ADP 2012 Annual Report Download - page 25

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Earnings from continuing operations before Income Taxes
Earnings from continuing operations before income taxes increased $189.4 million, or 10%, from $1,932.7 million in fiscal 2011 to $2,122.1
million in fiscal 2012 due to the increase in revenues and the gain on sale of assets, partially offset by the increase in expenses discussed above.
Overall margin increased approximately 30 basis points in fiscal 2012 with approximately 60 basis points of the margin contribution related to
the gain on the sale of assets and approximately 40 basis points of margin decline attributable to acquisitions.
Provision for Income Taxes
The effective tax rates in fiscal 2012 and 2011 were 34.6% and 35.1%, respectively. The decrease in the effective tax rate for the fiscal year is
the result of the final resolution of certain tax matters, the expiration of certain statutes of limitation, and the availability of foreign tax credits,
partially offset by an unfavorable mix of earnings between jurisdictions.
Net Earnings from continuing operations and Diluted Earnings per Share from continuing operations
Net earnings from continuing operations increased $134.3 million, or 11%, from $1,254.2 million in fiscal 2011 to $1,388.5 million in fiscal
2012 and includes an after-tax gain on sale of assets of $41.2 million. Diluted earnings per share from continuing operations increased 12%, to
$2.82 compared from $2.52 in fiscal 2011. The increase in diluted earnings per share reflects the increase in net earnings and the impact of
fewer shares outstanding as a result of the repurchase of approximately 14.6 million shares during fiscal 2012 and the repurchase of 14.2
million shares in fiscal 2011.
The following table reconciles our results for fiscal 2012 to adjusted results that exclude the sale of assets related to rights and obligations to
resell a third-party expense management platform. We use certain adjusted results, among other measures, to evaluate our operating
performance in the absence of certain items and for planning and forecasting of future periods. We believe that the adjusted results provide
relevant and useful information for investors because it allows investors to view performance in a manner similar to the method used by us and
improves our ability to understand our operating performance. Since adjusted earnings from continuing operations and adjusted diluted EPS
from continuing operations are not measures of performance calculated in accordance with U.S. GAAP, they should not be considered in
isolation from, or as a substitute for, earnings from continuing operations, and diluted EPS from continuing operations and they may not be
comparable to similarly titled measures employed by other companies.
Although we have presented our results for fiscal 2012 adjusted to exclude the gain on the sale of assets discussed above, we do not expect this
sale of assets to have a material impact on the results of our future operations.
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