FinanceLooker

Excrept from filing document 2024-06-30

Portions of the registrant s definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the fiscal year end of June 30 2024 are incorporated by reference into Part III
This Annual Report on Form 10 K of Broadridge Financial Solutions Inc Broadridge or the Company may contain 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 such as expects assumes projects anticipates estimates we believe could be on track and other words of similar meaning are forward looking statements In particular information appearing under Business Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations includes 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 Factors that could cause actual results to differ materially from those contemplated by the forward looking statements include
Broadridge s reliance on a relatively small number of clients the continued financial health of those clients and the continued use by such clients of Broadridge s services with favorable pricing terms
There may be other factors that may cause our actual results to differ materially from the forward looking statements Our actual results performance or achievements could differ materially from those expressed in or implied by the forward looking statements We can give no assurances that any of the events anticipated by the forward looking statements will occur or if any of them do what impact they will have on our results of operations and financial condition You should carefully read the factors described in the Risk Factors section of this Annual Report on Form 10 K for a description of certain risks that could among other things cause our actual results to differ from these forward looking statements
All forward looking statements speak only as of the date of this Annual Report on Form 10 K and are expressly qualified in their entirety by the cautionary statements included in this Annual Report on Form 10 K We disclaim any obligation to update or revise forward looking statements that may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events other than as required by law
We deliver technology driven solutions to banks broker dealers asset and wealth managers public companies investors and mutual funds that enable our clients to operate innovate and grow Our trusted expertise and transformative technology provide the infrastructure and data to help improve our clients business performance and operational efficiency and modernize the investor experience
Our Regulatory Solutions Data Driven Fund Solutions Corporate Issuer Solutions and Customer Communications Solutions are provided as part of the Investor Communication Solutions segment The Investor Communication Solutions segment is the larger of our two business segments and its revenues represented approximately 75 and 75 of our total Revenues in fiscal years 2024 and 2023 respectively including the foreign exchange impact from revenues generated in currencies other than the United States of America U S dollar See Analysis of Reportable Segments Revenues under Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations We provide the following services and solutions through our Investor Communication Solutions segment
We handle the entire proxy materials distribution and voting process for our bank broker dealer corporate issuer and fund clients We offer electronic and traditional hard copy services for the delivery of proxy materials to investors and collection of consents maintenance of a rules engine and database that contains the delivery method preferences of our clients customers posting of documents on their websites email notification to investors alerting them that proxy materials are available and proxy voting via paper telephone online or mobile app We 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 We also offer proxy vote solicitation services for the registered clients of fund companies efficiently managing the entire proxy campaign
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 customers the individual beneficial owners Nominees upon request are required to provide companies with the information of beneficial owners who do not object to having their names addresses and shareholdings 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 As DTCC s role is only as the 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
Given the large number of Nominees involved in the beneficial proxy process resulting from the large number of beneficial shareholders we play a unique central and integral role in ensuring that the beneficial proxy process occurs without issue for Nominees companies funds and investors A large number of Nominees have contracted out the processes of distributing proxy materials and tabulating voting instructions to us Nominees accomplish this by entering into agreements with Broadridge and transferring to us via powers of attorney the authority to execute a proxy which authority the Nominee receives from the DTCC via an omnibus proxy Through our agreements with Nominees for the provision of beneficial proxy services we take on the responsibility of ensuring that the account holders of Nominees receive proxy materials on a timely basis digitally or in print that their voting instructions are conveyed to the companies and funds conducting solicitations and that these services are fulfilled in accordance with the requirements of their particular solicitation In order for us to provide the beneficial proxy services effectively we interface and coordinate directly with each company and or fund to ensure that the services are performed in an accurate and timely manner As it would increase the costs for companies and funds to work with all of the Nominees through which their shares are held beneficially companies and funds work with us for the performance of all the tasks and processes necessary to ensure that proxy materials are distributed on a timely basis to all beneficial owners and that their votes are accurately reported
The SEC s 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 self regulatory organizations SROs including the New York Stock Exchange NYSE We bill public companies for the proxy services performed collect the fees and remit to the Nominee its portion of the fees In addition the NYSE rules establish fees for certain services provided by intermediaries such as Broadridge in the proxy process The preparation and delivery of NOBO information is subject to reimbursement by the corporate issuers requesting the information The reimbursement rates are based on the number of NOBOs produced pursuant to NYSE or other SRO rules The rules also determine the fees to be paid to third party intermediaries such as Broadridge who compile the NOBO information on behalf of Nominees who need to respond to corporate issuer requests for NOBO information
ProxyEdge is our innovative electronic proxy delivery and voting solution for institutional investors and financial advisors 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 ProxyEdge is offered in several languages and there are currently over 7 000 ProxyEdge users worldwide
In addition to our proxy services we provide regulatory communications solutions that enable global asset managers to communicate with large audiences of investors efficiently and reliably by centralizing all investor communications through one resource We provide composition printing filing and distribution services for regulatory reports prospectuses and proxy materials as well as mutual fund proxy solicitation services We manage the entire communications process with both registered and beneficial stockholders and provide a complete platform for creating and distributing regulatory investor communications across multiple channels including print e delivery online and mobile These services include prospectus delivery and the distribution of annual and semi annual shareholder reports Our clients have the ability to create and distribute these communications via print e delivery online and mobile In addition to our fund solutions we also provide a range of other regulatory communications solutions including reorganization communications notifying investors of U S reorganizations or corporate action events such as tender offers mergers and acquisitions bankruptcies and global class action services for the identification filing and recovery of class actions and collective redress proceedings involving securities and other financial products
Our pass through voting solutions support fund clients in providing individual investors the ability to participate in the proxy voting process helping them to expand their investor engagement efforts and receive valuable input for important investment decisions Broadridge s institutional solution helps asset managers split the vote in portfolio companies and pass directly to institutional investors on a proportional basis For retail investors our solutions allow funds to poll their investors on voting preferences and provides investors the ability to give voting instructions set standard voting preferences or potentially cast a vote at pre determined meetings
We provide a full range of data driven solutions that help our asset management and retirement service provider clients grow revenue operate efficiently and maintain compliance Our data and analytics solutions provide investment product distribution data predictive modeling analytical tools and insights and research to enable asset managers to optimize product distribution across retail and institutional channels globally We also provide fiduciary focused learning and development software and technology and data and analytics services to advisors institutions and asset managers across the retirement and wealth ecosystem
Through our Fund Communication Solutions business we provide fund managers with a single integrated provider to manage data perform calculations compose documents manage regulatory compliance and disseminate information across multiple jurisdictions Our solutions help fund managers increase distribution opportunities comply with both United Kingdom and European Union regulations such as Solvency II and MiFID II and make information easily accessible for investors in a digital format We also provide support to fund managers with document and data dissemination in the European market This enables the receipt by distributors and investors of complete accurate and timely information supporting fund sales
Through our Retirement and Workplace Solutions business Broadridge Retirement and Workplace we provide automated mutual fund and exchange traded funds trade processing services for financial institutions that submit trades on behalf of their clients such as qualified and non qualified retirement plans and individual wealth accounts
Our trust trading and settlement services are integrated into our product suite thereby strengthening Broadridge s role as a provider of insight technology and business process outsourcing to the asset management wealth and retirement industry In addition our marketing and transactional communications solutions provide a content management and omni channel distribution platform for marketing and sales communications for asset managers insurance providers and retirement service providers
We provide governance and communications services to corporate issuers supporting a full range of public company functions including the annual meeting of stockholders SEC reporting capital markets transactions transfer agency shareholder engagement and ESG solutions Our services provide corporate issuers a single source solution that spans the entire corporate disclosure and shareholder communications lifecycle
Proxy services we provide complete project management for the entire annual meeting process including registered and beneficial proxy materials distribution vote processing and tabulation through our ShareLink
Virtual Shareholder Meeting electronic annual meetings via webcast either on a stand alone basis or in conjunction with in person annual meetings including shareholder validation and voting services and the ability for shareholders to ask questions and for management to respond during the meetings
We offer tools for corporate issuers to help them better engage with their shareholders and other stakeholders in connection with the annual meeting process as well as on an ongoing basis throughout the year These services provide aggregated shareholder data and analytics shareholder delivery preferences and voting trends
Our ESG services provide consulting in support of issuers and their ESG journey The services include peer ESG disclosure benchmarking ESG strategy and policy development greenhouse gas emission assessments and ESG and sustainability report content development We also offer an ESG dashboard that provides ESG consensus ratings to allow corporate issuers to assess the progress of their ESG ratings and disclosure relative to their selection of peer companies
SEC Filing Services proxy and annual report design and digitization SEC filing printing and web hosting services as well as year round SEC reporting including document composition EDGARization and XBRL tagging
Capital Markets Transactional Services typesetting composition printing and SEC filing services for capital markets transactions such as initial public offerings spin offs acquisitions and securities offerings In addition we provide transaction support services such as virtual deal rooms and translation services
We also provide registrar stock transfer and record keeping services through our transfer agency services Our transfer agency services address the needs public companies have for more efficient and reliable stockholder record maintenance and communication services In addition we provide corporate actions services including acting as the exchange agent paying agent or tender agent in support of acquisitions initial public offerings and other significant corporate transactions We also provide abandoned property compliance and reporting services
We support financial services healthcare insurance consumer finance telecommunications utilities and other service industries with their omni channel customer communications management strategies for transactional communications such as statements and bills marketing communications such as personalized microsites and campaigns and regulatory communications such as trade confirmations and explanation of benefits
These services include digital and physical delivery of critical communications Our physical delivery services operate through a network of seven highly automated facilities across North America The Broadridge Communications Cloud
is an omni channel platform the Communications Cloud that provides our clients the flexibility to implement only the modules and delivery channels needed to address their specific communication needs The platform s open application programming interfaces and self servicing tools help our clients improve their communications systems efficiency and productivity Through the Communications Cloud our clients can
Transactions involving securities and other financial market instruments can for example originate with an institutional or retail 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 The transaction must comply with tax custody accounting and record keeping requirements and the customer s account information must correctly reflect the transaction The accurate processing of trading activity from its initial inception and custody activity requires effective automation and information flow across multiple systems and functions within the firm and across the systems of the various parties that participate in the execution of a transaction
Our Global Technology and Operations business provides the non differentiating yet mission critical infrastructure to the global financial markets As a leading software as a service SaaS provider we offer capital markets and wealth and investment management firms modern technology to enable growth simplify their technology stacks and mutualize costs
Our highly scalable resilient component based solutions automate the front to back transaction lifecycle of equity mutual fund fixed income foreign exchange and exchange traded derivatives from order capture and execution through trade confirmation margin cash management clearing and settlement reference data management reconciliations securities financing and collateral management asset servicing compliance and regulatory reporting portfolio accounting and custody related services Our Wealth Management business provides solutions for advisors and investors and streamlines back and middle office operations for broker dealers by providing systems for critical post trade activities including books and records transaction processing clearance and settlement and reporting
Our Investment Management business provides portfolio and order management solutions for traditional and alternative asset managers which bring insights into trading portfolio construction risk and analytics Our solutions connect asset managers to a global network of broker dealers for trade execution and post trade matching and confirmation In addition we provide business process outsourcing services for our buy and sell side clients businesses These services combine our technology with our operations expertise to support the entire trade lifecycle including securities clearing and settlement reconciliations record keeping wealth management asset servicing and custody related functions
The Global Technology and Operations segment s revenues represented approximately 25 and 25 of our total Revenues in fiscal years 2024 and 2023 respectively which gives effect to the foreign exchange impact from revenues generated in currencies other than the U S dollar See Analysis of Reportable Segments Revenues under Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations Services and solutions offered through the Global Technology and Operations segment include the following
Our capital markets technology and our solutions deliver simplification and innovation across the trade lifecycle from order initiation to settlement Largely provided on a SaaS basis within large user communities Broadridge s technology is a global solution processing trades clearance and settlement in over 100 countries Our technology enables our clients to meet the requirements of market change such as the T 1 securities settlement cycle Our solutions enable global capital markets firms to access market liquidity driving more effective market making and efficient front to back trade processing These services include reference data management securities financing securities based lending collateral management trade and transaction reporting reconciliations financial messaging and asset servicing Our solutions can be deployed as a complete solution as well as discrete components supporting financial institutions
we offer a set of global front office trade order and execution management systems and connectivity solutions that enable market participants to connect and trade Our front office solutions post trade product suite and other capital markets capabilities enable our clients to streamline their front to back technology platforms and operations and increase straight through processing efficiencies across equities fixed income exchange traded derivatives and other asset classes We also provide a set of multi asset multi entity and multi currency trading connectivity and post trade solutions that support processing of securities transactions in equities options fixed income securities foreign exchange exchange traded derivatives and mutual funds
In addition we provide comprehensive fixed income transaction processing capabilities to support clearance settlement custody P L reporting and regulatory reporting for domestic and foreign fixed income instruments Our solution includes extensive support for mortgage backed securities and other structured products It is a multi currency multi entity solution that provides position and balance information in addition to detailed accounting financing collateral management and repurchase agreement functionality The solution offers straight through processing capabilities enterprise wide integration and a robust technology infrastructure all focused on supporting firms specializing in the fixed income marketplace
Our Wealth Management business delivers technology solutions critical data and digital marketing services to enable full service regional and independent broker dealers and investment advisors to better engage with customers to help grow their business Our wealth solutions are designed to help optimize advisor productivity improve investor outcomes digitize operations reduce friction in investing increase financial literacy and deliver more personalized advice and insights
With respect to technology solutions we offer an integrated modern open architecture wealth management platform through which we provide enhanced data centric capabilities to improve the overall client experience across the entire front middle and back office wealth management lifecycle including advisor investor and operational workflows This comprehensive wealth management platform streamlines all aspects of the service model allowing our clients to digitally onboard customers manage advisor compensation for multiple products and service models and seamlessly transfer and service accounts
solutions to broker dealers financial advisors insurers and other firms with large distributed salesforces Our data aggregation solution helps financial advisors manage and build client relationships by providing customer account data aggregation performance reporting household grouping automated report creation document storage and integration with popular financial planning and productivity applications
Our digital marketing and content capabilities leverage analytics and machine learning to enable financial advisors and wealth management firms to grow their businesses and deepen relationships with their customers Financial advisors and wealth management firms can tap into our digital tools and library of omni channel content to personalize touchpoints to engage their customers and prospects across digital channels including websites social media email and mobile
Our Investment Management business services the global investment management industry with a range of buy side technology solutions Our asset management solutions are portfolio management compliance fee billing and operational support solutions such as order management data warehousing reporting reference data management and risk management and portfolio accounting for hedge funds family offices alternative asset managers traditional asset managers and the providers that service this space including prime brokers fund administrators and custodians The client base for these services includes institutional asset managers public funds start up or emerging managers through some of the largest global hedge fund complexes and global fund administrators
We earn our clients confidence every day by delivering real business value through leading technology driven solutions that help our clients get ahead of today s challenges and capitalize on future growth opportunities Our solutions harness people technology and insights to help transform our clients businesses by enriching customer engagement navigating risk optimizing efficiency and growing revenue
As financial institutions look to transform and mutualize their mission critical but non differentiating operational and support functions we have the proven technology scale innovation experience and most importantly the network to achieve this goal and meet their needs
Our strategy addresses critical industry needs by utilizing our leading platform capabilities Specifically our growth strategy is focused on three key themes i driving democratization and digitization in governance ii simplifying and innovating trading in capital markets and iii modernizing wealth and investment management businesses
We deliver multi client technology and business process outsourcing services primarily through common SaaS based operations platforms We create layers of value for clients by harnessing network benefits providing deep data and analytics and offering a comprehensive suite of digital capabilities all on a single platform Our SaaS offerings allow our clients to mutualize key functions and thereby reduce their costs All of this translates into our core value proposition to be a trusted provider of technology and services across a range of analytical operational and reporting functions
Our technology and associates power the critical infrastructure and services behind investing investment governance and investor communications Broadridge makes our clients stronger and through them we enable better financial lives for investors around the globe Our deep industry knowledge enables our clients to successfully solve complex technological and operational challenges while adapting to the latest technology trends and regulatory standards While financial services firms have historically kept much of their technology infrastructure work in house there are significant trends working in favor of Broadridge Specifically financial services firms globally are spending more on technology and the respective budgets allocated for such technology are consistently growing year over year Moreover these firms are devoting a growing percentage of this spend to third party technology operations and services Broadridge as a trusted outside service provider can streamline and better integrate our clients infrastructure and business processes We expect the efficiencies that result from such undertaking by Broadridge will lead to growth in the market for our solutions
We operate an extensive industry network through our governance platform that links broker dealers public companies mutual funds shareholders and regulators Through our platform we continue to grow our governance solutions by transforming content and delivery and improving e product capabilities to drive higher investor engagement We aim to be an integral partner to broker dealers asset managers and retirement service providers by offering data driven solutions that help them grow revenue reduce costs and maintain compliance We are also helping to simplify the governance process for public companies offering an expanding suite of capabilities that allows them to better navigate the complexity of reaching shareholders We continue to be a leading provider of investor communications and are at the forefront of delivering richer communication experiences both digitally and through optimized print and mail services
Global institutions have a strong need to simplify their complex technology environment and our SaaS based global multi asset class technology platforms address this need As a leader in global trade lifecycle management we are driving next generation solutions that simplify our clients operations improve performance and resiliency evolve to global operating models adapt to new technologies and enable our clients to better manage their data Our 2021 acquisition of Itiviti for example expanded our services across the trade lifecycle for equities and exchange traded derivatives and grew our international reach We continue to leverage emerging technologies such as blockchain and artificial intelligence AI to deliver innovative solutions to our clients Our blockchain enabled Distributed Ledger Repo DLR platform which combines distributed ledger technology with existing market settlement infrastructure provides clients added flexibility to manage their liquidity needs and execute cross border intraday repo transactions through our DLR network In addition we have introduced a number of AI driven solutions such as BondGPT and continue to develop new AI applications to create a more efficient trading process for our clients We also continue to develop component solutions that meet the regulatory risk data and analytics needs of our clients while also helping to drive more efficient liquidity price discovery and improved execution for the firms we serve We plan to continue building on our global platform capabilities enabling our clients to simplify and improve their global operations across cash equity securities and other asset classes
Wealth and investment management clients including full service regional and independent broker dealers investment advisors insurance companies and retirement solutions providers are all undergoing unprecedented change These firms are in need of partners to help them navigate the demographic shift of advisors and investors create more engaging client experiences and deliver operational technologies that are essential to their business These market dynamics are driving the need for more seamlessly integrated technology and as well as data centric digital wealth solutions that better service advisors and investors This can be achieved by simplifying and modernizing their complicated and interwoven legacy systems To address these demands we have developed a holistic wealth management platform solution that provides seamless systems and data integration capabilities Our platform enables firms to improve advisor productivity provide a more personalized investor experience and realize operational process efficiencies
Across financial services the pace of change is only accelerating Our clients understand that next generation technology is a key driving force for change and efficiency and there is a need among our client base to leverage this technology to address their critical business challenges However they face obstacles in making the necessary investments and more importantly in applying the right talent and intellectual capital which may be focused on their most differentiating functions This continues to create opportunities for Broadridge to assist in the areas where we have scale and domain expertise which includes areas such as AI blockchain cloud digital and other new technologies By leveraging our services firms can benefit from highly skilled experienced personnel with deep industry expertise while mutualizing the costs and risks of technology innovation We approach innovation through three actions experimenting partnering and engaging In turn we help our clients stay on the cutting edge and realize the benefits of digital transformation at a quicker pace
Broadridge is client centric and has created and grown multi entity infrastructures across a variety of functions with high client satisfaction We conduct a client satisfaction survey for each of our major business units annually the results of which are a component of all our associates compensation because of the importance of client retention to the achievement of our revenue goals
We have built a talent network focus of engaged and knowledgeable associates dedicated to serving clients well which in turn creates a real and sustainable advantage for our business Supporting this excellent client delivery takes engaged associates and we are passionate about creating an environment in which every associate can thrive and build their knowledge and skills All of this creates a culture that benefits our associates our clients and our stockholders
We serve a large and diverse client base including banks broker dealers mutual funds retirement service providers corporate issuers and wealth and asset management firms Our clients in the financial services industry include retail and institutional brokerage firms global banks mutual funds asset managers insurance companies annuity companies institutional investors specialty trading firms clearing firms third party administrators hedge funds and financial advisors Our corporate issuer clients are typically publicly held companies In addition to financial services firms we service corporate clients in the healthcare insurance consumer finance telecommunications utilities and other service industries with their essential communications We embrace the concept of the Service Profit Chain which directly connects employee engagement client satisfaction and the creation of shareholder value In furtherance of this principle client satisfaction is a component of every full time Broadridge associate s compensation
We operate in a highly competitive industry Our Investor Communication Solutions business competes with companies that provide investor communication and corporate governance solutions as well as our clients in house operations This includes independent proxy distribution service providers transfer agents proxy advisory firms proxy solicitation firms firms that process proxy votes and financial printers We also face competition from numerous firms in the compiling printing and electronic distribution of statements bills and other customer communications Within our Global Technology and Operations business our capital markets solutions compete with in house operations and vendors that provide trade processing back office record keeping and sell side order and execution management systems Similarly our wealth management solutions compete with service providers that deliver data technology solutions and marketing services to be used by wealth advisors Finally our investment management solutions compete with firms that provide portfolio management compliance and operational support solutions for asset managers and hedge funds
We provide products and platforms to the financial services industry and have several information processing systems that serve as the core foundation of our technology platform We are committed to maintaining high levels of quality service through our skilled technical employees and the use of our technology within an environment that seeks continual improvement Our strategy centers on four key pillars architecture data cyber and data security and AI
Broadridge s technology strategy is designed to provide high levels of availability scalability reliability and flexibility leveraging a hybrid model consisting of private and public cloud services as well as traditional data center services Our technology architecture consists of systems and applications which operate in data centers that employ multiple active power and cooling distribution paths and redundant components Additionally these data centers provide infrastructure capacity and capability to permit planned activities without disruption to the critical load and as a general matter are designed to sustain at least one worst case unplanned failure or event without a significant critical load impact Our geographically dispersed processing centers also provide disaster recovery and business continuity processing Our applications that incorporate cloud technology operate on industry standard enterprise architecture platforms that provide significant opportunities for horizontal and vertical scaling This scalability and redundancy allows us to provide high degrees of system availability for our clients
Our technology connects industry participants across the financial services ecosystem forming a network that includes capital markets firms broker dealers asset managers public companies and investors The data derived through these connections provides value to participants and is at the heart of our approach which leverages this data to generate insights that drive innovation address industry wide challenges accelerate product development and inform decision making
We conduct annual reviews with many of our clients around our cybersecurity and data security policies practices and controls which together with our ongoing engagement with regulators across the world helps us keep up with cybersecurity and data security standards and best practices and informs our product development and technology decisions For more information on our information security program please refer to Item 1 C Cybersecurity of this Annual Report on Form 10 K
Our multi pronged approach to AI looks to launch next generation capabilities while considering the protection of our clients and Broadridge s data privacy and intellectual property We have integrated AI capabilities into several of our solutions and provide our associates with access to internal AI tools designed to modernize our approach to product development and enhance our overall productivity and efficiency
We manage a diverse portfolio of products and services across our core businesses Our products and services are designed with resiliency scalability and flexibility so that we can fully meet our clients critical needs These products and services are built to meet the many complex requirements of our clients in a highly efficient manner
We do so by providing our product managers with the tools processes and capabilities to promptly deliver solutions that address key client needs This empowers product managers with the insights they need to make data driven decisions and prioritize resources effectively We further accelerate innovation by entering into strategic relationships with clients and other third parties to accelerate product development or gain access to capabilities complementary to our product development efforts To cultivate the talent behind these products we invest heavily in fostering a thriving community of highly skilled product associates This commitment is reflected in our diverse hiring practices accelerated leadership development programs and ongoing training opportunities
We are also focused on enterprise transformation with a focus on next generation technologies Our core strength lies in scalable reusable platform components that empower developers and accelerate application delivery across the Company This emphasis on unified product disciplines ensures business units have seamless access to top tier expertise Furthermore we leverage AI to unlock new commercial opportunities and enhance overall productivity To fuel this continuous innovation we are building a robust foundation with workload centric hosting platforms optimized for security scalability and efficiency This standardized technology stack powered by industry leading enterprise tools is fundamental to our strategy of delivering best in class solutions with improved speed
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 By focusing on these key areas we aim to meet the evolving needs of our clients through our product and service offerings
We own a portfolio of more than 155 U S and non U S patents and patent applications We also 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 are the owner or in some cases the licensee of all intellectual property and other proprietary rights necessary to conduct our business
The securities and financial services industries are subject to extensive regulation in the U S and in other jurisdictions As a matter of public policy regulatory bodies in the U S and the rest of the world are charged with safeguarding the integrity of the securities and other financial markets and with protecting the interests of investors participating in those markets Due to the nature of our services and the markets we serve these regulatory bodies impact our businesses in various manners
In the U S the securities and financial services industries are subject to regulation under both federal and state laws At the federal level the SEC regulates the securities industry along with the Financial Industry Regulatory Authority Inc FINRA the various stock exchanges and other SROs In addition SEC rules require public companies to reimburse banks and broker dealers for the expense of distributing certain stockholder communications to beneficial owners of securities held in street name and those reimbursement rates as well as fees that can be charged for proxy services are set by the NYSE The Department of Labor DOL enforces the Employee Retirement Income Security Act of 1974 ERISA regulations on plan fiduciaries and organizations that provide services to qualified retirement plans As a provider of services to financial institutions and issuers of securities our services such as our proxy and shareholder report processing and distribution services are provided in a manner to assist our clients in complying with the laws and regulations to which they are subject As a result the services we provide may be required to change as applicable laws and regulations are adopted or revised We monitor legislative and rulemaking activity by the SEC FINRA DOL and U S Internal Revenue Service the IRS the stock exchanges and other regulatory bodies that may impact our services and if new laws or regulations are adopted or changes are made to existing laws or regulations applicable to our services we expect to adapt our business practices and service offerings to continue to assist our clients in fulfilling their obligations under new or modified requirements
Certain aspects of our business are subject to regulatory compliance or oversight As a provider of technology services to financial institutions certain aspects of our U S operations are subject to regulatory oversight and examination by the Federal Financial Institutions Examination Council FFIEC an interagency body of the Federal Deposit Insurance Corporation the Office of the Comptroller of the Currency the Board of Governors of the Federal Reserve System the National Credit Union Administration and the Consumer Financial Protection Bureau Periodic examinations by the FFIEC generally include areas such as internal audit risk management business continuity planning information security systems development and third party vendor management to identify potential risks related to our services that could adversely affect our banking and financial services clients
In addition our business process outsourcing mutual fund processing and transfer agency solutions as well as the entities providing those services are subject to regulatory oversight Our business process outsourcing and mutual fund processing services are performed by a broker dealer Broadridge Business Process Outsourcing LLC BBPO BBPO is registered with the SEC is a member of FINRA and is required to participate in the Securities Investor Protection Corporation SIPC Although BBPO s FINRA membership agreement allows it to engage in clearing and the retailing of corporate securities in addition to mutual fund retailing on a wire order basis BBPO does not clear customer transactions process any retail business or carry customer accounts BBPO is subject to regulations concerning many aspects of its business including trade practices capital requirements record retention money laundering prevention the protection of customer funds and customer securities and the supervision of the conduct of directors officers and employees A failure to comply with any of these laws rules or regulations could result in censure fine the issuance of cease and desist orders or the suspension or revocation of SEC or FINRA authorization granted to allow the operation of its business or disqualification of its directors officers or employees There has been continual regulatory scrutiny of the securities industry including the outsourcing by firms of their operations or functions This oversight could result in the future enactment of more restrictive laws or rules with respect to business process outsourcing As a registered broker dealer and member of FINRA BBPO is subject to the Uniform Net Capital Rule 15c3 1 of the Securities Exchange Act of 1934 as amended which requires BBPO to maintain a minimum net capital amount At June 30 2024 BBPO was in compliance with this capital requirement
Matrix Trust Company Matrix Trust is a Colorado state chartered non depository trust company and National Securities Clearing Corporation trust member whose primary business is to provide cash agent custodial and directed trustee services to institutional customers and investment management services to its collective investment trust funds CITs As a result Matrix Trust is subject to various regulatory capital requirements administered by the Colorado Division of Banking and the Arizona Department of Insurance and Financial Institutions as well as the National Securities Clearing Corporation Specific capital guidelines that involve quantitative measures of assets liabilities and certain off balance sheet items when applicable must be met At June 30 2024 Matrix Trust was in compliance with its capital requirements In addition in connection with the offering of CITs Matrix Trust acts as a discretionary trustee and an ERISA fiduciary CITs are subject to regulation by the IRS SEC federal and state banking regulators and the DOL which impose a number of duties on persons who are fiduciaries under ERISA Matrix Trust is also subject to regulation by the Colorado Division of Banking and the Arizona Department of Financial Institutions which regulate CITs pursuant to guidance issued by the Office of the Comptroller of the Currency regulation Matrix Trust maintains an Identity Theft Prevention Program for certain of its services
Our transfer agency business Broadridge Corporate Issuer Solutions is subject to certain SEC rules and regulations including annual reporting examination internal controls proper safeguarding of issuer and shareholder funds and securities maintaining a written Identity Theft Prevention Program and obligations relating to its operations Our transfer agency business is subject to certain NYSE requirements concerning operational standards as a transfer agent or registrar for NYSE listed companies and is also subject to IRS regulations In addition Broadridge Corporate Issuer Solutions complies with all applicable trade control laws and regulations including country territory based sanctions and list based sanctions maintained by the U S and other jurisdictions where we do business Finally state laws govern certain services performed by our transfer agency business
In addition we are required to comply with anti money laundering laws and regulations such as in the U S the Bank Secrecy Act as amended by the USA PATRIOT Act of 2001 collectively the BSA and the BSA implementing regulations of the Financial Crimes Enforcement Network FinCEN a bureau of the U S Department of the Treasury A variety of similar anti money laundering requirements apply in other countries We are also subject to the relevant aspects of regulations and guidance published by FinCEN as discussed below which includes the Know Your Customer KYC requirements promulgated by FinCEN
The processing and transfer of personal information is required to provide certain of our services Privacy laws and regulations in the U S and foreign countries apply to the access collection transfer use storage and destruction of personal information In the U S our financial institution clients are required to comply with privacy regulations imposed under the Gramm Leach Bliley Act GLBA in addition to other regulations As a processor of personal information in our role as a provider of services to financial institutions we must comply with the Federal Trade Commission FTC Safeguards Rule implementing certain provisions of GLBA with respect to maintenance of information security safeguards
We perform services for healthcare companies and are therefore subject to compliance with laws and regulations regarding healthcare information including in the U S the Health Insurance Portability and Accountability Act of 1996 HIPAA We also perform credit related services and agree to comply with payment card standards including the Payment Card Industry Data Security Standard In addition federal and state privacy and information security laws and consumer protection laws which apply to businesses that collect or process personal information also apply to our businesses
Privacy laws and regulations may require notification to affected individuals federal and state regulators and consumer reporting agencies in the event of a security breach that results in unauthorized access to or disclosure of certain personal information Privacy laws outside the U S may be more restrictive and may require different compliance requirements than U S laws and regulations and they may impose additional duties on us in the performance of our services
The law in this area continues to develop and the changing nature of privacy laws in the U S the European Union and elsewhere could impact our processing of personal information of our employees and on behalf of our clients For example the European Union Parliament adopted the comprehensive General Data Protection Regulation GDPR and several U S states have also recently adopted new privacy laws or are proposing to pass their own state privacy laws including the California Privacy Rights Act CPRA
We continually monitor privacy and information security laws and regulations and while we believe that we are compliant with our regulatory responsibilities information security threats continue to evolve resulting in increased risk and exposure In addition legislation regulation litigation court rulings or other events could expose Broadridge to increased costs liability and possible damage to our reputation
Regulations issued by the Office of Foreign Assets Control OFAC of the U S Department of Treasury place prohibitions and restrictions on all U S citizens and entities including the Company with respect to transactions by U S persons with specified countries and individuals and entities identified on OFAC s sanctions lists and Specially Designated Nationals and Blocked Persons List a published list of individuals and companies owned or controlled by or acting for or on behalf of countries subject to certain economic and trade sanctions as well as terrorists terrorist organizations and narcotics traffickers identified by OFAC under programs that are not country specific Similar requirements apply to transactions and dealings with persons and entities specified in lists maintained in other countries We have developed procedures and controls that are designed to monitor and address legal and regulatory requirements and developments to protect against having direct business dealings with such prohibited countries individuals or entities
can be complex and may increase our cost of doing business in international jurisdictions Our international business could expose us to fines and penalties if we fail to comply with these regulations These laws and regulations include import and export requirements trade restrictions and embargoes data privacy requirements labor laws tax laws anti competition regulations U S laws such as the Foreign Corrupt Practices Act and local laws prohibiting bribery and other improper payments or inducements such as the U K Bribery Act Although we have implemented policies procedures and training designed to ensure compliance with applicable laws and regulations there can be no assurance that our employees contractors vendors and agents will not take actions in violation of our policies or applicable laws and regulations particularly as we expand our operations including through acquisitions of businesses that were not previously subject to and may not have familiarity with laws and regulations applicable to us or compliance policies similar to ours Any violations of sanctions or export control regulations or other laws could subject us to civil or criminal penalties including the imposition of substantial fines and interest or prohibitions on our ability to offer our products and services to one or more countries and could also damage our reputation our international expansion efforts and our business and negatively impact our operating results
As of June 30 2024 we had approximately 14 600 full time associates of which approximately 45 were employed in the U S Of the approximately 55 of associates located outside of the U S 40 are in the APAC region where a substantial number of associates are in India 11 are in Europe and 4 are in Canada None of our U S employees are represented by a labor union In some countries outside the U S we have works councils or we are required by local law to enter into and or comply with industry wide collective bargaining agreements We believe that our employee relations are good
We are driven by the success of each of our associates and we recognize that it is because of their hard work talent and commitment that we continue to deliver outstanding results for our clients That is why we strive to provide a workplace that fosters a collaborative and supportive culture where everyone feels welcomed accepted and empowered to be their best At the center of our associate engagement efforts is the concept of the Service Profit Chain where engaged associates deliver world class service which creates satisfied clients and in turn produces strong long term value for stockholders
Our human capital strategies are developed and managed by our Chief Human Resources Officer who reports to the Chief Executive Officer and are overseen by the Company s Board of Directors and the Compensation Committee of the Board of Directors Our Board of Directors believes that human capital management and succession planning are vital to our success The Board annually reviews the Company s leadership bench and succession planning In addition the Board receives regular updates on talent and other human capital matters such as culture attrition retention and diversity equity and inclusion DEI initiatives and practices including an annual update from our Chief Diversity Officer The Compensation Committee s oversight includes initiatives and programs that concern our culture talent recruitment retention and associate engagement
We believe there is a direct connection between associate engagement and the satisfaction of our clients and the creation of stockholder value so we regularly conduct surveys to assess associate engagement and determine if and how perspectives have changed over time Our surveys allow our associates to share their views on our workplace the importance of various aspects of work life among other topics The themes and insights from our associate feedback are shared with our executive leadership and have been instrumental in shaping our workplace In fiscal year 2024 we received an 82 overall favorable rating in the annual Great Place to Work survey In addition 85 of our associates stated that Broadridge is a great place to work and we have received certification from Great Place to Work for our outstanding workplace culture in 13 countries U S Canada India the United Kingdom Ireland Romania Poland Singapore Japan Germany Hong Kong Sweden and the Philippines Recognized as 2024 Best Workplaces in Ireland and UK as well as Best Workplaces in Technology Ireland and Best Workplaces for Development UK The Great Place to Work Institute is a global authority on high trust high performance workplaces
We are dedicated to fostering a diverse equitable inclusive and healthy environment As a leading provider of technology communications and data and analytics solutions to businesses around the world we must understand embrace and operate in a multicultural environment Every associate has unique strengths which when fully appreciated and embraced enable everyone to perform at their best leading to our success Our goal is to ensure our associates at every level of the organization represent the diversity of the clients we serve and the communities in which we work We are committed to advancing DEI initiatives and values as part of our culture Our commitment to developing a diverse workforce is evidenced by the fact that a component of our Executive Leadership Team s compensation is based on achievement of DEI goals
We have an Executive Diversity Council chaired by our President that meets quarterly and provides insight and recommendations on critical DEI related opportunities and challenges In addition we support several associate led employee resource groups our Associate Networks where associates with similar backgrounds and interests can find peer support shape company culture receive mentorship and sponsorship from senior members and develop their careers Broadridge s Associate Networks currently include B Pride Disability Equity Associate Network DEAN Lead For Next LFN MultiCultural Associate Network MCAN Veteran First Responder Network VFN Women s Leadership Forum WLF Family Care Network FCN and BeGreen Together these networks support the LQBTQ community associates with disabilities young professionals multicultural backgrounds veterans and first responders women associates with caregiving responsibilities and associates with a passion for sustainability
We have a Chief Diversity Officer who implements a holistic DEI strategy and partners with our business units to develop the resources and competencies needed to drive this strategy Our Chief Diversity Officer reports to our President is a member of the Executive Diversity Council and Executive Leadership Team and provides regular updates to our Chief Executive Officer and Board of Directors In addition the Chief Diversity Officer serves as an advisor on global initiatives such as our Associate Networks and our recruitment and compliance efforts
We continue to progress our DEI initiatives building off the opportunities identified in our inaugural DEI survey in 2022 which ran globally and over 7 000 associates across 19 countries participated The results of our inaugural survey revealed that an overwhelming majority of our associates believe that 1 the importance of DEI is reflected in the priorities of Broadridge s business 2 we were successful in advancing DEI initiatives over the past year and 3 we create a physically and psychologically safe environment where associates feel they belong and they are included and treated fairly We are committed to associate feedback to provide a comprehensive view of our organization s culture identify areas where improvements can be made to create a more welcoming and inclusive environment for all associates and measure our progress over time
We believe that our associates are among our most important assets Encouraging professional development opportunities is a core part of our culture One important resource we provide our associates is Broadridge University a comprehensive suite of online courses and virtual and on site training We offer career enhancing programs from top business schools leadership development and mentoring programs have a tuition reimbursement program and support participation in external learning opportunities These programs are designed to provide opportunities for associates at varying levels of the Company to expand their networks gain valuable skills and knowledge to excel in their current roles and enhance their leadership capabilities We offer our technology associates with resources to supplement their work experience and a Technology Expert Career Track a transparent dual career path process that allows associates to grow as leaders and experts in the organization We also empower associates to learn and grow as subject matter experts in the financial markets In turn this enables our associates to assist our clients with their expertise and adds value to our associates own career development and skill sets In addition to career oriented education we also require all associates to complete a variety of trainings on an annual basis which focus on our commitment to high ethical standards and a culture of honesty integrity and compliance
We are committed to providing a safe workplace We continuously strive to meet or exceed all laws regulations and accepted practices pertaining to workplace safety We have developed extensive safety policies standards and procedures to which all associates are required to comply Our policies are based on both U S Occupational Safety and Health Administration standards and site specific guidelines to ensure that associates work in a safe and healthy environment At our Edgewood New York facility we have an on site Wellness Centers staffed with physicians nurse practitioners and physician assistants who provide medical services at no cost to our associates
In addition we are committed to providing competitive health and wellness benefits to our associates We recognize the importance of work life balance and have designed our workplace to provide associates with flexible on and off site work options Our other health and wellness benefits include travel allowances for certain types of health care and subsidized emergency backup care services for our U S based associates various educational health and wellness programs and webinars and an employee assistance program which provides free counseling and other mental health services
We have demonstrated a history of investing in our workforce by offering competitive salaries and wages In addition we offer various types of compensation which vary by associate role and country region and may include annual bonuses stock awards and retirement savings plans Also a portion of every associate s incentive compensation is tied to client satisfaction goals which reinforces our commitment to the Service Profit Chain and rewards associates for their contributions to Broadridge s overall client satisfaction performance In addition we offer the following benefits which may vary by country region healthcare and insurance benefits tax efficient or savings programs such as health and dependent care flexible spending accounts health savings account and pretax commuter benefits or green transport tax savings programs paid time off including volunteer time off paid parental leave and sick time off life and disability insurance business travel accident insurance charitable gift matching tuition assistance among others
We maintain an Investor Relations website at www broadridge ir com We make available free of charge on or through this website our annual quarterly and current reports and any amendments to those reports as soon as reasonably practicable following the time they are electronically filed with or furnished to the SEC To access these reports just click on the SEC Filings link found at the top of our Investor Relations page You can also access our Investor Relations page through our main website at www broadridge com by clicking on the Investor Relations link which is located at the top of our homepage Information contained on our website is not incorporated by reference into this Annual Report on Form 10 K or any other report filed with or furnished to the SEC
You should carefully consider each of the following risks and all of the other information set forth in this Annual Report on Form 10 K or incorporated by reference herein Based on the information currently known to us we believe that the following information identifies the most significant factors affecting our company However additional risks and uncertainties not currently known to us or that we currently believe to be immaterial may also adversely affect our business
Our clients are subject to complex laws and regulations and new laws or regulations and or changes to existing laws or regulations could impact our clients and in turn adversely impact our business or may reduce our profitability
We provide technology solutions to financial services firms that are generally subject to extensive regulation in the U S and in other jurisdictions As a provider of products and services to financial institutions and issuers of securities our products and services are provided in a manner designed to assist our clients in complying with the laws and regulations to which they are subject Changes in laws and regulations could require changes in the services we provide the manner in which we provide our services the fees we charge for our services or they could result in a reduction or elimination of the demand for our services For example our investor communications services and the fees we charge our clients for certain services are subject to change if applicable SEC or stock exchange rules or regulations are amended or new laws or regulations are adopted that change the proxy materials regulatory disclosures or other communications issuers are required to send or the manner in which they send them Such changes in laws or regulations could result in a material negative impact on our business and financial results Therefore our services such as our proxy shareholder report and prospectus distribution and customer communications services are particularly sensitive to changes in laws and regulations including those governing the financial services industry and the securities markets
In addition new regulations governing our clients could result in significant expenditures that could cause them to reduce their use of our services seek to renegotiate existing agreements or cease or curtail their operations all of which could adversely impact our business Further an adverse regulatory action that changes a client s business or adversely affects its financial condition could decrease their ability to purchase or their demand for our products and services The loss of business from any of our larger clients could have a material adverse effect on our revenues and results of operations
Consolidation in the financial services industry could adversely affect our revenues by eliminating some of our existing and potential clients and could make us increasingly dependent on a more limited number of clients
There has been and may continue to be consolidation activity in the financial services industry These mergers or consolidations of financial institutions could reduce the number of our clients and potential clients For example in the past few years alone there have been several major consolidations involving our clients When our clients merge with or are acquired by other firms that are not our clients or firms that use fewer of our services they may discontinue or reduce the use of our services In addition it is possible that the larger financial institutions resulting from mergers or consolidations could decide to perform in house some or all of the services that we currently provide or could provide If we are unable to mitigate the impact of a loss or reduction of business resulting from a client consolidation we could have a material adverse effect on our business and results of operations
A large percentage of our revenues are derived from a small number of clients in the financial services industry and the loss of any of such clients a reduction of their demand for our services or change in the method of delivery of our services could have a material impact on our financial results
In fiscal year 2024 our largest client accounted for approximately 8 of our consolidated revenues While our clients generally work with multiple business segments the loss of business from any of our larger clients due to merger or consolidation financial difficulties or bankruptcy or the termination or non renewal of contracts could have a material adverse effect on our revenues and results of operations
Further in the event of the loss of a client s business a reduction of a client s demand for our services or a change in the method of delivery of our services then in addition to losing the revenue from that client we could be required to write off all or a portion of the related client investments or accelerate the amortization of certain costs including costs incurred to onboard a client or convert a client s systems to function with our technology Such costs for all clients represented approximately 11 of our total assets as of June 30 2024 with one client representing a large portion of this amount See Note 3 Revenue Recognition and Note 11 Deferred Client Conversion and Start up Costs to our consolidated financial statements for more information
Security breaches or cybersecurity incidents could adversely affect our financial results and ability to operate could result in personal confidential or proprietary information being misappropriated and may cause us to be held liable or suffer harm to our reputation
We process and transfer sensitive data including personal information valuable intellectual property and other proprietary or confidential data provided to us by our clients which include financial institutions public companies mutual funds and healthcare companies We also handle personal information of our employees in connection with their employment Some of our services are provided through the internet which increases our exposure to potential cybersecurity incidents Information security threats continue to evolve resulting in increased risk and exposure and increased costs to protect against the threat of information security breaches or to respond to or alleviate problems caused by such breaches
Due to the nature of our products and services we are subject to the risk of information security incidents including those impacting our clients and third party vendors Failure by our clients or third party vendors to notify us in a timely manner of cybersecurity incidents impacting their operations could result in unauthorized access to our systems and data and materially affect our business operations and financial results In certain circumstances our third party vendors may also have access to sensitive data including personal information It is also possible that a third party vendor could intentionally or inadvertently disclose such sensitive data Further unauthorized individuals could improperly access our systems or those of our vendors or improperly obtain or disclose the sensitive data including personal information that we or our vendors process or handle
We face ongoing cybersecurity threats to our information technology infrastructure including data loss data exfiltration denial of service and ransomware among others We have experienced non material cybersecurity incidents attempts to breach our systems and other similar attacks including incidents affecting our clients and third party vendors which if such attacks or attempts are successful in the future could cause harm to our business and our reputation and challenge our ability to provide reliable services as well as negatively impact our results of operations and financial condition Any impact on our results of operations and financial condition may be material depending on the scope of the incident Examples of previous incidents include but are not limited to social engineering phishing and denial of service attacks In addition our insurance coverage may not be adequate to cover all the costs related to cybersecurity incidents or disruptions resulting from such events
If we fail to maintain an adequate information security program or implement sufficient security standards technology or controls to protect against information security incidents or privacy breaches and identify and adapt to emerging security threats and risks it could cause us to lose revenues lose clients and or damage to our reputation
In addition any unauthorized access to our information technology systems could result in the use theft or disclosure of confidential sensitive or personal data destruction or modification of records interruptions to our operations and delivery of our services and products installation of malware and the potential need to pay ransom As a result we may incur significant costs to investigate and remediate such incidents and to protect against future threats to our information security and information technology systems In addition such incidents could give rise to legal actions from our clients and or their customers and regulatory investigations and or significant penalties and fines
Our business and results of operations may be adversely affected if we do not comply with legal and regulatory requirements that apply to our services or businesses and new laws or regulations and or changes to existing laws or regulations to which we are subject may adversely affect our ability to conduct our business or may reduce our profitability
The legislative and regulatory environment of the financial services industry is continuously changing The SEC FINRA DOL various stock exchanges and other U S and foreign governmental or regulatory authorities continuously review legislative and regulatory initiatives and may adopt new or revised laws and regulations or provide revised interpretations or they may change their priorities including those related to enforcement with respect to existing laws and regulations These legislative and regulatory initiatives impact the way in which we conduct our business requiring changes to the way we provide our services or additional investment which may make our business less profitable Further as a provider of technology services to financial institutions certain aspects of our U S operations are subject to regulatory oversight and examination by the FFIEC A sufficiently unfavorable review from the FFIEC could have a material adverse effect on our business With an increased focus on cybersecurity and vendor risk management the FFIEC and other regulatory agencies provide guidelines for overseeing technology service providers increasing the contractual requirements with our clients and the cost of providing our services
Our business process outsourcing mutual fund processing and transfer agency solutions as well as the entities providing those services are subject to regulatory oversight Our provision of these services must comply with applicable rules and regulations of the SEC FINRA DOL various stock exchanges and other regulatory bodies charged with safeguarding the integrity of the securities markets and other financial markets and protecting the interests of investors participating in these markets If we fail to comply with any applicable regulations in performing these services we could be subject to suits for breach of contract or to governmental proceedings censures and fines In addition we could lose clients and our reputation could be harmed negatively impacting our ability to attract new clients
As a provider of data and business processing solutions our systems contain a significant amount of sensitive data including personal information related to our clients customers of our clients and our employees We are therefore subject to compliance obligations under federal state and foreign privacy and information security laws including in the U S the GLBA HIPAA and the CPRA and the GDPR in the European Union and we are subject to compliance with various client industry standards such as PCI DSS as well as Medicare and Medicaid programs related to our clients We are subject to penalties for failure to comply with such regulations and requirements and such penalties could have a material adverse effect on our financial condition results of operations or cash flows There has been increased public attention regarding the use of personal information accompanied by legislation and regulations intended to strengthen data protection information security and consumer and personal privacy The law in these areas continues to develop the number of jurisdictions adopting such laws continues to increase and these laws may be inconsistent from jurisdiction to jurisdiction Furthermore the changing nature of privacy laws in the U S the European Union and elsewhere could impact our processing of personal information of our employees and on behalf of our clients
Further there is increased focus including by governments regulators our investors employees clients and other stakeholders on sustainability matters which has resulted in new or additional legal and regulatory requirements and may require increased compliance and operational costs In addition if we fail to comply with applicable regulations and maintain practices that meet our stakeholders evolving expectations it could harm our reputation adversely affect our ability to attract and retain employees or clients and expose us to increased scrutiny from investors and regulatory authorities
Our ability to comply with applicable laws and regulations depends largely upon the maintenance of an effective compliance system which can be time consuming and costly as well as our ability to attract and retain qualified compliance personnel Any failure by our employees to comply with our policies and any laws and regulations applicable to our business even if inadvertent could have a negative impact on our business
We generate significant revenues from the transaction processing fees we earn from our services These revenue sources are substantially dependent on the levels of participation and activity in the securities markets The number of unique securities positions held by investors through our clients and our clients customer trading volumes reflect the levels of participation and activity in the markets which are impacted by market prices and the liquidity of the securities markets among other factors Volatility in the securities markets and sudden sharp or gradual but sustained declines in market participation and activity can result in reduced investor communications activity including reduced proxy and event driven communications processing such as mutual fund proxy mergers and acquisitions and other special corporate event communications processing and reduced trading volumes In addition our event driven fee revenues are based on the number of special corporate events and transactions we process Event driven activity is impacted by financial market conditions and changes in regulatory compliance requirements resulting in fluctuations in the timing and levels of event driven fee revenues As such the timing and level of event driven activity and its potential impact on our revenues and earnings are difficult to forecast The occurrence of any of these events would likely result in reduced revenues and decreased profitability from our business operations
We rely on relationships with third parties including our service providers and other vendors for certain functions If we are unable to effectively manage our third party relationships and the agreements under which our third party vendors operate our financial results or reputation could suffer We rely on these third parties including for the provision of certain data center and cloud services to provide services in a timely and accurate manner and to adequately address their own risks including those related to cybersecurity Failure by these third parties to adequately perform their services as expected could result in material interruptions in our operations and negatively impact our services resulting in a material adverse effect on our business and financial results
Certain of our businesses rely on a single or a limited number of service providers or vendors Changes in the business condition financial or otherwise of these service providers or vendors could impact their provision of services to us or they may no longer be able to provide services to us at all which could have a material adverse effect on our business and financial results In such circumstances we cannot be certain that we will be able to replace our key third party vendors in a timely manner or on terms commercially reasonable to us given among other reasons the scope of responsibilities undertaken by some of our service providers the depth of their experience and their familiarity with our operations generally
If we change a significant vendor an existing service provider makes significant changes to the way it conducts its operations or is acquired or we seek to bring in house certain services performed today by third parties we may experience unexpected disruptions in the provision of our solutions and increased expenses which could have a material adverse effect on our business profitability and financial results Furthermore certain third party service providers or vendors may have access to sensitive data including personal information valuable intellectual property and other proprietary or confidential data including that provided to us by our clients It is possible that a third party vendor could intentionally or inadvertently disclose sensitive data including personal information which could have a material adverse effect on our business and financial results and damage our reputation
We rely on the United States Postal Service USPS and other third party carriers to deliver communications and changes in our relationships with these carriers or an increase in postal rates or shipping costs may adversely impact demand for our products and services and could have an adverse impact on our business and results of operations
We rely upon the USPS and third party carriers including the United Parcel Service for timely delivery of communications on behalf of our clients As a result we are subject to carrier disruptions due to factors that are beyond our control including employee strikes inclement weather and increased fuel costs Any failure to deliver communications to or on behalf of our clients in a timely and accurate manner may damage our reputation and brand and could cause us to lose clients In addition the USPS has incurred significant financial losses in recent years and may as a result implement significant changes to the breadth or frequency of its mail delivery causing disruptions in the service If our relationship with any of these third party carriers is terminated or impaired or if any of these third parties are unable to distribute communications we would be required to use alternative and possibly more expensive carriers to complete our distributions on behalf of our clients We may be unable to engage alternative carriers on a timely basis or on acceptable terms if at all which could have an adverse effect on our business In addition future increases in postal rates or shipping costs as well as changes in customer preferences may result in decreased demand for our traditional printed and mailed communications resulting in an adverse effect on our business financial condition and results of operations
Our operations are dependent on our ability to protect our infrastructure against damage from catastrophe natural disaster or severe weather as well as events resulting from unauthorized security breach power loss telecommunications failure terrorist attack pandemic or other events that could have a significant disruptive effect on our operations We have disaster recovery and business continuity plans in place in the event of system failure due to any of these events and we test our plans regularly In addition our data center services provider also has disaster recovery plans and procedures in place However we cannot be certain that our plans or those of our data center services provider will be successful in the event of a disaster If our disaster recovery or business continuity plans are unsuccessful in a disaster recovery scenario we could potentially lose client data or experience material adverse interruptions to our operations or delivery of services to our clients and we could be liable to parties who are financially harmed by those failures In addition such failures could cause us to lose revenues lose clients or damage our reputation
Any slowdown or failure of our computer or communications systems could impact our ability to provide services to our clients and support our internal operations and could subject us to liability for losses suffered by our clients or their customers
Our services depend on our ability to store retrieve process and manage significant databases and to receive and process transactions and investor communications through a variety of electronic systems Our systems those of our data center and cloud services providers or any other systems with which our systems interact could slow down significantly or fail for a variety of reasons including
While we monitor system loads and performance and implement system upgrades to handle predicted increases in trading volume and volatility we may not be able to predict future volume increases or volatility accurately or that our systems and those of our data center services and cloud services providers will be able to accommodate these volume increases or volatility without failure or degradation In addition we may not be able to prevent cybersecurity attacks on our systems
Moreover because we have outsourced our data center operations and use third party cloud services providers for storage of certain data the operation performance and security functions of the data center and the cloud system involve factors beyond our control and we cannot guarantee that our third party providers will be able to provide their services at a satisfactory level Any significant degradation or failure of our or our third party providers computer systems communications systems or any other systems in the performance of our services could cause our clients or their customers to suffer delays in their receipt of our services These delays could cause substantial losses for our clients or their customers and we could be liable to parties who are financially harmed by those failures In addition such failures could cause us to lose revenues lose clients or damage our reputation
Our clients operate in highly regulated industries and rely on our services to meet some of their regulatory requirements The inability or the failure to properly perform our services could result in our clients and or certain of our subsidiaries that operate regulated businesses being subjected to losses including censures fines or other sanctions by applicable regulatory authorities and we could be liable to parties who are financially harmed by those errors In addition the inability to properly perform our services or errors in the performance of our services could result in a decline in confidence in our products and services and cause us to incur expenses including service penalties lose revenues lose clients or damage our reputation
In addition some of our products services and processes leverage machine learning and AI The use of such technology is subject to risk and may result in insufficient or inaccurate information These deficiencies could undermine the quality of these products and services provided to our clients subjecting us to legal liability and reputational damage
Global economic and political conditions including global health crises and geopolitical instability broad trends in business and finance that are beyond our control have had and may have a material impact on our business operations and those of our clients and contribute to reduced levels of activity in the securities markets which could adversely impact our business and results of operations
Compliance with foreign and U S laws and regulations that are applicable to our international operations could cause us to incur higher than anticipated costs and inadequate enforcement of laws or policies such as those protecting intellectual property could affect our business and the Company s overall results of operations
These factors are beyond our control and may negatively impact our ability to perform our services or the demand for our services or may increase our costs resulting in an adverse impact on our business and results of operations
For example our services are impacted by the number of unique securities positions held by investors through our clients the level of investor communications activity we process on behalf of our clients trading volumes market prices and liquidity of the securities markets which are in turn affected by general national and international economic and political conditions and broad trends in business and finance that could result in changes in participation and activity in the securities markets Accordingly any significant reduction in participation and activity in the securities markets would likely adversely impact our business and results of operations
The global financial services industry is characterized by increasingly complex and integrated infrastructures and products new and changing business models and rapid technological and regulatory changes Our clients needs and demands for our products and services evolve with these changes Our future success will depend in part on our ability to respond to our clients demands for new services capabilities and technologies on a timely and cost effective basis We also need to adapt to technological advancements such as AI machine learning quantum computing digital and distributed ledger and cloud computing and keep pace with changing regulatory standards to address our clients increasingly sophisticated requirements Transitioning to these new technologies may require close coordination with our clients be disruptive to our resources and the services we provide and may increase our reliance on third party service providers such as our cloud services provider
In addition we run the risk of disintermediation due to emerging technologies fintech start ups and new market entrants If we fail to adapt or keep pace with new technologies in a timely manner it could harm our ability to compete decrease the value of our products and services to our clients and harm our business and impact our future growth
The growth of our business and expansion of our client base may place a strain on our management and operations We believe that our current and anticipated future growth will require the implementation of new and enhanced communications and information systems the training of personnel to operate these systems and the expansion and upgrade of core technologies While many of our systems are designed to accommodate additional growth without redesign or replacement we may nevertheless need to make significant investments in additional hardware and software to accommodate growth which may impact our profitability and business operations In addition we may not be able to predict the timing or rate of this growth accurately or expand and upgrade our systems and infrastructure on a timely basis
Our growth has required and will continue to require increased investments in management personnel and systems financial systems and controls and office facilities We cannot assure you that we will be able to manage or continue to manage our future growth successfully If we fail to manage our growth we may experience operating inefficiencies dissatisfaction among our client base and lost revenue opportunities
The markets for our products and services continue to evolve and are highly competitive We compete with a number of firms that provide similar products and services In addition our securities processing solutions compete with our clients in house capabilities to perform comparable functions Our competitors may be able to respond more quickly to new or changing opportunities technologies and client requirements and may be able to undertake more extensive promotional activities offer more attractive terms to clients and adopt more aggressive pricing policies than we will be able to offer or adopt In addition we expect that the markets in which we compete will continue to attract new competitors and new technologies There can be no assurances that we will be able to compete effectively with current or future competitors If we fail to compete effectively our business financial condition and results of operations could be materially harmed
Our continued success depends on our ability to attract and retain key personnel such as our senior management and other qualified personnel including highly skilled technical employees to conduct our business Skilled and experienced personnel in the areas where we compete are in high demand and competition for their talents is intense There can be no assurance that we will be successful in our efforts to recruit and retain the required key personnel If we are unable to attract and retain qualified individuals or our recruiting and retention costs increase significantly our operations and financial results could be materially adversely affected
Third parties may infringe or misappropriate our intellectual property which includes a combination of patents trademarks service marks copyrights domain names and trade secrets Our inability to protect our intellectual property and marks could adversely affect our business In an effort to protect our intellectual property we enter into confidentiality and invention assignment agreements with our employees consultants and other third parties and control access to our services software and proprietary information Moreover we license or acquire technology that we incorporate into our services and products Additional actions may be required to protect our intellectual property including legal action which could be time consuming and expensive and may negatively impact our business financial condition and results of operations
Despite our efforts to identify obtain retain enforce and protect our intellectual property rights and proprietary information we cannot be certain that they will be effective or sufficient to prevent the unauthorized access use copying theft or the reverse engineering of our intellectual property and proprietary information for a variety of reasons including a our inability to detect misappropriation by third parties of our intellectual property b disparate legal protections for intellectual property across different countries c constantly evolving intellectual property legal standards as to the scope of protection validity non infringement enforceability and infringement defenses d failure to maintain appropriate contractual restrictions and other measures to protect our know how and trade secrets or contract breaches by others e failure to identify and obtain patents on patentable innovations f potential invalidation unenforceability scope narrowing dilution and opposition through litigation and administrative processes both in the U S and abroad of our intellectual property rights and g other business or resource limitations on intellectual property enforcement against third parties
Our products and services and the products and services provided to us by third parties may infringe upon intellectual property rights of third parties and any infringement claims whether initiated by or against us could require us to incur substantial costs distract our management or prevent us from conducting our business
Costly complex time consuming and unpredictable litigation may be necessary to enforce our intellectual property rights or challenge the purported validity or scope of third party intellectual property Further although we attempt to avoid infringing upon known proprietary rights of third parties we are subject to the risk of claims alleging infringement of third party proprietary rights All intellectual property litigations even baseless claims result in significant expense and diversion of resources our management and time Any adverse outcome in an intellectual property litigation could prevent us from selling our products or services or require us to license the technology of others on unfavorable terms which may materially and adversely affect our brand business operations and financial condition Additionally third parties that provide us with products or services that are integral to the conduct of our business may also be subject to similar infringement allegations from others which could prevent such third parties from continuing to provide these products or services to us As a result we may need to undertake work arounds or substantial reengineering of our products or services in order to continue offering them and we may not succeed in doing so Furthermore a party asserting such an infringement claim could secure a judgment against us that requires us to pay substantial damages grant such party injunctive relief or grant other court ordered remedies that could prevent us from conducting our business
We use third party open source software in our products and services There is a risk that we incorporate into our products and services open source software with onerous licensing terms that purportedly require us to make the source code of our proprietary code combined with such open source software available under such license Furthermore U S courts have not interpreted the terms of various open source licenses but could interpret them in a manner that imposes unanticipated conditions or restrictions on our products and services Usage of open source software can lead to greater risks than use of third party commercial software given that licensors generally disclaim all warranties on their open source software and hackers frequently exploit vulnerabilities in open source software Any use of open source software inconsistent with its license or our policy could harm our business operations and financial position
As part of our overall business strategy we may make acquisitions and strategic investments in companies technologies or products or enter joint ventures In fact over the last three fiscal years we have completed four acquisitions and made strategic investments in seven firms These transactions and the integration of acquisitions involve a number of risks The core risks are in the areas of
finding suitable businesses to acquire at affordable valuations or on other acceptable terms competition for acquisitions from other potential acquirors and negotiating a fair price for the business based on inherently limited due diligence reviews
managing the complex process of integrating the acquired company s people products technology and other assets and converting their financial information security privacy and other systems and controls to meet our standards so as to achieve intended strategic objectives and realize the projected value synergies and other benefits in connection with the acquisition and
Our existing and future debt levels and compliance with our debt service obligations could have a negative impact on our financing options and liquidity position which could adversely affect our business
As of June 30 2024 we had 3 355 1 million in aggregate carrying amount of total debt Additionally our revolving credit facility has a remaining borrowing capacity of 1 500 0 million as of June 30 2024 Our overall leverage and the terms of our financing arrangements could
limit our ability to obtain additional financing in the future for working capital capital expenditures or acquisitions to fund growth or for general corporate purposes even when necessary to maintain adequate liquidity
require us to dedicate a substantial portion of our cash flow from operations to make interest and principal payments on our debt thereby limiting the availability of our cash flow to fund future investments capital expenditures working capital business activities and other general corporate requirements and
Our liquidity position may be negatively affected by changes in general economic conditions regulatory requirements and access to the capital markets which may be limited if we were to fail to renew any of the credit facilities on their renewal dates or if we were to fail to meet certain ratios Our ability to meet expenses and debt service obligations will depend on our future performance which could be affected by financial business economic and other factors If we are not able to pay our debt service obligations or comply with the financial or other restrictive covenants contained in the indenture governing our senior notes or our credit facility we may be required to immediately repay or refinance all or part of our debt sell assets borrow additional funds or raise additional equity capital which could also result in a credit rating downgrade In addition if the credit ratings of our outstanding indebtedness are downgraded or if rating agencies indicate that a downgrade may occur our business financial position and results of operations could be adversely affected and perceptions of our financial strength could be damaged A downgrade would also have the effect of increasing our borrowing costs and could decrease the availability of funds we are able to borrow adversely affecting our business financial position and results of operations Further a downgrade could adversely affect our relationships with our clients
As a result of past acquisitions we carry a significant goodwill and other acquired intangible assets on our balance sheet In addition we also defer certain costs to onboard a client or convert a client s systems to function with our technology Goodwill intangible assets net and deferred client conversion and start up costs accounted for approximately 69 of the total assets on our balance sheet as of June 30 2024 We test goodwill for impairment annually as of March 31st and we test goodwill intangible assets net and deferred client conversion and start up costs for impairment at other times if events have occurred or circumstances exist that indicate the carrying value of such assets may no longer be recoverable It is possible we may incur impairment charges in the future particularly in the event of a prolonged economic recession or loss of a key client or clients A significant non cash impairment could have a material adverse effect on our results of operations
Our mutual fund and exchange traded fund processing services and our transfer agency services involve the settlement of transactions on behalf of our clients and third parties With these activities we may be exposed to risk in the event our clients or broker dealers banks clearing organizations or depositories are unable to fulfill contractual obligations Failure to settle a transaction may affect our ability to conduct these services or may reduce their profitability as a result of the reputational risk associated with failure to settle
Our information security program is designed to meet the needs of our clients who entrust us with their sensitive information We maintain International Organization for Standardization ISO 27001 certification for most of our business units and core applications and facilities and where applicable align to other industry standards or frameworks including Cloud Security Alliance s Cloud Controls Matrix CSA CCM Payment Card Industry Data Security Standard PCI DSS Health Insurance Portability and Accountability Act HIPAA and HITRUST Common Security Framework HITRUST CSF
We recognize the importance of identifying assessing and managing material risks associated with cybersecurity threats Our cybersecurity risk management program is integrated into our overall enterprise risk management ERM process which provides an ongoing procedure effected at all levels of the Company across business units and corporate functions to identify and assess risk monitor risk and take appropriate mitigating action Central to our risk management process is the Risk Committee which is a management committee that oversees the identification and assessment of the key risks affecting our operations and reviews the controls established with respect to these risks The Risk Committee is comprised of key members of management including the President Chief Financial Officer Chief Legal Officer Chief Information Security Officer Chief Privacy Officer and other senior executives of the Company Our Risk Committee collaborates with subject matter experts as needed to gather insights for identifying and assessing material cybersecurity risks their severity and potential mitigations
We take the following actions among others to demonstrate our commitment to maintaining the highest levels of information security provide for the availability of critical data and systems maintain regulatory compliance manage our material risks from cybersecurity threats and to identify protect against detect respond to and recover from cybersecurity incidents
leverage encryption data masking technology data loss prevention technology authentication technology entitlement management access control network and application segmentation anti malware software and transmission of data over private networks among other systems and procedures designed to protect against unauthorized access to information
conduct annual reviews with many of our clients on our cybersecurity and data security policies practices and controls and engage with regulators across the world to remain apprised of cybersecurity and data security standards and best practices
utilize the National Institute of Standards and Technology Framework for Improving Critical Infrastructure Cybersecurity the NIST Framework issued by the U S government as a guideline to manage our cybersecurity related risk We are currently evaluating our program against the newly issued NIST Framework 2 0 The NIST Framework outlines security controls and outcomes over five functions identify protect detect respond and recover
maintain global information security policies and procedures including an incident response and crisis management plan which include processes to triage assess investigate escalate contain and remediate cybersecurity incidents
We further describe whether and how risks from identified cybersecurity threats including as a result of any previous cybersecurity incidents have materially affected or are reasonably likely to materially affect us including our business strategy results of operations or financial condition under the heading Security breaches or cybersecurity incidents could adversely affect our ability to operate could result in personal confidential or proprietary information being misappropriated and may cause us to be held liable or suffer harm to our reputation included as part of our risk factor disclosures at Item 1A of this Annual Report on Form 10 K which disclosures are incorporated by reference herein
Our CISO has more than 25 years of experience in managing and leading cybersecurity functions which includes cybersecurity operations strategy and governance and information technology and security risk compliance and audit responsibilities across the U S Latin America United Kingdom Eastern Europe Singapore and China Our CISO is responsible for developing implementing and overseeing our overall information security program including cybersecurity risk management governance and compliance security policies and training and the overall protection and defense of our networks systems and confidential data With respect to risk management our CISO works closely with our Managing Director Risk Management and other members of our Risk Committee including the President Chief Financial Officer Chief Legal Officer and Chief Technology Officer who are responsible for reviewing and challenging as necessary the activities of our information security team
The responsibilities of the Company s Board of Directors Board include oversight of our risk management processes The Board has two primary methods of oversight The first method is through the ERM process through which the Board receives regular reports from management regarding the most significant risks facing the Company The second is through the functioning of the Board s committees The Audit Committee assists the Board in its oversight of the Company s information security program including cybersecurity and data privacy risks and controls Our CISO provides reports on the Company s cybersec
urity program to the Audit Committee which includes all members of the Board on a quarterly basis In addition our Internal Audit function regularly audits our technology and cybersecurity programs and reports to the Audit Committee on its findings
We operate our business primarily from 43 facilities We lease 10 production related facilities in Edgewood New York El Dorado Hills California South Windsor Connecticut Kansas City Missouri Dallas Texas Coppell Texas and Markham Canada with a combined space of 2 3 million square feet which are used in connection with our Investor Communication Solutions business We also lease one facility in Newark New Jersey which houses our principal Global Technology and Operations business operations We lease space at 32 additional locations subject to customary lease arrangements and which expire on a staggered basis We believe our facilities are currently adequate for their intended purposes and are adequately maintained
Currently there are not any material pending legal proceedings other than ordinary routine litigation incidental to the business to which the Company is a party or of which any of the Company s property is the subject In the normal course of business the Company is subject to claims and litigation While the outcome of any claim or litigation is inherently unpredictable the Company believes that the ultimate resolution of these matters will not individually or in the aggregate result in a material impact on its financial condition results of operations or cash flows
For information concerning the Company s legal proceedings reference is made to Note 19 Contractual Commitments Contingencies and Off Balance Sheet Arrangements to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10 K
Our common stock began trading regular way on the NYSE under the symbol BR on April 2 2007 There were 8 492 stockholders of record of the Company s common stock as of August 1 2024 This figure excludes the beneficial holders whose shares may be held of record by brokerage firms and clearing agencies
We expect to pay cash dividends on our common stock On August 5 2024 our Board of Directors increased our quarterly cash dividend by 0 08 per share to 0 88 per share an increase in our expected annual dividend amount from 3 20 to 3 52 per share The declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend upon many factors including our financial condition earnings capital requirements of our businesses legal requirements regulatory constraints industry practice and other factors that the Board of Directors deems relevant
As a holding company substantially all our assets are comprised of the capital stock of our subsidiaries therefore our ability to pay dividends will be dependent on our receiving dividends from our operating subsidiaries Our subsidiaries through which we provide our business process outsourcing and mutual fund processing services are regulated and may be subject to restrictions on their ability to pay dividends to us We do not believe that these restrictions are significant enough to impact the Company s ability to pay dividends
The following graph compares the cumulative total return on Broadridge common stock from June 30 2019 to June 30 2024 with the comparable cumulative return of the i S P 500 Index ii S P 500 Information Technology Index and iii S P 500 Industrials Index The graph assumes 100 was invested on June 30 2019 in our common stock and in each of the indices and assumes that all cash dividends are reinvested The table below the graph shows the dollar value of those investments as of the dates in the graph The comparisons in the graph are required by the SEC and are not intended to forecast or be indicative of future performance of our common stock
The following performance graph and related information shall not be deemed soliciting material or to be filed with the SEC nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Exchange Act each as amended except to the extent that Broadridge specifically incorporates it by reference into such filing
During the fiscal quarter ended June 30 2024 the Company repurchased 1 503 778 shares of common stock at an average price of 199 52 under its share repurchase program At June 30 2024 the Company had 7 251 347 shares available for repurchase under its share repurchase program Any share repurchases will be made in the open market or privately negotiated transactions in compliance with applicable legal requirements and other factors
This discussion summarizes the significant factors affecting the results of operations and financial condition of Broadridge during the fiscal years ended June 30 2024 and 2023 and should be read in conjunction with our Consolidated 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 such as expects assumes projects anticipates estimates we believe could be on track 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 performance or achievements 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 Part 1 of this Annual Report on Form 10 K
The discussion summarizing the significant factors affecting the results of operations and financial condition of Broadridge during the fiscal year ended June 30 2023 can be found in Part II Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10 K for the fiscal year 2023 the 2023 Annual Report which was filed with the Securities and Exchange Commission on August 8 2023
Index is a global financial technology leader providing investor communications and technology driven solutions to banks broker dealers asset and wealth managers public companies investors and mutual funds Our services include investor communications securities processing data and analytics and customer communications solutions With over 60 years of experience including over 15 years as an independent public company we provide integrated solutions and an important infrastructure that powers the financial services industry Our solutions enable better financial lives by powering investing governance and communications and help reduce the need for our clients to make significant capital investments in operations infrastructure thereby allowing them to increase their focus on core business activities Our businesses operate in two reportable segments Investor Communication Solutions and Global Technology and Operations
Assets acquired and liabilities assumed in business combinations are recorded on the Company s Consolidated Balance Sheets as of the respective acquisition date based upon the estimated fair values at such date The results of operations of the business acquired by the Company are included in the Company s Consolidated Statements of Earnings since the respective date of acquisition The excess of the purchase price over the estimated fair values of the underlying assets acquired and liabilities assumed is allocated to Goodwill
In May 2024 the Company acquired AdvisorTarget a market leader in providing asset management and wealth management firms with data products to help power digital marketing sales and engagement programs targeting financial advisors AdvisorTarget is included in the Company s ICS reportable segment The aggregate purchase price included 34 3 million in cash 1 0 million in deferred payments 1 6 million for the settlement of a preexisting relationship and contingent consideration with a maximum potential pay out of 30 5 million The contingent consideration is payable through fiscal year 2028 upon the achievement by the acquired business of certain defined revenue targets Net tangible liabilities assumed in the transaction were 3 1 million and contingent liabilities incurred were valued at 14 0 million This acquisition resulted in 41 8 million of Goodwill which is tax deductible Intangible assets acquired which totaled 12 1 million consist primarily of software technology and customer relationships which are being amortized over a five year life
In May 2024 Broadridge announced the proposed acquisition of Kyndryl SIS to provide wealth management capital markets and information technology solutions to the Canadian financial services industry expanding our product offerings in our Global Technology and Operations segment The total purchase price is approximately 200 million The acquisition is subject to customary closing conditions including regulatory approvals
The Consolidated Financial Statements have been prepared in accordance with U S generally accepted accounting principles GAAP and in accordance with the SEC requirements for Annual Reports on Form 10 K These 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 as well as various entities in which the Company has investments recorded under the equity method of accounting as well as certain marketable and non marketable securities Intercompany balances and transactions have been eliminated Amounts presented may not sum due to rounding Certain prior period amounts have been reclassified to conform to the current year presentation where applicable
In presenting the Consolidated 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 Consolidated 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 those estimates made by management In management s opinion the Consolidated 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
Beginning with the first quarter of fiscal year 2023 the Company changed reporting for segment revenues segment earnings loss before income taxes and segment amortization of acquired intangibles and purchased intellectual property to reflect the impact of actual foreign exchange rates applicable to the individual periods presented The presentation of these metrics for the prior periods provided in this Form 10 K has been changed to conform to the current period presentation Total consolidated revenues and earnings before income taxes were not impacted Please refer to Note 3 Revenue Recognition and Note 21 Financial Data by Segment to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10 K
Processing and distributing proxy materials and annual reports to investors comprises a large portion of our Investor Communication Solutions business We process and distribute the greatest number of proxy materials and annual reports during our third and fourth fiscal quarters The recurring periodic activity of this business is linked to significant filing deadlines imposed by law on public reporting companies This has caused our revenues operating income net earnings and cash flows from operating activities to be higher in our third and fourth fiscal quarters The seasonality of our revenues makes it difficult to estimate future operating results based on the results of any specific fiscal quarter and could affect an investor s ability to compare our financial condition results of operations and cash flows on a fiscal quarter by quarter basis
We continually evaluate the accounting policies and estimates used to prepare the Consolidated 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 Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed below
We review the carrying value of all our Goodwill 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 a possible impairment When determining fair value of a reporting unit we utilize the income approach which considers a discounted future cash flow analysis using various assumptions including projections of revenues based on assumed long term growth rates estimated costs and appropriate discount rates based on the particular reporting unit s weighted average cost of capital The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flows based on forecasted earnings before interest and taxes and the selection of the terminal value growth rate and discount rate assumptions The weighted average cost of capital takes into account the relative weight 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 If the carrying amount of the reporting unit exceeds its fair value an impairment loss shall be recognized in an amount equal to that excess not to exceed the total amount of Goodwill allocated to that reporting unit We had 3 469 4 million of Goodwill as of June 30 2024 Given the significance of our Goodwill an adverse change to the fair value of one of our reporting units could result in an impairment charge which could be material to our earnings
The Company performs a sensitivity analysis under the goodwill impairment test assuming hypothetical reductions in the fair values of our reporting units 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 not result in an impairment of our Goodwill
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 Consolidated Financial Statements or tax returns e g realization of deferred tax assets changes in tax laws or interpretations thereof The Company is subject to regular examination of its income tax returns by the U S federal state and foreign tax authorities A change in the assessment of the outcomes of such matters could materially impact our Consolidated Financial Statements The Company has estimated foreign net operating loss carryforwards of approximately 46 2 million as of June 30 2024 of which 7 3 million are subject to expiration in the June 30 2026 through June 30 2043 period The remaining 38 8 million of carryforwards has an indefinite utilization period In addition the Company has estimated U S federal net operating loss carryforwards of approximately 30 1 million of which 12 4 million are subject to expiration in the June 30 2025 through June 30 2037 period with the balance of 17 6 million having an indefinite utilization period U S federal net operating loss carryforwards resulting from tax losses beginning with the fiscal year ended June 30 2019 have an indefinite carryforward under the U S Tax Cuts and Jobs Act the Tax Act The Company did not generate federal net operating losses for the fiscal year ended June 30 2024
Valuation allowances are recognized to reduce deferred tax assets when it is more likely than not that the Company will not be able to utilize the deferred tax assets of certain subsidiaries to offset future taxable earnings The Company has recorded valuation allowances of 10 8 million and 10 3 million at June 30 2024 and 2023 respectively The determination as to whether a deferred tax asset will be recognized is made on a jurisdictional basis and is based on the evaluation of historical taxable income or loss projected future taxable income carryforward periods scheduled reversals of deferred tax liabilities and tax planning strategies Projected future taxable income is based on expected results and assumptions as to the jurisdiction in which the income will be earned The assumptions used to project future taxable income requires significant judgment and are consistent with the plans and estimates used to manage the underlying businesses
Accounting for stock based compensation requires the measurement of stock based compensation expense based on the fair value of the award on the date of grant We determine the fair value of stock options issued by using a binomial option pricing model The binomial option pricing model considers a range of assumptions related to volatility dividend yield risk free interest rate and employee exercise behavior Expected volatilities utilized in the binomial option pricing model are based on a combination of implied market volatilities historical volatility of our stock price and other factors Similarly the dividend yield is based on historical experience and expected future changes The risk free rate is derived from the U S Treasury yield curve in effect at the time of grant The binomial option pricing model also incorporates exercise and forfeiture assumptions based on an analysis of historical data The expected life of the stock option grants is derived from the output of the binomial model and represents the period of time that options granted are expected to be outstanding Determining these assumptions are subjective and complex and therefore a change in the assumptions utilized could impact the calculation of the fair value of our stock options A hypothetical change of five percentage points applied to the volatility assumption used to determine the fair value of the fiscal year 2024 stock option grants would result in an approximate 2 4 million change in total pre tax stock based compensation expense for the fiscal year 2024 grants which would be amortized over the vesting period A hypothetical change of one year in the expected life assumption used to determine the fair value of the fiscal year 2024 stock option grants would result in an approximate 1 5 million change in the total pre tax stock based compensation expense for the fiscal year 2024 grants which would be amortized over the vesting period A hypothetical change of one percentage point in the forfeiture rate assumption used for the fiscal year 2024 stock option grants would result in an approximate 0 2 million change in the total pre tax stock based compensation expense for the fiscal year 2024 grants which would be amortized over the vesting period A hypothetical one half percentage point change in the dividend yield assumption used to determine the fair value of the fiscal year 2024 stock option grants would result in an approximate 1 5 million change in the total pre tax stock based compensation expense for the fiscal year 2024 grants which would be amortized over the vesting period
Management focuses on a variety of key indicators to plan measure and evaluate the Company s business and financial performance These performance indicators include Revenue and Recurring revenue as well as not generally accepted accounting principles measures Non GAAP of Adjusted Operating income Adjusted Net earnings Adjusted earnings per share Free Cash flow Recurring revenue growth constant currency and Closed sales In addition management focuses on select operating metrics specific to Broadridge of Record Growth and Internal Trade Growth as defined below
Refer to the section Explanation and Reconciliation of the Company s Use of Non GAAP Financial Measures for a reconciliation of Adjusted Operating income Adjusted Net earnings Adjusted earnings per share Free Cash flow and Recurring revenue growth constant currency to the most directly comparable GAAP measures and an explanation for why these Non GAAP metrics provide useful information to investors and how management uses these Non GAAP metrics for operational and financial decision making Refer to the section Results of Operations for a description of Closed sales and an explanation of why Closed sales is a useful performance metric for management and investors
Revenues are primarily generated from fees for processing and distributing investor communications and fees for technology enabled services and solutions The Company monitors revenue in each of our two reportable segments as a key measure of success in addressing our clients needs Revenues from fees are derived from both recurring and event driven activity The level of recurring and event driven activity the Company processes directly impacts distribution revenues While event driven activity is highly repeatable it may not recur on an annual basis Event driven revenues are based on the number of special events and corporate transactions the Company processes Event driven activity is impacted by financial market conditions and changes in regulatory compliance requirements resulting in fluctuations in the timing and levels of event driven revenues Distribution revenues primarily include revenues related to the physical mailing of proxy materials interim communications transaction reporting customer communications and fulfillment services as well as Broadridge Retirement and Workplace administrative services
Recurring revenue growth represents the Company s total annual revenue growth less growth from event driven and distribution revenues We distinguish recurring revenue growth between organic and acquired
Acquired We define acquired revenue as the recurring revenue generated from acquired services in the first twelve months following the date of acquisition This type of growth comes as a result of our strategy to purchase integrate and leverage the value of assets we acquire
Revenues and Recurring revenue are useful metrics for investors in understanding how management measures and evaluates the Company s ongoing operational performance See Results of Operations as well as Note 2 Summary of Significant Accounting Policies and Note 3 Revenue Recognition to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10 K
The Company uses select operating metrics specific to Broadridge of Record Growth and Internal Trade Growth in evaluating its business results and identifying trends affecting its business Record Growth is comprised of stock record growth and interim record growth
Interim record growth also referred to as IRG or mutual fund ETF position growth measures the estimated change in mutual fund and exchange traded fund positions eligible for interim communications These metrics are calculated from equity proxy and mutual fund ETF position data reported to Broadridge for the same issuers or funds in both the current and prior year periods
Internal Trade Growth represents the estimated change in daily average trade volumes for Broadridge securities processing clients whose contracts are linked to trade volumes and who were on Broadridge s trading platforms in both the current and prior year periods Record Growth and Internal Trade Growth are useful non financial metrics for investors in understanding how management measures and evaluates Broadridge s ongoing operational performance within its Investor Communication Solutions and Global Technology and Operations reportable segments respectively
The following discussions of Analysis of Consolidated Statements of Earnings and Analysis of Reportable Segments refer to the fiscal year ended June 30 2024 compared to the fiscal year ended June 30 2023 The Analysis of Consolidated Statements of Earnings should be read in conjunction with the Analysis of Reportable Segments which provides a more detailed discussion concerning certain components of the Consolidated Statements of Earnings Discussions of Analysis of Consolidated Statements of Earnings and Analysis of Reportable Segments for the fiscal year ended June 30 2023 compared to the fiscal year ended June 30 2022 is disclosed in Part II Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations of the 2023 Annual Report
Amortization of Acquired Intangibles and Purchased Intellectual Property and Acquisition and Integration Costs represent certain non cash amortization expenses associated with acquired intangible assets and purchased intellectual property assets as well as certain transaction and integration costs associated with the Company s acquisition activities respectively
Restructuring and Other Related Costs represent costs associated with the Company s Corporate Restructuring Initiative to exit and or realign some of our businesses streamline the Company s management structure reallocate work to lower cost locations and reduce headcount in deprioritized areas
Russia Related Exit Costs are direct and incremental costs associated with the Company s wind down of business activities in Russia in response to Russia s invasion of Ukraine including relocation related expenses of impacted associates
Net New Business refers to recurring revenue from Closed sales for the initial twelve month contract period after which the client goes live with the Company s service s less recurring revenue from client losses
Internal Growth is a component of recurring revenue and generally reflects year over year changes in existing services to our existing customers multi year contracts beyond the initial twelve month period in which it was included in Net New Business
Revenues in the Investor Communication Solutions segment are derived from both recurring and event driven activity in addition to distribution revenues The level of recurring and event driven activity we process directly impacts revenues While event driven activity is highly repeatable it may not recur on an annual basis The types of services we provide that comprise event driven activity are
Mutual Fund Proxy The proxy and related services we provide to mutual funds when certain events occur requiring a shareholder vote including changes in directors sub advisors fee structures investment restrictions and mergers of funds
Mutual Fund Communications Mutual fund communications services consist primarily of the distribution on behalf of mutual funds of supplemental information required to be provided to the annual mutual fund prospectus as a result of certain triggering events such as a change in portfolio managers In addition mutual fund communications consist of notices and marketing materials such as newsletters
Equity Proxy Contests and Specials Corporate Actions and Other The proxy services we provide in connection with shareholder meetings driven by special events such as proxy contests mergers and acquisitions and tender exchange offers
Event driven revenues are based on the number of special events and corporate transactions we process Event driven activity is impacted by financial market conditions and changes in regulatory compliance requirements resulting in fluctuations in the timing and levels of event driven revenues As such the timing and level of event driven activity and its potential impact on revenues and earnings are difficult to forecast
Generally mutual fund proxy activity has been subject to a greater level of volatility than the other components of event driven activity During fiscal year 2024 mutual fund proxy revenues were 66 higher than the prior fiscal year During fiscal year 2023 mutual fund proxy revenues were 51 lower than the prior fiscal year Although it is difficult to forecast the levels of event driven activity we expect that the portion of revenues derived from mutual fund proxy activity may continue to experience volatility in the future
Distribution revenues primarily include revenues related to the physical mailing of proxy materials interim communications transaction reporting customer communications and fulfillment services as well as Broadridge Retirement and Workplace administrative services
Distribution cost of revenues consists primarily of postage related expenses incurred in connection with our Investor Communication Solutions segment as well as Broadridge Retirement and Workplace administrative services expenses These costs are reflected in Cost of revenues
Closed sales represent an estimate of the expected annual recurring revenue for new client contracts that were signed by Broadridge in the current reporting period Closed sales does not include event driven or distribution activity We consider contract terms expected client volumes or activity knowledge of the marketplace and experience with our clients among other factors when determining the estimate Management uses Closed sales to measure the effectiveness of our sales and marketing programs as an indicator of expected future revenues and as a performance metric in determining incentive compensation
Closed sales is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for revenue or other income statement data prepared in accordance with GAAP Closed sales is a useful metric for investors in understanding how management measures and evaluates our ongoing operational performance
The inherent variability of transaction volumes and activity levels can result in some variability of amounts reported as actual achieved Closed sales Larger Closed sales can take up to 12 to 24 months or longer to convert to revenues particularly for the services provided by our Global Technology and Operations segment For the fiscal years ended June 30 2024 and June 30 2023 we reported Closed sales net of a 5 0 allowance adjustment Consequently our reported Closed sales amounts will not be adjusted for actual revenues achieved because these adjustments are estimated in the period the sale is reported We assess this allowance amount at the end of each fiscal year to establish the appropriate allowance for the subsequent year using the trailing five years actual data as the starting point normalized for outlying factors if any to enhance the accuracy of the allowance
For the fiscal years ended June 30 2024 and 2023 Closed sales were 341 8 million and 245 8 million respectively The fiscal years ended June 30 2024 and 2023 are net of an allowance adjustment of 18 0 million and 12 9 million respectively
Cost of revenues The increase of 297 4 million primarily reflecting the impact of higher postage and distribution expenses in our ICS segment of 116 3 million higher amortization and depreciation expense in our GTO segment of 62 8 million higher Restructuring and Other Related costs of 42 6 million and Litigation Settlement Charges of 18 4 million primarily for the settlement of litigation claims
Interest expense net was 138 1 million an increase of 2 6 million from 135 5 million in the fiscal year ended June 30 2023 as the impact of higher interest rates was partially offset by a decrease in average borrowings
Other non operating expenses net for the fiscal year ended June 30 2024 was 1 7 million compared to 6 0 million for the fiscal year ended June 30 2023 The decreased expense of 4 3 million was primarily driven by improved performance on investments associated with our retirement plans and other investments compared to the prior year period
The decrease in the effective tax rate for the fiscal year ended June 30 2024 compared to the fiscal year ended June 30 2023 was driven by an increase in discrete tax benefits relative to pre tax income The higher excess tax benefit related to equity compensation contributed to the increase in total discrete tax benefits
Certain corporate expenses as well as certain centrally managed expenses are allocated based upon budgeted amounts in a reasonable manner Because the Company compensates the management of its various businesses on among other factors segment profit the Company may elect to record certain segment related operating and non operating expense items in Other rather than reflect such items in segment profit
Earnings before income taxes increased 138 9 million or 17 primarily from higher Recurring revenue and higher event driven revenue Operating expenses rose 5 or 183 4 million to 3 907 5 million primarily driven by higher distribution expenses as well as higher technology and selling expenses
Loss before income taxes was 246 3 million for the fiscal year ended June 30 2024 an increase of 45 8 million or 23 compared to 200 5 million for the fiscal year ended June 30 2023 The increased loss before income taxes was primarily due to
The Company s results in this Annual Report on Form 10 K are presented in accordance with U S GAAP except where otherwise noted In certain circumstances Non GAAP results have been presented These Non GAAP measures are Adjusted Operating income Adjusted Operating income margin Adjusted Net earnings Adjusted earnings per share Free cash flow and Recurring revenue growth constant currency These Non GAAP financial measures should be viewed in addition to and not as a substitute for the Company s reported results
The Company believes our Non GAAP financial measures help investors understand how management plans measures and evaluates the Company s business performance Management believes that Non GAAP measures provide consistency in its financial reporting and facilitates investors understanding of the Company s operating results and trends by providing an additional basis for comparison Management uses these Non GAAP financial measures to among other things evaluate our ongoing operations and for internal planning and forecasting purposes In addition and as a consequence of the importance of these Non GAAP financial measures in managing our business the Company s Compensation Committee of the Board of Directors incorporates Non GAAP financial measures in the evaluation process for determining management compensation
These Non GAAP measures reflect Operating income Operating income margin Net earnings and Diluted earnings per share as adjusted to exclude the impact of certain costs expenses gains and losses and other specified items the exclusion of which management believes provides insight regarding our ongoing operating performance Depending on the period presented these adjusted measures exclude the impact of certain of the following items
iii Restructuring and Other Related Costs which represent costs associated with the Company s Corporate Restructuring Initiative to exit and or realign some of our businesses streamline the Company s management structure reallocate work to lower cost locations and reduce headcount in deprioritized areas Refer to Note 13 Payables and Accrued Expenses for further details on the Company s Corporate Restructuring Initiative
iv Litigation Settlement Charges which represent reserves established during the third and fourth quarters of fiscal year 2024 related to the settlement of claims Refer to Note 19 Contractual Commitments Contingencies and Off Balance Sheet Arrangements for further details
v Russia Related Exit Costs which are direct and incremental costs associated with the Company s wind down of business activities in Russia in response to Russia s invasion of Ukraine including relocation related expenses of impacted associates
We exclude Acquisition and Integration Costs Restructuring and Other Related Costs Litigation Settlement Charges and Russia Related Exit Costs from our Adjusted Operating income as applicable and other adjusted earnings measures
because excluding such information provides us with an understanding of the results from the primary operations of our business and enhances comparability across fiscal reporting periods as these items are not reflective of our underlying operations or performance
We also exclude the impact of Amortization of Acquired Intangibles and Purchased Intellectual Property as these non cash amounts are significantly impacted by the timing and size of individual acquisitions and do not factor into the Company s capital allocation decisions management compensation metrics or multi year objectives Furthermore management believes that this adjustment enables better comparison of our results as Amortization of Acquired Intangibles and Purchased Intellectual Property will not recur in future periods once such intangible assets have been fully amortized Although we exclude Amortization of Acquired Intangibles and Purchased Intellectual Property from our adjusted earnings measures our management believes that it is important for investors to understand that these intangible assets contribute to revenue generation Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized Any future acquisitions may result in the amortization of additional intangible assets
In addition to the Non GAAP financial measures discussed above we provide Free cash flow information because we consider Free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated that could be used for dividends share repurchases strategic acquisitions other investments as well as debt servicing Free cash flow is a Non GAAP financial measure and is defined by the Company as Net cash flows provided by operating activities less Capital expenditures as well as Software purchases and capitalized internal use software
As a multi national company we are subject to variability of our reported U S dollar results due to changes in foreign currency exchange rates The exclusion of the impact of foreign currency exchange fluctuations from our Recurring revenue growth or what we refer to as amounts expressed on a constant currency basis is a Non GAAP measure We believe that excluding the impact of foreign currency exchange fluctuations from our Recurring revenue growth provides additional information that enables enhanced comparison to prior periods
Changes in Recurring revenue growth expressed on a constant currency basis are presented excluding the impact of foreign currency exchange fluctuations To present this information current period results for entities reporting in currencies other than the U S dollar are translated into U S dollars at the average exchange rates in effect during the corresponding period of the comparative year rather than at the actual average exchange rates in effect during the current fiscal year
Restructuring and Other Related Costs for the fiscal year ended June 30 2024 includes 56 0 million of severance and professional services costs directly related to the Corporate Restructuring Initiative and a 7 0 million asset impairment charge as a result of the exit of a business in connection with the Corporate Restructuring Initiative Restructuring and Other Related Costs for the fiscal year ended June 30 2023 includes 20 4 million of severance costs Refer to Note 13 Payables and Accrued Expenses to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10 K for a more detailed discussion
Russia Related Exit Costs were 10 9 million for the fiscal year ended June 30 2023 comprised of 12 1 million of operating expenses offset by a gain of 1 2 million in non operating income for the fiscal year ended June 30 2023
Calculated using the GAAP effective tax rate adjusted to exclude 12 9 million of excess tax benefits ETB associated with stock based compensation for the fiscal year ended June 30 2024 and 10 4 million of ETB associated with stock based compensation for the fiscal year ended June 30 2023 For purposes of calculating the Adjusted earnings per share the same adjustments were made on a per share basis
At June 30 2024 and 2023 Cash and cash equivalents were 304 4 million and 252 3 million respectively Total stockholders equity was 2 168 2 million and 2 240 6 million at June 30 2024 and 2023 respectively At the current time and in future periods we expect cash generated by our operations together with existing cash cash equivalents and borrowings from the capital markets to be sufficient to cover cash needs for working capital capital expenditures strategic acquisitions dividends and common stock repurchases
We expect existing domestic cash cash equivalents cash flows from operations and borrowing capacity to continue to be sufficient to fund our domestic operating activities and cash commitments for investing and financing activities such as regular quarterly dividends debt repayment schedules and material capital expenditures for at least the next 12 months and thereafter for the foreseeable future In addition we expect existing foreign cash cash equivalents cash flows from operations and borrowing capacity to continue to be sufficient to fund our foreign operating activities and cash commitments for investing activities such as material capital expenditures for at least the next 12 months and thereafter for the foreseeable future If these funds are needed for our operations in the U S we may be required to pay additional foreign taxes to repatriate these funds However while we may do so at a future date the Company does not need to repatriate future foreign earnings to fund U S operations
The Fiscal 2021 Term Loans were reclassified from Current portion of long term debt to Long term debt in the first quarter of fiscal year 2024 upon amendment of the loan to reflect the remaining maturity of more than one year
The Company has a 1 5 billion five year revolving credit facility as amended on December 23 2021 and May 23 2023 the Fiscal 2021 Revolving Credit Facility which is comprised of a 1 1 billion U S dollar tranche and a 400 0 million multicurrency tranche Under the Fiscal 2021 Revolving Credit Facility revolving loans denominated in U S Dollars Canadian Dollars Euro Swedish Kronor and Yen initially bear interest at Adjusted Term SOFR CDOR EURIBOR TIBOR and STIBOR respectively plus 1 100 subject to step ups to 1 175 and step downs to 0 805 based on public debt ratings and revolving loans denominated in Sterling bears interest at SONIA plus 1 1326 per annum subject to step ups to 1 2076 and step downs to 0 8376 based on ratings The Fiscal 2021 Revolving Credit Facility also has an annual facility fee equal to 15 0 basis points on the entire facility subject to step ups to 20 0 basis points and step downs to 7 0 basis points based on ratings On May 23 2023 we amended the interest rate index from LIBOR to Adjusted Term SOFR All other terms remained unchanged
In March 2021 the Company entered into an amended and restated term credit agreement as amended on December 23 2021 and May 23 2023 Term Credit Agreement providing for term loan commitments in an aggregate principal amount of 2 55 billion comprised of a 1 0 billion tranche Tranche 1 and a 1 55 billion tranche Tranche 2 together with Tranche 1 the Fiscal 2021 Term Loans The Tranche 1 Loans were repaid in full in May 2021
The Tranche 2 Loans was to mature in May 2024 The proceeds of the Fiscal 2021 Term Loans were used by the Company to solely finance the Itiviti acquisition and pay certain fees and expenses in connection therewith On May 23 2023 we amended the interest rate index from LIBOR to Adjusted SOFR All other terms remained unchanged
Interest on the outstanding portion of the Fiscal 2021 Term Loans bore interest at Adjusted Term SOFR plus 1 000 per annum subject to step ups to Adjusted Term SOFR plus 1 250 or a step down to SOFR plus 0 750 based on ratings
On August 17 2023 the Company amended and restated the Term Credit Agreement the Amended and Restated Term Credit Agreement providing for term loan commitment in an aggregate principal amount of 1 3 billion replacing the Tranche 2 Loan of the Fiscal 2021 Term Loans the Fiscal 2024 Amended Term Loan The Fiscal 2024 Amended Term Loan will mature in August 2026 on the third anniversary of the amended Funding Date of August 17 2023 The Fiscal 2024 Amended Term Loan bears interest at Adjusted Term SOFR plus 1 250 per annum subject to a step up to Adjusted Term SOFR plus 1 375 or step downs to Adjusted Term SOFR plus 1 125 and Adjusted Term SOFR plus 1 000 in each case based on ratings
In June 2016 the Company completed an offering of 500 0 million in aggregate principal amount of senior notes the Fiscal 2016 Senior Notes Interest on the Fiscal 2016 Senior Notes is payable semiannually on June 27 and December 27
of each year based on a fixed per annum rate equal to 3 40 In December 2019 the Company completed an offering of 750 0 million in aggregate principal amount of senior notes the Fiscal 2020 Senior Notes Interest on the Fiscal 2020 Senior Notes is payable semiannually on June 1 and December 1 of each year based on a fixed per annum rate equal to 2 90
In May 2021 the Company completed an offering of 1 billion in aggregate principal amount of senior notes the Fiscal 2021 Senior Notes Interest on the Fiscal 2021 Senior Notes is payable semi annually in arrears on May 1 and November 1 of each year based on a fixed per annum rate equal to 2 60
The Fiscal 2021 Revolving Credit Facility Fiscal 2024 Amended Term Loans Fiscal 2016 Senior Notes Fiscal 2020 Senior Notes and Fiscal 2021 Senior Notes are senior unsecured obligations of the Company and are ranked equally in right of payment
The increase in cash from operating activities of 232 9 million for the twelve months ended June 30 2024 as compared to the twelve months ended June 30 2023 was due to an increase in Net earnings of 67 5 million a decrease in cash used for client related platform implementation and development costs of 300 8 million included in the change in Other non current assets and an increase in Accounts payable of 156 7 million from prior fiscal year combined with a decrease of 87 6 million for the twelve months ended June 30 2023
This was partially offset by a decrease in collections of advanced client billings of 280 0 million included in the change in Contract liabilities a decrease in the change in net Accounts receivable of 57 0 million due to billings exceeding collections relative to prior year and an increase in cash used for income taxes of 60 0 million related to the reduction in deductible client related platform implementation and development costs combined with the increase in pre tax income
The decrease in cash from investing activities of 67 6 million primarily reflects an increase in cash used for capital expenditures of 37 8 million and an increase in cash used for acquisitions of 34 3 million
The decrease in cash from financing activities of 140 8 million primarily reflects an increase in cash used for stock buybacks of 461 0 million partially offset by an increase in net borrowings of 325 0 million
The Company headquartered in the U S is routinely examined by the IRS and is also routinely examined by the tax authorities in the U S states and foreign countries in which it conducts business The tax years under audit examination vary by tax jurisdiction The Company regularly considers the likelihood of assessments in each of the jurisdictions resulting from examinations To the extent the Company determines it has potential tax assessments in particular tax jurisdictions the Company has established tax reserves which it believes are adequate in relation to the potential assessments Once established reserves are adjusted when there is more information available when an event occurs necessitating a change to the reserves or the statute of limitations for the relevant taxing authority to examine the tax position has expired The resolution of tax matters should not have a material effect on the financial condition of the Company or on the Company s Consolidated Statements of Earnings for a particular future period
The Company sponsors a Supplemental Officer Retirement Plan the SORP a Supplemental Executive Retirement Plan the SERP an Executive Retiree Health Insurance Plan and certain non US benefits related plans Please refer to Note 17 Employee Benefit Plans to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10 K for a discussion on the Company s Employee Benefit Plans
These amounts represent the principal repayments of Long term debt and are included on our Consolidated Balance Sheets See Note 14 Borrowings to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10 K for additional information about our Borrowings and related matters
We enter into operating leases in the normal course of business relating to facilities and equipment The majority of our lease agreements have fixed payment terms based on the passage of time Certain facility and equipment leases require payment of maintenance real estate taxes and related executory costs and contain escalation provisions based on future adjustments in price indices Our future operating lease obligations could change if we exit certain contracts and if we enter into additional operating lease agreements See Note 8 Leases to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10 K for additional information about our Leases and related matters
Purchase obligations relate to payments to Kyndryl Inc related to the Amended IT Services Agreement as described below that expires in fiscal year 2027 the Private Cloud Agreement as described below that expires in fiscal year 2030 the AWS Cloud Agreement as described below that expires in fiscal year 2027 as well as other data center arrangements and software license agreements including hosted software arrangements and software and hardware maintenance and support agreements and certain other related arrangements Purchase obligations also includes 53 0 million of other liabilities recorded on the Company s Consolidated Balance Sheet as of June 30 2024
Due to the uncertainty related to the timing of the reversal of uncertain tax positions only uncertain tax benefits related to certain settlements have been provided in the table above The Company is unable to make reasonably reliable estimates related to the timing of the remaining gross unrecognized tax benefit liability of
Certain post employment benefit obligations reported in our Consolidated Balance Sheets in the amount of 79 3 million as of June 30 2024 were not included in the table above due to the uncertainty of the timing of these future payments
The Company is a party to an Amended and Restated IT Services Agreement with Kyndryl Inc Kyndryl an entity formed by IBM s spin off of its managed infrastructure services business under which Kyndryl provides certain aspects of the Company s information technology infrastructure including supporting its mainframe midrange network and data center operations as well as providing disaster recovery services The Amended and Restated IT Services Agreement expires on June 30 2027 however the Company may renew the agreement for up to one additional 12 month period Fixed minimum commitments remaining under the Amended and Restated IT Services Agreement at June 30 2024 are 113 4 million through June 30 2027 the final year of the Amended and Restated IT Services Agreement
The Company is a party to an information technology agreement for private cloud services the Private Cloud Agreement under which Kyndryl operates manages and supports the Company s private cloud global distributed platforms and products and operates and manages certain Company networks The Private Cloud Agreement expires on March 31 2030 Fixed minimum commitments remaining under the Private Cloud Agreement at June 30 2024 are 106 3 million through March 31 2030 the final year of the contract
On December 31 2021 the Company and Presidio Networked Solutions LLC Presidio a reseller of services of Amazon Web Services Inc and its affiliates collectively AWS entered into an Order Form and AWS Private Pricing Addendum dated December 31 2021 the Order Form to the Cloud Services Resale Agreement dated December 15 2017 as amended together with the Order Form the AWS Cloud Agreement whereby Presidio will resell to the Company certain public cloud infrastructure and related services provided by AWS for the operation management and support of the Company s cloud global distributed platforms and products The AWS Cloud Agreement expires on December 31 2026 Fixed minimum commitments remaining under the AWS Cloud Agreement at June 30 2024 are 136 1 million in the aggregate through December 31 2026
The Company has an equity method investment that is a variable interest in a variable interest entity The Company is not the primary beneficiary and therefore does not consolidate the investee The Company s potential maximum loss exposure related to its unconsolidated investment in this variable interest entity totaled 34 3 million as of June 30 2024 which represents the carrying value of the Company s investment
It is not our business practice to enter into off balance sheet arrangements However we are exposed to market risk from changes in foreign currency exchange rates that could impact our financial position results of operations and cash flows We manage our exposure to these market risks through regular operating and financing activities and when deemed appropriate through the use of derivative financial instruments
In January 2022 we executed a series of cross currency swap derivative contracts with an aggregate notional amount of EUR 880 million which are designated as net investment hedges to hedge a portion of our net investment in our subsidiaries whose functional currency is the Euro The cross currency swap derivative contracts are agreements to pay fixed rate interest in Euros and receive fixed rate interest in U S Dollars thereby effectively converting a portion of our U S Dollar denominated fixed rate debt into Euro denominated fixed rate debt The cross currency swaps mature in May 2031 to coincide with the maturity of the Fiscal 2021 Senior Notes Accordingly foreign currency transaction gains or losses on the qualifying net investment hedge instruments are recorded as foreign currency translation within other comprehensive income loss net in the Consolidated Statements of Comprehensive Income and will remain in Accumulated other comprehensive income loss in the Consolidated Balance Sheets until the sale or complete liquidation of the underlying foreign subsidiary At June 30 2024 our position on the cross currency swaps was an asset of 59 9 million and is recorded as part of Other non current assets on the Consolidated Balance Sheets with the offsetting amount recorded as part of Accumulated other comprehensive income loss net of tax We have elected the spot method of accounting whereby the net interest savings from the cross currency swaps is recognized as a reduction in interest expense in our Consolidated Statements of Earnings
In connection with the acquisition of Itiviti in May 2021 we settled a forward treasury lock agreement that was designated as a cash flow hedge for a pre tax loss of 11 0 million after which the final settlement loss is being amortized into Interest expense net ratably over the ten year term of the Fiscal 2021 Senior Notes The expected amount of the existing loss that will be amortized into earnings before income taxes within the next twelve months is approximately 1 1 million
In the normal course of business we also enter into contracts in which it makes representations and warranties that relate to the performance of our products and services We do not expect any material losses related to such representations and warranties or collateral arrangements
Please refer to Note 2 Summary of Significant Accounting Policies to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10 K for a discussion on the impact of the adoption of new accounting pronouncements
In the ordinary course of business the financial position of the Company is routinely subject to certain market risks notably the effects of changes in interest rates and foreign currency exchange rates We manage our exposure to these market risks through our regular operating and financing activities and when deemed appropriate through the use of derivative financial instruments As a result the Company does not anticipate any material losses from these risks We do not use derivatives for trading purposes to generate income or to engage in speculative activity
As of June 30 2024 1 117 9 million or 33 of the Company s total outstanding debt balance of 3 355 1 million is based on floating interest rates Our 1 117 9 million in variable rate debt at June 30 2024 consists of the outstanding portion of our Fiscal 2024 Amended Term Loan which bears interest at Adjusted Term SOFR plus 1 250 per annum subject to a step up to Adjusted Term SOFR plus 1 375 or step downs to Adjusted Term SOFR plus 1 125 and Adjusted Term SOFR plus 1 000 in each case based on ratings We have assessed our exposure to changes in interest rates by analyzing the sensitivity to our earnings of a change in market interest rates on amounts borrowed from the revolving credit facility and Fiscal 2024 Amended Term Loans during the fiscal year ended June 30 2024 Assuming a hypothetical increase of one hundred basis points in interest rates on our variable rate debt during the fiscal year ended June 30 2024 and June 30 2023 our pre tax earnings would have decreased by approximately 14 4 million and 18 7 million respectively however for both years this would have been offset by interest earned on cash balances
While the substantial majority of our business is conducted within the U S approximately 14 of our fiscal year 2024 revenues were earned outside of the U S Our operations outside of the U S primarily reside in Canada Europe and India As a result we are exposed to foreign currency risk from changes in the value of underlying assets and liabilities of our non U S dollar denominated foreign investments and foreign currency transactions primarily with respect to the Canadian dollar the British pound the Euro the Indian Rupee and the Swedish Krona
We manage our foreign currency risk primarily by incurring to the extent practicable operating and financing expenses in the local currency in the countries in which we operate In addition we executed a series of cross currency swap derivative contracts with an aggregate notional amount of EUR 880 million which are designated as net investment hedges to hedge a portion of our net investment in our subsidiaries whose functional currency is the Euro At June 30 2024 the fair value of these derivatives is an asset of 59 9 million Refer to Note 19 Contractual Commitments Contingencies and Off Balance Sheet Arrangements to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10 K for additional details on our cross currency swap derivative contracts
For the fiscal year ended June 30 2024 and June 30 2023 a hypothetical 10 decrease in the value of the Canadian dollar the British pound the Euro the Indian Rupee and the Swedish Krona versus the U S dollar would have resulted in a decrease in our total pre tax earnings of approximately 22 5 million and 15 2 million respectively
We have audited the accompanying consolidated balance sheets of Broadridge Financial Solutions Inc and subsidiaries the Company as of June 30 2024 and 2023 the related consolidated statements of earnings comprehensive income stockholders equity and cash flows for each of the three years in the period ended June 30 2024 and the related notes and the financial statement schedule listed in the Index at Item 15 collectively referred to as the financial statements We also have audited the Company s internal control over financial reporting as of June 30 2024 based on criteria established in
In our opinion the financial statements referred to above present fairly in all material respects the financial position of the Company as of June 30 2024 and 2023 and the results of its operations and its cash flows for each of the three years in the period ended June 30 2024 in conformity with accounting principles generally accepted in the United States of America Also in our opinion the Company maintained in all material respects effective internal control over financial reporting as of June 30 2024 based on criteria established in
The Company s management is responsible for these financial statements for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management s Report on Internal Control over Financial Reporting Our responsibility is to express an opinion on these financial statements and an opinion on the Company s internal control over financial reporting based on our audits We are a public accounting firm registered with the Public Company Accounting Oversight Board United States PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud and whether effective internal control over financial reporting was maintained in all material respects
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements whether due to error or fraud and performing procedures to respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the financial statements Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk Our audits also included performing such other procedures as we considered necessary in the circumstances We believe that our audits provide a reasonable basis for our opinions
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that 1 pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company 2 provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and 3 provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that 1 relates to accounts or disclosures that are material to the financial statements and 2 involved our especially challenging subjective or complex judgments The communication of critical audit matters does not alter in any way our opinion on the financial statements taken as a whole and we are not by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates
The Company s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value The Company determines the fair value of its reporting units using the income approach which considers a discounted future cash flow analysis using various assumptions including projections of revenues based on assumed long term growth rates and projections of earnings before interest and taxes estimated costs and appropriate discount rates based on the particular reporting unit s weighted average cost of capital The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flows based on forecasted earnings before interest and taxes including projections of revenues and the selection of the terminal value growth rate and discount rate assumptions
During fiscal year 2024 the Company performed the required impairment tests of goodwill and determined that there was no impairment The Company also performed a sensitivity analysis under Step 1 of the goodwill impairment test assuming hypothetical reductions in the fair values of the reporting units A 10 change in their estimates of projected future operating cash flows discount rates or terminal value growth rates used in their calculations of the fair values of the reporting units would not result in an impairment of their goodwill
Auditing the fair value of a reporting unit within the Global Technology Operations GTO segment involved a high degree of subjectivity including the need to involve our fair value specialists as it relates to evaluating whether management s judgments in determining whether the projected future operating cash flows based on forecasted earnings before interest and taxes including projections of revenues selection of terminal value growth rates and the weighted average cost of capital used to determine the discount rates were appropriate
Our audit procedures related to the projected future operating cash flows based on forecasted earnings before interest and taxes including projections of revenues selection of the terminal value growth rates and weighted average cost of capital used to determine the discount rates for a reporting unit within the GTO segment included the following among others
We tested the effectiveness of controls over goodwill including those over the projected future operating cash flows based on forecasted earnings before interest and taxes including projections of revenues and the selection of the terminal value growth rates and weighted average cost of capital used to determine the discount rates
We performed a sensitivity analysis on the projected future operating cash flows to determine what revenue and earnings before interest and taxes growth rates are needed to cause an impairment for certain of the reporting units
We evaluated the reasonableness of management s projected future operating cash flows based on forecasted earnings before interest and taxes including projections of revenues by comparing to 1 historical results for the reporting unit 2 internal communications to management and the Board of Directors and 3 forecasted information included in Company press releases analyst and industry reports of the Company and companies in its peer group
With the assistance of our fair value specialists we evaluated the discount rate and terminal value growth rate for the reporting unit including testing the underlying source information and the mathematical accuracy of the calculations by developing a range of independent estimates and comparing those to the discount and terminal value growth rates selected by management
Index is a global financial technology leader powering investing corporate governance and communications to enable our clients to operate innovate and grow We deliver technology driven solutions to banks broker dealers asset and wealth managers public companies investors and mutual funds
Broadridge provides the following governance and communications solutions through its Investor Communication Solutions business segment Regulatory Solutions Data Driven Fund Solutions Corporate Issuer Solutions and Customer Communications Solutions
A large portion of Broadridge s ICS 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
ProxyEdge is Broadridge s innovative electronic proxy delivery and voting solution for institutional investors and financial advisors that helps ensure the voting participation of the largest stockholders of many companies Broadridge has implemented digital applications to make voting easier for retail investors Broadridge also provides the distribution of regulatory reports class action and corporate action reorganization event information as well as tax reporting solutions that help its clients meet their regulatory compliance needs
For asset managers and retirement service providers Broadridge offers data driven solutions and an end to end platform for content management composition and omni channel distribution of regulatory marketing and transactional information Broadridge s data and analytics solutions provide investment product distribution data analytical tools insights and research to enable asset managers to optimize product distribution across retail and institutional channels globally Broadridge also provides fiduciary focused learning and development software and technology and data and analytics services to advisors institutions and asset managers across the retirement and wealth ecosystem Through its Retirement and Workplace business Broadridge Retirement and Workplace Broadridge provides automated mutual fund and exchange traded funds trade processing services for financial institutions who submit trades on behalf of their clients such as qualified and non qualified retirement plans and individual wealth accounts In addition Broadridge s marketing and transactional communications solutions provide a content management and omni channel distribution platform for marketing and sales communications for asset managers insurance providers and retirement service providers
Broadridge provides public corporations and mutual funds with a full suite of solutions to help manage their annual meeting process including a full suite of annual meeting and shareholder engagement solutions such as registered and beneficial proxy materials distribution proxy processing and tabulation services digital voting solutions proxy and shareholder report document management solutions virtual shareholder meeting services shareholder engagement and environmental social and governance solutions Broadridge also offers disclosure solutions including annual SEC filing services and capital markets transaction services Broadridge provides registrar stock transfer and record keeping services through its transfer agency services
Broadridge provides omni channel customer communications solutions which include print and digital solutions to modernize technology infrastructures simplify communications processes accelerate digital adoption and improve the customer experience Through one point of integration the Broadridge Communications Cloud
platform helps companies create deliver and manage their communications and customer engagement The platform includes data driven composition tools identity and preference management omni channel optimization and digital communication experience archive and information management digital and print delivery and analytics and reporting tools
Broadridge s Global Technology and Operations business provides the non differentiating yet mission critical infrastructure to the global financial markets As a leading software as a service SaaS provider Broadridge offers capital markets wealth and investment management firms modern technology to enable growth simplify their technology stacks and mutualize costs Broadridge s highly scalable resilient component based solutions automate the front to back transaction lifecycle of equity mutual fund fixed income foreign exchange and exchange traded derivatives from order capture and execution through trade confirmation margin cash management clearing and settlement reference data management reconciliations securities financing and collateral management asset servicing compliance and regulatory reporting portfolio accounting and custody related services Broadridge s Wealth Management business provides solutions for advisors and investors and also streamlines back and middle office operations for broker dealers by providing systems for critical post trade activities including books and records transaction processing clearance and settlement and reporting Broadridge s Investment Management business provides portfolio and order management solutions for traditional and alternative asset managers which bring insights into trading portfolio construction risk and analytics Broadridge s solutions connect asset managers to a global network of broker dealers for trade execution and post trade matching and confirmation In addition Broadridge provides business process outsourcing services for its buy and sell side clients businesses These services combine Broadridge s technology with its operations expertise to support the entire trade lifecycle including securities clearing and settlement reconciliations record keeping wealth management asset servicing and custody related functions
Broadridge s capital markets technology and solutions deliver simplification and innovation across the trade lifecycle from order initiation to settlement Through Broadridge Trading and Connectivity Solutions Broadridge offers a set of global front office trade order and execution management systems and connectivity solutions that enable market participants to connect and trade Broadridge s front office solutions post trade product suite and other capital markets capabilities enable its clients to streamline their front to back technology platforms and operations and increase straight through processing efficiencies across equities fixed income exchange traded derivatives and other asset classes Broadridge also provides a set of multi asset multi entity and multi currency trading connectivity and post trade solutions that support processing of securities transactions in equities options fixed income securities foreign exchange exchange traded derivatives and mutual funds Provided on a SaaS basis within large user communities Broadridge s technology is a global solution processing clearance and settlement in over 100 countries Broadridge s technology enables its clients to meet the requirements of market change such as the T 1 securities settlement cycle and Broadridge s solutions enable global capital markets firms to access market liquidity drive more effective market making and efficient front to back trade processing
Broadridge s Wealth Management business delivers technology solutions and other capabilities across the entire wealth management lifecycle and streamlines all aspects of wealth management services including account management fee management and client on boarding The wealth technology solutions enable full service regional and independent broker dealers and investment advisors to better engage with customers through digital marketing and customer communications tools Broadridge also integrates data content and technology to drive new customer acquisition support holistic and personalized advice and cross sell opportunities
Broadridge s Investment Management business services the global investment management industry with a range of buy side technology solutions such as portfolio management compliance and fee billing and operational support solutions for hedge funds family offices alternative asset managers traditional asset managers and the providers that service this space including prime brokers fund administrators and custodians
The Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles GAAP in the U S and in accordance with the SEC requirements for Annual Reports on Form 10 K These 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 entities in which the Company has investments recorded under the equity method of accounting as well as certain marketable and non marketable securities Intercompany balances and transactions have been eliminated Amounts presented may not sum due to rounding Certain prior period amounts have been reclassified to conform to the current year presentation where applicable
Beginning with the first quarter of fiscal year 2023 the Company changed reporting for segment revenues segment earnings loss before income taxes and segment amortization of acquired intangibles and purchased intellectual property to reflect the impact of actual foreign exchange rates applicable to the individual periods presented The presentation of these metrics for the prior periods provided in this Form 10 K has been changed to conform to the current period presentation Total consolidated revenues and earnings before income taxes were not impacted Please refer to Note 3 Revenue Recognition and Note 21 Financial Data by Segment
The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes thereto These estimates are based on management s best knowledge of current events historical experience actions that the Company may undertake in the future and on various other assumptions and judgment that are believed to be reasonable under the circumstances Accordingly actual results could differ from those estimates The use of estimates in specific accounting policies is described further in the notes to the Consolidated Financial Statements as appropriate
ASC 606 Revenue from Contracts with Customers outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers The core principle is that an entity recognizes revenue to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services
The Company s revenues from clients are primarily generated from fees for providing investor communications and technology enabled services and solutions Revenues are recognized for the two reportable segments as follows
Revenues are generated primarily from processing and distributing investor communications and other related services as well as vote processing and tabulation The Company typically enters into agreements with clients to provide services on a fee for service basis Fees received for processing and distributing investor communications are generally variably priced and recognized as revenue over time as the Company provides the services to clients based on the number of units processed which coincides with the pattern of value transfer to the client Broadridge works directly with corporate issuers Issuers and mutual funds to ensure that the account holders of the Company s bank and broker clients who are also the shareholders of Issuers and mutual funds receive the appropriate investor communications materials and that the services are fulfilled in accordance with each Issuer s and mutual fund s requirements Broadridge works directly with the Issuers and mutual funds to resolve any issues that may arise As such Issuers and mutual funds are viewed as the customer of the Company s services As a result revenues for distribution services as well as proxy materials fulfillment services are recorded in Revenue on a gross basis with corresponding costs including amounts remitted to the broker dealers and banks referred to as Nominees recorded in Cost of revenues Fees for the Company s investor communications services arrangements are typically billed and paid on a monthly basis following the delivery of the services The Company also offers certain hosted service arrangements that can be priced on a fixed and or variable basis for which revenue is recognized over time as the Company satisfies its performance obligation by delivering services to the client on a monthly basis based on the number of transactions processed or units delivered in the case of variable priced arrangements or a fixed monthly fee in the case of fixed price arrangements in each case which coincides with the pattern of value transfer to the client These services may be billed in a variety of payment frequencies depending on the specific arrangement
Revenues are generated primarily from fees for trade processing and related services Revenue is recognized over time as the Company satisfies its performance obligation by delivering services to the client The Company s arrangements for processing and related services typically consist of an obligation to provide specific services to its clients on a when and if needed basis a stand ready obligation with revenue recognized from the satisfaction of the performance obligations on a monthly basis generally in the amount billable to the client These services are generally provided under variable priced arrangements based on volume of service and can include minimum monthly usage fees Client service agreements often include up front consideration in addition to the recurring fee for trade processing Up front implementation fees as well as certain enhancements to existing technology platforms are deferred and recognized on a straight line basis over the service term of the contract which corresponds to the timing of transfer of value to the client that commences after client acceptance when the processing term begins In addition revenue is also generated from the fulfillment of professional services engagements which are generally priced on a time and materials or fixed price basis and are recognized as the services are provided to the client which corresponds to the timing of transfer of value to the client Finally the Company generally recognizes license revenues from software term licenses installed on clients premises upon delivery and acceptance of the software license assuming a contract is deemed to exist and recognizes revenue attributed to the associated software maintenance and support obligation over the contract term Software term license revenue is not a significant portion of the Company s revenues
For revenue arrangements containing multiple goods or services the Company accounts for the individual goods or services as a separate performance obligation if they are distinct the good or service is separately identifiable from other items in the arrangement and if a client can benefit from it on its own or with other resources that are readily available to the client If these criteria are not met the promised goods or services are accounted for as a combined performance obligation
Once separate performance obligations are determined the transaction price is allocated to the individual performance obligations within a contract If the contracted prices reflect the relative standalone selling prices
for the individual performance obligations no allocations are made Otherwise the Company uses the relative selling price method to allocate the transaction price obtained from sources such as the observable price of a good or service when the Company sells that good or service separately in similar circumstances and to similar clients If such evidence is unavailable the Company uses the best estimate of the selling price which includes various internal factors such as pricing strategy and market factors A significant portion of the Company s performance obligations are generated from transactions with volume based fees and includes services that are delivered at the same time The Company recognizes revenue related to these arrangements over time as the services are provided to the client While many of the Company s contracts contain some component of variable consideration the Company only recognizes variable consideration that is not expected to reverse The Company allocates variable payments to distinct services in an overall contract when the variable payment relates specifically to that particular service and for which the variable payment reflects what the Company expects to receive in exchange for that particular service As a result the Company generally allocates and recognizes variable consideration in the period it has the contractual right to invoice the client
As described above our most significant performance obligations involve variable consideration which constitutes the majority of our revenue streams The Company s variable consideration components meet the criteria in ASC 606 for exclusion from disclosure of the remaining transaction price allocated to unsatisfied performance obligations as does any contracts with clients with an original duration of one year or less The Company has contracts with clients that vary in length depending on the nature of the services and contractual terms negotiated with the client and they generally extend over a multi year period
Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue producing transaction that are collected by the Company from a client are excluded from revenue Distribution revenues associated with shipping and handling activities are accounted for as a fulfillment activity and recognized as the related services or products are transferred to the client As a practical expedient the Company does not adjust the transaction price for the effects of a significant financing component if at contract inception the period between client payment and the transfer of goods or services is expected to be one year or less
Investment securities with an original maturity of 90 days or less are considered cash equivalents The fair value of the Company s Cash and cash equivalents approximates carrying value due to their short term nature
Substantially all of the financial instruments of the Company other than Long term debt are carried at fair values or at carrying amounts that approximate fair values because of the short maturity of the instruments The carrying value of the Company s long term fixed rate senior notes represent the face value of the long term fixed rate senior notes net of the unamortized discount and net of the associated unamortized debt issuance cost The fair value of the Company s long term fixed rate senior notes is based on quoted market prices Refer to Note 14 Borrowings for a further description of the Company s long term fixed rate senior notes as well as Note 7 Fair Value of Financial Instruments for additional details on the fair value of the Company s financial instruments In addition refer to Note 19 Contractual Commitments Contingencies and Off Balance Sheet Arrangements for details on the Company s cross currency swap derivative contracts which are carried at fair value
Property plant and equipment is initially recorded at cost and depreciated over the estimated useful lives of the assets using the straight line method Leasehold improvements are amortized over the shorter of the term of the lease or the estimated useful lives of the improvements The estimated useful lives of assets are as follows
Securities are non derivatives that are reflected in Other non current assets in the Consolidated Balance Sheets unless management intends to dispose of the investment within twelve months of the end of the reporting period in which case they are reflected in Other current assets in the Consolidated Balance Sheets These investments are in entities over which the Company does not have control joint control or significant influence Securities that have a readily determinable fair value are carried at fair value Securities without a readily determinable fair value are initially recognized at cost and subsequently carried at cost minus impairment if any plus or minus changes resulting from observable price changes in transactions for an identical or similar investment of the same issuer such as subsequent capital raising transactions Changes in the value of securities with or without a readily determinable fair value are recorded in the Consolidated Statements of Earnings In determining whether a security without a readily determinable fair value is impaired management considers qualitative factors to identify an impairment including the financial condition and near term prospects of the issuer Refer to Note 7 Fair Value of Financial Instruments for additional details on the fair value of the Company s securities
Inventories are stated at the lower of cost determined on a first in first out basis or market Inventory balances of 30 5 million and 34 1 million consisting of forms and envelopes used in the mailing of proxy and other materials to our customers are reflected in Other current assets in the Consolidated Balance Sheets at June 30 2024 and 2023 respectively
Deferred client conversion and start up costs include direct costs incurred to set up or convert a client s systems to function with the Company s technology and are generally deferred and recognized on a straight line basis over the service term of the arrangement to which the costs relate which commences when the client goes live with the Company s services The key judgment for determining the amount of costs to be deferred relates to the extent to which such costs are recoverable This estimate includes i projected future client revenues including variable revenues offset by an estimate of conversion costs including an estimate of onboarding costs as well as ongoing operational costs and ii an estimate of the expected client life This is also the basis for which the Company assesses such costs for impairment Refer to Note 11 Deferred Client Conversion and Start up Costs for a further description of the Company s Deferred client conversion and start up costs
The Company defers incremental costs to obtain a client contract that it expects to recover which consists of sales commissions incurred only if the contract is executed Deferred sales commission costs are amortized on a straight line basis using a portfolio approach consistent with the pattern of transfer of the goods or services to which the asset relates which also considers expected customer lives As a practical expedient the Company recognizes the sales commissions as an expense when incurred if the amortization period of the sales commission asset that the entity otherwise would have recognized is one year or less The Company evaluates the carrying value of deferred sales commission costs for impairment on the basis of whether these costs are fully recoverable from the expected future undiscounted net operating cash flows of the portfolio of clients to which the deferred sales commission costs relate Refer to Note 12 Other Non Current Assets for further information related to the Company s Deferred sales commission costs
Data center costs relate to conversion costs associated with our principal data center systems and applications Costs directly related to the activities necessary to make the data center usable for its intended purpose are deferred and amortized over the life of the contract on a straight line basis commencing on the date the data center has achieved full functionality These deferred costs are reflected in Other non current assets in the Consolidated Balance Sheets at June 30 2024 and 2023 respectively Refer to Note 12 Other Non Current Assets for a further description of the Company s Deferred data center costs
The Company does not amortize goodwill but instead tests goodwill for impairment at the reporting unit level at least annually or more frequently if circumstances indicate possible impairment The Company tests for goodwill impairment annually in the fourth quarter of the fiscal year using the March 31 financial statement balances The Company s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value The Company determines the fair value of its reporting units using the income approach which considers a discounted future cash flow analysis using various assumptions including projections of revenues based on assumed long term growth rates estimated costs and appropriate discount rates based on the particular reporting unit s weighted average cost of capital The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flows based on forecasted earnings before interest and taxes and the selection of the terminal value growth rate and discount rate assumptions The weighted average cost of capital takes into account the relative weight of each component of our consolidated capital structure equity and long term debt The 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 the Company s routine long range planning process If the carrying amount of the reporting unit exceeds its fair value an impairment loss shall be recognized in an amount equal to that excess not to exceed the total amount of goodwill allocated to that reporting unit Refer to Note 10 Goodwill and Intangible Assets Net for a further description on the Company s accounting for goodwill
Long lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group If the carrying amount of an asset or asset group exceeds its expected estimated future cash flows an impairment charge is recognized for the amount by which the carrying amount of the asset or asset group exceeds its fair value Intangible assets with finite lives are amortized on a straight line basis over their estimated useful lives and are also reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable Refer to Note 9 Property Plant and Equipment Net for a further description of the Company s Property plant and equipment net Refer to Note 6 Acquisitions and Note 10 Goodwill and Intangible Assets Net for a further description of the Company s Intangible assets net
The Company s investments resulting in a 20 to 50 ownership interest are accounted for using the equity method of accounting when the ability to exercise significant influence is maintained by the Company The Company s share of net income or losses of equity method investments is included in Other non operating income expenses net Equity method investments are included in Other non current assets Equity method investments are reviewed for impairment by assessing if a decline in market value of the investment below the carrying value is other than temporary which considers the intent and ability to retain the investment the length of time and extent that the market value has been less than cost and the financial condition of the investee
The assets and liabilities of the Company s foreign subsidiaries are translated into U S dollars based on exchange rates in effect at the end of each period Revenues and expenses are translated at average exchange rates during the periods Currency transaction gains or losses are included in Non operating income expenses net Gains or losses from balance sheet translation are included in Accumulated other comprehensive income loss
Distribution cost of revenues consists primarily of postage related expenses incurred in connection with the Company s Investor Communication Solutions segment as well as Broadridge Retirement and Workplace administrative services expenses These costs are reflected in Cost of revenues in the Consolidated Statements of Earnings
The Company accounts for stock based compensation by recognizing the measurement of stock based compensation expense in the Consolidated Statements of Earnings based on the fair value of the award on the date of grant For stock options issued the fair value of each stock option was estimated on the date of grant using a binomial option pricing model The binomial model considers a range of assumptions related to volatility dividend yield risk free interest rate and employee exercise behavior Expected volatilities utilized in the binomial model are based on a combination of implied market volatilities historical volatility of the Company s stock price and other factors Similarly the dividend yield is based on historical experience and expected future changes The risk free rate is derived from the U S Treasury yield curve in effect at the time of grant The binomial model also incorporates exercise and forfeiture assumptions based on an analysis of historical data The expected life of the stock option grants is derived from the output of the binomial model and represents the period of time that options granted are expected to be outstanding For restricted stock units the fair value of the award is based on the current fair value of the Company s stock on the date of grant less the present value of future expected dividends discounted at the risk free rate derived from the U S Treasury yield curve in effect at the time of grant Refer to Note 16 Stock Based Compensation for a further description of the Company s stock based compensation
Expenditures for major software purchases and software developed or obtained for internal use are capitalized and amortized on a straight line basis generally over a three to five year period or another period deemed appropriate based on the specific characteristics of the software considering the potential impact of obsolescence speed of technology changes competition and other economic factors For software developed or obtained for internal use the Company s accounting policy provides for the capitalization of external direct costs of materials and services associated with developing or obtaining internal use computer software In addition the Company also capitalizes payroll and payroll related costs for employees who are directly associated with internal use computer software projects The amount of capitalizable payroll costs with respect to these employees is limited to direct time spent on such projects Costs associated with preliminary project stage activities training maintenance and all other post implementation stage activities are expensed as incurred The Company also expenses internal costs related to minor upgrades and enhancements as it is impractical to separate these costs from normal maintenance activities Refer to Note 10 Goodwill and Intangible assets Net for a further description of the Company s capitalized software
The Company accounts for income taxes under the asset and liability method 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 the Company s Consolidated Financial Statements or tax returns Deferred tax assets and liabilities are recognized based on temporary differences between the consolidated financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse
Judgment is required in addressing the future tax consequences of events that have been recognized in our Consolidated Financial Statements or tax returns e g realization of deferred tax assets changes in tax laws or interpretations thereof Valuation allowances are recognized to reduce deferred tax assets when it is more likely than not that the Company will not be able to utilize the deferred tax assets attributable to net operating and capital loss carryforwards of certain subsidiaries to offset future taxable earnings The determination as to whether a deferred tax asset will be recognized is made on a jurisdictional basis and is based on the evaluation of historical taxable income or loss projected future taxable income carryforward periods scheduled reversals of deferred tax liabilities and tax planning strategies Projected future taxable income is based on expected results and assumptions
The majority of our clients operate in the financial services industry Our largest single client in each of our fiscal years 2024 2023 and 2022 accounted for approximately 8 7 and 7 of our consolidated revenues
In October 2021 the FASB issued ASU No 2021 08 Business Combinations Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ASU No 2021 08 which requires that an entity acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 Revenue from Contracts with Customers ASU No 2021 08 became effective for the Company in the first quarter of fiscal year 2024 The adoption of ASU No 2021 08 did not have a material impact on the Company s Consolidated Financial Statements
In March 2024 the FASB issued ASU No 2024 01 Compensation Stock Compensation Scope Application of Profits Interest and Similar Awards ASU No 2024 01 which provides illustrative guidance to help entities determine whether profits interest and similar awards should be accounted for as share based payment arrangements within the scope of Topic 718 or another accounting standard ASU No 2024 01 is effective for the Company in the first quarter of fiscal year 2026 Early adoption of the amendments is permitted The Company is currently assessing the impact that the adoption of ASU No 2024 01 will have on the Company s Consolidated Financial Statements
In December 2023 the FASB issued ASU No 2023 09 Income Taxes Topic 740 Improvements to Income Tax Disclosures ASU No 2023 09 which requires an entity to annually disclose specific categories in the rate reconciliation additional information for reconciling items that meet a quantitative threshold and certain information about income taxes paid ASU No 2023 09 is effective for the Company in the fourth quarter of fiscal year 2026 Early adoption of the amendments is permitted The Company is currently assessing the impact that the adoption of ASU No 2023 09 will have on the Company s Consolidated Financial Statements
In November 2023 the FASB issued ASU No 2023 07 Segment Reporting Topic 280 Improvements to Reportable Segment Disclosures ASU No 2023 07 which requires an entity to improve its disclosures related to reportable segments and provide additional more detailed information about a reportable segment s expenses ASU No 2023 07 is effective for the Company in the fourth quarter of fiscal year 2025 The amendments in this ASU must be applied on a retrospective basis to all prior periods presented in the financial statements and early adoption is permitted The Company is currently assessing the impact that the adoption of ASU No 2023 07 will have on its Consolidated Financial Statements
The Company has presented below its revenue disaggregated by product line and by revenue type within each of its Investor Communication Solutions and Global Technology and Operations reportable segments
Revenues in the Investor Communication Solutions segment are derived from both recurring and event driven activity In addition the level of recurring and event driven activity the Company processes directly impacts Distribution revenues While event driven activity is highly repeatable it may not recur on an annual basis Event driven revenues are based on the number of special events and corporate transactions the Company processes Event driven activity is impacted by financial market conditions and changes in regulatory compliance requirements resulting in fluctuations in the timing and levels of event driven revenues Distribution revenues primarily include revenues related to the physical mailing and distribution of proxy materials interim communications transaction reporting customer communications and fulfillment services as well as Broadridge Retirement and Workplace administrative services
Contract assets result from revenue already recognized but not yet invoiced including certain future amounts to be collected under software term licenses and certain other client contracts Contract liabilities represent consideration received or receivable from clients before the transfer of control occurs deferred revenue Contract balances are reported in a net contract asset or liability position on a contract by contract basis at the end of each reporting period
During the fiscal year ended June 30 2024 contract assets increased primarily due to an increase in software term license revenues while contract liabilities increased due to the timing of client invoices in relation to the timing of revenue recognized During the fiscal year ended June 30 2023 contract assets decreased primarily due to a decrease in software term license revenues and contract liabilities increased primarily due to growth in revenues and the timing of client payments The Company recognized 249 4 million of revenue during the fiscal year ended June 30 2024 that was included in the contract liability balance as of June 30 2023 The Company recognized 236 5 million of revenue during the fiscal year ended June 30 2023 that was included in the contract liability balance as of June 30 2022 The Company recognized 233 8 million of revenue during fiscal year ended June 30 2022 that was included in the contract liability balance as of June 30 2021
Basic earnings per share EPS is calculated by dividing the Company s Net earnings by the basic Weighted average shares outstanding for the periods presented The Company calculates diluted EPS using the treasury stock method which reflects the potential dilution that could occur if outstanding stock options at the presented date are exercised and restricted stock unit awards have vested
As of June 30 2024 2023 and 2022 the computation of diluted EPS excluded 0 3 million 1 2 million and 0 7 million options to purchase Broadridge common stock respectively as the effect of their inclusion would have been anti dilutive
Assets acquired and liabilities assumed in business combinations are recorded on the Company s Consolidated Balance Sheets as of the respective acquisition date based upon the estimated fair values at such date The results of operations of the businesses acquired by the Company are included in the Company s Consolidated Statements of Earnings since the respective dates of acquisition The excess of the purchase price over the estimated fair values of the underlying assets acquired and liabilities assumed is allocated to Goodwill
In May 2024 the Company acquired AdvisorTarget a market leader in providing asset management and wealth management firms with data products to help power digital marketing sales and engagement programs targeting financial advisors AdvisorTarget is included in the Company s ICS reportable segment The aggregate purchase price included 34 3 million in cash 1 0 million in deferred payments 1 6 million for the settlement of a preexisting relationship and contingent consideration with a maximum potential pay out of 30 5 million The contingent consideration is payable through fiscal year 2028 upon the achievement by the acquired business of certain defined revenue targets Net tangible liabilities assumed in the transaction were 3 1 million and contingent liabilities incurred were valued at 14 0 million This acquisition resulted in 41 8 million of Goodwill which is tax deductible Intangible assets acquired which totaled 12 1 million consist primarily of software technology and customer relationships which are being amortized over a five year life
Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities Level 3 assets and liabilities include financial instruments whose value is determined using pricing models discounted cash flow methodologies or similar techniques as well as instruments for which the determination of fair value requires significant management judgment or estimation
In valuing assets and liabilities the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs The Company calculates the fair value of its Level 1 and Level 2 instruments as applicable based on the exchange traded price of similar or identical instruments where available or based on other observable instruments These calculations take into consideration the credit risk of both the Company and its counterparties The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period
The fair values of contingent consideration obligations are based on a probability weighted approach derived from the estimates of earn out criteria and the probability assessment with respect to the likelihood of achieving those criteria The measurement is based on significant inputs that are not observable in the market therefore the Company classifies this liability as Level 3 in the table below
In addition the Company has non marketable securities with a carrying amount of 58 3 million as of June 30 2024 and 55 6 million as of June 30 2023 that are classified as Level 2 financial assets and included as part of Other non current assets on the Consolidated Balance Sheets
The Company did not incur any Level 3 fair value asset impairments during fiscal year 2024 or fiscal year 2023 Changes in economic conditions or model based valuation techniques may require the transfer of financial instruments between levels The Company s policy is to record transfers between levels if any as of the beginning of the fiscal year
The Company evaluates each lease and service arrangement at inception to determine if the arrangement is or contains a lease A lease exists if the Company obtains substantially all of the economic benefits of and has the right to control the use of an asset for a period of time The lease term begins on the commencement date which is the date the Company takes possession of the leased property and also classifies the lease as either operating or finance and may include options to extend or terminate the lease if exercise of the option to extend or terminate the lease is considered to be reasonably certain The Company s options to extend or terminate a lease generally do not exceed five years The lease term is used both to determine lease classification as an operating or finance lease and to calculate straight line lease expense for operating leases The weighted average remaining operating lease term as of June 30 2024 was 6 9 years
ROU assets represent the Company s right to use an underlying asset for the lease term while lease liabilities represent the Company s obligation to make lease payments arising from the lease ROU assets and lease liabilities are recognized at commencement date based on the present value of fixed lease payments over the lease term ROU assets also include prepaid lease payments and exclude lease incentives received Certain leases require the Company to pay taxes insurance maintenance and or other operating expenses associated with the leased asset Such amounts are not included in the measurement of the lease liability to the extent they are variable in nature e g based on actual costs incurred These variable lease costs are recognized as a variable lease expense when incurred As the Company s leases do not provide an implicit rate the Company uses its incremental borrowing rate to measure the lease liability and the associated ROU asset at commencement date The incremental borrowing rate was determined based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term The Company uses the unsecured borrowing rate and risk adjusts that rate to approximate a collateralized rate The weighted average discount rate used in measurement of the Company s operating lease liabilities as of June 30 2024 was 3 0
Operating lease assets are included within Other non current assets and operating lease liabilities are included within Payables and accrued expenses current portion and Other non current liabilities non current portion in the Company s Consolidated Balance Sheets as of June 30 2024 and 2023 respectively
In fiscal years 2024 and 2023 Property plant and equipment and Accumulated depreciation were each reduced by 3 7 million and 4 3 million respectively for asset retirements related to fully depreciated property plant and equipment no longer in use
During fiscal years 2024 2023 and 2022 the Company performed the required impairment tests of Goodwill and determined that there was no impairment The Company also performs a sensitivity analysis under Step 1 of the goodwill impairment test assuming hypothetical reductions in the fair values of the reporting units A 10 change in our estimates of projected future operating cash flows discount rates or terminal value growth rates which are the most significant estimates used in our calculations of the fair values of the reporting units would not result in an impairment of our goodwill
Expenditures for major software purchases and software developed or obtained for internal use are capitalized and amortized on a straight line basis generally over a three to five year period or another period deemed appropriate based on the specific characteristics of the software considering the potential impact of obsolescence speed of technology changes competition and other economic factors
Deferred client conversion and start up costs include direct costs incurred to set up or convert a client s systems to function with the Company s technology and are generally deferred and recognized on a straight line basis over the service term of the arrangement to which the costs relate which commences when the client goes live with the Company s services The key judgment for determining the amount of costs to be deferred relates to the extent to which such costs are recoverable This estimate includes i projected future client revenues including variable revenues offset by an estimate of conversion costs including an estimate of onboarding costs as well as ongoing operational costs and ii an estimate of the expected client life This is also the basis for how the Company assesses such costs for impairment
Deferred client conversion and start up costs of 892 1 million as of June 30 2024 consist of costs incurred to set up or convert a client s systems to function with the Company s technology of 884 5 million as well as other start up costs of 7 6 million Deferred client conversion and start up costs of 937 0 million as of June 30 2023 consist of costs incurred to set up or convert a client s systems to function with the Company s technology of 925 4 million as well as other start up costs of 11 5 million
The total amount of deferred client conversion and start up costs and deferred sales commission costs amortized in Operating expenses for the fiscal year ended June 30 2024 and 2023 was 132 9 million and 94 9 million respectively
c Represents deferred data center costs associated with the Company s information technology services agreements Please refer to Note 19 Contractual Commitments Contingencies and Off Balance Sheet Arrangements for a further discussion
d Includes 59 9 million and 66 7 million derivative assets as of June 30 2024 and June 30 2023 respectively related to the Company s cross currency swap derivative contracts Please refer to Note 19 Contractual Commitments Contingencies and Off Balance Sheet Arrangements for a further discussion
The total Employee compensation and benefits liability within the table above of 354 4 million and 335 6 million respectively includes a restructuring liability of 38 9 million and 19 5 million as of June 30 2024 and 2023 respectively
During the fourth quarter of fiscal year 2024 Broadridge completed a corporate restructuring initiative to exit and realign some of its businesses streamline the Company s management structure reallocate work to lower cost locations and reduce headcount in deprioritized areas the Corporate Restructuring Initiative which was initiated in the fourth quarter of fiscal year 2023 For fiscal years 2024 and 2023 this restructuring resulted in total severance costs of 45 2 million and 20 4 million respectively recorded in Operating expenses These costs were not reflected in segment profit and are recorded within the Other segment
a The Fiscal 2021 Term Loans were reclassified from Current portion of long term debt to Long term debt in the first quarter of fiscal year 2024 upon amendment of the loan to reflect the remaining maturity of more than one year
In April 2021 the Company entered into an amended and restated 1 5 billion five year revolving credit facility as amended on December 23 2021 and May 23 2023 the Fiscal 2021 Revolving Credit Facility which replaced the 1 5 billion five year revolving credit facility entered during March 2019 The Fiscal 2021 Revolving Credit Facility is comprised of a 1 1 billion U S dollar tranche and a 400 0 million multicurrency tranche On May 23 2023 we amended the interest rate index from LIBOR to Adjusted Term SOFR All other terms remained unchanged
The weighted average interest rate on the Fiscal 2021 Revolving Credit Facility was 6 50 4 95 and 1 30 for the fiscal years ended June 30 2024 2023 and 2022 respectively The fair value of the variable rate Fiscal 2021 Revolving Credit Facility borrowings at June 30 2024 approximates carrying value and has been classified as a Level 2 financial liability as defined in Note 7 Fair Value of Financial Instruments
Under the Fiscal 2021 Revolving Credit Facility revolving loans denominated in U S Dollars Canadian Dollars Euro Swedish Kronor and Yen bears interest at Adjusted Term SOFR CDOR EURIBOR TIBOR and STIBOR respectively plus 1 100 subject to step ups to 1 175 and step downs to 0 805 based on public debt ratings and revolving loans denominated in Sterling bears interest at SONIA plus 1 1326 per annum subject to step ups to 1 2076 and step downs to 0 8376 based on ratings The Fiscal 2021 Revolving Credit Facility also has an annual facility fee equal to 15 0 basis points on the entire facility subject to step ups to 20 0 basis points and step downs to 7 0 basis points based on ratings The Company may voluntarily prepay in whole or in part and without premium or penalty borrowings under the Fiscal 2021 Revolving Credit Facility in accordance with individual drawn loan maturities The Fiscal 2021 Revolving Credit Facility is subject to certain covenants including a leverage ratio At June 30 2024 the Company is in compliance with all covenants of the Fiscal 2021 Revolving Credit Facility
In March 2021 the Company entered into an amended and restated term credit agreement as amended on December 23 2021 and May 23 2023 Term Credit Agreement providing for term loan commitments in an aggregate principal amount of 2 55 billion comprised of a 1 0 billion tranche Tranche 1 and a 1 55 billion tranche Tranche 2 together with Tranche 1 the Fiscal 2021 Term Loans The proceeds of the Fiscal 2021 Term Loans were used by the Company to solely finance the acquisition of Itiviti and pay certain fees and expenses in connection therewith Once borrowed amounts repaid or prepaid in respect of such Fiscal 2021 Term Loans may not be reborrowed The Tranche 1 Loan was to mature on the date that is 18 months after the date on which the Fiscal 2021 Term Loans were borrowed the Funding Date but was repaid in full in May 2021 with proceeds from the Fiscal 2021 Senior Notes as discussed further below The Tranche 2 Loan was to mature in May 2024 The Tranche 2 Loan bore interest at Adjusted Term SOFR plus 1 000 per annum subject to step ups to Adjusted Term SOFR plus 1 250 or a step down to SOFR plus 0 750 based on ratings On May 23 2023 we amended the interest rate index from LIBOR to Adjusted Term SOFR All other terms remained unchanged
On August 17 2023 the Company amended and restated the Term Credit Agreement the Amended and Restated Term Credit Agreement providing for term loan commitment in an aggregate principal amount of 1 3 billion replacing the Tranche 2 Loan of the Fiscal 2021 Term Loans the Fiscal 2024 Amended Term Loan The Fiscal 2024 Amended Term Loan will mature in August 2026 on the third anniversary of the amended Funding Date of August 17 2023 The Fiscal 2024 Term Loan bears interest at Adjusted Term SOFR plus 1 250 per annum subject to a step up to Adjusted Term SOFR plus 1 375 or step downs to Adjusted Term SOFR plus 1 125 and Adjusted Term SOFR plus 1 000 in each case based on ratings
In the event of receipt of cash proceeds by the Company or its subsidiaries from certain incurrences of indebtedness certain equity issuances and certain sales transfers or other dispositions of assets the Company will be required to prepay the Fiscal 2024 Term Loan subject to certain limitations and qualifications as set forth in the Amended and Restated Term Credit Agreement The Amended and Restated Term Credit Agreement is subject to certain covenants including a leverage ratio At June 30 2024 the Company is in compliance with all covenants of the Fiscal 2024 Amended Term Loan
In June 2016 the Company completed an offering of 500 0 million in aggregate principal amount of senior notes the Fiscal 2016 Senior Notes The Fiscal 2016 Senior Notes will mature on June 27 2026 and bear interest at a rate of 3 40 per annum Interest on the Fiscal 2016 Senior Notes is payable semi annually in arrears on June 27 and December 27 of each year The Fiscal 2016 Senior Notes were issued at a price of 99 589 effective yield to maturity of 3 449 The indenture governing the Fiscal 2016 Senior Notes contains certain covenants including covenants restricting the Company s ability to create or incur liens securing indebtedness for borrowed money to enter into certain sale leaseback transactions certain subsidiary indebtedness and to engage in mergers or consolidations and transfer or lease all or substantially all of our assets At June 30 2024 the Company is in compliance with the covenants of the indenture governing the Fiscal 2016 Senior Notes The indenture also contains covenants regarding the purchase of the Fiscal 2016 Senior Notes upon a change of control triggering event The Company may redeem the Fiscal 2016 Senior Notes in whole or in part at any time before their maturity The fair value of the fixed rate Fiscal 2016 Senior Notes at June 30 2024 and June 30 2023 was 480 4 million and 471 4 million respectively based on quoted market prices and has been classified as a Level 1 financial liability as defined in Note 7 Fair Value of Financial Instruments
In December 2019 the Company completed an offering of 750 0 million in aggregate principal amount of senior notes the Fiscal 2020 Senior Notes The Fiscal 2020 Senior Notes will mature on December 1 2029 and bear interest at a rate of 2 90 per annum Interest on the Fiscal 2020 Senior Notes is payable semi annually in arrears on June 1 and December 1 of each year The Fiscal 2020 Senior Notes were issued at a price of 99 717 effective yield to maturity of 2 933 The indenture governing the Fiscal 2020 Senior Notes contains certain covenants including covenants restricting the Company s ability to create or incur liens securing indebtedness for borrowed money to enter into certain sale leaseback transactions certain subsidiary indebtedness and to engage in mergers or consolidations and transfer or lease all or substantially all of our assets At June 30 2024 the Company is in compliance with the covenants of the indenture governing the Fiscal 2020 Senior Notes The indenture also contains covenants regarding the purchase of the Fiscal 2020 Senior Notes
upon a change of control triggering event The Company may redeem the Fiscal 2020 Senior Notes in whole or in part at any time before their maturity The fair value of the fixed rate Fiscal 2020 Senior Notes at June 30 2024 and June 30 2023 was 667 7 million and 641 0 million respectively based on quoted market prices and has been classified as a Level 1 financial liability as defined in Note 7 Fair Value of Financial Instruments
In May 2021 the Company completed an offering of 1 0 billion in aggregate principal amount of senior notes the Fiscal 2021 Senior Notes The Fiscal 2021 Senior Notes will mature on May 1 2031 and bear interest at a rate of 2 60 per annum Interest on the Fiscal 2021 Senior Notes is payable semi annually in arrears on May 1 and November 1 of each year The Fiscal 2021 Senior Notes were issued at a price of 99 957 effective yield to maturity of 2 605 The indenture governing the Fiscal 2021 Senior Notes contains certain covenants including covenants restricting the Company s ability to create or incur liens securing indebtedness for borrowed money to enter into certain sale leaseback transactions certain subsidiary indebtedness and to engage in mergers or consolidations and transfer or lease all or substantially all of our assets At June 30 2024 the Company is in compliance with the covenants of the indenture governing the Fiscal 2021 Senior Notes The indenture also contains covenants regarding the purchase of the Fiscal 2021 Senior Notes upon a change of control triggering event The Company may redeem the Fiscal 2021 Senior Notes in whole or in part at any time before their maturity The fair value of the fixed rate Fiscal 2021 Senior Notes at June 30 2024 and June 30 2023 was 843 5 million and 817 4 million respectively based on quoted market prices and has been classified as a Level 1 financial liability as defined in Note 7 Fair Value of Financial Instruments
The Fiscal 2021 Revolving Credit Facility Fiscal 2024 Amended Term Loan Fiscal 2016 Senior Notes Fiscal 2020 Senior Notes and Fiscal 2021 Senior Notes are senior unsecured obligations of the Company and are ranked equally in right of payment
In addition certain of the Company s subsidiaries established unsecured uncommitted lines of credit with banks As of June 30 2024 and 2023 respectively there were no outstanding borrowings under these lines of credit
The Company sponsors a Supplemental Officer Retirement Plan the Broadridge SORP The Broadridge SORP is a non qualified ERISA defined benefit plan pursuant to which the Company will pay supplemental pension benefits to certain key officers upon retirement based upon the officers years of service and compensation The Broadridge SORP was closed to new participants beginning in fiscal year 2015 The Company also sponsors a Supplemental Executive Retirement Plan the Broadridge SERP The Broadridge SERP is also a non qualified ERISA defined benefit plan pursuant to which the Company will pay supplemental pension benefits to certain key executives upon retirement based upon the executives years of service and compensation The Broadridge SERP was closed to new participants beginning in fiscal year 2015
and SERP are effectively funded with assets held in a Rabbi Trust The assets invested in the Rabbi Trust are to be used in part to fund benefit payments to participants under the terms of the plans The Rabbi Trust is irrevocable and no portion of the trust funds may be used for any purpose other than the delivery of those assets to the participants except that assets held in the Rabbi Trust would be subject to the claims of the Company s general creditors in the event of bankruptcy or insolvency of the Company The Broadridge SORP and SERP are non qualified plans for federal tax purposes and for purposes of Title I of ERISA The Rabbi Trust assets had a value of 61 8 million at June 30 2024 and 57 8 million at June 30 2023 and are included in Other non current assets in the accompanying Consolidated Balance Sheets
The SORP and the SERP had a total benefit obligation of 61 6 million at June 30 2024 and 58 6 million at June 30 2023 and are included in Other non current liabilities in the accompanying Consolidated Balance Sheets
The Broadridge Financial Solutions Inc 2007 Omnibus Award Plan the 2007 Plan and 2018 Omnibus Award Plan the 2018 Plan provide for the granting of incentive stock options non qualified stock options stock appreciation rights restricted stock restricted stock units phantom stock awards stock bonuses and performance compensation awards to employees non employee directors and other key individuals who perform services for the Company The 2018 Plan was approved by shareholders in November 2018 and replaced the 2007 Plan The accounting for stock based compensation requires the measurement of stock based compensation expense to be recognized in the Consolidated Statements of Earnings based on the fair value of the award on the date of grant In accordance with the 2007 Plan and 2018 Plan the Company s stock based compensation consists of the following
Stock options are granted to employees at exercise prices equal to the fair market value of the Company s common stock on the dates of grant Stock options are generally issued under a graded vesting schedule meaning that they vest ratably over four years and have a term of 10 years A portion of the stock options granted in fiscal year 2018 have a cliff vesting schedule meaning that they fully vest in four years from the grant date and have a term of 10 years Compensation expense for stock options under a graded vesting schedule is recognized over the requisite service period for each separately vesting portion of the stock option award Compensation expense for stock options under a cliff vesting schedule is recognized equally over the vesting period of four years with 25 percent of the cost recognized over each 12 months period net of estimated forfeitures
The Company has a time based restricted stock unit RSU program under which RSUs representing the right to receive one share of the Company s common stock for each vested RSU granted Time based RSUs typically vest two and one half years from the date of grant The Company records stock compensation expense for time based RSUs net of estimated forfeitures on a straight line basis over the vesting period
The Company has a performance based RSU program under which RSUs representing the right to receive one share of the Company s common stock for each vested RSU granted RSUs vest upon the achievement by the Company of specific performance metrics The Company records stock compensation expense for performance based RSUs net of estimated forfeitures on a straight line basis over the performance period plus a subsequent vesting period which typically totals approximately two and one half years from the date of grant
Time based RSUs that vested during the fiscal years ended June 30 2024 2023 and 2022 had a total fair value of 59 0 million 49 6 million and 50 5 million respectively Performance based RSUs that vested during the fiscal years ended June 30 2024 2023 and 2022 had a total fair value of 17 2 million 15 9 million and 14 3 million respectively
As of June 30 2024 the Company s outstanding stock options using the fiscal year end share price of 197 00 had an aggregate intrinsic value of 140 8 million As of June 30 2024 the Company s outstanding in the money vested stock options using the fiscal year end share price of 197 00 had an aggregate intrinsic value of 112 0 million As of June 30 2024 time based RSUs and performance based RSUs expected to vest using the fiscal year end share price of 197 00 had an aggregate intrinsic value of 127 1 million and 29 8 million respectively Performance based RSUs granted in the table above represent initial target awards and performance adjustments for i change in shares issued based upon attainment of performance goals determined in the period and ii estimated change in shares issued resulting from attainment of performance goals to be determined at the end of the prospective performance period
Stock based compensation expense of 70 6 million 73 1 million and 68 4 million was recognized in the Consolidated Statements of Earnings for the fiscal years ended June 30 2024 2023 and 2022 respectively as well as related tax benefits of 13 7 million 13 1 million and 15 7 million respectively
As of June 30 2024 the total remaining unrecognized compensation cost related to non vested stock options and RSU awards amounted to 17 2 million and 55 9 million respectively which will be amortized over the weighted average remaining requisite service periods of 1 8 years and 1 8 years respectively
The Company may reissue treasury stock to satisfy stock option exercises and issuances under the Company s RSU awards From time to time the Company may repurchase shares of its common stock under its authorized share repurchase programs The Company repurchased 2 3 million shares in fiscal year 2024 under our share repurchase program as compared to no shares repurchased in fiscal year 2023 under our share repurchase program which excludes shares withheld by the Company to cover payroll taxes on the vesting of RSU awards which are also accounted for as treasury stock The Company considers several factors in determining when to execute share repurchases including among other things actual and potential acquisition activity cash balances and cash flows issuances due to employee benefit plan activity and market conditions
The following table presents the assumptions used to determine the fair values of the stock option grants using the Binomial options pricing model during the fiscal years ended June 30 2024 2023 and 2022
The Company sponsors a 401 k savings plan covering eligible U S employees of the Company This plan provides a base contribution plus Company matching contributions on a portion of employee contributions
The ERSP was adopted effective January 1 2015 for those executives who are not participants in the Broadridge SORP or Broadridge SERP defined below The ERSP is a defined contribution plan that allows eligible full time U S employees to defer compensation until a later date and the Company will match a portion of the deferred compensation above the qualified defined contribution compensation and deferral limitations
The Company sponsors a Supplemental Officer Retirement Plan the SORP The SORP is a nonqualified ERISA defined benefit plan pursuant to which the Company will pay supplemental pension benefits to certain key officers upon retirement based upon the officers years of service and compensation The SORP was closed to new participants beginning in fiscal year 2015 The Company also sponsors a Supplemental Executive Retirement Plan the SERP The SERP is also a nonqualified ERISA defined benefit plan pursuant to which the Company will pay supplemental pension benefits to certain key executives upon retirement based upon the executives years of service and compensation The SERP was closed to new participants beginning in fiscal year 2015
and SERP are effectively funded with assets held in a Rabbi Trust The assets invested in the Rabbi Trust are to be used in part to fund benefit payments to participants under the terms of the plans The Rabbi Trust is irrevocable and no portion of the trust funds may be used for any purpose other than the delivery of those assets to the participants except that assets held in the Rabbi Trust would be subject to the claims of the Company s general creditors in the event of bankruptcy or insolvency of the Company The SORP and SERP are nonqualified plans for federal tax purposes and for purposes of Title I of ERISA The Rabbi Trust assets had a value of 61 8 million at June 30 2024 and 57 8 million at June 30 2023 and are included in Other non current assets in the accompanying Consolidated Balance Sheets
The Company sponsors an Executive Retiree Health Insurance Plan It is a post retirement benefit plan pursuant to which the Company helps defray the health care costs of certain eligible key executive retirees and qualifying dependents based upon the retirees age and years of service until they reach the age of 65 The plan is currently unfunded
The Company sponsors certain non U S benefits related plans covering certain eligible international employees who are eligible under the terms of their employment in their respective countries These plans are generally unfunded
The Provision for income taxes and effective tax rates for the fiscal year ended June 30 2024 were 179 3 million and 20 4 compared to 164 3 million and 20 7 for the fiscal year ended June 30 2023 respectively The decrease in the effective tax rate for the fiscal year ended June 30 2024 compared to the fiscal year ended June 30 2023 was driven by an increase in discrete tax benefits relative to pre tax income primarily attributable to an ETB of 12 9 million for the fiscal year ended June 30 2024 compared to 10 4 million for the fiscal year ended June 30 2023
The Provision for income taxes and effective tax rates for the fiscal year ended June 30 2023 were 164 3 million and 20 7 compared to 133 1 million and 19 8 for the fiscal year ended June 30 2022 respectively The increase in the effective tax rate for the fiscal year ended June 30 2023 compared to the fiscal year ended June 30 2022 was driven by lower total discrete benefits primarily attributable to an ETB of 10 4 million for the fiscal year ended June 30 2023 compared to 18 1 million for the fiscal year ended June 30 2022
As of June 30 2024 the Company had approximately 853 9 million of accumulated earnings and profits attributable to foreign subsidiaries The Company considers 668 5 million of accumulated earnings attributable to foreign subsidiaries to be permanently reinvested outside the U S and has not determined the cost to repatriate such earnings since it is not practicable to calculate the amount of income taxes payable in the event all such foreign earnings are repatriated The Company does not consider the remaining 185 4 million of accumulated earnings to be permanently reinvested outside the U S The Company has accrued approximately 10 4 million of foreign income and withholding taxes state income taxes and tax on exchange gain attributable to such earnings
In December 2021 the OECD adopted model rules for a global framework to impose a 15 global minimum tax referred to as Pillar Two effective for tax years beginning after January 1 2024 The OECD continues to issue additional guidance on the operation of the model rules While the United States has not enacted Pillar Two certain countries in which we operate have adopted their own version of the Pillar Two model rules Management continues to monitor additional guidance from the OECD and countries which are implementing Pillar Two Based on current guidance we believe that our net income cash flows or financial condition will not be materially impacted by Pillar Two
Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when such differences are expected to reverse Significant components of the Company s deferred tax assets and liabilities at June 30 2024 and 2023 were as follows
The Company has estimated foreign net operating loss carryforwards of approximately 46 2 million as of June 30 2024 of which 7 3 million are subject to expiration in the June 30 2026 through June 30 2043 period and of which 38 8 million has an indefinite utilization period In addition the Company has estimated U S federal net operating loss carryforwards of approximately 30 1 million of which 12 4 million are subject to expiration in the June 30 2025 through June 30 2037 period with the balance of 17 6 million having an indefinite utilization period
Valuation allowances are recognized to reduce deferred tax assets when it is more likely than not that the Company will not be able to utilize the deferred tax assets of certain subsidiaries to offset future taxable earnings The Company has recorded valuation allowances of 10 8 million and 10 3 million at June 30 2024 and 2023 respectively The determination as to whether a deferred tax asset will be recognized is made on a jurisdictional basis and is based on the evaluation of historical taxable income or loss projected future taxable income carryforward periods scheduled reversals of deferred tax liabilities and tax planning strategies Projected future taxable income is based on expected results and assumptions as to the jurisdiction in which the income will be earned The assumptions used to project future taxable income require significant judgment and are consistent with the plans and estimates used to manage the underlying businesses
As of June 30 2024 2023 and 2022 the net reserve for unrecognized tax positions recorded by the Company that is included in the preceding table of gross unrecognized tax positions was 67 3 million 62 0 million and 51 6 million respectively and if reversed in full would favorably
During the fiscal year ended June 30 2024 the Company adjusted accrued interest by 0 1 million and recognized a total liability for interest on unrecognized tax positions of 4 2 million in the fiscal year ended June 30 2023 the Company adjusted accrued interest by 0 3 million and recognized a total liability for interest on unrecognized tax positions of 4 1 million in the fiscal year ended June 30 2022 the Company adjusted accrued interest by 0 2 million and recognized a total liability for interest on unrecognized tax positions of 3 8 million
The Company is regularly subject to examination of its income tax returns by U S Federal state and foreign income tax authorities The tax years that are currently open and could be subject to income tax audits for U S federal and most state and local jurisdictions are fiscal years ending June 30 2021 through June 30 2024 and for Canadian operations that could be subject to audit in Canada fiscal years ending June 30 2020 through June 30 2024 A change in the assessment of the outcomes of such matters could materially impact our Consolidated Financial Statements
The Company is a party to an Amended and Restated IT Services Agreement with Kyndryl Inc Kyndryl an entity formed by IBM s spin off of its managed infrastructure services business under which Kyndryl provides certain aspects of the Company s information technology infrastructure including supporting its mainframe midrange network and data center operations as well as providing disaster recovery services The Amended and Restated IT Services Agreement expires on June 30 2027 however the Company may renew the agreement for up to one additional 12 month period Fixed minimum commitments remaining under the Amended and Restated IT Services Agreement at June 30 2024 are 113 4 million through June 30 2027 the final year of the Amended and Restated IT Services Agreement
The Company is a party to an information technology agreement for private cloud services the Private Cloud Agreement under which Kyndryl operates manages and supports the Company s private cloud global distributed platforms and products and operates and manages certain Company networks The Private Cloud Agreement expires on March 31 2030 Fixed minimum commitments remaining under the Private Cloud Agreement at June 30 2024 are 106 3 million through March 31 2030 the final year of the contract
On December 31 2021 the Company and Presidio Networked Solutions LLC Presidio a reseller of services of Amazon Web Services Inc and its affiliates collectively AWS entered into an Order Form and AWS Private Pricing Addendum dated December 31 2021 the Order Form to the Cloud Services Resale Agreement dated December 15 2017 as amended together with the Order Form the AWS Cloud Agreement whereby Presidio will resell to the Company certain public cloud infrastructure and related services provided by AWS for the operation management and support of the Company s cloud global distributed platforms and products The AWS Cloud Agreement expires on December 31 2026 Fixed minimum commitments remaining under the AWS Cloud Agreement at June 30 2024 are 136 1 million through December 31 2026
The Company has an equity method investment that is a variable interest in a variable interest entity The Company is not the primary beneficiary and therefore does not consolidate the investee The Company s potential maximum loss exposure related to its unconsolidated investment in this variable interest entity totaled 34 3 million as of June 30 2024 which represents the carrying value of the Company s investment
The Company has obligations under the Amended IT Services Agreement the Private Cloud Agreement the AWS Cloud Agreement software license agreements including hosted software arrangements and software and hardware maintenance and support agreements
The future minimum commitments at June 30 2024 for the aforementioned Amended IT Services Agreement the Private Cloud Agreement the AWS Cloud Agreement software license agreements including hosted software arrangements and software and hardware maintenance and support agreements are as follows
Broadridge or its subsidiaries are subject to various claims and legal matters that arise in the normal course of business referred to as Litigation The Company establishes reserves for Litigation and other loss contingencies when it is both probable that a loss will occur and the amount of such loss can reasonably be estimated For certain Litigation matters for which the Company does not believe it probable that a loss will occur at this time the Company is able to estimate a range of reasonably possible losses in excess of established reserves Management currently estimates an aggregate range of reasonably possible losses for such matters of up to 5 0 million in excess of any established reserves The Litigation matters underlying the estimated range will change from time to time and it is reasonably possible that the actual results may vary significantly from this estimate The Company s management currently believes that resolution of any outstanding legal matters will not have a material adverse effect on the Company s financial position or results of operations However legal matters are subject to inherent uncertainties and there exists the possibility that the ultimate resolution of these matters could have a material adverse impact on the Company s financial position and results of operations in the period in which any such effects are recorded
Paramount Financial Communications Inc d b a Plan Management Corp Plan Management and Jonathan Miller filed a complaint on January 28 2015 in the United States District Court for the Eastern District of Pennsylvania Plan Management claimed that Broadridge Investor Communication Solutions Inc BRICS breached a marketing agreement between BRICS and Plan Management the Marketing Agreement and Mr Miller asserted a fraud claim The case went to trial in the second fiscal quarter of the Company s fiscal year 2023 The court dismissed Mr Miller s fraud claim and Plan Management s breach of contract claim went to the jury On December 7 2022 the jury found that BRICS breached the Marketing Agreement and acted with gross negligence and willful misconduct On July 26 2023 the trial court vacated the damages award but not the liability finding A new trial on damages was scheduled In July 2024 Broadridge agreed to settle the matter for 11 0 million and provided an incremental accrual of 10 3 million in the fourth quarter of the 2024 fiscal year The settlement is subject to final documentation
A law firm representing a machine operator currently employed by BRCC a business within the ICS segment in Edgewood New York sought compensation under the Fair Labor Standards Act and New York Labor Law on behalf of the machine operator and a proposed class of machine operators During the third quarter of 2024 Broadridge agreed to settle the matter for 9 9 million and provided an incremental accrual of 8 2 million The settlement is subject to final documentation and court approval
It is not the Company s business practice to enter into off balance sheet arrangements However the Company is exposed to market risk from changes in foreign currency exchange rates that could impact its financial position results of operations and cash flows The Company manages its exposure to these market risks through its regular operating and financing activities and when deemed appropriate through the use of derivative financial instruments
In January 2022 the Company executed a series of cross currency swap derivative contracts with an aggregate notional amount of EUR 880 million which are designated as net investment hedges to hedge a portion of its net investment in its subsidiaries whose functional currency is the Euro The cross currency swap derivative contracts are agreements to pay fixed rate interest in Euros and receive fixed rate interest in U S Dollars thereby effectively converting a portion of the Company s U S Dollar denominated fixed rate debt into Euro denominated fixed rate debt The cross currency swaps mature in May 2031 to coincide with the maturity of the Fiscal 2021 Senior Notes Accordingly foreign currency transaction gains or losses on the qualifying net investment hedge instruments are recorded as foreign currency translation within other comprehensive income loss net in the Consolidated Statements of Comprehensive Income and will remain in Accumulated other comprehensive income loss in the Consolidated Balance Sheets until the sale or complete liquidation of the underlying foreign subsidiary At June 30 2024 the Company s position on the cross currency swaps was an asset of 59 9 million and is recorded as part of Other non current assets on the Consolidated Balance Sheets with the offsetting amount recorded as part of Accumulated other comprehensive income loss net of tax The Company has elected the spot method of accounting whereby the net interest savings from the cross currency swaps is recognized as a reduction in interest expense in the Company s Consolidated Statements of Earnings
In May 2021 the Company settled a forward treasury lock agreement that was designated as a cash flow hedge for a pre tax loss of 11 0 million after which the final settlement loss is being amortized into Interest expense net ratably over the 10 year term of the Fiscal 2021 Senior Notes The expected amount of the existing loss that will be amortized into earnings before income taxes within the next twelve months is approximately 1 1 million
In the normal course of business the Company enters into contracts in which it makes representations and warranties that relate to the performance of the Company s products and services The Company does not expect any material losses related to such representations and warranties or collateral arrangements
The Company s business process outsourcing and mutual fund processing services are performed by Broadridge Business Process Outsourcing LLC BBPO an indirect subsidiary which is a broker dealer registered with the Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority Inc FINRA Although BBPO s FINRA membership agreement allows it to engage in clearing and the retailing of corporate securities in addition to mutual fund retailing on a wire order basis BBPO does not clear customer transactions process any retail business or carry customer accounts As a registered broker dealer and member of FINRA BBPO is subject to the Uniform Net Capital Rule 15c3 1 of the Securities Exchange Act of 1934 as amended which requires BBPO to maintain a minimum net capital amount At June 30 2024 BBPO was in compliance with this net capital requirement
a subsidiary of the Company is a Colorado State non depository trust company and National Securities Clearing Corporation trust member whose primary business is to provide cash agent custodial and directed trustee services to institutional customers and investment management services to collective investment trust funds As a result Matrix Trust Company is subject to various regulatory capital requirements administered by the Colorado Division of Banking and the Arizona Department of Financial Institutions as well as the National Securities Clearing Corporation Specific capital requirements that involve quantitative measures of assets liabilities and certain off balance sheet items when applicable must be met At June 30 2024 Matrix Trust Company was in compliance with its capital requirements
The Company operates in two reportable segments Investor Communication Solutions and Global Technology and Operations See Note 1 Basis of Presentation for a further description of the Company s reportable segments
Certain corporate expenses as well as certain centrally managed expenses are allocated based upon budgeted amounts in a reasonable manner Because the Company compensates the management of its various businesses on among other factors segment profit the Company may elect to record certain segment related operating and non operating expense items in Other rather than reflect such items in segment profit
On August 5 2024 the Company s Board of Directors increased the Company s quarterly cash dividend by 0 08 per share to 0 88 per share an increase in the expected annual dividend amount from 3 20 to 3 52 per share The declaration and payment of future dividends to holders of the Company s common stock will be at the discretion of the Company s Board of Directors and will depend upon many factors including the Company s financial condition earnings capital requirements of its businesses legal requirements regulatory constraints industry practice and other factors that the Board of Directors deems relevant
Attached as Exhibits 31 1 and 31 2 to this Form 10 K are certifications of Broadridge s Chief Executive Officer and Interim Chief Financial Officer which are required by Rule 13a 14 a of the Securities Exchange Act of 1934 as amended the Exchange Act This Controls and Procedures section should be read in conjunction with the Deloitte Touche LLP audit and attestation of the Company s internal control over financial reporting that appears in Item 8 Financial Statements and Supplementary Data in this Annual Report on Form 10 K and is hereby incorporated herein by reference
Our management with the participation of our Chief Executive Officer and Interim Chief Financial Officer as of June 30 2024 evaluated the effectiveness of our disclosure controls as defined in Rule 13a 15 e under the Exchange Act The Chief Executive Officer and Interim Chief Financial Officer concluded that our disclosure controls and procedures as of June 30 2024 were effective to ensure that the information required to be disclosed by us in reports filed under the Exchange Act is i recorded processed summarized and reported within the time periods specified in the SEC s rules and forms and ii accumulated and communicated to our management including our Chief Executive Officer and Interim Chief Financial Officer as appropriate to allow timely decisions regarding disclosure
It is the responsibility of Broadridge s management to establish and maintain effective internal control over financial reporting as defined in Rule 13a 15 f under the Exchange Act Internal control over financial reporting is designed to provide reasonable assurance to Broadridge s management and board of directors regarding the preparation of reliable financial statements for external purposes in accordance with generally accepted accounting principles
Broadridge s internal control over financial reporting includes those policies and procedures that i pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of Broadridge ii provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of Broadridge are being made only in accordance with authorizations of management and directors of Broadridge and iii provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition use or disposition of Broadridge s assets that could have a material effect on the financial statements of Broadridge
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Therefore even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation
2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission Based on this assessment management determined that Broadridge s internal control over financial reporting was effective as of June 30 2024
Deloitte Touche LLP the Company s independent registered public accounting firm has audited the effectiveness of the Company s internal control over financial reporting and has expressed an unqualified opinion in their report on the effectiveness of the Company s internal control over financial reporting which appears in Item 8 Financial Statements and Supplementary Data in this Annual Report on Form 10 K
No change in our internal control over financial reporting as defined in Rules 13a 15 f and 15d 15 f under the Exchange Act occurred during the fiscal quarter ended June 30 2024 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting
On May 15 2024 the Company s President Christopher Perry adopted a Rule 10b5 1 trading arrangement the Perry 10b5 1 Plan for the sale of securities of the Company The Perry 10b5 1 Plan allows for the contemporaneous exercise of options and sale of up to 42 045 underlying shares of the Company s common stock received upon exercise subject to the satisfaction of the Company s stock retention and holding period requirements The Perry 10b5 1 Plan will expire on May 31 2025
On May 17 2024 the Company s Chief Executive Officer Timothy C Gokey adopted a Rule 10b5 1 trading arrangement the Gokey 10b5 1 Plan for the sale of securities of the Company The Gokey 10b5 1 Plan allows for the contemporaneous exercise of options and sale of up to 61 349 underlying shares of the Company s common stock received upon exercise subject to the satisfaction of the Company s stock retention and holding period requirements The Gokey 10b5 1 Plan will expire on November 17 2024
Pursuant to the requirements of Section 13 or 15 d of the Securities Exchange Act of 1934 as amended the Registrant has duly caused this Annual Report on Form 10 K to be signed on its behalf by the undersigned hereunto duly authorized
KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature appears below hereby constitutes and appoints Timothy C Gokey and Ashima Ghei and each of them the true and lawful attorneys in fact and agents of the undersigned with full power of substitution and resubstitution for and in the name place and stead of the undersigned to sign in any and all capacities including without limitation the capacities listed below any and all amendments to the Annual Report on Form 10 K and to file the same with all exhibits thereto and all other documents in connection therewith with the Securities and Exchange Commission and hereby grants to such attorneys in fact and agents and each of them full power and authority to do and perform each and every act and anything necessary to be done to comply with the provisions of the Securities Exchange Act of 1934 as amended and all the requirements of the Securities and Exchange Commission as fully to all intents and purposes as the undersigned might or could do in person hereby ratifying and confirming all that said attorneys in fact and agents or any of them or their or his or her substitute or substitutes may lawfully do or cause to be done by virtue hereof
Pursuant to the requirements of the Securities Exchange Act of 1934 as amended this Annual Report on Form 10 K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated
Underwriting Agreement dated as of May 6 2021 among Broadridge Financial Solutions Inc and J P Morgan Securities LLC BofA Securities Inc Morgan Stanley Co LLC and Wells Fargo Securities LLC as representatives of the underwriters listed therein incorporated by reference to Exhibit 1 1 of Form 8 K filed on May 17 2021
Underwriting Agreement dated as of December 4 2019 among Broadridge Financial Solutions Inc and J P Morgan Securities LLC BofA Securities Inc Morgan Stanley Co LLC and Wells Fargo Securities LLC as representatives of the underwriters listed therein incorporated by reference to Exhibit 1 1 of Form 8 K filed on December 4 2019
Underwriting Agreement dated as of June 21 2016 among Broadridge Financial Solutions Inc and J P Morgan Securities LLC Mitsubishi UFJ Securities USA Inc Morgan Stanley Co LLC and Wells Fargo Securities LLC as representatives of the underwriters listed therein incorporated by reference to Exhibit 1 1 of Form 8 K filed on June 27 2016
Indenture dated as of May 29 2007 by and between Broadridge Financial Solutions Inc and U S Bank National Association as Trustee incorporated by reference to Exhibit 4 1 to Form 8 K filed on May 30 2007
Third Supplemental Indenture dated June 27 2016 by and among Broadridge Financial Solutions Inc and U S Bank National Association as trustee incorporated by reference to Exhibit 4 2 to Form 8 K filed on June 27 2016
Fourth Supplemental Indenture dated as of December 9 2019 by and between Broadridge Financial Solutions Inc and U S Bank National Association as Trustee incorporated by reference to Exhibit 4 2 of Form 8 K filed on December 9 2019
Fifth Supplemental Indenture dated as of May 17 2021 by and between Broadridge Financial Solutions Inc and U S Bank National Association as Trustee incorporated by reference to Exhibit 4 2 of Form 8 K filed on May 17 2021
Form of Broadridge Financial Solutions Inc 2 600 Senior Note due 2031 incorporated by reference to Exhibit 4 3 to Form 8 K filed on May 17 2021 and is included in Exhibit 4 2 to Form 8 K filed on May 17 2021
Amendment to the Broadridge Financial Solutions Inc 2007 Omnibus Award Plan Amended and Restated effective November 14 2013 effective February 6 2018 incorporated by reference to Exhibit 10 1 to Form 10 Q filed on May 8 2018
Amended and Restated Credit Agreement dated as of April 23 2021 among Broadridge Financial Solutions Inc the Lenders party thereto and JPMorgan Chase Bank N A as Administrative Agent incorporated by reference to Exhibit 10 1 to Form 8 K filed on April 23 2021
Amended and Restated Information Technology Services Agreement dated December 31 2019 by and between International Business Machines Corporation and Broadridge Financial Solutions Inc incorporated by reference to Exhibit 10 1 to Form 10 Q filed on January 31 2020
2019 Master Services Agreement dated December 31 2019 by and between International Business Machines Corporation and Broadridge Financial Solutions Inc incorporated by reference to Exhibit 10 2 to Form 10 Q filed on January 31 2020
Amended and Restated Term Credit Agreement as of dated August 17 2023 among Broadridge Financial Solutions Inc the Lenders party thereto and JPMorgan Chase Bank N A as Administrative Agent incorporated by reference to Exhibit 10 1 to Form 8 K filed on August 17 2023
Novation Agreement dated July 28 2021 among Broadridge Financial Solutions Inc International Business Machines Corporation and Kyndryl Inc incorporated by reference to Exhibit 10 2 to Form 10 Q filed on November 3 2021
First Amendment dated as of December 23 2021 to the Amended and Restated Credit Agreement dated as of April 23 2021 among Broadridge Financial Solutions Inc the Lenders party thereto and JPMorgan Chase Bank N A as Administrative Agent incorporated by reference to Exhibit 10 2 to Form 10 Q filed on February 1 2022
Second Amendment dated as of May 23 2023 to the Amended and Restated Credit Agreement dated as of April 23 2021 among Broadridge Financial Solutions Inc the Lenders party thereto and JPMorgan Chase Bank N A as Administrative Agent incorporated by reference to Exhibit 10 33 to Form 10 K filed on August 8 2023
Third Amendment dated as of June 28 2024 to the Amended and Restated Credit Agreement dated as of April 23 2021 among Broadridge Financial Solutions Inc the Lenders party thereto and JPMorgan Chase Bank N A as Administrative Agent
The following financial statements from the Broadridge Financial Solutions Inc Annual Report on Form 10 K for the fiscal year ended June 30 2024 formatted in eXtensible Business Reporting Language XBRL i consolidated statements of earnings for the fiscal years ended June 30 2024 2023 and 2022 ii consolidated statements of comprehensive income for the fiscal years ended June 30 2024 2023 and 2022 iii consolidated balance sheets as of June 30 2024 and 2023 iv consolidated statements of cash flows for the fiscal years ended June 30 2024 2023 and 2022 v consolidated statements of stockholders equity for the fiscal years ended June 30 2024 2023 and 2022 and vi the notes to the Consolidated Financial Statements

Company Name	BROADRIDGE FINANCIAL SOLUTIONS, INC. Vist SEC web-site
Category	SERVICES-BUSINESS SERVICES, NEC
Trading Symbol	BR