Employer Services

Employer Services (ES), our oldest and largest business, contributes 56% of ADP's revenue. ES serves over 350,000 employers with payroll, human resources, tax deposit and reporting services. ES now has 40 computer centers and 73 satellite sales and service centers in the U.S., as well as many others abroad.

The ES picture for '96 was one of steady growth. ES revenue grew by 18% to almost $2 billion. ADP now processes payroll for 20 million employees in North America and several million in Europe.

Employer Services is focused on three market segments:

National Accounts (companies with 1,000 or more employees), Major Accounts (100 - 999 employees) and the Heartland market. In National Accounts, average client tenure is 10 years. In Major Accounts, ADP has a 60% share of outsourced payroll. Perhaps the greatest growth potential exists in Heartland, where we now have 250,000 clients. As we look at all three market segments, we feel very confident that there is still lots of room for additional penetration and add-on services.

AutoPay continues to be ADP's most popular, flexible and comprehensive payroll product, serving 225,000 clients and 17 million employees. Approximately 55% of ES's worldwide revenue is derived from this core product. We recently introduced PC/Payroll for Windows, a new client/server front-end for AutoPay.

Below: World famous toy retailer, F.A.O. Schwarz counts on ADP to process its payroll for 900 employees. In over 40 states, ADP handles the company's payroll tax filing and reporting. Pictured below are Jennifer Miller (right), Major Account District Manager for ADP, and F.A.O. Schwarz Payroll Manager, Teddi O'Reilly (left).

EasyPay is ADP's newest outsourcing solution for clients in the Heartland market (fewer than 100 employees). Its client base more than doubled this fiscal year, to 100,000 clients with steadily improving client retention and margins.

Below: is pleased to be a supporter of our client Habitat for Humanity International, a non profit organization dedicated to eliminating poverty housing worldwide. Habitat looks to ADP to handle its payroll processing, tax filing and new hire reporting.

SoftPay is ADP's lowest-cost method for managing payroll and payroll taxes, designed for clients who prefer to process and print paychecks using their own PCs. In '96, ES launched a Win cows version and a CPA version of SoftPay. We have also added electronic tracking of time and attendance.

Total Time continues to grow rapidly as more of our clients replace manual systems with our automated time and attendance solutions. Our installed base nearly doubled last year. In addition, we recently launched a simple user-installable version designed specifically for smaller clients. Employees may also enter attendance information directly into their own PCs.

As new electronic funds movement-type products evolve, such as New Hire Reporting, ADP Check/Full Service Direct Deposit and Wage Garnishment Payment, our ADP Tax Filing center is also responsible for the efficient movement of funds and information to third-party destinations. Over 260,000 clients rely on Tax Filing to assure regulatory compliance and to have timely product enhancements available, such as the IRS' Electronic Federal Tax Payment System (EFTPS).

New value-added products and functionality, supported by three decades of business experience, are key to ES meeting its market place goals.

Human Resource Information Systems (HRIS) are excellent means to expand service offerings. The HRIS data bases and processes are similar to those already used for payroll.

For this reason, HRIS received special emphasis last year. Almost 80% of new National Accounts' sales included an HRIS component. We recently released CSS HRizon, a client/server HR solution, with fully integrated employee self-service modules for employee inquiry from a kiosk or desktop PC. This is a major help for short-staffed HR managers.

CSS/HRizon interfaces seamlessly with ADP payroll and other services. Future developments will include manager self- service modules for employee performance reviews, as well as, department compensation modeling and salary budgeting.

Because it is payroll-integrated, the ADP 401(k) product offers unique advantages to clients looking for a simple and afford- able retirement savings plan. ADP has become a significant 401(k) service provider, we've grown from the 28th largest to the 11th largest 401(k) provider in the past two years. Client retention has remained consistent at close to 90%.

Above: ADP Client Service Representative, Linda Del Savio (left) with Dennis Crumpler, Chairman and CEO of Atlanta- based XcelleNet, a worldwide leader in software for remote access computing that relies upon ADP to provide state-of-the art payroll processing and information support. ADP depends upon XcelleNet's Remote Ware to keep Its Client Service work- station software up to date.

In '96, ADP added two well-respected industry leaders to its list of 401(k) investment choices - Fidelity and Putnam Investments. A voice response system gives participants direct access to their accounts and eliminates most transaction-related paperwork.

Peachtree Complete for Windows is the most comprehensive Windows accounting and payroll product available in the low-end retail market. In December, Peachtree shipped First Accounting 2.0, geared to first-time users of accounting software. In March, Peachtree acquired One-Write Plus, the leading entry-level accounting system. This brings the total users of Peachtree software products to 485,000.

Peachtree expects significant new activity in '97 as it links with ADP Total Time, SoftPay and ADP's electronic banking joint venture, called EC-Partners.

Through EC-Partners, ADP clients can view bank account information, transfer funds between accounts, pay bills and reconcile their accounts - all from the same personal computer on which they process payroll. Peachtree Software was first to integrate this service with accounting software in its "Peachtree Accounting with e-CHECK."

As more ADP clients become multinational in scope, it becomes increasingly important to offer services on a global scale. ADP is firmly committed to further expanding outside the United States. Last November, ADP acquired Paris-based GSI, Europe's largest provider of payroll and related human resource services with operations in eight countries. This makes ADP the first provider of integrated human resources and payroll services to U.S. corporations and their European subsidiaries.