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):
November
3, 2008
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AUTOMATIC DATA PROCESSING, INC. |
||
|
(Exact name of registrant as specified in its charter) |
||
|
Delaware |
1-5397 |
22-1467904 |
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(State or other jurisdiction of incorporation)
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(Commission File Number) |
(IRS Employer Identification No.) |
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One ADP Boulevard, Roseland, New Jersey |
07068 |
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(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 November 3, 2008 the Registrant issued a press release announcing the Registrant’s financial results for the first fiscal quarter ended September 30, 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 November 3, 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: |
November 3, 2008 |
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AUTOMATIC DATA PROCESSING, INC. |
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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
| Exhibit Number | Description | |
| 99 | Press Release dated November 3, 2008, issued by Automatic Data Processing, Inc. |
Exhibit 99
ADP
Reports First Quarter Fiscal 2009 Results;
First
Quarter Revenues Grow 9.5%; EPS from Continuing Operations Increases 20%
Updates
Fiscal 2009 Forecast;
Reducing
Revenue Growth Forecast; Confirms 10% to 14% EPS Growth Forecast
ROSELAND, N.J.--(BUSINESS WIRE)--November 3, 2008--Automatic Data Processing, Inc. (Nasdaq:ADP) reported 9.5% revenue growth to $2.18 billion for the first fiscal quarter ended September 30, 2008, Gary C. Butler, president and chief executive officer, announced today. Revenue growth benefited over 1% from favorable foreign exchange rates during the quarter. Pretax and net earnings from continuing operations each grew nearly 16%, and diluted earnings per share from continuing operations increased 20% to $0.54 from $0.45 a year ago on fewer shares outstanding.
Fiscal year-to-date, ADP acquired nearly 6.6 million shares of its stock for treasury at a cost of over $280 million. At September 30, 2008, cash and marketable securities balances included fixed income securities related to an overnight commercial paper borrowing of $1.4 billion, which was repaid on October 1, 2008. Cash and marketable securities at September 30, 2008 were $3.0 billion, or $1.7 billion excluding the assets related to the commercial paper borrowing.
Commenting on the results, Mr. Butler said, “Despite the challenging economy, ADP’s first quarter revenue growth, pretax margin improvement and growth in diluted earnings per share from continuing operations were all solid. The turmoil in the financial sector and resulting volatility in the markets have, however, considerably weakened the selling environment in Employer Services and PEO Services. As a result, we are behind our expectations for new business sales growth. The market turmoil has also negatively impacted the North American automobile market and as a result, Dealer Services’ revenue growth has slowed. Notwithstanding these stronger economic headwinds, we continue to invest in client-facing resources to continue to drive our strategic growth program. Additionally, we are further tightening our expense control measures in areas of discretionary spending.”
Employer Services
“Employer Services’ revenues increased 8% for the first quarter compared with the same period last year. In the United States, revenues from our traditional payroll and payroll tax filing business grew a solid 5%, and I am also pleased with 13% growth in our beyond payroll revenues. The number of employees on our clients' payrolls in the United States increased 0.4%, as measured on a same-store-sales basis for clients on our AutoPay platform. In the first quarter, worldwide client retention continued at excellent levels, although declining 0.3 percentage points over the prior year’s first quarter. Combined new business sales for Employer Services and PEO Services declined 8% worldwide due to stronger than expected economic headwinds; new business sales represent the anticipated annualized dollar value of future recurring revenues from such sales. Employer Services’ pretax margin improved 150 basis points due to operating leverage, continued expense controls, and lower selling expenses from lower new business sales.”
PEO Services
“PEO Services’ revenues increased over 18% for the first quarter compared with the same period last year. PEO Services pretax margin declined about 40 basis points due to higher pass through costs. Average worksite employees paid by PEO Services increased 25,000 to approximately 190,000, or 15.5%, compared with the first quarter of fiscal 2008.”
Dealer Services
“Dealer Services’ revenues increased 2% for the first quarter compared with the same period last year. Pretax margin expanded nearly 10 basis points. Difficulties in the North American auto markets, where new car sales have drastically declined, have resulted in increased dealership consolidations and closings putting pressure on dealers to reduce costs, which is having a direct impact on our results. However, given the current environment, I am pleased with the execution on new business sales where our win rates remain strong against the competition.”
Interest on Funds Held for Clients, Interest Income on Corporate Funds, and Interest Expense
"As a reminder, the safety and liquidity of our clients’ funds are the foremost objectives of our investment strategy. Client funds are invested in accordance with ADP’s prudent and conservative investment guidelines and the overall credit quality of the investment portfolio is AAA/AA.”
“Our investment portfolio strategy is to ladder and extend maturities relating to our client funds. As a direct result of this strategy on approximately 200 days a year client cash inflows and maturing investments are lower than client obligations. We have chosen to employ short-term financing to satisfy client funds obligations. This extended investment strategy allows us to temper the effects of interest rate fluctuations and average our way through an interest rate cycle. It is important to note that ADP has had full access to the U.S. commercial paper market to fund client obligations throughout the credit market turbulence. During the first quarter of fiscal 2009, our average commercial paper borrowing was $2.4 billion at an average rate of 2.2%.”
“For the first quarter, interest on funds held for clients of $151.9 million declined $2.6 million, or 1.7%, due to a decline of 25 basis points in the average interest yield to 4.3%, partially offset by growth of 4.2% in average client funds balances to $14.0 billion.”
“Interest expense of $19.2 million declined $10.2 million, or 34.7%, primarily from lower interest expense on our short-term financing related to the extended investment strategy due to a 300 basis point decline in average commercial paper borrowing rates to 2.2%.”
Fiscal 2009 forecast
“The economic environment has worsened since the beginning of the fiscal year. As a result of these headwinds, we are reducing our revenue forecasts as discussed below. However, by stepping up our cost containment measures during this challenging period, and through the inherent leverage in our business model, we expect to continue to expand pretax margins in each of our business segments.
“For Employer Services, we anticipate revenue growth of about 5% compared with our previous forecast of 6% to 7% growth. We continue to anticipate at least 50 basis points of pretax margin expansion in Employer Services. We anticipate 14% to 16% revenue growth for PEO Services compared with our previous forecast of 16% to 17% growth. We anticipate up to 50 basis points of pretax margin expansion in PEO Services. We anticipate a decline of about 10% in worldwide new business sales for Employer Services and PEO Services on a combined basis from about $1.15 billion in new business sales last fiscal year. This sales forecast is lower than our previous forecast of mid single-digit growth due to the considerable stress in the economy. For Dealer Services, we anticipate revenues will be about flat with a year ago compared with our previous forecast of 6% to 8% growth. We anticipate up to 50 basis points of pretax margin expansion in Dealer Services. This lower forecast for Dealer Services is being driven by the significant challenges facing the auto industry.”
“We have also updated our client funds portfolio forecast. The interest assumptions in our current forecast are based on Fed Funds futures contracts and forward yield curves as of October 31, 2008, which anticipate a decrease of 25 basis points in the Fed Funds rate to 0.75% before the end of 2008, and then an increase of 25 basis points in the spring of 2009, exiting the fiscal year with a Fed Funds rate of 1.00%.”
“Interest on funds held for clients is expected to decline $60 to $65 million, or 9% to 10%, from $684.5 million in fiscal 2008 based on an approximate 40 basis point decline in the average interest yield to about 4.0%, and flat to slightly down average client funds balances. We anticipate unfavorable Canadian foreign exchange rates will reduce balance growth over 1 percentage point; additionally, we are forecasting fewer employees on our clients’ payrolls, slower than anticipated new business sales growth, and lower wage growth, including lower bonuses. This forecast is about $35 million lower than our previous estimate of a $25 to $30 million decline in interest on funds held for clients, which was based on an average interest yield of nearly 4.2% on expected growth of 1% to 2% in average client funds balances.”
“ Interest expense is expected to decline $35 to $40 million from $80.5 million in fiscal 2008, primarily from lower interest expense on our short-term financing related to the extended investment strategy due to an approximate 260 basis point decline in average commercial paper borrowing rates.”
“As a result of the preceding changes, we currently anticipate total revenue growth of 2% to 3% for fiscal 2009, compared with our previous forecast of 7% to 8% revenue growth. Over 2 percentage points of the 4 to 6 percentage point reduction is attributable to the anticipated continuation of unfavorable foreign exchange rates due to the strengthening dollar. The reduction in our business segment forecasts noted above reduced our total revenue forecast about 3 percentage points. However, by remaining focused on our strategy to expand pretax margins, along with continued tightening of cost containment measures, we continue to be confident in our ability to achieve our 10% to 14% forecasted growth in diluted earnings per share from continuing operations, up from $2.18 in fiscal 2008 (which excludes the net one-time gain of $0.02 per share recorded in the fourth quarter of fiscal 2008).”
“ADP is a strong brand with an excellent business model - about 90% of the revenues generated by our businesses are recurring revenues; our clients stay with us, on average, about 10 years; we have excellent margins; we have healthy, reliable and consistent cash flows and low capital expenditure requirements; we are proud to be a AAA credit rated company; and the markets we serve are under-penetrated. As such, we continue to remain optimistic about ADP’s long-term opportunities for growth,” Mr. Butler concluded.
Website Schedules
The schedules of quarterly and full-year revenue and pretax earnings by reportable segment for fiscal years 2007 and 2008 and the first quarter of fiscal 2009 have been updated to reflect fiscal 2009 budgeted foreign exchange rates, and are 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 2007 and fiscal 2008.
An analyst conference call will be held today, Monday, November 3 at 4:45 p.m. EST. 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 40 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. (Nasdaq: ADP), with nearly $9 billion in revenues and over 585,000 clients, is one of the world's largest providers of business outsourcing solutions. Leveraging nearly 60 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 .