ADP 2010 Annual Report Download - page 58

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At September 30, 2009 and June 30, 2010, the Company concluded it had the intent to sell certain securities for which unrealized
losses of $5.3 million and $9.1 million, respectively, were previously recorded in accumulated other comprehensive income on the
Consolidated Balance Sheets. As such, the Company realized impairment losses of $14.4 million in other income, net on the
Statements of Consolidated Earnings during fiscal 2010.
During fiscal years 2010, 2009 and 2008, the Company sold buildings and, as a result, recorded gains of $1.5 million, $2.2 million and
$16.0 million, respectively, in other income, net, on the Statements of Consolidated Earnings. Additionally, during fiscal 2010, the
Company reclassified assets related to one other building to Assets Held for Sale on the Consolidated Balance Sheets and recorded
a loss of $3.8 million on the Statements of Consolidated Earnings. Refer to Note 9 for more information related to Assets Held for
Sale.
The Company has an outsourcing agreement with Broadridge Financial Solutions, Inc. (“Broadridge”
)
pursuant to which the
Company provides data center outsourcing services, which principally consist of information technology services and service
delivery network services. As a result of the outsourcing agreement, the Company recognized income of $104.8 million and $103.5
million in fiscal 2010 and fiscal 2009, respectively, which is offset by expenses associated with providing such services of $102.6
million and $101.3 million, respectively, both of which were recorded in other income, net on the Statements of Consolidated
Earnings. The Company had a receivable on the Consolidated Balance Sheets from Broadridge for the services under this agreement
of $8.9 million and $8.7 million on June 30, 2010 and 2009, respectively. In fiscal 2010, Broadridge notified the Company that it would
not extend the outsourcing agreement beyond its current expiration date of June 30, 2012. The Company is currently evaluating the
impact on results of operations, if any, that this will have and does not currently anticipate this will have a material impact.
NOTE 3. ACQUISITIONS
Assets acquired and liabilities assumed in business combinations were recorded on the Company
’
s Consolidated Balance Sheets as
of the respective acquisition dates based upon their estimated fair values at such dates. The results of operations of businesses
acquired by the Company have been included in the Statements of Consolidated Earnings since their respective dates of acquisition.
The excess of the purchase price over the estimated fair values of the underlying assets acquired and liabilities assumed was
allocated to goodwill. In certain circumstances, the allocations of the excess purchase price are based upon preliminary estimates and
assumptions. Accordingly, the allocations are subject to revision when the Company receives final information, including appraisals
and other analyses, which typically occurs within one year from the date of acquisition.
The Company acquired five businesses in fiscal 2010 for approximately $101.0 million, net of cash acquired. The purchase price for
these acquisitions includes $3.7 million in accrued contingent payments expected to be paid in future periods. These acquisitions
resulted in approximately $80.8 million of goodwill. Intangible assets acquired, which totaled approximately $33.5 million, consist of
software, customer contracts and lists and trademarks that are being amortized over a weighted average life of 7 years. In addition,
the Company made $2.6 million of contingent payments in fiscal 2010 relating to previously consummated acquisitions. As of June
30, 2010, the Company had contingent consideration remaining for all transactions of approximately $7.1 million.
The Company acquired four businesses in fiscal 2009 for approximately $62.7 million, which includes $6.4 million in accrued
contingent payments expected to be paid in future periods and which is net of cash acquired. These acquisitions resulted in
approximately $60.3 million of goodwill. Intangible assets acquired, which totaled approximately $20.8 million, consist of software,
customer contracts and lists and trademarks that are being amortized over a weighted average life of 9 years. In addition, the
Company made $10.7 million of contingent payments in fiscal 2009 relating to previously consummated acquisitions.
The Company acquired four businesses in fiscal 2008 for approximately $45.9 million, net of cash acquired. These acquisitions
resulted in approximately $37.7 million of goodwill. Intangible assets acquired, which totaled approximately $11.6 million, consist
primarily of software and customer contracts and lists that are being amortized over a weighted average life of 9 years. In addition,
the Company made $51.4 million of contingent payments in fiscal 2008 relating to previously consummated acquisitions.
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