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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [no fee required]
For the fiscal year ended May 31, 1997
OR
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [no fee required]
Commission file number 0-11330
PAYCHEX, INC.
(Exact name of registrant as specified in its charter)
Delaware 16-1124166
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
911 Panorama Trail South, Rochester, New York 14625 - 0397
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (716) 385-6666
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
-- --
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ].
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of 7/31/97 was $3,664,859,233. The number of shares of
Registrant's Common Stock, $.01 par value, outstanding as of 7/31/97 was
108,582,592.
DOCUMENTS INCORPORATED BY REFERENCE
- -----------------------------------
Certain specified portions of the registrant's annual report to security
holders for the fiscal year ended May 31, 1997 (the "Annual Report") are
incorporated herein by reference in response to Part II, Items 5 through 8,
inclusive. Certain specified portions of the registrant's definitive proxy
statement to be filed within 120 days after May 31, 1997 (the "Proxy
Statement") are incorporated herein by reference in response to Part III,
Items 10 through 12, inclusive.
PAYCHEX, INC.
INDEX TO ANNUAL REPORT
ON FORM 10-K
PART I Page
Item 1: Business 4
Item 2: Properties 12
Item 3: Legal Proceedings 12
Item 4: Submission of Matters to a Vote of Security
Holders 12
PART II
Item 5: Market for the Registrant's Common Equity
and Related Stockholder Matters 13
Item 6: Selected Financial Data 14
Item 7: Management's Discussion and Analysis of
Financial Condition and Results of
Operations 14
Item 8: Financial Statements and Supplementary Data 14
Item 9: Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 14
PART III
Item 10: Directors and Executive Officers of the
Registrant 15
Item 11: Executive Compensation 15
Item 12: Security Ownership of Certain Beneficial
Owners and Management 15
Item 13: Certain Relationships and Related
Transactions 15
PART IV
Item 14: Exhibits, Financial Statements and Reports
on Form 8-K 16
Signatures 18
PART I
Item 1. Business
--------
GENERAL DEVELOPMENT OF BUSINESS
- -------------------------------
Paychex, Inc. (the "Company" or "Paychex"), a Delaware corporation, was formed
in 1979 through the consolidation of 17 corporations engaged in providing
computerized payroll accounting services. The Company's corporate
headquarters is located in a suburb of Rochester, New York. The Company's
fiscal year is from June 1 through May 31.
On August 26, 1996, the Company acquired all of the common stock of National
Business Solutions, Inc., now Paychex Business Solutions, Inc., a professional
employer organization (PEO) headquartered in St. Petersburg, Florida, in
exchange for 4,401,744 shares of Paychex common stock in a business
combination accounted for as a pooling of interests. All financial
information has been restated to reflect this merger. In the third quarter of
fiscal 1997, PBS was combined with the Company's Human Resources Services
(HRS) division to form the HRS-PEO business segment.
The Company acquired the common stock of Olsen Computer Systems, Inc., and The
Payroll Service, Inc., in fiscal 1997 and Pay-Fone Systems, Inc., in fiscal
1996 in business combinations accounted for as pooling of interests. During
fiscal 1996, the Company acquired the common stock of The Payroll Company,
Inc. (d/b/a Payday) in a business combination accounted for as a purchase
transaction. Each of these business combinations involved the issuance of
Paychex common stock and did not have a significant impact on the Company's
financial position and results of operations.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
- ---------------------------------------------
Financial information about business segments is contained in Note J - Segment
Financial Information in the Notes to the Consolidated Financial Statements
contained in Exhibit 13, Portions of the Annual Report to Stockholders for
1997, which is incorporated herein by reference.
NARRATIVE DESCRIPTION OF BUSINESS
- ---------------------------------
Overview
- --------
The Company operates in two major business segments: (1) Payroll and (2)
Human Resource Services-Professional Employer Organization (HRS-PEO).
The Payroll segment is engaged in the preparation of payroll checks, internal
accounting records, all Federal, state and local payroll tax returns, and
collection and remittance of payroll obligations for small- to medium-sized
businesses. The Payroll segment collects and remits funds as part of its
Electronic Network Services (ENS) products. In connection with Taxpay, the
automated tax payment and filing service, the segment collects payroll taxes,
files the applicable tax returns and pays taxes to the appropriate taxing
authorities. The Direct Deposit product collects net payroll from client
accounts and provides automatic salary deposit for employees.
The HRS portion of the HRS-PEO segment provides businesses with 401(k) plan
recordkeeping services, group benefits and workers' compensation insurance
services, section 125 plans, employee handbooks and management services. The
401(k) recordkeeping service provides plan implementation, ongoing compliance
with government regulations, employee and employer reporting and other
administrative services.
The PEO portion of the HRS-PEO segment operates as Paychex Business Solutions,
Inc. (PBS), previously National Business Solutions, Inc., and is engaged
primarily in providing human resource management and personnel administration
services to a diverse client base of small- to medium-sized businesses through
a network of branch offices located in Florida, Georgia and California. The
PEO provides certain managed care services, including managed health care,
employee assistance programs, drug-free workplace programs, comprehensive
workers' compensation management, risk management and loss containment
services. Consistent with PEO industry practice, direct costs billed include
the wages and payroll taxes of worksite employees, their related benefit
premiums and claims, including workers' compensation, and other direct costs.
Payroll Segment
- ---------------
Paychex' Payroll segment is a national payroll processing and payroll tax
preparation service provided to over 262,000 small- to medium-sized businesses
within the United States. The Company believes that in number of clients it
is the second largest payroll accounting service company in the country. The
Payroll segment prepares and furnishes paychecks, earnings statements and
internal accounting records such as journals, summaries and earnings
histories. The segment also prepares for its clients all required monthly,
quarterly and annual payroll tax returns for Federal, state and local
governments. Over 68% of its clients nationwide utilize TAXPAY, a service
which provides automatic payment of payroll taxes and filing of quarterly and
annual payroll tax returns. The segment also provides enhanced payroll
services, including a digital check signing and inserting service and an
automatic salary deposit service, DIRECT DEPOSIT. The DIRECT DEPOSIT service
electronically transmits the net payroll for a client's employees to banks
throughout the Federal Reserve System.
The Payroll segment markets its services principally to small- and
medium-sized businesses through its 79 branch operating centers and 23 sales
offices located in major metropolitan areas. Its market share in branch
processing center territories ranges from 1% to approximately 20%. No client
accounts for as much as 1% of its revenue.
Clients may discontinue Paychex payroll service at will. Approximately 80% of
the businesses which were clients in fiscal year 1995 or 1996 continued to be
clients in the succeeding fiscal year. Ownership changes or business failures
common to small businesses are the primary causes of client loss.
Paychex employs payroll specialists who communicate primarily by telephone
with their assigned clients each payroll period to record the hours worked by
each employee and any personnel or compensation changes. These specialists
are trained by Paychex in all facets of payroll preparation and applicable tax
regulations. All information furnished by a client is handled by someone who
is "payroll intelligent" and familiar with that client's payroll.
The Paychex payroll system is an on-line, direct entry computer system which
enables the payroll specialist, upon receiving the information from the client
over the telephone, to enter it simultaneously. Payroll processing is
decentralized and performed in most Paychex branches while TAXPAY and DIRECT
DEPOSIT processing are centralized at a leased facility in Rochester, New
York. Sales offices utilize a nearby branch for processing.
During fiscal 1997, the Company acquired Olsen Computer Systems, Inc., now
Paychex Computer Systems, Inc.(PCS). PCS has licensed its payroll and human
resource software to over 100 service bureaus who have over 20,000 clients
throughout the United States. The software is named RAPID PAYROLL and is
capable of generating complex wage- and job-based reports, including labor
distributions, general ledger reports, vacation accruals, job costing, tip
allocations, 401(k) and section 125 calculations and union-related
calculations. The software is ideal for companies ranging from fifty to two
hundred employees. Since the purchase of PCS, the Company has not sold any
licenses of the software and continues to provide support for prior existing
licensees. The Company's RAPID PAYROLL service bureaus compete with existing
RAPID PAYROLL licensees in offering the same or similar payroll services in
those markets where the Company and the licensees have offices.
Payroll Competition
The payroll accounting services industry is characterized by intense
competition. The principal competitive factors are price and service. Paychex
believes it has one major competitor that provides computerized payroll
accounting services nationwide. In addition, the Company competes with other
providers of computerized payroll services, including banks and smaller
independent firms.
The Company's principal competition, used by a majority of the businesses in
its market, is manual payroll systems sold by numerous vendors. Some
companies have in-house computer capability to generate their own payroll
documents and reports.
HRS-PEO Segment
- ----------------
Human Resource Services
The HRS-PEO segment provides human resource products and services through its
HRS division, on an a la carte basis to clients who choose to provide these
benefits directly rather than through a co-employer relationship with PBS, the
Company's PEO division. Among the HRS products is a 401(k) recordkeeping
service. This service provides plan implementation, ongoing compliance with
government regulations, employee and employer reporting and other
administrative services. The HRS division of this segment also offers
Cafeteria Plan products approved under section 125 of the Internal Revenue
Code. The Premium Only Plan allows employees to pay for certain health
insurance benefits with pre-tax dollars, with a resultant reduction in payroll
taxes to employers and employees. The Flexible Spending Account Plan allows a
client's employees to pay, with pre-tax dollars, health and dependent care
expenses not covered by insurance. All required administration, compliance
and coverage tests are provided with these services.
Other HRS products include customized employee handbooks, management manuals,
job descriptions and personnel forms. These have been designed to simplify
clients' office processes and enhance their employee benefits programs. Also
available is a measurement and evaluation tool to assist clients in the
process of hiring, training and developing employees. Group insurance
products are offered in selected geographical areas.
Professional Employer Organization Services
PBS, a subsidiary of Paychex, Inc., is a leading professional employer
organization, which provides small- and medium-sized businesses with an
outsourcing solution to the complexities and costs related to employment and
human resources. As of May 31, 1997, PBS provided professional employer
services to over 400 client worksite employer organizations with over 13,800
employees, primarily in Florida, Georgia and California.
Five Core Activities
PBS provides professional employer services through five core activities: (i)
human resource administration, (ii) employer regulatory compliance management,
(iii) worker compensation cost containment and safety management, (iv)
employee benefits and related administration and (v) payroll processing and
tax compliance. By engaging PBS to provide these services, clients are freed
to concentrate their resources on their core businesses.
(i) Human Resource Administration. PBS' comprehensive human resource
services reduce the employment-related administrative burdens faced by its
clients, and provide worksite employees with a wide array of benefits
typically offered by large employers. As a professional employer, PBS is
responsible for payroll, payroll tax deposits, payroll tax reporting, employee
file maintenance, unemployment claims, and monitoring and responding to
changing regulatory requirements. PBS develops and administers customized
personnel policies and procedures for each of its clients, relating to, among
other things, recruiting, performance appraisals, discipline and terminations.
PBS also provides recruiting, orientation, training, counseling, substance
abuse awareness and outplacement services for worksite employees.
(ii) Employer Regulatory Compliance Management. PBS' Client Services
Agreement establishes the contractual division of responsibility between PBS
and its clients for various payroll, personnel, and benefits matters including
compliance with and liability under employment related regulatory
requirements. Laws and regulations applicable to employers include state and
federal tax laws, and discrimination, sexual harassment and other civil rights
laws.
Although the Client Services Agreement requires the client to indemnify PBS
for any liability attributable to client conduct, PBS may not be able to
collect under the indemnification clause of its contract with clients.
(iii) Workers Compensation Cost Containment and Safety Management. Workers
compensation is a state-mandated, comprehensive insurance program that
requires employers to fund medical expenses, lost wages and other costs that
result from work-related injuries and illnesses, regardless of fault and
without any copayment by the employee. PBS seeks to control its workers
compensation costs through comprehensive risk evaluation of prospective
clients, the prevention of workplace injuries, early intervention in each
employee injury, intensive management of the medical costs related to such
injuries and the prompt return of employees to work.
PBS seeks to prevent workplace injuries by implementing a wide variety of
training, safety and mandatory drug-free workplace programs (including
pre-employment, random and post accident drug testing). Specific components
of the PBS proprietary managed care system include the prompt identification
and reporting of injuries, the use of PBS's carrier for designated health care
providers, utilization and fee review, telephonic claims and case management,
auditing of bills and other techniques designed to reduce medical costs. PBS's
efforts to return employees to work quickly involve both rehabilitation
services and the placement of employees in transitional, modified-duty
positions until they are able to resume their former positions.
(iv) Employee Benefits and Related Administration. PBS currently offers to
worksite employees an employee benefits package which includes several health
care options, such as Preferred Provider Organizations ("PPOs"), Health
Maintenance Organizations ("HMOs"), and Exclusive Provider Organizations
("EPOs"). Supplemental benefit programs offer dental care, vision care,
prescription drugs, an employee assistance plan, mental health benefits and
several life and disability insurance options. PBS also offers 401(K)
retirement savings and cafeteria plans to its eligible employees. In its role
as administrator, PBS delivers participant benefits to worksite employees and
monitors and reviews claims for loss control purposes, as well as
reconciliation of health premium billings and COBRA compliance. PBS believes
that its ability to provide and administer a wide variety of employee benefits
on behalf of its clients tends to mitigate the competitive disadvantage small
and medium-sized businesses normally face in the areas of employee benefit
cost control and employee recruiting and retention.
(v) Payroll Processing and Tax Compliance. PBS offers complete payroll
processing, preparation of payroll checks and direct deposits, federal and
state tax deposits, monthly and quarterly federal and state tax reporting, and
year end W-2 processing and distribution. The Company provides each of its
clients with a payroll reporting package which includes payroll and human
resource reports. At present, each of these reports and the payroll process
used by PBS are different from those used by its parent, Paychex, Inc.
PBS's standard PEO services agreement provides for an initial one year term,
subject to termination by PBS or the client at any time during the first year
upon 60 days' prior written notice, and thereafter annually. Revenues from
professional employer services are based on a pricing model that takes into
account the gross pay of each employee and a mark-up which includes the
estimated costs of federal and state employment taxes, workers compensation,
employee benefits and the human resource administrative services, as well as a
provision for profit. The specific mark-up varies by client based on the
workers compensation classification of the worksite employees and their
eligibility for health care benefits. Accordingly, the Company's average
mark-up percentage will fluctuate based on client mix.
HRS-PEO Sales Process
HRS-PEO products and services are sold through a sales organization separate
from that which sells Payroll services. This segment markets its products and
services through a direct sales force experienced in fields related to one or
more of its core services. Since PBS's acquisition by Paychex in August 1996,
its sales force and the HRS sales force have been undergoing cross training.
The HRS division sells the majority of its products and services to existing
Payroll segment clients since the processed payroll information provides the
data integration necessary to provide the service.
PBS generates sales leads from two primary sources: direct sales efforts and
referrals, including referrals of existing Payroll segment clients. These
leads result in initial presentations to prospective clients. PBS sales
executives then gather information about the prospective client and its
employees, including job classification, workers compensation claims history,
health insurance claims history, salary and the desired level of employee
benefits. These various factors are reviewed in the context of PBS's pricing
model and client selection guidelines. A client proposal is prepared and
submitted to acceptable clients.
This prospective client screening process plays a vital role in controlling
PBS's cost and limiting exposure to liability. Once a prospective client
accepts PBS's proposal and has passed the PBS due diligence process, PBS
schedules the client conversion process. The PBS Client Services Manager then
assumes the responsibility as team leader for administering the client's human
resources and benefits as well as coordinating the Company's response to the
client's needs for administrative support and responding to any questions or
problems encountered by clients.
HRS-PEO Competition
HRS-PEO segment competitors include (i) traditional in-house human resource
departments, (ii) other PEOs, and (iii) providers of unbundled
employment-related services such as payroll processing firms, temporary
employment firms, commercial insurance brokers, human resource consultants,
workers compensation insurers, HMOs and other specialty managed care
providers.
Competition in the highly fragmented PEO industry is generally on a local or
regional basis. Management believes that the primary elements of competition
are quality of service, choice and quality of benefits, and price. PBS
believes that name recognition, regulatory expertise, financial resources,
risk management and data processing capability distinguish leading PEOs from
the rest of the industry.
PBS believes that barriers to entry into the PEO industry are increasing and
include the following: (i) the complexity of the PEO business and the need
for expertise in the multiple human resources disciplines; (ii) the three to
five years of experience required to establish experience ratings in key cost
areas of workers compensation, health insurance and unemployment; and (iii)
the need for sophisticated management information systems to track all aspects
of business in a high-growth environment.
SOFTWARE MAINTENANCE AND PRODUCT DEVELOPMENT
- --------------------------------------------
The ever-changing mandates of Federal, state and local taxing authorities
compel the Company to continuously update its proprietary software. The
Company is also engaged in developing ongoing enhancements to its software to
meet the changing requirements of its clients and the marketplace. However,
the Company is not engaged, to any significant extent, in basic software
research and development.
WARRANTY PAYMENTS
- -----------------
Paychex warrants its services, agreeing to reimburse any client for penalties
and interest incurred as a result of a Paychex error. Payroll segment
warranty claims paid in fiscal years 1997, 1996 and 1995 were approximately
$969,000, $783,000 and $410,000, respectively. HRS-PEO segment warranty
claims paid in fiscal 1997, 1996 and 1995 were approximately $30,000, $11,000
and $0, respectively.
INVESTMENT RISKS
- ----------------
Investments consist of various government securities, investment grade
municipal securities, money market funds and other cash equivalents. The
Company is exposed to credit risk in connection with these investments through
the possible inability of the borrowers to meet the terms of the bonds. The
Company attempts to limit credit risk by investing primarily in AAA- and
AA-rated securities, A-rated or better money market funds and by limiting
amounts that can be invested in any single instrument. The Company invests in
short- to intermediate-term securities as they are less sensitive to interest
rate fluctuations. At May 31, 1997, the portfolio of securities had an
average duration of 2.6 years.
EMPLOYEES
- ---------
Paychex currently employs approximately 4,440 persons, of which 4,200 are full
time and 240 are part-time.
TRADEMARKS
- ----------
The Company has a number of trademarks registered in the U.S. Patent and
Trademark Office including the names PAYCHEX, TAXPAY, PAYLINK and RAPID
PAYROLL. The Company believes these trademarks are of material importance to
its business.
SEASONALITY
- -----------
There is no significant seasonality to the Company's business, except that
over 30% of new Payroll segment clients added in each of the last three fiscal
years have been added during the third fiscal quarter. Consequently, greater
sales commissions are paid in that quarter, resulting in higher selling
expenses for the third quarter.
Item 2. Properties
----------
The Company's headquarters for both business segments and corporate functions
are housed in a 139,000 square foot building complex owned by the Company in a
Rochester, New York suburb. In addition, approximately 44,000 square feet is
leased in several office complexes within the Rochester area. These leased
facilities house other Corporate functions, other Payroll operations and a
telemarketing unit.
The Payroll segment leases space for its branch and sales offices at various
locations throughout the United States. The average size of a branch office
and a sales office is 10,000 square feet and 850 square feet, respectively.
RAPID PAYROLL service bureaus operate in leased facilities with an average of
5,700 square feet in Orange County, Cerritos and Pleasanton, California and
Chicago, Illinois.
The HRS division occupies a 62,000 square foot office and distribution
facility owned by the Company and located within 10 miles of the Corporate
headquarters. HRS sales forces share space in some of the Payroll branches
and sales offices.
PBS is headquartered in St. Petersburg, Florida, in a leased building shared
with its Tampa Bay PEO unit. Three other PEO units are located in leased
facilities in Hollywood and Orlando, Florida, and in Atlanta, Georgia. These
leased facilities average 7,700 square feet of office space. Nine additional
PEO units are located in southern California and Florida and share space with
the Payroll branches in that area.
The Company believes that adequate, suitable lease space will continue to be
available for its needs.
Item 3. Legal Proceedings
-----------------
There are no material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended May 31, 1997.
Part II
Item 5. Market for Registrant's Common Equity and Related
-------------------------------------------------
Stockholder Matters
-------------------
The Company's common stock is traded in the over-the-counter market and quoted
on the NASDAQ National Market System under the symbol PAYX. Quarterly high
and low bid information reported by NASDAQ National Markets System and related
dividend information of the Company for the past two years is set forth below.
The high and low prices and dividends per share have been adjusted to reflect
the three-for-two stock splits declared in May 1997 and May 1996.
Year Ended May 31 1997 1997 1996 1996
Market Price Dividends Market Price Dividends
per Share Paid per Share per Share Paid per Share
- --------------------------------------------------------------------------------------
High Low High Low
1st Quarter $37.38 $26.88 $.04 $18.58 $13.08 $.03
2nd Quarter 42.38 33.13 .06 20.92 18.00 .04
3rd Quarter 37.88 28.38 .06 26.08 17.67 .04
4th Quarter 37.38 25.50 .06 31.33 22.92 .06
- --------------------------------------------------------------------------------------
On July 31, 1997, there were 6,198 holders of record of the Company's common
stock. The level of future dividends is necessarily dependent on the
Company's future earnings and cash flows.
During the past three fiscal years, the Company made four acquisitions in
which it issued shares of $.01 par value common stock ("Common Stock") which
were not registered under the Securities Act of 1933, as amended (the "Act"),
in reliance on the exemption from registration created by Section 4(2) of the
Act.
1. November 21, 1996 - The Company acquired all of the issued and
outstanding stock of Olsen Computer Systems, Inc., in a merger in which
589,389 shares of Common Stock were issued to the two Olsen Shareholders. The
basis for the Section 4(2) reliance was the financial and business
sophistication of the shareholders, their non-distributive intent and the
legending of their stock certificates.
2. August 29, 1996 - The Company acquired all of issued and outstanding
stock of The Payroll Service, Inc., in a merger in which 82,781 shares of
Common Stock were issued to the sole shareholder of The Payroll Service, Inc.
The basis for the Section 4(2) reliance was the financial and business
sophistication of the shareholder, his non-distributive intent and the
legending of his stock certificates.
3. August 26, 1996 - The Company acquired all of the issued and
outstanding stock of National Business Solutions, Inc., in a merger in which
4,401,744 shares of Common Stock were issued to the four shareholders of
National Business Solutions, Inc. The basis for the Section 4(2) reliance was
the financial and business sophistication of the shareholders, their
non-distributive intent and the legending of their stock certificates.
4. September 29, 1995 - The Company acquired all of the issued and
outstanding stock of The Payroll Company, Inc. (d/b/a Payday), in a merger in
which 260,762 shares of Common Stock were issued to the two shareholders of
The Payroll Company, Inc. The basis for the Section 4(2) reliance was the
financial and business sophistication of the shareholders, their
non-distributive intent and the legending of their stock certificates.
The number of shares of Common Stock issued in each of the above-transactions
has been restated to reflect subsequent three-for-two stock splits in May 1997
and May 1996.
Item 6. Selected Financial Data
-----------------------
The information required is set forth in the Company's Annual Report under the
heading "Selected Financial Data" and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
The information required is set forth in the Company's Annual Report under the
heading "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
The financial statements required are identified in Item 14 (a), and are set
forth in the Company's Annual Report and incorporated herein by reference.
Supplementary data required is set forth in the Company's Annual Report under
the heading "Quarterly Financial Data (Unaudited)" and is incorporated herein
by reference.
Item 9. Changes in and Disagreements with Accountants on
------------------------------------------------
Accounting and Financial Disclosure
-----------------------------------
There has been no change in accountants or reported disagreements on
accounting principles or practices or financial statement disclosures.
PART III
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
The information required is set forth in the Company's definitive Proxy
Statement in the section entitled "Proposal 1 - Election of Directors" under
the heading "Nominees for Election" and the section entitled "Other Executive
Officers" and is incorporated herein by reference.
Item 11. Executive Compensation
----------------------
The information required is set forth in the Company's definitive Proxy
Statement in the section entitled "Executive Officer Compensation" and is
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The information required is set forth in the Company's definitive Proxy
Statement under the heading "Security Ownership of Certain Beneficial Owners
and Management" and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
There were no relationships or related transactions required to be reported.
Part IV
Item 14. Exhibits, Financial Statements and Reports on Form 8-K
------------------------------------------------------
(a) 1. Financial Statements and Supplementary Data
-------------------------------------------
The following financial statements of the Company are incorporated
herein by reference to the Company's Annual Report:
Report of Independent Auditors
Consolidated Statements of Income - Years ended May 31, 1997, 1996 and
1995
Consolidated Balance Sheets - May 31, 1997 and 1996 Restated
Consolidated Statements of Stockholders' Equity - Years ended May 31,
1997, 1996 Restated and 1995 Restated
Consolidated Statements of Cash Flows - Years ended May 31, 1997, 1996
Restated and 1995 Restated
Notes to Consolidated Financial Statements
2. Schedules called for under Regulation S-X are not submitted because
they are not applicable or not required or because the required
information is not material or is included in the financial statements or
notes thereto.
3. Exhibits
--------
(3) (a) Articles of Incorporation, as amended, incorporated herein by
reference to the Company's Registration Statement No. 2-85103,
Exhibits 3.1 through 3.5 and Form 8-K filed with the Commission on
October 22, 1986 and Form 10-Q filed with the Commission on January
12, 1989 and Form 10-Q filed with the Commission on January 13, 1993
and Form 10-Q filed with the Commission on January 10, 1996.
(3) (b) By-Laws, as amended, incorporated herein by reference to the
Company's Registration Statement No. 2-85103, Exhibit 3.6.
(10)(a) Paychex, Inc. 1987 Stock Incentive Plan, incorporated herein by
reference to the Company's Registration Statement on Form S-8, No.
33-17780.
(10)(b) Paychex, Inc. 1992 Stock Incentive Plan incorporated herein by
reference to the Company's Registration Statement on Form S-8, No.
33-52772.
(10)(c) Paychex, Inc. 1995 Stock Incentive Plan incorporated herein by
reference to the Company's Registration Statement on Form S-8, No.
33-64389.
(10)(d) Paychex, Inc. Section 401(k) Incentive Retirement Plan,
incorporated herein by reference to the Company's Registration
Statements on Form S-8, No. 33-52838.
(10)(e) Paychex, Inc. - Pay-Fone Systems, Inc. 1993, 1990, 1987, 1983,
1981 Incentive Stock Option Plans and Director Non-Qualified Stock
Option Agreements incorporated herein by reference to the Company's
Registration Statement on Form S-8, No. 33-60255.
(13) Portions of the Annual Report to Stockholders for the Fiscal
Year ended May 31, 1997. Such report, except for the portions
thereof which are expressly incorporated by reference in this
filing, is furnished for the information of the Commission and is
not to be deemed "filed" as part of this filing.
(19) Previously unfiled documents - none.
(21) Subsidiaries of the registrant.
(23) Consents of experts and counsel.
(24) Powers of Attorney for Directors.
Item 14.(b) Reports on Form 8-K
-------------------
The Company did not file any current reports on Form 8-K during the fourth
quarter of the fiscal year ended May 31, 1997.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PAYCHEX, INC.
Dated: August 15, 1997 By: /s/ B. Thomas Golisano
-----------------------------
B. Thomas Golisano, Chairman, President,
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Dated: August 15, 1997 By: /s/ B. Thomas Golisano
-----------------------------
B. Thomas Golisano, Chairman, President,
and Chief Executive Officer and Director
Dated: August 15, 1997 By: /s/ Donald W. Brinckman*
-------------------------------
Donald W. Brinckman, Director
Dated: August 15, 1997 By: /s/ Steven D. Brooks*
-------------------------------
Steven D. Brooks, Director
Dated: August 15, 1997 By: /s/ G. Thomas Clark*
-------------------------------
G. Thomas Clark, Director
Dated: August 15, 1997 By: /s/ Phillip Horsley*
-------------------------------
Phillip Horsley, Director
Dated: August 15, 1997 By: /s/ Grant M. Inman*
-------------------------------
Grant M. Inman, Director
Dated: August 15, 1997 By: /s/ Harry P. Messina, Jr.*
-------------------------------
Harry P. Messina, Jr., Director
Dated: August 15, 1997 By: /s/ J. Robert Sebo*
-------------------------------
J. Robert Sebo, Director
Dated: August 15, 1997 By: /s/ John M. Morphy
-------------------------------
John M. Morphy, Vice President, Chief
Financial Officer and Secretary
(Principal Accounting Officer)
*By: /s/ B. Thomas Golisano
-------------------------------
B. Thomas Golisano, as Attorney-in-Fact