006, respectively.  The results of operations for this business are reported within discontinued operations in the fourth quarter and full-year fiscal 2007 results, and in prior periods presented within this release.  The sale of the Travel Clearing business was not probable when fiscal 2007 revenue and diluted earnings per share from continuing operations guidance was provided May 1, 2007 and therefore the guidance included the operations of this business.  The subsequent sale and resultant classification of the Travel Clearing business within discontinued operations resulted in a decrease in diluted earnings per share from continuing operations of $0.03 in fiscal 2007 and $0.04 in fiscal 2006.  ADP expects to record a gain on the sale of approximately $55 million to $65 million after tax within discontinued operations in the first quarter of fiscal 2008.
 
Fourth Quarter and Fiscal Year Discussion
 
Commenting on the results, Mr. Butler said, “We completed the year with a strong fourth quarter and our results for the year were terrific.  My top priority has been to increase shareholder value through a more focused ADP, improving financial metrics with accelerating organic revenue growth and improving margins, and returning a higher level of excess cash to our shareholders.  This year’s solid results are evidence of our strong execution on these priorities.”
 
 

 
Employer Services including PEO Services
 
“Employer Services had a great year.  Revenues increased 14% for the fourth quarter and over 12% for the year.  In the United States, revenues from our traditional payroll and payroll tax filing business grew a strong 10% for the fourth quarter and 9% for the year.  Beyond payroll revenues were also strong with 23% growth for the fourth quarter and 21% growth for the year.  As a reminder, new business sales for last year’s fourth quarter grew 28% worldwide and due to this particularly strong quarterly growth last year, we anticipated a tough comparison for new business sales growth in the current year’s fourth quarter.  We are very pleased to have grown fourth quarter new business sales 4% in the United States and 5% worldwide to a record sales dollar level.  For the year, fiscal 2007 new business sales growth was 10% in the United States and 11% worldwide.  New business sales reflect annualized recurring revenues anticipated from new orders, and growth was particularly strong in National Account Services, PEO Services, Major Account Services, and GlobalViewSM.  The number of employees on our clients' payrolls in the United States increased 2.0% in the fourth quarter and 2.3% for the year.  Pay growth in Europe continued in the fourth quarter and was positive for the full year.  Worldwide client retention improved 10 basis points for the year to a new record level.  We anticipated significant pretax margin expansion for Employer Services in the fourth quarter as we anniversaried the start of a higher expense level in fiscal 2006 related to our investments in sales and implementation headcount and our HR BPO offerings.  In addition, last year’s fourth quarter included higher sales commission expense relating to strong new business sales growth in that quarter.  With solid momentum in the business and easier comparisons in the fourth quarter year over year, Employer Services’ pretax margin improved nearly 290 basis points.  Pretax margin expansion for the year was approximately 25 basis points.”
 
Dealer Services
 
“Dealer Services’ results were also excellent for fiscal 2007.  Revenues increased 8.5% for the quarter and over 14% for the year.  The full-year growth was assisted by the December 2005 acquisition of Kerridge Computer Company Ltd.  Organic revenue growth accelerated to 7% in the quarter, up from 2% in last year’s fourth quarter.  For the full year, organic revenue growth was 6% compared with 4% a year ago.  New business sales growth for the year was strong in our North American and International businesses.  Dealer Services’ pretax margin improved nearly 400 basis points in the fourth quarter due to further cost synergies attained as well as restructuring charges that occurred in last year's fourth quarter relating to the Kerridge acquisition.  Pretax margin expansion was 160 basis points for the year.”
 
Client Funds
 
"Interest on funds held for clients grew 14% over last year's fourth quarter, to $178.1 million, due to a 6% increase in average client funds balances and a higher average interest yield of 30 basis points to 4.6%.  For the year, interest on client funds increased 19%, to $653.6 million.  Average client funds balances increased 8% for the year to $14.7 billion and the average portfolio yield increased 40 basis points to 4.5%.”
 
Segment Information
 
During fiscal 2007, ADP implemented several key changes to its operations, including the spin-off of its Brokerage Services Group business on March 30, 2007.  As a result of these changes, ADP reassessed its reportable segments and determined that PEO Services should be a separate reportable segment, instead of being reported within the Employer Services segment.  As of the period ended June 30, 2007, ADP’s strategic business units are aggregated into the following three reportable segments: Employer Services, PEO Services, and Dealer Services.  The fourth quarter and full-year fiscal 2007 results discussed above reflect a combination of the Employer Services and PEO Services segments to allow for comparability to previously issued guidance.  The tables attached to this release provide results for the new Employer Services and PEO Services segments both separately and combined.  A schedule reflecting historical revenues and pretax earnings for the new reportable segments will be available under the Financial Data link of ADP’s Investor Relations homepage at (http://www.investquest.com/iq/a/adp/index.htm).
 
Fiscal 2008 guidance
 
“Our fiscal 2008 guidance is for approximately 12% revenue growth, and 18% to 21% growth in diluted earnings per share, up from $1.80 earnings per share from continuing operations in fiscal 2007 excluding the net one-time gain recorded in the first fiscal quarter.
 
For Employer Services, we anticipate revenue growth of nearly 11% and margin expansion of 50 to 100 basis points.  For PEO Services we anticipate 18% to 19% revenue growth and approximately 50 basis points of margin expansion.  We are planning for high single-digit to low double-digit new business sales growth worldwide for Employer Services and PEO Services on a combined basis.  We anticipate 8% to 9% revenue growth in Dealer Services, and margin expansion of over 100 basis points.  Interest on funds held for clients is anticipated to grow 13% to 14% based on expected growth of over 8% in average client funds balances and an improvement of about 20 basis points in the overall average interest yield earned on our client funds portfolio to 4.7%.  Our interest assumptions are based on recent futures contracts and yield curves.”
 

 
“We move forward from fiscal 2007 from a position of strength.  I am excited about ADP’s future growth opportunities and believe we have an excellent foundation for sustained double-digit revenue growth with increasing profitability,” Mr. Butler concluded.
 
Website Schedules
 
The schedules noted below reflect the above items as discontinued operations and will be 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:
 
–  
Quarterly and full-year statements of earnings for fiscal 2006
 
–  
Statements of earnings for the first, second and third quarters of fiscal 2007
 
–  
Quarterly and full-year revenue and pretax earnings by reportable segment for fiscal years 2005, 2006, and 2007.
 
An analyst conference call will be held today, Tuesday, July 31 at 8:30 a.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 www.adp.com 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 website.
 
About ADP
 
Automatic Data Processing, Inc. (NYSE: ADP), with nearly $8 billion in revenues and more than 570,000 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 cost-effective, easy-to-use 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)
           
   
June 30,
   
June 30,
 
   
2007
   
2006
 
             
Assets
           
Cash and cash equivalents/Short-term
           
     marketable securities
  $
1,816.5
    $
2,127.6
 
Other current assets
   
1,490.0
     
1,146.5
 
Assets of discontinued operations
   
57.7
     
2,232.8
 
     Total current assets
   
3,364.2
     
5,506.9
 
                 
Long-term marketable securities
   
68.1
     
333.7
 
Property, plant and equipment, net
   
723.8
     
696.9
 
Other non-current assets
   
4,003.6
     
3,468.7
 
Funds held for clients
   
18,489.2
     
17,483.9
 
     Total assets
  $
26,648.9
    $
27,490.1
 
                 
Liabilities and Stockholders' Equity
               
Other current liabilities
   
1,754.9
     
1,675.1
 
Liabilities of discontinued operations
   
21.4
     
996.5
 
     Total current liabilities
   
1,776.3
     
2,671.6
 
                 
Long-term debt
   
43.5
     
74.3
 
Other non-current liabilities
   
1,008.2
     
945.2
 
Client funds obligations
   
18,673.0
     
17,787.4
 
     Total liabilities
   
21,501.0
     
21,478.5
 
                 
Total stockholders' equity
   
5,147.9
     
6,011.6
 
     Total liabilities and stockholders' equity
  $
26,648.9
    $
27,490.1
 
 

 
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,   
 
   
2007
   
2006
   
2007
   
2006
 
REVENUES: