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Executives

Elena Charles - Vice President, Investor Relations

Gary C. Butler - President, Chief Executive Officer, Director

Christopher R. Reidy - Chief Financial Officer, Vice President

Analysts

Rod Bourgeois - Sanford C. Bernstein

Kartik Mehta - FTN Midwest Research

Jim Kissane - Bear Stearns

Adam Frisch - UBS

David Grossman - Thomas Weisel Partners

Elizabeth Grausam - Goldman Sachs

Charles Murphy - Morgan Stanley

Gary Bisbee - Lehman Brothers

Mark Marcon - Robert W. Baird & Co.

Gregory Smith - Merrill Lynch

Michael Baker - Raymond James

Tien-tsin Huang - JP Morgan

Automatic Data Processing (ADP) F1Q08 Earnings Call October 30, 2007 8:30 AM ET

Operator

Good morning. My name is Carol and I will be your conference operator. At this time, I would like to welcome everyone to the Automatic Data Processing Incorporate first quarter fiscal 2008 earnings conference call. (Operator Instructions) Thank you. I will now turn the call over to Elena Charles, Vice President of Investor Relations. Ms. Charles, you may begin.

Elena Charles

Thank you. Good morning. I’m Elena Charles. Here this morning is Gary Butler, ADP's President and CEO; and Chris Reidy, ADP's Chief Financial Officer. A slide presentation accompanies today’s earnings call and webcast and it is available for you to print from the investor relations homepage of our website at adp.com.

Just to remind you, the first quarter of fiscal 2008 plus a two-year history of revenue and pretax earnings for our new reportable segment has been posted to the IR section of our website as well. During today’s conference call, we will discuss some forward-looking statements that involve some risks, and these are discussed on page two of the slide presentation and in our periodic filings with the SEC.

With that introduction, I will turn the call over to Gary for his opening remarks.

Gary C. Butler

Thank you, Elena. Good morning, everybody and welcome to the call. I’ll begin today’s call with some opening remarks about our first quarter. Then I’ll turn it over to Chris, who will take you through the more detailed results and then I’ll return a little later in the call to provide you with an update on our guidance for fiscal 2008. And you can see, in spite of the headwinds from lower interest rates, we are forecasting yet another strong year for ADP.

Also at the end, before we go to Q&A, I’ll discuss why I believe that ADP has never been better positioned to take advantage of the growth opportunities in the large and growing markets that we server.

First let me say I am very pleased with our results for the first quarter. We are off to an excellent start for fiscal ’08. Business momentum is strong and we are ahead of our expectations. We continue to execute against our growth strategies and you can see that we are achieving the desired results of double-digit revenue growth with pretax margin expansion.

In this quarter, we also acquired three smaller distributors to buy our dealer services Autoline product that support our strategy of expanding our direct presence in key rural markets in the dealer community. These acquisitions will add about $20 million in revenues to fiscal 2008.

Revenue growth for the quarter was a strong 13.5%, and we achieved better-than-anticipated pretax margin expansion, excluding last year’s net one-time gain.

Sales growth in employer services was double-digit and I am pleased with dealer strong sales growth. Client retention was excellent in both employer services and dealer services as well.

Our cash balances are down from the $1.9 billion at fiscal ’07 year-end, June 30th, to approximately $1.5 billion. This excludes the assets related to the reverse repurchase agreement discussed in the press release.

Year-to-date, we returned $560 million to our shareholders, buying back nearly $12 million shares of ADP stock. Again, off to a great start for the year and with that, I’ll turn it over to Chris for a more detailed view.

Christopher R. Reidy

Thanks, Gary, and good morning, everyone. As Gary said earlier, our results for the quarter were terrific. Total revenues grew 13.5% to $2 billion and client fund interest revenues grew 15%, from balanced growth of 7.5% and a 30-basis point improvement in the average interest yield of 4.6%.

I would like to remind you that we had a net one-time gain in last year’s first quarter, so we are showing here the first quarter fiscal 2008 comparisons including and excluding last year’s net one-time gain.

On an apples-to-apples basis, excluding last year’s one-time gain, pretax earnings grew 21% and the pretax margin expanded 110 basis points, and earnings per share from continuing operations increased 25% to $0.45 a share.

Turning to slide 5, we’ll talk about share repurchases and our cash balances at September 30th. As Gary mentioned earlier, we repurchased nearly 12 million share fiscal year-to-date for about $560 million. As we had indicated on our last earnings call, this level of share buy-backs is higher than historical buy-back levels but lower than last quarter’s $1.1 billion buy-back, which included investing the dividend from the Broadridge spin-off.

The share buy-back to date are anticipated to be a little over $0.01 accretive for the full fiscal year 2008.

With nearly 11 million shares purchased in the quarter at a cost of about $514 million, we have reduced our cash balances from June 30th to $1.5 billion at September 30th. This excludes the assets related to an outstanding reverse repurchase agreement of about $345 million that matured on October 1st.

The bottom line is that we continue to return excess cash to our shareholders. Now let’s turn to slide 6.

Employer services had a terrific first quarter. Eleven-percent revenue growth, with 9% organic growth and 8% growth in our traditional payroll and tax filing business in the United States. Our Beyond Payroll revenues grew 18% in the U.S. Strong performance from Employease and VirtualEdge that were both acquired last year, as well as comprehensive outsourcing services in time and attendance contributed to the strong Beyond Payroll growth.

I do want to point out that the PEO is a separate reportable segment this year and is no longer included in ES Beyond Payroll metrics.

ES' pretax margin of over 50 basis points was better than anticipated and results from increased operating efficiencies, and this included a drag from last year’s acquisitions that closed after last year’s first quarter.

Pays per control, a same-store sales metric, was up 1.6% in the quarter, and average client fund balances were up 7.5%.

Client retention was terrific in the quarter, improving 50 basis points over last year to a new record level. New business sales growth, which includes both ES and PEO, was 11% and all market-facing segments achieved double-digit sales growth. Now let’s turn to slide 7.

We are very pleased with the strong results for the PEO this quarter. Revenues grew a strong 21% and you see the pretax margin increased over 250 basis points. About half of the margin expansion is coming from growth in the business and the other half from an easy compare with last year’s first quarter. This improvement felt good to us and we are raising our full-year estimates for pretax margin expansion, as you’ll hear from Gary later on.

The number of average worksite employees paid during the quarter increased 19% to 165,000.

Moving on to dealer services, dealer also had a very solid first quarter. Total revenues grew 8%, organic revenue growth was 6% compared with 4% in last year’s first quarter, and we are on track to improve organic revenue growth for the full year to 7% or 8%, which is over last year’s 6%.

As Gary mentioned earlier, during the quarter we acquired three distributors of our dealer services Autoline product. There are terrific acquisitions that support our strategy of expanding our direct presence in Asia, Portugal and Mexico.

In the first quarter, there was a drag on dealer’s pretax margin from these acquisitions, and despite the impact of these acquisitions, dealer services pretax margin expanded nearly 70 basis points from increased business momentum and expense control.

New business sales were strong internationally with our Autoline product and in North America with sales of products such as digital marketing and IP telephony.

Now I will turn it back to Gary for an update on our full-year forecast.

Gary C. Butler

Thank you, Chris. Just for everybody, we’re on slide 9 and at this point, I’ll update our fiscal 2008 revenue guidance. We are raising our revenue growth forecast to 12% to 13%. This is based primarily due to our current estimate of the benefit from foreign exchange rates, as well as the acquisition activity in dealer services that we spoke to earlier.

As you know, we have lowered the anticipated growth in client funds interest. We are, however, still forecasting an increase of about 8%, which is about $30 million to $40 million lower than our previous forecast of 13% to 14% growth. This revision is based on fed funds futures contracts and forward yield curves which call for 75 basis points of reductions in the fed funds rate over the remainder of the fiscal year, and this is in addition to the 50 basis points reduction since our original forecast in July.

Also, just to give you another data point, even had we had the entire 125 basis point reduction in fed funds rate, effectively lowering the rate to 4%, if this rate had been in effect for the entire fiscal year since July 1st, our forecast for interest on client funds would have been lower by an additional $10 million to $20 million.

The average yield on the client funds portfolio is forecasted to be nearly 4.5% for the year. Now, this is different from our previous forecast by about 20 basis points, where we had forecast improvement to 4.7% over last year’s 5.5%.

We are also anticipating 7% to 8% growth in client funds balances, which is slightly lower than our previous forecast of over 8%. We do think we will see lower wage growth this year as a result of early indications that year-end bonuses may not be quite as robust as last year, and this year’s pay growth appears to be slightly lower than our internal plan, as we are forecasting about 1.5% growth in our pace per control metric, compared with 2% in our previous forecasts.

I am now switching to slide 10 to review the EPS forecast. We do anticipate another strong year of earnings growth and as I stated earlier, I am particularly pleased to express confidence in our ability to attain the high-end of our earnings per share forecast from continuing operations.

Just to remind the audience, the 18% to 21% growth is compared with $1.80 per share a year ago, which does include the impact of the net one-time gain -- which does exclude the impact of the net one-time gain from last year’s first quarter. We continue to see positive momentum in the businesses, as evidenced by the strong business metrics we reported today. And we believe the strength of our first quarter results and the $0.01 or so benefit from year-to-date share repurchases will counteract the 4% to 5% drag from the estimated reduction to earnings per share from our updated interest forecast on client funds.

In our forecast, there are no further share buy-backs contemplated in the ’08 guidance, although it is our intent to continue to buy back shares at higher-than-historical levels, again depending upon market conditions, but also not at the aggressive levels of last year’s fourth quarter, which included returning the dividend from the spin-off of the brokerage business.

I am now switching to slide 11 to talk about guidance by business segment.

On slide 11, you will see our updated guidance for the different business segments. I thought this table would help you clearly depict the current forecast for the year and also compare it to our previous forecast.

So for employer services, and again, this excludes the PEO services, we do anticipate for ES about 10.5% revenue growth, slightly down from our previous forecast of 11% revenue growth and this is due to the anticipated lower client funds balance growth, as I mentioned earlier.

And to remind you, employer services is credited with revenue at a constant 4.5% interest rate on client funds balances and is therefore not impacted by the changing interest rates. We do anticipate an improvement in pretax margin expansion of 70 to 120 basis points. This is up notably from our previous estimate of 50 to 100 basis points improvement.

As we switch to the PEO services segment, we are raising our revenue growth forecast to 19% to 20% from 18% to 19% previously forecasted, and we are estimating higher margin expansion of 50 to 90 basis points compared to about 50 basis points previously forecasted.

We have stayed the course with our forecast on new business sales, so we are confirming that forecast for high sales growth -- for sales growth in the high single digits to low double digits.

Dealer services -- we anticipate revenue growth of about 10% for dealer services. This is up from our previous forecast of 8% to 9% and it is due primarily to the first quarter acquisitions that both Chris and I spoke about a little earlier. And as a result of the cost associated with these acquisitions, we do anticipate pretax margin improvement of 70 to 90 basis points, compared with our prior forecast of over 100 basis points.

Now let’s turn to slide 12 as I try to summarize where we are. So to recap for the quarter, revenue growth was a strong 13.5%. Pretax and net earnings increased 21%, and earnings per share increased 25%, again excluding last year’s first quarter net one-time gain.

Our expectations for the year are strong, despite the expected lower interest rate environment. Anticipated revenue growth for the year is once again double digit. Pretax margins are improving across the board, and we are confident we will attain the high end of our EPS growth forecasts.

I would also like to take this opportunity while I have you all here to share some comments on the portfolio and the credit markets.

First of all, ADP's investment guidelines are very prudent. Our investment portfolios for both our client and corporate funds, as well as our ability to borrow in the commercial paper markets, have not in any way been adversely affected by the recent turmoil in the credit markets.

ADP only invests in highly liquid, investment grade fixed income securities. Our overall investment portfolio quality is very high at AAA/AA, and ADP has zero exposure to sub-prime, asset-backed or mortgage-backed securities, or asset-backed commercial paper. And ADP has zero exposure to CDOs and CLOs, which are collateralized debt and collateralized loan obligations.

Finally, I would like to express my views on why I believe that ADP is much better positioned today than it was some five or six years ago when the economy softened at that time and why I believe the new ADP can successfully execute our growth objectives over the long-term horizon.

First, as we think about the new ADP, we have divested four slow or no-growth businesses over the last 18 months. Second, I also believe ADP is much better positioned today. We are keenly focused on two large, under-penetrated markets in employer services and dealer services, and they both have strong, underlying growth attributes and both businesses have 90% recurring revenues.

Third, our product line today has never been more complete and we have excellent competitive positions across all of the markets we serve. In the international markets, our GlobalView product and Autoline product are winning market share handily and our largest organic growth opportunity in HRBPO is yielding tremendous results. The PEO, as you can see, is growing very robustly. COS in the high-end of the market is doing great. In fact, it turned profitable this month, and we are very pleased with our new administrative services offering, which is basically the PEO without co-employment for the middle market, is not starting to gain ground.

We have an abundance of new offerings that we didn’t have a number of years ago that are driving incremental market share gains. I couldn’t be more pleased with our success in VirtualEdge, our Employease acquisition, which is gaining share for new payroll and benefits in the mid markets, our workers’ comp and healthcare initiatives are gaining traction, and in dealer services, we are having great success with IP telephony and our acquisition results.

Fourth, in addition to the inherent scale advantage that we get from volume that drives improved margins, we have a number of other efforts underway to continue to augment these margins over time.

And fifth, our commitment to return excess cash to shareholders through share repurchases and higher dividends remains very strong.

So in closing, I believe ADP is on a very clear path to increase shareholder value by executing on the strategic initiatives discussed with you both today and over the last year. I hope you can see why I remain very excited about ADP's future growth opportunities.

So with that, I will conclude and turn it over to the operator to take your questions.

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.

I think we are pretty good at forecasting our balances and our people and our money movement center are quite skilled at this, so they basically, through educated experience, have come up with this forecast and frankly, I think they are probably right.

Rod Bourgeois - Sanford C. Bernstein

Okay, and one other quick question, Gary; given you are able to keep your revenue targets intact, despite some of the headwinds that you are seeing with pays per control and the float situation, is there something happening in your ancillary sales that are surprising on the upside? When you look at your portfolio of newer products, is there anything that is shining through there?

Gary C. Butler

Well, you know, a couple of things are going on there, Rod. One is we finished June with a very strong sales finish, which obviously gave us momentum from the revenue side. We also had a strong sales quarter in the first quarter, which gave us continued momentum. We have very strong momentum in our GlobalView sales, which we talked about for quite some time. We are doing very well in our national accounts area with our COS product. And we continue to see great sales success in not just COS but our time and labor management products and I couldn’t be more delighted with the penetration we are getting with Employease and VirtualEdge across the enterprise.

Dealer is doing great on the large dealer groups, as well as some of the new products that I mentioned in my opening comments.

Christopher R. Reidy

Bear in mind, Rod, that the rule of thumb that we use on pays per control is if the 2% goes to 1%, that’s about a $20 million impact on revenue, so it’s not all that substantial. And there were a number of other factors in the revenue. We had a pick-up a little bit of about $20 million or so from the dealer acquisitions, as well as the fact that the foreign exchange rates, as you saw, lifted the first quarter by about 1%, the dollar being very weak. And if we just look out and forecast based on where the dollar is today, that accounts for the biggest portion of the increase of the total revenue from 12% guidance to the 12% to 13% guidance.

Gary C. Butler

Rod, also the statistic that we quote, the 1.6, is our auto pay product, which is our historical mid-market product. And we did see a little bit of a decline there in this quarter. As you may recall, we also had in the first quarter of last year, it was 1.7% -- or the second quarter, Elena has corrected me here. So this can be aberrations and even though we don’t disclose the other statistics, we still saw pretty nice growth in the low-end of the market and the high-end of the market in terms of same-store growth from some of our other products that was at a higher level than the 1.6.

We don’t go to that level of detail in our reporting but we are seeing some drag but nothing like falling off the cliff or anything.

Rod Bourgeois - Sanford C. Bernstein

You can’t give a blended number for the pays per control growth across your whole client base?

Christopher R. Reidy

No.

Rod Bourgeois - Sanford C. Bernstein

Okay. All right, thanks, guys.

Operator

Our next question comes from the line of Kartik Mehta with FTN Midwest Research.

Kartik Mehta - FTN Midwest Research

Good morning, Gary. I wanted to ask you a little bit about the ES side. How much of that was net client growth? It sounds like the top line, if you exclude what’s happening in the interest rate environment, is still in line with your expectation, or maybe even a little bit better. I was wondering if you could break that down to maybe how of that is net new client growth?

Gary C. Butler

The best place to go look at that is a core growth in our payroll and tax filing revenue, which was up I think 8% for the quarter. That metric is probably the one that most clearly reflects the net new business add from new clients. And you’ve got to be careful about clients because you may not sell as many two-man payrolls but you may -- that generate smaller revenue numbers but you may be having great success up market, which is driving new business revenue from new clients, maybe not exactly just client count.

So that’s why we look at that blended number and just like we got last year in that 8% to 9% range, we’re seeing a continuation of net new business in that revenue line, and again to remind you, that’s the single highest margin contribution line in all of ADP. So we are delighted.

Kartik Mehta - FTN Midwest Research

Chris, if you looked at your float portfolio and assuming the interest rate decline that happened, that are being forecasted, will you change how you manage the float portfolio in any way? Or will you keep the same mentality right --

Christopher R. Reidy

On the contrary, this is why we have the strategy that we do. In a rising interest rate environment, we don’t experience that immediately because of the reinvestment portfolio, but in a declining interest rate environment, we are somewhat protected against that over time because we are only exposed to the extent that we are reinvesting. So since we are investing a little bit longer term, that lessens our exposure to the short-term rate.

So the metric that we use, and this changes as the duration of the portfolio changes, but our current metric on the impact is that as the short-term fed funds rate changes by 25 basis points, it has about a $5 million impact on us and across the whole yield curve, a 25 basis point decline is an $11 million impact. The reason why that’s as little as it is is because we tend to invest a little bit longer term and not put everything into short-term rates. So we are very pleased with that strategy, particularly in this environment.

Kartik Mehta - FTN Midwest Research

Are you looking to extend that duration at all or are you --

Christopher R. Reidy

It actually did extend a little bit since the beginning of the year to 2.4. That’s up from 2.3 but when you have the size of a portfolio we have, it’s hard to move that dramatically, but we have a little bit.

Where that shows up is that same rule of thumb at year-end would have been a $7 million impact for 25 basis points change in the fed fund rate, so the change from 7 to 5 is really indicative of the fact that we looked a little bit more long-term.

Kartik Mehta - FTN Midwest Research

And Gary, a little bit of a bigger picture question; I know at the beginning you had stated that you want to return capital back to the shareholders, but as you look at today and as the markets changed, how do you compare acquisition opportunities to share buy-back? And by that I mean, are the prices for acquisitions and returns improving so that you have an opportunity to make more acquisitions over the next couple of years, or at least over this fiscal year, versus share buy-backs?

Gary C. Butler

That’s about four questions rolled into one, but I’ll do my best. First of all, historically we were chasing large acquisitions -- the third leg, fourth leg, fifth leg, which we were totally off of that approach today. And we are looking more for smaller acquisitions, like a VirtualEdge or an Employease or a BZ Results, where we can leverage our large distribution channel and sell back into our very large client base of over 500,000 clients to drive organic revenue growth rather than acquired revenue growth.

We are going to remain on that track. We have no intentions to change. Probably the biggest challenge for us from an acquisition standpoint is not the price, because we are willing to pay, and I haven’t seen any real delta in pricing over the last year, but we are willing to pay for the right kind of acquisitions.

But I think the good news is that we have a pretty complete product line at this point and we have large, under-penetrated markets. So we’re just trying to drive the heck out of penetration and sale of those products, and if we find new acquisitions that make sense to where we can leverage the distribution, then so be it, we’ll do it.

Kartik Mehta - FTN Midwest Research

Great. Thank you very much.

Operator

Our next question comes from the line of Jim Kissane with Bear Stearns.

Jim Kissane - Bear Stearns

Great job, guys. Could you break out the U.S. employer services sales growth? I don’t think I caught it.

Christopher R. Reidy

No, we haven’t done that and I think if you’ll recall on the last earnings call, Jim, we talked about the fact that the lines are blurring with the GlobalView product that we have, so it’s difficult to be that precise. So going forward, we will just do a worldwide metric.

Jim Kissane - Bear Stearns

Can you give us a sense of the tone in the U.S. on the sales side?

Christopher R. Reidy

Not materially different.

Gary C. Butler

It’s positive, Jim. There’s nothing there -- there’s no need to roll over the rock.

Jim Kissane - Bear Stearns

Okay, and just following up on the pays per control, any sense on intra-quarter trends? I know it bumps around a little bit, but you are talking about 1.5% for the full year now.

Gary C. Butler

I think we just think that’s prudent to do, based on the first quarter and based on what we are seeing in the market. So I think it’s the right thing to do.

Jim Kissane - Bear Stearns

Okay, excellent, and just an update on progress for GlobalView implementations?

Gary C. Butler

Implementation as a general statement remains on track. There are a few bumps in the road, mostly caused by clients not being able to handle some of the implementations, because when you are implementing in 10 or 20 countries, it’s pretty much the burden on the client as well as a challenge for ADP. Our sales results for the fourth quarter and the first quarter in GlobalView were on track and considerably over last year, so pretty much business as usual.

Jim Kissane - Bear Stearns

Thanks, Gary.

Operator

Our next question comes from the line of Adam Frisch with UBS.

Adam Frisch - UBS

Great, thanks and good morning. Real nice job on the quarter, pretty strong across the board on execution. But some naysayers might look at the pays per control, I know other guys in Q&A have kind of touched on this, some of the naysayers might look at the pays per control and a slightly slower client fund as early indications of your business slowing, so I have three questions on that front, and Gary, I’ll give them one at a time.

One, are these leading indicators of your business, or are there lots of other things that go into it? And if so, how far into the future could we see a possible slowdown in growth?

Gary C. Butler

We’ve seen a slight degradation in pays per control and the balances, which we have shared with you. I think if you were to be looking at the national employment report or the DLS reports, I don’t think that’s a whole lot different than the economy in general. We just have a different slant or a weighted average across industry groups.

I think our base is reflecting pretty much what’s happened in the general economy, and again, even if it goes to 1% rather than 1.5%, you are talking about another $7 million or $8 million in revenue, so on an $8.5 billion enterprise, if we can’t figure out a way to deal with that, then we have other challenges.

So I’m pretty comfortable. You never know what’s going to happen but based on everything I know, I think we are in pretty good shape.

Adam Frisch - UBS

Do you still feel that the street is always -- how do I want to say this -- that the street always couples the macro stuff that is going on with employment and wages and stuff like what we just talked about with some of the secular trends in payroll outsourcing, where some of the secular trends of either penetration is still relatively low, or you have growth of new products and all that kind of stuff somewhat offsets some of the macro stuff that might be slowing a little bit? Is there still somewhat of a misunderstanding there do you think that the street has?

Gary C. Butler

Well, I think there’s a couple of things. I think the analyst community as a general statement is more concerned about interest rate fluctuation than I am. Certainly it is always better to have the wind at your back than the wind in your face, but ADP's been dealing with flowed income for 20-something years, and with the exception of the time when we got all the way to 1% fed funds rate and we had a collapse of the brokerage industry at the same time and slower employment, we’ve been able to deal with the vagaries of the fed funds rate for a long period of time.

Obviously if the fed funds goes to 1% again, it’s not something that I would particularly look forward to. But if we had normal cycles here, we’ll be perfectly fine.

Adam Frisch - UBS

Okay, and then, last question on this topic and then I’ll move on; if your top line did slow, and I’m assuming that if it did, it would be sometime in fiscal ’09, given the way you guys normally conservatively give your guidance, how much would margin suffer, if at all? Or are there some plans in place where if your top line slowed, your profitability and EPS would not be impacted?

Gary C. Butler

Well, first of all, let’s talk about the markets that we serve. The core payroll business is growing 6% to 8%, just the market itself. And Beyond Payroll is growing double-digits in terms of the market. So we get lift because of the businesses that we are in and we are seeing no change in that, plus the international car markets in terms of vehicle sales are going gangbusters, which we are benefiting from. And I don’t expect China to stop growing in terms of new vehicle sales in the same way with Eastern Europe and some of the other growth opportunities for us.

I think we are in pretty good shape as it relates to those kind of issues. We obviously don’t give ’09 forecast, top or bottom, but as we’ve shared with your previously, we have a lot of margin initiatives underway that will improve margins over time. So obviously that’s better if revenue growth is faster than it is if it is slower, but it’s still not going to change the impact that those margin initiatives are going to bear fruit in the future.

So whether we are growing 12% organically or 9% or 10%, we are still going to get great margin contribution over the next couple, three years.

Adam Frisch - UBS

Okay, that’s great. And that line of questioning was more so to look at the other side of the argument in terms of the bears, but I think we’ve pretty much covered that.

One last question -- pays per control, you said every 1% decline is about $20 million in revenues. Is it a disproportionately higher number for margins, considering that incremental paycheck is a higher margin than the original?

Gary C. Butler

Sure. I mean, it would be -- that margin is our highest margin across the enterprise, so it would certainly be more of a drag than a new GlobalView sale in revenue, to use that example.

Adam Frisch - UBS

Right, but how much -- if it’s $20 million in revenues, what is it to operating margins?

Gary C. Butler

We don’t go there.

Adam Frisch - UBS

Okay.

Christopher R. Reidy

But I would just clarify that generally, that metric, it’s $15 million just purely based on a change of pays per control. We say $20 million because generally, there are other implications of that -- participation of 401K plans, clients taking Beyond Payroll services, time and labor management. So the $20 million is kind of an [all-in] with the other ramifications, just to be clear on that.

Adam Frisch - UBS

Got it. Okay, thanks, guys. Good job.

Operator

Our next question comes from the line of David Grossman with Thomas Weisel Partners.

David Grossman - Thomas Weisel Partners

Thanks. Not to beat this pays per control issue, Gary, but maybe if you just go back in time to the ’01 time period and I think during that period, the pays per control actually went negative, yet the payroll business actually grew, maybe it bottomed at about 2% growth.

Can you help us just maybe understand the dynamic between pricing, new sales, and pays per control and retention? And what combination of factors could allow you to sustain this mid-single to high single digit growth in payroll, even if the economy does start slowing down here over the next 12 months or so?

Gary C. Butler

If you go back in time to the ’02 periods, we did see some slightly negative growth in the 1% to 2% kind of range. We had a period of time where we were flat.

The other thing that’s really I think helpful here is that the continued improvement and retention is helping us a lot. When you think about a 50 basis point improvement in retention on $7 billion or $8 billion in recurring revenue, it’s real money. So I would be much more pleased about an increase in retention than I would be worried about a one point drop in pays per control.

And the single busiest metric we have around our growth is new sales, and we are on our third year of consecutive, double-digit sales growth and it’s paying off in terms of the organic business growth that we are seeing in both dealer and in ES.

Christopher R. Reidy

Just as a reminder to that point, the metric that we’ve given on retention is a 1% change in retention is worth about $50 million of revenue.

David Grossman - Thomas Weisel Partners

So is there any quick -- I know you’ve given us some great rules of thumb here in terms of the individual metrics, but in terms of a combination of metrics, if we do see continued degradation in pays per control, the new sales one obviously is a difficult one to factor in here. Is there anything you can help us with? We can obviously offset the --

Gary C. Butler

Well, you know, we’ve talked about 1% is worth $15 million to $20 million in terms of revenue. Our new sales, the annual value of our new sales is roughly $1.2 billion. So continuing to grow new business at $1.2 billion plus is far more important than whether or not we lose $15 million to $20 million in further degradation and pays for control.

So -- I mean, I guess anything is possible. If you went negative 5% growth, it certainly wouldn’t be a whole lot of fun but again, that’s not something that keeps my up at night.

David Grossman - Thomas Weisel Partners

Okay, got it. And just on the margin side, you talked about the data center consolidation, you talked about telesales and the smart shorting. Where are we in that effort, if you will? Are we 50% through the effort? Are we 75%? Or is there still -- is this going to continue well into fiscal ’09?

Christopher R. Reidy

I’d say on the data center consolidation, probably around halfway there. And it is harder to say that on smart sharing because it’s almost continuous. We’ve got a significant number of people in India on an off-shoring basis. We’ve opened up centers in El Paso and El Paso is pretty far along, but we are now looking and expanding in Augusta. That will ultimately get up to about the same size, 1,000 to 1,500 people. So I think that’s a continuous effort as we look at the complexion of our employee base and as we grow, to grow in areas like El Paso and Augusta, or India.

David Grossman - Thomas Weisel Partners

And just one last thing, actually, for you Chris; if I understood you correctly on the last call, you had some cash outside the U.S. that if you could successfully repatriate it, you would apply that to incremental share repurchases. Can you perhaps just give us an update on where we are on that?

Christopher R. Reidy

The best reference would be back to our 10-K, where we actually do talk about freeing up the APB 23 ruling on that, which we basically took the income tax expense, we covered it with foreign tax losses so that it really wasn’t very dramatic. But in effect, that freed up a significant portion of the international cash and so when you look at our cash balances, other than basic working capital needs and some slight restricted cash, that the rest of that is pretty much free cash. So we’ve made progress on that and it’s now available.

Now, some of that will actually be repatriated. The timing of the repatriation will occur by the end of this calendar year for about half of that and the balance into the second half of our fiscal year.

David Grossman - Thomas Weisel Partners

And can you aggregate or quantify that for us?

Christopher R. Reidy

I don’t want to pin ourselves down to a number but if you look at it from another angle, we are probably -- the amount of cash that you would expect to see on the balance sheet on the near-term could be as low as $1 billion from the 1.5 that it is today.

David Grossman - Thomas Weisel Partners

Thanks very much.

Operator

Our next question comes from the line of Elizabeth Grausam with Goldman Sachs.

Elizabeth Grausam - Goldman Sachs

Thank you. I first wanted to touch on the employer sales growth for the quarter, at 11%. This is over probably your toughest comparable in the first quarter of ’07, where you posted 16% growth. When you look at your forecast now, which obviously is baking in a much more difficult macroeconomic conditions, do you think your new employer sales, employer services sales could come in stronger, given the start you had to the year? And is there a reason why you aren’t increasing that expectation at this point in time?

Gary C. Butler

Well, the performance in the first quarter is pretty consistent with our plan for the first quarter, for both dealer and ES. And even the metrics that we see across the enterprise pretty much have them forecasting to continue to finish at a plan kind of level. So we just didn’t want to be too optimistic and try to raise that forecast, when that’s really what the business units are telling us.

Elizabeth Grausam - Goldman Sachs

And then the PEO expectations were firmed up, both on the revenue and the margin expectations. Could you just discuss a little bit further what you are seeing in that market in particular that’s giving you greater confidence right now?

Gary C. Butler

Well, we had a very strong quarter, obviously in both revenue and margin. We had a good sales result for the first quarter, and we said double digits in all of our business units. And the number of worksite employees, which was in the press release, was also quite strong.

So in a full fiscal year, generally if you have a good first quarter, you are going to have a good fiscal year. If you have a bad first quarter, it’s obviously tougher to make up that ground in the service business. So we are feeling great about the results in the PEO.

Elizabeth Grausam - Goldman Sachs

Great, and just lastly on the cash allocation, you’ve obviously been a material repurchaser of your stock. You do tend to raise your dividend in mid-November. I know it’s a board decision but can you give us any color on the process of making that decision and looking at your dividend growth relative to your earnings growth rate at this point in time?

Gary C. Butler

Again, as you pointed out, I can’t speak for the board, but I would be quite surprised if they didn’t raise the dividend at least at the level of our EPS forecast or higher.

Elizabeth Grausam - Goldman Sachs

Great. Thank you.

Operator

Our next question comes from the line of Charles Murphy with Morgan Stanley.

Charles Murphy - Morgan Stanley

Thanks. Gary and Chris, I was wondering if you could isolate for us the one or two key factors that led you to raise the employer services margin forecast for ’08?

Gary C. Butler

I think the thing that was the most important is they had great margin performance in the first quarter and just like my comments earlier, typically if you’ve got good margin performance in the first quarter, it should stay with you, at least if not the whole year, at least over a good part of the year. So that would be the single biggest thing that would cause me to go there.

Charles Murphy - Morgan Stanley

And Chris, could you tell us what the diluted shares outstanding were on September 30th.

Christopher R. Reidy

Sure. Hold on one second.

Elena Charles

The diluted I believe --- well, no, the average is in the press release. The actual balance, I don’t have right here. Obviously it will be in the 10-Q.

Charles Murphy - Morgan Stanley

Okay.

Gary C. Butler

We probably have that here, Charlie. Just let us find it and we’ll move on and we’ll come back to that once we get it.

Charles Murphy - Morgan Stanley

Thanks very much.

Operator

Our next question will come from the line of Gary Bisbee with Lehman Brothers.

Gary Bisbee - Lehman Brothers

Good morning, and add my congratulations on a great quarter. I guess the first question, the retention continues to get better and I guess I’m wondering why. Is this still a case of as you cross-sell more things, the challenges the customer has to replace that if they leave is getting -- the barrier to exit is getting higher?

Gary C. Butler

It’s really three things, Gary. One is I think our service levels are good and in some cases, they are great. And so clients, if you do a good job for them, tend to stay around a longer period of time.

Secondly, our sales bundles, as well as our sales back into the base have never been better, so in national accounts when we sign up a new account, they sign up literally for two to three products and it usually includes hosting.

If you go to major accounts, it’s a couple of products and the PEO is a whole host of products, so clearly if you were to look at a client who was a payroll only client in major accounts and take that same group of clients that had payroll, 401K, and time and labor management, that retention rate would move up three or four percentage points because of the fact that they had multiple products.

On top of that, large clients stay with us longer than small clients. Obviously if you’re IKEA and you’re converting to ADP's payroll, our GlobalView product in 20 countries for 80,000 employees, it’s highly unusual, unless you have a major problem, for that client not to stay around for 10 to 15 years.

So we are having great success with COS, GlobalView and then our high-end of the marketplace, so the blended average will automatically get a lift, to the extent that we are able to grow those businesses even faster than our traditional markets.

Gary Bisbee - Lehman Brothers

So if we assume that we continue to have a somewhat weaker employment market in the U.S. and historically, I think at the small customer end, that would lead to more companies going out of business and hurting retention. Do you think that you can still have retention gains, or at least I guess in the worst case, keep it flat year over year, even if you have a little weaker environment at the low end?

Gary C. Butler

I don’t remember exactly, but I think even in 2001 and 2002 and we went into 2003, we didn’t see any real declines in our retention. It is harder to improve it, to your earlier point, but we really didn’t see any material degradation in retention.

Gary Bisbee - Lehman Brothers

Okay, and then the second question, on the PEO margin, obviously really strong year over year. Were there any one-time gains there or issues around the workers’ comp? Or is that just continued --

Gary C. Butler

It has nothing to do with workers’ comp, but it was primarily just an easy compare to the prior first quarter.

Gary Bisbee - Lehman Brothers

Okay, and then lastly, do you have on hand what cash flow from operations and CapEx were in the quarter?

Gary C. Butler

I think CapEx was around $30 million, $35 million. We were a little behind our internal plans, so I think we are still forecasting in the 175 to 200 kind of range.

Christopher R. Reidy

Cash flow from operations was a little over 275.

Gary Bisbee - Lehman Brothers

Great. Thanks a lot.

Christopher R. Reidy

Just to be clear on the question that Charlie had asked, we had 526 million shares outstanding at 9/30, about 7 million of dilution, so it’s about 533 to 544 diluted shares at September 30th.

Operator

Our next question comes from the line of Mark Marcon with Baird.

Mark Marcon - Robert W. Baird & Co.

Good morning and I would like to add my congratulations to a strong quarter. With regard to looking at employer services, you had internal growth in ES of 9%. And I’m wondering -- can you break that down in terms of looking at beyond payroll relative to core? Can you remind us what that split is between the two?

Gary C. Butler

The revenue split I think is about 60-40.

Mark Marcon - Robert W. Baird & Co.

Is that worldwide or U.S.?

Gary C. Butler

That’s more I think U.S., if I were guessing.

Elena Charles

It’s all U.S. It’s actually, since we pulled the PEO out of that mix now, the payroll, payroll tax actually is up. It’s closer to 68%, 65%, 66%, 68%, with 32% about in the Beyond Payroll. That’s of the U.S. revenues.

Mark Marcon - Robert W. Baird & Co.

Thank you.

Gary C. Butler

And that grew 18% this quarter, Mark.

Mark Marcon - Robert W. Baird & Co.

And how much of that was internal in terms of the Beyond?

Gary C. Butler

We don’t actually publish that. It’s not something we track as much. In the Beyond Payroll, almost by definition it’s all internal because if you didn’t have [TLN] before -- well, it’s internal growth in the sense that it’s a new product to an existing client, so it is internal growth.

Mark Marcon - Robert W. Baird & Co.

I meant if we were stripping out VirtualEdge and Employease and things of that nature, just to get a sense for how it’s -- what the organic growth rates are as opposed to how much is being contributed by acquisitions.

Gary C. Butler

Well, those acquisitions are growing like gangbusters, Mark. I mean, Employease and VirtualEdge are literally almost double in a 12-month period of time, so --

Mark Marcon - Robert W. Baird & Co.

And that’s because of the cross-selling, right? And that’s because of the cross-selling that you’ve got?

Gary C. Butler

Yeah, but again, it’s organic. If you’ve got $20 million and we double it to $40 million, that incremental 20 counts as organic growth.

Mark Marcon - Robert W. Baird & Co.

Got it. That makes sense. And then, with regard to the margin improvement, I was just trying to get to this again. I mean, how much of it is a price increase in terms of across the board, how much of it is the on-shoring, near-shoring, smart sourcing, and how much of it is just the improvement in terms of areas like COS, GlobalView, where you’ve been making investments?

And the real reason for the question is ultimately, what does this portend for future margin expansion as we look out over the next two to three years? It seems to me like you are still at the relatively early stages in terms of optimizing.

Christopher R. Reidy

Yeah, a couple of things. You started with price increases. I don’t think that’s where you want to go because price increases are about the same as they were last year, so that’s not contributing to the margin improvement.

And really, we don’t break out the improvements in margin by the items that we said because it’s almost impossible to tell. You know, you see it in your results and you know it’s being driven by these initiatives, but the lines blur.

We have in the past, when we made the investments we needed to make in our sales force and in some of our new businesses in COS, in GlobalView, we paid that price last year and the year before in terms of margin suppression, as well as some of the acquisitions that we did.

All of those things, as you’ve said, you’re beginning to get some leverage out of those acquisitions. So it’s all of those things combined that yield the improvements in the margin. You can’t really point to any one of the items and it’s impossible to break them down any further.

Mark Marcon - Robert W. Baird & Co.

How far along are we? We are obviously looking at this year but we are also looking beyond, and so I guess what I’m trying to ascertain is to what degree could we count on continued margin improvement in ES based on continued maturation of COS and GlobalView combined with all of the cost-savings initiatives that you’ve got in place.

Gary C. Butler

I think the way to think about it, you have to park acquisitions to the side, but assuming no acquisitions, and if we can maintain anywhere close to double-digit revenue growth, I would be very disappointed if we didn’t grow at last a half a point of margin a year.

Mark Marcon - Robert W. Baird & Co.

Great. And then finally, where do you think the -- you gave some great color with regard to your rate assumptions. Where does that take you in terms of where you think the effective yield would be at the very end of the year and last quarter of the year? And where do you think, if rates don’t change above and beyond what you’ve already described, the effective yield would be for next year?

Gary C. Butler

We have not gone to that level of detail and I’m not sure if we did, we would feel comfortable sharing that at this point.

I think there is so much up in the air around what the fed is going to do. We did try to give you some color by looking at a full year of FY08, if everything was at 4% in terms of fed funds rate, that would also imply medium intermediate term rates around 4.5 or 4.6, which is kind of where the yield curve is today. So we did try to give you our best guess on what would happen if that had been in effect for the entire year, and then I think you just kind of have to make your own assumptions and go from there.

Elena Charles

Mark, think about it when we talked about where we thought the full year would be, a little bit under the 4.5%, and the first quarter was about 4.6%, so to average out to the little under 4.5%, the fourth quarter would have to be then below the 4.5% -- not significantly below, but it would go a bit below that.

Christopher R. Reidy

One point to remember is that as our investments mature, the embedded rates are around 4.15 and the new purchase rates that we see are around 4.4 as well.

Mark Marcon - Robert W. Baird & Co.

Terrific. Thank you.

Gary C. Butler

Not that dramatic exiting this year.

Mark Marcon - Robert W. Baird & Co.

Thank you. Very helpful.

Operator

Our next question comes from the line of Greg Smith with Merrill Lynch.

Gregory Smith - Merrill Lynch

What’s your tax rate expectation for the full year? It was a little bit lower than we thought and I think international is driving that, if I’m correct.

Christopher R. Reidy

Well, some of it’s international, some of it’s the impact of our data center consolidation efforts, so we get some state tax benefits as well.

I would probably go back and say that on a reported basis, 2007 was 37.1. When you adjust for spin expenses and brokerage, or whatever, you’d really put that at a 36.8 level on an apples-to-apples basis. This year is 36.6, but that’s something misleading as well because of FIN-48, you now take the interest expense on tax liabilities and charge that to the tax line, so adjusting for that on an apples-to-apples basis, our effective tax rate would be 35.9.

The difference between the 36.8 and the 35.9, or just about 100 basis points, is really coming from the data center consolidation efforts, a decrease in some of the foreign income tax rates, Spain, Germany and U.K., as well as the optimization of some foreign NOLs.

So bottom line, moving in the right direction.

Gregory Smith - Merrill Lynch

Okay, great. And then, just in dealer, the growth rate to pick up a little bit as we move through the year -- I guess the question is how much -- do you -- how good is your visibility right now in dealer? And what is the sensitivity just to overall U.S. auto sales at this point?

Gary C. Butler

Two questions there; first of all, our visibility at dealer is pretty good because typically, the average time to install at dealer is five to six months. We are sitting here at the end of September and we have our backlog in place today, plus we have a pretty good view of our forecast for sales for the second quarter, so I think our confidence level in dealer in terms of the full-year forecast is pretty high.

And the second part of your question was?

Gregory Smith - Merrill Lynch

Just the sensitivity to U.S. auto sales for that business overall.

Gary C. Butler

In general, there is obviously some sensitivity but U.S. auto sales have been kind of at a low ebb now for going on the second year, and we had a great sales year last year. We started off strong in the first quarter. Obviously it’s a little easier if auto sales are up, but auto sales in Europe and in the far east are going gangbusters, so for what little drag we might have in the U.S., which we’ve seen for two years, we’re more than making up for it on the international scene.

Gregory Smith - Merrill Lynch

Okay, great. Thanks a lot.

Operator

Our next question comes from the line of Michael Baker with Raymond James.

Michael Baker - Raymond James

Thank you. As the company emerged out of the last downturn, Art Weinbach indicated that the most meaningful lesson was to actually invest more in the business and leverage the platform, and it seems like that’s a view that you share. I was wondering if you could update us on your sales headcount growth expectations, and also what kind of benefit you are seeing in terms of new sales from your channel strategy using CPAs, et cetera?

Gary C. Butler

A couple of things; one is, I agree with Art’s assessment. I think the error that we made last time was thinking we could save ourselves through a year to 18 month period of the downturn. Obviously the downturn lasted more like two to three years than throughout the 18 months, and so I think we had some hindsight there that said maybe we would have done things a little bit differently.

Today, based on where we are, I am continuing to invest and grow in the business because I’m really managing ADP for the five-year view, not just for the next year view. And if you are not bringing new products to the marketplace and growing your distribution, you ultimately will get in trouble.

This year, we are going to add about 4% or 5% in terms of headcount growth in our traditional sales force, and that would be true across the board. We’re adding a good bit more headcount there and telesales I think were up more like 40% or 50% in telesales headcount. But you know, you are talking hundreds of people, not thousands of people.

And we are also focusing on getting better productivity from the ones that we hired over the last couple, three years, where we were hiring more in the 8% to 10% in terms of headcount. So pretty much business as usual.

As you can see, in COS we are getting -- we’ve gone through the point where we are not profitable in our COS business. It’s approaching $140 million, $150 million run-rate business, and the same thing will happen with GlobalView but it won’t happen until ’09, which will help us on the margin side as well.

Michael Baker - Raymond James

I was just wondering if you could comment on the benefit that you are seeing from the channel, like using CPAs as referrals, or banks?

Gary C. Butler

We are continuing to see good improvement in CPA sales. I think we are pretty excited about a new product that we’ve launched that’s directed at allowing CPAs to wholesale our products. The new Internet platform that we have is built off of the Microsoft Small Business Accounting platform that we have, but it basically allows a CPA to remarket or wholesale ADP services directly to their client base and then we are the second line of service, as opposed to the first line of service.

So we’ve gotten real good initial reception from that product launch and we are optimistic that it will pay some good rewards in the year ahead.

Michael Baker - Raymond James

Thanks for the update.

Operator

We have time for one final question; that comes from the line of Tien-tsin Huang with JP Morgan.

Tien-tsin Huang - JP Morgan

Good morning. Thanks for all the disclosure and taking a conservative view on rates in your forecast.

I just have a couple of follow-up questions; first on employer services, client fund balance growth, I think you’ve got it down a bit. Are you seeing any impact from higher client penetration in addition to the macro issues you talked about, like wage inflation and lower bonuses, et cetera?

Gary C. Butler

I’m not sure I follow your question.

Tien-tsin Huang - JP Morgan

Well, I’m thinking with direct deposit, 401K and sort of the penetration rates creeping higher, I’m wondering if you are starting to see more of a normalization of growth in client fund balance?

Gary C. Butler

Most of the client fund balance is driven through direct deposits, new clients and tax money movement, and also the ADP check, where we get four to five days worth of float on that instrument.

Roughly in the mid and small end of the markets, 85%, 90% of our clients sign up for those kinds of services when we sell the payroll, and we’re not seeing any material difference there. In up market, it’s more like 50% of the clients use it because the clients are more float sensitive, although we do do a lot of standalone tax in that market.

But again, I think from your viewpoint, nothing materially different than what you’ve seen for the last year or to.

Tien-tsin Huang - JP Morgan

Okay. Maybe if I just ask it a different way -- what’s your long-term view, Gary, on client fund balance growth absent any major macro changes?

Gary C. Butler

High single digits, because we typically add 5% to 8% new payroll tax revenue in terms of adding new clients, and typically clients give 4% to 5% merit increases, somewhere between 3% and 5%. So you add the two together, along with some of the other additional float products that we sell, and you get pretty much to that high single digits.

Tien-tsin Huang - JP Morgan

Got it, thanks. And then in dealer, any change in the U.S. DMS market? We covered DealerTrack and it seems like they’ve had some early success there since they bough Arkona. Do you see any changes from that end or from UCS?

Gary C. Butler

Well, we are doing very well in the marketplace against rentals and UCS. We don’t get to a lot of detail and sharing competitive hooks by different competitors, but we are doing very well there. Our loss rate to Arkona today is no different than it’s been a year ago, so I think surely Dealer tried buying them gives them some more financial stability, but the company and the product and the service levels and the breadth of the product that they have hasn’t materially changed. So I think all things else being equal, the dealers are still quite happy to be an ADP client.

Tien-tsin Huang - JP Morgan

Okay. Good to know. Thanks a lot.

Gary C. Butler

I don’t think we have any other calls in the queue, so we appreciate you being with us today and we are very pleased with our quarter and continue to be optimistic for a very strong forecast for ’08. Thanks for being with us.

Christopher R. Reidy

Thank you.

Operator

This concludes today’s Automatic Data Processing Incorporated first quarter fiscal 2008 earnings conference call. Thank you for participating. You may now disconnect.

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Source: Automatic Data Processing F1Q08 (Qtr End 9/30/07) Earnings Call Transcript
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