ADP 2009 Annual Report Download - page 24

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D
ealer Services
Fiscal 2009 Compared to Fiscal 2008
R
evenues
Dealer Services' revenues decreased $42.8 million, or 3%, to $1,348.6 million in fiscal 2009. Revenues for our Dealer Services business
would have declined approximately 4% for fiscal 2009 without the impact of acquisitions. The decrease in revenues was due to client losses
and cancellation of services resulting from the consolidation and closing of dealerships and continued pressure on dealerships to reduce costs,
all of which resulted in a decrease to revenues of $72.9 million for fiscal 2009. In addition, revenues decreased $23.9 million due to lower
Credit Check, Laser Printing, and Computerized Vehicle Registration (“CVR”) transaction volume and $9.5 million due to a decrease in
revenues from consulting services and forms and supplies. These decreases in revenues were offset by a $67.8 million increase in revenues
from new clients and growth in our key products during fiscal 2009. The growth in our key products was driven by increased users for
Application Service Provider (“ASP”) managed services, growth in our Customer Relationship Management applications and new network and
hosted IP telephony installations.
E
arnings from Continuing Operations before Income Taxes
Dealer Services’ earnings from continuing operations before income taxes decreased $9.7 million, or 4%, to $224.1 million in fiscal 2009
due to the decrease of $42.8 million in revenues discussed above, which was partially offset by a decrease in expenses of $33.1 million. The
decrease in expenses was due to lower selling expenses of $11.4 million related to a decline in new client sales and a decrease of $13.2 million
in expenses due to certain cost saving initiatives, including headcount reductions and curtailment of non-essential travel and entertainment
expenses, and a decrease of $7.1 million related to management incentive compensation expenses.
Fiscal 2008 Compared to Fiscal 2007
R
evenues
Dealer Services' revenues increased $110.8 million, or 9%, to $1,391.4 million in fiscal 2008. The increase in revenues in fiscal 2008 was
driven by both internal revenue growth and by acquisitions. Internal revenue growth, which represents the revenue growth excluding the impact
of acquisitions and divestitures, was approximately 6% in fiscal 2008. Revenues increased for our dealer business systems in North America by
$59.1 million, to $1,012.9 million in fiscal 2008 due to growth in our key products. The growth in our key products was driven by the increased
users for ASP managed services, growth in our Digital Marketing strategic initiatives, increased Credit Check and CVR transaction volume,
and new network and hosted IP telephony installations. In addition, revenues increased $39.9 million due to business acquisitions in the fourth
quarter of the fiscal year 2007 as well as in fiscal 2008.
E
arnings from Continuing Operations before Income Taxes
Dealer Services’ earnings from continuing operations before income taxes increased $26.6 million, or 13%, to $233.8 million in fiscal 2008
due to the increase in revenues of our dealer business systems and contributions from recent acquisitions. These increases were offset by an
increase in operating expenses as a result of an increase in headcount to support new business sales and the timing of installations during the
year. Lastly, our expenses increased by approximately $37.0 million as a result of acquisitions of businesses during fiscal 2008.
Other
The primary components of the “Other” segment are miscellaneous processing services, such as customer financing transactions, non-
recurring gains and losses and certain expenses that have not been charged to the reportable segments, such as stock-based compensation
expense. Stock-based compensation expense was $96.0 million, $123.6 million and $130.5 million in fiscal 2009, 2008 and 2007, respectively.
Lastly, a gain on the sale of a building of $2.2 million in fiscal 2009 and a gain on sale of a building of $16.0 million in fiscal 2008 are included
in “Other.”
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