Welcome to the CBIZ Fourth Quarter 2012 Full Year Results Call. The conference has now begun. The host for today’s call will be Steven Gerard, Chairman and CEO of CBIZ. All participants are muted and there will be a question-and-answer session at the end of the call. At this time, I would like to turn the call over to Steven Gerard.

Thank you, Joanne, and good morning everyone and thank you for calling into CBIZ’s Fourth Quarter and Full Year 2012 Results Conference Call. Before I begin my comments, I’d like to remind you of a few things. As with all our conference calls, this call is intended to answer the questions of our shareholders and analysts. If there are media representatives on the call, you’re welcome to listen in; however, I ask that if you have questions, you hold them until after the call and we’ll be happy to address them at that time. This call is also being webcast and you can access it over our website. You should have all received a copy of the release which we issued this morning. If you did not, you can access it on our website or call our corporate office. Finally remember, that during the course of the call, we may make forward-looking statements. These statements represent management’s intentions, hopes, beliefs, expectations and predictions of the future. Actual results can and sometimes do differ materially from those projected in forward-looking statements. Additional information concerning the factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our SEC filings, Form 10-K and press releases. Joining me on the call this morning are Jerry Grisko, our President and Chief Operating Officer and Ware Grove, our Chief Financial Officer. Prior to the opening this morning, we were very pleased to release our fourth quarter and full year results. As you’ve noted from the release, we’re reporting for the full year 2012 revenue growth in excess of 4% and same unit growth for the first time since 2008. What is particularly encouraging as we look at the numbers in the third and the fourth quarter is the continuation of the positive trends we’ve seen in our core businesses. I would point out to you that our same unit growth for 2012 includes the absorption of the previously expected and announced reduction in the MMP revenue. So on a combined basis we have positive organic growth and it’s led by our core businesses. The trend that we were seeing in the third and the fourth quarter appears to continue into 2013, so we are guardedly optimistic of that 2013 will continue to see the continuation of the trends we’ve seen before. With that I’d liked to turn it over to Ware to give you the details of 2012.

Thank you, Steve, and good morning, everyone. I want to take a few minutes to run through the fourth quarter and full year numbers we released earlier this morning, for the year ended December 31, 2012. Now as Steve commented, we continue to see improvements in the economic environment throughout 2012, and we are very pleased to report organic same unit revenue growth for CBIZ of 2.5% in the fourth quarter with each of our business segments, including medical management professionals, achieving organic revenue growth in the fourth quarter. For the full year of 2012, same unit organic revenue growth was 0.8%. Led by our financial services group, this marks the fourth consecutive quarter of same unit organic revenue growth for our core financial and employee services business segments on a combined basis. And that represents about 77% of our total revenue. In the fourth quarter, these segments combined, grew by 2.6%. And for the full year, these 2 core business segments grew by 1.8% on a combined basis. Now in addition to improving organic revenue growth throughout the year, we were very active with acquisitions, having closed 5 transactions in the fourth quarter and 10 transactions for the full year of 2012. We closed 8 transactions for employee services and 1 each for medical management professionals and for financial services. The largest transaction closed December 31, with the acquisition of PHBV Partners, which is a $30 million consulting and accounting business that specializes in healthcare compliance for federal and state agencies. This new business will integrate very nicely with our existing business. The focus is on the same consulting and accounting services within this healthcare compliance area. Now thanks to the many CBIZ associates who are working hard to provide great service to our clients, we were able to…

Thank you, Ware. Let me comment on a few other items. Our acquisition pipeline remains strong. It’s unlikely that we will report any significant acquisition in the first quarter as we continue to focus our efforts on the appropriate integration of the companies that we acquired in the fourth quarter of 2012, but I am expecting, as Ware points out, for us to conclude at least the 3 to 5 transactions we have historically done and possibly closer to the 10 that we did in 2012. We also intend to continue our investment in our associates and our investment in technology and our investment in the other necessary parts of our business to take advantage of and help us grow. Ware commented that we are seeing a stable economic environment with positive indications on the horizon and we wish to be well-positioned to take advantage of that, specifically anything that may come out of the Affordable Care Act, the Tax Relief Act of 2012, as well as a general sentiment among our clients that with the certainty that came from the congressional actions at the end of the year, they are feeling a little bit better about their business prospects. With that, I would like to stop and take questions from our analysts and shareholders.

[Operator Instructions] Our first question is from Josh Vogel with Sidoti.

Steve and Ware, if I take all the acquisitions you made last year and the revenue contributions and basically put into my model, am I right to assume that your guidance implies about 2% same unit growth for the year.

Yes, I think, Josh, we are somewhere in the 2% to 4%. We are not quite sure, but at the lower end, that’s what our numbers would say.

Okay, great. And with regard to...

Josh, let me also, you know, we are comparing that to 2012, which was less than 1% in aggregate for the company, and we are expecting, quite frankly, the continuation of a decline in MMP. So we are looking for our core businesses to actually be higher than that.

Okay, that’s helpful. Thank you. And PHBV, are you going to run that through the employee services or financial services segment or both?

No. PHBV is in financial services and particularly with our Myers & Stauffer affiliated company. So it’s in financial services.

Okay, with the government budget cuts, does that hurt the government healthcare consulting market?

Our belief is that it’s actually going to help. If you look at the Affordable Care Act and if you look at the requirements for the states to have exchanges and to have their own Medicaid plans, state-by-state, our PHBV and our Myers & Stauffer business focuses primarily on the creation adjustment audit of and consulting for states on Medicaid. So overtime, we believe that as the federal government shifts the burden to the states, this is actually a very good place for us to be now.

Okay, great. And shifting to employee services, what percent of the business is group health and what percent is payroll?

Josh, about 40% to 45% is group health and slightly more than 10% is our payroll service.

Okay. And with regard to group health, can you talk about the trends here and the dialog you are having with clients about healthcare reform? And it seems like this could benefit the vision, are you seeing more opportunities arise here with potential clients?

I think we are seeing more opportunity to have a dialog with existing and potential clients because there is still great uncertainty as to what will happen and when it will happen. We don’t, on a today’s basis, expect -- if the Affordable Care Act is in fact implemented in 2014 and there is some question about that, we don’t see the movement of most of our clients to exchanges as being likely. So we think this is an opportunity for more consulting work and more creative structuring of plans, but the bulk of our business in the benefits area in terms of dollars are in larger clients anyway, which are not going to be affected by it. So we view this net-net as an opportunity, although I think there is still great confusion in the market today as to what might happen.

At this time, there are no further questions. My apologies, we have just received a question from Jim Macdonald with First Analysis.

Could you talk a little bit about the payroll acquisition you just did? And I guess you said that, that was completed in the end-of-the-year debt numbers, I guess, but how that’s going to fit into your core payroll business?

Sure. It’s a Minneapolis-based payroll company with a very strong footprint in the mid-west. The operating system is exactly the same as we have in our primary business. We made the acquisition and folded it into the existing CBIZ payroll, which is operated out of Roanoke. Overtime, we will look to find the efficiencies that come out of that kind of combination. Our expectation is to continue the sales activity and, certainly, the client-related activity there, and this is just the natural tuck-in of a payroll business into our existing one. There is nothing particularly special about it except that it’s got a good longstanding client base on an operating system that’s the same one we used.

And typically, payroll companies could be pretty expensive. Was this more expensive than your normal multiple?

No, it was not. Certainly, larger payroll companies go for higher multiples; this one doesn’t fall in that category.

Okay. And shifting to the legal area and legal settlements, you had a lot of cost throughout the year, are those all gone now or are there still outstanding actions? What are your expectations for legal costs in 2013?

I think that legal costs in 2013 will continue to be significant. As we reported in our 10-K, there is at least 1 large or 2 large cases, which will now start to come closer to trial. As you come closer to trial, you ramp up in -- with depositions and pre-trial activity. So I don’t see in the short run, certainly I don’t see in 2013, unless we are successful with various motions to dismiss, I don’t see it, the legal expense coming down dramatically, if anything it could tick up a little bit in 2013. As I think, you know, these are cases that go to the heart of how the alternative practice structure is run. They deal with allegations that CBIZ does audits, and we don’t do audits. So this is key to the business, and we are going to continue to defend it as aggressively as we can. I think at the end of the day, we will be hugely successful as we normally are, but there will be an expense.

Okay. And on MMP, you mentioned you expect another decline. Can you talk about that a little bit?

Yes. I think MMP had a good fourth quarter, and I congratulate them on an excellent quarter and a great year in terms of reducing expenses. I think as a practical matter, reimbursement rates will continue to give them a softer revenue line. So I expect them to be down a bit. I am hopeful we can again make it up or make up most of it on the bottom line, but I didn’t want anybody to extrapolate the fourth quarter year-over-year growth and think we are out of the woods. We are not quite there yet, although we may be getting close.

And is there another tick down of January 1st as usual?

Yes.

Okay. Can you quantify that at all?

I believe it’s in the 1% to 2% range or 2% to 2.5%, I think that’s where it is, in terms of their radiology business. But of course, you know, the acquisition we made the fourth quarter of last year was not in radiology, so that the mix of business is a little bit different. They also have a backlog of prospective clients that is as strong, if not stronger than we have seen for a long time. So there is an opportunity there to pick up some new business in 2013, which would make this revenue line a little bit better even though on a same-store basis for 2013, we might not see that improvement.

And switching to a technical question, can you talk about your current interest rate and whether you have that hedged at all and what your expected availability is towards the end of April or middle April when you kind of use cash in the first quarter usually?

Yes. The interest rates, Jim, are, as you know, really low. We're paying a spread on a variable basis of LIBOR plus about 250 basis points, which gives us roughly a 300 basis point effective incremental borrowing cost. We are keeping things relatively short. At this point in time, we are hedged a bit. Unfortunately, we are hedged at slightly higher cost because we and many people have thought for a long time that a rate increase might be imminent. Of course, we have a $130 million piece that’s due 2015 that’s fixed. So we got a good blend of fixed and variable rates. We got good availability on the unsecured credit facility with $275 million. We have got that fully available to us. While the balance is, I will say, $210 million, the acquisition activity, we have got another $50 plus million dollars available at the end of the year, and we don’t expect to be constrained in any way through the first quarter and through the balance of the year.

So you have enough EBITDA to be able to address that whole $275 million line at this point?

We do, because as we bring on newly acquired businesses, from a bank perspective, we include the pro forma EBITDA that’s acquired for leverage in covenant testing purposes.

And guess one more technical question, and I will circle back. The tax rate in the quarter, I guess net-net was kind of -- it seems like it was a true-up or something; any comments on that?

It is, Jim. With the acquisitions in the fourth quarter being fairly significant and the way we structure the business from a tax perspective, we now can take advantage of some net operating loss carry-forwards that are now, we relieve some allowances which reduced the effective tax rate in the fourth quarter as a result of that activity. So the 38.3% you see is as a result of some of the adjustments we made in the fourth quarter.

And our next question is from Robert Kirkpatrick with Cardinal Capital.

Steve, could you talk a little bit about your comment about doing 3 to 5 or maybe even as many as 10 acquisitions in the coming year? Is that supply-driven, meaning there are more acquisitions available for you to choose from, is that size-driven, there are a lot more smaller acquisitions, or is it demand-driven, CBIZ has a greater appetite?

Rob, what I wanted to highlight was that we historically do 3 to 5. Last year, we did 10, which was the highest since 1999 or 1998. That, my gut tells me that we will be somewhere in the middle of that. I just didn’t want us to be -- I didn’t want the investors to be surprised if we did a little more than the 3 to 5. We are seeing a continually good flow of acquisitions, both opportunities on financial services and employee services. I wouldn’t say that there are any more available. I just think we are refining our process better, we are able to make decisions faster and redeploy the resources and I just think the opportunity, if you look at the pipeline, is slightly better than we have done before. As you know we’ve always been opportunistic. We would have dumped more than 3 to 5 in the past if we could have found the right ones without changing our standards which we continue to maintain and are very high. There just seems to be more in the pipeline, and that is all I was trying to signal. I wouldn’t suggest in any way that there's been a dramatic shift in either of the market of available or our appetite. We continue to have an appetite for the employee benefits, the property and casualty and the various businesses within financial services.

Okay. And then secondly, you made reference during your remarks to your clients seeming more optimistic about their businesses due to -- let's just put it, getting past the end of the year. Could you provide a couple of generic examples as to what that has permitted clients to decide to do as they go forward that they were holding off on doing before?

No. Everything that I see tends to be very anecdotal. My sense of talking to our top accountants and our top producers on the employee side is that our clients are more engaged in discussions about expansion and investment. It isn’t specific to an industry. It isn’t specific to a geography. It’s much more a gut feel after going through the last 4 years, as to what the clients are thinking about. With projected GDP at not much more than 2% across the U.S, I’m not in any way suggesting we’re looking at a boom economy. But my gut feel, again, and its nothing more than that, is that there is far more discussion with us and far more discussion by our clients as to seeking where the opportunities are and beginning to think about investing. And as you know, with a very high client retention rate and with a good part of our business being reoccurring, the real advantage -- or the real opportunity for us, if you will, is when they begin to expand. And I’m just getting the feeling that we’re starting to see that in a more tangible way across the board than we’ve seen before.

At this time, there are no further questions in the queue.

Okay, I would like to again thank our shareholders for their continued support, but I would really particularly like to thank our associates. We’ve come through 2009 through 2011 in a very difficult environment and everyone hung in there and did the job as best they can. 2012 began to see a change and a turnaround in the external markets and we’re now well positioned to take advantage of it. But I never forget and the company never forgets that the revenues all generated by those of you in the field who are actually dealing with our clients. So I thank you for a good year in 2012 and I look forward to being able to report even a better year in 2013 due to your results. And I thank you with and look forward to talking to everyone after the first quarter.

Ladies and gentlemen, this call has concluded. We thank you for your participation.