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: December 20, 2000
(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 December 20, 2000 is attached. This
release announces the Company's results of operations for the quarter and
six-month period ended November 30, 2000.
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: December 20, 2000 /s/ B. Thomas Golisano
-----------------------
B. Thomas Golisano
Chairman, President and
Chief Executive Officer
Date: December 20, 2000 /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. Second Quarter Earnings Release
Conference Call scheduled for December 20, 2000 at 10:30 a.m. Eastern
Standard Time at http://www.paychex.com/paychex/finance/finance.html.
Paychex, Inc. news releases, current financial information and related SEC
filings can be found at the same Web site. The Company's Investor
Relations presentation will also be available on the Web site on or
before December 29, 2000.
PAYCHEX, INC. REPORTS RECORD SECOND QUARTER RESULTS
ROCHESTER, NY, December 20, 2000 -- Paychex, Inc. (NASDAQ: PAYX) today
announced record net income of $62.1 million, or $.16 diluted earnings per
share, for the quarter ended November 30, 2000, a 36% increase over net income
of $45.8 million, or $.12 diluted earnings per share, for the same period last
year. Total service revenues were $208.1 million, an increase of 21% over
$172.4 million for the second quarter last year.
For the six months ended November 30, 2000, net income increased 36% to $120.8
million, or $.32 diluted earnings per share, as compared to $88.8 million, or
$.24 diluted earnings per share, for the same period last year. Total service
revenues were $412.0 million, an increase of 22% over $338.8 million for the
same period last year.
PAYROLL SEGMENT
For the second quarter ended November 30, 2000, operating income for the
Payroll segment increased 24% to $90.3 million from $72.6 million for the
second quarter last year. Total payroll service revenues were $184.5 million,
an increase of 19% over $154.9 million for the prior year period.
For the six months ended November 30, 2000, operating income for the Payroll
Segment increased 23% to $177.9 million from $144.8 million for the same period
last year. Total payroll service revenues were $366.4 million, an increase of
20% over $305.8 million for the same period last year.
The increases in Total payroll service revenues and operating income were
primarily the result of continued growth in the Payroll client base, increased
utilization of ancillary services, higher rates of return on ENS investments
(funds held for clients) and leveraging of operating expenses.
As of November 30, 2000, 82% 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 and Access
Card products was utilized by 50% of its clients. Major Market Services
revenue increased 56% and 55% for the second quarter and six-month periods
to $10.6 million and $20.2 million, respectively.
HRS-PEO SEGMENT
For the second quarter ended November 30, 2000, operating income for the
HRS-PEO segment increased 61% from $5.7 million to $9.2 million. HRS-PEO
service revenue was $23.6 million, an increase of 35% over $17.5 million for
the second quarter last year.
For the six months ended November 30, 2000, operating income for the HRS-PEO
segment increased 72% from $10.2 million to $17.6 million. HRS-PEO service
revenue was $45.6 million, an increase of 38% over $32.9 million for the same
period last year.
The increases in service revenue and operating income are primarily related to
increasing 401(k) recordkeeping, workers' compensation insurance and section
125 clients. 401(k) recordkeeping revenue increased 41% and 45% in the second
quarter and six-month periods to $10.4 million and $20.1 million, respectively.
The second quarter and six-month period continued to reflect strong customer
acceptance of our workers' compensation insurance program.
CORPORATE EXPENSES
Corporate expenses are primarily related to the Information Technology,
Organizational Development, Finance, Marketing and Senior Management functions
of the Company. For the second quarter ended November 30, 2000, Corporate
expenses increased 2% to $16.1 million from $15.8. For the six months ended
November 30, 2000, Corporate expenses decreased 2% from $33.8 million to $33.2
million. The relatively flat year over year increases reflect additional
expenditures to support the growth of the Company being offset by lower
spending on national marketing efforts in fiscal 2001.
INVESTMENT INCOME
Investment income for the quarter ended November 30, 2000 increased 55% to $6.0
million from $3.9 million in the second quarter of last year. Investment
income for the six month period increased 52% to $11.5 million from $7.5
million in the prior year period. The increases are due to higher invested
balances and higher comparable rates of return.
B. Thomas Golisano, Chairman, President and Chief Executive Officer of Paychex
said, "We are pleased with our second quarter and year-to-date results, which
reflect continued growth in our client base, increased utilization of ancillary
services and leveraging of expenses. Our Major Market Services, 401(k)
recordkeeping, and worker's compensation insurance products continue to build
critical mass and offer excellent growth opportunities."
"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", "expects", "expected
to", "we look forward to", "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 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 the
use of the Internet; the possibility of catastrophic events that could impact
the Company's operating facilities, computer technology and communication
systems; and changes in short- and long-term interest rates 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)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
November 30, November 30, November 30, November 30,
2000 1999(B) 2000 1999 (B)
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Service revenues:
Payroll $167,133 $142,866 $331,654 $281,578
ENS investment revenue 17,353 12,033 34,766 24,240
-------- -------- -------- --------
Total payroll service
revenues 184,486 154,899 366,420 305,818
HRS-PEO 23,612 17,459 45,561 32,932
-------- -------- -------- --------
Total service revenues 208,098 172,358 411,981 338,750
Operating costs 47,095 41,356 93,022 80,722
Selling, general and
administrative expenses 77,578 68,494 156,708 136,836
-------- -------- -------- --------
Operating income 83,425 62,508 162,251 121,192
Investment income 5,965 3,854 11,499 7,542
-------- -------- -------- --------
Income before income taxes 89,390 66,362 173,750 128,734
Income taxes 27,264 20,572 52,994 39,907
-------- -------- -------- --------
Net income $ 62,126 $ 45,790 $120,756 $ 88,827
======== ======== ======== ========
Basic earnings per share(A) $ .17 $ .12 $ .32 $ .24
======== ======== ======== ========
Diluted earnings per share(A) $ .16 $ .12 $ .32 $ .24
======== ======== ======== ========
Weighted-average common
shares outstanding (A) 372,618 370,258 372,326 369,951
======== ======== ======== ========
Weighted-average shares
assuming dilution (A) 377,839 374,717 377,511 374,113
======== ======== ======== ========
Cash dividends per common
share (A) $ .09 $ .06 $ .15 $ .10
======== ======== ======== ========
</TABLE>
(A) Financial information for the periods ended November 30, 1999, have been
adjusted for a three-for-two stock split distributed in May 2000.
(B) Certain amounts from the prior year are reclassified to conform to the
current year presentation.
PAYCHEX, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
November 30, May 31,
2000 2000
------------ -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 32,561 $ 47,136
Corporate investments 491,212 412,357
Interest receivable 23,297 22,436
Accounts receivable 108,251 87,608
Deferred income taxes - 9,539
Prepaid expenses and other current assets 6,222 6,531
----------- ----------
Current assets before ENS investments 661,543 585,607
ENS investments 1,843,526 1,776,968
----------- ----------
Total current assets 2,505,069 2,362,575
Property and equipment - net 80,272 75,375
Goodwill and intangible assets - net 6,442 5,584
Deferred income taxes 2,915 2,494
Other assets 9,131 9,549
---------- ----------
Total assets $2,603,829 $2,455,577
========== ==========
LIABILITIES
Accounts payable $ 14,346 $ 17,086
Accrued compensation and related items 45,022 52,631
Deferred revenue 4,521 4,719
Accrued income taxes 827 2,969
Deferred income taxes 4,314 -
Other current liabilities 22,200 24,400
----------- ----------
Current liabilities before ENS client deposits 91,230 101,805
ENS client deposits 1,842,179 1,785,140
----------- ----------
Total current liabilities 1,933,409 1,886,945
Long-term liabilities 5,157 5,200
----------- ----------
Total liabilities 1,938,566 1,892,145
----------- ----------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value,
600,000 authorized shares
Issued: 372,910/November 30, 2000 and
371,769/May 31, 2000 3,729 3,718
Additional paid-in capital 125,127 98,904
Retained earnings 534,215 469,385
Accumulated other comprehensive income/(loss) 2,192 (8,575)
---------- ----------
Total stockholders' equity 665,263 563,432
---------- ----------
Total liabilities and stockholders' equity $2,603,829 $2,455,577
========== ==========
</TABLE>
PAYCHEX, INC.
BUSINESS SEGMENT INFORMATION
(In thousands)
The Company has two business segments: Payroll and Human Resource
Services-Professional Employer Organization (HRS-PEO). The Payroll segment is
engaged in the preparation of payroll checks, internal accounting records,
federal, state and local payroll tax returns, and collection and remittance of
payroll obligations for small- to medium-sized businesses. The HRS-PEO segment
specializes in providing small- to medium-sized businesses with cost-effective
outsourcing solutions for their employee benefits. HRS-PEO products include
401(k) plan recordkeeping, workers' compensation insurance, section 125 plan
administration, group benefits, state unemployment insurance, employee
handbooks and management services, Paychex Administrative Services and
Professional Employer Organization (PEO) services. Corporate expenses are
primarily related to the Information Technology, Organizational Development,
Finance, Marketing and Senior Management functions of the Company.
<TABLE>
<CAPTION>
For the three months ended For the six months ended
November 30, November 30, November 30, November 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Service revenues:
Payroll $167,133 $142,866 $331,654 $281,578
ENS investment revenue 17,353 12,033 34,766 24,240
-------- -------- -------- --------
Total payroll service
revenues 184,486 154,899 366,420 305,818
HRS-PEO 23,612 17,459 45,561 32,932
-------- -------- -------- --------
Total service revenues $208,098 $172,358 $411,981 $338,750
======== ======== ======== ========
Operating income:
Payroll $ 90,328 $ 72,567 $177,862 $144,751
HRS-PEO 9,199 5,729 17,593 10,233
-------- -------- -------- --------
Segment operating income 99,527 78,296 195,455 154,984
Corporate expenses 16,102 15,788 33,204 33,792
-------- -------- -------- --------
Total operating income 83,425 62,508 162,251 121,192
Investment income 5,965 3,854 11,499 7,542
-------- -------- -------- --------
Income before income taxes $ 89,390 $ 66,362 $173,750 $128,734
======== ======== ======== ========
</TABLE>
