ADP 2001 Annual Report Download - page 5

“We are succeeding with the best
quality ratings from our clients and…
the highest client retention we
have ever had.”
3
Despite these macroeconomic changes and the Bridge
write-off, ADP had a strong year:
•Consolidated revenues for the year grew 12%
to over $7 billion.
•Pre-tax earnings increased 25%, net earnings were
up 16% to almost $1 billion, and earnings per
share rose 16% (before the previously mentioned
write-off of our investment in Bridge).
•Our cash flow from operations was an exceptional
$1.4 billion.
•We invested over $900 million by acquiring over
16 million shares of ADP stock.
•Our cash balances are over $2.5 billion, we have a
very low debt-to-equity ratio of 2%, and our return
on shareholders’ equity is about 20%.
•Our Board increased our dividend for the 27th
consecutive year, by 17% to an annual rate of
$.41 per share.
•We had an unprecedented level of client satisfac-
tion across ADP and record client retention in
Employer Services.
•Our associate satisfaction scores increased, and
associate productivity and retention ended the
year at improved levels over last year.
•Our product positioning is very strong with impor-
tant new Web-based products coming to market in
the year ahead.
•As the economy slowed, we instituted a series
of cost containment activities enabling us to
reduce our expense run rate by about $150 million
from where it would have been as we entered
fiscal 2002.
How did we achieve such excellent results in
today’s troubled economy? The answer lies at the heart
of ADP’s uniquely consistent performance over the years.
While there are many factors (including knowledgeable,
focused leadership in our business units and a growth- and
results-oriented corporate culture), the single most impor-
tant reason is the strength of our recurring revenue model.
We have long-term relationships with virtually all of our
clients and receive revenue each month for the high quality,
value-added services we provide. We do not have to resell
our clients to grow. Our growth comes from continuing to
add more clients and more services. Because of the recur-
ring nature of our revenues, we can also anticipate the
costs needed to support our clients and keep our cost
structure in line with revenues. It is a powerful model that
has served us well through many economic cycles.
Major Initiatives
A
ll of us at ADP are focused on three major initiatives:
World Class Service We have committed our-
selves to providing world class service to our clients.
Over the last four years, we have made sizable investments
in service in the belief that service quality is the ultimate
competitive advantage for our businesses. We are suc-
ceeding with the best quality ratings from our clients and,
most importantly, the highest client retention we have ever
had. While we are proud of these results, we recognize
world class service is an ongoing journey. We must ever
intensify our efforts to earn market superiority in the eyes
of our clients.
Employer of Choice We also realize that we cannot
succeed as a world class service company unless we
attract and retain knowledgeable and committed associates.
Three years ago, we embarked on an Employer of Choice
initiative to make ADP an increasingly attractive work
environment. So far this year, associate retention and asso-
ciate satisfaction have improved (excellent results). Clearly,
becoming an Employer of Choice is important, and we are
committed to making ADP a place where people want –
and are proud – to work.
Product Leadership This year, we added a third,
very important building block to our strategy – product
leadership. Product leadership means delivering the best
products to market ahead of the competition on a consistent
basis. Similar to world class service, this also is a journey,
a continuous process. It is not about getting any single
client retention