Summary
Automatic Data Processing, Inc. (ADP) reported solid financial performance for the quarter ended December 31, 2001, with total revenues increasing by 3% to $1.7 billion. Net earnings saw a significant jump of 21% to $264.6 million, reflecting strong operational execution and the benefits of cost containment initiatives. Diluted earnings per share also showed robust growth, increasing by 24% to $0.42, aided by fewer shares outstanding due to ongoing share repurchase programs and the adoption of SFAS 142, which eliminated goodwill amortization. The company maintains a strong financial position, with over $2.6 billion in cash and marketable securities and a low long-term debt-to-equity ratio of 2%. ADP's Employer Services segment, its largest, grew revenue by 6%, although this was moderated by economic headwinds affecting client retention and employee counts. Brokerage Services experienced a revenue decline of 1% due to a shift in transaction mix and reduced discretionary spending in the financial services sector. The company anticipates continued mid-single-digit revenue growth and double-digit earnings per share growth for fiscal year 2001.
Key Highlights
- 1Total revenues increased 3% to $1.7 billion for the quarter ended December 31, 2001.
- 2Net earnings rose 21% to $264.6 million, demonstrating strong profitability.
- 3Diluted earnings per share grew by 24% to $0.42, benefiting from share repurchases and SFAS 142 adoption.
- 4Employer Services, the largest segment, reported a 6% revenue increase, while Brokerage Services saw a 1% decline.
- 5Company adopted SFAS 142, eliminating goodwill amortization and positively impacting reported earnings and tax rates.
- 6Maintained a strong financial position with $2.6 billion in cash and marketable securities and a low debt-to-equity ratio of 2%.
- 7Company repurchased approximately 9.4 million shares of common stock in the first six months of fiscal 2002.