ADP 2010 Annual Report Download - page 27

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Other income, net, decreased $58.5 million in fiscal 2009 as compared to fiscal 2008 due to a loss of $18.3 million related to investment
in the Reserve Fund, a decrease in interest income on corporate funds of $15.3 million, a reduction in income of $13.8 million from the
sale of buildings and an increase in net realized losses on available
-
for
-
sale securities of $11.1 million. In the aggregate, interest
income on corporate funds decreased by approximately $30.9 million related to decreases in interest rates and increased
approximately $15.6 million related to increases in average daily balances. Average interest rates decreased from 4.4% in fiscal 2008
to 3.6% in fiscal 2009. Average daily balances increased from $3.4 billion in fiscal 2008 to $3.7 billion in fiscal 2009.
Earnings from Continuing Operations before Income Taxes
Earnings from continuing operations before income taxes increased 5%, to $1,900.1 million in fiscal 2009, from $1,803.4 million in fiscal
2008, due to the increase in revenues and the decrease in expenses discussed above. Overall margin increased 80 basis points in
fiscal 2009.
Provision for Income Taxes
The effective tax rate in fiscal 2009 was 30.3%, as compared to 35.9% in fiscal 2008. The decrease in the effective tax rate is due to a
reduction in the provision for income taxes of $120.0 million related to favorable tax settlements, including an IRS audit settlement
and the settlement of a state tax matter. These settlements decreased the effective tax rate by approximately 6.3 percentage points in
fiscal 2009. Lastly, during fiscal 2008, there was a reduction in the provision for income taxes of $12.4 million related to the settlement
of a state tax matter. This decreased the effective tax rate by approximately 0.7 percentage points in fiscal 2008.
Net Earnings from Continuing Operations and Diluted Earnings per Share from Continuing Operations
Net earnings from continuing operations increased 15%, to $1,325.1 million, in fiscal 2009, from $1,155.7 million in fiscal 2008, and the
related diluted earnings per share from continuing operations increased 20%, to $2.62 in fiscal 2009. The increase in net earnings from
continuing operations in fiscal 2009 reflects the increased revenues, lower expenses and lower effective tax rate as described above.
The increase in diluted earnings per share from continuing operations in fiscal 2009 reflects the increase in net earnings from
continuing operations and the impact of fewer weighted average diluted shares outstanding due to the repurchase of 13.8 million
shares in fiscal 2009 and 32.9 million shares in fiscal 2008.
ANALYSIS OF REPORTABLE SEGMENTS
Revenues
23
(Dollars in millions)
Years ended June 30,
$ Change
% Change
2010
2009
2008
2010
2009
2010
2009
Employer Services
$
6,442.6
$
6,438.9
$
6,227.8
$
3.7
$
211.1
0
%
3
%
PEO Services
1,316.8
1,185.8
1,060.5
131.0
125.3
11
%
12
%
Dealer Services
1,229.4
1,267.9
1,301.8
(38.5
)
(33.9
)
(3
)%
(3
)%
Other
16.4
19.4
4.9
(3.0
)
14.5
(15
)%
100
+%
Reconciling items:
Foreign exchange
59.2
(7.3
)
153.8
Client funds interest
(136.7
)
(66.3
)
(15.1
)
Total revenues
$
8,927.7
$
8,838.4
$
8,733.7
$
89.3
$
104.7
1
%
1
%