Paychex 2012 Annual Report Download - page 62

PAYCHEX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Other recent authoritative guidance issued by the FASB (including technical corrections to the FASB
Accounting Standards Codification), the American Institute of Certified Public Accountants, and the Securities
and Exchange Commission (“SEC”) did not, or are not expected to have a material effect on the Company’s
consolidated financial statements.
Note B — Basic and Diluted Earnings Per Share
Basic and diluted earnings per share were calculated as follows:
Year ended May 31,
In millions, except per share amounts 2012 2011 2010
Basic earnings per share:
Net income ....................................................... $548.0 $515.3 $477.0
Weighted-average common shares outstanding ........................... 362.4 361.8 361.4
Basic earnings per share ............................................. $ 1.51 $ 1.42 $ 1.32
Diluted earnings per share:
Net income ....................................................... $548.0 $515.3 $477.0
Weighted-average common shares outstanding ........................... 362.4 361.8 361.4
Dilutive effect of common share equivalents at average market price ......... 0.6 0.6 0.3
Weighted-average common shares outstanding, assuming dilution ........... 363.0 362.4 361.7
Diluted earnings per share ........................................... $ 1.51 $ 1.42 $ 1.32
Weighted-average anti-dilutive common share equivalents ................ 9.9 11.5 13.0
Weighted-average common share equivalents that had an anti-dilutive impact are excluded from the
computation of diluted earnings per share.
Note C — Business Combinations
During fiscal 2011, the Company acquired two software-as-a-service (“SaaS”) companies, opening up
additional areas of the markets the Company serves. Effective February 8, 2011, the Company acquired
SurePayroll, Inc. (“SurePayroll”), a payroll processing provider for small businesses, for $114.9 million, net of
cash acquired. The acquisition of SurePayroll allowed the Company entry into a new area of the online market
for small businesses, and resulted in $83.9 million of goodwill, which is not tax-deductible.
Effective May 3, 2011, the Company acquired ePlan Services, Inc. (“ePlan”), a provider of recordkeeping
and administrative solutions to the defined contribution marketplace, for $15.2 million, net of cash acquired. The
ePlan acquisition resulted in $7.4 million of goodwill, which is not tax-deductible.
Upon their respective closing dates, both entities acquired became wholly owned subsidiaries of the
Company. The financial results of SurePayroll and ePlan are included in the Company’s consolidated financial
statements from their respective dates of acquisition. These acquisitions are not material to the Company’s results
of operations, financial position, or cash flows.
Note D — Stock-Based Compensation Plans
The Paychex, Inc. 2002 Stock Incentive Plan, as amended and restated (the “2002 Plan”), effective on
October 13, 2010 upon its approval by the Company’s stockholders, authorizes grants of up to 39.1 million
shares of the Company’s common stock. As of May 31, 2012, there were 23.4 million shares available for future
grants under the 2002 Plan. No future grants will be made pursuant to the Paychex, Inc. 1998 Stock Incentive
Plan, which expired in August 2002; however, options to purchase an aggregate of 0.1 million shares under the
plan remain outstanding as of May 31, 2012.
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