Market Overview

Paychex, Inc. Reports Fourth Quarter and Fiscal 2018 Results

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Fourth Quarter and Full Year Fiscal 2018 Highlights

  • Total revenue increased 9% to $871.1 million for the fourth quarter;
    7% to $3.4 billion for fiscal 2018.
    • Human Resource Services revenue increased 17% to $401.0 million
      for the fourth quarter; 14% to $1.5 billion for fiscal 2018.
    • Payroll service revenue increased 3% to $452.4 million for the
      fourth quarter; 2% to $1.8 billion for fiscal 2018.
    • Interest on funds held for clients increased 27% to $17.7 million
      for the fourth quarter; 26% to $63.5 million for fiscal 2018.
  • Operating income increased 6% to $317.8 million for the fourth
    quarter; 4% to $1.3 billion for fiscal 2018. Adjusted operating income(1)
    increased 6% for both the fourth quarter and for fiscal 2018 to $317.8
    million and $1.3 billion, respectively.
  • Net income increased 17% to $228.5 million for the fourth quarter; 14%
    to $933.7 million for fiscal 2018. Adjusted net income(1)
    increased 13% to $219.1 million for the fourth quarter; 15% to $919.9
    million for fiscal 2018.
  • Diluted earnings per share increased 17% to $0.63 per share for the
    fourth quarter; 15% to $2.58 per share for fiscal 2018. Adjusted
    diluted earnings per share(1) increased 13% to $0.61 per
    share for the fourth quarter; 16% to $2.55 per share for fiscal 2018.

(1) Adjusted operating income, adjusted net income, and adjusted
diluted earnings per share are not United States ("U.S.") generally
accepted accounting principles ("GAAP") measures. Please refer to the
"Non-GAAP Financial Measures" section on page 5 of this press release
for a discussion of these non-GAAP measures and a reconciliation to the
most comparable GAAP measures of operating income, net income, and
diluted earnings per share.

Paychex,
Inc.
("Paychex," "we," "our," or "us") (NASDAQ:PAYX) today announced
its results of operations for the three months ended May 31, 2018 (the
"fourth quarter"), as well as the full fiscal year ended May 31, 2018
("fiscal 2018" or the "fiscal year"). Total revenue increased 9% for the
fourth quarter to $871.1 million. For the fiscal year, total revenue
increased 7% to $3.4 billion. Net income and diluted earnings per share
both increased 17% for the fourth quarter to $228.5 million and $0.63
per share, respectively. For the fiscal year, net income and diluted
earnings per share increased 14% to $933.7 million and 15% to $2.58 per
share, respectively.

Martin Mucci, President and Chief Executive Officer, commented, "We had
a strong finish to fiscal 2018. Providing our clients the value of our
complete human capital management ("HCM") solutions through a
combination of leading-edge technology and flexible service options is
driving our results. Our flexible service options, including 7 by 24
access to our specialists, allows our clients to decide when, where and
how they access our services."

Mr. Mucci added, "During fiscal 2018, we completed the acquisitions of
HR Outsourcing Holdings, Inc. ("HROI"), a national professional employer
organization ("PEO"), and Lessor Group ("Lessor"), a market-leading
provider of payroll and human resource ("HR") software solutions
headquartered in Denmark.  The integration of these acquisitions has
proceeded well.  They are showing better-than-expected progress and are
expected to make a positive contribution to our longer-term growth.  In
addition, we had a reduction in tax expense in fiscal 2018 as a result
of the enactment of the Tax Cuts and Jobs Act (the "Tax Act") in
December 2017, the most comprehensive tax reform legislation approved in
more than two decades.  Given our industry-leading operating margins, we
are benefiting significantly from tax reform and passing a substantial
amount of this benefit to shareholders while also accelerating
technology investments for enhanced product value for our clients and
future top-line growth."

Human Resource Services ("HRS") revenue increased 17% to $401.0 million
for the fourth quarter and 14% to $1.5 billion for the fiscal year,
compared to the same periods last year. HRS revenue growth was primarily
driven by increases in client bases across the following HCM services:
comprehensive HR outsourcing services, including HROI; retirement
services; time and attendance; and insurance services. HROI contributed
approximately 8% and 6% to the total HRS revenue growth for
the fourth quarter and fiscal year, respectively. Our largest HRS
revenue stream is Paychex HR Services, which includes our administrative
services organization and our PEO. Demand for these services resulted in
double-digit growth in the number of client worksite employees served as
of May 31, 2018 compared to May 31, 2017. Retirement services revenue
benefited from an increase in asset fee revenue earned on the asset
value of participants' funds as well as an increase in the number of
plans served. Insurance services revenue benefited from an increase in
the number of health and benefits applicants, coupled with higher
average premiums for our workers' compensation insurance services.

Payroll service revenue increased 3% to $452.4 million for the fourth
quarter and 2% to $1.8 billion for the fiscal year, compared to the same
periods last year. These increases were primarily driven by growth in
revenue per check, which improved as a result of price increases, net of
discounts. Lessor contributed approximately 1% to total payroll service
revenue growth for the fourth quarter. As of May 31, 2018, including the
Lessor acquisition, we served over 650,000 payroll clients.

Interest on funds held for clients increased 27% to $17.7 million for
the fourth quarter and 26% to $63.5 million for the fiscal year,
compared to the same periods last year. The increases resulted primarily
from higher average interest rates earned. The funds held for clients
average investment balances were down 3% for the fourth quarter and 1%
for the fiscal year, primarily due to the impact of the Tax Act on
employee withholdings and changes in client mix, which offset the impact
of wage inflation.

Average investment balances and interest rates are summarized below:

      For the three months ended         For the twelve months ended    
May 31, May 31,
$ in millions 2018     2017 Change 2018     2017 Change
Average investment balances:
Funds held for clients $ 4,164.3 $ 4,310.4 (3) % $ 4,040.8 $ 4,066.3 (1) %
Corporate investments $ 901.9 $ 927.5 (3) % $ 915.1 $ 906.7 1 %
 

Average interest rates earned(1)
(exclusive of net
realized gains):

Funds held for clients 1.7 % 1.3 % 1.6 % 1.2 %
Corporate investments 1.4 % 1.2 % 1.3 % 1.1 %
 
Total net realized gains $ $ $ 0.1 $ 0.1
 

(1)

 

For further discussion of the impact of interest rate
changes, please refer to the "Market Risk Factors" section of our
Annual Report on Form 10-K ("Form 10-K"), which we expect to file
with the Securities and Exchange Commission ("SEC") by the end of
July 2018.

 

Total expenses increased 11% to $553.3 million for the fourth quarter
and 10% to $2.1 billion for the fiscal year, compared to the same
periods last year. HROI and Lessor contributed approximately 7% and 5%
to the total expense growth for the fourth quarter and fiscal year,
respectively. Compensation-related costs increased approximately 7% for
the fourth quarter and approximately 5% for the fiscal year as compared
to the same prior year periods. Higher compensation was driven by higher
headcount reflecting accelerated investment in technology, sales teams,
and the impact of the acquisitions. Higher compensation for the year
also included a one-time bonus paid to non-management employees.
Continued growth of our combined PEO business also contributed to the
overall increase in total expenses. For the fiscal year, expenses also
reflect a one-time expense related to the termination of certain license
agreements during the three months ended February 28, 2018 (the "third
quarter").

Operating income increased 6% for the fourth quarter and 4% for the
fiscal year, compared to the same periods last year. Operating income,
as a percent of total revenue, was 36.5% for the fourth quarter and
38.1% for the fiscal year, compared to 37.4% and 39.3% for the same
prior year periods. Adjusted operating income increased 6% for both the
fourth quarter and fiscal year, compared to the same periods last year.
Adjusted operating income for the fiscal year excludes the one-time
charge of $32.6 million following the termination of certain license
agreements during the third quarter. See the "Non-GAAP Financial
Measures" section on page 5 of this press release for further discussion
of this non-GAAP measure.

Our effective income tax rate was 28.7% for the fourth quarter and 28.0%
for the fiscal year, compared to 35.0% and 34.3% for the same prior year
periods. The effective income tax rate for the fiscal year was
significantly impacted by the Tax Act. As it relates to the Tax Act, we
recorded a non-recurring net tax benefit of $4.8 million for the fourth
quarter and $25.6 million for the fiscal year for the revaluation of our
net deferred tax liabilities, which impacted diluted earnings per share
by approximately $0.01 per share for the fourth quarter and $0.07 per
share for the fiscal year. In addition, our effective income tax rate
for the fourth quarter and for the fiscal year benefited from a reduced
statutory tax rate applied to our current year taxable income.

Financial Position and Liquidity

Our financial position as of May 31, 2018 remained strong with cash and
total corporate investments of $719.7 million and no debt. Our primary
source of cash is generated from our ongoing operations. The slight
decrease in cash and total corporate investments from $777.4 million as
of May 31, 2017 is primarily the result of share repurchases, business
acquisitions, and an increase in the rate for quarterly dividend
payments, which offset cash generated from operations during fiscal
2018. Our positive cash flows have historically allowed us to support
our business and to pay substantial dividends to our stockholders. It is
anticipated that cash and total corporate investments as of May 31,
2018, along with projected operating cash flows and available short-term
financing, will support our normal business operations, capital
purchases, share repurchases, dividend payments, and business
acquisitions, if any, for the foreseeable future.

Cash flows from operations were $1.3 billion for fiscal 2018, an
increase of 33% over the prior year. This increase is primarily the
result of higher net income, adjusted for non-cash items and the
increase in cash provided by fluctuations in our operating assets and
liabilities including income taxes and PEO payroll accruals and unbilled
receivables, which can fluctuate based on timing of period end compared
to payroll check dates. The increase in net income for fiscal 2018 was
impacted by the enactment of the Tax Act. In addition, for the year
ended May 31, 2017, cash outflows were impacted by higher accounts
receivable balances related to growth in our payroll funding business
for temporary staffing agency clients.

During fiscal 2018, we repurchased 2.5 million shares of our common
stock for a total of $143.1 million. In the respective prior year
period, we repurchased 2.9 million shares for a total of $166.2 million.

Non-GAAP Financial Measures

      For the three months ended         For the twelve months ended    
May 31, May 31,
$ in millions 2018     2017 Change 2018     2017 Change
Operating income $ 317.8 $ 298.9 6 % $ 1,287.5 $ 1,239.6 4 %
Non-GAAP adjustments:
Termination of license agreements(1)       32.6  
Total non-GAAP adjustments       32.6  
Adjusted operating income $ 317.8 $ 298.9 6 % $ 1,320.1 $ 1,239.6 6 %
 
Net income $ 228.5 $ 195.3 17 % $ 933.7 $ 817.3 14 %
Non-GAAP adjustments:

Excess tax benefit related to
employee stock-based
compensation
payments(2)

(4.6) (1.0) (12.9) (18.3)

Revaluation of net deferred tax liabilities(3)

(4.8) (25.6)
Termination of license agreements(1)           24.7      
Total non-GAAP adjustments   (9.4)     (1.0)     (13.8)     (18.3)  
Adjusted net income $ 219.1   $ 194.3   13 % $ 919.9   $ 799.0   15 %
 
Diluted earnings per share $ 0.63 $ 0.54 17 % $ 2.58 $ 2.25 15 %
Non-GAAP adjustments:

Excess tax benefit related to
employee stock-based
compensation
payments(2)

(0.01) (0.03) (0.05)
Revaluation of net deferred tax liabilities(3) (0.01) (0.07)
Termination of license agreements(1)           0.07      
Total non-GAAP adjustments   (0.02)         (0.03)     (0.05)  
Adjusted diluted earnings per
share
$ 0.61   $ 0.54   13 % $ 2.55   $ 2.20   16 %
 

(1)

 

Additional expense and corresponding tax benefit recognized
as a result of the termination of certain license agreements. This
event is not expected to recur.

(2)

Net tax windfall or shortfall benefits related to employee
stock-based compensation payments recognized in income taxes. This
item is subject to volatility and will vary based on employee
decisions on exercising employee stock options and fluctuations in
our stock price, neither of which is within the control of
management.

(3)

Non-recurring tax benefits recognized as a result of the Tax
Act related to the revaluation of net deferred tax liabilities.

 

In addition to reporting operating income, net income, and diluted
earnings per share, which are U.S. GAAP measures, we present adjusted
operating income, adjusted net income, and adjusted diluted earnings per
share, which are non-GAAP measures. We believe adjusted operating
income, adjusted net income, and adjusted diluted earnings per share are
appropriate additional measures, as they are indicators of our core
business operations performance period over period. Adjusted operating
income, adjusted net income, and adjusted diluted earnings per share are
not calculated through the application of GAAP and are not required
forms of disclosure by the SEC. As such, they should not be considered
as a substitute for the GAAP measures of operating income, net income,
and diluted earnings per share, and therefore should not be used in
isolation, but in conjunction with the GAAP measures. The use of any
non-GAAP measure may produce results that vary from the GAAP measure and
may not be comparable to a similarly defined non-GAAP measure used by
other companies.

Outlook

Our outlook for the fiscal year ending May 31, 2019 ("fiscal 2019") is
based upon current market expectations and economic conditions
continuing with no significant changes. The guidance reflects the
adoption of Accounting Standards Codification Topic 606, "Revenue from
Contracts with Customers" ("ASC Topic 606"), which is effective for
fiscal 2019. Our guidance for fiscal 2019 is as follows:

  • Payroll service revenue is anticipated to increase in the range of 2%
    to 3%, incorporating a full year of Lessor;
  • HRS revenue is anticipated to increase in the range of 10% to 11%;
  • Interest on funds held for clients is expected to increase in the
    range of 15% to 20%;
  • Total revenue, including interest on funds held for clients, is
    expected to increase in the range of 6% to 7%;
  • Operating income, as a percent of total revenue, is anticipated to be
    approximately 37%;
  • Investment income, net is anticipated to be approximately $15 million;
  • The effective income tax rate for fiscal 2019 is expected to be
    approximately 24%;
  • Adjusted net income (non-GAAP)(1) is expected to increase
    in the range of 11% to 12%;
  • Adjusted diluted earnings per share (non-GAAP)(1) is
    expected to increase approximately 11%.
 

(1)

Adjusted net income and adjusted diluted earnings per share
are non-GAAP measures, which exclude the impact of certain
discrete tax items and a one-time charge following the termination
of certain licensing agreements. Fiscal 2019 growth rates for
these non-GAAP measures are based on fiscal 2018 adjusted net
income of $922.9 million and adjusted diluted earnings per share
of $2.56, which includes the impact of the restatement of fiscal
2018 results as it relates to our adoption of ASC Topic 606 on
June 1, 2018. No assumptions were made in regards to discrete tax
items in fiscal 2019 for employee stock-based compensation
payments.

 

Paychex will host a separate, supplemental conference call from 11:00
a.m. to 11:30 a.m. Eastern Time on Wednesday, June 27, 2018 to review
the fiscal 2018 quarterly and annual results adjusted for ASC Topic 606
and other items.

Annual Report on Form 10-K

We anticipate filing our Form 10-K before the end of July 2018, and this
will be available at our Investor
Relations page
. This press release should be read in conjunction
with the Form 10-K and the related Notes to Consolidated Financial
Statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations contained in that Form 10-K.

Conference Call

Interested parties may access the webcast
of our Earnings Release Conference Call, scheduled for June 27, 2018 at
9:30 a.m. Eastern Time, at our investor relations page. The webcast will
be archived for approximately one month. Our news releases, current
financial information, SEC filings, and investor presentation are also
accessible at our Investor
Relations page
.

About Paychex

Paychex, Inc. (NASDAQ:PAYX) is a leading provider of integrated human
capital management solutions for payroll, human resources, retirement,
and insurance services. By combining its innovative
software-as-a-service technology and mobility platform with dedicated,
personal service, Paychex empowers small- and medium-sized business
owners to focus on the growth and management of their business. Backed
by more than 45 years of industry expertise, Paychex serves over 650,000
payroll clients as of May 31, 2018 across more than 100 locations in the
U.S. and Europe, and pays one out of every 12 American private sector
employees. Learn more about Paychex by visiting paychex.com
and stay connected on Twitter
and LinkedIn.

Cautionary Note Regarding Forward-Looking Statements Pursuant to the
U.S. Private Securities Litigation Reform Act of 1995

Certain written and oral statements made by us may constitute
"forward-looking statements" within the meaning of the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements can be identified by such words and phrases
as "we expect," "expected to," "estimates," "estimated," "overview,"
"current outlook," "we look forward to," "would equate to," "projects,"
"projections," "projected," "projected to be," "anticipates,"
"anticipated," "we believe," "believes", "could be," and other similar
words or phrases. Examples of forward-looking statements include, among
others, statements we make regarding operating performance, events, or
developments that we expect or anticipate will occur in the future,
including statements relating to our outlook, revenue growth, earnings,
earnings-per-share growth, or similar projections.

Forward-looking statements are neither historical facts nor assurances
of future performance. Instead, they are based only on our current
beliefs, expectations, and assumptions regarding the future of our
business, future plans and strategies, projections, anticipated events
and trends, the economy, and other future conditions. Because
forward-looking statements relate to the future, they are subject to
inherent uncertainties, risks, and changes in circumstances that are
difficult to predict, many of which are outside our control. Our actual
results and financial conditions may differ materially from those
indicated in the forward-looking statements. Therefore, you should not
place undue reliance upon any of these forward-looking statements.
Important factors that could cause our actual results and financial
condition to differ materially from those indicated in the
forward-looking statements include, among others, the following:

  • general market and economic conditions including, among others,
    changes in U.S. employment and wage levels, changes to new hiring
    trends, legislative changes to stimulate the economy, changes in
    short- and long-term interest rates, changes in the fair value and the
    credit rating of securities held by us, and accessibility of financing;
  • changes in demand for our services and products, ability to develop
    and market new services and products effectively, pricing changes, and
    the impact of competition;
  • changes in the availability of skilled workers, in particular those
    supporting our technology and product development;
  • changes in the laws regulating collection and payment of payroll
    taxes, PEOs, and employee benefits, including retirement plans,
    workers' compensation insurance, health insurance (including health
    care reform legislation), state unemployment, and section 125 plans;
  • changes in health insurance and workers' compensation insurance rates
    and underlying claims trends;
  • changes in technology that adversely affect our products and services
    and impact our ability to provide timely enhancements to services and
    products;
  • the possibility of cyberattacks, security breaches, or other security
    vulnerabilities that could disrupt operations or expose confidential
    client data, and could also result in reduced revenues, increased
    costs, liability claims, or harm to our competitive position;
  • the possibility of failure of our operating facilities, or the failure
    of our computer systems, and communication systems during a
    catastrophic event;
  • the possibility of third-party service providers failing to perform
    their functions;
  • the possibility of a failure of internal controls or our inability to
    implement business process improvements;
  • the possibility that we may be subject to liability for violations of
    employment or discrimination laws by our clients and acts or omissions
    of client employees who may be deemed to be our agents, even if we do
    not participate in any such acts or violations, including possible
    liability related to our co-employment relationship with our PEO;
  • potential outcomes related to pending or future legal and legislative
    matters;
  • the expected impacts of the Tax Act; and
  • risks related to the integration of the businesses we acquire.

Any of these factors, as well as such other factors as discussed in our
SEC filings, could cause our actual results to differ materially from
our anticipated results. The information provided in this document is
based upon the facts and circumstances known at this time, and any
forward-looking statement made by us in this document speaks only as of
the date on which it is made. Except as required by law, we undertake no
obligation to update these forward-looking statements after the date of
issuance of this press release to reflect events or circumstances after
such date, or to reflect the occurrence of unanticipated events.

                             

PAYCHEX, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In millions, except per share amounts)

 
 
For the three months ended For the twelve months ended
May 31, May 31,
2018 2017 Change 2018 2017 Change
Revenue:
Payroll service revenue $ 452.4 $ 440.9 3 % $ 1,810.0 $ 1,779.3 2 %
Human Resource Services revenue   401.0     343.7 17 %   1,507.4   1,321.4 14 %
Total service revenue 853.4 784.6 9 % 3,317.4 3,100.7 7 %
Interest on funds held for clients (1)   17.7     14.0 27 %   63.5   50.6 26 %
Total revenue 871.1 798.6 9 % 3,380.9 3,151.3 7 %
Expenses:
Operating expenses 266.3 231.4 15 % 1,017.8 919.6 11 %
Selling, general and administrative expenses   287.0     268.3 7 %   1,075.6   992.1 8 %
Total expenses   553.3     499.7 11 %   2,093.4   1,911.7 10 %
Operating income 317.8 298.9 6 % 1,287.5 1,239.6 4 %
Investment income, net (1)   2.5     1.6 57 %   8.6   5.2 66 %
Income before income taxes 320.3 300.5 7 % 1,296.1 1,244.8 4 %
Income taxes   91.8   105.2 (13) %   362.4   427.5 (15) %
Net income $ 228.5 $ 195.3 17 % $ 933.7 $ 817.3 14 %
 
Basic earnings per share $ 0.64 $ 0.54 19 % $ 2.60 $ 2.27 15 %
Diluted earnings per share $ 0.63 $ 0.54 17 % $ 2.58 $ 2.25 15 %
Weighted-average common shares

outstanding

359.0 359.3 359.0 359.8

Weighted-average common shares
outstanding,
assuming dilution

361.5 362.1 361.5 362.6
Cash dividends per common share $ 0.56 $ 0.46 $ 2.06 $ 1.84
 

(1)

 

Further information on interest on funds held for clients and
investment income, net, and the short- and long-term effects of
changing interest rates can be found in our filings with the SEC,
including our Quarterly Report on Form 10-Q and our Form 10-K, as
applicable, under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
subheadings "Results of Operations" and "Market Risk Factors."
These filings are accessible at www.paychex.com.

 
         

PAYCHEX, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions, except per share amount)

 
 
May 31,
2018 2017
ASSETS
Cash and cash equivalents $ 358.2 $ 184.6
Corporate investments 66.0 138.8
Interest receivable 32.2 35.9
Accounts receivable, net of allowance for doubtful accounts 531.4 507.5
Prepaid income taxes 17.0 45.0
Prepaid expenses and other current assets   75.8   58.3
Current assets before funds held for clients 1,080.6 970.1
Funds held for clients   4,703.8   4,301.9
Total current assets 5,784.4 5,272.0
Long-term corporate investments 295.5 454.0
Property and equipment, net of accumulated depreciation 393.5 337.2
Intangible assets, net of accumulated amortization 141.4 57.6
Goodwill 814.0 657.1
Prepaid income taxes 24.9
Other long-term assets   34.9   30.9
Total assets $ 7,463.7 $ 6,833.7
 
LIABILITIES
Accounts payable $ 74.5 $ 57.2
Accrued compensation and related items 325.2 280.5
Deferred revenue 24.3 22.9
Other current liabilities   132.9   91.9
Current liabilities before client fund obligations 556.9 452.5
Client fund obligations   4,734.9   4,272.6
Total current liabilities 5,291.8 4,725.1
Accrued income taxes 18.4 45.6
Deferred income taxes 48.8 33.9
Other long-term liabilities   80.2   73.8
Total liabilities 5,439.2 4,878.4
 
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; Authorized: 600.0 shares;
Issued
and outstanding: 359.0 shares as of May 31, 2018
and 359.4
shares as of May 31, 2017
3.6 3.6
Additional paid-in capital 1,126.8 1,030.0
Retained earnings 930.3 901.7
Accumulated other comprehensive (loss)/ income   (36.2)   20.0
Total stockholders' equity   2,024.5   1,955.3
Total liabilities and stockholders' equity $ 7,463.7 $ 6,833.7
 
         

PAYCHEX, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)

 
 
For the twelve months ended
May 31,
2018 2017
OPERATING ACTIVITIES
Net income $ 933.7 $ 817.3
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization on property and equipment and
intangible assets
138.0 126.9
Amortization of premiums and discounts on available-for-sale
securities, net
65.4 72.5
Stock-based compensation costs 44.6 35.4
Provision for deferred income taxes 19.2 17.4
Provision for allowance for doubtful accounts 3.6 4.9
Net realized gains on sales of available-for-sale securities (0.1) (0.1)
Changes in operating assets and liabilities:
Interest receivable 3.7 0.2
Accounts receivable 13.6 (103.7)
Prepaid expenses and other current assets 17.7 (34.1)
Accounts payable and other current liabilities 47.2 39.1
Net change in other long-term assets and liabilities   (10.2)   (15.4)
Net cash provided by operating activities 1,276.4 960.4
INVESTING ACTIVITIES
Purchases of available-for-sale securities (50,220.2) (50,462.3)
Proceeds from sales and maturities of available-for-sale securities 51,592.9 49,903.0
Net change in funds held for clients' money market securities and
other cash equivalents
(1,677.5) 237.6
Purchases of property and equipment (154.0) (94.3)
Acquisition of businesses, net of cash acquired (180.4)
Purchases of other assets   (39.8)   (8.6)
Net cash used in investing activities (679.0) (424.6)
FINANCING ACTIVITIES
Net change in client fund obligations 462.4 317.3
Dividends paid (739.7) (662.3)
Repurchases of common shares (143.1) (166.2)
Activity related to equity-based plans   (3.4)   28.5
Net cash used in financing activities   (423.8)   (482.7)
Increase in cash and cash equivalents 173.6 53.1
Cash and cash equivalents, beginning of period   184.6   131.5
Cash and cash equivalents, end of period $ 358.2 $ 184.6

© 2018 Paychex, Inc.

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