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Ceridian Corp. - HR Services - Category Main Page
(952)
853-8100
3311
East Old Shakopee Rd.
Minneapolis, MN 55425
www.ceridian.com
Business Description
The
company is an $1.2 billion in revenue information services company
principally in the human resource, transportation and retail markets. Our
human resource solutions business enables customers to outsource a broad
range of employment processes, from recruitment and applicant screening, to
payroll, tax filing, human resource information systems, employee
self-service, time and labor management, benefits administration, employee
assistance and work-life programs, to post-employment COBRA, HIPAA, and
retirement plan administration. We have human resource solutions operations
in the United States, Canada and the United Kingdom. Our
Comdata business
provides transaction processing, financial services and regulatory
compliance services primarily to the transportation and retail industries.
Comdata’s products and services include payment processing and the issuance
of credit, debt and stored value cards. The company's website is
and the relevant contact information for the company is as follows:
Human
Resource Solutions
The businesses comprising our human resource solutions business (referred to
in this report as “HRS”) offer a broad range of managed human resource
solutions designed to help companies maximize the value of their people by
more effectively managing their work forces and the information that is
integral to human resource processes. Our human resource management products
and services are provided principally in the United States, Canada and the
United Kingdom.
In 2003, about 73.0% of our HRS revenue came from payroll processing and tax
filing services, 14.6% from benefits services and 12.4% from employee
assistance programs. Further, about 77.5% of our 2003 HRS revenue was from
operations located in the United States, about 13.6% from Canada, and about
8.9% from the United Kingdom.
Because the volume of payroll items processed increases in the fourth
quarter of each year in connection with employers’ year-end reporting
requirements, and because the amount of tax filing deposits also tends to be
greatest in the first quarter, our HRS revenue and profitability tend to be
greater in those quarters.
Our HRS revenue includes investment income earned from customer deposits
temporarily held in the United States and Canada pending remittance to
taxing authorities, customer employees or other third parties. About $93.1
million of revenue in 2003 was attributable to this investment income, with
approximately 33.9% of this income from interest rate derivative contracts.
All customer funds temporarily held by us are held in either a trust or in
segregated accounts. Funds from U.S. customers are invested primarily in
money market mutual funds, short-term repurchase agreements with high
quality counterparties, U.S. Treasury and Agency securities, AAA rated asset
and mortgage backed securities, and corporate bonds rated A3/A- or better.
Funds from Canadian customers are invested primarily in securities issued by
the government and provinces of Canada, highly rated Canadian banks and
corporations, asset backed trusts and mortgages. The maturity of these
investments is carefully managed to meet the related payment obligations.
Investment income is earned on these funds in lieu of charging additional
fees to our customers. Due to the significance of this investment income,
our quarterly revenue and profitability fluctuate as a result of changes in
interest rates and in the amount of customer deposits held. We use
derivative securities such as interest rate collars and swaps to manage
interest rate risk on customer deposits as further described in Part II,
Item 7A of this report.
Market
The market for human resource solutions covers a comprehensive range of
information management, human resource administration and employee
assistance services and software. These products and services include:
• transaction-oriented administrative services and software products,
primarily in areas such as payroll processing, tax filing and benefits
enrollment and administration; and
• management support software and services, primarily in areas such as human
resource administration, regulatory compliance, work-life effectiveness and
employee assistance programs.
We believe that the market for these solutions will continue to grow as
organizations seek to reduce costs, improve productivity and add services
for employees by outsourcing administrative services and further automating
internal processes. We also believe the demand for human resource solutions
to increase as organizations acquire managed human resource services from
third parties to obtain assistance in maintaining compliance with the
increasing scope and complexity of laws and regulations governing businesses
and increasingly complicated work-life issues faced by employers and
employees.
HRO
relationships will over time further expand long-term growth in revenue and
margins for this business.
Products and Services
Our human resource management solutions include:
• payroll processing and integrated human resource and time and labor
management information systems solutions;
• tax filing services;
• benefits administration, qualified retirement and other plan
administration and regulatory compliance services; and
• work-life effectiveness and employee assistance programs.
Payroll Processing and Integrated Human Resource Information Systems
Solutions. Our payroll processing for customers in the United States
consists primarily of preparing and furnishing employee payroll checks,
direct deposit advices and supporting journals and summaries. For certain
business customers, we may handle the transmission of customer payroll
funds. We also supply quarterly and annual social security, Medicare and
federal, state and local income tax withholding reports that are required to
be filed by employers and employees.
We provide human resource information systems (commonly referred to as “HRIS”)
solutions that run in Microsoft Windows environments and serve as a
“front-end” to our payroll processing system, allowing our customers to
utilize a common database for both payroll and other HRIS purposes. This
enables the customer to create a single database of employee information for
on-line inquiry, updating and reporting in payroll and other areas important
to human resource administration and management, such as employee data
tracking, government compliance, compensation analysis and benefits
administration. We also provide HRIS solutions for Microsoft operating
environments that incorporate open, industry standard technology, are
scalable, and can be utilized with an existing interface as a front-end for
our payroll processing and tax filing services.
Our eSource product is a web-enabled, fully hosted integrated payroll and
human resource administration solution, designed specifically for the
corporate and enterprise customer markets. eSource also includes integrated
time management and Source self service features, as well as wage
attachments and disbursements, internet payroll management, and
customization features within the core product offering.
Our Source 500 product suite provides an integrated HR/payroll and benefits
solution with outsourced payroll and tax filing services to customers
primarily in the corporate and enterprise customer markets. It is available
in a hosted “application service provider” environment (Source Assist) or
can be managed in-house as an installed application. Our hosted solutions
provide customers with secure 24/7 access to our solutions using a standard
web browser.
Additionally, we have a license agreement with The Ultimate Software Group,
Inc. to allow us to use that company’s UltiPro software as part of an
on-line payroll service offering. In 2003, using the UltiPro software as
modified by us, we introduced SourceWeb, an integrated payroll, HRIS, self
service solution that is completely hosted and supported by us. This product
is designed specifically for the small to smaller corporate customer market.
We also provide Internet payroll processing, tax filing, unemployment
compensation management and related services for small employers located in
the United States and Canada. Our Powerpay product is a web-based solution
that allows customers to complete payroll transactions via the Internet. The
Powerpay product also provides small businesses with access to services,
such as new hire reporting, tax filing, direct deposit, optional benefits
programs, unemployment filing and special reports services that were
previously only available to larger companies.
Tax Filing Services. Our payroll tax filing services for customers in the
United States consist primarily of collecting funds for federal, state and
local employment taxes from customers based on payroll information provided
by the customers, remitting funds collected to the appropriate taxing
authorities, filing applicable returns and handling related regulatory
correspondence and amendments. Our tax filing services are provided not only
to employers who utilize our payroll processing service, but also to local
and regional payroll processors and stand alone tax services provided
directly to employees. Payroll-related services are typically priced on a
fee-per-item-processed basis.
Benefits Administration, Qualified Retirement and Other Plan Administration
and Regulatory Compliance Services. We provide employee health and welfare
benefits administration and qualified plan administration services to our
customers. Employee health and welfare benefits administration services
include health insurance portability (i.e., the Consolidated Omnibus Budget
Reconciliation Act, or COBRA, and the Health Insurance Portability and
Accountability Act of 1996, or HIPAA) compliance services. We provide our
portability services through the trade name CobraServ. Health and welfare
benefits administration services also encompass benefits provided to active
employees, such as annual health plan enrollment, ongoing employee
enrollment and eligibility services, tuition refund plans, transportation
reimbursement under the Transportation Equity Act, and Internal Revenue Code
Section 125 plans including fully administered and self-administered
flexible spending accounts and premium-only plans. We also provide
administration services for benefits provided to retired and inactive
employees, including retiree healthcare, disability, surviving dependent,
family leave and severance benefits.
Our qualified plan administration services include 401(k) plan
administration, profit sharing plan administration, defined benefit plan
administration, employee stock ownership plan administration and Qualified
Domestic Relations Order administration.
Work-Life Effectiveness and Employee Assistance Programs. We provide
customers and their employees with a single source for fully integrated
work-life and employee assistance programs to clients of all sizes
throughout the United States, Canada and the United Kingdom. Services are
delivered through on-line access and telephonically, and through
face-to-face meetings provided by referral resources.
The services and programs we provide may be customized to meet an individual
customer’s particular needs. Our portfolio of products allows a customer to
choose the mix, level and mode of access to services that best meet its
needs. These products range from “high touch technology” capabilities
allowing employees to access specific information on-line to comprehensive
person-to-person consultation and referral services. Also included are
specialized service options, such as assistance with college selection,
elder care assessment and facility review services, and health and wellness
services. These services address employee effectiveness issues and seek to
improve employee retention and productivity, and to reduce absenteeism as
well as increase the customers’ recruitment success. Consultants provide
confidential assistance 24 hours a day to customers’ employees to help them
address issues ranging from everyday matters to crisis situations.
Supporting these consultants are research and subject matter experts who
provide specialized expertise or referrals in areas such as parenting/child
care, elder care, disabilities, addiction disorders, mental health, health
and wellness, financial, legal, managerial/supervisory and
education/schooling issues. We have also entered into arrangements with some
service and product providers to provide additional leading edge services
and expertise to our customers.
International Operations
Our international HRS operations are primarily conducted in the United
Kingdom, through Ceridian Centrefile Limited, and Canada, through Ceridian
Canada Ltd. Ceridian Centrefile Limited provides human resource services,
payroll processing services and HRIS software primarily in the United
Kingdom. Ceridian Centrefile’s services generally do not involve the
handling or transmission of customer funds. In a very few instances,
Ceridian Centrefile holds client funds for a short period of time in
non-interest bearing segregated accounts prior to disbursement pursuant to
Ceridian Centrefile’s client’s instructions.
Ceridian Canada’s operations handle payroll as well as tax filing funds for
our Canadian customers. These Canadian operations collect payroll and
payroll tax amounts from customers and remit tax amounts to applicable
governmental authorities and make direct deposits of payroll amounts to
employees’ bank accounts. As a result, revenue from our payroll processing
services in Canada includes investment income received from temporarily
holding these amounts in trust. We also charge fees for services to our
Canadian customers that are similar to those provided in the United States.
We are expanding our international payroll services into other countries,
principally in Europe, by engaging partners within each country to provide
us with payroll administration and processing services for that country. We
in turn have contracted with multinational customers for their international
requirements, and deliver a fully outsourced payroll service to these
customers.
Competition
The human resource solutions industry is highly competitive. Competition
comes from national, regional and local third party transaction processors,
as well as from software companies, consulting firms, governments,
enterprise wide providers of financial services, complete enterprise
outsourcing providers, and internally developed and operated systems and
software.
We believe that the majority of all payroll processing and tax filing in the
United States, Canada and the United Kingdom is supported in-house, with the
remainder supported by third party providers. In the United States,
Automatic Data Processing, Inc. is the largest third party provider of
payroll processing in terms of revenue, with Paychex, Inc. and Ceridian
comprising the other two large, national providers in terms of revenue. ADP
serves all sizes of employers, while Paychex generally focuses on small
employers. Other third party payroll and tax filing providers are generally
regional and local competitors, although larger, national providers of
benefits administration, 401(k) processing services or financial
institutions may expand further into outsourced payroll processing. In the
United Kingdom, we believe that our Ceridian Centrefile subsidiary is the
largest outsourced payroll processing provider in terms of revenue,
competing with several other national providers, including a subsidiary of
ADP, and local providers. In Canada, we believe that our Ceridian Canada
subsidiary is the second largest outsourced payroll processing provider in
terms of revenue, facing a similar competitive environment as in the United
Kingdom. Competition in both the payroll processing and HRIS areas also
comes from a number of large, national software companies that provide both
payroll processing software for in-house processing as well as HRIS
software, often in conjunction with other enterprise management software
applications.
Apart from payroll processing and tax filing, our other human resource
solutions generally compete with a variety of national and regional
application software companies, consulting firms, financial services
companies and human resource services providers. Generally, the market for
these products and services is evolving and is not dominated by a small
number of competitors.
Currently, we believe the principal competitive factors in the human
resource solutions industry are:
• customer service;
• leadership in technology applications;
• choice of services;
• integrated platforms;
• performance;
• price;
• functionality;
• ease and flexibility of use; and
• expertise in HR processes.
We believe that the ability to integrate human resource management solutions
with customers’ other in-house applications and the ability to provide
solutions delivered through the Internet are increasingly important
competitive factors. While we believe our businesses will be able to compete
effectively in the overall human resource solutions market, our ability to
compete effectively will depend in large measure on our ability to timely
develop and implement the appropriate technology solutions, particularly
that which incorporates industry standard architecture and Internet-based
solutions, and provide leading-edge customer service.
Comdata
Our Comdata subsidiary (which we refer to in this report as “Comdata”)
provides transaction processing, financial services and regulatory
compliance services to the transportation, retail and other industries.
Services
Comdata provides transaction processing, financial services, and regulatory
compliance services primarily to the transportation industry. Comdata also
provides transaction processing services to other industries, including the
retail, temporary staffing, oil company, restaurant and grocery store
sectors. Comdata provides services to trucking companies, truck stops and
truck drivers in the long haul segment of the trucking industry, and to the
local fleet segment. These services primarily involve the use of a
proprietary funds transfer card that facilitates truck driver transactions
and provides transaction control and trip information for trucking firms.
Additionally, Comdata markets “co-branded” transaction processing in
association with MasterCard networks. Comdata also provides assistance in
obtaining regulatory permits, pilot car services, and other compliance
services, such as fuel tax reporting and driver log auditing, local fueling
services and discounted telecommunications services in its markets. Through
Comdata’s retail services division (which includes SVS), Comdata provides
its specialty card products and services to customers outside of the
transportation industry. Comdata operates primarily in the United States and
Canada, and is expanding its business into Mexico and Europe.
BusinessLink. Comdata’s BusinessLink product is a payment transaction
services card with credit and debit capabilities principally designed to
provide businesses with control over payments to and spending by employees.
The BusinessLink card allows businesses to authenticate and authorize
individual employee purchases and provide payroll to employees. Through
BusinessLink a business can review reports of transactions made by its
employees over the Internet, as well as request the issuance of new employee
cards. BusinessLink offers businesses the capability of performing these
services on a single, customizable employee card. The BusinessLink card may
be customized for each individual employee within a business. Comdata
intends to expand the services currently available under the BusinessLink
card. BusinessLink has been initially introduced to Comdata’s principal
markets, transportation and retail. Comdata believes that the BusinessLink
card has application to businesses in other industries. BusinessLink is
being used by more than 350 customers.
Trucking Company Services (The Comdata card). Comdata’s funds transfer
system, most commonly initiated through the use of Comdata’s proprietary
Comdata card, is designed to enable truck drivers to obtain funding for
purchases and cash advances at truck stops and other locations en route to
their destination. Drivers may use the Comdata card to purchase fuel,
lodging and other approved items, obtain cash advances from ATM machines or
through the use of Comchek drafts, make long distance phone calls and make
direct deposits of pay, settlements (for non-employee owner-operators) or
trip advances to personal bank accounts. In 2003, Comdata processed
approximately 82.9 million funds transfer transactions involving
approximately $14.3 billion for the transportation industry.
Use of the Comdata card allows the trucking company customer greater control
over its expenses by allowing it to set limits on the use of the cards, such
as by designating locations where the cards may be used, the frequency with
which they may be used, phone numbers which may be called and the amount of
authorized use. Use of a Comdata card also enables Comdata to capture and
provide transaction and trip-related information to trucking company
customers (usually within 24 hours after the completion of a given trip).
This information greatly enhances a customer’s ability to track and plan
fuel purchases and other trip expenses and settle with drivers. Comdata also
provides trucking companies with a Windows-based software application that
provides trucking companies with on-line access to Comdata’s computer system
for data on fuel purchases and other trip information, and facilitates pre-
and post-trip planning functions. Comdata’s iConnectData and MOTRS (Modular
Over The Road System) web-based applications enable customers to go on-line
for local dial-up access, interactive reporting capabilities, the latest
diesel fuel prices and related information from their desktop.
Use of a Comdata account, in many instances, generates a Comchek draft,
which is payable through a Comdata bank account. Comdata funds the
underlying transaction when the truck stop (or other payee) negotiates the
draft by depositing it in its bank account. Comdata bills the trucking
company for the amount of the draft plus a portion of the service fee, and
collects from the truck stop the balance of the service fee. The trucking
company remits payment to Comdata by wire transfer or check, typically
within six days, although Comdata may bill trucking companies in advance for
all funds transfers authorized for any purpose in connection with a
particular trip. Risks associated with fraudulent or unauthorized
transactions are allocated between Comdata and its customers based upon
which party may be at fault under a specific circumstance and based upon
which party is in the better position to control or eliminate these types of
transactions. Comdata believes that historically the number of fraudulent or
unauthorized transactions attributable to this aspect of its business has
been minimal compared to the aggregate dollar amount of funds Comdata has
transferred annually. Comdata is licensed by 41 states as a seller of checks
or money transmitter and, pursuant to these licenses, undergoes annual
examinations by several states with respect to the integrity of its funds
transfer methods and procedures.
When a truck driver makes a request at a truck stop for a funds transfer,
Comdata verifies that the driver’s company has established sufficient
credit. Upon presentation of valid identification, the truck stop obtains an
authorization number from Comdata and issues a Comchek draft. Comdata also
provides information gathering and processing services in connection with
fueling transactions that Comdata does not fund, but instead are billed
directly by the truck stop to the trucking company. Fees for these “direct
bill” transactions are substantially lower. Comdata also provides fuel price
tracking reports and management within a network of truck stops, including
cost/plus fuel purchase programs.
Comdata’s regulatory compliance division assists in determining the permits
needed for a designated trip, truck and load; purchases those permits on
behalf of the customer; and delivers them by facsimile machine to a truck
stop where they can be picked up by the driver. Comdata also provides
regulatory compliance services, such as processing and auditing of driver
trip logs, reporting of fuel taxes, annual licensing and motor vehicle
registration verification. Vehicle escort services for oversized loads are
also provided.
Truck Stop Services. Comdata maintains a nationwide electronic data network
with 24-hour independent truck stop service centers that utilize
point-of-sale devices and other computer equipment to facilitate
communication with Comdata’s database and operations centers. The service
centers act as Comdata’s agents pursuant to a service center agreement, and
typically also offer the funds transfer services of other companies.
Comdata’s merchant services division provides fueling centers with PC-based,
point of sale systems that automate the various transactions that occur at a
fuel purchase desk, systems which enable customers to transact card-based
fuel purchases at the fuel pump. These systems accept many types of fuel
purchase cards currently used by drivers. The merchant services division
additionally offers point-of-sale systems for use at privately owned truck
terminals and unattended fuel sites.
Local Fueling. Comdata is a provider of fuel management and payment systems
for local transportation fleets. Comdata provides local fleet operators with
Comdata MasterCard corporate fleet cards that offer the fleet operators
transaction control and trip-related information gathering features similar
to those of the Comdata card.
Financial Services. Comdata operates a factoring business known as Financial
Services. Generally, Financial Services purchases accounts receivable due to
trucking companies from manufacturers and shippers at a discount and with
recourse back to the trucking company in the event of non-payment. This
permits trucking companies to receive payment on shipping invoices sooner
than they may otherwise receive payment from shippers. While the majority of
the Financial Services’ portfolio relates to trucking company operations as
described above, Comdata may, on occasion, enter into a factoring
arrangement with a business outside the trucking industry.
Retail Services. Comdata’s retail services division, which is comprised of
SVS and Comdata’s payment services division, provides stored value cards and
employer pay cards to customers principally in the retail industry. SVS
provides, among other services, debit card programs to major retailers that
are used as gift cards, gift certificates, credits for returned product,
loyalty promotions and retail promotions. SVS believes that its cards,
transaction reliability, card maintenance/inventory programs and reporting
capability provide benefits to retailers and their customers, including ease
of use and controls previously difficult to realize.
Comdata’s payment services division provides pay cards used by its customers
to pay their employees. Comchek eCash is a card-based service allowing
employers to post or load payment of wages and other payments, such as
expense reimbursements, to cards issued to employees and other recipients.
Cardholders, in turn, may access these funds in a number of ways, including
withdrawal of cash from ATMs, point-of-sale purchases at stores or issuance
of a Comdata negotiable draft. Long distance telephone service is also
available through the card.
Data Processing Companies in the Directory
Affiliated Computer Services
Bank of New York
BISYS
Ceridian
DST Systems
EquiServe
Fiserv
NCR
Metavante
SunGard Data Systems
WebMD
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