Broadridge Financial Solutions Inc (BR) 2008 Q4 法說會逐字稿

Good morning, my name is Carol and I will be your conference facilitator.

At this time I would like to welcome everyone to the Broadridge Financial Solutions fourth quarter and fiscal year 2008 earnings conference call.

I would now like to inform you that this call is being recorded and that all lines have been placed on mute to prevent any background noise.

There will be a question and answer period after the speakers' remarks.

Please try to limit your questions to one per participant.

I will now turn the conference over to Marvin Sims, Vice President of Investor Relations.

Please go ahead, sir.

Thank you, Carol.

Good morning, everyone.

Welcome to the Broadridge quarterly earnings call and webcast for the fourth quarter and fiscal year 2008.

I'm Marvin Sims, Vice President of Investor Relations.

This morning I'm here with Rich Daly, Chief Executive Officer for Broadridge, and Dan Sheldon, Chief Financial Officer for Broadridge.

I'm sure by now everyone has had the opportunity to review the earnings release we issued earlier this morning.

The news release and the slide presentation that will accompany today's earnings call and webcast can be found on the investor relations home page of our website at Broadridge.com.

Before we begin, I would like to remind everyone that during today's conference call we will discuss some forward-looking statements that involve risk and these risks are discussed here on slide one and in our periodic filings with the SEC.

During the review of our financial results, to provide the appropriate point to point comparison between fiscal '08 and fiscal '07, all pre-tax and net earnings numbers discussed throughout the presentation are non-GAAP and exclude one-time transition expenses and interest on new debt unless otherwise disclosed.

For fiscal year 2009 GAAP earnings the appropriate point to point comparison to fiscal year 2008 pre-tax and net earnings is to exclude one-time transition expenses from fiscal 2008 earnings numbers.

The actual GAAP reported numbers and comparisons are also listed.

During the review of the segment results, again, for the appropriate point to point comparison, for full year revenue and operating profits we'll discuss adjusted numbers that reflect a change in the methodology that occurred in the third quarter of fiscal 2007 for inter-segment allocations between the clearing and outsourcing segment and the other two Broadridge segments.

I'm happy to say that this is the last time that you will have to hear this statement as in fiscal year 2009 the actual segment results for each year will be the appropriate comparison.

As always, a reconciliation to GAAP numbers is available in the presentation appendix as well as in the press release.

Now let's turn to the next slide to review today's agenda.

Rich Daly will start today's meeting with his opening remarks and provide you with a summary of the financial results for the quarter and full year, as well as guidance for fiscal year 2009 and a discussion on a few key topics.

Dan will then review the financial results in further detail for the fourth quarter and 2008 fiscal year, as well as summarize the outlook for fiscal year 2009.

Rich will then return and provide a summary and some closing thoughts before we head into the Q&A part of the call.

Now please turn to the next slide and I will turn the call over to Rich Daly.

Rich?

Thanks, Marvin.

Good morning.

I hope you are all doing well.

Although I feel terrific about the business, as you will probably hear, I seem to have picked up a summer cold this week.

My already raspy voice will be probably be even raspier, so I will try to minimize the throat clearings but I do appreciate you all bearing with me.

As part of my opening remarks, I will discuss the following topics.

First, a summary of the financial results for the full year and fourth quarter of the 2008 fiscal year.

Then a review of the financial guidance for fiscal year 2009, where I will touch on business segment performance, initiatives and how the world around us is affecting the key business drivers for each segment.

Finally, I will provide an update on some cash policies and the credit rating agencies.

Let me start by saying that overall I'm pleased with our fourth quarter and full year results, as the business fundamentals in our operating units continue to be solid.

This has been a good year, especially when you consider the economic conditions in which we achieve these results.

For the fourth quarter we had revenue growth of 2% and 3% growth for the full year,both negatively impacted by reduced distribution fees related to notice and access.

More importantly, though, fee only revenue growth was 7% for the quarter and 6% for the fiscal year.

Our fourth quarter non-GAAP EPS, excluding one-time transition expenses of $0.71, puts us at $1.42 for fiscal year 2008, which is within our latest full year guidance range of $1.35 to $1.45.

When we started the 2008 fiscal year, I anticipated this being the second down year of my career.

But I'm pleased to report that this has turned out not to be the case, as we exceeded last year's GAAP and non-GAAP pre-tax earnings.

This year we exceeded the financial guidance we had set at the beginning of the year and we were even able to grow-over the two large client losses from fiscal year 2007.

We also improved operating margins by 60 basis points.

We generated strong cash flow and we paid down $170 million in debt, putting us at our debt to EBITDA ratio target of 1 to 1 a full year ahead of schedule.

EPS at $1.42 is $0.21 per share ahead of the midpoint of our original guidance.

Let me try to put that into context for you.

Our first half performance was driven by higher than expected trading volumes, which drove results an additional $0.09 per share.

We also benefited from termination fees and one-time items related to the timing of our public Company infrastructure and investment spend ramp-ups.

This gave us another $0.10 per share.

Our second half performance for revenues and earnings were slightly better than our original guidance and were driven by strong recurring revenues in the fourth quarter from our core investor communications business.

This provided the remaining EPS benefit.

The fourth quarter is the biggest quarter for the communications business segment, driven primarily by the proxy season.

Our proxy season was solid and in line with our expectations due to higher equity stock record growth.

This resulted in strong growth and recurring revenues, a slightly higher than anticipated adoption rate for notice and access, and higher traditional electronic delivery rates, driven by our new investor mailbox product.

The core business isn't only performing well, but it's extending its market leadership.

I will talk more about notice and access, our investor mailbox product and other new opportunities later in my fiscal year 2009 business segment discuss.

Event driven revenues were down slightly in the fourth quarter and were basically flat for the year.

Contributions from mutual fund proxy, specifically one large job, were offset by drops in proxy contests, M&A and other event driven activities.

One note regarding the recent Yahoo!

annual meeting.

We failed to report all direct withheld votes for two bank nominees due to an isolated systems error.

We take this very seriously.

We fixed the problem and are in the process of expanding the extensive internal and big four order term external reviews we already performed.

Moving on to the transaction reporting, which is our statement and confirm business.

We had a solid quarter due to the traditional business drivers related to products, volumes and new sales, as the previously disclosed loss client grow-over finally hit its anniversary date in March and therefore is no longer relevant.

The communication segment is responsible for approximately 70% of our revenue and operating profit for the year.

This is a rock solid business that has performed consistently, steadily and reliably in a market that has none of those traits.

The fourth quarter results in our securities processing segment and clearing and outsourcing segments are in line with our expectations.

Overall, the combined securities processing businesses are performing at acceptable levels and better than we would have forecasted in the current market environment.

While we are exiting the year as expected in the securities processing segment, we are behind our expectations in the clearing segment due to the decreases in the fed funds rate, which primarily impacted us in the second half of the fiscal year.

However, the interest income shortfalls created in the clearing and outsourcing business was largely offset by lower corporate interest expense.

We generated new business growth for both the quarter and the full year, and we were able to grow-over the previously disclosed loss revenue from TD Waterhouse.

We signed one outsourcing client in Q4, which brings us the five clients on outsourcing with annualized revenue now over $20 million.

We added ten new clearing clients during the year.

Given our strong value proposition, we are disappointed we didn't land a large deal in this space, but we continue to work several opportunities.

Our consolidated closed sales for the quarter were in line with our expectations, as we ended the year with total sales of $149 million, 60% of which were recurring and 40% event driven.

This was a great year for sales.

We had a 19% growth over last year and we were 6% ahead of our annual sales plan.

We have a strong high quality pipeline that continues to improve.

In market like this, there is a significant need for firms to take cost out.

After virtually all of our products, we raised quality and reduced cost.

Now that fiscal year 2008 is in context, let's move on to the overview of our guidance for fiscal year 2009.

Despite a tough economic backdrop, our sales plan for fiscal year 2009 will increase to a range of $160 million to $180 million.

This represents approximately a 7% to 21% growth rate over our strong 2008 sales achievement.

I will talk a little bit more about sales in my fiscal year 2009 business segment discussions.

Overall, we expect fiscal year 2009 to be a solid year, with the operating units continuing to perform well in a challenging market, led by the core investor communication business.

We anticipate revenue growth for the fiscal year in the range of 2% to 4%, with 3% to 7% growth in fee only revenue.

We expect revenue growth in every quarter for the year and in every segment for the year.

We are expecting fiscal year 2009 EPS in a range of $1.45 to $1.55.

This puts GAAP EPS growth in a range of 7% to 14%, or numerically $1.36 versus this new range of $1.45 to $1.55.

However, the appropriate point to point EPS comparison would probably be to compare fiscal year 2009 GAAP earnings with fiscal year 2008 non-GAAP EPS, excluding transition expenses.

This results in EPS growth in a range of 2% to 9% from $1.42 to a range of $1.45 to $1.55.

The first half of fiscal year 2009 will be a tough EPS comparison as a result of the 10% EPS benefit in fiscal year 2008 from one-time items related to termination fees and the timing of our spending for our public Company infrastructure build that I just spoke about before.

This creates a first half grow-over in fiscal year 2009.

The second half of fiscal year 2009 will not be impacted by these grow-over items and will show stronger EPS contribution from revenue more characteristic of the ongoing businesses driven by the core communications business.

I'm satisfied with the business unit growth for our 2009 plan, as we are expecting revenue and margin improvement in our consolidated core business segments.

Now let's move on to the business segment overview.

I will start with our largest segment investor communications solutions.

As I mentioned earlier, the ICS segment represents over 70% of Broadridge's revenue and operating profits.

We anticipate fee revenue growth for this segment in a range of 5% to 9%, which feels great.

Overall revenue growth will be in a range of 2% to 4% but that's just given the decline in postage.

We are anticipating closed sales in a range of $100 million to $110 million, of which 50% is expected to be recurring and 50% is expected to be event driven.

Event driven sales will primarily be related to mutual fund proxies.

For the second year in a row we are expecting solid sales for both registered equity proxy and transaction reporting, which we expect will drive our recurring sales activity.

Our strategic leadership around notice and access in the core communications business has increased the chasm between Broadridge and our competitors.

While leadership with notice and access has resulted in industrywide savings of an additional $140 million, the 600 or so companies that took advantage of the program realized significant savings in postage and print costs.

Our industry leading notice and access solution gave us entree to sell our registered proxy services to over 350 new companies, increasing our client count by 45% to approximately 1200 public companies.

Despite the industry's financial success from notice and access, the reduced rate of voter participation by retail shareholders that resulted remains an industry challenge, but it's an opportunity for Broadridge to once again provide industry leadership.

Notice and access has had a slightly better financial impact on Broadridge than we originally anticipated.

This was primarily due to winning new clients for our registered proxy services, as well as selling a greater percentage of the ancillary services that are required to support notice and access.

Although other than there is all for these ancillary services, we believe we had a higher win ratio because of our strong one-stop shop value proposition and our subject matter expertise.

In fiscal year 2009 we are anticipating a 40% adoption rate for notice and access.

The fact that we ended the full year with an adoption rate of 28% and we had an adoption rate during our fourth quarter proxy season of 31%, lead us to believe that 40% is a reasonable estimate.

Event driven revenues are anticipated to be virtually flat to slightly down this year, given the current economic environment we are still in.

Although we are in a down market, we don't expect to see the falloff in event driven revenues that we experienced in fiscal year 2003 when it was down 30%.

In fiscal year 2008, we did see a decline in proxy contests and M&A activity.

However, the changes in mutual fund regulatory focus requiring more activity, our market share gains and our new products in the mutual fund space lead us to believe that there will be less volatility than we experienced in the past.

As we exit this down market, we anticipate we will get back to realizing the greater than 10% CAGRs and event driven revenue we experienced before in the past.

Now I will talk about a few other product opportunities in the segment.

Summary prospectus is a pending regulatory change related to how investment companies communicate with investor.

It could result in mutual fund prospectus going from 20 plus pages today down to say five or so pages.

Although the regulatory change would most likely have a negative impact on our pick and pack fulfillment business, the change could drive opportunities for our print on demand business.

Directionally we view it similarly to the way we saw the notice and access regulatory change.

Our investor mailbox product, which is part of our E-delivery solution, is designed to streamline multiple deliver channels into a single visit financial portal that investors find on their brokers website.

This product is having a positive impact by converting investors from traditional hard copy delivery to electronic delivery.

Investor mailbox has been the primary driver for increasing our electronic delivery rate for proxies from 47% to 52% this fiscal year.

I believe one of the new and exciting opportunities is around what we are calling the investor network.

It's really unusual for us to be talking about something so early in its development, but the range of this opportunity could be anything from negligible to a unique and meaningful financial social network, which could be really big.

The investor network is an on-line electronic forum that will facilitate shareholder to shareholder communications, with a unique feature that will differentiate it from the chat rooms in existence today.

Investors who use our investor network will be validated as real shareholders.

This feature will not only enhance shareholder to shareholder communications, but it will provide a new channel of communication between shareholders and companies.

When the SEC expressed the desire to enable better communications between shareholders using today's on-line technology, Broadridge stepped up to help provide a workable solution by leveraging our unique capabilities.

The investor network will validate shareholders through the core plumbing of the Investor communication segment, while allowing institutional, retail and professional investors to remain anonymous.

We are uniquely positioned to create a vibrant social network that validates real shareholders, while allowing both anonymity and accountability to any statements made on-line.

Through providing industrywide technology based solutions for notice and access, summary prospectus and the new investor networks, we continue to demonstrate that we are in the communications solution business and it is so much more than merely an ink on paper or physical distribution business.

Another recent focus in the ICS segment is the realignment of our organizational structure from a product structure to a market facing structure.

We assigned the responsibility for servicing the mutual fund market to an executive committee corporate officer executive.

The focus of this new alignment is that it will create an increase focus on the market penetration that we believe we can achieve in the mutual fund space and to continue our efforts to become more client centric in creating new revenue opportunities.

Our core communication business plays a mission critical role in assisting broker dealers, corporate issuers and mutual funds to comply with corporate covenants governance requirements.

As those requirements continue to evolve, they will create new product and servicing opportunities for Broadridge.

I made it this long, I'm going to take a sip of my tea.

Now I want to talk about our securities processing solutions and clearing and outsourcing segments.

For the securities processing segment in fiscal 2009 we anticipate revenue growth in a range of 2% to 4% and in the clearing and outsourcing segment we anticipate revenue growth in a range of 8% to 16%.

For the combined securities processing businesses, we are anticipating closed sales in a range of $60 million to $70 million.

We expect 25 to 35 of these closed sales to be related to outsourcing.

We still expect we can generate $100 million in Broadridge revenues over the next three years through outsourcing The current sales plan represents about a third of that goal and we expect that number to build each year.

The outsourcing offering typically has an implementation cycle of six to nine months.

Therefore, we will see little revenue this year coming from sales closed in fiscal year 2009.

New revenue in fiscal year 2009 will come primarily from closed sales drawing from fiscal year 2008.

This, though, is typical of our sales to revenue creation cycle.

On the acquisition front, we recently completed the acquisition of Investigo.

This was a tuck-in transaction with an up-front purchase price of less than $15 million and an earn-out potential of about the same amount.

With this transaction we continue to execute our plan to expand and deepen our wealth management offering as part of the strategy to enhance our retail processing platform and transaction reporting capabilities.

Additionally, we see a cross selling opportunity as the Investigo acquisition provides us access to its insurance broker dealer clients and other similar firms, which haven't traditionally been part of Broadridge's customer base.

As I mentioned during our last earnings call and earlier in my comments, the current market condition should continue to provide new client opportunity.

However, there has been a much higher than normal senior executive turnover in our industry, which seems to have slowed our progress in closing large deals.

Finally, we are not aware of any large clients leaving us in these two segments.

We continue to work with our clients JPMorgan and the former Bear Stearns to provide solutions that will benefit both organizations.

Both the SPS and clearing and outsourcing businesses are well positioned and to our outsourcing offering I believe our prospects are good.

I viewed fiscal '08 as a tough market and we are planning for fiscal '09 to be about the same.

I don't know when it will turn, but I have been around long enough to know all bad markets do come to an end.

Now let's move on and talk about some policy updates related to cash and our use of free cash flows.

In fiscal year 2009, we anticipate generating free cash flow in the range of $180 million to $250 million.

Dan will go into the components and drivers later.

I want to focus on three particular uses of free cash flow.

First, as most of you know by now, we recently initiated a self-tender offer to repurchase some of our outstanding notes.

We believe the current price of the notes and the related interest rate makes this a good opportunity.

The second item relates to return in cash or shareholders.

We will continue to pay a dividend, which our board has recently increased from $0.24 to $0.28 per share annually, representing a 70% increase.

Our board has also approved a share repurchase program that authorizes the open market purchase of up to 2 million shares to cover the dilution created from our equity compensation programs.

The third item is we would like to be more acquisitive in fiscal 2009, which includes a focus on international as well.

As we proceed with our note self-tender initiative, our increased dividend payout and our share repurchase program, we still have sufficient free cash flows to pursue our acquisition strategy.

Now I will provide you with a brief credit rating update.

Fitch has recently initiated coverage of Broadridge with a solid investment grade credit rating of BBB flat with a stable outlook.

We believe this rating reflects the solid business we have.

That's my opening, I will now turn it over to Dan for his review of the financials.

Thanks, Rich.

I'm on slide eight.

On slide eight we are going to review Q4 and FY '08.

First thing I would like to point out is remind everyone that Q4 is our largest quarter and represents 35% of our revenues and over 50% of our earnings for any fiscal year.

This is due to the proxy season in our ICS segment.

Our revenue growth, as Rich mentioned, was in line with our forecast at 2% for the quarter bringing in the year at 3%.

A couple of comments I would like to make here.

First of all, it's important to focus on fee revenue growth, which for the quarter and the year were 7% and 6% representatively and represents 60% of our revenues today and in the future will continue to grow and have the highest margins.

The other 40% of our revenues are related to distribution or postage.

And this revenue is down year-over-year, primarily due to notice and access and increased electronic distribution, which l will go into more detail when discussing the ICS segment.

The takeaway is that incremental increases in service fee revenues contribute higher margin dollars than those margin dollars lost to any distribution revenue drop.

I will also address in more detail the other revenue drivers when I review the segments.

Focusing now on our pre-tax earnings before transition expenses and interest, it's down 100 basis points for the quarter but up 60 basis points for the year.

Let me recap the quarter for you.

The quarter was positively impacted from solid investor communication services performance and negatively impacted from our securities processing and other category .

More details when I go through the segments in other.

The full year positive impact is primarily due to the investor communications mix in the business.

I would also point out that in FY '08 was going to be a down year given the negative impact from the two large clients we lost in FY '07.

Both have reached their anniversary dates and short of some small grow-overs in Q1 related to our clearing segment, they will no longer have any negative impact to our businesses.

With respect to earnings per share, before transition expenses, down for both the quarter and the year, due to what I just previously discussed for pre-tax, as well as interest expense was up $19 million to 31, as in FY '07 we only had one quarter of interest.

For our effective tax rate it's up to 41% for the year versus a forecast of 39%, and this is due to final one-time adjustments from our spin.

You will see our FY 09' guidance that we expect the effective tax rate due back around 39%.

We will hopefully see opportunities to reduce this rate further with respect to state taxes as we continue to work with the states on tax credits.

All spin related expenses, whether one-times or tacked, should now be behind us as we move into fiscal year '09.

Earnings per share is at the higher end of our guidance for both the quarter and the year, primarily due to the solid performance, as Rich mentioned, in our investor communication segment in the fourth quarter.

Let's move on to the segments and I'm now on slide nine.

This is our investor communications segment.

You will see at the top of the page we break total revenue into the various components.

First, we split between fee and distribution revenues, which is about a 50/50 split.

And again our distribution revenues are primarily postage.

Then we further split fee revenues between recurring and event driven.

The revenue grow of 2% for the quarter and 1% for the year translate into the following.

Fee is up 9% and 5% representatively and all growth coming from recurring, as event driven is down for the quarter and flat for the year.

With respect to recurring revenue for the quarter, which also drives the year, has contributions from net new business, which is sales less losses, internal growth from proxy and mutual fund additional positions, which we call stock record growth, and the notice in access activity primarily in the fourth quarter.

Our event driven is virtually flat for the quarter and the year.

Sales in our mutual fund proxy were up over 15% for the year, from $79 million to $92 million, but offset by the falloff in the equity proxy contest, mergers and acquisitions, and other activity went from $78 million to $64 million and this is not surprising given the economic environment we are in.

With respect to distribution revenues, they are down for both the quarter and the year and all primarily due to notice and access and an increase in our equity proxy electronic suppression rate, which were partially offset by increases in the US Post Office and normal business growth.

With respect to margins for both the quarter and the year, they are up due to a combination of scale in the business, notice and access, and the mix in distribution margins, especially in the first half of the year.

With respect to '09, we will give some guidance here looking at revenue growth consolidated 2% to 4% and fee revenue growth of 5% to 9%.

Our distribution fees virtually flat again, due to increased participation we are expecting in notice access and continued increases in suppression, again offset by additional net new business and expected postage rate increases.

With respect to the fee revenue growth, at the high end of the guidance event driven revenues pick up for M&A activity and mutual fund proxies with an additional point from increased stock record growth related to equity and interim.

At the low end it's a continued falloff in event driven revenues and flat stock record growth.

Our margins we are expecting to up 40 to 80 basis points given the revenues and the mix in those revenues.

Let's turn to slide 10 for our review our security processing solution segment.

With respect to revenue growth, about 2% for both the quarter and the year.

Our net new business was down for both the quarter and the year, but less so in the quarter as we benefit from increased sales contribution to revenue, primarily from our RBC client which went live at the end of February.

Our internal growth for the quarter benefited from fixed income trade volume increases in equity client trade mix.

Our equity trades per day were virtually flat.

The contribution for the year came primarily from Q1 increases in trade volumes over the prior year.

Equity trades per day continue to be in the 2 million to 5 million range per day and we have not seen any growth in these trades per day in the second half of this year.

With respect to margins, they are down to 21% for the quarter as we had forecasted.

The decrease primarily related to no longer capitalizing R&D implementation costs related to the RBC and those expenses are returning to our expense run rate.

As we have discussed before, on major implementations we have internal R&D expenses that are capitalized and then amortized over the term of the contracts.

When these large implementations are completed, the expenses that were being capitalized return to the expense run rate and the people are assigned to projects related to system enhancements and maintenance that are not capitalizable.

With respect to guidance for FY 09', our revenue growth will be in the 2% to 4% range, the low end reflective of virtually flat trade volumes and potential delay in sales implementations, and at the high end increased trade volume growth.

The 21% Q4 margin is the new step-off for this business as we move into FY '09.

However, we expect improvements to margins from 21%, as you can see on the sheet, to 25.3% to 26%, as we go throughout next year and add new additional business on.

Again, it shows the scalability in this business.

If you lose a client or you have any costs coming back in, it negatively impacts the margins, but as you add new business on it significantly and quickly brings the margins back up.

Let's go to slide 11.

We are in the clearing and outsourcing at this point.

So with respect to revenue growth for the quarter and the year, it's down 8% for the quarter and up 2% for the year.

As we've discussed before, the drop in the fed fund rates negatively impacted revenue and margins by $2 million this quarter and $4 million for the fiscal year, primarily in the second half and that's what drives the negative 8% revenue growth for the quarter.

As Rich mentioned, the negative impact, however, was for the most part offset by our corporate interest expense on our long-term debt due to the LIBOR rates coming down as well.

Sales contributions are very good, but not enough to offset yet the loss of the TD outsourcing business.

The anniversary date for TD loss is August as of this year.

We did sign one new outsourcing deal in Q4 and that brings total sales in FY '08 to three new clients.

As we mentioned, the outsourcing pipeline is strong and with respect to margin improvement, it is an improvement $2 million year-over-year and in line with the last guidance we gave in May.

Let's turn to slide 12, which is other and foreign exchange.

With respect to slide 12, for both revenues and margins we've broken other into its major categories.

Termination fees were at an all-time high this year at $9 million and in most years are zero to $1 million contribution.

FX, the US dollar continued to decline, especially against the Canadian dollar and contributed for the fiscal year $27 million of revenue growth from a negative $13 million to a positive $14 million and $12 million of margin growth from a negative $6 million to a positive $6 million.

As for FY '09, we were holding the US dollar constant to the other currencies at the high end of our guidance and assuming there could be an improvement in the US dollar at the low end of the guidance.

Corporate and investments in FY '09 will increase between $7 million and $9 million, due to the first half of FY '08 where we are still building our corporate departments and had not really started our incremental investment spend we had previously talked about.

On the next slide I will go into more details on this.

Finally, with respect to interest expense, our June 30th long-term debt is at $447 million.

And we plan to take that down another $100 million to $150 million by the end of FY '09.

We will pay down at least $75 million in this quarter by repurchasing some of our ten year bond, which we incur interest expense of just over 6% per annum today.

Although we have achieved our one to one debt to EBITDA ratio at the end of June of '08, our clearing business had no debt and currently averages about $50 million a day in short-term debt.

The rating agencies are very focused on us maintaining a one to one ratio and include short-term borrowings in their calculations of debt to EBITDA.

Therefore, we will drive long-term debt down to $300 million to $350 million in FY '09 so as to cover anywhere between $100 million to $150 million in short-term debt needs related to the clearing and still maintain our one to one ratio.

Turning to slide 13.

This is where I will review with you our grow-over issues.

This slide highlights the grow-over items from FY '08 into FY 09', which negatively impact the first two quarters of FY '09.

The combination of termination fees falling off by $7 million in the first two quarters and our corporate and investment build of $17 million creates a $0.10 negative impact to earning per share in the first half of FY 09'.

As well, in the second quarter we have founder grants carryover of $5 million, which is both a negative to Q -- the first half but a positive to the second half given the timing of last year's grants expense recognition.

I have also included the impact due to the our securities processing RBC return to run rate expenses where we no longer capitalize the R&D implementation.

So with respect to the $17 million in corporate and interest increases, these were planned, by the way, to start in the first quarter of FY '08 but didn't ramp up until the end of the second quarter in '08 and this timing creates the grow-over.

Net-net we have almost $40 million in grow-overs in the first half.

Q4 will always, by the way, be our largest quarter in any given year given the proxy season.

And quarters one through three, as far as compares year-over-year, can be positively or negatively impacted due to the timing of event driven revenues, as they don't repeat in the same quarters each year, as well as fluctuations in distribution fee revenues and related margins.

Let's move onto slide 14, which is the cash flows.

As discussed before, we look at our cash flows with and without the clearing business, as clearing is self-funding and doesn't require any of the cash generated from our core operations to fund the business.

Clearing does usually require short-term borrowings, which I discussed on the earlier page, and at June 30, FY '08, clearing had no short-term borrowings and at June 30, FY '07 had $109 million.

You can see how it fluctuates there.

So focus will always be on what we define as our all other processing activities, which for fiscal year '08 was in the middle column and fiscal year '09 is to the far right and that's what I am going to focus on in the rest of the conversation.

Our fiscal year '08 net cash flows provided by operating activities of $336 million in the middle of the page generated $144 million above earnings.

Now let me put that into perspective.

Half of it is coming from non-cash P&L items and the other half coming from improved working capital specifically related to receivable collections.

We put a lot of effort this year behind speeding up receivables and expect to maintain our current improved days outstanding.

So I expect in the future, working capital will be more of a use, but a small use, of cash approximately equal to the revenue growth as related to growth in net receivables.

Cash flows from investing, CapEx and intangibles for both FY '08 and '09 is still about at our 2% to 2.5% of revenue.

And this is in line with our long-term objectives.

Free cash flows should usually be above net earnings due to the stock compensation benefit as depreciation and amortization should be about the same over the long-term as Cap Ex.

With respect to cash flows from other investing and financing activities, acquisitions show as currently not in guidance.

Now what does that mean?

It means that cash used for acquisitions, as well as any impact to our revenues and earnings from future acquisitions, are not in our guidance.

However, as Rich mentioned, we do expect to be more acquisitive in the future.

As for cash flows from financing activities, I mentioned when discussing interest that we would most likely pay-down an additional $100 million to $150 million in long-term debt.

We did not pay-down any in debt in Q4 of FY '08, as we were waiting to take advantage of the bond repurchases in Q1 of FY '09.

Therefore, part of $172 million that you see as cash and cash equivalents at the end of the year in that second column will be used to take advantage and used for the bond repurchases and any other debt pay-down we make.

And by the way, we increased our dividend and expect to payback -- buyback shares to the extent of stock compensation dilution up to 2 million shares.

So before acquisitions we expect to have $128 million to $250 million in cash and cash equivalents in 2009.

Let's move on to page -- slide 15.

Here is where we will review the 2009 fiscal guidance summary.

First bullet is very important.

As you look at our history we are impacted by up and down markets.

In our up markets, like fiscal year '05 through '07, expect high single double-digit revenue growth and in down markets expect negative to low single-digit revenue growth.

We were definitely in a down market.

And that's how we see '09.

However, at this point we have not been made aware of any significant losses due to consolidations or reductions in event driven revenue and trade volumes are flat but not significantly down.

So FY '09 with a 3% to 7% fee revenue growth looks pretty good to us, given the current state of the environment and compared to what we did experience in fiscal '03 in our last down market.

Other statistics on here.

Sales plan for the year $160 million to $180 million.

A split, thinking about 60/40, 60% going to recurring, 40% going to the event.

Earnings before interest in taxes, margins $15.9 million to $16.6 million, diluted earnings per share of $1.45 to $1.55, interest expense of approximately $19 million.

Our effective tax rate coming back to 39%, no additional one-time transition expenses, free cash flows in the range again of $180 million to $250 million, and again that's free cash flow.

As I described on the other page, we expect our cash or cash equivalents at the end of the year before acquisitions to be at $128 million to $250 million.

We recently completed the Investigo acquisition and that is contemplated in our guidance and diluted weighted average shares of approximately 143 million.

With that said, I will now turn the meeting back over to

Thanks, Dan.

I want to just clarify one of the stats Dan gave you back in the securities processing.

The number is that trades per day continue to be in the 2.5 million range and that we haven't seen any growth in trades per day in the second half of the year.

What I love about Dan is that I can ask him any of these stats all day long and he gives me instant answers.

So let me summarize and give you a few thoughts on how I feel about the business before we go into the Q&A part of the call.

As you've just heard, fiscal year 2008 was a good year.

We exceeded our original financial objectives, we improved margins and we grew our revenues over the previously announced two large client losses.

We've taken the uncertainty of notice and access and turned it into a positive for both public companies and Broadridge.

Through our industry leadership, notice and access was successfully implemented and the industry realized $140 million in savings.

We gained more market share and improved earnings.

And companies, as well as the SEC, see us as the experts and innovators when it comes to corporate governance process evolution.

We generated strong cash flows allowing us to pay down $170 million in debt and we'll continue to use our strong cash flows to maintain our debt to EBITDA ratio of one to one, as well as continue to invest in the business including being more acquisitive.

We've also increased our annual dividend by 17% to $0.28 per share.

And we've implemented a share buyback program to offset the dilution from our equity compensation plans.

In fiscal year 2009, we are expecting to have revenue growth in every quarter, and despite the current challenging economic backdrop, we anticipate fiscal year 2009 being another solid year, as the business units are expected to continue to perform well in this down market led by the core communication business.

The first half of fiscal year 2009 will be impacted by grow-overs, which will not impact the second half of fiscal year 2009.

The biggest piece of our business, the investor communication segment, is growing with better recurring revenues and is better off today than it was a year ago.

We believe with potential new opportunities like investor network, investor mailbox and summary prospectus that our core communications business will continue to be a great business.

In the 2008 fiscal year, a large part of our focus was on developing the financial results that we said we could deliver, as well as getting our feet on the ground as a new public Company after the spin-off from ADP.

We accomplished these two objectives and now in the 2009 fiscal year and beyond our effort and attention are solely focused on growing the business at a higher growth rate.

To do this we will need to focus on a few key strategies.

We have to continue strengthening our value proposition in order to raise our sales growth, drive new solutions that differentiate us in the market and identify acquisitions that can leverage our mission critical processing expertise and our distribution channel capabilities.

By successfully executing these strategies, we believe we can create a tipping point for our core products.

We believe the incremental functionality that will be derived from the higher levels of investments we've made in the business will create this tipping point that will push the key decision makers to outsource more mission critical functions to us.

Overall, the business is well positioned and managing through tough economic times better than it has historically and I feel good about our prospects for the upcoming fiscal year.

I'm confident that our improved business fundamentals will enable us to achieve even better results in normal markets in the future.

As you have heard me say in the past, Broadridge is not in control of the markets, but we are in control of our business.

With that I would like to use this opportunity to again thank all of our highly engaged associates who have made being in control of our business a real part of their lives.

With that I am going to now turn it back over to Carol or the operator for the Q&A part of the call.

(OPERATOR INSTRUCTIONS) Our first question will come from the line from Ian Zaffino from Oppenheimer & Company.

Thank you, very good quarter.

Question just focus on the free cash flow.

You talk about the $180 million at $250 million.

Why not get more aggressive as far as your share buyback program?

Unless you have another acquisition up your sleeve or any -- my understanding is you probably don't have a large one, so you probably would make sense to buy in Love to hear what you guys have to say.

Thanks.

Ian, first of all thanks for the comments.

We believe the best opportunity for us is to create value by creating top-line revenue growth.

So our focus is going to be to invest in the business by improving our value propositions, which we have been doing, to accelerate our sales rate, creating new products, things like the investor network, which we have already invested pretty well into to take advantage of leveraging our market position.

And we believe that both our process capabilities, the reputation we have in the market and our distribution channel capabilities really should enable us to identify more acquisitions than we have historically done, where we can take those products and by adding our process skills and our reputational skills accelerate the growth rate of those entities under our umbrella than they otherwise had on their own.

That's the way we believe top-line growth will ultimately create the greatest shareholder value.

And that is what we are committed to do.

Okay.

And then the other question would be -- I'm just comparing some of the guidance you had given to what you gave a while ago.

And you talked about revenue growth at 4% to 6% and now you are talking about 2% to 4%.

Is that just you guys being conservative once again?

Or is it related to the downturn in the market?

What are your thoughts behind that, too?

Thanks.

Ian, the way to think about that is when we gave that guidance out, and we are still behind that guidance, we were thinking that notice and access had not been understood what it would do to postage revenues.

When you kind of think about it and that's why I brought up the point of look at our service fee revenue growth, and when you look at next year when we have gone out with the guidance there and said that you will see that in that, what we will call, anywhere between 3% and 7% range.

When you look at that, that brings us into, even in a down market, that we should be coming close to our 4% to 6% and the margins obviously improve because we are pushing more of the service than we are of the distribution.

All right.

Thank you very much and good quarter.

Thank you.

Our next question comes from the line of Anurag Rana with KeyBanc.

Good morning, gentlemen.

Good quarter.

Could we get a little more color on your acquisition strategy as to what areas are you going to focus on and how large can we expect an acquisition to be?

I would like to be able to give more specific color than I'm actually going to be able to give.

We have significantly intensified our search efforts to identify transaction that we think would be enhanced under our umbrella.

We've added people.

We have outsiders working on this as well.

We are not going to do a deal for the sake of doing a deal.

But we are going to look at things in the wealth management space.

We are going to look at things in the processing space and we are going to look at things in the communications space.

And our belief is, based on our initial efforts, that we should at the minimum be able to identify a larger number of tuck-ins than we have historically done.

If there was to be a more meaningful sized transaction, we would look to do that as well.

That certainly is something where I have no ability to project whether or not that will or won't successfully happen.

But I would be very disappointed if in our tuck-in space we weren't more successful than we have historically been in the past given the increased effort than we have put into this.

Thank you.

And just one follow-up on the clearing and outsourcing business.

How far should we look in terms of when we can expect the business to breakeven?

We are looking for the second half of '09.

Thank you.

Our next question will come from the line of Stefan Mykytiuk with Pike Place Capital.

Good morning.

Couple questions.

I guess before I even mention the questions, it seems, Dan, as though when you're looking at this leverage goal of one to one you're not even giving yourself credit for the cash.

Am I missing something here?

Why not look at net debt rather than just the actual debt?

Well, internally, by the way you are absolutely right.

We usually take just long-term debt and we look at return on invested capital and all those things.

What I'm pointing out to everyone is that our rating agencies have made it very clear, they have given us the formula of long-term and short-term debt against EBITDA.

So that's the only reason we really referenced that.

It's an excellent point and I'm glad you raised it at what we should be giving ourselves credit for move and we will do those kind of things as we do calls, but I did want to bring everybody back to understanding what the rating agencies are telling us because, as we said, the investment grade is very important to us.

Okay.

Maybe they are listening, too.

To this call, I mean.

And just along those lines, I want to -- just point out just as a shareholder it looks like using your guidance your stock is trading at about an 8.5% free cash flow yield.

Maybe 7% at the low end and you're buying back bonds that yield 6% pre-tax.

So it just seems like as a shareholder I'd rather you buyback the stock at a much higher after tax free cash flow yield than buyback bonds at a lower pre-tax yield.

That's more of a statement, obviously, than a question.

In terms of the guidance, I mean, is the actual -- how much did you actually spend this year in terms of product development or R&D or things like that?

And you have the slide here with the grow-over rates.

And I am wondering is that the change or is that the absolute numbers?

I'm trying to figure out whether your kind of product development spin is actually going up in absolute dollars in fiscal '09 or it is just kind of the timing of when it was -- when it's going to be spent?

Excellent point.

Let me put it in perspective.

Last year we said to ourselves we wanted to increase.

So the important point is what you just mentioned, which was increase our product development spend in our systems and programming to the tune of $15 million to $20 million.

We got about $10 million of it in and as of the end of Q2 we are on a run rate for that full $20 million and that's what carries over in the first two quarters next year of the $10 million carryover.

And on an overall spend, we have systems and programming spend of just over $100 million.

And we moved our product spend up to call it $40 million run rate, which is both our corporate piece, which I just went through, as well as investments that we have in the field.

And we plan on keeping it now at that level as we move forward.

Okay.

So I'm still a little confused.

What was the total for FY '08 less the corporate and kind of the systems.

It would have been $30 million and now as we move into next year be thinking of that incremental $10 million, which is a carryover from this year run rate and that will bring it to the $40 million.

Okay.

So it's the step up in 10.

Okay.

I get it.

And was there option grant expense in the fourth quarter?

Yeah.

Remember, the founder grants we had talked about before?

There was an incremental $5 million in that quarter.

There is $5 million in Q4 of that.

There was the transition expense of the 4.9?

Yes.

Correct.

And then the tax rate by my calculations -- the 42.8% tax rate versus the 39% was another $0.04 or $0.05 a share, I think?

Yes, that's correct.

And again, those are all due to what I call the final spin related ones in our contracts with ADP.

Okay.

And so that thing that came up with tax rate is -- that's not going to recur?

No, it's not going to recur.

Terrific.

Thanks very much.

Our next question will come from the line of Vivian Mamelak with US Steel Pension Fund.

I have a couple questions for you, Rich.

First of all you made a statement, you said you were disappointed that you didn't land a large deal in clearing and outsourcing in the quarter.

Can you just be more specific?

Are you disappointed that a specific deal went elsewhere or just in general that the environment didn't allow you to close?

I'm disappointed that the environment didn't allow us to close.

I would think -- my opinion is in most of the transactions where we were having dialogues, the choices to stay in-house or to utilize us.

I don't believe there is another vendor solution at the same breadth of capabilities we have out there.

Okay.

And then the second question I had was in terms of international.

It's a follow-up on your acquisitions strategy.

If I'm not mistaken most of what you do internationally is on the fixed income processing side.

So could you just provide a little bit of color as to what you are thinking about for international markets?

Well, first of all in the international side we do equity processing internationally.

We are in 50 markets.

We do proxies in 90 markets.

Now that includes fixed income as well.

About 12% of our revenue is international, but if you take Canada out it's only about 4%.

I have done international traveling.

I have visited our international sites over this past year and we feel very, very good about the expansion of our strategy across the business as it is.

And the primary goal for this year is to feel the same way about that strategy worldwide as we feel about it as it relates to North America, North American clients.

And we believe that given the reputation we have, the strong reputation we have in North America, at the minimum we should be able to service more of those entity's needs internationally than we are today.

Rich, just let me add on one thing.

You had mentioned that fixed income was primarily the revenue there.

I way I would frame that is our equity business, trade equity business and very importantly our investor communications business are the primary drivers of what we will call that 12% or over $200 million.

And yes, fixed income is a piece of it, but predominately it is the other two I just mentioned.

That's right.

I thought I made that clear.

Thanks.

Thank you.

And the very last question I have is just in terms of you use the term meaningful for the size of acquisitions.

I think originally you said something over $100 million.

Where are you now in terms of thinking about meaningful?

Without having transactions that are more tangible and even if candidly if we had something more tangible we wouldn't be discussing it until it was closed.

We believe that the organization we have can create value through revenue growth and even though when we talked about the cash earlier in some the Q&A here, if there was an opportunity out there beyond the $100 million that we thought would create meaningful shareholder value, we would go out and borrow to close that transaction.

So I don't want to leave anyone with the impression we have a deal and we are about to announce it, but I certainly want to leave you with the impression that at every level in the organization, including our board, we strongly believe that we can create top-line growth through new sales, through new products and through acquisitions and we have a stronger focus than ever on the acquisition side.

That's really where I need to leave it.

Okay.

Thank you very much.

Our next question will come from the line of Tien-Tsin Huang with JP Morgan.

Thank you.

Appreciate all of the disclosure here as well.

I guess just a follow-up on the acquisition question.

What's the criteria in terms of accretion or dilution as you consider doing deals.

The criteria is that it will ultimately create profitable revenue growth.

It's -- for most acquisition there is some initial dilution.

And our numbers do not consider any acquisitions in them.

So we will be sensitive to this, but we are ultimately looking to create long-term shareholder value growth.

Got it.

And then I guess just a few follow on questions.

How critical is your leverage and credit rating in the eyes of your clients with respect to securing any new deals particularly in C&O and as well as in securities and processing.

It really can vary from client to client, Tien-Tsin.

But the way I look at it is we don't want a reason and a large deal why someone can say, well, it meets all of the criteria but we are concerned about what happens if they -- if the economy hits a rough patch.

So we think where we are right now and what we've proven with our strong cash flows and our ability to successfully run the business since the spin, we believe right now we are positioned where we need to be where that will not be an item that will block any transactions as we go forward and that's where we wanted it to be.

So having a solid investment grade rating is in line with the quality of the business and we think it delivers the right message.

I'm not committed to taking that rating to higher levels.

We want to maintain a solid investment grade rating.

And I will say to that to it's not just the rating agencies.

As we move out years to come now, having that investment grade, and as Rich mentioned, solid investment grade not necessarily higher, it allows for ability to get what we call debt when we want to get debt.

Currently we have a revolver.

But we want to always make sure that we can maintain and continue to have a revolver at decent rates if we ever needed to borrow.

Understood.

That's helpful.

Then the sales plan of $160 million to $180 million that you mentioned, Dan, how much of that is subject to client delays or postponements?

I appreciate the commentary around some of the delayed outsourcing decisions.

I'm curious how much of that could influence the $160 million, $180 million, how much of that did you factor in.

And I guess just generally in outsourcing the up-front costs of doing deals, is that currently being overshadowed by the cost savings potentials behind some of these deals?

When we put together our sales plan, we don't include I'll call it mega deals.

So we are anticipating in our increased product breadth that we can successfully increase our sales closed rate in the range that we gave you.

Right.

Now let me -- I kind of know where you are going so it's a great question and we were going to prepare ourselves this time to answer it, but it looked like we had so much to cover we are going to move it off to the next one, but let's answer it now, which is timing.

When we give you the $160 million to $180 million, that's what our sales force we expect to have signed contracts, as we call closed deals.

When you look at that we also said that about 60%, 65% of that was going to be recurring and the other half being event driven.

When you look at event driven, 85% of event driven revenue that we call sales will become revenue in that fiscal year.

When we talk about recurring, and primarily if we talk to you about transaction reporting or fulfillment, and that's been about a $30 million, $20 million range kind of business for sales, that takes about half a year to convert.

And finally when we are talking about our securities processing or in our outsourcing, that's where we've said that you need to be thinking more of a six month to as far out as a year for any kind of conversion.

Hopefully that helps with our modeling that go from our sales plan to our revenue plan.

Good.

That does help.

Let me just ask one last one, if you don't mind.

Just detail on the issue if Yahoo!

was the potential fallout from the negative news flow surrounding that proxy issue?

We have extensive activities.

We have 19 full time people who check votes.

We have extensive SAS 70 external reviews, a half dozen or so.

We spend more on vote verification alone, in my opinion, than every one else combined spends on processing votes.

So this is a very, very detailed process.

The nature of this was very serious and unfortunate in that it was such an isolated activity.

The system verification process worked perfectly.

It was on this particular tabulator, doesn't take an electronic vote and the paper ballot truncated at eight digits.

So we -- every time anything of any nature has come up, we are extremely transparent here.

And so the entities that matter the most, call it the NYSE the SEC, et cetera, are very well versed on how detailed our procedures and systems are here and recognize that the chasm between us and any other alternative is just huge.

So my concern here is related to the occurrence of this.

I didn't mean to imply a concern that the mission critical role we provide could be replaced or if even replaceable by other -- any other entity out there, given how dramatically ahead we are of anyone else who even represents they can provide these services.

Our next question will come from the line of Milan Gupta with South Point Capital.

Hi, guys.

Congrats again on a good quarter.

Could you just talk about the trades per day outlook in '09 and what your expectations are both on a fixed income and equity side and what you are building into the guidance?

And also just help me reconcile some of the volume growth we see at some of the -- at the major exchanges with your guys' trades per day being flat.

When you think about next year, I will split it like you have done between the equity and the fixed income.

When you think about the equity and what we were going out with our plan, I said if you are thinking about the low end guidance, we are thinking it's virtually flat, it stays flat to maybe a couple of points of trades per day growth.

So that $2.5 million would either stay at $2.5 million or it would move up slightly a couple of points.

If you are thinking at our higher end of the guidance, that's where we would say single, high single-digits to as high as 10% or 11%.

That's the equity side.

On the fixed income side, we are pretty much in the same place.

Even though we have seen a lot of activity, and you can see that on the charts we have given you, in the high 20s right now of trades per day, that, we believe, is being generated by a lot of what's going on in the mortgage space in that business.

And we are not sure that's really going to continue as we really move into next year.

That's why we've discounted that a little bit.

And as far as thinking about the industry out there or the New York Stock Exchange and the kind of statistics you are seeing of growth coming from there, our clients aren't behaving the same way.

That's what I can just generally say.

We said that same thing back at Q3 because usually we've said we had a pretty good alignment at least as far as if they are growing we are growing and at about the same rate, but we haven't seen that for the last two quarters.

Got it.

That's helpful.

And then one other follow-up, could you talk a little bit more about this Investigo acquisition that you guys did.

What it allows you to do as you go to the marketplace and what sort of returns or EBITDA or cash flow you expect to get out of this.

The Investigo acquisition, date aggregation is in the wealth management space.

Somewhat of the holy grail out there where if you can -- if you are advising a client and you can get access to all of their investments regardless of who the custodian is or who the broker or bank trustee is, and then provide them a complete view, this gives you an advantage in servicing them and ultimately attracting more assets and managing more of those assets as you go forward.

So this is something where we are committed to be a leader in all processing, including wealth and retail processing.

And it's something where we believe this will differentiate us even further as we go forward.

In our transaction reporting business, we believe that this will also generate opportunities because if we are aggregating this data, we certainly should be able to create opportunities to do the actual reporting of the data, whether it be in paper or electronic as well.

Just let me add to there, these -- if you remember we did an acquisition called Finaplex, again a smaller acquisition at the beginning of the year.

We just did the Investigo, and as Rich mentioned, this was the data aggregation on the Investigo and think about Finaplex more as wealth management content, we aren't going to look at those as standalones, Those are absolutely going to be merged into our businesses as we develop the product and look more for us to be talking about wealth management products, as Rich said, for an overall return, meaning increased sales and revenue for the combination of those things.

Got it.

Let me add one other thing.

When we talk about the large deals and for that matter all transactions, there is always going to be a tipping point where the client will have to acknowledge that our capabilities are better than their in-house capabilities.

So these activities are driven by looking at our value propositions, looking for ways that we can increase those value propositions.

And not through just desire but through real market study understand what we believe a real tipping point is to increase sales activity and to create profitable top-line growth.

That's what our focus is on, profitable top-line growth and all of these transactions are tied to that.

Thanks.

Our next question will come from Leo Schmidt with the Chubb Corp.

First of all, very good quarter, gentlemen.

Could you give us a little more insight into this new product you have been talking about.

I know you have been talking about growing sales through acquisitions.

And then through products you will invest in networks?

Could you give us some insight how big that -- you think you could grow that.

Could you explain a little bit how that works.

Would that be something that investors would pay for, companies would pay for.

Would this be mandated by the SEC.

Would you pay as you go.

Could you give us a little sense of how that works and I am assuming the incremental cost would not be that much.

It would be very additive to revenues.

Could you give us some sense of that?

Okay.

Well, the first thing I am going to give you a sense of is it is really hard to say this early.

I took the unusually step, and we actually talked about it internally here, but I took the step of talking about it now since we will be meeting with so many new entities out there on this topic I really had a need to make it public completely.

So far the experts we are working with view it as an arrange as some of them think well maybe it will work, maybe it won't, maybe it will just be another social network.

To some of them their eyes bulge open and say wow, this could really be a game changer.

The activity here is really going to be driven by is the SEC going to deem that this is something that shareholders need to have the right to.

And if that was the case then I can not imagine it getting done any other way than through the plumbing we have in place.

And again, that is a chasm between us and anyone else.

No one else is close to connecting every investor to every public company.

If this is going to be something where it is on a shareholder opt-in basis only, then the validation process becomes a little more complicated, but again we are uniquely positioned to create that validation.

And that would be, I'll call it, a more evolutionary process, where it would take longer for the network to gain hold.

Now, depending on which way it happens is depending on who will pay and what the model will be.

If it is a opt-in model, I expect it is going to be probably a similar to an eyeball model, where there is going to advertising, et cetera.

If it is a right of shareholders, then it could be a combination of fees and banner advertising or other related activities.

We have a significant number of people internally and externally working on this.

We are looking to use the best mind on this activity outside of here.

But let me be very clear, I think it is upside, I think there is very little downside, but we are certainly not putting anything in any numbers we are representing to you related to the future as it relates to this activity.

But, it is meaningful enough that if it was to become a real deal, we would be uniquely positioned with a high quality social network, with real investors who are validated, accountable, have anonymity and I'll call it a place where serious people could have serious conversations about their investments.

I am assuming that some regulator somewhere has made noise about how making this happen, this is part of the reason why you have interest in this.

This is not or is that a fair assumption?

I have had meetings with the SEC staff and the Chairman of the SEC on this topic.

Okay, that is terrific.

And then I guess if you could give us some more insight to what or your tendering of debt, what would be the range of cash you would put to use for that?

I think I understand the question on how we would put that to use, I mean -- .

How much money do you think you are going to use to tender to buyback your debt.

Right now we out the $75 million for the bonds, okay.

Depending upon how many people go for it, it could be a little bit higher, whatever, but overall be thinking that somewhere between $100 million to $150 million for overall debt, whether it be related to the bonds or related to our term debt, we will be paying down to get us to the $300 million to $350 million level.

Great, thank you very much.

Good quarter.

Thank you.

And our final question will come from the line of Charlie Park with Findlay Park.

Good morning.

If you were to have signed one of your many (inaudible) in the securities processing side, if you are doing over $500 million there, given that that takes six months to get them converted, would that meaningfully change the margin assumptions that you put out on slide 10?

Let me put things in prospective here.

If you are talking about a really large transaction, you really need to be thinking of the conversion taking a year plus.

On our outsourcing activity, we have had something we referred to in the past as what we call project 57, where we had identified, it's now over 100 entities that are clearing through someone else that we believe could be in a self clearing environment through our combined Ridge and SPS offering.

And we actually have done meaningful transactions, meaningful meaning call it $3 million to $5 million in revenue, and from signing to conversion has been six months.

But that is where we are taking somebody who is clearing through another entity and going self clearing using both our systems capabilities and then outsourcing the people to us, by putting themselves in a legal position of self clearing.

The very large deals that we aspire for, and the word aspire is probably the right word here, we believe any of those transactions would more than likely take a year plus to convert.

And there are no announced deals there, so we are not anticipating from a large transaction any revenue in '09.

Right, just to add on to that, because you asked a specific question on margins.

In that space, whether we are talking about clearing and outsourcing or securities processing, we have said that if you think about new business coming on, which would be those sales, Rich very clearly pointed out the conversion time, but we have always said that those we would expect to have at least a 50% margin.

On the outsourcing side what we have said is be thinking anything we are talking about there to have about a 20% margin.

Okay, thanks.

Sir, I am showing that we have no further questions, I will now turn the call back to Mr Daly.

Carol, thanks.

Well, I really do what to thank everyone for their participation.

We seem to have had an increased number of questions, which also feels good.

I am also delighted my voice held up pretty well for most of the meeting.

With all that said, Dan, Marvin and I look forward to meeting with you in the near future.

Have a great day.

Thanks.

This concludes today's Broadridge Financial Solutions, Inc.

fourth quarter and fiscal year 2008 earnings conference call.

Thank you for your participation.

You may now disconnect,