Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from David Koning – Robert W. Baird.
David Koning – Robert W. Baird
On your forecast for 113.8 million registered accounts by the end of this year I just want to make sure that doesn’t include any movement in the existing client base, meaning if we did have a difficult October could we see a lower number than that 113.8 at the end of the year?
Thomas McDonnell
You are correct. This is just taking the numbers, adding the two million converted and the known other conversions. It does not project because we really don’t know how to project any specific declines in the underlying client accounts. I think right now October will be soft and your guess may be as good as ours as to what the November/December markets will look like. Obviously some of the accounts are moving from equity to money markets so clearly there are accounts that are closing as people remove money from investment vehicles period. So that is pretty hard to determine but I think the assumption is correct that number will be subject to potential declines between now and year-end.
David Koning – Robert W. Baird
Secondly, when you think about financial services margins and you think about Q3 to Q4 normally Q4 is a strong margin quarter but this year given that Health Professional Services one-time item in Q3 goes away in Q4 we could see lower license revenues given some trends and in the track revenues you’ve probably got some still in Q3 that goes away. Could all of those things together make a situation where margins stay flat or even were down in Q4 in that segment?
Thomas McDonnell
I think your observation in Health Solutions is correct. There was a recognition of a one-time set of professional fees. The other thing was the $2.5 million that came out in the quarter from the last quarter of the processing agreement with Computer Share. That is out also for the fourth quarter and on an ongoing basis. I think we have to assume that when we talked in July it was clear to us given the situation with major multinational financial organizations the revenues at DST International relative to licenses were going to be negatively impacted because of the client’s situation but I think as you can see the issues of expanding on a broader basis throughout the economy I think the budgets for software and technology investments are going to be constrained for a period of time and you mentioned Argus and there was a couple of articles recently that prescription claims have been declining because of perceived reluctance particularly in the elderly community to spend money on pharmaceuticals given their view of the economy. I think all of those things could certainly have a dampening if not pressing effect over the next several months.
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