ADP 2008 Annual Report Download - page 22

Download and view the complete annual report

Please find page 22 of the 2008 ADP annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 105

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105

We credit Employer Services with interest on client funds at a standard rate of 4.5%; therefore, Employer Services’ results are not
influenced by changes in interest rates. Interest on client funds recorded within the Employer Services segment increased $41.4 million in fiscal
2008, which accounted for 1% growth in Employer Services’ revenues. This increase was due to the increase in the average client funds
balances as a result of new business started in the period, growth in our existing client base and growth in wages. The average client funds
balances were $15.5 billion in fiscal 2008 and $14.6 billion in fiscal 2007, representing an increase of 6.4%.
E
arnings from Continuing Operations before Income Taxes
Earnings from continuing operations before income taxes increased $189.0 million, or 13%, to $1,601.4 million in fiscal 2008. Earnings
from continuing operations before income taxes for fiscal 2008 grew at a faster rate than revenues due to the improvement in margins for our
services resulting from the leveraging of our expense structure with increased revenues. This was offset, in part, by higher compensation
expenses of $131.7 million for implementation and service personnel, as well as higher selling expenses of $38.0 million attributable to the
increase in salesforce personnel in Employer Services. Lastly, our expenses increased by approximately $42.2 million as a result of acquisitions
of businesses in Employer Services.
Fiscal 2007 Compared to Fiscal 2006
R
evenues
Employer Services’ revenues increased $545.1 million, or 11%, to $5,707.7 million in fiscal 2007 due to new business started in the period,
an increase in the number of employees on our clients’ payrolls in the United States, increased client retention, the impact of price increases,
which contributed approximately 2% to our revenue growth, and an increase in client funds balances, which increased interest revenues.
Internal revenue growth was approximately 9% for fiscal 2007. Revenue from our traditional payroll and payroll tax filing business grew 9%.
The number of employees on our clients’ payrolls, “pays per control,” increased 2.3% in the United States. Our worldwide client retention
improved 0.1 percentage point over last year’ s record level. Revenues from our “beyond payroll” services, excluding PEO Services, increased
18% in fiscal 2007 due to an increase in our Time and Labor Management services revenues of 22%, as well as the impact of certain business
acquisitions in fiscal 2007. The increase in revenues related to our Time and Labor Management services was due to an increase in the number
of clients utilizing these services.
We credit Employer Services with interest on client funds at a standard rate of 4.5%; therefore, Employer Services’ results are not
influenced by changes in interest rates. Interest on client funds recorded within the Employer Services segment increased $48.8 million in fiscal
2007, which represented 1% growth in Employer Services’ revenues, due to the increase in the average client funds balances as a result of
increased Employer Services’ new business and growth in our existing client base. The average client funds balances were $14.6 billion in
fiscal 2007 as compared to $13.5 billion in fiscal 2006, an increase of 8%.
E
arnings from Continuing Operations before Income Taxes
Earnings from continuing operations before income taxes increased $153.1 million, or 12%, to $1,412.4 million, in fiscal 2007. Earnings
from continuing operations before income taxes in fiscal 2007 grew at a faster rate than revenues due to the improvement in margins for our
services from the leveraging of our expense structure with the increased revenues. This was offset, in part, by higher operating expenses from
the increase of approximately $226.5 million in compensation expenses for implementation, service and salesforce personnel, and spending on
new business opportunities related to our HR BPO offerings of approximately $7 million. This spending on new business opportunities was
targeted at expanding our COS product for larger employers and our ADP Resource® product, as well as our GlobalView® product, which is
our outsourcing offering for multi-national and global organizations. Lastly, earnings from continuing operations before income taxes were
negatively impacted by approximately $8.4 million related to six acquisitions made in fiscal 2007.
22