ADP 2010 Annual Report Download - page 32

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Earnings from Continuing Operations before Income Taxes
Dealer Services' earnings from continuing operations before income taxes decreased $13.3 million, or 6%, to $201.0 million in fiscal
2010. The decrease was due to the decline in revenues of $38.5 million discussed above, which was partially offset by a decrease in
expenses of $25.2 million. The decrease in expenses was due to certain cost saving initiatives, including headcount reductions at the
end of fiscal 2009 and a reduction in travel and entertainment expenses, offset by an asset impairment charge of $6.8 million as a
result of the announcement by GM that it will shut down its Saturn division.
Fiscal 2009 Compared to Fiscal 2008
Revenues
Dealer Services' revenues decreased $33.9 million, or 3%, to $1,267.9 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 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 ASP managed services, growth in our CRM applications and new network and hosted IP telephony installations.
Earnings from Continuing Operations before Income Taxes
Dealer Services
’
earnings from continuing operations before income taxes decreased $5.8 million, or 3%, to $214.3 million in fiscal
2009 due to the decrease of $33.9 million in revenues discussed above, which was partially offset by a decrease in expenses of $28.1
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.
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 $67.6 million, $96.0 million and $123.6 million in fiscal 2010, 2009 and
2008, respectively.
27