ADP 2008 Annual Report Download - page 40

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I. Impairment of Long-Lived Assets. In accordance with SFAS No. 144, long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the
asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which
the carrying amount of the asset exceeds the fair value of the asset.
J. Foreign Currency Translation. The net assets of the Company’ s foreign subsidiaries are translated into U.S. dollars based on exchange
rates in effect for each period, and revenues and expenses are translated at average exchange rates in the periods. Currency transaction gains or
losses, which are included in the results of operations, are immaterial for all periods presented. Gains or losses from balance sheet translation
are included in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.
K. Derivative Financial Instruments. Derivative financial instruments are measured at fair value and are recognized as assets or liabilities on
the Consolidated Balance Sheets with changes in the fair value of the derivatives recognized in either net earnings from continuing operations
or accumulated other comprehensive income (loss), depending on the timing and designated purpose of the derivative, in accordance with
SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”), SFAS No. 138, “Accounting for Certain
Derivative Instruments and Certain Hedging Activities” and SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and
Hedging Activities.”
There were no derivative financial instruments outstanding at June 30, 2008 or June 30, 2007. The Company does not hold any derivative
instruments for trading purposes.
L. Earnings per Share (“EPS”). The calculations of basic and diluted EPS are as follows:
Options to purchase 12.6 million, 16.9 million, and 26.6 million shares of common stock for fiscal 2008, 2007 and 2006, respectively, were
excluded from the calculation of diluted earnings per share because their exercise prices exceeded the average market price of outstanding
common shares for the respective fiscal year.
40
Effect of Effect of Effect of Effect of
Zero Coupon Employee Employee Employee
Subordinated Stock Option Stock Purchase Restricted Stock
Years ended June 30, Basic Notes Shares Plan Shares Shares Diluted
2008
et earnings from continuing operations $1,161.7 $ - $ - $ - $ - $1,161.7
Weighted average shares (in millions) 521.5 4.3 0.3 1.1 527.2
EPS from continuing operations $ 2.23 $ 2.20
2007
et earnings from continuing operations $1,021.2 $1.1 $ - $ - $ - $1,022.3
Weighted average shares (in millions) 549.7 0.8 4.8 1.0 1.6 557.9
EPS from continuing operations $ 1.86 $ 1.83
2006
et earnings from continuing operations $ 841.9 $1.0 $ - $ - $ - $ 842.9
Weighted average shares (in millions) 574.8 1.1 3.6 0.6 0.2 580.3
EPS from continuing operations $ 1.46 $ 1.45