ADP 2008 Annual Report Download - page 45

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The Company acquired five businesses in fiscal 2006 for approximately $353.8 million, net of cash acquired. These acquisitions resulted in
approximately $362.5 million of goodwill. Intangible assets acquired, which totaled approximately $74.7 million, consist primarily of software,
and customer contracts and lists that are being amortized over a weighted average life of 10 years. In addition, the Company made $0.7 million
of contingent payments in fiscal 2006 relating to previously consummated acquisitions.
The acquisitions discussed above for fiscal 2008, 2007 and 2006 were not material, either individually or in the aggregate, to the Company’ s
operations, financial position or cash flows.
NOTE 5. DIVESTITURES
On June 30, 2007, the Company entered into a definitive agreement to sell its Travel Clearing business for approximately $116.0 million in
cash. The Company completed the sale of its Travel Clearing business on July 6, 2007. The Travel Clearing business was previously reported
in the “Other” segment. In connection with the disposal of this business, the Company has classified the results of this business as discontinued
operations for all periods presented. Additionally, in January 2008, the Company finalized a purchase price adjustment and received an
additional payment of $7.2 million, for which the Company recorded a gain of $7.2 million, or $4.9 million after taxes, within earnings from
discontinued operations on the Statements of Consolidated Earnings. During fiscal 2008, the Company reported a gain of $95.8 million, or
$62.2 million after taxes, within earnings from discontinued operations on the Statements of Consolidated Earnings.
On March 30, 2007, the Company completed the tax-free spin-off of its former Brokerage Services Group business, comprised of Brokerage
Services and Securities Clearing and Outsourcing Services, into an independent publicly traded company called Broadridge. As a result of the
spin-off, ADP stockholders of record on March 23, 2007 (the “record date”) received one share of Broadridge common stock for every four
shares of ADP common stock held by them on the record date and cash for any fractional shares of Broadridge common stock. ADP distributed
approximately 138.8 million shares of Broadridge common stock in the distribution. The spin-off was made without the payment of any
consideration or the exchange of any shares by ADP stockholders. The Company has classified the results of operations of the spun-off
business as discontinued operations for all periods presented.
During fiscal 2008, the Company recorded a net gain of $10.2 million, net of taxes, within earnings from discontinued operations related to a
change in estimated taxes on the divestitures of businesses of $11.3 million, partially offset by professional fees incurred in connection with the
divestitures of businesses of $1.1 million.
On January 23, 2007, the Company completed the sale of Sandy Corporation, a business within the Dealer Services segment, which specializes
in sales and marketing training, for approximately $4.0 million in cash and the assumption of certain liabilities by the buyer, plus an additional
earn-out payment if certain revenue targets are achieved. The Company has classified the results of operations of this business as discontinued
operations for all periods presented. Additionally, during the fiscal year 2007, the Company reported a gain of $11.2 million, or $6.9 million
after tax, within earnings from discontinued operations on the Statements of Consolidated Earnings. In March 2008, the Company received an
additional payment of $2.5 million, which represented a purchase price adjustment for the sale of Sandy Corporation. The Company recorded
an additional gain of $2.5 million, or $1.6 million net of tax, within earnings from discontinued operations during fiscal 2008.
On April 13, 2006, the Company completed the sale of its Claims Services business to Solera, Inc. for $975.0 million in cash and reported a
gain of $560.9 million, or $452.8 million after tax, in fiscal 2006. In fiscal 2007, the Company received an additional payment of $13.2 million,
or $12.6 million after tax, from Solera, Inc., which represented the final purchase price adjustment for the sale of the Claims Services business.
The Company reported the gain and the final purchase price adjustment within earnings from discontinued operations on the Statements of
Consolidated Earnings. The Claims Services business was a separate operating segment of the Company and was reported in the “Other”
segment. In connection with the disposal of this business, the Company has classified the results of operations of this business as discontinued
operations for all periods presented.
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