-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VrCqtXAdtenhkl0hKOzquQiQrkTHRysGdI2KrwEyhmYDTqSkAQWk3oHvn53wAx+D DYPRiCOHKhuKqz9D7/aa5A== 0000723531-96-000008.txt : 19960412 0000723531-96-000008.hdr.sgml : 19960412 ACCESSION NUMBER: 0000723531-96-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960229 FILED AS OF DATE: 19960411 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAYCHEX INC CENTRAL INDEX KEY: 0000723531 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT [8700] IRS NUMBER: 161124166 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11330 FILM NUMBER: 96546197 BUSINESS ADDRESS: STREET 1: 911 PANORAMA TRAIL S CITY: ROCHESTER STATE: NY ZIP: 14625-0397 BUSINESS PHONE: 7163856666 MAIL ADDRESS: STREET 1: 911 PANORAMA TRAIL SOUTH CITY: ROCHESTER STATE: NY ZIP: 14625-0397 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 (Mark One) (x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 29, 1996 ------------------------------- OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------- ---------------- For Quarter Ended February 29, 1996 Commission file number 0-11330 ----------------- ------- PAYCHEX, INC. - --------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 16-1124166 -------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 911 PANORAMA TRAIL SOUTH, ROCHESTER, NEW YORK 14625-0397 - ---------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (716)385-6666 ------------ - ---------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ----- ----- CLASS OUTSTANDING AT FEBRUARY 29, 1996 - ------------------------------ ----------------------------------- (Common Stock, $.01 Par Value) (45,686,814 Shares) PAYCHEX, INC. AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION PAGE - ------------------------------ ---- ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) CONSOLIDATED BALANCE SHEETS - FEBRUARY 29, 1996 AND MAY 31, 1995 3-4 CONSOLIDATED STATEMENTS OF INCOME - THREE AND NINE MONTHS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995 5 CONSOLIDATED STATEMENTS OF CASH FLOWS - NINE MONTHS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS- FEBRUARY 29, 1996 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8-9 PART II. OTHER INFORMATION - -------------------------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10 SIGNATURES 11 - ---------- PART I. FINANCIAL INFORMATION PAYCHEX, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
FEBRUARY 29, MAY 31, 1996 1995 ----------- ------- ASSETS (UNAUDITED) (in thousands) CURRENT ASSETS CASH AND CASH EQUIVALENTS $ 21,497 $ 12,942 INVESTMENTS 96,400 70,753 INTEREST RECEIVABLE 6,419 6,699 TRADE ACCOUNTS RECEIVABLE 31,733 30,772 PREPAID EXPENSES AND OTHER CURRENT ASSETS 2,703 1,743 DEFERRED INCOME TAXES 2,232 1,310 --------- --------- TOTAL CURRENT ASSETS 160,984 124,219 PROPERTY AND EQUIPMENT LAND AND IMPROVEMENTS 2,787 2,779 BUILDINGS 23,988 21,304 DATA PROCESSING EQUIPMENT 42,115 33,980 FURNITURE, FIXTURES AND EQUIPMENT 36,715 29,135 LEASEHOLD IMPROVEMENTS 2,437 1,528 --------- --------- 108,042 88,726 LESS ALLOWANCE FOR DEPRECIATION AND AMORTIZATION 57,857 45,019 --------- --------- NET PROPERTY AND EQUIPMENT 50,185 43,707 OTHER ASSETS 4,897 511 --------- --------- TOTAL ASSETS $ 216,066 $ 168,437 ========= ==========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS PAYCHEX, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS, CONT'D.
FEBRUARY 29, MAY 31, 1996 1995 ----------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY (UNAUDITED) (in thousands) CURRENT LIABILITIES TRADE ACCOUNTS PAYABLE $ 4,871 $ 3,519 ACCRUED COMPENSATION AND RELATED ITEMS 16,580 13,162 ACCRUED INCOME TAXES 4,160 682 OTHER ACCRUED EXPENSES 6,565 6,116 DEFERRED REVENUE 5,346 2,977 CURRENT PORTION OF LONG-TERM DEBT -0- 205 ---------- ---------- TOTAL CURRENT LIABILITIES 37,522 26,661 OTHER LIABILITIES LONG-TERM DEBT -0- 523 UNAMORTIZED LEASE INCENTIVES 595 557 DEFERRED INCOME TAXES 217 764 ---------- ---------- TOTAL LIABILITIES 38,334 28,505 STOCKHOLDERS' EQUITY COMMON STOCK, $.01 PAR VALUE, AUTHORIZED 150,000,000 SHARES: ISSUED 45,686,814 AT FEBRUARY 29, 1996 AND 45,031,716 AT MAY 31, 1995 457 450 ADDITIONAL CAPITAL 26,497 17,727 RETAINED EARNINGS 150,778 121,755 --------- ---------- 177,732 139,932 --------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 216,066 $ 168,437 ========== ==========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS PAYCHEX, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED ------------------ ----------------- FEB 29, 1996 FEB 28, 1995 FEB 29, 1996 FEB 28, 1995 ------------ ------------ ------------ ------------ (in thousands, except per share amounts) REVENUE $84,941 $68,638 $239,346 $195,327 OPERATING COSTS 25,756 21,309 71,933 57,358 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 42,937 35,350 118,929 100,164 ------- ------- -------- -------- OPERATING INCOME 16,248 11,979 48,484 37,805 OTHER INCOME (EXPENSE) INVESTMENT INCOME 1,421 1,006 4,168 2,500 INTEREST EXPENSE (27) (105) (68) (168) ------- ------- -------- -------- INCOME BEFORE INCOME TAXES 17,642 12,880 52,584 40,137 INCOME TAXES 4,766 3,532 14,724 11,600 ------- ------- -------- -------- NET INCOME $12,876 $ 9,348 $ 37,860 $ 28,537 ======= ======= ======== ======== NET INCOME PER SHARE $ .28 $ .21 $ .83 $ .64 ======= ======= ======== ======== CASH DIVIDENDS PER SHARE $ .09 $ .06 $ .24 $ .16 ======= ======= ======== ======== WEIGHTED AVERAGE SHARES OUTSTANDING 45,640 44,940 45,514 44,899 ======= ======= ======== ======== NOTE: PER SHARE AMOUNTS AND AVERAGE SHARES OUTSTANDING HAVE BEEN ADJUSTED FOR A THREE-FOR-TWO STOCK SPLIT EFFECTIVE MAY, 1995.
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS PAYCHEX, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED ---------------------- FEB 29, FEB 28, 1996 1995 ------- ------- (in thousands) OPERATING ACTIVITIES NET INCOME $ 37,860 $ 28,537 ADJUSTMENTS TO RECONCILE NET INCOME TO CASH PROVIDED BY OPERATING ACTIVITIES: DEPRECIATION AND AMORTIZATION 10,469 8,041 PROVISION FOR DEFERRED INCOME TAXES (1,438) (652) PROVISION FOR BAD DEBTS 657 818 NET REALIZED GAIN ON SALES OF AVAILABLE-FOR-SALE SECURITIES (616) (45) CHANGES IN OPERATING ASSETS AND LIABILITIES: TRADE ACCOUNTS RECEIVABLE (872) (4,664) INTEREST RECEIVABLE 280 393 PREPAID EXPENSES AND OTHER CURRENT ASSETS (681) 628 TRADE ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES 7,845 6,139 DEFERRED REVENUE 2,369 650 CHANGE IN UNAMORTIZED LEASE INCENTIVES (74) (334) --------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 55,799 39,511 INVESTING ACTIVITIES INVESTMENT PURCHASES OF AVAILABLE- FOR-SALE SECURITIES (99,371) (26,351) PROCEEDS FROM SALES OF AVAILABLE- FOR-SALE SECURITIES 71,711 14,035 PROCEEDS FROM MATURITIES OF AVAILABLE- FOR-SALE SECURITIES 3,787 1,000 ADDITIONS TO PROPERTY AND EQUIPMENT, NET OF NORMAL DISPOSALS (13,907) (9,199) NET CHANGE IN OTHER ASSETS (591) (98) ---------- -------- NET CASH USED IN INVESTING ACTIVITIES (38,371) (20,613) FINANCING ACTIVITIES PAYMENTS ON LONG-TERM DEBT (728) -0- PROCEEDS AND TAX BENEFIT FROM EXERCISE OF STOCK OPTIONS 1,973 1,645 DIVIDENDS PAID (10,930) (7,187) ----------- -------- NET CASH USED IN FINANCING ACTIVITIES (9,685) (5,542) ----------- -------- INCREASE IN CASH AND CASH EQUIVALENTS 7,743 13,356 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 12,942 14,605 CASH OBTAINED FROM PAY-FONE AND THE PAYROLL COMPANY MERGERS 812 -0- ---------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 21,497 $ 27,961 ========== ========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS PAYCHEX, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FEBRUARY 29, 1996 A) THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF PAYCHEX, INC. AND ITS WHOLLY-OWNED SUBSIDIARIES HAVE BEEN PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOR INTERIM FINANCIAL INFORMATION AND WITH THE INSTRUCTIONS TO FORM 10-Q AND ARTICLE 10 OF REGULATION S-X. ACCORDINGLY, THE CONSOLIDATED FINANCIAL STATEMENTS DO NOT INCLUDE ALL OF THE INFORMATION AND FOOTNOTES REQUIRED BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOR COMPLETE FINANCIAL STATEMENTS. IN THE OPINION OF MANAGEMENT, ALL ADJUSTMENTS CONSIDERED NECESSARY FOR A FAIR PRESENTATION HAVE BEEN INCLUDED. THE ACCOMPANYING FINANCIAL STATEMENTS SHOULD BE READ IN CONJUNCTION WITH THE NOTES TO FINANCIAL STATEMENTS PRESENTED IN THE COMPANY'S FORM 10-K AND ANNUAL REPORT FOR THE YEAR ENDED MAY 31, 1995. B) DURING THE NINE-MONTH PERIOD ENDING FEBRUARY 29, 1996, 216,351 SHARES OF STOCK WERE ISSUED UPON EXERCISE OF STOCK OPTIONS. C) ON JUNE 15, 1995, PAYCHEX ACQUIRED PAY-FONE SYSTEMS, INC. FOR APPROXIMATELY 332,000 SHARES OF PAYCHEX STOCK IN A BUSINESS COMBINATION ACCOUNTED FOR AS A POOLING OF INTERESTS. RESULTS OF OPERATIONS PRIOR TO THE MERGER HAVE NOT BEEN RESTATED AS THE EFFECTS WOULD BE IMMATERIAL. D) ON SEPTEMBER 29, 1995, PAYCHEX ACQUIRED THE PAYROLL COMPANY, INC. FOR APPROXIMATELY 116,000 SHARES OF COMMON STOCK IN A BUSINESS COMBINATION ACCOUNTED FOR AS A PURCHASE. THE PURCHASE DID NOT HAVE A SIGNIFICANT IMPACT ON THE COMPANY'S SECOND QUARTER FINANCIAL POSITION AND RESULTS OF OPERATIONS. E) CERTAIN AMOUNTS FROM THE PRIOR YEAR ARE RECLASSIFIED TO CONFORM TO FISCAL 1996 PRESENTATIONS. PAYCHEX, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE FOLLOWING IS MANAGEMENT'S DISCUSSION OF CERTAIN SIGNIFICANT CHANGES IN THE RESULTS OF OPERATIONS DURING THE PERIODS INCLUDED IN THE ACCOMPANYING FINANCIAL STATEMENTS. RESULTS OF OPERATIONS --------------------- REVENUE FOR THE THIRD QUARTER AND NINE MONTHS ENDED FEBRUARY 29, 1996 ROSE 24% TO $84,941,000 AND 23% TO $239,346,000, RESPECTIVELY, WHEN COMPARED TO THE SAME PERIODS LAST YEAR. THESE GAINS RESULTED FROM THE CONTINUED EXPANSION OF THE PAYROLL CLIENT BASE. GROWTH IN THE KEY ADD-ON SERVICES OF TAXPAY AND DIRECT DEPOSIT, AND THE RESULTANT INCREASE OF FEE AND INVESTMENT REVENUE, ALSO CONTRIBUTED TO REVENUE GROWTH. THE COMPANY EXPECTS CONTINUED REVENUE INCREASES THROUGHOUT THE REMAINDER OF THE YEAR. OPERATING COSTS WERE 30% OF REVENUE FOR THE CURRENT THREE AND NINE MONTH PERIODS AS COMPARED TO 31% AND 29% FOR THE RESPECTIVE PRIOR YEAR PERIODS. THE COMPANY BENEFITED FROM MORE COST EFFECTIVE CALENDAR YEAR-END PROCESSING. FULL YEAR OPERATING COSTS, AS A PERCENTAGE OF REVENUE, ARE EXPECTED TO BE SLIGHTLY HIGHER THAN FISCAL 1995. SELLING, GENERAL AND ADMINISTRATING EXPENSES WERE 51% AND 50% OF REVENUE FOR THE RESPECTIVE THREE AND NINE-MONTH PERIODS OF THE CURRENT YEAR, WHICH WERE SLIGHTLY BELOW COMPARATIVE PRIOR YEAR PERIODS. THE EFFECTIVE TAX RATES FOR THE CURRENT QUARTER AND NINE MONTHS ENDED FEBRUARY 29, 1996 WERE 27.0% AND 28.0%, RESPECTIVELY, AS COMPARED TO 27.4% AND 28.9% FOR THE SAME PERIODS LAST YEAR. THE LOWER CURRENT YEAR RATES WERE GENERALLY DUE TO THE INCREASE OF TAX-EXEMPT INTEREST INCOME AS A PERCENTAGE OF PRE-TAX INCOME. IT IS ANTICIPATED THAT THE EFFECTIVE TAX RATE FOR THE CURRENT FISCAL YEAR WILL BE SLIGHTLY LOWER THAN LAST YEAR'S RATE. ON JUNE 15, 1995, THE STOCKHOLDERS OF PAY-FONE SYSTEMS, INC. RECEIVED APPROXIMATELY 332,000 SHARES OF PAYCHEX COMMON STOCK IN A BUSINESS COMBINATION ACCOUNTED FOR AS A POOLING OF INTERESTS. RESULTS OF OPERATIONS PRIOR TO THE MERGER HAVE NOT BEEN RESTATED AS THE EFFECTS WOULD BE IMMATERIAL. ON SEPTEMBER 29, 1995, THE COMPANY ACQUIRED THE PAYROLL COMPANY, INC. FOR APPROXIMATELY 116,000 SHARES OF COMMON STOCK IN A BUSINESS COMBINATION ACCOUNTED FOR AS A PURCHASE. THE ACQUISITION DID NOT HAVE A SIGNIFICANT IMPACT ON PAYCHEX' FINANCIAL POSITION AND RESULTS OF OPERATIONS. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES TOTALED $55,799,000 FOR THE NINE MONTHS ENDED FEBRUARY 29, 1996, UP FROM $39,511,000 FOR THE SAME PERIOD LAST YEAR. THIS GAIN WAS PRIMARILY ATTRIBUTED TO RECORD YEAR-TO-DATE NET INCOME WHICH REACHED $37,860,000, A 33% INCREASE OVER NET INCOME OF $28,537,000 FOR THE SAME PERIOD LAST YEAR THE COMPANY'S INVESTMENT PURCHASES AND SALES TRANSACTIONS INCREASED DURING THE NINE MONTHS OF THE CURRENT YEAR WHEN COMPARED TO THE SAME PERIOD LAST YEAR. THIS RESULTED FROM THE COMPANY'S DECISION TO REPOSITION ITS INVESTMENT PORTFOLIO TO MAXIMIZE RETURNS AND MINIMIZE RISK ASSOCIATED WITH INTEREST RATE VOLATILITY. CAPITAL EXPENDITURES FOR THE NINE-MONTH PERIOD WERE $14,032,000 AND ARE EXPECTED TO APPROXIMATE $21,000,000 FOR THE YEAR. PROJECTED CASH FLOWS ARE EXPECTED TO BE ADEQUATE TO SUPPORT NORMAL BUSINESS OPERATIONS, PLANNED CAPITAL EXPENDITURES AND DIVIDEND PAYMENTS. FURTHERMORE, THE COMPANY HAS $210,000,000 OF UNSECURED BANK LINES OF CREDIT AVAILABLE FOR ITS USE. AS OF FEBRUARY 29, 1996, THERE WERE NO OUTSTANDING BORROWINGS UNDER THESE LINES OF CREDIT. PART II. OTHER INFORMATION PAYCHEX, INC. AND SUBSIDIARIES ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A. EXHIBITS -------- THERE WERE NO EXHIBITS APPLICABLE FOR THE THREE MONTH PERIOD ENDED FEBRUARY 29, 1996. B. REPORTS ON FORM 8-K ------------------- THERE WERE NO REPORTS ON FORM 8-K FILED DURING THE THREE MONTH PERIOD ENDED FEBRUARY 29, 1996. 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. AND SUBSIDIARIES DATE: APRIL 11, 1996 /s/ B. THOMAS GOLISANO ---------------------- B. THOMAS GOLISANO CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER DATE: APRIL 11, 1996 /s/ G. THOMAS CLARK ------------------- G. THOMAS CLARK SECRETARY, TREASURER AND SENIOR VICE PRESIDENT OF FINANCE EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FEBRUARY 29, 1996 FINANCIAL STATEMENTS OF PAYCHEX, INC. AND SUBSIDIARIES AND IS QUAlIFIED IN ITS ENTIRETY BY REFERNCE TO SUCH FINANCIAL STATEMENTS. 0000723531 PAYCHEX,INC. 1,000 US 9-MOS MAY-31-1996 JUN-01-1995 FEB-29-1996 1 21,497 96,400 31,733 0 0 160,984 108,042 57,857 216,066 37,522 0 0 0 457 177,275 216,066 239,346 239,346 0 190,862 0 0 68 52,584 14,724 37,860 0 0 0 37,860 .83 .83
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