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Paychex Annual Report, Year Ended May 31, 2002

Filing Date
Filed July 22, 2002
Period End
May 31, 2002
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 July 22, 2002. Cited figures are marked; the original filing is the authoritative source.

Paychex, Inc. reported fiscal 2002 (year ended May 31, 2002) total revenues of $954.9 milliona, up from $869.9 million in fiscal 2001, and net income of $274.5 million, up from $254.9 million.

Diluted earnings per share were $.73, compared with $.68 in fiscal 2001. Service revenues rose to $892.2 millionb, led by Payroll service revenues of $770.2 million and Human Resource and Benefits service revenues of $121.9 million. Interest on funds held for clients declined to $62.7 million from $83.3 million, which management attributes primarily to lower interest rates.

The company describes fiscal 2002 as its twelfth consecutive year of record total revenues and net income, and it attributes the results partly to recessionary economic conditions and lower interest rates. The company serviced over 390,000 clients and had approximately 7,400 employees at May 31, 2002. Checks per client declined 3.7%c for the year, and the Taxpay product was used by 85% of clients.

The company's balance sheet carried no debt, and stockholders' equity rose to $923.98 milliond. Net cash provided by operating activities was $303.8 million, and dividends paid totaled $157.5 million, or $.42 per share declared for the year. Management projects fiscal 2003 total revenue growth of 8% to 10% and expects net income growth approximating or slightly below revenue growth.

The filing highlights exposure to interest rate changes, since interest on client funds is a substantial part of total revenue, and to the possibility of client funds shortfalls and service errors. Management believes the company's pending legal claims will not have a material adverse effect on its financial position or results of operations.

02—Key points

Key Highlights

  1. Total revenues of $954.9 million in fiscal 2002, up from $869.9 million in fiscal 2001; described as the twelfth consecutive year of record total revenues and net income.
  2. Net income of $274.5 million, or $.73 diluted earnings per share, compared with $254.9 million and $.68 in fiscal 2001.
  3. Interest on funds held for clients fell to $62.7 million from $83.3 million, reflecting lower interest rates; the Federal Funds rate ended the year at 1.75%.
  4. Payroll service revenues rose to $770.2 million and Human Resource and Benefits service revenues rose to $121.9 million.
  5. Serviced over 390,000 clients at May 31, 2002, with 85% using Taxpay and 57% using Employee Pay Services.
  6. No debt outstanding; stockholders' equity increased to $923.98 million and $725 million in cash and corporate investments was available at year end.
  7. Fiscal 2003 outlook projects total revenue growth of 8% to 10% and net income growth approximating or slightly below revenue growth.

03—Questions

Frequently Asked Questions

  1. How did Paychex perform financially in fiscal 2002?

    Total revenues rose to $954.9 million from $869.9 million, and net income increased to $274.5 million from $254.9 million. Diluted earnings per share were $.73, up from $.68.

  2. What drove revenue growth in fiscal 2002?

    Payroll service revenues grew to $770.2 million and Human Resource and Benefits service revenues grew to $121.9 million, reflecting new clients, new services, price increases, and greater use of ancillary services. Interest on funds held for clients declined to $62.7 million.

  3. What is the company's outlook for fiscal 2003?

    Management anticipates record total revenues and net income, with total revenue growth estimated at 8% to 10% and net income growth approximating or slightly less than revenue growth. It projects Payroll service revenue growth of 9% to 11% and Human Resource and Benefits service revenue growth of 17% to 19%.

  4. What risks could affect the company's results?

    Interest on funds held for clients is a substantial part of total revenue, so lower interest rates or changes in tax remittance regulations could reduce income. The filing also cites risks of service errors and penalties, third-party provider failures, clients with insufficient funds to cover payments, and catastrophic events.

  5. What is the company's financial position and dividend policy?

    The company had no debt at May 31, 2002, and total stockholders' equity was $923.98 million. Dividends declared were $.42 per share for fiscal 2002, up from $.33, and the Board of Directors has discretion over future dividends.

04—Continue

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