ADP 2014 Annual Report Download - page 23

Note 1. Non-GAAP measures
The following table reconciles our fiscal 2013 results to adjusted results which exclude a non tax-deductible goodwill impairment charge.
(In millions)
2013
As reported
Goodwill
impairment
Adjusted
Earnings from continuing operations before income taxes
$ 1,710.1
$ 42.7
$ 1,752.8
Net earnings from continuing operations
$ 1,122.2
$ 42.7
$ 1,164.9
Diluted earnings per share from continuing operations
$ 2.30
$ 0.09
$ 2.39
Fiscal 2015 Compared to Fiscal 2014
Total Revenues
Despite pressure from foreign currency translation, our total revenues increased 7% in fiscal 2015 , as compared to fiscal 2014 , primarily due to new
business started during the year from new business bookings growth. Refer to “A nalysis of Reportable Segments” for additional discussion of the increases in
revenue for both of our reportable segments, Employer Services and PEO Services. For fiscal 2015 , total revenue was negatively impacted two percentage points
by unfavorable foreign currency translation.
Total revenues in fiscal 2015 include interest on funds held for clients of $377.7 million , as compared to $373.4 million in fiscal 2014 . The increase in
the consolidated interest earned on funds held for clients resulted from an increase in our average client funds balance of 5% , to $21.8 billion in fiscal 2015 ,
partially offset by a decrease in the average interest rate earned to 1.7% in fiscal 2015 as compared to 1.8% in fiscal 2014 . Total interest on funds held for clients
was impacted one percentage point from unfavorable foreign currency translation.
Total Expenses
Total expenses increased 6% in fiscal 2015 , as compared to fiscal 2014 , primarily due to increased costs to service our expanding client base and support
our growing revenue. Total expenses also increased due to additional investments in product innovation and expenses directly related to the increase in new
business bookings. For fiscal 2015 , our total expense growth decreased two percentage points from foreign currency translation.
Operating expenses include the costs directly attributable to servicing our clients. Additionally, operating expenses include PEO Services pass-through
costs that are re-billable and which include costs for benefits coverage, workers’ compensation coverage, and state unemployment taxes for worksite
employees. These pass-through costs were $2,015.9 million for fiscal 2015 , which included costs for benefits coverage of $1,627.1 million and costs for workers’
compensation and payment of state unemployment taxes of $388.8 million . These pass-through costs were $1,736.0 million for fiscal 2014 , which included costs
for benefits coverage of $1,383.3 million and costs for workers’ compensation and payment of state unemployment taxes of $352.7 million .
Systems development and programming costs increased $44.2 million in fiscal 2015 , as compared to fiscal 2014 , due to increased investment and costs
to develop, support, and maintain our products, partially offset by a higher proportion of capitalized costs of our strategic projects.
Selling, general and administrative expenses increased $126.6 million due to an increase in selling expenses to support our growth in new business
bookings as we experienced traction from our increased focus on product development, high demand for additional HCM solutions, including products that assist
businesses in complying with the ACA , improved productivity, and an improving economic backdrop in the U.S., partially offset by the impact of foreign currency
translation.
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