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Paychex Annual Report, Year Ended May 31, 1996

Filing Date
Filed August 14, 1996
Period End
May 31, 1996
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 14, 1996. Cited figures are marked; the original filing is the authoritative source.

Paychex, Inc. reported record fiscal 1996 results for the year ended May 31, 1996, its sixth consecutive year of record revenues and net income.

Revenue rose 21.7% to $325.3 milliona, operating income reached $67.5 million, and net income was $52.3 million, or $.77 per share, compared with $39.0 million in fiscal 1995. The company served over 234,000 small and medium-sized business clients, and the filing states it believes it is the second largest payroll accounting service company in the country by number of clients. Management attributed growth to client growth in basic payroll service, increased use of the TAXPAY product (used by 56% of clients, up from 51% in 1995), and ancillary products such as Direct Deposit and Human Resource Services.

Balance sheet strength was notable: stockholders' equity rose to $190.8 millionb, long-term debt was fully repaid, and the company had $200 million of unsecured bank lines of credit with no borrowings outstanding at May 31, 1996. Net cash from operating activities was $59.9 million, and capital expenditures were $17.3 million. The quarterly dividend was increased to $.06 per share during the second quarter, bringing the annual dividend to $.22 per share.

The company agreed on June 25, 1996 to merge with National Business Solutions, Inc. (NBS), a professional employer organization, in a pooling-of-interests transaction in which NBS stockholders would receive approximately 3 million Paychex shares valued at $140 millionc. NBS generated approximately $240 million in revenue for the twelve months ended May 31, 1996. The filing states the merger is pending favorable judgment on Hart-Scott-Rodino Act filings and Florida approvals, and that the company does not anticipate a dilutive effect on future earnings.

02—Key points

Key Highlights

  1. Revenue of $325.3 million in fiscal 1996, up 21.7%, a record for the sixth consecutive year of record revenues and net income.
  2. Net income of $52.3 million, or $.77 per share, up from $39.0 million, or $.58 per share, in fiscal 1995.
  3. Operating income of $67.5 million, or 20.8% of revenue, compared with 19.1% in fiscal 1995.
  4. Serves over 234,000 clients; 56% use the TAXPAY service, up from 51% in 1995 and 43% in 1994.
  5. Stockholders' equity rose to $190.8 million; long-term debt was fully repaid and $200 million of unsecured bank credit lines were undrawn at May 31, 1996.
  6. Pending merger with National Business Solutions, Inc., a professional employer organization with approximately $240 million in revenue, to be accounted for as a pooling of interests in exchange for about 3 million Paychex shares valued at $140 million.
  7. Quarterly dividend increased to $.06 per share in the second quarter, for an annual dividend of $.22 per share versus $.15 in 1995.

03—Questions

Frequently Asked Questions

  1. How did Paychex perform financially in fiscal 1996?

    Paychex reported record fiscal 1996 results for the year ended May 31, 1996. Revenue rose 21.7% to $325.3 million, net income reached $52.3 million ($.77 per share), and operating income was $67.5 million, all records for the sixth consecutive year.

  2. What drove revenue growth?

    Management attributed growth primarily to continued growth in clients using the basic payroll service, which rose 12.7% in 1996, and increased utilization of the TAXPAY product by new and existing clients. About 2% of the 1996 revenue increase came from the Pay-Fone Systems and The Payroll Company acquisitions, and other ancillary products such as Direct Deposit and Check Signing and Inserting also contributed.

  3. What is the status of the proposed NBS merger?

    On June 25, 1996, Paychex agreed to merge with National Business Solutions, Inc. (NBS), a professional employer organization, in a pooling-of-interests transaction. NBS stockholders would receive about 3 million Paychex shares valued at $140 million. The merger was pending favorable judgment on Hart-Scott-Rodino Act filings and approvals required under the Florida Business Corporations Act. The company does not anticipate the merger will have a dilutive effect on future earnings.

  4. How strong is the company's financial position and liquidity?

    At May 31, 1996, total assets were $220.2 million and stockholders' equity was $190.8 million. The company had no long-term debt, $200 million of unsecured bank lines of credit with no amounts outstanding, and net cash from operating activities of $59.9 million. Management stated projected cash flows are expected to be adequate to support normal operations, planned capital expenditures and dividends.

  5. What are the company's dividend and capital spending plans?

    The quarterly dividend was raised to $.06 per share in the second quarter of 1996, for an annual total of $.22 per share compared with $.15 in 1995. Capital expenditures were $17.3 million in 1996 and are expected to range between $16 million and $22 million in 1997. The company also planned a laser printing equipment upgrade through a five-year operating lease with future minimum payments of approximately $10 million.

04—Continue

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