10-Q/APeriod: Q1 FY2003

AUTOMATIC DATA PROCESSING INC Quarterly Report (Amendment) for Q1 Ended Sep 30, 2002

Filed November 1, 2002For Securities:ADP

Summary

Automatic Data Processing, Inc. (ADP) reported a 2% increase in total revenues to $1.65 billion for the quarter ended September 30, 2002, compared to the same period last year. Net earnings also saw a 7% rise, reaching $210.4 million, with diluted earnings per share increasing to $0.34 from $0.31 in the prior year. The Employer Services segment was a key driver of growth, with revenues up 4%, though Brokerage Services experienced a 2% revenue decline due to industry consolidation and pricing pressures. Financially, ADP maintains a strong position with $2.3 billion in cash and marketable securities and a low long-term debt-to-equity ratio of 2%. The company anticipates continued growth, forecasting a mid-single-digit increase in revenue and earnings per share for fiscal year 2003. ADP also highlighted its robust liquidity through a new $4.0 billion revolving credit agreement and an established commercial paper program, with no commercial paper outstanding as of the reporting date.

Key Highlights

  • 1Total revenues increased by 2% to $1.65 billion for the quarter ended September 30, 2002.
  • 2Net earnings grew by 7% to $210.4 million, with diluted EPS rising to $0.34.
  • 3Employer Services revenue increased by 4%, driven by new business sales and client retention.
  • 4Brokerage Services revenue declined by 2% due to industry consolidation and pricing pressures.
  • 5The company reported a strong financial position with $2.3 billion in cash and marketable securities.
  • 6ADP forecasts mid-single-digit growth in revenue and EPS for fiscal year 2003.
  • 7A new $4.0 billion unsecured revolving credit facility was established in October 2002.

Frequently Asked Questions

The primary driver of revenue growth was the Employer Services segment, which saw a 4% increase. This growth was supported by a 4% increase in new business sales and slight improvements in client retention. Overall consolidated revenues grew 2% year-over-year.

The Brokerage Services segment experienced a 2% revenue decline. This was attributed to several factors including business lost due to industry consolidations, reduced discretionary spending in the financial services sector, compression of institutional trades, pricing pressure in their back-office trade processing business, lower postage revenue, and slower growth in equity positions within their investor communications business.

ADP maintains a strong liquidity position, with $2.3 billion in cash and marketable securities and a low long-term debt-to-equity ratio of 2%. In October 2002, the company entered into a new $4.0 billion unsecured revolving credit agreement, which is available for liquidity needs and normal business operations. Additionally, ADP has a $4.0 billion commercial paper program, with no outstanding commercial paper as of September 30, 2002.

ADP is forecasting another record year for fiscal year 2003, with expectations of mid-single-digit growth in both revenue and earnings per share over the fiscal year 2002 results.