Paychex 2011 Annual Report Download - page 33

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Results of Operations
Summary of Results of Operations for the Fiscal Years Ended May 31:
In millions, except per share amounts 2011 Change 2010 Change 2009
Revenue:
Payroll service revenue ............... $1,438.8 2% $1,404.9 (5)% $1,483.7
Human Resource Services revenue ....... 597.4 10% 540.9 3% 523.6
Total service revenue ................. 2,036.2 5% 1,945.8 (3)% 2,007.3
Interest on funds held for clients ........ 48.1 (13)% 55.0 (27)% 75.5
Total revenue ...................... 2,084.3 4% 2,000.8 (4)% 2,082.8
Combined operating and SG&A expenses . . . 1,297.9 2% 1,276.0 — 1,277.6
Operating income .................... 786.4 8% 724.8 (10)% 805.2
As a % of total revenue ............... 38% 36% 39%
Investment income, net ................. 5.8 29% 4.5 (34)% 6.9
Income before income taxes ............ 792.2 9% 729.3 (10)% 812.1
As a % of total revenue ............... 38% 36% 39%
Income taxes ........................ 276.9 10% 252.3 (9)% 278.6
Effective income tax rate .............. 35.0% 34.6% 34.3%
Net income ......................... $ 515.3 8% $ 477.0 (11)% $ 533.5
As a % of total revenue ............... 25% 24% 26%
Diluted earnings per share ............. $ 1.42 8% $ 1.32 (11)% $ 1.48
We invest in highly liquid, investment-grade fixed income securities and do not utilize derivative instruments
to manage interest rate risk. As of May 31, 2011, we had no exposure to high-risk or illiquid investments. Details
regarding our combined funds held for clients and corporate investment portfolios are as follows:
$ in millions 2011 2010 2009
Year ended May 31,
Average investment balances:
Funds held for clients ............................... $3,350.3 $3,167.9 $3,323.3
Corporate investments ............................... 662.4 653.8 538.2
Total . ........................................... $4,012.7 $3,821.7 $3,861.5
Average interest rates earned (exclusive of net realized gains):
Funds held for clients ............................... 1.4% 1.6% 2.2%
Corporate investments ............................... 0.9% 0.8% 1.4%
Combined funds held for clients and corporate investments.... 1.3% 1.5% 2.1%
Net realized gains:
Funds held for clients ............................... $ 1.3 $ 3.2 $ 1.1
Corporate investments ............................... — — —
Total . ........................................... $ 1.3 $ 3.2 $ 1.1
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