Paychex 2010 Annual Report Download - page 6

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2 Annual Report 2010
Fiscal 2010 was a challenging year for
Paychex as we experienced the most
turbulent economic times most of us can
remember. It was also a year of accomplishment
as we met or exceeded most of the financial
goals we established at the beginning of the
year, converted nearly 500,000 of our clients
to a new payroll platform, invested billions of
dollars of our client funds with no principal
losses, continued to generate strong growth in
our health care offerings, and returned 94% of
our net income to shareholders in the form of
dividends.
While the
economic
recovery is
slower than we
would like and
the challenges of a weak economy are not over,
many of the key economic indicators that we
watch closely are beginning to stabilize and, in
some cases, turn favorable. Our most important
key indicator is checks per client, and this
metric ended the year slightly higher than a year
ago; in addition, it was up 1.1% in the fourth
quarter of fiscal 2010 compared to the fourth
quarter of fiscal 2009. Looking ahead, we are
encouraged yet cautious about the economy,
but confident that when it improves Paychex is
poised to take advantage of the recovery.
Fiscal 2010 Results
Our team rose to the challenges we faced
this year, providing excellent customer
service, maximizing shareholder value,
and demonstrating outstanding expense
management in delivering our fiscal 2010
results.
Total revenue for the year ended May 31, 2010,
was $2.0 billion, down 4% from the previous
year. Service revenue declined 3% to
$1.9 billion. Our commitment to controlling
costs helped us meet our expectations for
operating income, net of certain items, which
was $688.5 million for fiscal 2010. As a
percentage of total service revenue, it was
35.4%, off just 1% compared to fiscal 2009.
Net income was $477.0 million, a decrease of
11%. Diluted earnings per share were $1.32.
We returned 94% of our net income, or
$448.6 million, to shareholders in cash
To Our Shareholders,