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Article by DailyStocks_admin    (02-20-09 08:21 AM)

The Daily Magic Formula Stock for 02/20/2009 is Broadridge Financial Solutions Inc. According to the Magic Formula Investing Web Site, the ebit yield is 15% and the EBIT ROIC is >100%.

Dailystocks.com only deals with facts, not biased journalism. What is a better way than to go to the SEC Filings? It's not exciting reading, but it makes you money. We cut and paste the important information from SEC filings for you to get started on your research on a specific company.


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BUSINESS OVERVIEW

Broadridge is a leading global provider of technology-based outsourcing solutions to the financial services industry. Our systems and services include investor communication solutions, securities processing solutions, and securities clearing and operations outsourcing solutions. In short, we provide the infrastructure that helps make the financial services industry work. With more than 40 years of experience, we provide financial services firms with advanced, dependable, scalable and cost-effective integrated systems. Our systems help reduce the need for clients to make significant capital investments in operations infrastructure, thereby allowing them to increase their focus on core business activities.

We serve a large and diverse client base in the financial services industry, including retail and institutional brokerage firms, global banks, mutual funds, annuity companies, institutional investors, specialty trading firms, and clearing firms. We also provide services to corporate issuers.

We deliver a broad range of solutions that help our clients better serve their retail and institutional customers across the entire investment lifecycle, including pre-trade, trade, and post-trade processing. Our securities processing systems enable our clients to process securities transactions in more than 50 countries. In fiscal year 2008, we: (i) distributed over one billion investor communications, including proxy materials, investor account statements, trade confirmations, tax statements and prospectuses; (ii) provided components of our securities processing solutions to eight of the top 10 United States (“U.S.”) broker-dealers, as ranked by Securities Industry and Financial Markets Association (“SIFMA”); and (iii) served over 100 correspondents through our securities clearing services. Our operations are classified into three business segments:

Investor Communication Solutions

A large portion of our Investor Communication Solutions business involves the processing and distribution of proxy materials to investors in equity securities and mutual funds, as well as the facilitation of related vote processing. ProxyEdge ® , our innovative electronic proxy delivery and voting solution for institutional investors, helps ensure the participation of the largest stockholders of many companies. We also provide the distribution of regulatory reports and corporate action/reorganization event information, as well as tax reporting solutions that help our clients meet their regulatory compliance needs. In addition, we provide financial information distribution and transaction reporting services to both financial institutions and securities issuers. These services include the processing and distribution of account statements and trade confirmations, traditional and personalized document fulfillment and content management services, marketing communications, and imaging, archival and workflow solutions that enable and enhance our clients’ communications with investors. All of these communications are delivered in paper or electronic form.

Securities Processing Solutions

We offer a suite of advanced computerized real-time transaction processing services that automate the securities transaction lifecycle, from desktop productivity tools and portfolio management to order capture and execution, trade confirmation, settlement, and accounting. Our services help financial institutions efficiently and cost-effectively consolidate their books and records, focus on their core businesses, and manage risk. With multi-currency capabilities, our Global Processing Solution supports real-time global trading of equity, option, mutual fund, and fixed income securities in established and emerging markets.

Clearing and Outsourcing Solutions

We provide securities clearing and operations outsourcing services through our subsidiary Ridge Clearing & Outsourcing Solutions, Inc. (“Ridge Clearing”). Securities clearing and settlement is the process of matching, recording, and processing transaction instructions and then exchanging payment between counterparties. Ridge Clearing also provides financing for client inventory through margin lending. Our operations outsourcing solutions allow broker-dealers to outsource to Ridge Clearing certain administrative functions relating to clearing and settlement, from order entry to trade matching and settlement, while maintaining their ability to finance and capitalize their business.

History and Development of Our Company

We are the former Brokerage Services division of ADP. Broadridge Financial Solutions, Inc. was incorporated in Delaware as a wholly-owned subsidiary of ADP on March 29, 2007 in anticipation of our spin-off from ADP. On March 30, 2007, we spun off from ADP and began operating as an independent public company. Our company has more than 40 years of history of providing innovative solutions to the financial services industry and publicly-held companies. In 1962, the Brokerage Services division of ADP opened for business with one client, processing an average of 300 trades per night. In 1979, we expanded our U.S.-based securities processing solutions to process Canadian securities.

We made significant additions to our Securities Processing Solutions business through two key acquisitions in the mid-1990s. In 1995, we acquired a London-based provider of multi-currency clearance and settlement services, to become a global supplier of transaction processing services. In 1996, we acquired a provider of institutional fixed income transaction processing systems. In fiscal year 2008, we processed on average approximately $3 trillion daily in fixed income trades.

We began offering our proxy services in 1989. The proxy services business, which started what has become our Investor Communication Solutions business, leveraged the information processing systems and infrastructure of our Securities Processing Solutions business. Our proxy services offering attracted 31 major clients in its first year of operations. In 1992, we acquired The Independent Election Corporation of America which further increased our proxy services capabilities. By 1999, we were handling over 90% of the investor communication distributions for all securities held of record by banks and broker-dealers in the U.S.—from proxy statements to annual reports. During the 1990s, we expanded our proxy services business to serve security owners of Canadian and United Kingdom issuers and we began offering a complete outsourced solution for international proxies.

In 1998, having previously provided print and distribution services as an accommodation to our securities processing and proxy clients, we decided to focus on account statement and reporting services. In 2001, we developed and released PostEdge ® to meet the need for electronic distribution and archiving of all investor communications.

In 2004, we entered the securities clearing business by purchasing Bank of America Corporation’s U.S. Clearing and BrokerDealer Services businesses. The following year we commenced offering our unique business process outsourcing service to self-clearing U.S. broker-dealers.

The Broadridge Business

Our operations are classified into three business segments: Investor Communication Solutions, Securities Processing Solutions, and Clearing and Outsourcing Solutions.

Investor Communication Solutions

A majority of publicly-traded shares are not registered in companies’ records in the names of their ultimate beneficial owners. Instead, a substantial majority of all public companies’ shares are held in “street name,” meaning that they are held of record by broker-dealers or banks through their depositories. Most street name shares are registered in the name “Cede & Co.,” the name used by The Depository Trust and Clearing Corporation (“DTCC”), which holds shares on behalf of its participant broker-dealers and banks. These participant broker-dealers and banks (which are known as nominees because they hold securities in name only) in turn hold the shares on behalf of their clients, the individual beneficial owners. Nominees, upon request, are required to provide companies with lists of beneficial owners who do not object to having their names, addresses, and share holdings supplied to companies, so called “non-objecting beneficial owners” (or “NOBOs”). Objecting beneficial owners (or “OBOs”) may be contacted directly only by the broker-dealer or bank.

Because DTCC’s role is only that of custodian, a number of mechanisms have been developed in order to pass the legal rights it holds as the record owner (such as the right to vote) to the beneficial owners. The first step in passing voting rights down the chain is the “omnibus proxy,” which DTCC executes to transfer its voting rights to its participant nominees.

Under applicable rules, nominees must deliver proxy materials to beneficial owners and request voting instructions. Nominees are often prohibited by applicable New York Stock Exchange (“NYSE”), or other self-regulatory organization (“SRO”) rules, or by express agreements with their customers from voting the securities held in their customers’ accounts in the absence of receiving such customers’ voting instructions.

A large number of nominees have contracted out the administrative processes of distributing proxy materials and tabulating voting instructions to us. Nominees accomplish this by transferring to us via powers of attorney the authority to execute a proxy, which authority they receive from DTCC (via omnibus proxy). We then distribute the proxy materials and voting instruction forms (known as “VIFs”) to beneficial owners.

The Securities and Exchange Commission’s (the “SEC”) rules require public companies to reimburse nominees for the expense of distributing stockholder communications to beneficial owners of securities held in street name. The reimbursement rates are set forth in the rules of SROs, including the NYSE. We act as a billing and collection agent for many nominees with respect to this reimbursement. We bill public companies on behalf of the nominees, collect the fee and remit to the nominee any difference between the fee that the nominee is entitled to collect and the amount that the nominee has agreed to pay us for our services.

We also compile NOBO lists on behalf of nominees in response to requests from issuers. The preparation of NOBO lists is subject to reimbursement by the securities issuers requesting such lists to the broker-dealers. The reimbursement rates are based on the number of NOBOs on the list produced pursuant to NYSE or other SRO rules. Such rules also provide for certain fees to be paid to third party intermediaries who compile such NOBO lists. We function as such an intermediary in the NOBO process.

We also provide proxy distribution, vote tabulation, and various additional investor communication tools and services to institutional investors, corporate issuers, and investment companies.

The services we provide in this segment represented approximately 71%, 73%, and 72% of our total net revenues in fiscal years 2008, 2007, and 2006, respectively. They include:

Bank and Brokerage Offerings . We handle the entire proxy materials distribution and voting process for our bank and broker-dealer clients on-line and in real-time, from coordination with third-party entities to ordering, inventory maintenance, mailing, tracking and vote tabulation. We offer electronic proxy delivery services for the electronic delivery of proxy materials to investors and collection of consents; maintenance of a database that contains the delivery method preferences of our clients’ customers; posting of documents on the Internet; e-mail notification to investors notifying them that proxy materials are available; and proxy voting over the Internet. We also have the ability to combine stockholder communications for multiple stockholders residing at the same address which we accomplish by having ascertained the delivery preferences of investors. In addition, we provide a complete outsourced solution for the processing of international proxies. We also provide a complete reorganization communications solution to notify investors of reorganizations or corporate action events such as tender offers, mergers and acquisitions, bankruptcies, and class action lawsuits.

We also offer our bank and brokerage clients financial information distribution and transaction reporting services to help them meet their regulatory compliance requirements and business needs including: prospectus fulfillment services; electronic prospectus services; Investor Mailbox, our service providing the electronic delivery of investor communications to our clients’ websites; PostEdge ® , our electronic document archival and electronic delivery solution for documents including trade confirmations, tax documents and account statements; marketing communications; imaging, archival and workflow solutions; and on-demand digital print services.

Institutional Investor Offerings . We provide a suite of services to manage the entire proxy voting process of institutional investors, including fulfilling their fiduciary obligations and meeting their reporting needs such as ProxyEdge ® , our workflow solution that integrates ballots for positions held across multiple custodians and presents them under a single proxy. Voting can be instructed for the entire position, by account vote group or on an individual account basis either manually or automatically based on the recommendations of participating governance research providers. ProxyEdge ® also provides for client reporting and regulatory reporting. ProxyEdge ® can be utilized for meetings of U.S. and Canadian companies and for meetings in many non-North American countries based on the holdings of our global custodian clients.

Corporate Issuer Offerings . We are the largest processor and provider of investor communication solutions to public companies. We offer our corporate issuer clients many tools to facilitate their communications with investors such as Internet and telephone proxy voting, electronic delivery of corporate filings, and householding of communications to stockholders at the same address. One of our opportunities for growth in the Investor Communication Solutions segment involves serving corporate issuer clients in providing communications services to registered stockholders—that is, stockholders who do not hold their shares through a broker-dealer in street name. We also offer proxy services to non-North American corporate issuers in connection with their general and special meetings of stockholders. Our corporate issuer services include ShareLink ® , our service that enables the creation and printing of personalized proxy forms in a variety of formats. ShareLink ® provides complete project management for the beneficial and registered proxy process.

Mutual Fund Offerings . We provide a full range of tools that enable mutual funds to communicate with large audiences of investors efficiently, reliably, and often with substantial cost savings. Our solutions allow mutual funds to centralize all investor communications through one resource. We also provide printing and mailing of regulatory reports, prospectuses and proxy materials, as well as proxy solicitation services. In addition, we distribute marketing communications and informational materials and create on-demand enrollment materials for mutual fund investors. Our unique position in the industry enables us to manage the entire communication process with both registered and beneficial stockholders.

Securities Processing Solutions

Transactions involving securities and other financial market instruments originate with an investor, who places an order with a broker who in turn routes that order to an appropriate market for execution. At that point, the parties to the transaction coordinate payment and settlement of the transaction through a clearinghouse. The records of the parties involved must then be updated to reflect completion of the transaction. Tax, accounting and record-keeping requirements must be complied with in connection with the transaction and the customer’s account information must correctly reflect the transaction. The accurate processing of trading activity requires effective automation and information flow across multiple systems and functions within the brokerage firm and across the systems of the various parties that participate in the execution of a transaction.

Our securities processing solutions automate the transaction lifecycle of equity, mutual fund, fixed income, and option securities trading operations, from order capture and execution through trade confirmation, settlement, and accounting. Our services facilitate the automation of straight-through-processi ng operations and enable financial institutions efficiently and cost-effectively to consolidate their books and records, focus on their core businesses, and manage risk. With our multi-currency capabilities, we support trading activities on a global basis.

North American Processing Services . We provide a set of sophisticated, multi-currency systems that support real-time processing of securities transactions in North American equities, options, fixed income securities, and mutual funds. Brokerage Processing Services (“BPS”) is our core multi-currency back-office processing system that supports real-time processing of transactions in the U.S. markets. BPS handles everything from order management to clearance and settlement, and assists our clients in meeting their regulatory reporting and other back-office requirements. BPS is provided on a hosted application service provider (“ASP”) basis. We also offer a version of BPS for processing Canadian securities. In addition to our BPS offering, we provide specialized transaction processing tools and services for small to mid-market financial firms in the U.S. and Canada that are operated on separate Broadridge technology platforms. We also provide state-of-the-art fixed-income transaction processing capabilities and support for front, middle, and back-office functions. Our securities processing services can be integrated with our web-based desktop applications, enterprise workflow, automated inquiry reporting and record-keeping services.

International Processing Services . We provide advanced multi-currency transaction processing solutions for institutional and retail securities operations, corporate actions, and business process outsourcing services such as data cleansing. Our Global Processing Solution is our integrated delivery of multiple securities processing products and services to create a comprehensive system that is capable of processing transactions in equity, option, mutual fund, and fixed income securities in established and emerging markets, at any time. Its advanced real-time processes automate the securities transaction lifecycle from order capture and execution through confirmation, settlement, and accounting.

Clearing and Outsourcing Solutions

Ridge Clearing provides clearing and execution services, and financing of client inventory through margin lending. Ridge Clearing also provides operations outsourcing services for a variety of clearing, record-keeping, and custody-related functions.

Securities clearing is the verification of information between two broker-dealers in a securities transaction and the subsequent settlement of that transaction, either as a book-entry transfer or through physical delivery of certificates, in exchange for payment. Record-keeping includes customer account maintenance and customized data processing services. Custody services are the safe-keeping of another party’s assets, such as physical securities. Clients for whom we provide securities clearing, record-keeping, and custody-related services are generally referred to as our “correspondents.” In the U.S., clearing relationships typically are “fully-disclosed.” This means that the correspondent’s customer is known to the clearing firm and the clearing firm is known to the customer.

Our clients engage in either the retail or institutional brokerage business in the U.S. Our clients generally engage us either to act as a full-service clearing firm, whereby our securities clearing and processing personnel execute and clear transactions and we are the broker-dealer of record, or as a provider of operations outsourcing solutions, whereby our clients execute and clear transactions and we perform a number of related administrative back-office functions, such as record-keeping and reconciliations. In this capacity, we are not the broker-dealer of record.

We effect securities transactions for our clients on either a cash or margin basis. In a cash basis transaction, our clients fully pay for the purchase price of the security, and we provide execution and clearing services. In a margin transaction, we extend credit to a client for a portion of the purchase price of the security. Such credit is collateralized by securities in the client’s accounts in accordance with regulatory and internal requirements. We receive income from interest charged on such loans. In the normal course of business, we borrow securities from banks and other broker-dealers to facilitate customer short selling activity and to effect delivery of securities at settlement. Conversely, we lend securities to broker-dealers and other trading entities who need to cover their short sales and to complete transactions that require delivery of securities at settlement.

Our services also include an extensive mutual fund roster, a variety of retirement plans (for which we are the custodian), comprehensive cash management services, brand name institutional quality research, and fee-based advisory products.

As a member of Euroclear, Cedel, and the Citibank Global Custodian Clearance Network, we offer international clearing capabilities including multi-currency confirmation and statement reporting.

Broadridge’s Integrated Solutions

Our U.S. clients can choose from three levels of securities processing services, all of which utilize the same technology platform. We provide our clients the ability to integrate our securities processing services with our securities clearing services and/or operations outsourcing services. This allows our clients to migrate across these services as they grow or as their business needs change without having to undergo the cost and risk of changing their underlying back-office systems. Our three-tier service offering is as follows:


• financial institutions that choose to run their own clearing operations can utilize our securities transaction processing systems on a hosted ASP basis;


• financial institutions that choose to take advantage of the scale and resources of a large securities clearing firm can receive our securities processing and securities clearing, settlement and financing services on an integrated outsourced basis as our correspondents; and


• financial institutions that believe the best way to optimize their business is to outsource their staff, systems and securities processing functions while retaining customer credit and financing activities can utilize our operations outsourcing services.
In addition, our clients can integrate our securities processing and clearing services with our other services including: (i) the processing of trade confirmations and account statements, delivered traditionally or electronically; (ii) equity and mutual fund prospectus processing; and (iii) automated workflow tools that help our clients streamline their securities processing and operations activities. Our core systems for processing equity, option, and mutual fund transactions in the U.S. markets can also be combined with our specialized systems for trading in fixed income and international securities. These specialized securities processing services are fully integrated with our correspondent clearing and operations outsourcing services.

Clients

We serve a large and diverse client base in the financial services industry including retail and institutional brokerage firms, global banks, mutual funds, annuity companies, institutional investors, specialty trading firms, and clearing firms. We also provide services to corporate issuers.

In fiscal year 2008, we:


• processed approximately 74% of the outstanding shares in the U.S. in the performance of our proxy services;


• distributed over one billion investor communications in either paper or electronic form, as requested by the investor;


• provided components of our securities processing solutions to eight of the top 10 U.S. broker-dealers;


• provided six of the top 10 Fortune Global 500 banks with fixed income trade processing services, processing on average approximately $3 trillion daily in fixed income trades; and


• served over 100 correspondents through our securities clearing services.

In fiscal year 2008, we derived approximately 22% of our revenues from five clients. Our largest single client accounted for between 5-6% of our revenues.



7

Table of Contents

Competition

We operate in a highly competitive industry. Our Investor Communication Solutions business competes with companies that provide investor communication and corporate governance solutions including transfer agents who handle communication services to registered (non-beneficial) securities holders, proxy advisory firms, proxy solicitation firms and other proxy services providers. We also face competition from numerous firms in the compiling and printing of transaction confirmations and account statements. Our Securities Processing Solutions business principally competes with brokerage firms that perform their trade processing in-house, and with numerous other outsourcing vendors. Our Clearing and Outsourcing Solutions business competes with other financial institutions that offer correspondent clearing and execution services. Our back-office support services offered through this segment also compete with very large financial institutions that both clear transactions and manage their own back-office record-keeping operations. In many cases, clients engage us only to perform certain functions, such as back-office processing, and do not outsource certain functions that we would also perform for them, such as clearing transactions.

Technology

We have several information processing systems which serve as the core foundation of our technology platform. We leverage these systems in order to provide our investor communication, securities processing, and securities clearing and operations outsourcing services. We are committed to maintaining extremely high levels of quality service through our skilled technical employees and the use of our technology within an environment that seeks continual improvement.

Our mission-critical applications are designed to provide high levels of availability, scalability, reliability, and flexibility. They operate on industry standard enterprise architecture platforms that provide high degrees of horizontal and vertical scaling. This scalability and redundancy allows us to provide high degrees of system availability. In July 2006, we combined our primary data center with ADP’s data center. Those data center systems and applications are operated and managed by ADP under the data center outsourcing services agreement we entered into with ADP in connection with the spin-off from ADP in March 2007. The data center services are provided to us consistent with the services provided to us immediately before the spin-off, provided that the operation of the data center is the sole responsibility of ADP. Under this agreement, ADP is responsible for hosting our mainframe, midrange, open systems, and networks. Additionally, systems engineering, network engineering, hardware engineering, network operations, data center operations, application change management, and data center disaster recovery services are managed by ADP. All critical platforms are fully supported under ADP’s disaster recovery program which provides geographic diversity and precise system, application, data and network recovery. The agreement with ADP provides for increasing volumes and the addition of new services over the term. We continue to manage the application development, information technology strategy and system architecture direction and management functions. The data center outsourcing services agreement with ADP will expire on June 30, 2012.

Most of our systems and applications process in Tier IV data centers. Tier IV data centers employ multiple active power and cooling distribution paths, redundant components, and are capable of providing 99.995% availability. Tier IV data centers provide infrastructure capacity and capability to permit any planned activity without disruption to the critical load, and can sustain at least one worst-case, unplanned failure or event with no critical load impact. The geographically dispersed processing centers of ADP and Broadridge also provide disaster recovery and business continuity processing.

To further demonstrate our commitment to maintaining the highest levels of quality service and client satisfaction within an environment that fosters continual improvement, Broadridge’s and ADP’s data centers are International Organization for Standardization (“ISO”) 9001:2000 certified. In addition, Broadridge’s core applications and facilities for the provision of our proxy, U.S. equity and fixed income securities processing services, and ADP’s data centers will be ISO 27001 certified in August 2008.

Product Development . Our products and services are designed with reliability, availability, scalability, and flexibility so that we can fully meet our clients’ processing needs. These applications are built in a manner which allows us to meet the breadth and depth of requirements of our financial services industry clients in a highly efficient manner. We continually upgrade, enhance, and expand our existing products and services taking into account input from clients, industry-wide initiatives and regulatory changes affecting our clients.

Intellectual Property . We own registered marks for our trade name and own or have applied for trademark registrations for many of our services and products. We regard our products and services as proprietary and utilize internal security practices and confidentiality restrictions in contracts with employees, clients, and others for protection. We believe that we hold all proprietary rights necessary to conduct our business.

Employees

At June 30, 2008, we had approximately 4,850 employees. None of our employees are subject to collective bargaining agreements governing their employment with our company. We believe that our employee relations are good.


CEO BACKGROUND

Leslie A. Brun, age 56, has been a member of our Board of Directors since 2007. He is the Chairman and Chief Executive Officer of SARR Group, LLC, a private equity firm. He is also the founder and Chairman Emeritus of Hamilton Lane, a provider of asset management services for which he served as Chief Executive Officer and Chairman from 1991 until 2005. From 1988 to 1991, he was Managing Director of Fidelity Bank in Philadelphia. Mr. Brun serves as the Chairman of the Board of Automatic Data Processing, Inc. (“ ADP ”), and as a director of Merck & Co., Inc. He is also a director of The Episcopal Academy in Merion, PA and a trustee of the University at Buffalo Foundation, Inc.

Richard J. Daly, age 55, is our Chief Executive Officer and has been a member of our Board of Directors since 2007. Prior to the March 2007 spin-off of Broadridge from ADP, Mr. Daly served as Group President of the Brokerage Services Group of ADP, as a member of the Executive Committee and a Corporate Officer of ADP since June 1996. In his role as President, he shared the responsibility of running the Brokerage Services Group with John Hogan and was directly responsible for our Investor Communications Solutions business. Mr. Daly joined ADP in 1989 as Senior Vice President of the Brokerage Services Group.

Richard J. Haviland, age 62, has been a member of our Board of Directors since 2007. Mr. Haviland served for 20 years in various executive and financial positions at ADP, most recently as its Chief Financial Officer and a member of its Executive Committee, retiring from ADP in 2001. His experience prior to ADP includes 11 years in the auditing and assurance practice of Touche Ross & Co., a predecessor firm of Deloitte & Touche LLP, a public accounting firm.

Alexandra Lebenthal, age 44, has been a member of our Board of Directors since 2007. Since 2006, Ms. Lebenthal has been President and Chief Executive Officer of Lebenthal & Co. LLC, and its wealth management division, Alexandra & James Inc., a financial services company which she co-founded. Prior to forming Lebenthal & Co. LLC, Ms. Lebenthal was Chief Executive Officer, Executive Vice President of the Lebenthal Division of Advest Inc. from January 2002 until December 2005. Ms. Lebenthal is a director of Care Investment Trust and the Securities Industry and Financial Markets Association (SIFMA). Ms. Lebenthal is a member of The Committee of 200, a leading organization for female businesswomen. She also serves as a board member of the School of American Ballet and is involved with several other leading New York cultural institutions including The Business Council of The Metropolitan Museum of Art, the Capital Campaign for the Museum of the City of New York, the American Museum of Natural History, and the New York Botanical Garden.

Stuart R. Levine, age 61, has been a member of our Board of Directors since 2007. Mr. Levine is the founder, Chairman and Chief Executive Officer of Stuart Levine and Associates LLC, an international consulting and leadership development company. From September 1992 to June 1996 he was Chief Executive Officer of Dale Carnegie & Associates, Inc., a provider of leadership, communication and sales skills training. Mr. Levine is a Lead Director for Gentiva Health Services, Inc., a provider of home healthcare services, and Lead Director for J. D’Addario & Company, Inc., a manufacturer of musical instrument accessories. He also serves on the board of North Shore-Long Island Jewish Health System. In addition, Mr. Levine is the bestselling author of “The Leader in You” (Simon & Schuster 2004), “The Six Fundamentals of Success” (Doubleday 2004) and “Cut to the Chase” (Doubleday 2007). He is former Chairman of Dowling College as well as a former Member of the New York State Assembly. His prior directorships include European American Bank, The Olsten Corporation and the New York State Excelsior Quality Board.

Thomas E. McInerney, age 67, has been a member of our Board of Directors since 2007. Mr. McInerney is a general partner of Welsh, Carson, Anderson & Stowe (“ WCAS ”), a private equity investment firm. He joined WCAS in 1986 and focuses on investments in the information services and telecommunications industries. Before joining WCAS, he co-founded and served as President and Chief Executive Officer of Momentum Technologies Inc., a provider of computer systems and services, and Dama Telecommunications Corp., a communications services company. Earlier he was President of ADP’s Brokerage Services Division and Group Vice President—Financial Industry Services. Prior to joining ADP, Mr. McInerney was Senior Vice President of Operations and Technology at the American Stock Exchange. Mr. McInerney serves as Chairman of the Board of ITC Deltacom, Inc., a provider of communications services, a director of SAVVIS, Inc., a global IT utility services provider, and Centennial Communications Corp., a provider of telecommunications services. He is also a director of Global Knowledge Corp. and several other private companies. Mr. McInerney is Chairman of the Board of Trustees of St. John’s University.

Alan J. Weber, age 59, has been a member of our Board of Directors since 2007. He is the Chief Executive Officer of Weber Group LLC, a private investment firm. Mr. Weber retired as Chairman and Chief Executive Officer of U.S. Trust Corporation and as a member of the executive committee of the Charles Schwab Corporation in 2005. Previously, he was the Vice Chairman and Chief Financial Officer of Aetna Inc., where he was responsible for capital management, information technology, investor relations, e-business and financial operations. He also held a number of senior level positions at Citibank N.A., where he worked from 1971 to 1998, including Chairman of Citibank International and Executive Vice President of Citibank. During his tenure at Citibank, Mr. Weber oversaw operations in approximately 30 countries, including assignments in Japan, Italy and Latin America. Mr. Weber serves as a director of Diebold, Inc., a provider of self-service delivery and security systems and services, OnForce, Inc., an IT services company he helped establish, and Keane, Inc., a business process and information technology company.

Arthur F. Weinbach, age 65, is our Executive Chairman and has served as the Chairman of our Board of Directors since 2007. Mr. Weinbach served as Chairman of the Board and Chief Executive Officer of ADP from 1998 to 2006. He retired as Chief Executive Officer of ADP in 2006 and retired as Chairman of ADP’s Board in 2007. Mr. Weinbach held a variety of positions of increasing responsibility since joining ADP in 1980, including two years as President and Chief Executive Officer, and two years as President and Chief Operating Officer. Prior to that he was Chief Financial Officer of ADP for almost 10 years. Mr. Weinbach is a director of Schering-Plough Corp., CA, Inc., and The Phoenix Companies, Inc. He is also on the Board of Trustees of New Jersey SEEDS, a charitable organization.

MANAGEMENT DISCUSSION FROM LATEST 10K

This discussion summarizes the significant factors affecting the results of operations and financial condition of Broadridge during the fiscal years ended June 30, 2008, 2007, and 2006 and should be read in conjunction with our Financial Statements and accompanying Notes thereto included elsewhere herein. Certain information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature and which may be identified by the use of words like “expects,” “assumes,” “projects,” “anticipates,” “estimates,” “we believe,” “could be” and other words of similar meaning, are forward-looking statements. These statements are based on management’s expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from those expressed. Our actual results may differ materially from the results discussed in this Item 7 because of various factors, including those set forth elsewhere herein. See “Forward-Looking Statements” and “Risk Factors” included in Item 1 of this Annual Report on Form 10-K.

DESCRIPTION OF THE COMPANY AND BUSINESS SEGMENTS

Broadridge is a leading global provider of investor communication solutions, securities processing solutions, and clearing and outsourcing solutions to the financial services industry. We offer advanced integrated systems and services that are dependable, scalable and cost-efficient. Our systems help reduce the need for clients to make significant capital investments in operations infrastructure, thereby allowing them to increase their focus on core business activities. Our operations are classified into three business segments: Investor Communication Solutions, Securities Processing Solutions, and Clearing and Outsourcing Solutions.

Investor Communication Solutions

A large portion of our Investor Communication Solutions business involves the processing and distribution of proxy materials to investors in equity securities and mutual funds, as well as the facilitation of related vote processing. ProxyEdge ® , our innovative electronic proxy delivery and voting solution for institutional investors, helps ensure the participation of the largest stockholders of many companies. We also provide the distribution of regulatory reports and corporate action/reorganization event information, as well as tax reporting solutions that help our clients meet their regulatory compliance needs. In addition, we provide financial information distribution and transaction reporting services to both financial institutions and securities issuers. These services include the processing and distribution of account statements and trade confirmations, traditional and personalized document fulfillment and content management services, marketing communications, and imaging, archival and workflow solutions that enable and enhance our clients’ communications with investors. All of these communications are delivered in paper or electronic form.

Securities Processing Solutions

We offer a suite of advanced computerized real-time transaction processing services that automate the securities transaction lifecycle, from desktop productivity tools and portfolio management to order capture and execution, trade confirmation, settlement, and accounting. Our services help financial institutions efficiently and cost-effectively consolidate their books and records, focus on their core businesses, and manage risk. With multi-currency capabilities, our Global Processing Solution supports real-time global trading of equity, option, mutual fund and fixed income securities in established and emerging markets.

Clearing and Outsourcing Solutions

We provide securities clearing and operations outsourcing services through our subsidiary Ridge Clearing. Securities clearing and settlement is the process of matching, recording, and processing transaction instructions and then exchanging payment between counterparties. Ridge Clearing also provides financing for client inventory through margin lending. Our operations outsourcing solutions allow broker-dealers to outsource to Ridge Clearing certain administrative functions relating to clearing and settlement, from order entry to trade matching and settlement, while maintaining their ability to finance and capitalize their business.

SEPARATION OF BROADRIDGE FROM ADP

The spin-off of Broadridge by ADP became effective on March 30, 2007 through a distribution of 100% of the common stock of the Company to the holders of record of ADP common stock (the “Distribution”). The Distribution was effected pursuant to a separation and distribution agreement by which ADP contributed to the Company the subsidiaries that operated its brokerage services business. ADP distributed all of the shares of Broadridge Financial Solutions, Inc. as a dividend on ADP common stock on March 30, 2007 to all stockholders of record as of March 23, 2007.

In connection with the spin-off, we made a cash payment to ADP on March 30, 2007 of $690.0 million which was financed through borrowings under $1,190.0 million of credit facilities that were entered into on March 29, 2007. The payment is reflected as a dividend to ADP in Stockholders’ Equity.

A significant portion of the expenses to effect the separation were incurred by ADP, such as investment banking fees, related outside legal and accounting fees, office move costs, costs to separate information systems, and temporary consulting costs. Broadridge incurred separation costs that have a future benefit to the Company, including stock compensation expense relating to the Distribution and other items such as relocation expenses associated with hiring senior management positions new to the Company, and the temporary labor costs incurred to develop ongoing processes for operating on a stand-alone basis.

FACTORS AFFECTING COMPARABILITY OF FINANCIAL RESULTS

Historical ADP Cost Allocations Compared to Broadridge as a Stand-alone Entity

Our historical Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. These Financial Statements present the consolidated and combined financial position and results of operations of the former brokerage services business of ADP. The Combined Financial Statements for periods before the Distribution include allocated costs for facilities, functions and services used by the brokerage services business at shared ADP sites and costs for certain functions and services performed by centralized ADP organizations and directly charged to the brokerage services business based on usage. Our management believes these allocation methods are reasonable.

As an independent public company, we are responsible for these services and bear all of these expenses directly. The historical allocation of ADP’s expenses to us may be significantly less than the actual costs we will incur as an independent company. For the fiscal year ended June 30, 2008 and for the period from the date of the Distribution to June 30, 2007, the Company incurred approximately $26.6 million and $8.0 million, respectively, in public company related expenses.

ACQUISITIONS AND DIVESTITURES

Assets acquired and liabilities assumed in business combinations were recorded on the Company’s Consolidated Balance Sheets as of the respective acquisition dates based upon their estimated fair values at such dates. The results of operations of businesses acquired by the Company were included in the Company’s Consolidated and Combined Statements of Earnings since their respective dates of acquisition. The excess of the purchase price over the estimated fair values of the underlying assets acquired and liabilities assumed was allocated to goodwill.

The Company acquired one business in the Securities Processing Solutions segment in fiscal year 2008 for $6.1 million. This acquisition resulted in approximately $3.6 million of goodwill. Intangible assets acquired, which totaled approximately $2.5 million, consist of acquired technology that is being amortized over a five-year life. This acquisition was not material to the Company’s operations, financial position, or cash flows.

The Company acquired one business in the Investor Communication Solutions segment in fiscal year 2006 for $3.0 million. This acquisition resulted in approximately $0.9 million of goodwill. This acquisition was not material to the Company’s operations, financial position, or cash flows. In fiscal year 2006, a purchase price adjustment of $15.4 million was received from the seller based on the resolution of certain provisions of the purchase agreement for the fiscal year 2005 acquisition of the U.S. Clearing and Dealer Services divisions of Bank of America Corporation, the business that became our subsidiary Ridge Clearing.

BORROWINGS

On March 29, 2007, the Company entered into a $1,190.0 million senior unsecured credit facility, consisting of a $440.0 million five-year term loan facility, a $500.0 million five-year revolving credit facility and a $250.0 million one-year revolving credit facility. On March 29, 2007, the Company borrowed $440.0 million under the five-year term loan facility and $250.0 million under the one-year revolving credit facility. The proceeds received in connection with the $690.0 million of borrowings were paid to ADP on March 30, 2007 as a dividend. These credit facilities are subject to covenants, including financial covenants consisting of a leverage ratio and an interest coverage ratio. At June 30, 2008 and 2007, the Company was not aware of any instances of non-compliance with the financial covenants of this credit facility. During the fiscal years ended June 30, 2008 and 2007, the Company repaid $170.0 million and $70.0 million, respectively, of the five-year term loan facility. The one-year revolving credit facility was cancelled upon repayment on May 29, 2007 with the net proceeds from the issuance of $250.0 million in aggregate principal amount of the Senior Notes and cash. The Senior Notes are unsecured obligations of Broadridge and rank equally in right of payment with other unsecured and unsubordinated obligations of Broadridge. Please refer to Note 11 “Borrowings” to our Financial Statements under Item 8 of Part II of this Annual Report on Form 10-K for a more detailed discussion.

BASIS OF PRESENTATION

The Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. These Financial Statements present the consolidated position of the Company as a separate, stand- alone entity subsequent to the Distribution, presented along with the historical operations of the brokerage services business on a combined basis which were operated as part of ADP before the Distribution. These Financial Statements include the entities in which the Company directly or indirectly has a controlling financial interest and various entities in which the Company has investments recorded under the cost and equity methods of accounting. Intercompany balances and transactions have been eliminated. Amounts included in Retained earnings reflect the Company’s Net earnings subsequent to the Distribution. The Company’s combined results of operations, and cash flows for periods before the Distribution, may not be indicative of its future performance and do not necessarily reflect what its results of operations and cash flows would have been had the Company operated as a separate, stand-alone entity during the periods presented, including changes in its operations and capitalization as a result of the separation from ADP. In particular, interest expense and corporate overhead costs are higher in the periods after the Distribution than they were before the Distribution. In addition, the Consolidated and Combined Statements of Earnings for the period before the Distribution include a trademark royalty fee charged by ADP to the Company based on revenues for licensing fees associated with the use of the ADP trademark. After the Distribution, such royalties are no longer charged to the Company.

In presenting the Financial Statements, management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates. In management’s opinion, the Financial Statements contain all normal recurring adjustments necessary for a fair presentation of results reported. The results of operations reported for the periods presented are not necessarily indicative of the results of operations for subsequent periods.

The Financial Statements for periods before the Distribution include costs for facilities, functions and services used by the Company at shared ADP sites, and costs for certain functions and services performed by centralized ADP organizations and directly charged to the Company based on usage. The expenses allocated to the Company for these services are not necessarily indicative of the expenses that would have been incurred if the Company had been a separate, independent entity and had otherwise managed these functions. Following the separation from ADP, the Company performs these functions using internal resources or purchased services, certain of which were provided by ADP during a transitional period pursuant to the Transition Services Agreement. See Note 17, “Transactions With Former Parent” to the Financial Statements for a detailed description of the Company’s transactions with ADP subsequent to the Distribution.

CRITICAL ACCOUNTING POLICIES

We continually evaluate the accounting policies and estimates used to prepare the Financial Statements. The estimates are based on historical experience and are believed to be reasonable. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed below.

Goodwill . We review the carrying value of all our goodwill in accordance with Financial Accounting Standards Board, (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets ,” by comparing the carrying value of our reporting units to their fair values. We are required to perform this comparison at least annually or more frequently if circumstances indicate possible impairment. When determining fair value, we utilize a discounted future cash flow approach using various assumptions, including projections of revenues based on assumed long-term growth rates, estimated costs and appropriate discount rates based on the particular business’ weighted-average cost of capital. The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flows, the weighted-average cost of capital and the terminal value growth rate assumptions. The weighted-average cost of capital takes into account the relative weights of each component of our consolidated capital structure (equity and long-term debt). Our estimates of long-term growth and costs are based on historical data, various internal estimates and a variety of external sources, and are developed as part of our routine, long-range planning process. Changes in economic and operating conditions impacting these assumptions could result in goodwill impairments in future periods. We had $484.3 million of goodwill as of June 30, 2008. Given the significance of our goodwill, an adverse change to the fair value could result in an impairment charge, which could be material to our earnings. A 10% change in our estimates of projected future operating cash flows, discount rates, or terminal value growth rates used in our calculations of the fair values of the reporting units would have no impact on the reported value of our goodwill.

Income Taxes . We account for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes, ” which establishes financial accounting and reporting standards for the effect of income taxes. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. Judgment is required in addressing the future tax consequences of events that have been recognized in our Financial Statements or tax returns (e.g., realization of deferred tax assets, changes in tax laws or interpretations thereof). In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities. A change in the assessment of the outcomes of such matters could materially impact our Financial Statements. As of June 30, 2008, we had estimated foreign net operating loss carryforwards of approximately $27.9 million of which $4.7 million expires in years 2009 through 2014, and $ 23.2 million which has an indefinite utilization period. In addition, we have estimated U.S. federal net operating loss carryforwards of a U.S. subsidiary which is not included in our consolidated tax return of approximately $27.6 million as of June 30, 2008 and will expire in 2023 through 2028. We have recorded valuation allowances of $29.8 million and $21.9 million at June 30, 2008 and 2007, respectively, because we do not believe that it is more likely than not that we will be able to utilize the deferred tax assets attributable to the net operating and capital loss carryforwards, and foreign tax credits of certain subsidiaries to offset future taxable earnings.

MANAGEMENT DISCUSSION FOR LATEST QUARTER

Overview

We are a leading global provider of technology-based outsourcing solutions to the financial services industry. Our systems and services include investor communication solutions, securities processing solutions, and securities clearing and operations outsourcing solutions. In short, we provide the infrastructure that helps make the financial services industry work. With more than 40 years of experience, we provide financial services firms with advanced, dependable, scalable and cost-effective integrated systems. Our systems help reduce the need for clients to make significant capital investments in operations infrastructure, thereby allowing them to increase their focus on core business activities.

We serve a large and diverse client base in the financial services industry, including retail and institutional brokerage firms, global banks, mutual funds, annuity companies, institutional investors, specialty trading firms, and clearing firms. We also provide services to corporate issuers.

We deliver a broad range of solutions that help our clients better serve their retail and institutional customers across the entire investment lifecycle, including pre-trade, trade, and post-trade processing. Our securities processing systems enable our clients to process transactions in more than 50 countries. In fiscal year 2008, we: (i) distributed over one billion investor communications, including proxy materials, investor account statements, trade confirmations, tax statements and prospectuses; (ii) provided components of our securities processing solutions to eight of the top 10 United States of America (“U.S.”) broker-dealers, as ranked by Securities Industry and Financial Markets Association (“SIFMA”); and (iii) served over 100 correspondents through our securities clearing services. Our operations are classified into three business segments:

Investor Communication Solutions

A large portion of our Investor Communication Solutions business involves the processing and distribution of proxy materials to investors in equity securities and mutual funds, as well as the facilitation of related vote processing. ProxyEdge ® , our innovative electronic proxy delivery and voting solution for institutional investors, helps ensure the participation of the largest stockholders of many companies. We also provide the distribution of regulatory reports and corporate action/reorganization event information, as well as tax reporting solutions that help our clients meet their regulatory compliance needs. In addition, we provide financial information distribution and transaction reporting services to both financial institutions and securities issuers. These services include the processing and distribution of account statements and trade confirmations, traditional and personalized document fulfillment and content management services, marketing communications, and imaging, archival and workflow solutions that enable and enhance our clients’ communications with investors. All of these communications are delivered in paper or electronic form.

Securities Processing Solutions

We offer a suite of advanced computerized real-time transaction processing services that automate the securities transaction lifecycle, from desktop productivity tools and portfolio management to order capture and execution, trade confirmation, settlement, and accounting. Our services help financial institutions efficiently and cost-effectively consolidate their books and records, focus on their core businesses, and manage risk. With multi-currency capabilities, our Global Processing Solution supports real-time global trading of equity, option, mutual fund, and fixed income securities in established and emerging markets.

Clearing and Outsourcing Solutions

We provide securities clearing and operations outsourcing services through our subsidiary Ridge Clearing & Outsourcing Solutions, Inc. (“Ridge Clearing”). Securities clearing and settlement is the process of matching, recording, and processing transaction instructions and then exchanging payment between counterparties. Ridge Clearing also provides financing for client inventory through margin lending. Our operations outsourcing solutions allow broker-dealers to outsource to Ridge Clearing certain administrative functions relating to clearing and settlement, from order entry to trade matching and settlement, while maintaining their ability to finance and capitalize their business.

Basis of Presentation

The Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. The Financial Statements present the consolidated position of the Company and include the entities in which the Company directly or indirectly has a controlling financial interest and various entities in which the Company has investments recorded under the cost and equity methods of accounting. Intercompany balances and transactions have been eliminated. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. The Financial Statements should be read in conjunction with the Company’s financial statements for the fiscal year ended June 30, 2008 in the Company’s 2008 Annual Report filed with the SEC on August 14, 2008.

Critical Accounting Policies

In presenting the Financial Statements, management makes estimates and assumptions that affect the amounts reported and related disclosures. Management continually evaluates the accounting policies and estimates used to prepare the Financial Statements. The estimates, by their nature, are based on judgment, available information, and historical experience and are believed to be reasonable. However, actual amounts and results could differ from these estimates made by management. In management’s opinion, the Financial Statements contain all normal recurring adjustments necessary for a fair presentation of results reported. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed in Item 7 of Part II of our 2008 Annual Report in the Critical Accounting Policies section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Results of Operations

The following discussions of Analysis of Condensed Consolidated Operations and Analysis of Reportable Segments refer to the three and six months ended December 31, 2008 compared to the three and six months ended December 31, 2007. The Analysis of Condensed Consolidated Operations should be read in conjunction with the Analysis of Reportable Segments, which provides more detailed discussions concerning certain components of the Condensed Consolidated Statements of Earnings.

CONF CALL

Marvin Sims

Good morning everyone and welcome to the Broadridge quarterly earnings call and web cast for the second quarter of the fiscal year 2009. I'm Marvin Sims, Vice President of Investor Relations. As usual this morning I am 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 slide presentation that accompanied today's earnings call and web cast can be found on the Investor Relations homepage of our website at www.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 risks. These risks are discussed here on Slide 1 and in our periodic filings with the SEC.

Now let's turn to the next slide and review today's agenda. Rich Daly will start today's call with his opening remarks and will provide you with a summary of the financial results for the quarter, followed by a discussion on some key topics. Dan Sheldon will then review the second quarter results in further detail including a review of the cash flows for the quarter end. Rich will then return and summarize the fiscal year 2009 guidance and provide his overall 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'll turn the call over to Rich Daly. Rich?

Rich Daly

Thanks Marvin. Good morning everyone. I am now on slide number three. This morning I will talk about the following topics: A summary of our second quarter financial results and the reaffirmation of our 2009 fiscal year EPS guidance, a review of our sales performance, an update on the current market dynamics including industry consolidation and how to put these dynamics into context for Broadridge. Finally, after Dan’s financial update I will provide some concluding thoughts before Q&A.

So, let’s go to slide number four and start. Given the current market environment I am satisfied overall with our second quarter results. I am also pleased with our sales results, increased market share, liquidity and forecasted free cash flows. I will talk more about these points a little later.

Our Q2 performance was better than our expectations as we continued to experience strong trade volumes in our securities processing segment. Our revenues for the quarter were down 1%. However, operating revenue growth for the business segments excluding foreign exchange and other was up 2% and recurring fee revenues were up 7%. Event driven mutual fund proxies were down year-over-year as well as distribution revenues related to the increased adoption rate of notice and access. The increase in notice and access adoption rate lowers overall revenues but creates a positive offset in fee revenues at higher margins.

Reductions in distribution revenues replaced by recurring fee revenues at higher margins is the only time I am not upset with declining revenues.

Net earnings for the quarter are up 3% and were better than expected. Despite the anticipated expense rollovers we previously disclosed our earnings growth was primarily due to our trade revenue over performance and lower interest expense related to our lower debt level. Despite the challenging market conditions the business fundamentals continue to demonstrate resiliency as the core investor communications key recurring revenue drivers remain essentially unaffected by volatile market activity.

Mutual fund interim positions continue to grow and stock record growth for equities is better today than it was last year at this time. Given this, we continue to anticipate volume growth for the year in equity proxy’s. These factors are helping to offset much lower event driven mutual fund proxy activity.

As we look forward to the remainder of the fiscal year we are once again reaffirming our full year guidance for non-GAAP EPS to be in the range of $1.45 to $1.55 which excludes the benefit of $0.04 for the one-time gain on the purchase of our senior notes from our first quarter.

Therefore, we are also reaffirming our GAAP EPS of $1.49 to $1.59 which does include the $0.04. We are anticipating a revenue decline of minus 3% to flat which is down from our previous growth guidance of flat to 3% growth. The 3 point drop in both the low and high end of the guidance is primarily due to the FX in the second half, lower mutual fund proxy event driven activities and reduced distribution revenues resulting from higher notice and access adoption rates.

We are still expecting recurring revenue to grow in the second half of the fiscal year and on a full year basis a contribution of 3-4% towards overall revenue growth. Irrespective of the unfavorable impact from foreign exchange rates and product exchanges driving our lower revenue growth guidance for the year we still expect to generate free cash flows in the range of $210-250 million, where we have increased the lower end from our November guidance.

Keep in mind that over 50% of our free cash is generated in our fiscal fourth quarter. Dan will talk more on cash flow in his section.

This quarter we purchased one million Broadridge shares at an average price of approximately $11 per share and have authorization to buy back another million shares. In the short-term given the banking and credit market environment we remain focused on our liquidity options to ensure we have the ability to run, invest in and grow our business. We believe our liquidity for the current needs of the business are strong given our impressive free cash flow, balance sheet and financial flexibility from our $500 million committed revolver and other bank lines.

We are also confident that our balance sheet is strong and given our debt level at a 1:1 debt to EBITDA ratio we are pleased that the liquidity crisis is not a direct threat to Broadridge or our ability to execute on strategy.

Now let’s move on to sales on slide number five. As I mentioned earlier I am pleased with our sales performance. As a matter of fact, if you promise to keep it a secret from our sales management I am actually very pleased with our sales performance. Our closed sales of $47 million for the quarter are up 36% for the quarter and year-to-date closed sales of $80 million are up 26% over the prior year.

Recurring sales year-to-date represent almost 80% of total closed sales and are up 100% over the prior year. Recurring closed sales being this high over the prior year is very good news for the long-term given our successful history of client retention? This quarter we closed a $5 million statement deal. We signed an international deal with Instinet, a subsidiary of Nomura Bank. We also signed a new contract with JP Morgan for fixed income processing which now includes the old Bear Stearns fixed income business.

We signed a new contract with Barclays for both equity and fixed income processing services including all of the Lehman business they acquired. In addition, 67% of our closed sales were made to 15 different entities each purchasing greater than $1 million in new services.

Our sales pipeline remains strong and is still building momentum. Our only disappointment is that the level and length of our outsourcing sales cycle for mid-sized prospects has increased, in some cases influenced by the liquidity crisis but we also have a stronger pipeline of promising larger deals that we are moving along in the sales cycle. Although talking about promising larger deals lets never forget that it ain’t over till it is over.

Even though we arguably have the most efficient processing platform in the industry, the complexity of conversion remains the biggest hurdle to overcome in closing larger deals. Outsourcing the people function to Broadridge along with the system should ultimately reduce this hurdle. Our comfort level about achieving our full year sales forecast of $160-180 million is even higher than it was one quarter ago.

Our market’s current challenges ironically add to our optimism for Broadridge’s future, given the financial industry’s focus on cost reductions and more than likely future greater regulatory requirements. Our industry’s recent challenges means that every firm needs to look at cost, look at efficiency and look at functionality as they recognize that regulatory requirements are expected by virtually everyone to increase.

Broadridge, as the number one player in our space as substantiated by Brown and Wilson’s Black Book of Outsourcing is best positioned not only to be able to reduce costs but simultaneously improve accuracy, meet any new regulatory requirements and ultimately provide our clients a platform with scalability, flexibility and the industry’s best reliability and functionality.

Now on slide number six let’s talk about the current headwinds in the financial services industry and how we are managing through them. We believe these headwinds are creating short-term revenue slow down or shrinkage for us. However, as I just mentioned they are also providing long-term opportunities.

In the short-term as we move into the second half of our fiscal year we are expecting to see less trade volumes and increased concessions in our securities processing business and continued shrinkage in mutual fund proxy activity in our core investor communications business. With regard to seeing lower trading volumes we normally see trades per day decline shortly after they spike especially in markets like we are in now.

With respect to pricing pressures, we are resigning and extending contracts for existing clients earlier than normal. This has created greater concessions than we had originally anticipated for fiscal 2009 and will impact the second half of our fiscal year as well as carry over into the future. The offsetting point is that we have been able to retain clients and market share with longer contract terms and we believe this better positions Broadridge to benefit for the longer term when the markets return to normal.

Last quarter I provided you with a summary of the impact to Broadridge from consolidation in the financial services industry. So let me recap that summary. I stated that we were winning about as much as we were losing and that in the long-term it appeared the consolidation would create new opportunities for us to demonstrate our strong value proposition.

The consolidation of Lehman and Bear Stearns into Barclays and JP Morgan respectively will negatively impact revenues in our securities processing segment given volume discounts. However, with Neuberger going to our clearing segment and new sales to JP Morgan and Barclays of fixed income products which I mentioned in my sales update we are still in a net positive position on a consolidated Broadridge basis.

With respect to Bank of America and Merrill Lynch, the transaction just closed and their processing platform strategy has not yet been settled. We are still involved in discussions around their immediate decisions and their longer term platform strategy.

There are two new items related to industry consolidation that I want to address now. The first is the combination of Morgan Stanley’s wealth management business with Smith Barney. Virtually the only impact we can see from this if any would be upside benefit. This is because neither firm makes any material use of Broadridge products other than our core proxy offering. Of course we expect them to continue using our proxy offering and we will look at this new opportunity as aggressively as we can to induce them to use other Broadridge communications and securities processing offerings.

The next item is related to the future potential consolidations driven by the TARP good bank/bad bank activities. It is too soon to have any clear view regarding any positive or negative impact on Broadridge if any at all. In our favor we believe the controlled environment of our processing applications should be very attractive to any bank in this position. On the other hand it seems unlikely that if a bank in this position was performing any proprietary trading activities they would continue these activities at the same level going forward.

Both of these new items are still unclear at this point.

Overall, in the securities processing and outsourcing businesses there are many reasons to be pleased. Our strategy is sound. We have a strong sales pipeline and have active dialogues taking place. But in order for me to be completely pleased with the performance of the securities processing business I have to be convinced that we are near the end of the market correction and we were winning new business by adding outsourcing clients and adding new applications to all clients at a rate that creates market share and revenue gains well beyond being just net positive.

As for our investor communications business I am pleased with our financial results and how we are faring in these markets. This is not surprising given the high quality of the investor communications recurring revenue base. The investor communications core proxy recurring revenue which is more than 50% of Broadridge’s overall revenues is maintaining its unique historical resiliency to negative markets. Recurring fee revenue is expected to do well in the second half of our fiscal year.

We have also had increases in notice and access adoption rates as well as increased market share in registered equity proxy. As for the strategy and long-term, we expect we will exit this down market with additional market share and increased compliance opportunities as the new administration in Washington is expected to champion increased transparency for investors and regulatory oversight of industry participants which would most likely increase compliance requirements.

When you take all of the factors that I have just discussed for all of the businesses into consideration, we anticipate leaving these challenging times with more market share than we entered them with and we will be better positioned when the markets return. We continue to make strategic investments in the business at a slightly higher run rate than last year as we believe the financial services crisis will create significant long-term opportunity to serve our markets.

This is an opportune time for a trusted and proven partner like Broadridge.

I will now turn the call over to Dan who will go into more detail about the quarter, year-to-date and full year with respect to each of the segments.

Dan Sheldon

Thanks Rich. I am now on slide seven. As Rich mentioned our revenues are down slightly for the quarter and up slightly year-to-date. Looking at the specific revenue drivers you can see that sales and losses are running at our Q2 forecasted contribution to revenue rate and we expect the year-to-date contribution rates to continue into the second half.

Once you are half way into a year you pretty much know your contributions for revenue for sales and losses given the conversion and de-conversion timeframes. Also we have included in the appendix a general guideline for conversion timeframes between closed sales and revenue recognition.

Looking down at internal growth it continues to be up and slightly over our forecast given the strong trade volumes and time and material activity in the quarter. For the second half we are expecting additional contributions to internal growth as Rich mentioned from our investor communications business and less from the other two segments given lower trade per day growth, lower time on material jobs and less interest revenue which I will go into more detail on when I review the segments.

Both our event driven mutual fund proxy and foreign exchange revenues continued to strengthen in the quarter and were slightly below our Q2 forecast and we are also forecasting the shrinkage to continue into the second half. Our year-to-date pre-tax margins are slightly down and diluted EPS is flat to last year but above our forecast given the revenue mix and the net FX transaction gains.

Let’s move to the next slide where I will go into more detail on the quarter, year-to-date and full year view of our segments, other and wrap up with cash flows.

I am now on slide eight, investor communications solutions. For the quarter our revenues were down 3%. Recurring revenues up and event driven and distribution fees down. The good news is that recurring revenues driven by net new business and internal growth from equity and mutual fund stock record positions as well as transaction and fulfillment activity continued to show growth this quarter and are slightly better than our expectations. You see the growth in recurring revenues continue into the second half where we are anticipating increased notice and access adoption rates as well as increased market share gains with respect to registered equity U.S. and global product fees.

However, we are lowering our full year forecast with respect to event driven and distribution revenues. Let me go into that a bit. Our event revenues are down entirely due to mutual fund proxies. Given where we are year-to-date in our sales pipeline we are now forecasting the mutual fund proxy to be down this year by 50% to 60%. As we said before, mutual fund proxies don’t repeat each year and it takes a triggering effect like a change in directors, a change in pricing or fund mergers to cause a proxy.

Although we are forecasting this year to be down, I really suspect given all the activity in mutual funds that in FY10 and into FY11 we will see the resurgence as we have seen before given that at some point there will be a triggering event. The good news on our other event driven revenues for equity proxy content, mutual fund supplemental mailings and pre-sale fulfillment have been up slightly year-over-year and we see this continuing into the second half.

With respect to distribution fees they are down for the quarter and expected to be down for the year due to both increased notice and access adoption and revenue mix. With respect to notice and access as Rich mentioned overall lower revenues but overall higher margin dollars is a good thing. With respect to our margins they are down for the quarter and year-to-date but it is entirely due to the revenue mix of less event driven.

For the full year we are still expecting margin expansion given strong fourth quarter growth which is heavily weighted towards recurring revenues primarily driven from the equity proxy products.

I will now move to slide nine, securities products. This segment had revenue growth of 9% for the quarter and year-to-date 8%. Net new business for the quarter and year-to-date contributed 2% to revenue growth and we expect sales to continue to contribute 5-6% to overall revenue and losses to continue at about a 4% rate for the year.

Our internal growth this quarter was very positively impacted and above our forecast due to increased trading volumes as well as higher than expected time and material revenues and delayed price concessions. We saw the increased trade volumes toward the end of Q1 and they continued for the most part into Q2. However, we have seen both retail and institutional volumes drop since December and are forecasting trades per day growth to be less in the second half but still forecasting growth in both the low and high end between 3-8%.

We are also forecasting less E&M in the second half given the tightening of R&D spend by our clients. I mentioned a delay in price concessions had a positive impact to our forecast in Q2. We have historically averaged an annualized negative 2-3% impact to revenue from concessions each year in this segment due to contract re-signs. In some fiscal years we have had as low as 1% negative impact to revenues from price concessions and some years plus 4%.

It is all dependent upon when the contracts are re-signed. As Rich mentioned this year we have some very large clients up for renewal and finalization of pricing terms will take place in the second half. So where we experienced some negative impact to revenue from price concessions in the first half we will have at least 4% negative impact to revenue in the second half. Overall for the year it averages out about the same 3% that we have talked about.

Our margins for the quarter were positively impacted by the internal growth contribution. Full year forecasted margins are down year-over-year due to the planned investment and less deferred conversion expenses this year as well as the higher concessions I just walked through on the second half.

Let’s turn to slide ten. This is our clearing and outsourcing segment. Our revenue growth for the quarter and year-to-date is primarily driven by the addition of the Neuberger sale which impacted September and all of Q2. Offsetting the growth is the continued drop in interest revenue due both to reduced Fed fund rates and approximately a 25% decrease in margin balances. Besides the Neuberger sale we also added net two clearing clients over the last six months and sold one new outsourcing deal in Q2 and converted two clients from our securities processing segment onto outsourcing.

For a full year perspective the contribution to revenue from net new business is primarily from the Neuberger deal as outsourcing deals are slower in closing than we had planned. However, as Rich mentioned we do have some larger outsourcing deals we are working on. If closed they would not benefit FY09 and likely not be a contribution until late FY10 or into FY11 given the long implementation times for large accounts.

Our internal growth from interest revenues continues to be a drag to both year-to-date and for the full year. The combination of lower Fed fund and lower margin balances negatively impacts the first half by $6 million and on a full year basis by $11 million. I guess the good news with respect to interest revenues is that Fed fund rates really can’t go much lower and margin balances are forecasted to remain at the $700 million level of which were experienced in Q2.

I look forward to providing an upside in the future.

With respect to pre-tax operating losses, the loss of interest revenues more than offset the positive contribution from net sales in that interest all falls to the bottom line.

Moving on to slide 11, other and FX, we are giving you all the data points you asked for. The only area I am going to cover in detail is with respect to FX because that is what has changed most since the last time we gave guidance. With a [penal] impact perspective both revenues and margins are negatively impacted primarily by the strengthening of the U.S. dollar against the Canadian dollar in the latter part of Q2.

Our full year forecast uses the forward rates which negatively impacted the second half revenues and margins. By the way, the line called FX transaction activity which is the last line under other is all related to cash and billing we have in U.S. dollars in foreign locations. Given the forward rates are about the same for the second half as they were at the end of December we are not forecasting additional gains or losses for the remainder of the year.

Finally, interest is in line with our previous guidance and corporate expenses are down at the high end due to discretionary spend hold back and less stock compensation expense given where our stock price is at.

Moving to slide 12, we shared this slide with you before to help in understanding the grow over challenges we were faced with which primarily impacted us in the first half and really nothing has changed on this page.

Let’s move to my last slide which is cash flow, and by the way this is my favorite slide. The greatest benefit of an 80% recurring revenue model and a low capital intensive business is that free cash flows are mostly predictable and always positive. In our business model I pay very close attention to client retention as this is the foundation of our recurring revenues.

As we have discussed before, internal growth from market transaction activity including event driven will be up in good markets and down in bad markets but in any given 5-year period has been up on a compounded annual basis. The really good news is that our client revenue retention rates are forecasted to be over 98% this year.

With that said let’s focus on the first slide of earnings and go to the far right to the FY09 low and high range guidance. Even though we have lowered our revenue growth ranges from flat to a positive 3% to a negative 3% to flat, we have maintained our $207-222 million earnings range. As Rich mentioned, we did not reduce our investment spend but addressed discretionary spend as appropriate. We are a highly fixed base cost company but we do have areas of discretionary spend including variable compensation and temporary employment that help us manage our expense levels to some degree.

As far as free cash flows we have tightened the ranges and are up on the low end. Our range is now, as Rich mentioned, $210-250 million. With respect to cash flows from other investing and financing activities we really haven’t changed much here. We do expect to continue to pay a dividend and with respect to additional acquisitions, additional pay down or additional buy backs as we move into the second half will determine how to use cash based upon the returns of the opportunities and how we are tracking against the high and low end of our free cash flows.

As Rich mentioned, we earn and collect the majority of our cash in Q4. I do want to shift attention back to the left side of the page which addresses our rich clearing and financing activities. First, let me say that our Broadridge business has had no write offs since we acquired the business and that is due to the tight credit and margin policies we have as well as the quality of our clients and how they operate their businesses.

Remember, we are strictly a clearing firm and don’t have any investment positions or inventory ourselves. Second, we are in a net positive cash position with short-term cash at the end of Q2 just as we were at the end of the last fiscal year. Just like in our Q1 of this year and last year’s Q3 we could be in a short-term debt position as it is all due to timing of activity. However, given our margin credit policy and highly liquid collateral I don’t lose sleep over this swing and we purposely paid down our long-term debt to ensure we average over any period of time a 1:1 debt to EBITDA ratio including both long and short-term debt.

I am also, by the way, happy to report that S&P upgraded us in November to DD+ with a stable outlook from DD flat with a negative outlook. Our other two agencies, Moody’s and Fitch have maintained their investment grade ratings.

With that said, Rich I will turn it back over to you.

Rich Daly

Thanks Dan. Let me summarize our fiscal year 2009 guidance on slide 14 as Dan and I have already touched on most of these points. Our revenue for the year will be in the range of own 3% to flat. This is down from our previous guidance of flat to up 3% as a result of the continuation of unfavorable foreign exchange rates, lower event driven mutual fund proxy revenues and lower distribution fees related to higher notice and access adoption rates.

As I have already mentioned, we are very pleased with the growth in our recurring revenue this year and we expect the operating segments to generate revenue growth in the range of flat to 2%. We still expect our sales plan to be in the range of $160-180 million. We expect EBIT margin of 16.2% to 17.1%. GAAP EPS of $1.49 to $1.59. Non-GAAP EPS of $1.45 to $1.55 and a tax rate of 39%.

Finally, we expect to generate free cash flows in a range of $210-250 million.

So, on slide 15 before we go into the Q&A part of the call let me leave you with a few thoughts on how I feel about the business as we continue to navigate through these unprecedented times.

As you know, the financial services industry is in a crisis. However, Broadridge is weathering the storm well. The majority of the Broadridge business model continues to be resilient as key recurring revenue metrics remain stable. Our recurring fee revenue base contributed 2% to overall revenue growth in the first half of our fiscal year and is projected to do better in the second half. Our investor communications business had recurring revenue fee growth of 8% in the first half and is expected to grow 7-11% for the year.

We believe Broadridge has navigated the recent financial services industry consolidations well, to date providing slightly more upside than downside risk. Our unique three tiered securities processing model turned the Lehman loss into a Neuberger Barclays win. We still have Bank of America/Merrill opportunities and/or risk on the table which we will understand better over the next few months. New consolidations will always create opportunities for us.

[inaudible] remain and are impacting our near to mid-term results as mutual fund proxy event driven activities have slowed and early contract renewals with term extensions are creating greater than planned pricing concessions. These headwinds combined are turning good execution into flat to slightly negative revenue growth.

We remain disciplined and focused on our long-term strategy as we continue to invest in the business with improving our long-term prospects to create greater long-term shareholder value. We will always continue our focused cause management practices that will help drive sustainable margin improvement.

In terms of our acquisition, we will pursue tuck in acquisitions that are strategic investments as opposed to acquiring revenue for the sake of acquiring revenue. However, the new liquidity filters and unsettled valuations have temporarily delayed acquisitions. The financial services crisis really should create significant long-term opportunities for Broadridge to serve our industry.

Our sales pipeline has good momentum with some exciting opportunities and we are closing meaningful business in this pipeline. We are continuing to expand our market share as we have signed contracts for new business with some of the larger players in our space and positioned ourselves for when the up markets turn.

The new administration in Washington we expect will be championing increased transparency for investors and the regulatory oversight of industry participants should increase or should translate into more requirements that Broadridge is best suited to fulfill and the industry cost savings mandates that are being made across the board should bode well for our high functionality, low cost, securities processing solutions which uniquely includes outsourcing.

When the storm subsides and capital returns to the equity markets, Broadridge will be well positioned to be on the high ground. I continue to believe Broadridge is well positioned for the future. We have a strong recurring revenue base consisting of more than 50% of all of Broadridge’s revenue that historically always grows irrespective of market conditions.

In our great communications business this is particularly true. Our customer satisfaction levels are the highest in our market as noted by the Black book of Outsourcing. Our value propositions are the strongest in our market and we continue to generate new initiatives. Our cash flow always remains strong and our balance sheet is solid and we have the liquidity we need to execute our strategy.

All of this could not be possible without our dedicated and engaged associates. I want to take this time to personally thank them again. As I said earlier, this is a good time for a trusted and proven partner like Broadridge.

I will now turn the call over for the Q&A part. Dan, Marvin and I welcome your questions.






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