EX-99 4 ex99.txt EX-99, EXHIBIT 99.1 FOR IMMEDIATE RELEASE ADP FISCAL 2003 REVENUE RISES 2%, EPS DECLINES 4% TO $1.68; FORECASTS MID-SINGLE DIGIT REVENUE GROWTH AND $1.50 - $1.60 EPS FOR FISCAL 2004 ROSELAND, NJ, July 29, 2003 - Automatic Data Processing, Inc. (NYSE:ADP) reported 2% revenue growth and $1.68 earnings per share for the fiscal year ended June 30, 2003, Arthur F. Weinbach, chairman and chief executive officer, announced today. Revenues of $7.1 billion increased 2% over last year. Pretax and net earnings declined 8% compared with last year. Diluted earnings per share, on fewer shares outstanding, declined 4% from $1.75 per share last year. During fiscal 2003, ADP acquired over 27 million shares of its stock for approximately $940 million reflecting confidence in the long-term growth of the businesses. With cash and marketable securities of $2.3 billion, operating cash flows of $1.6 billion for the year, and only $85 million of debt, ADP is well positioned for future growth opportunities. In the fourth quarter, revenues increased 4% to $1.9 billion. Pretax and net earnings decreased 25% compared with last year's fourth quarter. Earnings per share, on fewer shares outstanding, declined to $0.36 per share from $0.46 per share in fiscal 2002. Commenting on the year, Mr. Weinbach said, "In fiscal 2003, the weak economy impacted Employer Services, Brokerage Services and interest income in a significant way. Employer Services' revenues grew 5% despite a 2% decline in new business sales and a 1% decline in the number of employees on our clients' payrolls during the year. Client retention improved 1%. Brokerage Services' revenues declined 9% based on the weakness in the financial services industry which affected our primarily volume-based back office processing and investor communication activities. Dealer Services' revenues grew 12%, and Claims Services' revenues were approximately the same as last year. Lower interest rates reduced interest income on funds held for clients 14%, despite 7% growth during the year in average client fund balances to $8.9 billion. "In March we announced plans to accelerate investments in our most promising key products and in our associates, and to restructure under-performing businesses. Our fiscal 2003 results include approximately $60 million of incremental restructuring charges to exit certain businesses and reduce costs in slow growth areas, most of which occurred in the fourth quarter. The restructuring charges were primarily related to severance, including charges to exit our Medical Claims business within Claims Services and a small payroll business servicing primarily government agencies, separate from our core payroll business, in the United Kingdom. "As we look ahead, we are assuming little improvement in the economic environment. Our guidance for fiscal 2004 is mid-single digit revenue growth, and earnings per share of $1.50 - $1.60. This outlook reflects the ongoing impact of the weak economy on Employer Services and Brokerage Services, as well as lower interest rates compared with last year, which we anticipate will cause a decline in interest income on corporate and client funds of $60 - $80 million from fiscal 2003. In addition, we will invest an incremental $90 - $100 million in our highest growth opportunities, primarily in Employer Services' products such as the TotalChoiceSM, PayeXpert(R) and Enterprise platforms. We will also spend $40 - $45 million on Employer of Choice initiatives aimed at retaining our quality associates. "We are seeing growth opportunities where positive early market reaction to our new offerings clearly justifies an increased level of investment. Our business model and financial strength provide us the ability to pursue these opportunities even in times of economic uncertainty," Mr. Weinbach concluded. An analyst conference call to review the fiscal 2003 results will be held today, Tuesday, July 29th at 1:30PM EDT. A live audio webcast of the call will be available to the public on a listen-only basis. To listen to the webcast go to www.adp.com and click on the webcast icon. ADP's news releases, current financial information, SEC filings and Investor Relations presentations are accessible at the same website. ADP, with over $7 billion in revenues and more than 500,000 clients, is one of the largest independent computing services firms in the world. -2- Automatic Data Processing, Inc. and Subsidiaries Consolidated Statements of Earnings (In thousands, except per share amounts)
Three Months Ended June 30, Twelve Months Ended June 30, 2003 2002 2003 2002 -------------------------------- ------------------------------ Revenues, other than interest on funds held for clients and PEO revenues $ 1,720,785 $ 1,671,547 $ 6,412,059 $ 6,305,206 Interest on funds held for clients 91,992 100,096 368,727 431,236 PEO revenues (A) 98,782 73,673 366,231 267,821 ------------ ------------ ----------- ----------- Total revenues 1,911,559 1,845,316 7,147,017 7,004,263 ------------ ------------ ----------- ----------- Operating expenses 888,955 829,831 3,096,719 2,970,645 Selling, general and administrative expenses 495,602 387,354 1,758,353 1,606,690 Systems development and programming costs 134,513 125,087 499,192 474,843 Depreciation and amortization 70,796 67,962 274,682 279,077 Other income, net (26,657) (29,938) (127,129) (113,962) ------------ ------------- ----------- ----------- Total expenses 1,563,209 1,380,296 5,501,817 5,217,293 ------------ ------------- ----------- ----------- Earnings before income taxes 348,350 465,020 1,645,200 1,786,970 Provision for income taxes 131,680 177,710 627,050 686,200 ------------ ------------- ----------- ----------- Net earnings $ 216,670 $ 287,310 $ 1,018,150 $ 1,100,770 =========== ============= ============= ============= Basic earnings per share $ 0.36 $ 0.47 $ 1.70 $ 1.78 ============ ============= ============== ============= Diluted earnings per share $ 0.36 $ 0.46 $ 1.68 $ 1.75 ============ ============= ============== ============= Dividends per common share $ 0.1200 $ 0.1150 $ 0.4750 $ 0.4475 ============ ============= ============== ============= (A) Net of pass-through costs of $921,525 and $725,511 for the three months ended June 30, 2003 and 2002, respectively, and $3,462,783 and $2,648,321 for the twelve months ended June 30, 2003 and 2002, respectively.
-3- Automatic Data Processing, Inc. and Subsidiaries Other Selected Financial Data (In thousands, except per share amounts)
Three Months Ended June 30, Twelve Months Ended June 30, 2003 2002 2003 2002 -------------------------------- ------------------------------ Revenues for select business units (B) Employer Services $ 1,084,000 $ 1,011,000 $ 4,401,000 $ 4,180,000 Brokerage Services $ 528,000 $ 573,000 $ 1,593,000 $ 1,758,000 Dealer Services $ 201,000 $ 181,000 $ 788,000 $ 706,000 Pre-tax earnings for select business units (B) Employer Services $ 213,000 $ 235,000 $ 1,193,000 $ 1,110,000 Brokerage Services $ 97,000 $ 137,000 $ 230,000 $ 354,000 Dealer Services $ 34,000 $ 29,000 $ 132,000 $ 116,000 (B) Prior year's segment results were adjusted to reflect fiscal year 2003 budgeted foreign exchange rates. Components of Other Income, net: -------------------------------- Interest income on corporate funds $ (23,832) $ (34,530) $ (119,413) $ (118,672) Interest expense 4,186 5,113 21,838 21,164 Realized gains on available-for-sale securities, net (7,011) (521) (29,554) (16,454) ------------- ------------- ----------- ------------- Total other income, net $ (26,657) $ (29,938) $ (127,129) $ (113,962) ================================= =============================+ Earnings per share information: ------------------------------- Net earnings $ 216,670 $ 287,310 $ 1,018,150 $ 1,100,770 Average shares outstanding 595,211 617,445 600,071 618,857 Basic earnings per share $ 0.36 $ 0.47 $ 1.70 $ 1.78 Diluted net earnings $ 216,969 $ 287,669 $ 1,019,357 $ 1,102,381 Diluted shares outstanding 600,168 627,181 605,917 630,579 Diluted earnings per share $ 0.36 $ 0.46 $ 1.68 $ 1.75
-4- Automatic Data Processing, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands)
June 30, June 30, 2003 2002 -------------------- -------------------- Assets ------ Cash and cash equivalents / Short-term marketable securities $ 2,005,384 $ 1,475,815 Other current assets 1,670,117 1,341,442 -------------------- -------------------- Total current assets 3,675,501 2,817,257 Long-term marketable securities 338,959 1,273,768 Property, plant and equipment, net 614,701 596,451 Other non-current assets 3,396,761 2,363,775 Funds held for clients 11,807,749 11,225,271 -------------------- -------------------- Total assets $ 19,833,671 $ 18,276,522 ==================== ==================== Liabilities and Shareholders' Equity ------------------------------------ Total current liabilities $ 1,998,783 $ 1,411,102 Long-term debt 84,674 90,648 Other non-current liabilities 929,826 610,197 Client funds obligations 11,448,915 11,050,370 -------------------- -------------------- Total liabilities 14,462,198 13,162,317 Total shareholders' equity 5,371,473 5,114,205 -------------------- -------------------- Total liabilities and shareholders' equity $ 19,833,671 $ 18,276,522 ==================== ====================
------------------------------------------ This release and other written or oral statements made from time to time by ADP may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature and which may be identified by the use of words like "expects," "projects," "anticipates," "estimates," "we believe," "could be" and other words of similar meaning, are forward-looking statements. These statements are based on management's expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed. Factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include: ADP's success in obtaining, retaining and selling additional services to clients; the pricing of products and services; changes in laws regulating payroll taxes, professional employer organizations and employee benefits; overall market and economic conditions, including interest rate and foreign currency trends; competitive conditions; stock market activity; auto sales and related industry changes; employment and wage levels; changes in technology; availability of skilled technical associates and the impact of new acquisitions and divestitures. ADP disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. #7#29#03#