Paychex 2010 Annual Report Download - page 28

Item 6. Selected Financial Data
In thousands, except per share amounts
Year ended May 31, 2010
(1)
2009 2008 2007
(2)
2006
Service revenue ................. $1,945,789 $2,007,305 $1,934,536 $1,752,868 $1,573,797
Interest on funds held for clients ..... 55,031 75,454 131,787 134,096 100,799
Total revenue ................... $2,000,820 $2,082,759 $2,066,323 $1,886,964 $1,674,596
Operating income ................ $ 724,795 $ 805,200 $ 828,267 $ 701,548 $ 649,571
As a % of total revenue .......... 36% 39% 40% 37% 39%
Net income ..................... $ 476,999 $ 533,545 $ 576,145 $ 515,447 $ 464,914
As a % of total revenue .......... 24% 26% 28% 27% 28%
Diluted earnings per share .......... $ 1.32 $ 1.48 $ 1.56 $ 1.35 $ 1.22
Cash dividends per common share .... $ 1.24 $ 1.24 $ 1.20 $ 0.79 $ 0.61
Purchases of property and equipment . . $ 61,262 $ 64,709 $ 82,289 $ 79,020 $ 81,143
Cash and total corporate investments . . $ 656,918 $ 574,713 $ 434,762 $1,224,211 $ 962,011
Total assets ..................... $5,226,299 $5,127,415 $5,309,791 $6,246,519 $5,549,302
Total debt ...................... $ — $ — $ — $ — $ —
Stockholders’ equity .............. $1,401,979 $1,341,478 $1,196,642 $1,952,248 $1,654,843
Return on stockholders’ equity ...... 34% 41% 39% 28% 30%
(1) Includes an expense charge of $18.7 million to increase the litigation reserve.
(2) Includes $25.7 million of stock-based compensation costs and an expense charge of $38.0 million to increase
the litigation reserve.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations reviews the
operating results of Paychex, Inc. and its wholly owned subsidiaries (“Paychex,” “we,” “our,” or “us”) for each
of the three fiscal years ended May 31, 2010 (“fiscal 2010”), May 31, 2009 (“fiscal 2009”), and May 31, 2008
(“fiscal 2008”), and our financial condition as of May 31, 2010. This review should be read in conjunction with the
accompanying Consolidated Financial Statements and the related Notes to Consolidated Financial Statements
contained in Item 8 of this Annual Report on Form 10-K (“Form 10-K”) and the “Risk Factors” discussed in Item 1A
of this Form 10-K. Forward-looking statements in this review are qualified by the cautionary statement under the
heading “Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995” contained at the
beginning of Part I of this Form 10-K.
Overview
We are a leading provider of payroll, human resource, and benefits outsourcing solutions for small- to medium-
sized businesses. Our Payroll and Human Resource Services offer a portfolio of services and products that allow our
clients to meet their diverse payroll and human resource needs. Our payroll services are the foundation of our
service portfolio. They are provided through either our core payroll or Major Market Services (“MMS”), which is
utilized by clients that have more sophisticated payroll and benefits needs, and include:
• payroll processing;
• payroll tax administration services;
• employee payment services; and
• regulatory compliance services (new-hire reporting and garnishment processing).
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