01—Abstract
Summary
Summary of the 10-K filed August 28, 2009. Cited figures are marked; the original filing is the authoritative source.
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 billiona.
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 $2.63b.
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.
02—Key points
Key Highlights
- Consolidated revenues grew 1% to $8.87 billion for fiscal year 2009.
- Employer Services revenue increased by 4% and PEO Services revenue by 12%.
- Dealer Services revenue decreased by 3% due to economic pressures on the automotive industry.
- Diluted earnings per share from continuing operations increased by 20% to $2.63.
- Net earnings from continuing operations increased by 14% to $1.33 billion.
- The company maintained a strong liquidity position with $2.39 billion in cash and marketable securities.
- ADP continued to return capital to shareholders through share repurchases and dividends, with 34 consecutive years of dividend increases.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed August 28, 2009Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $8.84B$8.73B | +1.2% |
| SG&A Expenses | $2.19B$2.36B | −7.2% |
| Operating Expenses | $7.05B$7.10B | −0.7% |
| Interest Expense | $33.30M$80.50M | −58.6% |
| Net Income | $1.33B$1.24B | +7.8% |
| EPS (Basic) | $2.65$2.37 | +11.8% |
| EPS (Diluted) | $2.63$2.34 | +12.4% |
| Shares Outstanding (Basic) | 503.20M521.50M | −3.5% |
| Shares Outstanding (Diluted) | 505.80M527.20M | −4.1% |
05—Questions
Frequently Asked Questions
How did ADP's different business segments perform in fiscal year 2009?
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.
What was ADP's financial performance regarding earnings and profitability?
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.
What is the company's financial health and liquidity as of the end of fiscal year 2009?
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.
Did ADP engage in any share buybacks or dividend payments during fiscal year 2009?
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.
06—Continue