Question-and-Answer Session
Operator
(Operator Instructions) Our first question will come from the line of Rod Bourgeois with Bernstein.
Rod Bourgeois - Sanford C. Bernstein
Good morning. Gary, I wanted to inquire about what is enabling you to increase your margin targets for fiscal ’08? I guess specifically what I wanted to ask about, is the increased margin outlook in reaction to the lower float outlook? Or is the new margin outlook something you would have granted to us even if the float situation had not worsened?
Gary C. Butler
Well, we definitely would have improved margins had float not gone the opposite way. I guess the good news is we are on track or ahead of where we thought we would be on some of the margin expansion and that, coupled with the accretion from the share buy-backs, has put us in a position to put out a pretty good forecast.
Rod Bourgeois - Sanford C. Bernstein
All right, so just to be really precise here though, after you saw the yield curve drop during the quarter, did you get more aggressive with your margin targets than you would have in sort of a normal course scenario on the float side?
Christopher R. Reidy
We didn’t do anything unnatural in terms of clamping down on expense or kind of starving areas. This is really more just the momentum in the business, as well as the fruition of some margin initiatives that we’ve been talking about for a while -- things like the data center consolidation, [smart sharing], telesales -- all the things that we were planning on doing anyway.
So it wasn’t that we just clamped on expenses completely to offset the other.
Rod Bourgeois - Sanford C. Bernstein
Okay, great. And the other obstacle that appeared to have occurred in the quarter is pays per control growth slowed some, and then also your client funds balance growth. It looks like the outlook has come down there. Can you talk specifically to what you are seeing in terms of the key economic trends in your client base that’s causing you particularly to take the client funds balance growth outlook down? You mentioned a lower outlook for bonus activity. Can you talk specifically to what you are seeing in the relevant economic trends?
Gary C. Butler
We wouldn’t generally get to that level of detail, Rod. We see bonuses pending on fiscal year-ends and people getting prepared for the calendar year-end, which is when most of the bonuses are paid. And obviously this has not been a banner year on Wall Street, which is also generally a place where we do benefit from higher bonuses.
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