Paychex Inc. (PAYX, Financial) filed Quarterly Report for the period ended 2010-11-30.
Paychex Inc. has a market cap of $11.22 billion; its shares were traded at around $31.02 with a P/E ratio of 22.64 and P/S ratio of 5.61. The dividend yield of Paychex Inc. stocks is 4%. Paychex Inc. had an annual average earning growth of 11.8% over the past 10 years. GuruFocus rated Paychex Inc. the business predictability rank of 4-star.PAYX is in the portfolios of Jeff Auxier of Auxier Focus Fund, Arnold Van Den Berg of Century Management, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC, Tom Gayner of Markel Gayner Asset Management Corp, Bruce Kovner of Caxton Associates, Diamond Hill Capital of Diamond Hill Capital Management Inc, James Barrow of Barrow, Hanley, Mewhinney & Strauss, Louis Moore Bacon of Moore Capital Management, LP, Paul Tudor Jones of The Tudor Group, Richard Aster Jr of Meridian Fund, Manning & Napier Advisors, Inc, Donald Yacktman of Yacktman Asset Management Co., Steven Cohen of SAC Capital Advisors.
produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies. Operating income, net of certain items, increased 7% for both the second quarter and six months ended November 30, 2010 (the six months), to $191.9 million and $380.6 million respectively, as compared to the same periods last year. Refer to the reconciliation of operating income to operating income, net of certain items, in the Results of Operations section of this Form 10-Q.
We continue to follow our conservative investment strategy of optimizing liquidity and protecting principal. Yields on high quality instruments remain low, negatively impacting our income earned on funds held for clients and corporate investments. We invest predominately in municipal bonds general obligation bonds; pre-refunded bonds, which are secured by a U.S. government escrow; and essential services revenue bonds. Starting in November 2009, we began to invest in select A-1/P-1-rated variable rate demand notes (VRDNs) and have gradually increased our investments in VRDNs to $700.0 million as of November 30, 2010, up from $226.3 million as of May 31, 2010. During the second quarter, we earned an after-tax rate of approximately 0.25% on VRDNs compared to approximately 0.08% on U.S. agency discount notes, which are our primary short-term investment vehicle.
Our primary source of cash is from our ongoing operations. Cash flow from operations was $319.2 million for the six months of fiscal 2011, as compared with $279.1 million for the same period last year. Historically, we have funded operations, capital purchases, and dividend payments from our operating activities. Our positive cash flows have allowed us to support our business and to pay what we believe are substantial dividends to our stockholders. We anticipate that cash and total corporate investments as of November 30, 2010, along with projected operating cash flows, will support our normal business operations, capital purchases, business acquisitions, and dividend payments for the foreseeable future.
Purchases of property and equipment for fiscal 2011 were revised to an expected range of $95 million to $100 million, as we continue to invest in technology and infrastructure. Fiscal 2011 depreciation expense is projected to be in the range of $65 million to $70 million, and we project amortization of intangible assets for fiscal 2011 to be approximately $20 million.
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Paychex Inc. has a market cap of $11.22 billion; its shares were traded at around $31.02 with a P/E ratio of 22.64 and P/S ratio of 5.61. The dividend yield of Paychex Inc. stocks is 4%. Paychex Inc. had an annual average earning growth of 11.8% over the past 10 years. GuruFocus rated Paychex Inc. the business predictability rank of 4-star.PAYX is in the portfolios of Jeff Auxier of Auxier Focus Fund, Arnold Van Den Berg of Century Management, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC, Tom Gayner of Markel Gayner Asset Management Corp, Bruce Kovner of Caxton Associates, Diamond Hill Capital of Diamond Hill Capital Management Inc, James Barrow of Barrow, Hanley, Mewhinney & Strauss, Louis Moore Bacon of Moore Capital Management, LP, Paul Tudor Jones of The Tudor Group, Richard Aster Jr of Meridian Fund, Manning & Napier Advisors, Inc, Donald Yacktman of Yacktman Asset Management Co., Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
On December 9, 2010, we announced that we entered into an agreement to acquire SurePayroll, Inc. (SurePayroll), the nations leading provider of software-as-a-service payroll processing for small businesses, for approximately $115.0 million. SurePayroll serves approximately 30,000 small businesses with its easy-to-use, online payroll product. The transaction is expected to close by the end of calendar year 2010. Calendar year 2010 revenue for SurePayroll is expected to be approximately $23.0 million. We do not anticipate that this acquisition will have a material impact on our financial results for fiscal 2011.produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies. Operating income, net of certain items, increased 7% for both the second quarter and six months ended November 30, 2010 (the six months), to $191.9 million and $380.6 million respectively, as compared to the same periods last year. Refer to the reconciliation of operating income to operating income, net of certain items, in the Results of Operations section of this Form 10-Q.
We continue to follow our conservative investment strategy of optimizing liquidity and protecting principal. Yields on high quality instruments remain low, negatively impacting our income earned on funds held for clients and corporate investments. We invest predominately in municipal bonds general obligation bonds; pre-refunded bonds, which are secured by a U.S. government escrow; and essential services revenue bonds. Starting in November 2009, we began to invest in select A-1/P-1-rated variable rate demand notes (VRDNs) and have gradually increased our investments in VRDNs to $700.0 million as of November 30, 2010, up from $226.3 million as of May 31, 2010. During the second quarter, we earned an after-tax rate of approximately 0.25% on VRDNs compared to approximately 0.08% on U.S. agency discount notes, which are our primary short-term investment vehicle.
Our primary source of cash is from our ongoing operations. Cash flow from operations was $319.2 million for the six months of fiscal 2011, as compared with $279.1 million for the same period last year. Historically, we have funded operations, capital purchases, and dividend payments from our operating activities. Our positive cash flows have allowed us to support our business and to pay what we believe are substantial dividends to our stockholders. We anticipate that cash and total corporate investments as of November 30, 2010, along with projected operating cash flows, will support our normal business operations, capital purchases, business acquisitions, and dividend payments for the foreseeable future.
Purchases of property and equipment for fiscal 2011 were revised to an expected range of $95 million to $100 million, as we continue to invest in technology and infrastructure. Fiscal 2011 depreciation expense is projected to be in the range of $65 million to $70 million, and we project amortization of intangible assets for fiscal 2011 to be approximately $20 million.
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