Operator: Welcome and thank you for standing by. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. (Operator instructions). Today's conference is being recorded. If you have any objections, you may disconnect at this time.
Now I'll turn over the meeting to Mr. John Morphy, Senior Vice President and Chief Financial Officer of Paychex. Sir, you may begin.
John M. Morphy - SVP, CFO and Secretary: Thank you for joining us today for our Fiscal 2010 Year-End Earnings Release. We'll begin today with a view of fiscal 2010 financial results, including guidance for fiscal 2011; then Jon Judge, our President and CEO, will provide you an overview and we will end with a Q&A session.
Yesterday afternoon, after the market closed, we released our financial results for the fiscal year-ended May 31, 2010 and filed our Form 8-K, which provides additional discussion and analysis of the results for the year. These are available by accessing our Investor Relations page at www.paychex.com, and we expect to file our Form 10-K by the end of July. In addition, this teleconference is being broadcast over the Internet and will be archived and available on our website for approximately one month.
Early in fiscal 2010, we slightly decreased our service revenue guidance while maintaining our operating income and net income guidance. Our actual fiscal 2010 results were very consistent with that guidance as the year for the most part played out as we foresaw in late last summer.
Our operating income, net of certain items as a percent of service revenue, was 35.4% for fiscal 2010. The poor economic conditions of 2009 and 2010 impeded our revenue growth as they have contributed to declines in new client sales, client retention and checks per client. Despite this, we ended the year encouraged by the modest improvement in some of our key indicators, and most importantly, checks per client. We will talk more about that later.
Our served payroll client base declined 3.2% to approximately 536,000 clients. Our client retention was 77% of our beginning of the year client base, slightly better than the prior year. We have begun to see signs of improvement as lost clients decreased 6%, compared to fiscal 2009, when lost clients increased 18% over the prior year. Our range of client retention over the past 10 years has been 76% to 81% of our beginning of the year client base.
The equity markets had a low in March 2009, with interest rates remaining low since then. The Federal fund's rate has been at the range of zero to 25 basis points since December 2008. Our combined portfolios have earned an average rate of return of 1.5% for fiscal 2010, compared to 2.1% for fiscal 2009, and 3.7% in fiscal 2008.
We'll now share our latest results on some of key indicators. Our most positive trend relates to checks per client. Our checks per client have shown modest improvement in each sequential quarter of fiscal 2010. Checks per client declined 2.6% for the year, where the quality breakout is follows.