AUTOMATIC DATA PROCESSING INC Quarterly Report for Q1 Ended Sep 30, 2011

Summary

Automatic Data Processing, Inc. (ADP) reported solid financial results for the first quarter of fiscal year 2012, ending September 30, 2011. The company demonstrated robust revenue growth of 13%, reaching $2.52 billion, driven by strong performance across its Employer Services, PEO Services, and Dealer Services segments. Net earnings increased by 9% to $302.7 million, with diluted earnings per share rising to $0.61 from $0.56 in the prior year period. Key drivers for this growth include new business sales, improved client retention, and strategic acquisitions. Despite an increase in total expenses, the company maintained healthy margins and demonstrated effective cost management. ADP continued to return value to shareholders through share repurchases and dividends. The company's financial position remains strong, supported by consistent cash flow generation and a conservative investment strategy for client funds.

Key Highlights

• 1Total revenues increased by 13% to $2.52 billion for the three months ended September 30, 2011, compared to $2.23 billion in the prior year period.
• 2Net earnings grew by 9% to $302.7 million, with diluted EPS rising to $0.61 from $0.56.
• 3All three major segments—Employer Services, PEO Services, and Dealer Services—showed significant revenue growth, ranging from 9% to 18%.
• 4The company repurchased approximately 5.3 million shares of its common stock during the quarter, contributing to the increase in EPS.
• 5Operating expenses saw an increase of 16% ($176.0 million), primarily driven by higher pass-through costs in PEO services and operating expenses related to recent acquisitions.
• 6The effective income tax rate decreased to 34.1% from 36.2% in the prior year, positively impacting net earnings.
• 7As of September 30, 2011, the company maintained a strong liquidity position with $1.37 billion in cash and marketable securities.

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