Part I
Item 1. Business
Automatic Data Processing, Inc.,
incorporated in Delaware in 1961 (together with its subsidiaries, “ADP” or the
“Company”), is one of the world’s largest providers of business outsourcing
solutions. Leveraging 60 years of experience, ADP® offers a wide range of
human resource (HR), payroll, tax and benefits administration solutions from a
single source. ADP is also a leading provider of integrated computing solutions
to automotive, truck, motorcycle, marine, recreational vehicle and heavy
machinery dealers throughout the world. For financial information by segment and
by geographic area, see Note 18 of the “Notes to Consolidated Financial
Statements” contained in this Annual Report on Form 10-K. The Company’s Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all
amendments to those reports, and the Proxy Statement for its Annual Meeting of
Stockholders are made available, free of charge, on its website at www.adp.com
as soon as reasonably practicable after such reports have been filed with or
furnished to the Securities and Exchange Commission. The following summary describes
ADP’s activities.
Employer
Services
Employer Services offers a
comprehensive range of HR information, payroll processing, tax and benefits
administration solutions and services, including traditional and Web-based
outsourcing solutions, that assist employers in the United States, Canada,
Europe, South America (primarily Brazil), Australia and Asia to staff, manage,
pay and retain their employees. As of June 30, 2010, Employer Services assisted
approximately 520,000 employers with approximately 614,000 payrolls. Employer
Services markets these solutions and services through its direct marketing
salesforce and, on a limited basis, through indirect sales channels, such as
marketing relationships with banks and accountants, among others. In fiscal
2010, 80% of Employer Services’ revenues were from the United States, 13% were
from Europe, 5% were from Canada and 2% were from South America (primarily
Brazil), Australia and Asia.
Employer Services’ approach to the
market is to match clients’ needs to the solutions and services that will best
meet their expectations. To facilitate this approach, in the United States,
Employer Services is comprised of the following market-facing groups: Small
Business Services (SBS) (serving primarily organizations with fewer than 50
employees); Major Account Services (serving primarily organizations with between
50 and 999 employees); and National Account Services (serving primarily
organizations with 1,000 or more employees). In addition, Employer Services’
Added Value Services division provides services to clients across all three of
these groups.
ADP provides payroll services that
include the preparation of client employee paychecks, electronic direct deposits
and stored value payroll cards, along with employee pay statements, supporting
journals, summaries and management reports. ADP also supplies the quarterly and
annual social security, medicare and federal, state and local income tax
withholding reports required to be filed by employers. ADP enables its largest
clients to interface their major enterprise resource planning (ERP) applications
with ADP’s outsourced payroll services. For those companies that choose to
process payroll in-house, ADP delivers stand-alone services such as payroll tax
filing, check printing and distribution, year-end tax statements (i.e., Form W-2), wage garnishment
services, health and welfare administration and flexible spending account (FSA)
administration.
In order to address the growing
business process outsourcing (BPO) market for clients seeking human resource
information systems and benefit outsourcing solutions, ADP offers its integrated
comprehensive outsourcing services (COS) solution that allows larger clients to
outsource to ADP HR, payroll, payroll administration, employee service center,
benefits administration, and time and labor management functions. For mid-sized
clients, ADP Workforce Now™ Comprehensive Services provides integrated tools and
technology to support payroll, a full-featured benefits administration solution,
HR guidance and HR administration needs from recruitment to retirement. ADP also
offers ADP Resource®, an integrated,
flexible HR and payroll service offering for smaller clients that provides a
menu of optional services, such as 401(k), FSA and a comprehensive
Pay-by-Pay®
workers’ compensation payment program.
ADP’s Added Value Services division
includes the following businesses: Tax and Financial Services, Insurance
Services and Tax Credit Services. These businesses primarily support SBS, Major
Account Services and/or National Account Services, and their services are sold
through those businesses, as well as by dedicated sales teams and via marketing
arrangements with alliance partners.
- Tax and Financial
Services processes and collects federal, state and local payroll taxes on
behalf of, and from, ADP clients and remits these taxes to the appropriate
taxing authorities. This business provides an electronic interface between ADP
clients and over 7,600 federal, state and local tax agencies in the United
States, from the Internal Revenue Service to local governments. In fiscal
2010, Tax and Financial Services in the United States processed and delivered
approximately 47 million employee year-end tax statements and over 38 million
employer payroll tax returns and deposits, and moved $1.1 trillion in client
funds to taxing authorities and its clients’ employees via electronic
transfer, direct deposit and ADPCheck™. Tax and Financial Services is also
responsible for the efficient movement of information and funds from clients
to third parties through service offerings such as new hire reporting,
TotalPay®
payroll check (ADPCheck™), full service direct deposit (FSDD), stored value
payroll card (TotalPay® Card), wage
verification services, unemployment claims processing, wage garnishment
processing, sales and use tax services and its new ADP Procure-to-Pay
SolutionsSM,
which automates the P2P supply chain and streamlines order, receipt, invoice
and payment processes.
- Insurance Services
provides a comprehensive Pay-by-Pay workers’ compensation payment program and,
through Automatic Data Processing Insurance Agency, Inc., offers workers
compensation and group health insurance to small and mid-sized
clients.
- Tax Credit Services
provides job tax credit services that assist employers in the identification
of, and filing for, federal, state and local tax credits and other incentives
based on geography, demographics and other criteria, and includes negotiation
of incentive packages with applicable governmental agencies.
Employer Services also provides the
following solutions and services:
- Retirement Services
provides recordkeeping and/or related administrative services with respect to
various types of retirement (primarily 401(k) and SIMPLE IRA) plans, deferred
compensation plans and “premium only” cafeteria plans.
- Pre-Employment Services
includes Screening and Selection Services and Applicant Management Services.
Screening and Selection Services provides background checks, reference
verifications and an HR help desk. Applicant Management Services provides
employers with a web-based solution to manage their talent throughout their
lifecycle.
- ADP’s Benefit Services
provides benefits administration across all market segments, including
management of open enrollment and ongoing enrollment of benefits, and leave of
absence, COBRA and FSA administration.
- ADP’s Time and Labor
Management Services provides solutions for employers to capture, calculate and
report employee time and attendance.
- ADP’s Talent Management
solutions include Performance Management, Compensation Management and Learning
Management.
In fiscal 2010, ADP made several
acquisitions to help expand its client base and reach into adjacent markets,
including: DO2 Technologies Inc., a leading provider of electronic-invoicing
solutions; OneClick HR plc, a UK provider of human resources solutions offering
HR software, training services and outsourced HR solutions; and HRinterax, Inc.,
an HR content and support services company focused on the small business market.
In August 2010, ADP acquired Workscape, Inc., a leading provider of integrated
benefits and compensation solutions and services.
International
Employer Services has a growing
presence outside of the United States, where it offers solutions on the basis of
both geographic and specific client business needs. ADP offers in-country “best
of breed” payroll and human resource outsourcing solutions to both small and
large clients in over a dozen foreign countries. In each of Canada and Europe,
ADP is the leading provider of payroll processing (including full departmental
outsourcing) and human resource administration services. Within Europe, Employer
Services has business operations supporting its in-country solutions in eight
countries: France, Germany, Italy, the Netherlands, Poland, Spain, Switzerland
and the United Kingdom. It also offers services in Ireland (from the United
Kingdom) and in Portugal (from Spain). In South America (primarily Brazil),
Australia and Asia (primarily China), ADP provides traditional service bureau
payroll and also offers full departmental outsourcing of payroll services. ADP
also offers wage and tax collection and remittance services in Canada, the
United Kingdom and the Netherlands.
In fiscal 2010, ADP continued to
expand its GlobalView® offering, making it
available in 41 countries. GlobalView is built on the SAP® ERP Human Capital
Management and the SAP NetWeaver® platform and offers
multinational and global companies an end-to-end outsourcing solution enabling
standardized payroll processing and human resource administration. As of the end
of fiscal 2010, 96 clients had contracted for GlobalView services, with
approximately 714,000 employees being processed. Upon completing the
implementation for all these clients, ADP expects to be providing GlobalView
services to nearly 1.3 million employees in 41 countries. Further, through its
ADP Streamline®
offering, ADP also provides a single point of contact for payroll processing and
human resource administration services for multinational companies with small
and mid-sized operations in 63 countries. At the end of fiscal 2010, ADP
Streamline was used by 330 multinational companies with
approximately 52,000 employees being processed.
Professional Employer Organization
Services
In the United States, ADP’s
TotalSource®, the
Company’s professional employer organization (PEO) business, provides
approximately 5,600 clients with comprehensive
employment administration outsourcing solutions through a co-employment
relationship, including payroll, payroll tax filing, HR guidance, 401(k) plan
administration, benefits administration, compliance services, health and
workers’ compensation coverage and other supplemental benefits for employees.
ADP’s TotalSource is the largest PEO in the United States based on the number of
paid worksite employees. ADP’s TotalSource has 47 offices located in 22 states
and serves approximately 211,000 worksite employees in all 50
states.