Paychex 2014 Annual Report Download - page 32

Our Peer Group is comprised of the following companies:
Automatic Data Processing, Inc. (direct competitor) Broadridge Financial Solutions, Inc.
Fiserv, Inc. Robert Half International Inc.
The Western Union Company Intuit Inc.
Total Systems Services, Inc. Iron Mountain Incorporated
Global Payments Inc. Moody’s Corporation
The Brink’s Company H&R Block, Inc.
DST System, Inc. TD AMERITRADE Holding Corporation
The Dun & Bradstreet Corporation
Item 6. Selected Financial Data
In millions, except per share amounts
Year ended May 31, 2014(1) 2013(2) 2012 2011 2010(3)
Service revenue ............................. $2,478.2 $2,285.2 $2,186.2 $2,036.2 $1,945.8
Interest on funds held for clients ................ 40.7 41.0 43.6 48.1 55.0
Total revenue ............................... $2,518.9 $2,326.2 $2,229.8 $2,084.3 $2,000.8
Operating income ........................... $ 982.7 $ 904.8 $ 853.9 $ 786.4 $ 724.8
Net income ................................ $ 627.5 $ 569.0 $ 548.0 $ 515.3 $ 477.0
Diluted earnings per share ..................... $ 1.71 $ 1.56 $ 1.51 $ 1.42 $ 1.32
Cash dividends per common share .............. $ 1.40 $ 1.31 $ 1.27 $ 1.24 $ 1.24
Purchases of property and equipment ............ $ 84.1 $ 98.7 $ 89.6 $ 100.5 $ 61.3
Cash and total corporate investments ............ $ 936.8 $ 874.6 $ 790.0 $ 671.3 $ 656.9
Total assets ................................ $6,370.1 $6,163.7 $6,479.6 $5,393.8 $5,226.3
Total debt .................................. $ — $ — $ — $ — $ —
Stockholders’ equity ......................... $1,777.0 $1,773.7 $1,604.5 $1,496.2 $1,402.0
Return on stockholders’ equity ................. 35% 34% 34% 35% 34%
(1) With the introduction of a new health care offering within the PEO, the Company began to recognize certain
PEO direct costs as operating expenses rather than as a reduction in service revenue. In the table above, this
impacted service revenue and total revenue, but had no impact on operating income. Refer to the Results of
Operations section of Item 7 of this Form 10-K and Note O of the Notes to Consolidated Financial
Statements, contained in Item 8 of this Form 10-K, for further details on the impact to service revenue, total
revenue, and operating expenses.
(2) In the fourth quarter of fiscal 2013, the Company increased its tax provision related to the settlement of a
state income tax matter. This reduced diluted earnings per share by approximately $0.04 per share.
(3) Includes an expense charge of $18.7 million to increase the Rapid Payroll 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, 2014 (“fiscal 2014”), May 31, 2013 (“fiscal 2013”), and May 31, 2012
(“fiscal 2012”), and our financial condition as of May 31, 2014. 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 “Cautionary Note Regarding Forward-Looking Statements Pursuant to the United States
Private Securities Litigation Reform Act of 1995” contained at the beginning of Part I of this Form 10-K.
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