SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: September 20, 2001
(Date of earliest event reported)
PAYCHEX, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-11330 16-1124166
(State of incorporation) (Commission (IRS Employer
File Number) Identification Number)
911 PANORAMA TRAIL SOUTH, ROCHESTER, NEW YORK 14625-0397
(Address of principal executive offices) (Zip Code)
(716)385-6666
(Registrant's telephone number, including area code)
ITEM 9. REGULATION FD DISCLOSURE
The registrant's press release dated September 20, 2001 is attached. This
release announces the Company's results of operations for the first quarter
ended August 31, 2001.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAYCHEX, INC.
Date: September 20, 2001 /s/ B. Thomas Golisano
-----------------------
B. Thomas Golisano
Chairman, President and
Chief Executive Officer
Date: September 20, 2001 /s/ John M. Morphy
-----------------------
John M. Morphy
Vice President, Chief
Financial Officer and
Secretary
FOR IMMEDIATE RELEASE
John M. Morphy, Chief Financial Officer or Jan Shuler 716-383-3406
Access the Webcast of the Paychex, Inc. First Quarter Earnings Release
Conference Call scheduled for September 20, 2001 at 11:00 a.m.
Eastern Standard Time at http://www.paychex.com at the Investor
Relations page.
Paychex, Inc. news releases, current financial information, related
SEC filings and Investor Relations presentation are accessible at
the same Web site.
PAYCHEX, INC. REPORTS RECORD FIRST QUARTER RESULTS
ROCHESTER, NY, September 20, 2001 -- Paychex, Inc. (NASDAQ: PAYX) today
announced record net income of $70.2 million, or $.19 diluted earnings per
share, for the quarter ended August 31, 2001, a 20% increase over net income of
$58.6 million, or $.16 diluted earnings per share, for the same period last
year. Total revenues were $234.8 million, a 15% increase over $203.9 million for
the first quarter last year.
SERVICE REVENUES
For the quarter ended August 31, 2001, service revenues were $216.2 million, an
increase of 16% over $186.5 million for the prior year quarter.
Payroll service revenue increased 15% to $189.4 million from $164.5 million for
the prior year first quarter. The increase in Payroll service revenue reflects
growth in the client base, increased utilization of ancillary services and price
increases. As of August 31, 2001, 83% of Paychex clients utilized Taxpay
(Registered Trademark), the Company's tax filing and payment feature. The
Company's Employee Pay Services, which includes Direct Deposit, Readychex
(Service Mark) and Access Card products, was utilized by 54% of its clients.
Human Resource and Benefits service revenue was $26.7 million, an increase of
22% over $21.9 million for the first quarter last year. This increase is related
primarily to increases in clients for 401(k) Recordkeeping, Workers'
Compensation Insurance, and Section 125 services and in client employees served
by the Company's comprehensive PAS (Paychex Administrative Services) and PEO
(Professional Employer Organization) bundled services. 401(k) Recordkeeping
revenue increased 26% to $12.3 million for the first quarter from $9.8 million
in the same period last year.
INTEREST ON FUNDS HELD FOR CLIENTS
For the quarter ended August 31, 2001, interest on funds held for clients was
$18.6 million, a 7% increase from $17.4 million for the first quarter last year.
The increase in interest on funds held for clients is the result of net realized
gains on the sale of available-for-sale securities and higher average portfolio
balances, offset by the impact of lower interest rates in the first quarter of
fiscal 2002. Net realized gains included in interest on funds held for clients
were $3.2 million for the first quarter compared with net realized losses of $.1
million in the prior year first quarter.
OPERATING INCOME
For the quarter ended August 31, 2001, operating income was $93.8 million, a 19%
increase over $78.8 million for the first quarter last year. Operating margin
for the first quarter of fiscal 2002 was 40% compared with 39% for the first
quarter of fiscal 2001.
Operating costs for the quarter increased 17% and selling, general and
administrative costs increased 10% when compared with the prior year quarter.
Combined operating and selling, general and administrative expenses increased
13% in the first quarter over the prior year period. These increases reflect
increases in personnel, information technology and facility costs necessary to
support the growth of the Company.
INVESTMENT INCOME
Investment income for the quarter ended August 31, 2001 increased 36% to $7.5
million from $5.5 million in the first quarter of last year. The increase is due
to net realized gains on the sale of available-for-sale securities and higher
average daily invested balances generated from increases in overall cash flows,
offset by the impact of lower interest rates in the first quarter of fiscal
2002. Net realized gains included in investment income were $1.0 million for the
first quarter compared with net realized losses of $.1 million in the prior year
first quarter.
INCOME TAXES
The income tax rate for the quarter ended August 31, 2001 was 30.7% compared to
30.5% for the same period last year.
B. Thomas Golisano, Chairman, President and Chief Executive Officer of Paychex,
said, "We were pleased with our financial results for the first quarter of
fiscal 2002 in light of current economic conditions. A slowing United States
economy and further interest rate reductions have caused us to adjust our
expected total revenue growth for the current year to a range of 13% to 15%. We
still expect to generate record revenues and net income in the current year as
we continue to focus on increasing our client base and utilization of ancillary
services and leveraging our infrastructure."
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
Certain written and oral statements made by Paychex, Inc., (the "Company")
management may constitute "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. Forward-looking statements are
identified by such words and phrases as "we expect," "expected to," "estimates,"
"we look forward to," "would equate to," "projects," "projected to be,"
"anticipates," "we believe," "could be" and other similar phrases. Because they
are forward-looking, they should be evaluated in light of important risk
factors. These risk factors include, but are not limited to, general market and
economic conditions, including demand for the Company's products and services,
availability of internal and external resources, executing expansion plans,
competition, and price levels; changes in the laws regulating collection and
payment of payroll taxes, professional employer organizations, and employee
benefits, including 401(k) plans, workers' compensation, state unemployment, and
section 125 plans; delays in the development, timing of the introduction, and
marketing of new products and services; changes in technology, including use
of the Internet; the possibility of catastrophic events that could impact the
Company's operating facilities, computer technology, and communication systems;
stock market volatility; and changes in short- and long-term interest rates,
changes in market value of available-for-sale securities, and the credit rating
of cash, cash equivalents, and securities held in the Company's investment
portfolios, all of which could cause actual results to differ materially from
anticipated results. The information provided in this document is based upon the
facts and circumstances known at this time. The Company assumes no obligation to
update this document for new information subsequent to its issuance.
PAYCHEX, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
For the three months ended
August 31, August 31,
2001 2000
--------------------------------------------------------------------------------
Revenues:
Service revenues $216,176 $186,470
Interest on funds held for clients 18,638 17,413
--------------------------------------------------------------------------------
Total revenues 234,814 203,883
Operating costs 53,756 45,927
Selling, general and administrative expenses 87,296 79,130
--------------------------------------------------------------------------------
Operating income 93,762 78,826
Investment income 7,527 5,534
--------------------------------------------------------------------------------
Income before income taxes 101,289 84,360
Income taxes 31,096 25,730
--------------------------------------------------------------------------------
Net income $ 70,193 $ 58,630
================================================================================
Basic earnings per share $ .19 $ .16
--------------------------------------------------------------------------------
Diluted earnings per share $ .19 $ .16
--------------------------------------------------------------------------------
Weighted-average common shares outstanding 373,978 372,015
--------------------------------------------------------------------------------
Weighted-average shares assuming dilution 377,747 377,165
--------------------------------------------------------------------------------
Cash dividends per common share $ .09 $ .06
--------------------------------------------------------------------------------
<FN>
(A) Certain amounts for the three-month period ended August 31, 2000 have been
reclassified to conform to the current year presentation. In addition, the
Company has changed its segment reporting from two segments to one segment
in fiscal 2002.
(B) Further information on interest on funds held for clients and investment
income can be found in the Company's SEC filings under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and subheadings "Results of Operations" and "Market Risk
Factors." These SEC filings are accessible at the Company's Web site.
</FN>
PAYCHEX, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
--------------------------------------------------------------------------------
August 31, May 31,
2001 2001
--------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 59,325 $ 45,784
Corporate investments 593,649 568,217
Interest receivable 23,276 28,281
Accounts receivable 112,682 100,640
Prepaid expenses and other current assets 8,227 7,306
--------------------------------------------------------------------------------
Current assets before funds held for clients 797,159 750,228
Funds held for clients 1,879,740 2,041,045
--------------------------------------------------------------------------------
Total current assets 2,676,899 2,791,273
Property and equipment - net 96,699 96,078
Intangible assets - net 9,476 9,612
Deferred income taxes 266 1,361
Other assets 8,909 8,872
--------------------------------------------------------------------------------
Total assets $2,792,249 $2,907,196
================================================================================
LIABILITIES
Accounts payable $ 13,136 $ 16,377
Accrued compensation and related items 33,087 57,418
Deferred revenue 3,239 4,421
Accrued income taxes 22,877 9,783
Deferred income taxes 12,993 4,996
Other current liabilities 20,920 19,282
--------------------------------------------------------------------------------
Current liabilities before client fund deposits 106,252 112,277
Client fund deposits 1,864,581 2,031,565
--------------------------------------------------------------------------------
Total current liabilities 1,970,833 2,143,842
Long-term liabilities 5,682 5,512
--------------------------------------------------------------------------------
Total liabilities 1,976,515 2,149,354
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 600,000 authorized
shares
Issued: 374,300 at August 31, 2001 and
373,647 at May 31, 2001 3,743 3,736
Additional paid-in capital 153,982 139,897
Retained earnings 637,656 601,142
Accumulated other comprehensive income 20,353 13,067
--------------------------------------------------------------------------------
Total stockholders' equity 815,734 757,842
--------------------------------------------------------------------------------
Total liabilities and stockholders' equity $2,792,249 $2,907,196
================================================================================