Total revenues were $869.9 million, an increase of 19% over $728.1 million for the prior year.
For the fourth quarter ended May 31, 2001, net income increased 31% to $67.8 million, or $.18 diluted earnings per share, as compared to $51.6 million, or $.14 diluted earnings per share, for the same period last year. Total revenues were $228.6 million, an increase of 16% over $197.2 million for the prior year
fourth quarter.
For the year ended May 31, 2001, operating income for the Payroll segment increased 21% to $366.5 million from $303.4 million for the prior fiscal year. Total Payroll segment revenues were $772.0 million, an increase of 18% over $653.2 million for the prior year.
For the fourth quarter ended May 31, 2001, operating income for the Payroll segment increased 17% to $94.4 million from $80.9 million for the same period last year. Total Payroll segment revenues were $201.8 million, an increase of 15% over $175.6 million for the prior year fourth quarter.
The increases in total Payroll segment revenues and operating income reflect continued growth in the client base, increased utilization of ancillary services, and leveraging of operating expenses. In addition, the Payroll segment benefited from growth in the interest on funds held for clients due to higher daily client balances and net realized gains. The full year period also reflected higher comparable average rates of return.
As of May 31, 2001, 83% of Paychex clients utilized Taxpayâ, the Company’s tax filing and payment feature. The Company’s Employee Pay Services, which includes Direct Deposit, Readychex and Access Card products, was utilized by 53% of its clients. Major Market Services revenue increased 56% and 58% for the fourth quarter and the fiscal year to $13.5 million and $47.4 million, respectively.
For the year ended May 31, 2001, operating income for the Human Resource and Benefits segment increased 62% from $23.4 million to $37.9 million. Human Resource and Benefits service revenue was $97.9 million, an increase of 31% over $74.9 million for the prior fiscal year. For the fourth quarter ended May 31, 2001, operating income for the Human Resource and Benefits segment increased 73% from $6.3 million to $10.9 million. Human Resource and Benefits service revenue was $26.8 million, an increase of 24% over $21.6 million for the fourth quarter last year.
The increases in service revenue and operating income are primarily related to increases in clients for 401(k) Recordkeeping, Workers’ Compensation Insurance, Section 125, PAS and PEO services. 401(k) Recordkeeping revenue increased 26% and 36% for the fourth quarter and the full year period to $11.5
million and $43.0 million, respectively.
Corporate expenses are primarily related to the Information Technology, Organizational Development, Finance, Marketing and Senior Management functions of the Company. For the year ended May 31, 2001, corporate expenses decreased 0.3% from $67.9 million to $67.7 million. For the quarter ended
May 31, 2001, corporate expenses increased 1.7% to $17.8 million from $17.5 million. The relatively flat year-over-year comparisons reflect additional employees and other expenditures to support the growth of the Company’s service operations and sales force offset by lower spending on national marketing
efforts and other areas in fiscal 2001.
Investment income for fiscal year 2001 increased 66% to $27.3 million from $16.5 million in the prior year. Investment income for the quarter ended May 31, 2001 increased 74% to $8.5 million from $4.9 million for the fourth quarter of fiscal 2000. The increases are due to higher balances of investments and
net realized gains on the sale of available-for-sale securities. The full year period also benefited from higher comparable average rates of return.
The income tax rates for the fourth quarter and the year ended May 31, 2001 were 29.5% and 30.0%, respectively, as compared to 31.0% for the same periods last year.
B. Thomas Golisano, Chairman, President and Chief Executive Officer of Paychex, said, We are pleased with our financial results for the fourth quarter and fiscal year. We have completed our eleventh straight year of record revenues and net income and our tenth consecutive year of net income growth exceeding 30%. These results have been achieved by applying our growth strategy – increasing our client base, increasing client utilization of ancillary services, developing new services and leveraging our infrastructure. Looking ahead to fiscal 2002, we recognize interest rate reductions will impact year-over-year net income growth. However, we expect to continue to generate record revenues and net income with total revenue growth in the range of 16% to 18%.
