10-KPeriod: FY2009

AUTOMATIC DATA PROCESSING INC Annual Report, Year Ended Jun 30, 2009

Filed August 28, 2009For Securities:ADP

Summary

For the fiscal year ended June 30, 2009, Automatic Data Processing, Inc. (ADP) demonstrated resilience amidst challenging economic conditions, reporting a 1% increase in consolidated revenues to $8.87 billion. This growth was primarily driven by its Employer Services and PEO Services segments, which saw revenue increases of 4% and 12% respectively. Despite headwinds from rising unemployment and declining auto sales impacting the Dealer Services segment, ADP's diversified business model and strong recurring revenue base of approximately 90% provided stability. The company successfully increased its earnings from continuing operations before income taxes by 5% and net earnings from continuing operations by 14%, resulting in a 20% rise in diluted earnings per share to $2.63. This performance was supported by cost-saving initiatives and a lower effective tax rate due to favorable tax settlements. ADP also continued to focus on its strategic growth program, including international expansion and strengthening its core offerings, while maintaining a solid liquidity position and returning capital to shareholders through share repurchases and dividends.

Financial Highlights

52 data points
Beta

Revenue

$8.84B

Net Income

$1.33B

15.1% Net Margin

EPS (Diluted)

$2.63

Total Assets

$25.35B

Cash & Equivalents

$2.27B

Free Cash Flow

$1.56B

Financial Statements
Beta
Revenue$8.84B
SG&A Expenses$2.19B
Operating Expenses$7.05B
Interest Expense$33.30M
Net Income$1.33B
EPS (Basic)$2.65
EPS (Diluted)$2.63
Shares Outstanding (Basic)503.20M
Shares Outstanding (Diluted)505.80M

Key Highlights

  • 1Consolidated revenues grew 1% to $8.87 billion for fiscal year 2009.
  • 2Employer Services revenue increased by 4% and PEO Services revenue by 12%.
  • 3Dealer Services revenue decreased by 3% due to economic pressures on the automotive industry.
  • 4Diluted earnings per share from continuing operations increased by 20% to $2.63.
  • 5Net earnings from continuing operations increased by 14% to $1.33 billion.
  • 6The company maintained a strong liquidity position with $2.39 billion in cash and marketable securities.
  • 7ADP continued to return capital to shareholders through share repurchases and dividends, with 34 consecutive years of dividend increases.

Frequently Asked Questions

ADP's Employer Services segment saw a 4% revenue increase, driven by payroll and tax administration services and growth in 'beyond payroll' offerings. The PEO Services segment experienced a significant 12% revenue increase, largely due to a 10% rise in worksite employees. However, the Dealer Services segment faced challenges, with a 3% revenue decrease attributed to the struggling automotive industry, including dealership consolidations and closures.

ADP reported a 14% increase in net earnings from continuing operations to $1.33 billion, and diluted earnings per share from continuing operations rose by 20% to $2.63. This improvement was supported by revenue growth in key segments, cost-saving measures, and a lower effective tax rate stemming from favorable tax settlements.

ADP maintained a strong financial position, with $2.39 billion in cash and marketable securities as of June 30, 2009. The company's balance sheet remained solid, with stockholders' equity at $5.32 billion and a low long-term debt-to-equity ratio of 0.8%. Net cash flows from operating activities were $1.56 billion, demonstrating continued operational strength.

Yes, ADP continued to return capital to shareholders. The company repurchased approximately 13.8 million shares of its common stock during fiscal year 2009. Additionally, ADP has a consistent history of increasing dividends, having raised its dividend payout for 34 consecutive years.