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Paychex, Inc. Reports First Quarter Results

       

PAYCHEX, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)

(In millions, except per share amounts)
             
For the three months ended

August 31,
      2012     2011     Change
Revenue:    
Payroll service revenue $ 385.9 $ 382.3 1 %
Human Resource Services revenue   182.2         169.7 7 %
Total service revenue 568.1 552.0 3 %
Interest on funds held for clients (1)   10.1         11.1 (9 %)
Total revenue 578.2 563.1 3 %
 
Expenses:
Operating expenses 164.2 164.1
Selling, general and administrative expenses   176.0         169.3 4 %
Total expenses   340.2         333.4 2 %
 
Operating income 238.0 229.7 4 %
 
Investment income, net (1)   1.9         1.5 30 %
Income before income taxes 239.9 231.2 4 %
 
Income taxes   86.8         82.3 6 %
Net income 153.1 148.9 3 %
 
 
Basic earnings per share $ 0.42 $ 0.41 2 %
 
Diluted earnings per share $ 0.42 $ 0.41 2 %
 
Weighted-average common shares outstanding 363.0 362.2
 
Weighted-average common shares outstanding, assuming dilution 363.8 362.8
 
Cash dividends per common share $ 0.32 $ 0.31 3 %
 
Other comprehensive (loss)/income, net of tax:
Unrealized (losses)/gains on securities, net of tax (0.4 )       6.7
Comprehensive income $ 152.7       $ 155.6 (2 %)
                       

(1)
 

Further information on interest on funds held for clients and investment income, net, and the short- and long-term effects of changing interest rates can be found in our filings with the SEC, including our Form 10-Q and our Annual Report on Form 10-K, as applicable, 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 filings are accessible at our website www.paychex.com.

 
       

PAYCHEX, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions, except per share amount)
             
August 31, May 31,
      2012     2012
ASSETS
Cash and cash equivalents $ 149.0 $ 108.8
Corporate investments 241.9 207.5
Interest receivable 24.0 30.6
Accounts receivable, net of allowance for doubtful accounts 153.1 142.4
Deferred income taxes 1.6
Prepaid income taxes 5.6
Prepaid expenses and other current assets   36.3       35.2
Current assets before funds held for clients 604.3 531.7
Funds held for clients   3,696.1       4,544.2
Total current assets 4,300.4 5,075.9
Long-term corporate investments 480.4 473.7
Property and equipment, net of accumulated depreciation 326.9 324.3
Intangible assets, net of accumulated amortization 51.3 55.8
Goodwill 517.4 517.4
Deferred income taxes 30.5 29.2
Other long-term assets   4.0       3.3
Total assets $ 5,710.9     $ 6,479.6
 
LIABILITIES
Accounts payable $ 40.7 $ 69.7
Accrued compensation and related items 115.4 130.9
Deferred revenue 2.7 3.0
Accrued income taxes 61.0
Deferred income taxes 19.5 13.9
Other current liabilities   33.5       33.8
Current liabilities before client fund obligations 272.8 251.3
Client fund obligations   3,646.9       4,494.4
Total current liabilities 3,919.7 4,745.7
Accrued income taxes 42.2 35.9
Deferred income taxes 45.3 40.6
Other long-term liabilities   48.3       52.9
Total liabilities 4,055.5 4,875.1
 
STOCKHOLDERS’ EQUITY

Common stock, $0.01 par value; Authorized: 600.0 shares;

Issued and outstanding: 363.5 shares as of August 31, 2012

and 362.6 shares as of May 31, 2012, respectively.
3.6 3.6
Additional paid-in capital 581.5 561.1
Retained earnings 1,033.0 1,002.1
Accumulated other comprehensive income   37.3       37.7
Total stockholders’ equity   1,655.4       1,604.5
Total liabilities and stockholders’ equity $ 5,710.9     $ 6,479.6
                 
 

   

PAYCHEX, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)
       
For the three months ended

August 31,
      2012     2011
OPERATING ACTIVITIES    
Net income $ 153.1 $ 148.9
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization on property and equipment and intangible assets 24.1 24.2
Amortization of premiums and discounts on available-for-sale securities 13.3 10.3
Stock-based compensation costs 6.4 6.6
Provision for deferred income taxes 10.2 10.8
Provision for allowance for doubtful accounts 0.2 0.2
Net realized gains on sales of available-for-sale securities (0.2 ) (0.1 )
Changes in operating assets and liabilities:
Interest receivable 6.6 7.3
Accounts receivable (10.9 ) (37.0 )
Prepaid expenses and other current assets 4.5 (2.2 )
Accounts payable and other current liabilities 10.3 21.2
Net change in other assets and liabilities   0.1         (3.0 )
Net cash provided by operating activities 217.7 187.2
 
INVESTING ACTIVITIES
Purchases of available-for-sale securities (5,228.6 ) (1,653.5 )
Proceeds from sales and maturities of available-for-sale securities 4,865.8 2,095.9
Net change in funds held for clients' money market securities and other cash equivalents 1,156.8 (23.4 )
Purchases of property and equipment (22.0 ) (20.2 )
Purchases of other assets   (0.1 )       (0.8 )
Net cash provided by investing activities 771.9 398.0
 
FINANCING ACTIVITIES
Net change in client fund obligations (847.5 ) (479.7 )
Dividends paid (116.4 ) (112.4 )
Proceeds from and excess tax benefit related to stock-based awards   14.5         1.0  
Net cash used in financing activities   (949.4 )       (591.1 )
 
Increase/(decrease) in cash and cash equivalents 40.2 (5.9 )
Cash and cash equivalents, beginning of period   108.8         119.0  
Cash and cash equivalents, end of period $ 149.0       $ 113.1  
                     

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