ADP 2004 Annual Report Download

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Please find the complete 2004 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.

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WELL POSITIONED
Large and
Diversified
Client Base
Large and
Growing
Salesforce
Strong
Service
Offerings
Strong
Financial
Position
Major
Market
Share
Positions
42,000
Committed
and Engaged
Associates
2004 ANNUAL REPORT
Record
Levels of
Productivity
Highest
Quality
Service
Levels
Long-term
Clients

Table of contents

  • Page 1
    ... and Diversified Client Base Major Market Share Positions Strong Financial Position Highest Quality Service Levels Large and Growing Salesforce WELL POSITIONED Strong Service Offerings Long-term Clients Record Levels of Productivity 2004 ANNUAL REPORT 42,000 Committed and Engaged Associates

  • Page 2
    ...dividends per share Basic average shares outstanding Diluted average shares outstanding Return on equity At year end: Cash, cash equivalents and marketable securities Working capital Total assets before funds held for clients Long-term debt Stockholders' equity Number of employees $ 7,754,942 $ 935...

  • Page 3
    ADP is well positioned with significant strengths...> a very strong financial position > 42,000 committed and engaged associates worldwide > market-leading products and service offerings > the highest levels of service quality ever > long-term client relationships in all of our businesses Together, ...

  • Page 4
    ... revenue each month for the high-quality, value-added services we provide. Our growth is primarily driven by adding more new clients and services (sales) than we lose (client retention), and by the organic growth of our clients (for example, the number of employees on our clients' payrolls (pays per...

  • Page 5
    ...timing of our investments in growth opportunities (primarily product development and salesforce growth) and employer of choice initiatives (including restoring full bonuses and increased focus on training) has worked out particularly well. Our new products, larger salesforce and energized associates...

  • Page 6
    .... The largest transactions were the acquisitions of ABZ, a Netherlands-based provider of insurance distribution services by our Claims Services division, and EDS's Automotive Retail Group by Dealer Services. In June, we announced the acquisition of Bank of America's third-party clearing operations...

  • Page 7
    ...story, At ADP, we measure success by how well we serve our clients. In fact, world class service is one of several enterprise-wide strengths that...accomplishments of our dedicated associates worldwide. their words. It is an honor for us to welcome the perspective of ADP clients in this year's ...

  • Page 8
    ... scale. Processing payroll, filing taxes, managing time and attendance, administering benefits and securing workers' compensation insurance coverage are among the requirements that many employers share, regardless of the size of their employee population. In fact, an increasing number of small...

  • Page 9
    ..., COBRA, Flexible Spending Accounts and other services that enable us to be a single-source provider to many employers. Sales of ADP's Web-based payroll service, Pay eXpert®, continued to grow at a robust rate. Our eXpert ServicesSM suite, which includes Pay eXpert, enables users to access ADP...

  • Page 10
    ... replacing payroll checks and paper-based reports with electronic transfer of funds, pay card technology and on-demand access to information that streamlines payroll administration. Thirty years ago, our average client solely utilized our payroll services; today most of our new clients with employee...

  • Page 11
    ...new technology. As an example, ADP's introduction this year of the My TotalSourceSM secure Web site enables PEO clients to manage payroll and benefit information and utilize recruiting and screening tools online. It concurrently allows worksite employees to make benefit elections and access training...

  • Page 12
    ... thirdparty clearing operations by signing a definitive agreement to acquire the U.S. Clearing and BrokerDealer Services divisions of Bank of America Corporation. When completed, this acquisition will enable us to provide both retail and institutional broker clients with an integrated solution that...

  • Page 13
    ... key processing hubs of the United States, Europe and Asia. We also expanded our footprint in the global proxy services market through a joint venture with the Tokyo Stock Exchange and Japan Securities Dealers Association to provide an electronic voting platform in the Japanese market. Users will...

  • Page 14
    ... as expanded our CRM applications to continue to offer dealers a choice of customized front-end management tools. Concurrently this year, ADP introduced the Payroll Tax Service solution, the first of a suite of tax and financial services designed to help dealerships improve tax filing accuracy and...

  • Page 15
    ... completely Web-based collision estimating system permits both insurance companies and collision repair facilities to view and work from a single claims file. To further serve our clients, we are adding products and services that support the end-to-end claims management process - from notification...

  • Page 16
    ... Health and Welfare, COBRA, FSA, 401(k) plan and other benefit administration solutions to all Employer Services business segments including SBS, MA and NAS ADP TOTALSOURCE Professional Employer Organization Services Assists small and medium-sized businesses, through co-employment, with a suite...

  • Page 17
    ... Web-based small business payroll solution > Payroll Processing Management, Payroll Tax Deposit and Filing Services, Online Reports and Pay Statements, General Ledger Interface, Direct Deposit, Payroll Card, Check Reconciliation, Time and Labor Management, HRIS, Employee/Manager Self Service...

  • Page 18
    ...North America and Europe. DEALER SERVICES A leading provider of integrated dealer management systems (DMS) and business solutions for automotive, heavy truck, and powersports vehicle retailers and their manufacturers. Auto insurance claims divisions, auto collision repair centers, auto recyclers...

  • Page 19
    ..., claims audit, claims payment and total loss vehicle valuation Body shop and auto recycler management systems, and auto recycler alternative parts locating solutions Other applications, databases, management information tools and services that enhance and optimize the claims process Insurance...

  • Page 20
    ...shares outstanding Cash dividends per share Return on equity At year end: Cash, cash equivalents and marketable securities Working capital Total assets before funds held for clients Total assets Long-term debt Stockholders' equity $ 7,754,942 $ 1,494,530 $ 935,570 $ $ 1.58 1.56 $ 7,147,017 $ 1,645...

  • Page 21
    ... Time and Labor Management, and benefit and retirement administration. Within Employer Services, the Company collects client funds and remits such funds to tax authorities for payroll tax filing and payment services and to employees of payroll services clients. Brokerage Services Brokerage Services...

  • Page 22
    ... "pays per control," and a 3% increase in investor communications pieces delivered with lower mutual fund mailings related to regulatory activity. At the end of fiscal 2004, we reached an agreement to acquire the U.S. Clearing and BrokerDealer Services divisions of Bank of America Corporation, which...

  • Page 23
    ... on our available-for-sale securities. Earnings Before Income Taxes Earnings before income taxes decreased by $151 million, or 9%, to $1.5 billion for the fiscal year primarily due to the investment spending relating to our employer of choice initiatives, investments in our salesforce and costs to...

  • Page 24
    ... from sales orders to new and existing clients, increased 6% to approximately $750 million in fiscal 2004. Interest income is credited to Employer Services at a standard rate of 4.5%. The average client funds Employer Services $ Brokerage Services Dealer Services Other Reconciling items: Foreign...

  • Page 25
    ..."beyond payroll" revenues increased due to increased number of clients utilizing services, such as Time and Labor Management and TotalPay Services. Earnings Before Income Taxes Earnings before income taxes in Employer Services decreased 7% for the fiscal year due primarily to our investment spending...

  • Page 26
    ...Revenue growth was generated by strong client retention as well as growth from new services, primarily ASP managed services, Networking and Computer Vehicle Registration. Further, sales of our CRM products were strong. Earnings Before Income Taxes Earnings before income taxes grew 14% as a result of...

  • Page 27
    ... to pay facility fees on the credit agreements. The primary uses of the credit facilities are to provide liquidity to the unsecured commercial paper program and to provide funding for general corporate purposes, if necessary. The Company had no borrowings through June 30, 2004 under the new credit...

  • Page 28
    ... certain contracts and if we enter into additional operating lease agreements. (3) Purchase obligations primarily relate to maintenance agreements on our software, equipment and other assets. (4) Compensation and benefits primarily relates to amounts associated with our employee benefit plans and...

  • Page 29
    ... Services' trade processing fees) as well as investment income on payroll funds, payroll tax filing funds and other Employer Services' client-related funds. We typically enter into agreements for a fixed fee per transaction (e.g., number of payees or number of trades). Fees associated with services...

  • Page 30
    ... Revenue Service and other tax authorities. A change in the assessment of the outcomes of such matters could materially impact our consolidated financial statements. Market Price, Dividend Data and Other The market price of our common stock (symbol: ADP) based on New York Stock Exchange composite...

  • Page 31
    ... 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...

  • Page 32
    ... Data Processing, Inc. and Subsidiaries (In thousands, except per share amounts) Years ended June 30, 2004 2003 2002 Revenues other than interest on funds held for clients and PEO revenues Interest on funds held for clients PEO revenues (A) Total revenues Operating expenses Selling, general and...

  • Page 33
    ... Data processing equipment Furniture, leaseholds and other Less accumulated depreciation Other assets Goodwill Intangible assets, net Total assets before funds held for clients Funds held for clients Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued...

  • Page 34
    ... Net earnings - - - 1,100,770 - Currency translation adjustments Unrealized net gain on securities, net of tax Comprehensive income Employee stock plans and related tax benefits - - (197,083) - 515,729 Treasury stock acquired (17,412 shares) - - - - (875,449) Acquisitions (226 shares) - - (423) - 12...

  • Page 35
    ... in accounts payable and accrued expenses Net cash flows provided by operating activities Cash Flows From Investing Activities Purchases of marketable securities Proceeds from sale of marketable securities Net proceeds from client fund money market securities Net change in client funds obligations...

  • Page 36
    ... Services' trade processing fees) as well as interest income on payroll funds, tax filing funds and other Employer Services' client-related funds. The Company typically enters into agreements for a fixed fee per transaction (e.g., number of payees or number of trades). Fees associated with services...

  • Page 37
    ... Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations, as permitted by SFAS No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123). No stock-based employee compensation expense related to the Company's stock option and stock purchase plans...

  • Page 38
    ... Stock purchase plans 2.0 2.0 2.0 Weighted average fair value (in dollars): Options $13.96 $12.85 $16.54 Stock purchase plans $11.95 $12.94 $21.55 See Note 10, Employee Benefit Plans, for additional information relating to the Company's stock plans. O. Reclassification of Prior Financial Statements...

  • Page 39
    ... direct obligations of U.S. government agencies Asset backed securities Corporate bonds Canadian government obligations and Canadian government agency obligations Other debt securities Other equity securities Total available-for-sale securities Total corporate investments and funds held for clients...

  • Page 40
    ...: NOTE 6 Employer Services Brokerage Services Dealer Services Other Total NOTE 5 Receivables Accounts receivable is net of an allowance for doubtful accounts of $51 million and $55 million at June 30, 2004 and 2003, respectively. The Company's receivables for the financing of the sale of computer...

  • Page 41
    ... to pay facility fees on the credit agreements. The primary uses of the credit facilities are to provide liquidity to the unsecured commercial paper program and to provide funding for general corporate purposes, if necessary. The Company had no borrowings through June 30, 2004 under the new credit...

  • Page 42
    ... payroll tax filings, correspondence, amendments, and penalty and interest disputes; remits the funds to the appropriate tax agencies; and handles other employer-related services. In addition to fees paid by clients for these services, the Company receives interest Employee Benefit Plans A. Stock...

  • Page 43
    Automatic Data Processing, Inc. and Subsidiaries The Company has stock purchase plans under which eligible employees have the ability to purchase shares of common stock at 85% of the lower of market value as of the date of purchase election or as of the end of the plans. Approximately 3.3 million ...

  • Page 44
    ... to measure the Company's pension plans' benefit obligation at June 30, 2004 and include estimated future employee service. C. Retirement and Savings Plan. The Company has a 401(k) retirement and savings plan, which allows eligible employees to contribute up to 20% of their compensation annually and...

  • Page 45
    ...rentals, certain leases require payment of maintenance and real estate taxes and contain escalation provisions based on future adjustments in price indices. As of June 30, 2004, the Company has purchase commitments of approximately $89 million relating to software and equipment maintenance contracts...

  • Page 46
    ... income taxes. Business unit assets include funds held for clients but exclude corporate cash, marketable securities and goodwill. Reconciling Items (In millions) Employer Services Brokerage Services Dealer Services Other Foreign Exchange Client Fund Interest Cost of Capital Charge Total...

  • Page 47
    .... Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders of Automatic Data Processing, Inc. Roseland, New Jersey We have audited the accompanying consolidated balance sheets of Automatic Data Processing, Inc. and subsidiaries ("the Company") as of June 30...

  • Page 48
    ... expert" (2) Compensation Committee (3) Executive Committee (4) Nominating/Corporate Governance Committee Gary C. Butler President and Chief Operating Officer Joseph A. Califano, Jr. (1), (2) Chairman of the Board and President, The National Center on Addiction and Substance Abuse at Columbia...

  • Page 49
    ... Inc. and Subsidiaries Corporate Headquarters Automatic Data Processing, Inc. One ADP Boulevard Roseland, New Jersey 07068-1728 973.974.5000 Annual Report, Form 10-K and Other Reports This 2004 Annual Report is also available online under "Investor Information" on ADP's Web site at www.adp.com. Our...

  • Page 50
    Automatic Data Processing, Inc. One ADP Boulevard Roseland, New Jersey 07068-1728 973.974.5000 www.adp.com