Skip to content
AnalystLens

Paychex Annual Report, Year Ended May 31, 1999

Filing Date
Filed August 27, 1999
Period End
May 31, 1999
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 27, 1999. Cited figures are marked; the original filing is the authoritative source.

Paychex, Inc. reported results for the fiscal year ended May 31, 1999, with service revenues of $597,296 thousanda (up 21.0% from $493,704 thousand in 1998) and net income of $139,099 thousand (up 36.1% from $102,219 thousand).

Diluted earnings per share were $.56, up 36.6%. The Payroll segment generated $545,249 thousandb in service revenue (up 19.8%) and operating income of $235,710 thousand (up 30.8%), while the HRS-PEO segment reported service revenue of $52,047 thousand (up 35.3%) and operating income of $12,598 thousand (up 89.7%). The filing describes 1999 as the ninth consecutive year of record service revenues and net income.

The company's client base grew to 322,600 payroll clients, and management cited growth in ancillary services such as TAXPAY (used by 79% of payroll clients), Direct Deposit (42% client utilization), and 401(k) recordkeeping, which served 10,100 clients. Operating cash flow was $174,120 thousandc, and at year-end the company held $343.2 million in available cash and investments plus $297.5 million of undrawn lines of credit. Management expects fiscal 2000 Payroll revenue growth within a 17% to 19% long-term historical range and an effective tax rate of 30.5% to 31.0%.

The company's investment portfolio is concentrated in high-credit-quality, tax-exempt municipal and government securities, with a weighted-average yield to maturity of 4.10% and an estimated fair value decrease of approximately $16.2 milliond from a hypothetical 75 basis point rate increase. Year 2000 remediation costs were estimated at approximately $5 million, with about 80% spent through May 31, 1999. The company reported no material pending legal proceedings.

02—Key points

Key Highlights

  1. Service revenues of $597,296 thousand, up 21.0% from fiscal 1998; net income of $139,099 thousand, up 36.1%.
  2. Diluted EPS of $.56, up 36.6%; cash dividends per share of $.22, up 46.7%.
  3. Payroll segment operating income of $235,710 thousand, up 30.8%, with 322,600 payroll clients at May 31, 1999.
  4. HRS-PEO segment operating income of $12,598 thousand, up 89.7%, after the loss of two large PEO clients in November 1998.
  5. Operating cash flow of $174,120 thousand; $343.2 million in available cash and investments and $297.5 million in unused credit lines.
  6. Investment portfolio of $879.6 million in available-for-sale securities, with a weighted-average yield to maturity of 4.10%.
  7. Year 2000 expenditures estimated at approximately $5 million, with about 80% spent through May 31, 1999.

03—Questions

Frequently Asked Questions

  1. How did Paychex perform financially in fiscal 1999?

    Service revenues rose 21.0% to $597,296 thousand, operating income rose 39.2% to $187,562 thousand, and net income rose 36.1% to $139,099 thousand. The filing describes this as the ninth consecutive year of record service revenues and net income.

  2. What drove growth in the Payroll segment?

    The filing attributes growth to a larger client base, improved client retention, and higher use of ancillary services such as TAXPAY, Direct Deposit, and Check Signing. Payroll clients reached 322.6 thousand, up 9.9%, and Direct Deposit clients rose 29.7%. The filing expects fiscal 2000 Payroll revenue growth within a 17% to 19% long-term historical range.

  3. What risks does the company disclose regarding interest rates?

    A portion of earnings depends on interest rates, and the filing notes that lower rates reduced investment income growth in fiscal 1999. A hypothetical 75 basis point increase in rates would reduce the fair value of the $879.6 million available-for-sale portfolio by approximately $16.2 million, or about 2%, with no immediate effect on results of operations. The company does not use derivative instruments to manage this risk.

  4. What is the company's outlook for fiscal 2000?

    The filing expects Payroll revenue growth within 17% to 19%, HRS-PEO service revenue growth higher than the Payroll segment's, investment income growth slightly below net income growth, and an effective tax rate of 30.5% to 31.0%. Purchases of property and equipment are expected to range from $27 million to $30 million. The company also expects the SOP 98-1 software accounting change to increase net income by approximately $2.0 million to $3.0 million.

  5. What are the company's Year 2000 exposures?

    The company states that its internal mission-critical systems were Year 2000 compliant by the end of the first quarter of calendar 1999. Remaining work includes desktop systems and third-party interface testing, and the company says it expects minimal business disruption. It cautions that third parties, such as government agencies and vendors, may not convert their systems in time, and it estimates total Year 2000 expenditures of approximately $5 million.

04—Continue

← View all 10-K filings