AUTOMATIC DATA PROCESSING INC Annual Report, Year Ended Jun 30, 2010

Automatic Data Processing, Inc. (ADP) filed its 10-K for the fiscal year ended June 29, 2010, revealing a year of resilience amidst a challenging economic environment. Consolidated revenues saw a modest 1% increase to $8.9 billion, largely influenced by favorable foreign currency fluctuations and growth in its Professional Employer Organization (PEO) services. However, earnings from continuing operations before income taxes and net earnings from continuing operations declined by 2% and 9%, respectively, primarily impacted by lower interest income on client funds due to historically low interest rates and increased expenses in its PEO segment. The company highlighted its strategic focus on strengthening its core business, growing its HR Business Process Outsourcing (BPO) offerings, international expansion, entering adjacent markets, and improving pretax margins. Despite the economic headwinds, ADP demonstrated strong client retention, particularly in its Employer Services segment, and continued to return capital to shareholders through share repurchases and dividends, maintaining its history of consistent dividend increases. Acquisitions in Dealer Services (Cobalt) and benefits solutions (Workscape) were completed in August 2010, signaling a forward-looking strategy for growth. Key risk factors identified include changes in laws and regulations, security and privacy breaches, system disruptions, technological adaptation challenges, and the impact of political and economic factors, including currency fluctuations. Management expressed confidence in the company's solid financial condition, liquidity, and robust business model, characterized by approximately 90% recurring revenues.