Automatic Data Processing says it will write off the remaining book value of its investment in ailing market data vendor Bridge Information Systems. This write-off will result in a $45 million non-cash charge ($27 million after tax) in the quarter ended 31 March, 2001.
ADP sold its brokerage front-office business to Bridge in 1999 and, as part of the proceeds, received $90 million of Bridge convertible preferred stock. An initial write-down of $45 million was recorded in the quarter ended 31 December, 2000.
Bridge is filing for Chapter 11 bankruptcy protection as it seeks to protect its assets from creditors and restructure its heavy debt burden. ADP says recent developments have made it clear the investment has no remaining value.
Commenting on the write-off, Arthur Weinbach, ADP chairman and CEO says: "We are very disappointed that conditions at Bridge have caused us to write off our investment. The only good news is that we have no remaining investment in them. This brings to a close the fiscal 1999 disposition of our Brokerage front-office business. This is a non-cash write-off and there is no impact to our current business."
He says the company remains comfortable with its previous forecast of 16 to 18% earnings per share growth for the year ended June 30, 2001.