ADP 2012 Annual Report Download - page 32

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Finally, the reportable segments’ results also include a cost of capital charge related to the funding of acquisitions and other investments. This
charge is a reconciling item to earnings from continuing operations before income taxes and is eliminated in consolidation.
Employer Services
Fiscal 2012 Compared to Fiscal 2011
Revenues
Employer Services' revenues increased $524.8 million, or 7%, to $7,567.7 million in fiscal 2012 as compared to fiscal 2011. Revenues for our
Employer Services business would have increased approximately 6% without the impact of acquisitions and revenues pertaining to the sale of
assets related to rights and obligations to resell a third-party expense management platform. Revenues increased due to new business started
during the year from new business sales growth, an increase in the number of employees on our clients’ payrolls, and the impact of price
increases. Our worldwide client revenue retention rate for fiscal 2012 decreased slightly as compared to our rate for fiscal 2011. Pays per
control, which represents the number of employees on our clients’ payrolls as measured on a same-store-sales basis utilizing a representative
subset of payrolls ranging from small to large businesses that are reflective of a broad range of U.S. geographic regions, increased 3.0% for
fiscal 2012.
Earnings from Continuing Operations before Income Taxes
Employer Services’ earnings from continuing operations before income taxes increased $115.8 million, or 6%, to $1,972.3 million in fiscal
2012 as compared to fiscal 2011. The increase was due to the increase in revenues of $524.8 million discussed above, which was partially
offset by an increase in expenses of $409.0 million. In addition to an increase in expenses related to increased revenues, expenses increased for
fiscal 2012 due to increases in sales headcount and labor-related costs over the same period prior year levels coupled with the effects of
acquisitions. Overall margin decreased approximately 30 basis points from 26.4% to 26.1% for fiscal 2012 as compared to fiscal 2011, with
approximately 80 basis points of margin decline attributable to acquisitions.
Fiscal 2011 Compared to Fiscal 2010
Revenues
Employer Services' revenues increased $507.8 million, or 8%, to $7,042.9 million in fiscal 2011 as compared to fiscal 2010. Revenues for our
Employer Services business would have increased approximately 6% without the impact of acquisitions. Revenues increased due to new
business started during the year from new business sales growth, an increase in the number of employees on our clients’ payrolls, and higher
average client funds balances. Our worldwide client revenue retention rate increased 120 basis points in fiscal 2011 to 91.1% as compared to
our rate for fiscal 2010 and our pays per control increased 2.4% in fiscal 2011 as compared to our rate for fiscal 2010.
Earnings from Continuing Operations before Income Taxes
Employer Services’ earnings from continuing operations before income taxes increased $115.1 million to $1,856.5 million in fiscal 2011 as
compared to fiscal 2010. The increase was due to the increase in revenues of $507.8 million discussed above, which was partially offset by an
increase in expenses of $392.7 million. In addition to an increase in expenses related to increased revenues, expenses increased in fiscal 2011
due to increases in sales and service headcount over fiscal 2010 levels coupled with the effects of acquisitions. Overall margin decreased
approximately 20 basis points from 26.6% to 26.4% in fiscal 2011 as compared to fiscal 2010, with approximately 110 basis points of margin
decline attributable to acquisitions.
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