ADP 2013 Annual Report Download - page 28

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In addition, the reconciling items include an adjustment for the difference between actual interest income earned on invested funds held
for clients and interest credited to Employer Services and PEO Services at a standard rate of 4.5%. This allocation is made for management
reasons so that the reportable segments’
results are presented on a consistent basis without the impact of fluctuations in interest rates. This
allocation is a reconciling item to our reportable segments’
revenues from continuing operations and earnings from continuing operations before
income taxes and is eliminated in consolidation.
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 2013 Compared to Fiscal 2012
Revenues
Employer Services' revenues increased $525.5 million , or 7% , to $7,914.0 million in fiscal 2013 , as compared to fiscal 2012 .
Revenues for our Employer Services business would have increased approximately 6% without the impact of acquisitions and revenues
pertaining to the sale in fiscal 2012 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 bookings growth, an increase in the number of employees on our
clients’ payrolls, and the impact of price increases. Our worldwide client revenue retention rate in fiscal 2013
increased 40 basis points to 91.3%
as compared to our rate in fiscal 2012 and our pays per control increased 2.8% in fiscal 2013 .
Earnings from Continuing Operations before Income Taxes
Employer Services’ earnings from continuing operations before income taxes increased $185.0 million , or 9% , to $2,134.2 million in
fiscal 2013 , as compared to fiscal 2012 . The increase was due to the increase in revenues of $525.5 million discussed above, which was
partially offset by an increase in expenses of $340.5 million . In addition to an increase in expenses related to increased revenues, expenses
increased in fiscal 2013 due to investments in our salesforce and labor-related costs over the same period prior year levels coupled with the
effects of acquisitions. Overall margin increase d approximately 60 basis points from 26.4% to 27.0% for fiscal 2013 , as compared to fiscal
2012 , and included the benefit of increased operating scale, offset by approximately 50 basis points of margin decline attributable to
acquisitions.
Fiscal 2012 Compared to Fiscal 2011
Revenues
Employer Services' revenues increased $510.2 million , or 7% , to $7,388.5 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 bookings 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 while our pays per control metric increased 3.0% for fiscal 2012.
Earnings from Continuing Operations before Income Taxes
Employer Services' earnings from continuing operations before income taxes increased $117.3 million , or 6% , to $1,949.2 million in
fiscal 2012, as compared to fiscal 2011. The increase was due to the increase in revenues of $510.2 million discussed above, which was partially
offset by an increase in expenses of $392.9 million. In addition to an increase in expenses related to increased revenues, expenses increased for
fiscal 2012 due to investments in salesforce associate headcount and labor-related costs over the same period prior year levels coupled with the
effects of acquisitions. Overall margin decrease d approximately 20 basis points from 26.6% to 26.4% for fiscal 2012, as compared to fiscal
2011, with approximately 80 basis points of margin decline attributable to acquisitions.
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