UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
Paychex, Inc. 401(k)
Incentive Retirement Plan
(Full title of the Plan)
Paychex, Inc.
911 Panorama Trail South
Rochester, NY 14625
(Name and address of issuer of the securities held pursuant
to the Plan and the address of its principal executive office)
<PAGE>
Index to Financial Statements, Schedules and Exhibits
Financial Statements Page No.
Report of Independent Auditors 3
Statement of Net Assets Available for Benefits 4
December 31, 1999 and 1998
Statement of Changes in Net Assets Available for Benefits 5
For the year ended December 31, 1999 and 1998
Notes to Financial Statements 6-8
Schedules
Schedule I - Form 5500 Schedule H, Line 4i, 9
Schedule of Assets Held for Investment Purposes -
December 31, 1999
Exhibit
23 - Consent of Independent Auditors 10
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Committee has caused this Annual Report to be signed by the
undersigned thereunto duly authorized.
Dated: May 26, 2000
PAYCHEX, INC. 401(k) INCENTIVE RETIREMENT PLAN
(Name of Plan)
/s/ Francis G. Provino
______________________
Francis G. Provino
401(k) COMMITTEE MEMBER
<PAGE>
Report of Independent Auditors
The Plan Committee
Paychex, Inc. 401(k)
Incentive Retirement Plan
Rochester, New York
We have audited the accompanying statements of net assets available for
benefits of Paychex, Inc. 401(k) Incentive Retirement Plan (the Plan) as of
December 31, 1999 and 1998, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1999 and 1998, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1999 are presented
for purposes of additional analysis and are not a required part of the
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These supplemental
schedules are the responsibility of the Plan's management. The supplemental
schedules have been subjected to the auditing procedures applied in our audits
of the financial statements and, in our opinion, are fairly stated in all
material respects in relation to the financial statements taken as a whole.
May 15, 2000
Buffalo, New York /s/ Ernst & Young LLP
<PAGE>
PAYCHEX, INC. 401(k) INCENTIVE RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
(In Thousands)
<TABLE>
<CAPTION>
December 31,
________________________
1999 1998
_________ _________
<S> <C> <C>
Investments at fair value:
Paychex, Inc. Common Stock $ 180,377 $ 160,277
INVESCO Total Return Fund 10,999 11,030
INVESCO Blue Chip Growth Fund 29,487 18,035
IRT Stable Value Fund 15,303 14,269
IRT 500 Index Fund 8,956 3,593
G A M International Fund 2,791 2,953
Participant Loans Receivable 6,017 5,061
Cash 8,324 4,983
_________ _________
Net assets available for benefits $ 262,254 $ 220,201
_________ _________
_________ _________
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PAYCHEX, INC. 401(k) INCENTIVE RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(In Thousands)
<TABLE>
<CAPTIONS>
For the year ended December 31,
______________________________
1999 1998
<S> <C> <C>
Additions:
Dividends and interest income $ 4,610 $ 2,968
Net realized and unrealized appreciation
in fair value of investments (footnote C) 34,297 61,965
_________ _________
Total investment income 38,907 64,933
Contributions:
Participants 13,748 13,041
Employer 3,852 3,432
_________ _________
Total contributions 17,600 16,473
_________ _________
Total additions 56,507 81,406
Deductions:
Benefits paid to participants (14,454) (7,591)
_________ _________
Change in net assets 42,053 73,815
Net assets available for benefits
at beginning of year 220,201 146,386
_________ _________
Net assets available for benefits $ 262,254 $ 220,201
_________ _________
_________ _________
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PAYCHEX, INC. 401(k) INCENTIVE RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE A. DESCRIPTION OF THE PLAN
The following description of the Paychex, Inc. (the "Company") 401(k) Incentive
Retirement Plan (the "Plan") is provided for general information purposes only.
More complete information regarding the Plan's provisions may be found in the
plan document.
General - Established July 1, 1984, the Plan is a defined contribution plan,
qualified under Section 401(a) of the Internal Revenue Code (the "Code"), which
includes provisions under Section 401(k) allowing an eligible participant to
direct the employer to contribute a portion of the participant's compensation
to the Plan on a pre-tax basis through payroll deductions. The Plan is subject
to the provisions of the Employer Retirement Income Security Act of 1974
(ERISA).
Plan Administration - The Plan is administered by the Paychex, Inc. 401(k)
Incentive Retirement Plan Committee (the "Plan Committee") which is appointed
by the Board of Directors of the Company. The Plan's trustee, INVESCO Trust
Company (INVESCO), is responsible for the custody and management of the Plan's
assets.
Eligible Employees - Effective November 1, 1999, all new employees of the
Company and its subsidiaries are eligible to participate in the salary deferral
portion of the plan immediately. Employees must be employed for one year in
which a minimum of 1,000 hours have been worked to be eligible to receive a
Company matching contribution. Prior to November 1, 1999, new employees were
not eligible to participate until they had completed one year of service, and a
minimum of 1,000 hours.
Contributions - Employees may contribute up to 15% of their compensation
through payroll deductions in increments of 1%, subject to the limit
established by the Code. Discretionary employer contributions are equal to 50%
of the participant's elective contribution, but not to exceed 3% of the
participant's compensation. The Company may elect to make an additional
discretionary contribution to the Plan, but has not done so for the years ended
December 31, 1999 and 1998.
Vesting - Each participant is fully vested as to their elective contributions
and rollover contributions as well as any earnings or losses on them.
Employees are fully vested with respect to Company matching contributions upon
completion of three consecutive years of service, disability, death, or
attainment of retirement age, 59 1/2.
Participant Accounts - The Trustee maintains an account for each participant,
including participant directed allocations to each investment fund. Each
participant's account is credited with the participant's contribution and
allocations of any employer contribution and Plan earnings, less loans and
withdrawals, based on the direction of the participant.
Investment Options - Upon enrollment in the Plan, a participant may direct
contributions in the following investment options: (1) Paychex Stock Fund,
<PAGE>
(2) INVESCO Blue Chip Growth Fund, (3) INVESCO Total Return Fund, (4) The
INVESCO Retirement Trust Stable Value Fund, (5) The INVESCO Retirement Trust
500 Index Fund, and (6) The Global Asset Management International Fund.
Payment of Benefits - Upon termination of service, a participant may elect to
receive either a lump-sum amount equal to the value of the participant's vested
interest in his or her account, or annual installments over a fixed reasonable
period of time.
Forfeited Accounts - Forfeited nonvested accounts are used to reduce future
employer contributions.
Participant Loans Receivable - The Plan allows participants to borrow up to 50%
of the vested balance from their account. Payroll deductions are required to
repay the loan within five years, except for loans used for the purchase of a
principal residence, which are required to be repaid within ten years. The
rate of interest is the prime lending rate plus 1% at the time the loan is
disbursed.
Plan Termination - Although it has not expressed any intent to do so, the
Company has the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions of ERISA. In the
event of plan termination, participants will become fully vested in their
account balances.
NOTE B. SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting - The financial statements of the Plan are prepared under
the accrual method of accounting in accordance with generally accepted
accounting principles.
Administrative Expenses - Administrative expenses of the Plan are paid by the
Company.
Investment Valuation and Income Recognition - Investments are stated at their
approximate fair value determined on the basis of a quoted market price, with
the exception of the Stable Value Fund. The value of the Stable Value Fund is
determined in the manner set forth above except that guaranteed income
contracts, annuities, and other assets that provide for benefit payments or
withdrawals on a contractual basis are at book value (cost plus accrued
income). Participant loans receivable are valued at the principal amount which
approximates fair value.
Purchases and Sales of Securities - Purchases and sales of securities are
recorded on a trade date basis. Net realized gains or losses upon the sale of
investments are based on their average cost.
Interest Income - Interest income is recorded on the accrual basis. Dividends
are recorded on the ex-dividend date.
Payment of Benefits - Benefits are recorded when paid.
Contributions - Contributions from the Company are accrued for in accordance
with the terms of the Plan. Participant contributions are recorded in the
period the Company makes corresponding payroll deductions.
<PAGE>
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the financial statements and accompanying notes.
Actual results could differ from those estimates.
Reclassification - Certain prior year amounts have been reclassified to conform
to current year presentation.
NOTE C. INVESTMENTS
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as, held during the year) appreciated in fair value as
follows:
<TABLE>
<CAPTION>
1999 1998
Net Realized Net Realized
and Unrealized and Unrealized
Appreciation in Appreciation in
Fair Value of Fair Value of
Investments Investments
_______________ _______________
<S> <C> <C>
Paychex, Inc. Common Stock $28,205 $56,785
INVESCO Total Return Fund (841) 754
INVESCO Blue Chip Growth Fund 5,461 3,762
IRT 500 Index Fund 1,318 561
G A M International Fund 154 103
________ ________
$34,297 $61,965
________ ________
________ ________
</TABLE>
NOTE D. TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated April 28, 1995, stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (the Code) and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan was amended
subsequent to the IRS determination letter. The Plan Administrator believes
the Plan is being operated in compliance with the applicable requirements of
the Code and, therefore, believes that the Plan is qualified and the related
trust is tax exempt.
<PAGE>
SCHEDULE I - FORM 5500 SCHEDULE H, LINE 4I
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT YEAR END
PAYCHEX, INC. 401(k) INCENTIVE RETIREMENT PLAN
EIN-16-1124166
PLAN-0-40436
DECEMBER 31, 1999
(In Thousands)
<TABLE>
<CAPTION>
Description of Investment
Identity of including Maturity Date,
Party Rate of Interest, Collateral, Current
Involved Par or Maturity Value Cost Value
___________ ______________________________ _________ _________
<S> <C> <C> <C>
INVESCO* 13,176 shares of Paychex, Inc.
Stock Fund $ 77,961 $ 188,701
INVESCO* 380 shares of the INVESCO
Total Return Fund $ 10,427 $ 10,999
INVESCO* 3,636 shares of the INVESCO
Blue Chip Growth Fund $ 22,531 $ 29,487
INVESCO* 15,303 shares of the IRT
Stable Value Fund $ 15,303 $ 15,303
INVESCO* 257 shares of the IRT 500
Index Fund $ 7,410 $ 8,956
Global Asset
Management,
Inc. 87 shares of the G A M
International Fund $ 2,433 $ 2,791
Loan Fund Participant Loans Receivable** $ - $ 6,017
_________ _________
$ 136,065 $ 262,254
_________ _________
_________ _________
</TABLE>
* Represents party-in-interest
** Loans to participants have various maturity dates
and bear interest at rates ranging from 7% to 10%.
<PAGE>
EXHIBIT 23 - Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
below, of our report dated May 15, 2000, with respect to the financial
statements and schedules of Paychex, Inc. 401(k) Incentive Retirement Plan
included in this Annual Report (Form 11-K) for the year ended December 31, 1999
a. Form S-8 - Paychex, Inc. 401(k) Incentive Retirement Plan - as filed
with the Securities and Exchange Commission on October 2, 1992
(No.33-52838).
b. Form S-8 - Paychex, Inc. 401(k) Incentive Retirement Plan - as filed
with the Securities and Exchange Commission on July 30, 1999
(No.333-84055).
May 22, 2000
Buffalo, New York /s/ Ernst & Young LLP
