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Paychex Annual Report, Year Ended May 31, 1995

Filing Date
Filed August 18, 1995
Period End
May 31, 1995
Security
PAYX
In the record · 2016–202610-K1110-Q328-K99

PAYX filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 99 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Jul ’17Jul ’17
  2. Material agreement8-K · Aug ’19Aug ’19
  3. Material agreement8-K · Sep ’21Sep ’21
  4. Leadership change8-K · Jul ’25Jul ’25

01—Abstract

Summary

Summary of the 10-K filed August 18, 1995. Cited figures are marked; the original filing is the authoritative source.

Paychex, Inc. (Rochester, New York) filed this Form 10-K for the fiscal year ended May 31, 1995.

The company provides computerized payroll accounting services to approximately 208,000 small and medium-sized businesses nationwide, and states it believes it is the second largest payroll accounting service company in the country by number of clients. Its services include paychecks and payroll records, Taxpay automatic tax payment and filing (used by over 50%a of clients), Direct Deposit, check signing and inserting, and the Paylink PC-based data entry product. Its Human Resource Services division offers Section 125 cafeteria plans, employee handbooks and, newly in 1995, 401(k) recordkeeping.

Financially, revenue rose to $267,176 thousandb in 1995 from $224,052 thousand in 1994 and $190,032 thousand in 1993. Operating income reached $51,011 thousand, up from $36,783 thousand, and net income was $39,040 thousand, or $.87 per share, compared with $28,070 thousand, or $.63 per share, in 1994. Operating costs fell to 29% of revenue and selling, general and administrative expenses to 51%.

Total assets were $168,437 thousandc and stockholders' equity was $139,932 thousand at May 31, 1995. Net cash provided by operating activities was $48,147 thousand. Capital expenditures for fiscal 1996 are expected to be between $17,000,000 and $20,000,000.

The company reported no outstanding borrowings under its $200,000,000d of unsecured bank lines of credit and stated there were no material pending legal proceedings. In June 1995 it completed a pooling-of-interests merger with Pay-Fone Systems, Inc., issuing approximately 357,000 shares, which the company said would not significantly affect fiscal 1996 results. The quarterly dividend was raised to $.06 per share during fiscal 1995, and a three-for-two stock split was distributed May 25, 1995.

02—Key points

Key Highlights

  1. Revenue grew to $267,176 thousand in fiscal 1995, up from $224,052 thousand in fiscal 1994, which the filing attributes to client growth, Taxpay usage and higher interest rates on Taxpay investments.
  2. Net income rose to $39,040 thousand ($.87 per share) from $28,070 thousand ($.63 per share), with the filing citing a record year.
  3. Operating costs decreased to 29% of revenue and SG&A decreased to 51% of revenue, and the company expects operating costs to remain relatively consistent in fiscal 1996.
  4. Taxpay is used by more than 50% of clients, compared with approximately 43% in 1994 and 35% in 1993.
  5. Client base of approximately 208,000 businesses, with about 80% of prior-year clients retained in the succeeding year.
  6. The company held $200,000,000 of unsecured bank lines of credit with no outstanding borrowings at May 31, 1995.
  7. Stock traded on NASDAQ under the symbol PAYX; the quarterly dividend increased to $.06 per share, with a three-for-two stock split distributed May 25, 1995.

03—Questions

Frequently Asked Questions

  1. What does Paychex do and who are its customers?

    Paychex provides computerized payroll accounting services, including paychecks, earnings statements, payroll tax returns and the Taxpay tax payment and filing service, primarily to small and medium-sized businesses. It serves approximately 208,000 clients through 71 branch operating centers and 23 sales offices.

  2. How strong was the company's financial performance in fiscal 1995?

    Revenue reached $267,176 thousand and net income reached $39,040 thousand, or $.87 per share, both described as records. Operating income rose to $51,011 thousand from $36,783 thousand in fiscal 1994.

  3. Does Paychex carry significant debt?

    No. Long-term debt, including the current portion, was $728 thousand at May 31, 1995, consisting of industrial revenue bonds, and no amounts were outstanding under its $200,000,000 bank lines of credit.

  4. What are the company's expectations for fiscal 1996?

    The company expects revenue to continue increasing from client base growth, modest price increases and ancillary services. Operating costs as a percentage of revenue are expected to remain relatively consistent, and capital expenditures are expected to range between $17,000,000 and $20,000,000.

  5. What competitive and client-retention factors does the filing describe?

    The filing says competition is intense and based principally on price and service, with one major nationwide competitor and manual payroll systems used by most businesses in its market. About 80% of businesses that were clients in fiscal 1993 or 1994 remained clients the following year, and client losses are primarily caused by ownership changes or business failures.

04—Continue

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