ADP 2011 Annual Report Download - page 19

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Provision for Income Taxes
The effective tax rate in fiscal 2011 and 2010 was 35.1% and 35.2%, respectively. The reduction in the effective tax rate for fiscal 2011
is due to the resolution of certain tax matters in fiscal 2010 that resulted in a decrease to the effective tax rate of 0.7 percentage points
for that period, offset by a decrease in federal and state income tax expense and a favorable mix of earnings in foreign jurisdictions in
fiscal 2011.
Net Earnings from Continuing Operations and Diluted Earnings per Share from Continuing Operations
Net earnings from continuing operations increased $46.9 million to $1,254.2 million in fiscal 2011, from $1,207.3 million in fiscal 2010,
and diluted earnings per share from continuing operations increased 5%, to $2.52. The increase in net earnings from continuing
operations in fiscal 2011 reflects the increase in earnings from continuing operations before income taxes and the impact of the tax
matters discussed above. The increase in diluted earnings per share from continuing operations in fiscal 2011 reflects the increase in
earnings from continuing operations and the impact of the tax matters discussed above coupled with the effects of fewer shares
outstanding.
The following table reconciles the Company
’
s results for fiscal 2011 and fiscal 2010 to adjusted results that exclude the impact of
favorable tax items. The Company uses certain adjusted results, among other measures, to evaluate the Company
’
s operating
performance in the absence of certain items and for planning and forecasting of future periods. The Company believes that the
adjusted results provide relevant and useful information for investors because it allows investors to view performance in a manner
similar to the method used by the Company
’
s management and improves their ability to understand the Company
’
s operating
performance. Since adjusted earnings from continuing operations and adjusted diluted EPS are not measures of performance
calculated in accordance with accounting principles generally accepted in the United States of America (“
U.S. GAAP
”
),
they should
not be considered in isolation from, or as a substitute for, earnings from continuing operations and diluted EPS from continuing
operations, respectively, and they may not be comparable to similarly titled measures employed by other companies.
Net earnings from continuing operations, as adjusted, increased $59.1 million to $1,254.2 million for fiscal 2011, from $1,195.1 million
for fiscal 2010, and the related diluted earnings per share from continuing operations, as adjusted, increased $0.15 to $2.52. The
increase in diluted earnings per share from continuing operations in fiscal 2011 reflects the increase in earnings from continuing
operations described above coupled with the effects of fewer shares outstanding.
19
Year ended June 30, 2011
Diluted EPS
Earnings from
Net earnings from
from
continuing operations
Provision for
continuing
continuing
before income taxes
income taxes
operations
operations
As Reported
$
1,932.7
$
678.5
$
1,254.2
$
2.52
Adjustments:
Favorable tax items
-
-
-
-
As Adjusted
$
1,932.7
$
678.5
$
1,254.2
$
2.52
Year ended June 30, 2010
Diluted EPS
Earnings from
Net earnings from
from
continuing operations
Provision for
continuing
continuing
before income taxes
income taxes
operations
operations
As Reported
$
1,863.2
$
655.9
$
1,207.3
$
2.40
Adjustments:
Favorable tax items
-
12.2
12.2
0.02
As Adjusted
$
1,863.2
$
668.1
$
1,195.1
$
2.37