ADP 2011 Annual Report Download - page 15

Dealer Services
Dealer Services provides integrated dealer management systems (such a system is also known in the industry as a “DMS”
), digital
marketing solutions, including website, sales leads, email, search, display and social media marketing services and other business
management solutions to auto, truck, motorcycle, marine, RV and heavy equipment retailers in North America, Europe, South Africa,
the Middle East, and the Asia Pacific region. Approximately 25,000 auto, truck, motorcycle, marine, RV and heavy equipment retailers
in nearly 100 countries use our DMS products, other software applications, networking solutions, data integration, consulting and/or
digital marketing services. As of June 30, 2010, Dealer Services provided DMS products to approximately 25,000 retailers in over 90
countries.
EXECUTIVE OVERVIEW
We are pleased with the strong results we achieved in fiscal 2011 coming out of a challenging year in fiscal 2010 and remain
optimistic as we continue to see strengthening in our core business model, significant improvements in our key business metrics and
strong growth from our strategic acquisitions. Our continued investment in product innovation, sales force and client service has
had a positive impact and remains in support of our five
- point strategic growth program, which consists of:
●Strengthening the core business;
●Growing our differentiated HR Business Process Outsourcing (“
BPO ” ) offerings;
●Focusing on international expansion;
●Entering adjacent markets that leverage the core; and
●Expanding pretax margin
Consolidated revenues from continuing operations in fiscal 2011 increased 11%, to $9,879.5 million, as compared to $8,927.7 million in
fiscal 2010. Earnings from continuing operations before income taxes and net earnings from continuing operations increased 4%.
Diluted earnings per share from continuing operations increased 5%, to $2.52 in fiscal 2011, from $2.40 per share in fiscal 2010, on
fewer shares outstanding. Fiscal 2010 included a favorable tax item that reduced the provision for income taxes by $12.2 million.
Excluding this favorable tax item in fiscal 2010, net earnings from continuing operations increased 5% and diluted earnings per share
from continuing operations increased 6% from $2.37 to $2.52. In fiscal 2011 we continued to enhance value to our shareholders by
returning excess cash of $1.4 billion through dividends and our share buyback program while also investing $776 million in new
acquisitions.
Each of our business segments has continued to demonstrate core strength. Employer Services
’ revenues increased 8% to $6,861.7
million, PEO Services ’ revenues increased 17% to $1,543.9 million, and Dealer Services ’ revenues increased 24% to $1,494.4 million in
fiscal 2011. In the United States, revenues from our traditional payroll and beyond payroll Employer Services businesses grew 3%
and 13%, respectively, in fiscal 2011 aided in part by acquisitions. Pays per control, which represents the number of employees on
our clients' payrolls as measured on a same
- store - sales basis utilizing a subset of over 125,000 payrolls of small to large businesses
that are reflective of a broad range of U.S. geographic regions, increased 2.4 % for the twelve months ended June 30, 2011. Our client
retention level continued the improvement in trends seen from fiscal 2010 with a gain of 1.2 percentage points worldwide over last
year
’ s level, ending at 91% for the year. The growth in PEO Services ’ revenues is primarily due to a 12% increase in the average
number of worksite employees as well as an increase in benefit costs and state unemployment insurance rates. Dealer Services
’
revenues growth of 24% resulted mainly from the effects of the Cobalt acquisition in August 2010. Excluding the Cobalt acquisition,
Dealer Services
’ revenues grew 3%.
Employer Services
’ and PEO Services ’ new business sales, which represent annualized recurring revenues anticipated from sales
orders to new and existing clients, grew 9% worldwide, to approximately $1,082.1 million in fiscal 2011. Dealer Services
’ new business
sales showed continued strength with growth primarily as a result of the recent acquisition of Cobalt.
Consolidated interest on funds held for clients decreased approximately 0.5%, or $2.7 million, to $540.1 million from $542.8 million in
fiscal 2010. The decrease in the consolidated interest on funds held for clients resulted from the decrease in the average interest rate
earned to 3.2% in fiscal 2011 as compared to 3.6 % in fiscal 2010 with such decreases having been offset by 11% growth in average
client funds balances resulting from our positive Employer Services metrics.
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