What was the impact of the Broadridge spin-off on ADP's financial statements?

The spin-off of the Brokerage Services Group into Broadridge Financial Solutions, Inc. was accounted for as discontinued operations for all periods presented. While this removed the Brokerage Services Group's revenues and earnings from continuing operations, it also impacted retained earnings with a non-cash reduction of $1.2 billion and an increase of $690.0 million from a cash dividend received. ADP expects to incur approximately $40.0 million in incremental costs related to the spin-off during fiscal year 2007.

How did the Employer Services segment perform, and what drove its growth?

The Employer Services segment reported a 12% increase in revenue for both the three and nine months ended March 31, 2007. This growth was attributed to new business wins, an increase in the number of employees on clients' payrolls, strong client retention, price increases, and higher client fund balances. The 'beyond payroll' product offerings, including PEO services and Time and Labor Management, showed particularly robust growth.

What is the company's outlook on its liquidity and capital resources?

ADP maintains strong liquidity with $2.79 billion in cash and marketable securities at March 31, 2007. The company's principal sources of liquidity are cash generated from operations and existing cash reserves. Additionally, ADP has access to significant credit facilities, including a $5.5 billion commercial paper program and revolving credit agreements totaling $5.5 billion, although no borrowings were outstanding under these agreements. The company believes its internally generated cash flows and financing arrangements are sufficient to support its operations and capital expenditures.

What are the key risks facing ADP as identified in the filing?

Key risks include potential adverse impacts from changes in laws and regulations affecting payroll taxes and employee benefits, security and privacy breaches that could compromise client data, system disruptions that could halt critical transaction processing, failure to adapt technology to customer needs, adverse political and economic conditions, changes in credit ratings affecting borrowing costs, and the inability to attract and retain qualified personnel. The spin-off of Broadridge also necessitated an update to these risk factors.

ADP 10-Q Quarterly Report Q3 FY2007 — Revenue, Net Income, EPS

Summary

Automatic Data Processing, Inc. (ADP) reported strong financial results for the nine months ended March 31, 2007, with total revenues increasing by 14% to $5.85 billion, driven by growth in both its Employer Services and Dealer Services segments. Net earnings from continuing operations also saw a significant rise of 17% to $840.4 million. A major event during this period was the tax-free spin-off of its Brokerage Services Group into a new entity, Broadridge Financial Solutions, Inc., which has been classified as discontinued operations. This strategic move allows ADP to focus more intensely on its core payroll and HR solutions. The company's financial health remains robust, characterized by substantial operating cash flow and a solid balance sheet. Despite increased investments in salesforce, implementation personnel, and new business opportunities within Employer Services, the company maintained its operating margin. ADP continues to demonstrate a commitment to shareholder returns through active share repurchases and dividend payments, supported by strong liquidity and access to credit facilities.

Key Highlights

1Total revenues increased by 14% to $5.85 billion for the nine months ended March 31, 2007, driven by growth in Employer Services (12%) and Dealer Services (16%).
2Net earnings from continuing operations rose 17% to $840.4 million for the nine-month period.
3Diluted earnings per share from continuing operations increased by 23% to $1.51 for the nine-month period.
4The company completed the spin-off of its Brokerage Services Group into Broadridge Financial Solutions, Inc., classifying these operations as discontinued.
5Employer Services segment revenue grew 12%, with 'beyond payroll' products showing particularly strong growth of 23% and 20% for the three and nine months, respectively.
6Dealer Services segment revenue saw an 8% increase for the quarter and 16% for the nine months, bolstered by acquisitions and increased user adoption of key products.
7The company repurchased 18.1 million shares of common stock during the nine months ended March 31, 2007, demonstrating a commitment to shareholder returns.

AUTOMATIC DATA PROCESSING INC Quarterly Report for Q3 Ended Mar 31, 2007

Summary

Key Highlights

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