ADP 2009 Annual Report Download - page 23

Download and view the complete annual report

Please find page 23 of the 2009 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 84

  • 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

P
EO Services
Fiscal 2009 Compared to Fiscal 2008
R
evenues
PEO Services’ revenues increased $125.3 million, or 12%, to $1,185.8 million in fiscal 2009 due to a 10% increase in the average number
of worksite employees. The increase in the average number of worksite employees was due to new client sales. Revenues associated with
benefits coverage, workers’ compensation coverage and state unemployment taxes for worksite employees that were billed to our clients
increased $119.5 million due to the increase in the average number of worksite employees, as well as increases in health care costs.
Administrative revenues, which represent the fees for our services and are billed based upon a percentage of wages related to worksite
employees, increased $15.3 million, or 7%, due to the increase in the number of average worksite employees. We credit PEO Services with
interest on client funds at a standard rate of 4.5%; therefore, PEO Services’ results are not influenced by changes in interest rates. Interest on
client funds recorded within the PEO Services segment increased $1.5 million in fiscal 2009 due to the increase in the average client funds
balances as a result of increased PEO Services’ new business and growth in our existing client base. The average client funds balances were
$0.2 billion in both fiscal 2009 and fiscal 2008.
E
arnings from Continuing Operations before Income Taxes
PEO Services’ earnings from continuing operations before income taxes increased $13.9 million, or 13%, to $118.7 million in fiscal 2009.
This increase was primarily attributable to the increase in revenues described above, net of the related cost of providing benefits coverage,
workers’ compensation coverage and payment of state unemployment taxes for worksite employees, which are included in costs of revenues. In
fiscal 2009, there was an increase in costs associated with our PEO business related to costs associated with providing benefits coverage for
worksite employees of $102.7 million and costs associated with workers’ compensation and payment of state unemployment taxes for worksite
employees of $16.8 million. In addition, there was an increase in expenses related to new business sales of $2.0 million in fiscal 2009.
Fiscal 2008 Compared to Fiscal 2007
R
evenues
PEO Services’ revenues increased $175.7 million, or 20%, to $1,060.5 million in fiscal 2008 due to an 18% increase in the average number
of worksite employees. The increase in the average number of worksite employees was due to new client sales and the net increase in the
number of worksite employees at existing clients. Additionally, benefits related revenues, which are billed to our clients and have an equal
amount of cost in operating expenses, increased $115.8 million, or 23%, due to the increase in the average number of worksite employees, as
well as increases in health care costs. Administrative revenues, which represent the fees for our services that are billed based upon a percentage
of wages related to worksite employees, increased $29.4 million, or 17%, due to the increase in the number of average worksite employees and
price increases. We credit PEO Services with interest on client funds at a standard rate of 4.5%; therefore, PEO Services’ results are not
influenced by changes in interest rates. Interest on client funds recorded within the PEO Services segment increased $1.7 million in fiscal 2008
due to the increase in the average client funds balances as a result of increased PEO Services’ new business and growth in our existing client
base. The average client funds balances were $0.2 billion in fiscal 2008 and $0.1 billion in fiscal 2007.
E
arnings from Continuing Operations before Income Taxes
PEO Services’ earnings from continuing operations before income taxes increased $24.4 million, or 30%, to $104.8 million in fiscal 2008.
This increase was primarily attributable to the increase in revenues described above, net of the related cost of providing benefits coverage,
workers compensation coverage and payment of state unemployment taxes for worksite employees, which are included in costs of revenues.
This increase was partially offset by an increase in our operating costs and selling expenses. In fiscal 2008, our cost of providing benefits to
worksite employees increased $116.1 million over fiscal 2007. Our expenses associated with new business sales increased $12.2 million as a
result of growth in our salesforce and an increase in sales over fiscal 2007. In addition, the costs of providing our services increased $14.0
million in fiscal 2008.
23