Paychex ( PAYX) saw its fiscal third-quarter net income and revenue fall slightly, but its earnings per share were in line with Wall Street estimates.

The Rochester, N.Y.-based payroll services outfit said Wednesday that its profit dropped to $130.8 million, or 36 cents a share, from $142.5 million, or 39 cents a share in the year-ago period. Revenue fell to $528.6 million from $532.2 million.

Analysts surveyed by Thomson Reuters expected EPS of 36 cents on revenue of $536.9 million.

Shares were down 64 cents or 2.64% to $23.62 in regular trading, and were recently trading at $23.56 after hours.

"Our financial results continue to be challenged by weakening economic conditions in the third quarter, as many of our key indicators were weaker than on a year-to-date basis," said Jonathan J. Judge, president and CEO. "The most significant change was in the area of checks per client, which declined 4.3% for the third quarter compared to 2.4% for the first nine months of fiscal 2009. On a positive note, operating income, net of certain items, increased 8% for the first nine months of fiscal 2009 and improved as a percentage of service revenue from 36.6% to 37.4%."

The company's payroll service revenue increased 2% to $381.2 million, and human resource services revenue increased 9% to $131 million year over year.

"We expect the difficult economic conditions will continue throughout the remainder of fiscal 2009 and into fiscal 2010," Judge said. "Our people have responded well in managing expenses and we expect to generate a record for operating income, net of certain items, as a percentage of service revenue for the full year fiscal 2009.

"During the first nine months of fiscal 2009, our total cash and corporate investments increased more than $100 million to a little over $570 million. Our dividend payout ratio was 80% of net income for the first nine months."

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