EX-99 4 exhibit99mar.txt EXHIBIT 99 FORM 8K ADP REPORTS THIRD FISCAL QUARTER RESULTS; REVENUES INCREASE 11%, EPS DECLINES 7%; FISCAL 2004 REVENUE GUIDANCE RAISED TO HIGH-SINGLE DIGIT GROWTH, EPS GUIDANCE UNCHANGED ROSELAND, NJ, April 22, 2004 - Automatic Data Processing, Inc. (NYSE:ADP) reported 11% revenue growth, with revenues of $2.1 billion and $.50 earnings per share for the third fiscal quarter ended March 31, 2004, Arthur F. Weinbach, chairman and chief executive officer, announced today. Pretax and net earnings declined 10% and 9%, respectively, impacted by lower interest rates, incremental investment activity and by dilution from last year's acquisitions. Diluted earnings per share, on fewer shares outstanding, declined 7% from $.54 per share last year. Commenting on the quarter, Mr. Weinbach said, "Employer Services' revenues grew 10% in the quarter. New business sales, which to ADP represents the annualized revenues anticipated from new orders, improved to 10% growth during the quarter, our first double-digit sales growth quarter in three years. Client retention was strong during this critical year-end retention period, improving more than 1.5% for the quarter compared to record levels a year ago. The number of employees on our clients' payrolls in North America increased compared with last year, representing the first growth quarter in nearly three years, while the number of employees on clients' payrolls in our European businesses continued to decline. Average client fund balances, which have been strong all year, increased 13% during the quarter excluding the impact of last year's ProBusiness acquisition and about 27% after the impact of the acquisition. "Revenues in Brokerage Services grew 13% primarily driven by increased investor communications activity, higher trade volume and higher retail versus institutional mix. Non-proxy mutual fund mailings were again strong in the quarter with recent regulatory oversight resulting in extra communications. Brokerage Services' margin improved over last year from increased scale on higher volumes in our back office trading business. Dealer Services' revenues grew 8% and Claims Services' revenues were flat with last year. "Our consolidated margin declined in the third quarter and was primarily impacted by lower interest rates on corporate and client fund investments and lower margins in Employer Services resulting from increased investment spending and the continued integration of last year's acquisitions. We continue to take advantage of opportunities to invest in our businesses, particularly in Employer Services, and have increased the incremental spending level to $165 - $180 million for the fiscal year, which now includes about $30 - $35 million of non-recurring charges anticipated in the fourth quarter. "Our leading indicators have started to move in the right direction and we are pleased with the improvement in our revenues. We anticipate stronger Employer Services' sales growth in the fourth quarter due to easier comparisons with last year as well as increases in our sales force. With our stronger Brokerage Services' revenues, we are increasing our revenue guidance to high-single digit growth from mid-single digit growth and confirming our fiscal 2004 earnings per share guidance of $1.53 - $1.58. "In fiscal 2004 we have acquired over 11 million shares of ADP stock for treasury for approximately $445 million reflecting our confidence in the long-term growth of our businesses," Mr. Weinbach concluded. An analyst conference call to review the third quarter results will be held today, Thursday, April 22 at 1:30 p.m. 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 approximately 500,000 clients, is one of the largest independent computing services firms in the world. AUTOMATIC DATA PROCESSING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Three Months Ended Nine Months Ended March 31, March 31, 2004 2003 2004 2003 ---------- ----------- ---------- ----------- Revenues, other than interest on funds held for clients and PEO revenues $1,894,672 $ 1,704,454 $5,063,394 $ 4,691,274 Interest on funds held for clients 96,531 99,108 261,667 276,735 PEO revenues (A) 130,232 102,216 344,051 267,449 ---------- ----------- ---------- ----------- Total revenues 2,121,435 1,905,778 5,669,112 5,235,458 ---------- ----------- ---------- ----------- Operating expenses 944,373 796,580 2,548,914 2,207,764 Selling, general and administrative expenses 487,410 412,793 1,373,581 1,262,751 Systems development and programming costs 144,824 123,401 409,703 364,679 Depreciation and amortization 77,185 67,503 225,520 203,886 Other income, net (11,997) (27,499) (44,656) (100,472) ---------- ----------- ---------- ----------- Total expenses 1,641,795 1,372,778 4,513,062 3,938,608 ---------- ----------- ---------- ----------- Earnings before income taxes 479,640 533,000 1,156,050 1,296,850 Provision for income taxes 179,390 203,610 432,370 495,370 ---------- ----------- ---------- ----------- Net earnings $ 300,250 $ 329,390 $ 723,680 $ 801,480 ========== =========== ========== =========== Basic earnings per share $ 0.51 $ 0.55 $ 1.22 $ 1.33 ========== =========== ========== =========== Diluted earnings per share $ 0.50 $ 0.54 $ 1.21 $ 1.32 ========== =========== ========== =========== Dividends per common share $ 0.1400 $ 0.1200 $ 0.4000 $ 0.3550 ========== ========== ========== ===========
(A) Net of pass-through costs of $1,136,832 and $904,391 for the three months ended March 31, 2004 and 2003, respectively, and $3,086,265 and $2,541,258 for the nine months ended March 31, 2004 and 2003, respectively. AUTOMATIC DATA PROCESSING, INC. AND SUBSIDIARIES OTHER SELECTED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Three Months Ended Nine Months Ended March 31, March 31, 2004 2003 2004 2003 ----------- ---------- ---------- ---------- Revenues for select business units (B) Employer Services $ 1,366,000 $1,240,000 $ 3,635,000 $3,312,000 Brokerage Services 452,000 401,000 1,105,000 1,078,000 Dealer Services 226,000 209,000 655,000 605,000 Pre-tax earnings for select business units (B) Employer Services $ 385,000 $ 411,000 $ 854,000 $ 892,000 Brokerage Services 68,000 45,000 121,000 134,000 Dealer Services 39,000 36,000 108,000 101,000
(B) Prior year's segment results were adjusted to reflect fiscal year 2004 budgeted foreign exchange rates. In addition, Employer Services' prior year revenue was adjusted to include interest earned on client funds credited at 4.5%. Employer Services' revenues are credited with interest earned on client funds at a standard rate to better judge real business growth without the impact of changing interest rates.
Components of Other Income, net: -------------------------------- Interest income on corporate funds $ (13,521) $ (21,529) $ (59,263) $ (95,581) Interest expense 1,965 2,198 11,966 17,652 Realized (gains) losses on available-for-sale securities, net (441) (8,168) 2,641 (22,543) ----------- ---------- ----------- ---------- Total other income, net $ (11,997) $ (27,499) $ (44,656) $ (100,472) =========== ========== =========== ========== Earnings per share information: ------------------------------- Net earnings $ 300,250 $ 329,390 $ 723,680 $ 801,480 Average shares outstanding 591,210 600,217 592,575 601,737 Basic earnings per share $ 0.51 $ 0.55 $ 1.22 $ 1.33 Diluted net earnings $ 300,572 $ 329,683 $ 724,820 $ 802,388 Diluted shares outstanding 599,479 605,340 599,127 607,911 Diluted earnings per share $ 0.50 $ 0.54 $ 1.21 $ 1.32
AUTOMATIC DATA PROCESSING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) March 31, June 30, 2004 2003 ------------ ------------ (Unaudited) Assets ------ Cash and cash equivalents/Short-term marketable securities $ 1,225,858 $ 2,005,384 Other current assets 1,610,713 1,670,117 ------------ ------------ Total current assets 2,836,571 3,675,501 Long-term marketable securities 1,070,971 338,959 Property, plant and equipment, net 615,314 614,701 Other non-current assets 3,772,998 3,396,761 Funds held for clients 17,129,627 11,807,749 ------------ ------------ Total assets $ 25,425,481 $ 19,833,671 ============ ============ Liabilities and Shareholders' Equity ------------------------------------ Total current liabilities $ 1,827,081 $ 1,998,783 Long-term debt 82,049 84,674 Other non-current liabilities 1,031,322 929,826 Client funds obligations 16,860,331 11,448,915 ------------ ------------ Total liabilities 19,800,783 14,462,198 Total shareholders' equity 5,624,698 5,371,473 ------------ ------------ Total liabilities and shareholders' equity $ 25,425,481 $ 19,833,671 ============ ============ -------------------------------------------- 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. Source: Automatic Data Processing, Inc. ADP Investor Relations Elena Charles, 973.974.4077 Debbie Morris, 973.974.7821 #4#22#04#