Earnings Call Excerpt
Automatic Data Processing (ADP)
Q2 Fiscal 2006 Earnings Conference Call
January 25th 2006, 1:30 PM.
Executives:
Karen Dykstra, Chief Financial Officer
Art Weinbach, Chairman and Chief Executive Officer
Gary Butler, President and Chief Operating Officer
Analysts:
Greg Cappelli, Credit Suisse
Greg Smith, Merrill Lynch
Tien-tsin Huang, JP Morgan
Brandt Sakakeeny, Deutsche Banc
Lloyd Zeitman, Bernstein Investment Research
Greg Gould, Goldman Sachs
Adam Frisch, UBS
Mark Marcon, Robert W Baird
Bryan Keane, Prudential
David Togut, Morgan Stanley
Rod Bourgeois, Sanford Bernstein
David Grossman, Thomas Weisel Partners
Pat Burton, Citigroup
Gary Bisbee, Lehman Brothers
Cindy Shaw, Moors & Cabot
Presentation
Operator
Good afternoon. My name is Carol, and I will your conference facilitator. At this time I would like to welcome everyone to the Automatic Data Processing, Inc. second quarter fiscal 2006 earnings conference call. I would like to inform you that this conference is being recorded, and all lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. (Operator Instructions) I will now turn the call over to Karen Dykstra, Chief Financial Officer. Please go ahead ma'am.
Karen Dykstra, Chief Financial Officer
Good afternoon. I'm Karen Dykstra, Chief Financial Officer for ADP, and I'm here today with Art Weinbach, our Chairman and CEO, and Gary Butler, our President and Chief Operating Officer. As you know, we issued our earnings release for the quarter earlier today.
Our results were strong, with 9% revenue growth and 31% growth in earnings per share from continuing operations. And as you can see in our release, we recently completed the divestiture of our Graphics Communication business within our Investor Communications group. The business was the financial print business, which had declined in recent years with the decline in demand for research print. The revenues for that business were about $100 million annually, and it was close to a breakeven business pre-tax. During the second quarter we recorded a onetime charge for the write-down of the assets, and reclassified the business to a category called discontinued operations. Almost all of the charge that we took in the second quarter was related to the write-down of the assets. As I said, the business itself was running at close to a breakeven point. All prior periods now reflect this discontinued operation, and we have provided those reclassified numbers on our Website.
Also I wanted to mention we've been getting a lot of questions over the last few weeks as the SEC issued its proposal on Internet availability of proxy materials, and I'd like to take you through how we look at this, although I'm sure, you're welcome to ask more questions during the call. The comment period runs about three more weeks, and ADP will be submitting a written response in the next few days. The proposed rule is directed at the annual proxy mailings for corporate issuers, with the underlying premise of access equals delivery, and a goal of lowering printing and distribution costs for corporate issuers. ADP will continue to provide voting services; that supposed to change. Access in this case means allowing shareholders to get this information on the Internet versus the historical delivery, the mailing of annual reports and proxies.
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