Paychex 2010 Annual Report Download - page 76

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Other commitments: As of May 31, 2010, the Company had outstanding commitments under purchase
orders and legally binding contractual arrangements with minimum future payment obligations of approximately
$73.0 million, including $8.9 million of commitments to purchase capital assets. These minimum future payment
obligations relate to the following fiscal years:
In thousands
Year ending May 31, Minimum payment obligation
2011 ................................................... $46,228
2012 ................................................... $16,226
2013 ................................................... $ 7,357
2014 ................................................... $ 1,186
2015 ................................................... $ 1,156
Thereafter ............................................... $ 853
The Company guarantees performance of service on annual maintenance contracts for clients who financed
their service contracts through a third party. In the normal course of business, the Company makes representations
and warranties that guarantee the performance of services under service arrangements with clients. Historically,
there have been no material losses related to such guarantees. In addition, the Company has entered into
indemnification agreements with its officers and directors, which require the Company to defend and, if necessary,
indemnify these individuals for certain pending or future claims as they relate to their services provided to the
Company.
Paychex currently self-insures the deductible portion of various insured exposures under certain employee
benefit plans. The Company’s estimated loss exposure under these insurance arrangements is recorded in other
current liabilities on the Consolidated Balance Sheets. Historically, the amounts accrued have not been material.
The Company also maintains insurance coverage in addition to its purchased primary insurance policies for gap
coverage for employment practices liability, errors and omissions, warranty liability, and acts of terrorism; and
capacity for deductibles and self-insured retentions through its captive insurance company.
Note M — Related Parties
During fiscal years 2010, 2009, and 2008, the Company purchased approximately $3.2 million, $4.5 million,
and $4.4 million, respectively, of data processing equipment and software from EMC Corporation. The Chairman,
President, and Chief Executive Officer of EMC Corporation is a member of the Company’s Board.
During fiscal years 2010, 2009, and 2008, the Company purchased approximately $0.4 million, $0.5 million,
and $0.5 million, respectively, of services from Dun & Bradstreet Corporation. Jonathan J. Judge, the Company’s
President and Chief Executive Officer, is a member of the Board of Directors of Dun & Bradstreet Corporation.
60
PAYCHEX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)