Martin Mucci - President and CEO Efrain Rivera - SVP, CFO and Treasurer

Jason Kupferberg - Jefferies & Co. Kartik Mehta - Northcoast Research Timothy McHugh - William Blair & Company David Togut - Evercore Partners Gary Bisbee - RBC Capital Markets Sara Gubins - Bank of America Merrill Lynch James MacDonald - First Analysis Securities Ryan Davis - Credit Suisse Ashwin Shirvaikar - Citigroup Smittipon Srethapramote - Morgan Stanley Jeffery Silber - BMO Capital Markets Tien-Tsin Huang - JPMorgan Chase & Co. Mark S. Marcon - Robert W. Baird Ashish Sabadra - Deutsche Bank Joseph D. Foresi - Janney Montgomery Scott LLC David M. Grossman - Stifel, Nicolaus & Co., Inc.

Welcome, and thank you for standing by. (Operator Instructions). Today's conference is being recorded. If you have any objections you may disconnect at this time. I would now like to turn the meeting over to Mr. Martin Mucci, President and Chief Executive Officer. Go ahead sir, you may begin.

Thank you. Good morning, and thank you for joining us for our discussion of the Paychex's third quarter fiscal 2014 results. Joining me today is Efrain Rivera, our Chief Financial Officer. Yesterday afternoon, after the market closed we released our financial results for the third quarter ended February 28, 2014. We also filed our Form 10-Q, which provides additional discussion and analysis of the results for the quarter. These documents are available also by accessing our Investor Relations page at paychex.com and this teleconference is being broadcast over the Internet and will be archived and available on our website for approximately one month. On today's call I will share my thoughts on our results and update you on how we are doing in operations, sales and product development areas and Efrain will review our third quarter financial highlights and discuss our full year guidance. And then we'll open it up for your questions. We are pleased with our results in the third quarter. We continue to make progress driving new business revenue and selling more value added services and increasing revenue from our client base. We released additional enhancements to our online and mid-market products and in fact we’ll be releasing the next version of our mobile app user interface this week. Along with these technology enhancements we remain focused on providing industry leading service to our clients and their employees. Efrain will go into more detail on the financial results and comparisons. However I would like to provide you with some highlights of the quarter. Total service revenue showed good growth of 7% for the quarter. Payroll service revenue growth of 5% was supported by solid results in the core payroll product. HRS revenue increased 12% in the third quarter as we continued to benefit from demand -- support from demand for human resource outsourcing solutions and strong execution highlighted particularly in the PEO business. Checks per payroll have improved for 16 consecutive quarters now, third quarter growth was 1% moderating a bit from the first half of the fiscal year. From a sales perspective we continue to experience good new business revenue growth particularly in core payroll and Paychex HR outsourcing solutions. Our execution in service operation s also continued to be excellent. The team did a great job for our clients with year-end processing including the distribution of our W2s and year-end reporting ahead of schedule. I also want to note that our business continuity plans have performed extremely well through severe winter conditions that many of our clients experienced, ensuring that our client needs our service even in the worst condition. This is probably one of the toughest winters that we've gone through from a service perspective and we've just done an excellent job particularly on the East Coast as went through a number of storms. I am proud of the partnership and the service commitment demonstrated by our employees that continued to result in client satisfaction and client retention results that remain at very high levels. This effort is really a testimony to the strength of our client service model, always putting our clients first. From a technology perspective continued investment in our SaaS solutions and mobility offerings positioned us for long-term growth. We have market-leading SaaS solutions, levering the latest technologies, our online HR, administration and time and attendance products are integrated with our Paychex next generation offering. We are experiencing increased demand for our SaaS solutions across our client base. We continue to invest significantly in our online capabilities as well as our mobile applications and whether you are a client or client employee our mobile app provides clean and efficient access to all of your own information with one to two clicks. We give clients the ability to start, edit and submit their payroll with the best mobility app in the marketplace. And as I mentioned we'll be introducing the latest version of the mobile offering this week. During the third quarter we officially initiated our operations in São Paulo, Brazil and enhanced our portfolio of value-added products and services with the official introduction of Paychex's payment processing services. This is a full suite of payment processing solutions, including credit and debit card processing, mobile and online payment services and point-of-sales solutions designed to meet the evolving needs of today's small businesses. This service is being offered in partnership with Elavon, a leading global payments provider. In the past few quarters I've talked about our new products designed to help our clients manage compliance requirements of the Affordable Care Act or more commonly known as Healthcare Reform. We continue to execute on the rollout of those product offerings in this area including our Paychex employer, shared responsibility service of more robust monitoring service in our Paychex benefit account. These products while new to the market represent an opportunity for us as we are uniquely positioned as both the payroll provider and insurance agency to help small businesses with these regulations. The frequent changes in ACA rules have caused some clients to delay decisions on purchasing products or making changes to their healthcare plans. However we continue to see healthcare reform as an opportunity for us as we are able to provide clients with the most up-to-date information on the latest requirements. We also continue our shareholder friendly actions. We increased our dividend back in July 6% to $0.35 per share and we continue to repurchase Paychex stock opportunistically and we have repurchased approximately five million shares of common stock in the first nine months of fiscal 2014. And finally last week we announced that on April 1, 2014 just next week in conjunction with IHS Inc. we will launch the Paychex IHS Small Business Jobs Index. This is a new monthly index that examines the state of small business employment in the U.S. by measuring aggregated small business payroll data from a subset of our small business client base. The index will identify and track small business employment trends and provide probably the most real timely accurate insight into national and regional employment activity as well as report on state and metro employment trends for many of the country's largest states and metropolitan markets. This index does not indicate Paychex financial results. In summary I am pleased with our results for the third quarter and I appreciate the great work of our Paychex employee team across all organizations from sales to service. And I will now turn over the call to Efrain Rivera to review the financial results in more detail. Efrain?

Thanks, Martin. I would like to remind everyone that during today's conference call we'll make some forward-looking statements that refer to future events and as such involve risks. Refer to our press release for a discussion of forward-looking statements and related risk factors. As Marty indicated our third quarter financial results for fiscal 2014 represented good progress. There are a number of -- there are some of the key highlights for the quarter and nine months that I’ll talk about now and I’ll provide greater detail in several areas and wrap with a review of 2014 outlook. Total service revenue grew 7% for the third quarter and the nine months to $626 million and $1.8 billion respectively. Interest on funds held for clients decreased 3% for the third quarter and 1% for the nine months to $11 million and $31 million respectively. This result was due to lower average interest rate partially offset by an increase in average investment balances. Expenses increased 5% for both the third quarter and the nine months. The increase was mainly in compensation-related costs with higher wages and higher performance based comps. Wages were impacted by our investment in product development and supporting technology and new sales initiatives, implemented in fiscal 2013. For the nine months we also experienced higher sales-related costs attributable to new business revenue growth. We maintained strong operating margin of 38.4% for the third quarter and 39.7% for the nine months. Operating income, net of certain items, increased 12% for the third quarter and 9% for the nine months. We expect operating margin for the full year to be approximately 38%. Net income increased 11% to $169 million for the third quarter and 8% to $482 million for the nine month period. Diluted earnings per share increased 10% to $0.44 per share for the third quarter and 7% to $1.31 per share for the nine months. Turning to payroll service revenue, it increased 5% for the third quarter and 4% for the nine months. We benefited from increases in checks per payroll, revenue per client and client bases. As Marty already mentioned our checks per payroll growth metric continued to improve with the rate of growth moderating from earlier in the year. As we expected, checks per payroll increased 1% for the quarter and for the nine month period, 1.5%. Revenue per check grew as a result of price increases, net of discount coupled with the impact of increased product penetration. The third quarter payroll revenue growth was bolstered by one additional payroll processing day in the quarter compared with the same period last year. The estimated impact on payroll revenue growth is in the range of 0.5% to 1%. Note that payroll revenue growth is expected to moderate in the fourth quarter due to one less payroll processing day compared to the prior year and we anticipate that payroll service revenue growth in the fourth quarter will be at the low end of the full year range. HRS, HRS revenue increased 12% for both third quarter and the nine months. We continued to experience rapid growth in both our ASO and PEO as well as in our online HR administration products. Interest revenue increase reflects client growth primarily in HR solutions, retirement services and online HR administration products. Our online HR administration products continued to grow due to success in sales of SaaS solutions. Within HR solutions the PEO continued to show strong growth in the number of clients we served. Retirement services revenue also benefited from an increase in average asset value of participant funds. Insurance services revenue growth reflected higher premiums in workers' comp insurance services and an increase in the number of health and benefits applicants. HRS revenue growth was tempered modestly in the nine month period by higher direct cost in our PEO. Note that HRS revenue quarterly growth can vary due to the volume of client, PEO worker’s compensation and basis points earned on retirement services client employee funds, basis points change in the fluctuations in the financial markets in the asset value fund invested. PEO net service revenue also exhibits greater variability between quarters due to a number of factors, including change in the worker’s comp claims experienced. Turning to our investment portfolio, in the short term portfolio primary investment vehicles remain high quality variable rate demand note and bank demand deposit accounts. In the longer term portfolio we invest primarily in high credit quality municipal bonds. Our long-term portfolio has an average yield of 1.7% and an average duration of 3.1 years. Our combined portfolio earned an average rate of return of 0.9% for the third quarter compared to 1% for the same period last year. For the nine months we earned 1% compared to 1.1% for the same period last year. Average balances for interest on funds held for clients increased during both the third quarter and the nine months due to growth in checks per payroll and the client base. For the nine months average balance benefited from the expiration of certain payroll tax cuts on December 31, 2012 which resulted in higher social security withholdings. Let’s turn to the highlights of our financial position. It remains strong, cash and total corporate investments totaled $964 million as of February 28, 2014 and we had no debt. Funds held for clients as of February 28, 2014 were $4.9 billion compared to $4.1 billion as of May 31, 2013. Funds held for clients vary widely on a day to day basis and averaged $3.7 billion for the nine months, a year-over-year increase of 5%. Total available-for-sale investments, including corporate investments and funds held for clients, reflected net unrealized gains of $39 million as of February 28, 2014 compared with net unrealized gains of $35 million as of May 31, 2013. Total shareholders’ equity was $1.8 billion as of February 28, reflecting $383 million in dividends paid during the first nine months. Our return on equity for the past 12 months was 34%. Cash flows from operations were $706 million for the first nine months, a 16% increase compared to the prior year. This increase was driven by higher net income, higher non-cash adjustments to net income, monthly higher amortization of premiums of available for sale securities along with higher depreciation and stock-based comp cost and changes in our operating assets and liabilities, related primarily to [time]. I would like to remind you that our outlook, turning to fiscal 2014 guidance for the remainder of the year is based on our current view of economic and interest conditions continuing with no significant changes. As I have mentioned the growth rate for payroll services revenue is expected to be at the low end of the full year range in the fourth quarter as a result of one less processing day compared to the same period last year. Our payroll service revenue growth is expected to be in the range of 3% to 4% for the full year and at the high end of that range. HRS revenue growth is also expected to be at the low end of the full year range for the fourth quarter for similar reasons and because we believe there will be a moderation in HR solutions performance. Overall HRS growth is expected to be in the range of 10% to 11% for the full year. Total service revenue is anticipated to be in the range of previous guidance although at the high end of that range. Net income growth is anticipated to be in the range of 9% to 10%, adjusted up slightly from previous guidance. I remind you that in the fourth quarter of last year we recognized an additional tax provision for the settlement of the state tax issue which impacted diluted earnings per share. Our operating margin for the year is anticipated to be approximately 38% and as I mentioned to many of you 38% can be anything up to 38.5% and we don't call it to the nearest half percent. This is slightly lower than the margin experienced in the first nine months of fiscal 2014 as our margins are historically lower in the second half of the fiscal year. Finally thanks to those of you who participated in our Investor Day survey. Based on survey’s feedback we decided to move it later in fiscal year ’15 and we’ll provide further information as we finalize the detail. Thank you very much and let me turn it back over to Marty.

Thanks, Efrain. Operator we’ll now open the meeting to questions.

Thank you. (Operator Instructions). Our first question comes from Jason Kupferberg of Jefferies. Go ahead, sir. Your line is open. Jason Kupferberg - Jefferies & Co.: Hey, thank you, guys. I appreciate you taking the question. Can you just give us a sense, now that the key selling season is over how your sales force did relative to the quota that they had during the key selling season and are you still expecting to be -- or I should say where are you expecting to be in kind of your 1% to 3% target range for organic client growth this year, now that you did get through the key selling season I am guessing you got some better visibility on where you might land in that range?

Jason, it's Marty. We don't necessarily we don't give the client growth number for the end of the year as you know because we want to get through the whole year. But I would say on the sales execution and selling season, continued solid performance there, so particularly in the HRS side in core payroll and HR small business and in the HRS particularly in the PEO, as we have said in some comments, feel really strong and the PEO came in really strong in the year and I think that's healthcare reform. I think that's just real resurgence there and that's been good. But really overall very continued solid execution from a sales perspective.

And Jason just to add to what Marty said we don't give the specifics but we feel very comfortable that we are within that range. Jason Kupferberg - Jefferies & Co.: Okay, that's helpful. And I think in the past, over the last several quarters or so when you guys have asked -- have been asked where pricing is running in core payroll, and seems like you've indicated it's been closer to the lower end of that longer term 2% to 4% range that you have made at the Analyst Meeting, a couple of years ago. Was that the case again during this quarter?

Yeah, we are still feeling good retention from a client base and from a revenue, I guess I would say capture perspective, feel good about holding the price increase that we did last year. And I would think we never really changed that range going forward and we wouldn't want to get any more specific than that coming up. Jason Kupferberg - Jefferies & Co.: Okay, and then just last question I think you mentioned seeing good traction on the SaaS side of the business. Can you give us any sense just in terms of mix of new sales how you've seen that shift, presumably the SaaS mix there has been increasing but any numbers you could give us just to help convey how much demand you've seen for SaaS, perhaps relative to the classic full service outsourced model?

Yeah, it's an interesting mix. I will give you a comment then let Efrain pick up as well. But it's our model is we're giving over the last few years with all the technology investment and what we rolled out, we see a much bigger impact of clients moving to the online apps, but it's with our service tied into it. So what we like -- the way we positioned is was deliberately to say hey, you have a dedicated person there available to you but we have a much more robust online payroll time and attendance HR administration solutions for you as well. So if you want to do it online through the SaaS solution you can do that, if you want support and use your dedicated person you can do that. And what we're really starting to see is very much what we hope which was a mix of both using the solution and so many more online clients signing up for online but then using other service person as well, when they need to. So this week I may put in my own online payroll, I may call for something I need but I am putting it in myself, the next week I may go to the payroll specialist. What we're seeing, the biggest push online has continued to grow very much but the biggest push also had been in the time and attendance and HR solutions, the administration that our SaaS products online and we're seeing across both small and mid-market some growth in those products that's picking up in penetration and sales. So I wouldn't give exact numbers but we are certainly seeing a better penetration rate on the new sales; our attachment rate and a better penetration overall into the customer base.

Just to add to what Marty said when we say SaaS products we're talking about a suite of products that not only includes core payroll but includes things like timing, attendance, HR administration online, those are doing very, very well for us and they are both sold to our core base and also to -- in the mid-market space. With respect to the low end, the micro enterprise space, SaaS it's doing very well, it's continued to do well, that part of the market, the low end SaaS is very attractive to that portion of the market and so [payroll] translates very, very effectively there. Jason Kupferberg - Jefferies & Co.: Okay, thank you guys for the color.

Okay.

Our next question comes from Kartik Mehta of Northcoast Research. Go ahead sir your line is open. Kartik Mehta - Northcoast Research: Hey good morning, Marty and Efrain.

Good morning. Kartik Mehta - Northcoast Research: Efrain, you said client growth, you don't want to give the client growth numbers but you are comfortable within the range you've set, is there a difference you are witnessing between may be the short payroll type of clients versus what I would consider your traditional Paychex type of client in terms of net client growth?

So we look at both and I think we are satisfied with the performance of both segments of the market. So I would say Kartik, the answer to your question is that we see growth on the low end and we've seen growth in our core client base also. Kartik Mehta - Northcoast Research: And then Efrain, you had what I consider a very good margin quarter, seems like good growth year-over-year. Anything specific as why margins were really strong this quarter or is it that just one extra day and maybe just management of the expenses, was there anything else in terms of sales or sales execution or commission that might have impacted that?

I think Kartik that really, our model is -- has a significant component of variable expenses associated with it. And when we deliver strong top line growth the marginal expenses associated with that, that top line are relatively small and I think what you see in the model is that when we had strong revenue quarters like we did this quarter a lot of it flows to the bottom line and that’s the way the model is built. So the more top line growth we deliver the better leverage we see. So I guess I'd characterize it that way. In other words we did everything we were thinking of doing in the quarter from an expense standpoint. There was nothing unusual about our spending pattern. Kartik Mehta - Northcoast Research: And then just one last question Marty, have you seen any change or difference in terms of what’s happening with your healthcare insurance business? I know at the beginning of the year you thought there might be some impact because of the Affordable Healthcare Act. I'm wondering because of all the changes that are happening or the delays that have been announced if that's impacted the business any differently than what you had anticipated?

Yeah, I think it certainly as moderated a bit. I think what we’re finding, as I mentioned in the comments, Kartik was kind of a lack of decision making on some parts of the small business and really mid-size business because the rules keep changing and so I think the employers are not sure what to do exactly. So I think that it slowed a little bit from what we had expected or hoped for. The good news is the products are out there and the products that we rolled out giving the tools to the employer are really helpful. There is -- we’re finding a lot of confusion from the small business and midsize business base and we’re able to help them. So the good news is it's continuing to get us -- our reps in front of them with different products. I guess I’d say the moderate news is that they are not buying as much insurance because they are not sure if now it's been pushed off a little bit and I think you might see that pickup more in toward into the summer and the fall as they look at benefit plans and start to see some, could be seeing healthy premium increases and they may look for alternatives from folks like our insurance agency, who can give them those tools. Kartik Mehta - Northcoast Research: Thank you very much. Appreciate it.

All right, thanks.

Our next question comes from Tim McHugh of William Blair & Company. Go ahead sir. Your line is open. Timothy McHugh - William Blair & Company: Hi, yes. Just wanted to ask you, you talked about seeing in the payroll growth, I guess better attach rates. Can you -- what is, I guess what solutions are included within the payroll services growth that you are attaching? And I guess the follow on, associated question also is, can we look at the revenue per client growth that’s helping payroll growth partly reflecting that you are seeing, that your growth was in the mid-market necessarily than with smaller clients at this point or is that not a good conclusion to draw from the data?

No, I’ll start on the product and then let Efrain take that last part. I think Tim primarily what we’re seeing is time and attendance solutions picking up and from a SaaS product standpoint anyway we’re seeing time and attendance solutions that we would have felt were more mid-market are actually sliding down as well into the -- what we think of as the under 50, the small business market and that’s been a nice pickup for us. So our time and attendance online solutions as well as some of the HR administration but mostly time and attendance are picking up into the small business. So they are showing up in the 20 to 50 where we were thinking they would be more seen in the 50 plus. Now we have a small end clock as well, when we purchased the Icon Time Systems, very basic clock, and that’s the work in the under 10 but we’re seeing even better pickup on the SaaS solution for time and attendance over 20, I would say.

Yeah, I would say, I don’t think we can draw any conclusions on mid-market growth rates and I think that Tim what you see is a bit better client base, a bit better pricing, a bit better sales execution overall is really kind of driving what’s going in payroll service revenue. In payroll service revenue we don't include the SaaS products that Marty just mentioned so time and attendance and HR online administration are reported in HR ad. So although we are attaching you are seeing some of the growth occurring on the HRS side. Now core payroll is I should say payroll is basically payroll services, tax pay, employee deposit which is executing better this year than we were last year. Timothy McHugh - William Blair & Company: Okay and then I guess just given you had another SaaS based competitor become public, there’s another one that’s on file, that I guess just give us updated comments on the competitive environment as you see it from particularly in the I guess the small to mid-market right now.

Yeah, I don't see a lot of difference you know, whether they go public or not, you know obviously I don't think it changes a lot, it gives them a little bit of some name out there to get going public but we don't run into them too much -- we’re still running into mostly the national competitor. They are not going to be able to offer as much from the service model perspective across the country, they are not going to offer quite as much from a technology perspective in its broader category from small to mid-size, I don't think as we do. So I think we’re seeing kind of still the same level of competition and I think our investments from a technology standpoint combined with the service has been particularly strong right now. So I guess I would say for once Tim I am really glad that we invested where we did starting I would say four years ago when we really put a lot into the mobility app and the SaaS solutions because they are competing very well and it's positioned us nicely for the competition, that’s coming up. But there is still more regional competitors from that standpoint. Efrain anything you want to add to that?

I would just say Tim that we know them very well, we know them in detail, we know their weaknesses and their strengths and we take all competition in this space seriously. Timothy McHugh - William Blair & Company: Okay, thanks.

Our next question comes from David Togut of Evercore. Go ahead. Your line is open.

Hi, David. David Togut - Evercore Partners: Good morning, Marty and Efrain.

Good morning. David Togut - Evercore Partners: Marty you mentioned some very recent enhancements in the mobile and SaaS product areas, can you perhaps lay out the broader new product roadmap over the next 12 to 18 months what we should expect from an innovation perspective from Paychex?

Yeah, I think the biggest thing is we have talked about it in the past, but I think we’re seeing it come to fruition which is very much exactly what the clients want, which is an integrated experience for the way that we’re delivering the entire product. So we started seeing a few years ago that really the mid-market and sometimes even the higher and small market is selling more to an HR or time and attendance need of the client and then payroll is part of that. And so what we worked on was enhancing products that we either purchased or built over the last four to seven years and then enhancing them to integrate the experience, put a revised look to them so that there is a combined, there’s a single sign on, there’s a combined UI -- the user experience and user interface for them. And you’ll continue to see a more, I guess I’ll say in that market you’ll continue to see more integration and more UI and additional functionality that is more sophisticated and integrated like job costing and so forth that giving them everything and you are able to update, for example in the past we would have issues where you had -- you could update people's -- employees information in multiple places and sometimes that was confusing to the client. We now have one kind of people section that applies to the time and attendance HR in payroll and you can update in one place that updates everything and it’s a much smoother seamless approach for the client and you’ll continue to see that integration and usability improved and modernized. In mobility, like this week its making user interface even more modern and we just released this, the UI, I would say 12 to 18 months ago. Now we’re releasing kind of an updated UI for the mobility platform. So the changes are going to be more frequent and they are just more modern as we see what the competitive market needs. David Togut - Evercore Partners: That makes sense. Just as a related question could you update us on the performance of some of your recent acquisitions and new products like ExpenseWire, myStaffing and Kashoo?

Yeah, myStaffing, extremely strong performance from -- on organic -- they sell directly to clients as well and there is some indirect partners -- sellers there, indirect partnerships, that's selling very well and selling into our base as well. There is just a huge need for talent from applicant tracking through talent management and so forth and doing well. ExpenseWire is performing fine, that's from an expense management again integrating. We're pulling more and more those acquisitions into the overall mid-market products, so that there is more of a seamless integration along with our time and attendance and HR administration, so the client has a full suite. And then from Kashoo perspective on the Paychex's Accounting Online app very recent so we're getting good signups, we're getting a lot of attention. We're kind of learning how to drive more and more the, not only the sign up but then the adoption and actually registering and signing up the client. So we're working with Kashoo and then of course the private label version, our own is how do you drive -- we're doing pretty good driving activity in and then it's how do you get them to register in and sign up for the product. But it's very early, so we're kind of learning a lot in that market. But we're happy with -- we like the product and we're continuing to rollout with them additional enhancements to the Paychex accounting online. David Togut - Evercore Partners: On the topic of Kashoo, Intuit on its recent quarter reported 95% growth in their payroll processing business, are you seeing that the level of Kashoo, was that a little bit above or little bit below from a client size perspective?

So you are saying they are seeing a big jump in their payroll processing service? David Togut - Evercore Partners: Right, I know they are targeted typically at very small businesses that may be below your average client size but I am just wondering if you see them at all in the market from a competitive standpoint.

Okay. No, I think mostly what we'll see them, SurePayroll will see them and SurePayroll continues to perform very well. So that's the other acquisition that we would talk about it. Three years now we feel very good about SurePayroll continue to have good growth in more even in their direct channels and the indirect channels that they've done a lot of white labeling with banks and so forth. But even the direct channel's even stronger than we had expected. So we feel real good about their growth and their continued competitiveness against Intuit and others. David Togut - Evercore Partners: Just a quick final question, I thought in your comments about the strength in new business sales in the quarter, you called out every area as being strong except the mid-market. Do I have that correct or there was another message you are trying to send on mid-market payroll?

I think what we said there David was we just called out the one that were the strongest. We could have called out a number of different sales areas and we called out the ones that were strongest. David Togut - Evercore Partners: Okay. Thank you very much.

Okay.

Our next question comes from Gary Bisbee of RBC. Go ahead sir. Your line is open. Gary Bisbee - RBC Capital Markets: Hi, good morning.

Hi Gary. Gary Bisbee - RBC Capital Markets: I think in the comments you said that for the nine months sales commissions was one of the drivers of growth but didn't specifically say that, that was a big driver of cost growth this quarter. Should we read into that a change in that the trending or growth of new business this quarter versus early in the year or am I reading too much into it?

I think you are reading too much into it. Actually sales expenses for the nine months are up with sales growth for the year. So I think you are reading a little bit too much into it. Gary Bisbee - RBC Capital Markets: Okay, all right.

And by the way, so as Marty said we continue to have very solid sales execution for the year and expect that to continue. Gary Bisbee - RBC Capital Markets: Yeah, okay. The next question you talked a lot about new product launches over the last few years and certainly all the product development investments you've been making, can you give us a sense, either numbers or sort of anecdotally how much of those efforts are to upgrade existing offerings that are going in and supporting the same revenue that you've been getting from customers versus driving incremental revenue through new sales or actually being a separate service?

Yeah, I guess I would say certainly because when you look at the offering as a complete offering and we are seeing that more and more come down in the marketplace from people who wanted payroll years ago only and tax pay and direct deposit too, hey I would like something for my HR administration and time and attendance in particular, I think what you’d see is the development has helped, it's both, it’s shored up the existing product base but it’s certainly getting more revenue per client in the addition of the time and attendance offerings. When you look at our product development work it's been about building mobility, so the clients have more choices to how they get to us and do their payroll, so they have a better online product now, and a much better mobility, I think the best app in the market place, for us from a payroll standpoint and combined services. So those kind of shore up the existing products for what clients expect now from a competitive standpoint. So if we didn’t have mobility for example, I think it would improve sales and retention overtime, particularly the two national players compete and some of the regionals can’t do as much in that standpoint. Then there is also -- when you take something like time and attendance, we didn’t offer as robust a product few years ago as we do now and so that’s the new revenue streams that have helped the HRS growth in time and attendance, HR administration online, both SaaS products, BeneTrac, the benefit and enrollment products that we added there and so forth. So it’s a combination of shoring up and keeping you very competitive and then also adding more products to it. Gary Bisbee - RBC Capital Markets: Okay, great and then just one more question about the competition, and I totally realize that you grow your revenue in dollar terms more in a year than the size of most of these new upstarts. So looking at the growth rates is unfair but there just seems to be an awful lot of more press by very unscientific review of banner ads on the web and other things. It’s just showing a lot more discussions around some of these upstarts. So in light of all that have you changed the mix or sophistication of how you’re marketing and attracting customers, doing efforts to compete with what seems like some more brand awareness and probably somewhat more tech savvy new entrants trying to come after your market share?

Yeah, a couple of things on that. One, I think that one of the positive things about all the press and some of these regional players going -- doing IPOs or partial IPOs I guess I’d say is that they bring more awareness to the market of the products and so there’s a little bit of plus there for all of us and I think when you look at Paychex or another national competitor, hopefully clients see a much bigger strength there of being around for 40 years and producing consistently solid results retention service numbers et cetera. So I think there’s actually a little bit of plus there and we already have the competition, so it’s interesting. From a marketing perspective we definitely have pushed a lot more on the web. We’re picking up a lot more leads from the market search and that’s been a bigger part of our approach. We also have found a much better way to handle those leads. We’ve evolved into much more real time handling of the leads themselves that come in. So I think our marketing has picked up some, always can do I think more, but I think it’s a balance of where do you spend the money, is it on marketing around sales, which we kind of put in, in that category and we always tend to give more on the sales side and put more on our actual execution of the sales team and put more money there for supporting the sales team and their execution. But I think the marketing -- our marketing has picked up, our website is much stronger, our whole process of handling the lead is stronger, and I guess that’s how I look at it. I appreciate that you do talk about looking at absolute numbers of growth as opposed to percentages because that certainly means a lot to us. The amount of growth of what, 5% to 6% means for us is a lot bigger than sometimes the entire company that someone else might be looking at.

Hey Gary, one other thing I’d add to what Marty said, we don’t talk a lot about the efforts, that support sales but we have an entire organization where we’ve made significant investments, our national sales support office here, both in terms of technology and numbers of people. And I would say, I would put our ability to both generate and convert leads up against anyone. We can put a person -- feet on the street within hours of getting a web lead, which I don’t think many people can do. And we also have both SurePayroll, as I mentioned to some of you. SurePayroll and our core sales competing, we let them compete head to head in terms of web and sales lead. So we don’t feel like we’re missing anything that’s occurring in the market. We just don't toot a horn with respect to that either. I think to be in this game long term, not short term but to be in it long term you would have to have a compelling service proposition and a compelling technology position. And what we have been doing is we have been improving both. Some people in the competition have not been doing that. We think long term the right solution that works is the one that combines, that creates a sustainable advantage by maximizing both, not just one. Gary Bisbee - RBC Capital Markets: Thank you. That’s very helpful.

Our next question comes from Sara Gubins of Bank of America Merrill Lynch. Go ahead. Your line is open.

Hi, Sara. Sara Gubins - Bank of America Merrill Lynch: Thank you. A question about checks per payroll trend and the 1% growth in the quarter; I know that your comparison was more difficult and you have highlighted that it would slow, but I am just wondering what you would expect going forward and if there’s any potential mix impact on that?

There’s a little bit of mix impact always, just to kind of refresh your recollection. We’re not doing same store comparison, we do a little bit of validation and make sure it’s not too whacky but it’s not a same store comparison. We are just taking the amount of checks we admitted and comparing them to a prior period. So you get some mix effect in there. I think Sara what happened, we had a pretty strong Q3 last year. There was some Sandy overhang, there were bonuses in there, we think that may have affected that number. Now we’re normalizing down in the -- I would say that we’re down in the 1% -1.5% range that’s what we have seen during the year. Our assumptions are that will continue to moderate but we’ll see. We haven’t got it precisely correctly, so you are going to get some variability there and our expectation is, one we will be probably moderating slightly down from there. Sara Gubins - Bank of America Merrill Lynch: Okay, and then separately, could you talk a bit more about the new payment processing service with Elavon and I am wondering how that fits into the chain of client acquisition, since I generally think of clients signing up for credit card processing first and then maybe adding on payroll solutions after that.

Well I think you know -- Sara you are right. I think when we went into this and we started trialing it we really kind of looked at that we are getting in pretty early on a new business and that we had -- because we had feet on the street we would get to the new businesses as they started up and would be successful in signing them up for the first time. And what we found in trialing it, in a number of zones around the country was that wasn’t always the case and that, so we actually changed the sales model around and we sell more of that now basically over the phone and into the client base and we are having more success there. And so what we found and it's kind of its own animal. So you have to know the pricing, you have to know how to price it per transaction, the different kinds of businesses and what we found was a little bit more of a specialized team over the phone and concentrated could sell into the client base more successfully than 200 reps going at brand new clients the first time. So we trialed that around, found the best way we think to sell it and now we’ve kind of officially introduced it and we’re just starting to get you know some traction and results on it but we are definitely starting to get some traction. So we feel with -- you know over 500,000 clients and under that on the small business side that we have got a nice opportunity there, with Elavon obviously. So what we are doing is setting it up, we’re getting to the client base who have the strength of knowing the Paychex brand and knowing that they already use us for money flow and so forth and that by trusting us that they’ll sign up with us with competitive packages and all the solutions that Elavon brings and then we get a piece of that action on a go forward basis. Sara Gubins - Bank of America Merrill Lynch: Thank you.

Okay.

Our next question comes from Jim MacDonald of First Analysis. Go ahead. Your line is open. James MacDonald - First Analysis Securities: Good morning guys. Back when you just reported HR client service in place on a sequential basis you sometimes had a more moderate growth over year-end given high attritions. It looks like you had a really good quarter, does that mean you actually had pretty good client employee growth over year-end this year?

I think we had good growth over year-end but I think Jim, we just really had strong sales in HR services overall. It’s been a good sales year from that perspective. James MacDonald - First Analysis Securities: And does that processing day impact next quarter? You said that HR services wouldn’t be at the low end, next quarter growth rate, is that as affected by processing day or is it something else there?

No, there is a little bit of impact on there but I also called out we had a very, very strong quarter in terms of HR solutions and look, we'd love to have every single quarter look like that. But at this point we don't think that will repeat quite to the extend it did this quarter. James MacDonald - First Analysis Securities: And just one final sort of technical question, so last quarter your SG&A sort of jumped a bunch, in this quarter it was didn't -- the increase wasn't very much at all. Anything going on there that I should know about?

Not really, what ends up happening, what's ending up happening in SG&A is that we are adjusting as we go through the year variable elements at constant terms. We get it right sometimes we overshoot a little bit. And we develop a view of kind of how it's going to project quarter-over-quarter. I would say in terms of the year we think it will be pretty close to what we expect to deploy, may be it shifted a little bit from one quarter to another. And then rate of IT spending also has an impact on that. So it can shift a little bit but not dramatically beyond what we expected when we started the year. James MacDonald - First Analysis Securities: Great, thanks guys.

Okay.

Our next question comes from Ryan Davis of Credit Suisse. Go ahead your line is open. Ryan Davis - Credit Suisse: Hi guys, this is Ryan calling in for George. I had the first question about the selling season. It sounds like you guys had some positive comments around it. Is it surrounding like the overall selling environment being better or is it may be a product of market share gains or combination of the two?

I think -- well I think the overall environment is okay. I think it's still -- we would say from a new business start, one way to gauge it. Is it still fairly sluggish? I think new business starts are up a bit but it's nothing to kind of write home about. It's not back to pre-recession levels yet that we've seen employment is up a little, when we look at checks per payroll and so forth. So I think it's just kind of continued good execution on the sales side, more than that the environment is suddenly swelled or anything. I think we've seen some positive in the environment but it hasn't been anything to be overly excited about. We see kind of a steady improvement in the small business environment. Efrain anything you want to add to that? And I think as I said the execution has been consistent and in good there. So I think it's been just as much that more that than the environment itself.

You have to group it. Ryan Davis - Credit Suisse: Okay, fair enough. Now focusing in on the margins, ex [inaudible], they have been on a nice upward trajectory over the last several years. Is it a point where these -- it kind of takes a breather given commentary, I guess of accelerating new sales growth '14 over '13. And some of the acquisitions and the gracing cost, is it fair to assume these, the market could take a breather?

I think we'll talk more about that when we get to the fourth quarter and talk about plans. The rates and the extent of leverages that is the function and part of top line growth. So as we grow top line more, we get more ability to leverage. So we have to go through the plan and look at it. I would just say what I say to everyone one on this point which is that when we go into a plan we look at trying to get leverage and when we get the leverage we try to beat it during the year. So that's what you see. Ryan Davis - Credit Suisse: Okay. And just one quick model maintenance question on start-up, it looked like there is a negative swing and the net change in funds held for clients' cash flow and balance pretty significant I guess what is that from?

Not sure what exactly you are pointing to. Ryan Davis - Credit Suisse: So year-over-year it looked like there is $1.4 billion negative change in funds held for clients?

I am sorry, yeah. Well it's -- I would urge you to really think about average funds held for clients. It really is very dependent on when a particular quarter closes, how much we have in funds, how much we have disbursed on that day or that quarter. On average if you look at our Q, I think nine months we call out the balance, the average balance $3.7 billion, so that's really what you need to focus on we're up about 5% for the nine months period. Quarter-to-quarter it can really, really swing and it's really a function of when the quarter ended, what funds we’re holding, what payments needed to be made. Ryan Davis - Credit Suisse: Okay, thank you.

Sure.

Our next question comes from Ashwin Shirvaikar of Citi. Go ahead sir. Your line is open. Ashwin Shirvaikar - Citigroup: Thank you. Hi, Marty, hi, Efrain. I guess my first question is with regards to the impact of new partner product that you introduced, some of it you covered, but there’s been a range of payments, accounting, payroll cards, the new announcement recently. What is the revenue implication in terms of ramping revenues of that and also given their partner products as opposed to your own products how does that work with regards to margins and split of economics?

Well, obviously we didn’t gave too much detail on it from a competitive standpoint what we’re doing with the partners exactly but I guess it's pretty small at the beginning with what we think that there is a nice value added advantage we have of getting into the client base and we decided instead of certain things like payment processing et cetera going out and acquiring a global payments process or our regional payments process was better to just get a commission on the sales there, on the ongoing transactions. And so it’s positive but it’s going to be pretty small compared to our overall revenue. We certainly hope that it will grow with the client base, as we penetrate the client base more but it’s a little bit early to tell. When you look at the accounting that's a partnership with kind of an investment in Kashoo and then labeling our own product. So a piece of that it will be a pretty small for a while until we start converting clients and getting them to register and then overtime we may make a bigger investment there and then it starts to show up as a bigger impact on our revenue stream. So again these tend to be small longer-term investments that we think have a great opportunity to become significant but over the longer period of time.

The other thing Ashwin I’d say and just echo what Marty said, it is a longer term play, but in the shorter term what we know is that the more products the client have the stickier they are. So that’s a part of what we’re trying to do is to build multiple touch-points with the client so that they are stickier within the base. Ashwin Shirvaikar - Citigroup: Right, understood. With regards to one of the product lines that you had for some time now healthcare, how big is it and with regards to ACA being I guess for the small business segment the below 100 being pushed out by maybe a year, is that affecting growth in the segment or are people looking forward and saying there is something they need to do?

Yeah, I think from a size perspective I think we publicly said the agency is over a $100 million in revenue and that we have over a 100,000 clients, and that's for our insurance agency and I think specific to the health piece of it, as I mentioned earlier, it has moderated a bit, because I think clients -- it’s been a good opportunity for us to get in front of client and support them with the products that we already rolled out which help them decide there is tools there as to whether on a monthly reporting and monitoring service whether it applies to them or not but I think all the confusion in the delays now the 50 to a 100 don’t have to have insurance for their employees in ’15, 2015 I think all that has moderated the sales of some of the products in short term. I do think as you approach the fall and people start looking at their annual premiums going up I think they will be well positioned to offer them options and in expertise to combine both because we offer that payroll company all the other solutions that we have, added services and an insurance agency, I think it will position us well. But it kind of pushed it out a bit as the rules have been and the requirements have pushed out. Ashwin Shirvaikar - Citigroup: Right, and just so I understand the people that -- your sales force that are selling whether it is specialized sales force and does it now have to be re-focused on other things or is it more fungible than that?

No, it’s a specialized sales force on the health and benefit side and the worker’s comp insurance and other insurances side we are a full service agency. There are specific sales force that are licensed and sell those products in the field and over the phone and they are still out selling and there is good execution there, it's just not quite as big of an increase as we expected. We think it more moderate but it will continue to -- it's continuing to grow, that’s for sure. Ashwin Shirvaikar - Citigroup: Okay, my last question is with regards to the index that you've introduced, how much of that is more of a branding exercise versus is there a lack of information in the public domain today that you will focus on bringing out? What sort of information is there in public domain?

Yeah I mean there’s a number of indexes out there but I think we felt we talked about this for number of years internally about whether to do it or not. We think that we’re uniquely positioned because the one thing that we keep getting at is looking for more real time data on small business growth and we’re taking basically a subset of our overall client base of 350,000 of the clients under 50 in creating an index with same store sale -- the same store that kind of shows year-over-year what the worker growth is for those clients. And the conclusion we came to was hey we have some unique data here. Typically you would get that kind of data from Federal Indexes that are or federal sources that are kind of lagged three quarters and that we were getting a push forward, hey how about some real time data from some of your clients, so we felt that we had something unique here. It’s real time, it focus on under 50 and I think we have some of the best data in the business and so we produced an index that we think will add something a little bit different for the marketplace. Ashwin Shirvaikar - Citigroup: Okay, thank you guys. Good execution on the margin.

Thank you.

Thanks Ashwin. That's hard praise.

Our next question comes from Smitti Srethapramote at Morgan Stanley. Go ahead, sir. Your line is open. Smittipon Srethapramote - Morgan Stanley: Hi, good morning. So couple of quick questions on pricing. You talked about offering a bundle of the core payroll product with some online solutions. What does pricing look like there? Is there a higher revenue per client solution or does it fall somewhere between the core product or just the pure SaaS product?

No, it’s really when you don't count your payroll and if you look at just the Paychex offerings there is no real difference. It’s a complete offering for the small business under 50. You are looking at a complete offering with both online and that’s part of the full suite. You are getting full service, dedicated service and you have the online and mobility it’s all part of shoring up that product. The good news that we have seen is we’re continuing to grow the revenue per client as we have said and we think that, that’s been part of higher retention and better new business revenue being higher so a stronger I guess a stronger offering that is driving up the revenue per client and again we have said that the price increases are holding as well. So we think that’s all part of a complete offering. When you look at your payroll it’s a different offering. It’s roughly a third typically in an average client that we see, we have said that and that’s continuing to hold up very well on a price perspective as well. Smittipon Srethapramote - Morgan Stanley: Got it and on the HR side you mentioned in the release that you are getting higher average premiums in worker’s comp does it that going to translate into higher expected claims cost or is that all a pass-through?

No, that’s just underlying rate that we would negotiate with [carriers]. It really doesn’t have to do and on workers comp by the way at least within our agency that’s broker business so we are not taking an interest on that portion of business. Smittipon Srethapramote - Morgan Stanley: Got it. Okay, thank you.

Welcome.

Our next question comes from Jeff Silber of BMO Capital Markets. Go ahead. Your line is open. Jeffery Silber - BMO Capital Markets: Thanks so much. I know it’s late. I will just ask one quick one. Efrain on the guidance and looking at the operating margin, I know you said 38% could be 38.5% but even at that level it does imply some margin contraction for the fourth quarter. Is my math correct? Is there something going on that we should know about?

You are right, Jeff and if you look at every fourth quarter kind of going back probably three years you see we have pretty significant contraction in the quarter and it’s just a higher spend quarter in general and part of that, just to get kind of one level deeper is that IT spending typically has been going up double digits. This year is no exception and that ramps through the year, so that we exit the year at higher spending and then there’s other sales related expenses that occur in that quarter, that typically kind of burden that margin a bit more. Jeffery Silber - BMO Capital Markets: But would that still imply margin contraction on a year-over-year basis compared to fourth quarter last year?

I haven’t looked at quarter over quarter. I am just sticking to guidance. It shouldn’t, Jeff even if we’re between 38 and 39 we should be a little bit better. I have to look at it specifically. Jeffery Silber - BMO Capital Markets: Okay, great. I think that’s all I have got. All right, thanks I can follow up offline.

Okay.

Our next question comes from Tien-Tsin Huang of JPMorgan Chase. Go ahead, your line is open. Tien-Tsin Huang - JPMorgan Chase & Co.: Hey good morning.

Good morning. Tien-Tsin Huang - JPMorgan Chase & Co.: Yeah I just want to ask about retention, I am sorry if I missed this but did you give any color around what retention looked like in the quarter versus spend?

Retention just started -- continues to be very strong. I think we're still looking approximately at the highest levels of retention we've had in our history, certainly five to six years. So we still feel very good about the client retention that we're seeing in the client base. Tien-Tsin Huang - JPMorgan Chase & Co.: All right, that's just good to know and then just, I know you had a lot of questions, not surprisingly about SaaS and some of the changes gone over in the public market place but just -- can you just give us a quick high level [inaudible] on just right now to date point solution versus service bureau sort of given all the stuff that's going on in the world with ACA and what have you, sort of what are you seeing on the ground in terms of preference between the two sides, because I know there can be push and pull at different periods of the cycle?

Not seeing any drastic change, I think we continue because of the investments we've made and what we've rolled out. We feel good about the SaaS offerings that we have, both small market and large, that we're well positioned and the perspective from the offerings from the small business to mid-market, the time and attendance, the HR administration, the benefit enrollment all real SaaS solutions. But our focus has been very much offering the combination of that with the service, that's what folks are not seeing as much when they are usually when they are going somewhere else. We're still trying to give you that dedicated model and focusing that you have all the technology you have all the SaaS and cloud based solution that you want, all online now. There isn't -- we are not selling software that you are putting on your system and haven't been really for some time. It's all SaaS based and everything is becoming more and more integrated across the product set. So we feel very well positioned there, so even with all the hype we probably, as I think Efrain mentioned earlier we don't hype that as much and people look at us more as a service bureau but we are very much a SaaS based with the service model is how we look at it. Tien-Tsin Huang - JPMorgan Chase & Co.: Yeah, that makes perfect sense. Just lastly I now want to go to the PEO stuff, a lot of good commentary there, are you making some incremental investments in the PEO, given some of the commentary around pick-up in demand?

Yeah what we did previously, probably last year they went more to the SaaS model, the new online Paychex's next gen product. And so I think what we're seeing is that paid off -- that's being paying off very nicely because not only that we always have good service in the PEO model but as PEO kind of came more in favor, back in favor in the marketplace we were really well positioned to execute on the sales side not only for the need but because we have technology and the service level. Tien-Tsin Huang - JPMorgan Chase & Co.: Great, great quarter guys, appreciate it.

Thank you.

Our next question comes from Mark Marcon of R. W. Baird. Go ahead your line is open.

Hi Mark. Mark S. Marcon - Robert W. Baird: Hi, Efrain, hey Marty? Congrats on a great quarter. One strategic question, just as we continue to see an expansion in terms of the solution set, how are you thinking either or about build versus buy versus alliances as you optimize your solution set, just you had a couple of experiences, just how are you thinking about that?

Yeah I think, we look at that a lot it's always -- we're very proud of the investment that we've made and that we're feeling good about them paying off as we kind of talked about through the call. But we're always on an eye to a year out, two years out, three years out in how well positioned are we in the various markets and we're very open to build or partner and always kind of looking pretty closely at that. We think we have a tremendous distribution model still. Our field sales team, of course the 3,000 sales people in the field have continued to execute and so it's all about how fast can we give them more to sell and what the best way to do that. And obviously you've seen kind of the smaller end when we look at payment processing we think there is an opportunity there, we partner. When we look at a new product like accounting online we partner. If we think that in various markets we're better our partnering we'll look at the we think that in various markets we’re better off partnering we’ll look at the economics of that and the opportunity to grow and we’re very open to it. Mark S. Marcon - Robert W. Baird: Great and then with regards to some of the sales initiatives that you put in place such as going after franchises, can you just give us a little bit of sense for what areas have seen the strongest results in terms of the initiatives that you laid out at your analyst meeting?

Yeah, I think one the banking channel that something that in the past we were much stronger on the CPA channel not as strong in the banks I think that Mark Bottini and the team there building a team that really are dedicated, more focused on the banks and support of the bank channel has led to all a number of referrals and sales there, and we’ve seen that. We think that’s been very successful particularly in certain markets and because we just focus better on, that was one of the initiatives the franchise has picked up as well. I would say even more successful in signing up the franchises and now we’re kind of learning how best to service those franchises. So there is connections to subway, there is connections to Yum brands, there is Connexions there. Now we’re learning who has more kind of cloud in those organizations because we’re still not -- you are requiring them to sign up with you but you’re driving influenced from the headquarters type of thing, and so we’re learning a lot how best to partner with the headquarters and with the franchisees. But there’s something we continue to invest in and I think that team has been very successful in building the relationships and signing up new franchisees from a corporate standpoint and now we got to pick-up the pay side on closing those franchisees and these we’re finding different ways to sell into the markets once we have the agreement as well. So the initiatives on banks, franchisees and so forth we feel they are doing good. They’re picking up momentum and so we’re feeling pretty good about them. Mark S. Marcon - Robert W. Baird: That’s great. And then one last question with regards to the expense performance this quarter, I mean it was basically isolated to the other line, what are some of the areas that just fluctuate within that?

The other line… Mark S. Marcon - Robert W. Baird: Yeah, so when we go through the Q, as an example there is -- you breakout expenses between wages and compensation, the other…

Yeah as you’re looking at it by natural categories. Mark S. Marcon - Robert W. Baird: Yes.

I think, I’d say this that our P&L is variable and we have a fair amount of ability to manage expenses intra-quarter and obviously based on what we’re seeing in the year we can make adjustments as we go forward. So there’s nothing unusual popping out in that category. We have higher IT expenses and we did a really good job on operating expenses, controlling that growth as the financial statements in the K, there’s nothing strange going on there. Mark S. Marcon - Robert W. Baird: I was just wondering if you can keep that up.

Look if you ignore the natural category expense breakdown and look at what we’re doing, step back a bit, what we’re doing is we’re leveraging operating cost and we are continue to invest in IT so SG&A growing faster than sales primarily driven by G and ops expenses growing slower than sales. That trend, that macro-trend, irrespective of where it falls from a natural expense category standpoint is a trend that we expect to continue. Mark S. Marcon - Robert W. Baird: Great, thanks very much.

Okay.

Thanks, Mark.

Our next question comes from Bryan Keane of Deutsche Bank. Go ahead, your line is open. Ashish Sabadra - Deutsche Bank: Hi this is Ashish Sabadra on behalf of Bryan.

Hi. Ashish Sabadra - Deutsche Bank: Hi, most of my questions have been answered. Just a quick one on the CPA channel. I was just wondering if you could provide a quick update on that one.

Yeah, that continues to be good for us, pretty solid across the board. We maintain those relationships and I think the only thing that would moderate that sum is just the new business growth as we’ve said continues to be a bit sluggish and a lot of the new business referrals came from the CPAs. So that has probably tamped that down a little bit but the relationships and the approach from the CPAs and our referrals from them continue to be okay. Ashish Sabadra - Deutsche Bank: Great and just one more, quick question on the partnership model. Is there an opportunity for you to partner with other technology vendor and provide services as on top of that, these could be into a segment where you’ve not currently tapped them, could be much more the big mid-tier clients or other HR solutions that you currently don't have in your portfolio. I was just wondering if you could just comment on that.

Yeah we are always -- I might have mentioned earlier, we're always open to that. We think we're not going to go too far flung from what we do but in providing strength to the employer-employee relationship and if there is a technology need or a market that we think we can be very successful in and leverage the great 3,000 sales people that we have out there that execute well and we can bring them something else. We would certainly be open to that versus building. It's always a matter of looking at the economics of that and certainly what we think is our level of success. So we're certainly open to it and always looking at those alternatives. Ashish Sabadra - Deutsche Bank: Okay thanks.

All right.

Our next question comes from Joseph Foresi of Janney Montgomery. Go ahead. Your line is open.

Hi, Joe. Joseph D. Foresi - Janney Montgomery Scott LLC: Hi, how are you guys. I got a ton of questions, how much time do we have left? I am just kidding. So just two quick ones, hopefully they are quick, but how do you measure the progress of the technology upgrades? In other words I am wondering do you measure that per usage and if there is any color, if not that's fine and then just one quick follow-up.

Yeah I wouldn't say as much and usage at this point as it is the selling. So are we selling it, are we competitive. And again with good continued sales execution we feel good about that and increased penetration. So we're seeing increased attachment and increased penetration in those SaaS solution so we feel that, that's a good marker for us. And then certainly retention and we see good retention of the products that we're rolling up from a technical standpoint. And so we closely monitor that, we look at obviously all the surveys that we are doing on top of that and are counseling, tweaking and changing to keep competitive. So I think it's more of a measurement of that then usage necessarily of the product itself. Joseph D. Foresi - Janney Montgomery Scott LLC: Okay. And then secondly it sounds like the business is better after sort of slogging away at it for quite some time here. Yet the traditional catalyst like small business starts haven't necessarily picked up. Should we start thinking about that differently? Are there -- you finding new catalysts within the business that can pick up the slack even though we haven't seen the traditional ones pick up steam?

Yeah, I think that's fair. I mean we still have a good percentage of sales that come from new businesses and while that's sluggish it certainly is up from where it was last year. It's not back to pre-recession levels. So I do think -- I don't want to mislead you and think that new business still isn't the strong part of our business. We're still very good at that and get referrals from CPAs and new business and banks and so forth. But I do think that we -- knowing that we were -- that, that continued to be kind of sluggish coming back we look for new ways to attract to get referrals, that we've looked at new ways to retain clients, we looked at new products in investing a lot of the technology investment has been that we also I think have gotten -- we've done a nice job in building the revenue per client. And so we're taking even getting better at saying we've done a lot of product here to sell into the client base. And we're not going to wait around for the economy to be super strong, let's just sell in to the client base as well as bring in new clients. And I think may be that mix is -- it's changing a little bit. Efrain anything you want to add?

Hi, Joe, so I think that the execution we're seeing is a result of our ability to extract value from the distribution base we've got and there is long way we've got a long way to go in that process.

I think we've also found new ways to refinance, so if you take like our initiatives on 401(k), we've always sold into the small market but we would say small market for 401(k), very successful. And but we started looking at how do we increase that over what we've always been doing. And we found a way to go in to the large market, larger assets for clients and we really sent build our sales team just focused on that, build a team small team focused on financial advisers and getting more leads from them. So we're not just going to traditional. We really worked hard to find new ways to grow what we've always been good at. Joseph D. Foresi - Janney Montgomery Scott LLC: Thank you.

Okay.

Our last question comes from David Grossman of Stifel Financial. Go ahead, sir. Your line is open.

Hi, David. David M. Grossman - Stifel, Nicolaus & Co., Inc.: Hi, sorry I am late here, actually got on the call late so if this has been answered we can take this offline but just really quickly I had a quick question about the exchanges, where are you, I know you had announced a partnership with one of the small business exchanges. Just kind of wondering where you are in that process and what impact you expect the exchanges to have on your business both near term as well as out two or three years based on what you know right now.

Yeah I think Evolution1 was the partner we were in with and we have that set up and we are not -- one of the things that what we were trying to do there was help businesses, small businesses who are under pressure to give to -- we don't have to do small business group insurance, small group insurance but want to provide something to their clients to do some pretax and then go over to the private exchange and use that. Unfortunately some of the changes in the healthcare reform kind of took away that benefit at least at this point the pretax benefit. So if I am a small group employer and I want to just give you know $300 a month to my employee pretax that’s not really necessarily an alternative anymore, that it’s going to be pretax and so forth. So it’s slowed kind of that whole thing for us on the private exchange piece. We still have the partnership, we still offer it. It’s just not quite as attractive as it was previously and that may still change as these rules kind of solidify over the next year or so. And then the exchanges in general we have not seen as much of a loss, I would say to the exchanges yet that we thought we might see on the small business side and we haven’t -- we have seen the sales to those who need insurance. We’ve seen that moderated as I mentioned earlier, just we haven’t seen as much of a decision making process from the clients because they are kind of confused and they realize like 50 to 100 don't have to do anything now in 2015, up till 2016. So I would say overall the whole exchange piece hasn’t caused any major disruption. It also hasn’t accelerated anything. It’s been a more moderate kind of thing and we expect to see more of the opportunity and maybe the impact in the next fiscal year as they approach 2016 will be the bigger impact. David M. Grossman - Stifel, Nicolaus & Co., Inc.: Right, great, thanks very much.

Okay.

You are welcome.

And there are no further questions at this time.

Great. Thank you. And at this point we’ll close the meeting. And if you are interested in replaying the webcast of this conference call it will be archived for approximately a month until April 28. Thank you for taking the time to participate in our third quarter press release conference call and for your interest in Paychex. Have a great day.

This concludes today’s conference. Thank you for your participation. You may now disconnect.