Elena Charles - VP of IR Gary Butler - President and CEO Chris Reidy - CFO

Bryan Keane - Prudential Rod Bourgeois - Bernstein Adam Frisch - UBS Warburg Jim Kissane - Bear Stearns David Grossman - Thomas Weisel Partners Liz Grausam - Goldman Sachs Michael Baker - Raymond James Franco Turinelli - William Blair & Company Gary Bisbee - Lehman Brothers Patrick Burton - Citigroup Mark Marcon - Baird T.C. Robillard - Banc of America Securities Craig Peckham - Jefferies Richard Gray - Deutsche Bank David - JP Morgan Lloyd Zeitman - Bernstein Charlie Murphy - Morgan Stanley

Good morning, my name is Carol and I will be your conference operator. At this time I would like to welcome everyone to the Automatic Data Processing Incorporated Second Quarter Fiscal 2007 Earnings 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 speaker's remarks, there will be a question-and-answer session. (Operator Instructions). Thank you. I will now turn the conference over to Ms. Elena Charles, Vice President of Investor Relations. Please go ahead.

Thank you. Good morning, I am Elena Charles, ADP's Vice President of Investor Relations. I am here this morning with Gary Butler, ADP's President and CEO and Chris Reidy, our Chief Financial Officer. A slide presentation accompanies today's earnings call webcast and it is available for you to print from the Investor Relations' home page of our website at adp.com. During today's conference call, we will discuss some forward-looking statements that involve some risks, and these are discussed here on this slide and in our periodic filings with the SEC. With that, I'll turn the call over now to Gary Butler.

Thank you, Elena. I am going to begin today's agenda with a few opening remarks and then I'll turn the program over to Chris Reidy, our CFO, who will give you more detail on the quarter. Then I will come back in and give you the full year outlook including our improved forecast for the full year. And before we get to the Q&A, I will also update you with some detail on the brokerage spin-off and then we will adjourn to our typical Q&A session that we have at the end of the call. Let me begin by giving you a high-level perspective on the quarter. I think, in totality, I am extremely pleased with the second quarter results as well as the overall strong first half that we had across the enterprise. As I mentioned, Chris is going to give you the detail of the quarter in just a few moments when I hand the program off to him. But in general we are executing well on our strategic initiatives that we have laid out for you over the last year or so. We have got strong revenue growth, great momentum in all three of the businesses and the investments that we have made over the last several years are continuing to payoff, and I am particularly pleased with some of the revenue acceleration programs that we put in place around new sales etcetera. In the quarter, as expected and as we tried to indicate you in our correspondence and talking to you over the first half of the year, we did have expected tough pre-tax margin comparison, both the first quarter and the second quarter. And we do anticipate some drag similar to this will continue into our third quarter, but we do expect to continue to get a full year improvement in margins, which will be driven by particularly strong fourth quarter margin comparison in this particular year. I am especially pleased with the continued strong sales momentum that we have in Employer Services and the overall strong revenue and EPS growth that we are seeing across all of ADP. And I think the additional piece of good news, which I will give you more detail on is that we are progressing as planned on the brokerage spin-off. So, at this point, I will turn it over to Chris and give you our full year forecast, as he concludes the Q2 remarks. Chris?

Thanks Gary and good morning everyone. As Gary said, our second quarter results were terrific. Revenues reached $2.3 billion for the quarter growing 14% and our internal growth rate was a very strong 12% in the quarter. ADP's pre-tax margin declined 80 basis points as we anticipated, primarily due to the planned incremental expenses and ES of approximately $30 million. The impact of previously discussed acquisitions in ES; the $8 million of brokerage spin cost, as well as the tougher comparables from the grow-over impact of the Kerridge acquisition and dealer services in December of 2005. You will see when Gary speaks about our full-year forecast a little later on, that we continue to anticipate margin expansion for the full year, driven by strength in our fourth quarter. EPS grew 16% or $0.07 from $0.44 to $0.51, about $0.02 from lower share counts in the quarter versus a year ago. Share buybacks totaled 18.1 million shares through early January, and as discussed on our last earnings call, the pace of buyback activity did slow from our first quarter activity. At this time, we anticipate significantly moderating the pace of share buybacks, until the completion of the brokerage spin-off. At that time, we would anticipate resuming aggressive share buybacks, of course, depending on market conditions. And also during the second quarter, we raised our dividend by 24%, reflecting our optimism of ADP's future prospects. I would also note that we will maintain the stellar amount of dividend after the brokerage spin. Now turning to the next slide 5, we will review the segment results, where all of our businesses had good momentum in the quarter. Internal revenue growth for ES was strong at 11%. Revenues from our traditional payroll and payroll tax filing business again grew 9%. And this is important, as this is our most profitable business and it creates additional opportunities to cross-sell our beyond payroll products. It's also important to note that this did not include any impact from the change in interest rates, as ES is held to a constant 4.5% rate. This healthy 9% growth reflects accelerating new business sales, growth in client fund balances, and an increase in the number of pays on our clients' payrolls. Beyond payroll revenues grew a strong 19%, PEO, COS, and Time and Attendance all posted strong growth in the quarter. We anticipated the decline in pretax margin due to a higher step-off expense level from last year, and we believe our sales force investments are paying off. Once again, new business sales growth was strong with 13% growth in the quarter worldwide and 11% in the US. Pays per control and same-store sales metric was up 1.7% in the quarter with even stronger pay growth in the small business services market and nearly a strong growth in national accounts. And we continue to see some growth in the number of pays in Europe. Overall, we continue to anticipate 2% growth in pays per control for the full year, and we continue to see growth in client fund balances and retention continues at strong level. Now moving down the page to Dealer services had strong revenue growth of 19%, which was assisted by the December 2005 Kerridge acquisition. Internal growth -- revenue growth rate was over 5% in the quarter. Overall, margins improved 30 basis points compared with the year ago, and are anticipated to continue to expand as the year progresses. We are pleased with the new business sales growth in Dealer and particularly in the international business. Now let's move to slide 6 to review Brokerage. Internal revenue growth for Brokerage was 9%. This increase was driven by our Investor Communications business, primarily due to increased volume fulfillment and registered mutual funds, as well as higher postage revenues. Our proxy season is still ahead and that’s where you get the scale in this business, so we anticipate better pretax margins ahead particularly in the fourth quarter. In the clearing and operations outsourcing business, revenue growth was strong in the quarter at 17% all internal. And as anticipated, the pretax loss is lower than a year ago. So the bottom line is that Employer Services, our most profitable business, is heading in the right direction with 12% revenue growth and continued double-digit sales growth. We are also pleased with the growth we are seeing in Dealer Services and Brokerage. Margin comparisons were tough this quarter, and we did expect this. Incremental expenses began to ramp late in the third quarter last year, and this year we have the impact of the acquisitions we have previously announced. Putting that together, the third quarter pretax margins will continue to be tough compared to the prior year. And the full-year margin expansion of 20 basis points is anticipated to be driven by strength in the fourth quarter. Overall, we are very pleased as we enter the second half of the year. Now let’s move ahead to slide 7, and I’ll turn it back to Gary to review our full-year forecast.

Thank you, Chris. As you can all see on the ADP forecast page, we had a great second quarter, results were very strong. We also are confident in our 11% revenue growth forecast for the full fiscal year. The momentum in all of our businesses is strong, including the announced additional strategic acquisition activity that we announced and closed on in the second quarter. At this point, we are also highly confident in our ability to attain the high end of our 17% to 20% earnings per share growth forecast. And to be clear what's included or excluded from this forecast, this forecast does include the estimated $0.03 dilution from the acquisitions we have announced to-date, it does exclude the net one-time items that increased earnings per share by $0.03 from the first quarter. So this is over and above the high end of the forecast, and it doesn't exclude any brokerage spin-related costs. This includes the $10.6 million of spin costs that we have recorded, through the end of the second quarter, because this will be reclassified to discontinued operations upon completion of the spin, which again is on-target for the late March, early April timeframe. Our forecast also does not contemplate further share buybacks. Our forecast for client funds includes interest revenue increases of approximately 18%. This is driven by pre-tax yields of about 40 basis points for the full year to 4.5% and increased balances of over 8%. This 8% is lower than our previous forecast of nearly 10% growth in client balances and this is primarily driven by lower State Unemployment rates or SUI rate that have been implemented by the states over the course of the first quarter, reflecting the low unemployment levels that we've seen across the United States. Also you will see in our press release, this quarter we sold the Sandy Corporation, a non-core Dealer Services business that was reported as discontinued operations in this second quarter. This business would have contributed a penny to earnings per share, but is now reported within discontinued operations. We'll now go to slide 8, the next page, to review the forecast with you, by segment. First in Employer Services, there is really no change in the full year forecast. The key business metrics remain terrific. Our current revenue growth forecast of 12% reflects strong internal growth in revenue of 11%, plus around 1% growth on the acquisitions we've announced today. Also with the momentum in our new business sales, we continue to anticipate higher than planned double-digit growth for the full year. I would remind you however at this point, that we will have a difficult fourth quarter comparison to the fourth quarter of '06, as our sales in that quarter were up 24% in the fourth quarter. So, we expect to have a great fourth quarter in '07, but it will be against a difficult compare in the fourth quarter. We also anticipate full year pre-tax margin expansion of around 20 basis points, again as Chris mentioned, driven by strong fourth quarter comparison. As Chris said earlier, we do anticipate some drag on the pretax margin in our third quarter for ES and the full year margin expansion is anticipated to be driven by the strength in the fourth quarter. Secondly, in Dealer Services, our revenue growth forecast of 14%, is up slightly from our previous forecast of 13% growth, as a result of the recent sale of the slower growing Sandy Corporation in the Dealer Services business that I mentioned a few moments ago. Again, the total revenue growth is assisted by the Kerridge acquisition, but we do anticipate 5% to 6% internal revenue growth, for the full year, and we continue to expect full year pre-tax margin improvement of over 100 basis points. And finally, in our Brokerage Services unit, our revenue growth forecast is 6%, up slightly from the previous forecast of 5% to 6% growth, due primarily to higher postage revenues, which also yield lower margin. This is anticipated to drive pre-tax margin improvement down from nearly a 100 basis point improvement that we previously forecast, to about 70 basis points improvement for the full year. Now, I think the really good news in the Brokerage Services business is the spin-off is progressing as planned, and I will give you more detail here in a moment. In our Clearing and Operations Outsourcing business, we continue to anticipate 20% revenue growth with lower pre-tax loss than a year ago. Now, let's go to more detail on the next page on the Brokerage Spin-Off. As I mentioned, the spin-off is progressing as planned. You also probably saw the press release in mid-January, with the name announcement for the Brokerage Service business unit of Broadridge Financial Solutions Incorporated. It will also be listed on the New York Stock Exchange under the symbol, BR. We remain solidly on track to complete this spin in late March, early April, and there will be a pre-spin road show in the days or a couple of weeks ahead of the actual spin-off. We are in the midst of our discussions at this point with the rating agencies, and it is still our goal to achieve an investment grade rating for Broadridge debt at the spin, but I want to remind you that this is a work in progress. As you know, we also filed a preliminary Form 10 with the SEC on December 19th, and it is disclosed in that Form 10. Our best estimate at this point of the dividends to be paid back to ADP is approximately $800 million, and we continue again to remind you to anticipate an investment grade credit rating on the Broadridge debt. We are maintaining our previously announced goal to remain cost neutral, which means taking out roughly $30 million to $40 million from the new ADP as we go forward. We also anticipate providing continued operations guidance, which will exclude brokerage at our upcoming March 22 Analyst Conference, which will be held in New York on March 22. So, the message is we are overall moving forward as planned. And before I -- as you turn the slide, I'd like to leave you with a couple of closing comments before we go to the Q&A session. We are very pleased as I can, I'm sure you can tell from my comments with our progress to-date. We are ahead of our internal plan, we have a clear strategic direction as a corporation, and we are executing well on the strategic initiative that we've laid out for you over the last year or so. We are very well-positioned to continue on the course that we've laid out and I remain highly confident in our ability to grow this business in the months and years ahead. So, with that I'll turn the session back to the operator and we'll be delighted to take your questions.

(Operator Instructions). Our first question will come from the line of Bryan Keane with Prudential. Bryan Keane - Prudential: Hi. Good morning. Just wanted to talk about the major Account Services, I know that is the most penetrated division, yet it's still growing double-digit sales. Can you just talk about what's going on there and how that division is able to grow double-digits despite the penetration?

Really, a couple of things happening there; one is that we've expanded the sales force there over the last year or two, which is good news. Secondly, we are selling larger product bundle, so more and more of our new sales include our Time and Labor Management products, as well as our Benefits Products, particularly from our employee acquisition that we announced a while back, as well as we were in a strategic alliance with them for almost a year prior to the acquisition. I think the really great news that's happening with the employee's acquisition as we bundle it with our core payroll is almost half of the business we're selling in employee, brings new payroll client with it, which has been our toughest challenge because the market, as you indicated, is relatively penetrated. So, we are very delighted with the success we're having there in this first half of the year and we're looking forward to a great finish in major accounts, and I couldn't be more pleased with what's happening there. Bryan Keane - Prudential: Okay. And I just want to ask about the National Employment Report that you guys do on a monthly basis; the predictions have been off some from what the governments have being reported. Can you just talk about the differences between in your numbers and the government and can you get to that, close that gap going forward?

Well, as you know most of the actual commentary and work is done by Macroeconomic Advisor, Joel Prakken is the Chairman there, and he is really the guy that's best capable of serve -- really answering the economic kind of questions that you have. We do have, in any kind of statistical comparison; you have occasional outliers where these kind of things do happen. December is then one of those months where typically our comparison against the BLS is more negatively skewed and their's tends to be more positively skewed in the December month. So, we weren't all that surprised with the comparison or Joel wasn't all that surprised with the comparison in December. But the methodology remains the same that we've used that we are statistically verified over a five year period. We remain confident in the algorithms that they are using, and we are also announcing some revisions and additional expansion of that report, which will be announced here this month that will begin for the February results. So, we remain confident and we are going to continue the course. Bryan Keane - Prudential: Okay, so the December weakness that you guys reported didn't necessarily correlate to exactly what ADP had. You don't see it in a fundamental too.

No, we still had positive growth for the quarter and one of the things you have to be careful about with these quarterly, our pays per control numbers is the months tend to be up and down and the quarter is the most true reflection of what's happening in the business. And we saw 1.7 pays per control growth in the quarter. And we also had a strong January, but again you can't read too much into that until you see the full quarter because of the fact that you have 13 weeks in a quarter, and you have ins and outs from quarter-to-quarter depending upon four-week months versus five-week months, and holiday cut-off et cetera. But again, we see a kind of business as usual and that's why as Chris mentioned, we’ve maintained our forecast of 2% same-store sales comparison for the full year.

But Bryan, I think you are right, you cannot correlate that report directly to ADP performance given some of the extrapolation and what have you that they do on the economic side. Bryan Keane - Prudential: Okay. And finally, now turn it over up after this, but in the Brokerage Division, can you guys just talk about some of the pluses and minuses that brokerage will be dealing with kind of on a going forward basis, maybe even some on a macro level that are good and bad?

Can you be a little bit more specific, you are talking about post spend or for the third quarter or? Bryan Keane - Prudential: I guess -- I guess third and then post spend just any, I guess, some of the -- any client losses that we have to be aware of or any client adds that are going to make much of a difference in the brokerage revenue? In particular, if you look at it, brokerages had such a strong first half of the year, it tails off a little bit. You are expecting 6% revenue growth for the full year. So, I am just trying to get a sense of the difference there in the third and the fourth quarter, obviously brokerage drops a little, and then kind of going forward anything -- any things we should be aware of?

Bryan, excuse me, this is Elena. Let me start on the revenue forecast that we have for the year, you are right. I mean there was stronger revenue growth in the first quarter, as well as the second quarter. A lot of the first quarter revenue we had said it was driven by special, some one-time very large mailing events that we had. And then, as continuing stores, the higher postage that we are seeing part of it, as you know, there was a January first postage increase, January of '06, of course, that’s going to give us easier comps on the revenue this year, in the first half of the year. So, those numbers are really because of the one-time nature of grow-over of the postage, that’s not going to continue for the second half of the year, but it doesn’t suggest that there is any drop-off in the business at all. In terms of the client was that you spoke about, maybe you saw in the Form 10, we did talk in there about the, I think that the number was $39 million, $40 million, that is TD Waterhouse that'd we spoken about, with everyone for the last couple of years, with Ameritrade's intend to bring them back in-house. So, that’s something that’s out there, there is nothing new that is for seeing I know, that Form 10, went through many of the risks and uncertainties, and the management team will dive in a lot deeper on the brokerage road show, or actually Broadridge road show when that comes up. So, does that help -- does that help you a little bit? Bryan Keane - Prudential: That’s perfect. Thank you very much.

You're welcome.

Our next question comes from the line of Rod Bourgeois with Bernstein. Rod Bourgeois - Bernstein: Yes, I wanted to talk a little bit about the share buyback and if there is anyway you can mention for us, how aggressive is your position to get with the share buyback? If I look at your cash balance, the free cash flow over the next year and the cash that you are extracting from brokerage, you have the capacity to get pretty aggressive. And if there is anyway that you can kind of give us a weighted dimension, what's in your plan that will be very helpful?

Let me make a couple of comments, first Rod and then I'll let Chris chime in at the end. As I've communicated consistently over the last nine months or so, ADP clearly had excess cash on its balance sheet. And I think we have continued to execute as I have laid out to return that value to our shareholders through fairly aggressive share buyback. Obviously, any comments I make are going to be contingent upon market conditions, but again we're sitting at $1.7 billion today, we'll get $800 million or there about from the Brokerage unit and to your point, we will continue to create cash flow based upon the strong business model that we have. So again depending on market conditions, we would be returning to the market in a fairly aggressive way, starting in the fourth quarter and would continue on that course until we get to a point where we think we have taken out the excess cash on the balance sheet as we go forward. So, Chris I don't know if you have other comments to what I have said.

No, I think that sums it up. As we have said previously, we will and we intend to utilize the Brokerage dividend of $800 million and as you have seen, we had $2.7 billion of cash after we sold the Claims business and that's come down steadily to the current balance of $1.7. I would expect to spend some of that cash down in the future, again based on market conditions and being opportunistic in the market over time. So once the Brokerage spin occurs and we receive that dividend you can see us get more aggressive.

And we can buyback more shares at obviously the lower ADP price after we expand Broadridge. Rod Bourgeois - Bernstein: Got it. And one clarification on Broadridge, you mentioned the goal of being cost neutral across the new ADP and Broadridge. In the Form 10, you also disclosed that Brokerage will incur about $30 million of expenses, if you run as a separate company. So I am wondering if that $30 million of expense figure is an increase over the plan you had in place when you first announced the spin-off, or whether that's kind of exactly what you expected and fully in-line with the plan?

The 30 million that you are referencing is -- we have anticipated that since the very beginning. I think we mentioned it even back, as long ago as August when we announced that it would be a significant -- not a significant, but an uplift in terms of their expenses. Most of the people that have been transferred to Brokerage, to build out the corporate nucleus that they need, have not been replaced at ADP. And as I have mentioned in some of our previous conversations, obviously the new ADP, which is only ES and Dealer, there are some synergies between the ES infrastructure and the corporate infrastructure, as we are consolidating those two units going forward, because we don't need a corporate infrastructure to the same extent that we did before, when the primary businesses Employer Services and Deal are going forward. So there are some savings that we are working on there in addition to not replacing the people that have been transferred and our goal remains that in the aggregate, between the new ADP and Broadridge, that we will be cost neutral from an overhead or an infrastructure cost standpoint. Rod Bourgeois - Bernstein: So, the aggregate guidance you had for the fiscal year for the new ADP and the old Brokerage business, that aggregate guidance should not be affected by this event, is that correct?

Right, that would be correct. Rod Bourgeois - Bernstein: Okay. Thank you guys very much.

Our next question comes from the line of Adam Frisch with UBS Warburg. Adam Frisch - UBS Warburg: Thanks. Good morning guys.

Good morning Adam. How are you doing? Adam Frisch - UBS Warburg: Kudos to you again, I'll say this one last time on the presentation of everything with the slides and the press release and everything, much improved, easy comp, but much improved. For instance, what you guys used to do. I had a question on the investments made in the quarter in both the sales and in the HR, BPO. Could you just provide a little bit more color on what you invested in your sales-force, where and for what opportunities are you gearing up for in that initiative? And then on the HR side, $20 million, what do -- how do you spend $20 million in that business and how did you prioritize it?

Well the investments in the sales force last year in '07 -- I mean in '06, if you may recall we were actually behind our manpower plan from '05. So we not only staffed up for '05, but we staffed up for '06 and as we exited the year, we started staffing up for '07. So that's the reason why we had these difficult comparisons in the first and second quarter, and you'll also see some continuation at a lower level in the third quarter, but still a continuation, until we get into the fourth quarter. So that's pretty much as planned and the basic reason we've done it is, we've tried to step up the level of new business accretion across the enterprise, and fortunately over the last couple of years, we've had the earnings wherewithal to be able to do that and still meet our commitments to The Street and to our shareholders. Now included beyond the sales-force ramp up, it has been a significant investment in our HR BPO in a box which I had talked to you about for some period of time. That includes significant investments in our GlobalView platform, as we build out our ability there to implement across 40 countries, up from, 20 a year ago. It includes a substantial expansion of the PEO, including sales and implementation capability in California, where we got a large market opportunity there. And it also includes a significant investment in our COS national account BPO product, to take care of that big opportunities that we have. So again, this is all good news as far as I am concerned and we are seeing returns in terms of new sales, based on those investments and you will start to see a more normal compare, as we get into the fourth quarter. Adam Frisch - UBS Warburg: On the sales front, are you now up to -- are you caught up in where you want to be in terms of your investment initiatives there?

We are -- I'd say through the accelerated step-up period that I have been talking to you folks about for the last couple of years. We will do a normal uplift in staffing as we prepare for '08, but that really won't take place until the latter part of the third quarter or the first part of the fourth quarter. So we are going to return to kind of the normal pattern that we've had historically, as we got through this step-up in expense in '05 and '06. Adam Frisch - UBS Warburg: Okay. And then on the HR side, do you expect in future quarters for there to be chunky investments like these, or now that you've made this one. I don't know if this -- you are viewing this as kind of like a one-time thing but you are always going to be investing in it obviously, but is this kind of like a big one-time thing and then each quarter will be more measured?

We've clearly in the last two years had what I would call step-up levels of investments and as you think about where we are today, they're going to be more ratable overtime after we've got through these initial step-up investments, they kick start these businesses. So, our strategic direction today is the same as it was a year ago, and it's clear and we're on the path and we're through some of the initial investments period that we've had to kick-start the businesses. Adam Frisch - UBS Warburg: Okay. Two strategic questions and I'll turn over. First, any update on the First Data relationship? Anything material happening there yet, or are you still in the early stages?

We are still in pilot stage, nothing overly positive or negative at this point. And again I think it's still really too early to report. But I would be happy to update you when we get to the March analyst meeting. Adam Frisch - UBS Warburg: Okay and then just on the small -- on the S&P marketplace. Can you discuss your current capabilities or whatever future plans you might have as it relates to health insurance and 401(k) plans for that market?

When you say SMB, did you mean that SBS? Adam Frisch - UBS Warburg: Small and mid--

Yes. We clearly think in both the small business below 50 employees as well as in the low end of our major accounts that there are clear opportunities for workers' comp distribution to our base as well as clear opportunities to sell healthcare into our base. And we are committed to both at this point, and we will share that direction with you and in considerable detail again at the March analyst meeting. Adam Frisch - UBS Warburg: Okay. Thank you.

Welcome.

Thanks.

Our next question will come from the line of Jim Kissane with Bear Stearns. Jim Kissane - Bear Stearns: Thanks, just the one up on the margin question; can you give us some more details on the third quarter, Employer Services, margin outlook and your confidence in getting to your 4Q objectives, because there has been some pretty big step up in 4Q margins?

You want to--

What I just want to say is, as a rule Jim, we don’t give quarterly guidance but we did feel it necessary to give you some feel of how we were seeing the second half play out. As we mentioned, we began ramping those incremental expenses in the third quarter of last year throughout the year. So, it didn’t all happen on January 1, and combined with the acquisitions that were previously announced, we just wanted to make sure everybody understood that, third quarter was still a tough compare. Our margins typically increased, if you look at cyclicality of our margins, you'll see increases but the compare is difficult and where we have the easier comparison in the fourth quarter. So, as we look at that, all-in-all in, we are still confident in the 20 basis point improvement in ES margins. But we see that coming from the fourth quarter and we didn't want to set the expectation that you would begin to see that in the third quarter. And that's been true, I mean that's the way we've always seen that happening.

Jim, just to give you a little color there, clearly our '07 plan and our '07 results are going to be more back end loaded than we would "prefer" but because of the step-up investment, it was kind of the way it was, and it was supportive of the overall strategic environment or the initiatives that we are on and clearly we would hope to return to more of a historical pattern as we go into '08. But we've scrubbed this to fairly well and obviously expected these concerns, and we still remain confident that we're going to have a very strong fourth quarter and that we'll honor our commitment that we've made around margins where we are today. Jim Kissane - Bear Stearns: Okay great. And can you give, can you break out new orders for the National account segment. Because it seem like Major accounts was very strong, but that National may have slowed a little bit from last quarter.

We don't give the actual details by segments, but National accounts was still very strong, it's strong double-digit new sales growth for the quarter. Jim Kissane - Bear Stearns: Okay.

You shouldn't read into our comments around Majors that we've seen any lessening of success in National account. We still remain really pleased with our National account sales results as well as our GlobalView results; to kind of overlay that around the world. So, you shouldn't read any negatives into the National account result. Jim Kissane - Bear Stearns: Excellent. If I can get, one last question. Any update on the impact that the new regulations will have on the brokerage revenues. Because I think last March, you indicated about $150 million, I think two-thirds of which we've postage, any update?

Yes, that was a year ago, I think on this earnings call exactly and, we really don't have any update on numbers; when we had put that together, that was based on proposed rules or worst-case scenario. I think right now with the way the rules have been written there are some puts and takes, there's going to be some pluses and minuses. Some of them we did discussed on the call a year ago in terms of while there won't be the bulk distribution of the paper proxies. So, the postage rates will go down, our revenues will go down as a result of that. However, and we don’t know at this point how many of the corporate issuers, their shareholder's will still elect to have paper copies. That’s something that our brokerage company is very prepared to fulfill. We will be involved in that process, but of course, those will be at higher prices because it won't be the bulk processing anymore. So, there are some pluses and minuses, and at this point we are really not ready to give an exact amount on that.

Jim, this -- the situation there is still very fluid and this thing is still playing out, and I expect that as we approach the road show, then we will have a much clear perspective and detailed -- ability to answer detail questions that you will see in March, when they go out on the road show. But again, I think it's really still too early to tell and it could be a plus, it could be a minus, but I don’t think we are expecting a material degradation to the business. Jim Kissane - Bear Stearns: Right. Thank you very much.

Our next question will come from the line of David Grossman with Thomas Weisel Partners. David Grossman - Thomas Weisel Partners: Thanks. Gary, not to belabor the margin question, but it just seems like there is so many moving pieces here, particularly as we go through kind of third quarter and to the fourth. Can you give us just a sense on a longer-term basis, once you get through the spin in this fiscal year, how we should think about the opportunity for continued margin expansion?

Yeah, again, I have been fairly consistent as we talk about this. We have been on -- over the course of the last year, a course to get our business more focused with the divesture of claims and the tax-free spin now on brokerage. You can see what we are doing with the further pruning of some of our slower growth businesses like the Sandy Corporation, which we announced. We have couple of other smaller kind of things they are going to pan out over the next quarter or two. But as we enter '08, I expect us to be in to the strategic business positioning of the go-forward model. And I think as a general rule of thumb, again [Sandy's] acquisition because you feel that -- and big buybacks that you should expect half a point of margin improvement from the company on a year-in and year-out basis, based on the scale that we get in the business. And I understand that in particularly '07, we've had a lot of puts and takes between discontinued operations, divesture of things, as well as the ramp up of expenses to get up the nose of the ship, so to speak. But I would expect to achieve a more normal state of course, as we enter '08 and beyond. David Grossman - Thomas Weisel Partners: So, there is no obvious head-wins then as we enter fiscal '08?

I think we've got -- Employer Services and the Employer Services market is a fantastic market. It’s a growing market in its own right. It's under penetrated, and we have a great global opportunity to boom on top of a strong US market. And the dealer market is almost the same way even though it's highly penetrated market in the US, it has an enormous opportunity on a global basis. So, I think, we are in great market. I think we got a great management team across our both businesses, and we are going to continue to execute as we've laid out. David Grossman - Thomas Weisel Partners: Okay. And just -- I know this number moves around and the comparisons maybe are a little bit difficult. But it looks like there is a little bit of a deceleration in the pays per control number on a year-over-year basis and it coincided obviously with lower client balance growth in your forecast, but I know you mentioned that there were other factors impacting that. But is there anything in that number or is it pretty much as you would have anticipated for the quarter?

Well, the 1.7% is clearly a lower quarterly pays per control growth than we've seen over the last seven or eight quarters. So, I mean that's a fact. But again in January, again you can't use that as a proxy, but it's at least good news, we had strong growth in pays per control across the enterprise in January. And as we talk to business units, they are not seeing any significant lessening in that category, which again might -- why we were confident in maintaining our forecast of 2% growth for the full year. And I think the general statement in the employment statistics that have been recorded, both by the National Employment Report and also by the Bureau of Labor Statistics, is that we are seeing continued growth in employment. The real issue around balances is almost solely due to state unemployment drop because as unemployment levels remain low over several years, they don't need the excess and they continue to drop rates. This generally lags what's happening in employment by a year or so, and we've seen this trend many times over the course of the multiple decades that we've been in this business. So, again we're not surprised, but it will affect us this year with the drop to 8%. I would just say David that, you saw that it was higher in the first quarter and we stuck to our 2% projection for the year. So, we did anticipate seeing some swing in that pays per control number. As Gary said, we have looked at January and we are encouraged by where January came in. So there is some correction between December and January, where that evolvement occurs. So, we are comfortable with that 2% going forward. David Grossman - Thomas Weisel Partners: Thanks, Chris. And actually just Chris, couple of just very quick questions for you. It looks like the tax rate dropped modestly. I don't know if you are still expecting kind of a 37 and a half-ish type number for the year. And also, if you could maybe just comment on the uptick in capital gains, is there something structurally going on in the portfolio or is that just time and place?

Sure. On the tax rate, we are continuing to anticipate about 37.6%. Last year it was 38.5% and that included about 0.6 for the tax repatriation. So, on an apples-to-apples basis, it was 37.9. So, we got about 30 basis points improvement, and that's basically due to the favorable tax jurisdiction mix that results from consolidating our datacenter operations in Georgia. So, you will see a little bit of that going forward, as we continue to do some smart [churning] and move some of the -- other datacenters into Georgia and that will hit going forward. Again not huge step down impacts, the kind of like what you have seen. In terms of the gain on the sale of securities, really when you think about that, you've got to look back over many quarters and we have some net gains and some net losses and with the portfolio of this size, in excess of $13 billion, you are going to get that kind of movement. In this particular quarter, we funded our previously announced acquisition, so we took the opportunity at the same time to reposition the portfolio and that resulted in taking some gains. Also as part of this, we extended the duration of the portfolio form 2.2 to 2.3. So, nothing unusual, you are going to see gains and losses from time to time on a portfolio like this, so I wouldn't see that as anything unusual. David Grossman - Thomas Weisel Partners: Okay thank you.

Our next question will come from the line of Liz Grausam with Goldman Sachs. Liz Grausam - Goldman Sachs: Hi, just wanted to ask you few questions on Dealer. What are some of the strategic plans you may have in place -- you may explain it more in March Meeting. It should really accelerate the internal growth rate there. I know you've had some good announcements recently, certainly the international market, it looks like they are picking up pace. So, could kind of help us what gets us from 5% upward in some of the out years?

There are really three things that are going on in Dealer Services. One is, even though we have a highly penetrated market in the US, we continue to gain share and we will continue to see momentum in our business as usual. In addition, in the US market we have a new front-end product, which I have spoken about several times, which you'll again get more detail in March, that helps dealers convert advertising dollars into search spend and lead generation through the Internet, which where this marketplace is moving. The average sale, this was from an acquisition that we made, now going about nine months back of BZ Results and we've seen BZ Results accelerate from selling like 15 to 20 new units to over 40 units per month and each one of these units is worth $50,000 a year in annual recurring revenue to ADP. So, this is going to really help us accelerate our growth in North America. On top of that, as evidenced by the recent announcement that we made of BMW in -- to be their provider for the Pacific Rim and specifically China. We are very excited about the opportunity that Kerridge has brought us on a global basis. And we have more activity going on there that I have seen in my entire 30 years at ADP. So, I am very optimistic about Dealer's international prospects, because we are by and away the largest leading supplier of these kind of services, particularly as you would leave the United States and the manufacturers need us. So, we are very excited about the international opportunity there and I think it's going to be a major growth vehicle for Dealer in the years ahead. Liz Grausam - Goldman Sachs: Is there any difference in the margin structure of this business, domestically versus internationally? And are there any incremental sales expenses that you might need to pickup in the Dealer division to capture that international opportunity better?

The margin expansion or the margin attributes are slightly lower international, because we don't have quite the scale by country that we would have. Clearly, in the United States, so, you can't compare those two, but we are clearly seeing margin expansion in our international efforts and particularly in Europe as we are gaining scale there. But clearly as we build out to service China and some of the specific rim; there are upfront investments that will have to occur, but we think it is absolutely the right thing to do long-term for the business. But in our internal strategic plans as we look at the five year view, we still expect to get in aggregate modest margin improvement year-over-year for the foreseeable future. And to address this year, margins have begun to improve as we anniversaried the Kerridge acquisition in December. And so we do anticipate somewhat easier comps in the second half of the year to our guidance of over a 100 basis points, so margin improvement in Dealer.

The same had happened there, just to help you mostly in the US market. We sell a dealer at a time or a consolidator at a time, typically for example in China. We are giving like all of BMW and we are in conversations with a number of other manufacturers. I had hopefully get their entire dealership network across China. So, our sales cost is lower for those kind of sale. Liz Grausam - Goldman Sachs: Great, thank you very much.

Our next question will come from the line of Michael Baker with Raymond James. Michael Baker - Raymond James: Yes, thank you. I wanted to get a little bit more color on the performance of the PEO more specifically, how the workers' comp program faired as well as health benefits how claims cost trended related to your expectation?

In the PEO, our worker’s comp is doing perfectly fine. As you know that market has softened somewhat over the last 12 months and so we have not had to increase our rates and in fact some cases actually brought our rates down over the course of the last 12 months. Our claims experiences is below our internal plans, we do have a captive insurance. A unit within ADP that serves as the insurance captive for the PEO and our claims experience is beating our internal plan. So, our claims experience is good and we don’t see any significant risk there in the year ahead. Michael Baker - Raymond James: How about on the Health side, what are you seeing in terms of claims relative to expectation?

Well, we don’t really self insure on the claim side with Healthcare, and so our suppliers there, which are multiple across the United States continue to be very positive about our relationships there, and we continue to have a pretty positive claims experience versus their internal plans with us. Michael Baker - Raymond James: Thanks a lot.

Our next question will come from the line of Franco Turrinelli with William Blair & Company. Franco Turinelli - William Blair & Company: Actually I am sorry. My questions have been asked and answered. Thank you.

Thank you, Franco.

Our next question will come from the line of Gary Bisbee with Lehman Brothers. Gary Bisbee - Lehman Brothers: Hi, guys. Good morning.

Hi, Gary. Gary Bisbee - Lehman Brothers: Couple of questions on, following up on the questions on Dealer, its sound like you have got a lot going on in Asia. We have seen a couple of press releases and heard some rumblings in the US about Microsoft developing a DMS product, right now to roll out some point in the next 12 months to 18 months. Given you entrench market share, what do you have to think about that? Is that a big deal? Do you think they have any chance to make any significant inroads or do you have any sense how competitive their product may end up being?

Well, first of all the market is somewhat of a duopoly in the sense that you have the rental UCS consolidation and ADP and then there are a number of smaller providers. So, that being said, it’s not surprising that companies, like Microsoft see this as an opportunity. The market also is moving to consolidators and higher end suppliers, which is a much more difficult implementation and sophistication level of the software product. And you also have to remember that all these dealers have to interface with all these third parties including a lot of manufactures who sell products in the US. So, and Microsoft is also using a third party distribution in terms of their resellers to try to attack this market. So, I'm sure they are capable of doing a lot of things if they throw a lot of money at it. But, it’s not as easy as it may look to be a major supplier here. So I think this is going to play out and we are not surprised by it. But we don’t see any near term threat to our efforts here. Gary Bisbee - Lehman Brothers: Okay, and then obviously we saw the announcement in China and you said there are several other dealers you are talking about. China is obviously a huge opportunity. What are the other countries or areas? Is it mostly Asia that’s the biggest opportunity over the next few years in addition to China or are there some remaining untapped areas in Europe that you are going to go after as well?

First of all in Europe, the Kerridge had terrific relationships with the major OEM in Europe, and we have a much smaller share and the share itself across Europe is more spread over many different suppliers. So we think the combination of ADP and Kerridge is going to be a much more preeminent force in the European market and Eastern European than we previously had the ability to execute. So, we do see strong growth in Europe and there is no company like ADP Dealer Services across the Pacific Rim. So we expect even larger growth across the Pacific Rim. China is clearly where the bull's eye is, but there is also great opportunity in Korea, as well as in all the Asia-PAC countries across the lower side of that region. So we think it’s a terrific opportunity for us and we're really focused on it, and we're executing well against the opportunity. And as I mentioned, there are several OEMs that we are in pretty detailed conversations with that we hope to be able to announce over the next six months or so. Gary Bisbee - Lehman Brothers: Okay, great. Moving on to the PEO, I think you've mentioned in the last few calls, the potential -- I guess you've already launched an ASO product where you wouldn’t be providing the workers comp and self insuring a portion of that. Can you give us an update as to where that is, and given as that would seem to have a lot lower revenue, that business opportunity although maybe be more profitable. How do you feel about real success with that business potentially slowing the revenue growth from the PEO and what that’s going to mean for the P&L overall if you're successful with that?

As you think about the ASO, I think you have to think about a continuum of products and if I could speak to just the low end of the market below 50, which is the kind of the sweet spot of SBS and the PEO, clearly we have the PEO as the full outsourced model including co-employment and all of the insurance products, which is a good thing. And clearly, you have single payroll sales to -- in the SBS market. In the ASO, it's kind of half way in between. So it’s a significant uplift to a straight payroll sale because it has multiple products and it is a full compliance bundle that is a lot larger than a pure payroll sale, but not as big as the co-employment model of the PEO. I suppose there is some risk that there will be a slight decline in PEO referral's from the SBS sales force. But at the same time, there is a significant uplift to a pure payroll sale by selling them the ASO bundle. And we clearly believe that with the gives and takes, it is a clear upside opportunity for the below 50 market spot. Gary Bisbee - Lehman Brothers: And do you have any traction to-date in that product or is that are you still trying to educate the clients right now?

We are in a pilot mode. We are using a subset of the PEO product, which doesn’t include the insurance model. You can still buy insurance product from us, but it's on a menu basis as opposed to included in the self-employment. I mean in the co-employment model, we have had great sale success in the areas where we are piloting it, and we have multiple hundred in clients installed and if things stay on course, we will roll it out nationally in the year ahead. Gary Bisbee - Lehman Brothers: Okay, great. And then just one last question, as we look out say six months or so past the spin of brokerage business, what is your appetite at this point looking forward to that period for acquisitions in Employer and specifically mid to large size acquisitions. Any change, first as what you have said over the last year or so?

I had been relatively clear over the last nine months that we do not have a real appetite for large acquisitions, particularly if they are dilutive beyond 12 months. And in today's pricing environment for those kinds of acquisition, it's very difficult to make a large acquisition and not have multi-year dilution. We still have a very strong appetite to do the kind of acquisitions that we've done over the last six months with our sales tax acquisition, with our acquisition of employees, with our acquisition of VirtualEdge, where we can overlay our existing client-base of 500,000 plus clients. So, you will see us continue to focus there. Now that being said, if the perfect acquisition came along that was an extension of our core product and I could make it accretive within a 12-month period, I would still look at those kind of things. But I don't see that is high probability, but again you should never say never. But it's not clearly -- it's clearly not our strategic course. Gary Bisbee - Lehman Brothers: Great. Thanks for the color.

At this time, please limit your questions to one question and one follow-up question due to time. Our next question will come from the line of Patrick Burton with Citigroup. Patrick Burton - Citigroup: Hi, thanks for taking the call. My question is, in the Brokerage guidance that ADP has given, does that include the customer loss that was broken out in the Form-10, or should that be factored in after the guidance is provided?

The guidance does include that. It is still with us right now. It's not going to have much of an impact on fiscal '07 time period. Patrick Burton - Citigroup: Okay. So, the loss of profitability from that client is included in the numbers?

Yeah, because it's sometime in the fourth quarter.

Yeah, for TD Waterhouse specifically, it is included.

Yeah. Patrick Burton - Citigroup: It is included, okay. And then the other question just to follow-up on the Form-10. Is the difference in the historical data provided in the Form-10 and the data that is reported on the ADP segment basis in your releases and 10-Qs are a little bit different. What does that stem from?

That's the result of the Form-10 put together based on what the historical brokerage would look like as a standalone company. So, there is a lot of corporate allocations that we don't show within our segment results that are put back into the corporate -- into Brokerage numbers for example; the stock comp expense is something, that's one item that's held in the corporate level, that's put into the segment for brokerage. So, there are some pluses and minuses, and that will be reconciled during the road show. Patrick Burton - Citigroup: Okay. Thank you.

You're welcome.

Our next question will come from the line of Mark Marcon with Baird. Mark Marcon - Baird: I wanted to focus on the long-term opportunities within ES. Specifically, I am wondering, if you can given us a breakout on two facets; one, how big is international now and how do you view that long-term growth opportunity? And then secondly, if you could split out on the size of beyond payroll relative to the core and specifically how we should think about beyond payroll in terms of whether or not you can keep up this growth rate and how we should think about the margins within beyond payroll as some of the investments like HR BPO start becoming rationalized?

We may be here the next hour answering that question. Let me give you some perspective on international. I don't think Elena, that we specifically breakout that revenue per se.

Right.

But you ought to think about it in the order of -- including Canada and the rest of the world that's in $800 million to $900 million kind of business and a great business. We are experiencing single-digit revenue growth in that unit today, but we clearly see over the next couple of years that revenue growth accelerating to a double-digit kind of level. Although, we won't see the same kind of margins in that business, because that business doesn't have the benefit of the contribution that we get from float on tax balances, etcetera, that we achieve in the United States. So again, I think the international prospects are very high. Would you clarify again for me your question on the beyond payroll or you would --? Mark Marcon - Baird: Yeah. Just the split up, Gary between currently in terms of revenue, in terms of beyond payroll versus the core and just as we think about beyond payroll, you are obviously making some investments in things like COS? How we should think about the margins progressing on the beyond payroll side?

Let me let Elena to talk about the revenue split between beyond payroll and payroll in terms of how much is beyond payroll versus included in the standard payroll, to make sure we give you the right number.

Sure, yeah. When we look at that and we talk about our beyond payroll, we are talking about as a percent of the US payrolls for ES, so and then in '06 we said it was about 4.9 billion just under the 5 billion mark, so for fiscal '05 that -- I am sorry, fiscal '06 that revenue breakout was about 60% in our traditional payroll, payroll tax filings business with that 40% being the beyond payroll. Mark Marcon - Baird: Great. And the margin progress going forward?

The way to think about the margins is those are growth businesses, they are scaling. So obviously they are below margins in our existing business, but they will ramp and begin contributing more, but in the mean time, they do put some margin compression on our core business, which is why we are particularly happy with the growth that we see in our core business, particularly in the payroll and payroll tax filing business. Mark Marcon - Baird: Okay. And one last question, just on the Form 10, specifically with regards to the puts and takes and specifically the royalty payment. Just to be clear, that's not going to have, just in terms of an allocation, that's not going to have a negative impact with regards to new ADP in terms of the margins that you show there once post split will it?

No, it's not Mark, because that’s not right now it's not in the other segment and it's not as a credit, for example, income and it's not in Brokerage segment as we reported as an expense, so now, we have no impact. Mark Marcon - Baird: Super. Thank you.

Okay

Our next question will come from the line of T.C. Robillard with Banc of America Securities T.C. Robillard - Banc of America Securities: Great, thank you. Gary, can you just remind us what step-up investments where in Employer Services in the fourth quarter last year that's going to give you the easier margin comp?

Well in the fourth quarter of the last year we did ramp up, finish the ramp up for sales and implementation. We kind of concluded it at the end of the third quarter, so it was in full force during that fourth quarter. So, there is, it just makes, since those numbers were higher, it makes for an easier comparison over last fourth quarter. Elena, I don't know if you've got some of the other details of other things that occurred there.

No, that's primarily a -- it's really the fact that in the fourth quarter, as Gary said, we have got the full load of expenses in last year's quarter making it comparable to what we expect to see this fourth quarter. So, you really got is a good apples-to-apples comparison, so you will see then the business momentum and the scale and everything that was spoken about kick in with the margin expansion. T.C. Robillard - Banc of America Securities: Okay, and then just a quick follow-up on the new sales for the Employer Services; slowed down a little bit from the first quarter level. Is there some seasonality with that? I am just surprised, given the sales force being in full swing, so to speak from the ramp up levels coming through '06, I was surprised to see that kind of tick down a little bit. Can you just talk to that?

The sales numbers and especially if you get more influenced with GlobalView picking up steam with the tremendous traction we have there. Those are some of the large deals, same in national accounts. It's still very strong double-digit growth. I think you are going to see a little bit of lumpiness from quarter-to-quarter. I don't think you should expect to see really steady state growth or a little pick-up in each of every single quarter. I think it is going to move around a bit and that partially due to the mix now that -- in the business and where the growth is coming from. T.C. Robillard - Banc of America Securities: Great. Thank you.

Our next question will come from the line of Craig Peckham with Jefferies. Craig Peckham - Jefferies: Hi. One question I promise. The $8 million spin-off expenses, just a geography question, does that fall in the brokerage segment or have you that in the other?

It's in other. Craig Peckham - Jefferies: Okay. Great. Thank you.

You are welcome.

Our next question will come from the line of Brandt Sakakeeny with Deutsche Bank. Richard Gray - Deutsche Bank: Hi, this is Richard Gray for Brandt. All of my questions have been answered. Thanks.

Thank you, Richard.

Thank you.

Our next question will come from the line of Tien-Tsin Huang with JP Morgan. David - JP Morgan: Hi, this David calling for Tien-Tsin. Just a quick clarification, on the Form 10, you spoke about an Investor Communications' client that didn't renew, is that you have been talking about Waterhouse is that the same or is it something different?

I don't know. I am sure it's the same one, but in terms of that language didn't renew, let me get back to you to be sure on that one, but I believe it is the same. David - JP Morgan: Okay, because the dollar amount looked -- didn't look the same, but that's fine. The other question I had then was--

What was the dollar amount?

Yeah, what was the dollar amount? David - JP Morgan: I had $44.8 million in FY '06 in revenues and $11.1 million of pre tax income, which sounded higher than what you had mentioned with Waterhouse?

I said about 40. David - JP Morgan: And you said, it was a non-renewal as opposed to a lost client.

Okay. Let me get back to you on that to be sure. David - JP Morgan: Okay. Yeah, the question really was just -- is that in the guidance for brokerage for the year? Then I just had a quick question --

Yeah, whatever is now, it certainly -- we were able to say it in the Form-10, it's in our guidance. David - JP Morgan: Okay.

Yeah, I think that is an existing client that has advised us that they may potentially leave, but they will be here for the rest of this fiscal year and we'll not change any of the guidance that we've given you thus far. David - JP Morgan: Okay. That's very helpful. And then my question, you asked -- you talked a little bit about the acquisitions in ES. Any thoughts on acquisitions for Dealer or Brokerage?

In Brokerage, I would not expect to see any acquisitions in the third quarter in our Brokerage unit, post the spin, it's really not for me to say. So it would really be where they decide to take the business. I would expect from time-to-time for Dealer as it expands internationally to pickup smaller kind of integratable kind of acquisitions as we build infrastructure country-by-country, but nothing of any big magnitude, mostly smaller units that will rationalize in a 6- to 12-month period. David - JP Morgan: Great. Thank you.

Our next question comes from the line of Lloyd Zeitman with Bernstein. Lloyd Zeitman - Bernstein: Hi folks, my questions have been answered. Thank you.

Thank you Lloyd.

And our final question will come from the line of Charlie Murphy with Morgan Stanley. Charlie Murphy - Morgan Stanley: Thanks Gary and Chris. The '07 guidance for the client funds yield implies a modest pickup in the second half. Could you tell us any specific drivers of that, that we should be aware of and then I was wondering how much in realized gains do you expect in fiscal year of '07? How much in realized gains you expect in fiscal year '07? How much is included in your guidance?

The overall yield to go up to about 4.5% on new purchase rates since the Q4 of fiscal year '06 or just under 5. So as you roll, we would expect that to be moving up towards the 4.5%.

What was the second? Charlie Murphy - Morgan Stanley: Yeah, how much in realized gains are built into your '07 guidance?

We don't plan for realized gains n the guidance going forward.

For losses.

For losses, for that matter it really depends on the positioning of the portfolio. So we don't plan for anything in the guidance. Charlie Murphy - Morgan Stanley: Thanks very much.

Thank you.

Thank you.

So, in summary, we appreciate all the questions. Hopefully, we've answered them as directly and forthright as we can. I'll close by just summarizing how pleased we are with the quarter. We are above our plans, we believe we're going to have an excellent second half to the year, and the businesses continue to execute on the strategic direction that we've laid out. And we continue to see strong acceptance of our products and services, not only in the United States, but around the rest of the world as well. So, we remain optimistic about the long term future growth of the company and we appreciate your interest and attendance in today's session. Thank you and have a good day.

Thank you.

Thank you for participating in today's Automatic Data Processing conference call. You may now disconnect.