WASHINGTON, D.C. 20549 UNITED STATES SECURITIES AND EXCHANGE COMMISSION _________________________________________ FORM 10-Q _________________________________________ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 2023 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from __________to __________ Commission file number 0-11330 _______________________________ ...

Paychex, Inc. (NASDAQ:PAYX) Q3 2023 Results Conference Call March 29, 2023 9:30 AM ET Company Participants John Gibson - President and Chief Executive Officer Efrain Rivera - Senior Vice President, Chief Financial Officer Conference Call Participants Kevin McVeigh - Credit Suisse David Togut - Evercore ISI Ramsey El-Assal - Barclays Daniel Maxwell - William Blair Samad Samana - Jefferies Jared Levine - TD Cowen Jason Kupferberg - Bank of America Kartik Mehta - Northcoast Research Bryan Keane - Deutsche Bank ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________________________ FORM 10-Q _________________________________________ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 2022 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from __________to __________ Commission file number 0-11330 _______________________________ ...

Paychex, Inc. (NASDAQ:PAYX) Q2 2023 Earnings Conference Call December 22, 2022 9:30 AM ET Company Participants John Gibson - President and Chief Executive Officer Efrain Rivera - Senior Vice President, Chief Financial Officer Conference Call Participants Ramsey El-Assal - Barclays Bryan Bergin - Cowen and Company Jason Kupferberg - Bank of America Kevin McVeigh - Credit Suisse Samad Samana - Jefferies Kartik Mehta - Northcoast Research Bryan Keane - Deutsche Bank Eugene Simuni - MoffettNathanson LLC Peter ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________________________ FORM 10-Q _________________________________________ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 2022 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from __________to __________ Commission file number 0-11330 _________________________________ ...

Paychex Inc. (NASDAQ:PAYX) Q1 2023 Earnings Conference Call September 28, 2022 9:30 AM ET Company Participants Martin Mucci - Chairman, Chief Executive Officer John Gibson - President, Chief Operating Officer Efrain Rivera - Senior Vice President, Chief Financial Officer Conference Call Participants Bryan Bergin - Cowen Jason Kupferberg - Bank of America Andrew Nicholas - William Blair Ramsey El-Assal - Barclays Eugene Simuni - MoffettNathanson Bryan Keane - Deutsche Bank Kevin McVeigh - Credit Suisse Jord ...

[PART I](index=3&type=section&id=PART%20I) [Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section outlines that forward-looking statements are subject to inherent uncertainties and risks, with actual results potentially differing due to factors like technological changes, cybersecurity threats, and macroeconomic conditions - Forward-looking statements are based on current beliefs, expectations, and assumptions, but are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside the Company's control[14](index=14&type=chunk) - Key risk factors that could cause actual results to differ materially include: ability to keep pace with technology, software defects, cyberattacks, failure of operating facilities, third-party service provider failures, PEO co-employment risks, changes in insurance rates, acquisition risks, client reimbursement failures, government regulation changes, compliance with laws, intellectual property protection, litigation, impact of COVID-19 and macroeconomic factors (e.g., inflation), availability of qualified personnel, and negative publicity[16](index=16&type=chunk) [Business Overview](index=5&type=section&id=Item%201%20Business) Paychex, Inc. is a leading human capital management (HCM) software and services provider, offering integrated HR, payroll, benefits, and insurance solutions to small- to medium-sized businesses - Paychex is a leading HCM software and services company, offering integrated solutions for HR, payroll, benefits, and insurance services for small- to medium-sized businesses[21](index=21&type=chunk) - As of May 31, 2022, Paychex served greater than **730,000 payroll and PEO clients** throughout the U.S. and parts of Europe[22](index=22&type=chunk) - The company's mission is to be an essential partner to small- and medium-sized businesses, aiming for strong, long-term financial performance through continued investments in technology and service offerings[26](index=26&type=chunk) [Company Profile and Mission](index=5&type=section&id=Overview) Paychex, Inc., incorporated in Delaware in 1979, aims to empower small- to medium-sized businesses by simplifying complex HR, payroll, and benefits challenges - Paychex, Inc. was incorporated in Delaware in **1979**, with its corporate headquarters in Rochester, New York, and operates with a fiscal year ending May 31st[22](index=22&type=chunk) - The company's purpose is to provide customers the freedom to succeed by simplifying complex HR, payroll, and benefits for small- to medium-sized businesses facing evolving requirements and regulations[21](index=21&type=chunk)[23](index=23&type=chunk) [Strategic Pillars](index=5&type=section&id=Company%20Strategy) The company's strategy focuses on integrated technology, client satisfaction, HR leadership, client base expansion, and strategic acquisitions - Key strategic elements include providing industry-leading, integrated technology (e.g., **Paychex Flex® platform**), increasing client satisfaction through personalized service and AI/machine learning, expanding leadership in HR solutions, growing the client base in an under-penetrated market, and engaging in strategic acquisitions[26](index=26&type=chunk)[30](index=30&type=chunk) - The **Paychex Flex® platform** is a comprehensive cloud-based solution optimized for small- to medium-sized organizations, offering streamlined workforce management, a modern user experience, scalability, and a SaaS delivery model[26](index=26&type=chunk) [Product and Service Offerings](index=6&type=section&id=Our%20Solutions) Paychex provides integrated payroll and HCM software with HR and compliance expertise, offering flexible service options and continuous product innovation - Paychex offers integrated payroll and HCM software with HR and compliance expertise, providing flexible service options including online SaaS, specialist outsourcing, or a hybrid approach[28](index=28&type=chunk) - In fiscal 2022, product developments focused on digital transformation and efficiency for distributed workforces, including **Paychex Pre-Check** for paystub review, **Retention Insights** using predictive analytics, **ERTC Service** for tax credits, and a **Talent Dashboard**[29](index=29&type=chunk)[31](index=31&type=chunk) - The company supports its HCM solutions with over **700 HR business professionals** and **200 compliance experts**, ensuring timely updates to adhere to regulations and provide client guidance[33](index=33&type=chunk) [Client Base and Engagement](index=7&type=section&id=Our%20Clients) Paychex serves diverse small- to medium-sized businesses with flexible HR solutions, maintaining high client retention rates - Paychex targets small- to medium-sized businesses with flexible and scalable HR solutions, from DIY payroll to comprehensive HR outsourcing, serving a diverse client base across various industries[37](index=37&type=chunk) - Client retention for fiscal 2022 was approximately **84%** of the beginning client base, remaining near record levels[37](index=37&type=chunk) [Detailed Solution Portfolio](index=8&type=section&id=Description%20of%20Solutions) The comprehensive portfolio includes payroll, HR, retirement, HR administration, PEO, and insurance solutions, supported by extensive expertise - The comprehensive portfolio includes Payroll processing, Payroll tax administration, Employee payment services (including same-day ACH and pay-on-demand), and Regulatory compliance services (new-hire reporting, garnishment processing, ACA solutions)[44](index=44&type=chunk)[46](index=46&type=chunk) - HR Solutions (ASO) offer combined packages of payroll, compliance, HR, benefits administration, and risk management, with **Paychex HR Essentials** providing phone/online support[46](index=46&type=chunk) - Retirement solutions include various **401(k) plans** and administrative services, with Paychex being the largest **401(k) recordkeeper** for small businesses in the U.S[46](index=46&type=chunk) - HR administration solutions feature cloud-based software for employee benefits, time and attendance (**Paychex Flex Time**, **InVision™ IRIS Time Clock**), recruiting, and onboarding, complemented by digital communication tools[46](index=46&type=chunk) - PEO solutions involve co-employment, assuming risks for workers' compensation and health insurance, and offering the **PEO Protection Plus Package**; Insurance solutions provide property & casualty and health & benefits coverage through **Paychex Insurance Agency, Inc.**[53](index=53&type=chunk) [Sales Channels and Marketing Initiatives](index=10&type=section&id=Sales%20and%20Marketing) Paychex utilizes direct and indirect sales channels, digital marketing, and educational resources to expand its client base and engage the CPA community - Paychex markets services through direct and virtual sales forces, supported by corporate lead generation, marketing, advertising, public relations, and telemarketing programs[49](index=49&type=chunk) - Over **50%** of new small-market payroll clients come from indirect sales channels, including referrals from existing clients, CPAs, and banks; the company also leverages digital marketing and partnerships like the **AICPA Business Solutions™ Program**[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) - Paychex provides educational resources such as webinars, podcasts, white papers, and trend reports (e.g., **Paychex | IHS Markit Small Business Employment Watch**) to clients and the CPA community[54](index=54&type=chunk)[55](index=55&type=chunk) [Market Landscape and Competitive Positioning](index=11&type=section&id=Markets%20and%20Competition) Operating in a competitive HCM market, Paychex targets small- to medium-sized businesses, differentiating through technology, mobility, and personalized service - The company focuses on the small- to medium-sized business market, which includes approximately **8 million employer firms** in the U.S., and operates in a highly competitive and fragmented HCM services market[56](index=56&type=chunk)[57](index=57&type=chunk) - Competition is based on service responsiveness, product quality, technology ease of use, breadth of offerings, and price; Paychex differentiates itself through leading-edge technology, mobility applications, and personalized service[58](index=58&type=chunk) [Technology Investment and Evolution](index=11&type=section&id=Software%20Maintenance%20and%20Development) Paychex continuously invests in software development and maintenance to meet evolving client needs and regulatory mandates, focusing on integrated user experiences - Paychex continuously invests in developing enhancements and maintaining its software platforms to meet evolving client needs and regulatory mandates, focusing on integrated and unified user experiences[59](index=59&type=chunk) [Workforce Management and Culture](index=11&type=section&id=Human%20Capital) With approximately 16,000 employees, Paychex fosters a culture guided by core values, investing in talent development and comprehensive compensation packages - As of May 31, 2022, Paychex employed approximately **16,000 people**, primarily full-time in the U.S., with no employees covered by collective bargaining agreements[62](index=62&type=chunk) - The company's core cultural values (Integrity, Service, Innovation, Partnership, Accountability, Respect) guide decision-making and are promoted through annual training and 'Culture Champions'[63](index=63&type=chunk) - Paychex invests in talent acquisition and development, offering functional, personal, professional, and leadership training, and provides a comprehensive compensation and benefits package, including a **401(k) plan** and wellness programs[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) [Intellectual Property Protection](index=13&type=section&id=Intellectual%20Property) Paychex protects its material intellectual property, including trademarks, copyrights, and software, through confidentiality agreements and registrations - Paychex owns or licenses various intellectual property rights, including trademarks, trade names, copyrights, and software, which are material to its business; measures are taken to protect these rights, such as confidentiality agreements and registrations[71](index=71&type=chunk) [Business Seasonality](index=13&type=section&id=Seasonality) While generally not seasonal, the third fiscal quarter typically sees higher new client acquisition and year-end transaction processing - While there is no significant seasonality to the business, the third fiscal quarter (ending February) typically sees higher new client acquisition and year-end transaction processing due to clients starting services at the calendar year-end and paying bonuses[72](index=72&type=chunk) [Public Information Availability](index=13&type=section&id=Available%20Information) Paychex provides SEC filings, investor materials, and service information on its corporate website - Paychex files periodic reports with the SEC (www.sec.gov) and makes its SEC filings, investor materials, and service information available on its corporate website (www.paychex.com)[73](index=73&type=chunk)[74](index=74&type=chunk) [Risk Factors](index=14&type=section&id=Item%201A%20Risk%20Factors) This section outlines various business, operational, financial, legal, regulatory, and general risks that could materially impact Paychex's future results and financial condition - The company's future results are subject to risks that could cause actual results to differ materially from projections, including those not currently known or deemed immaterial[75](index=75&type=chunk) [Business and Operational Risks](index=14&type=section&id=Business%20and%20Operational%20Risks) Key risks include technological obsolescence, software defects, cyberattacks, data privacy breaches, business interruptions, third-party dependence, PEO liabilities, and acquisition challenges - Risks include the inability to keep pace with rapid technological advancements, software defects, cyberattacks, security vulnerabilities, data privacy leaks, and business interruptions due to system failures or catastrophic events[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk)[80](index=80&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) - Dependence on third-party service providers, additional liabilities from the PEO co-employment relationship, and adverse impacts from changes in health insurance and workers' compensation rates are also significant operational risks[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) - Acquisitions involve risks such as increased debt, unforeseen liabilities, and integration challenges that could impact operating costs and customer retention[87](index=87&type=chunk) [Financial Risks](index=16&type=section&id=Financial%20Risks) Financial risks include client payment defaults, adverse impacts on interest income from regulatory changes, and non-compliance with debt covenants - The company faces financial loss if clients have insufficient funds to cover payments made on their behalf for payroll and taxes[88](index=88&type=chunk) - Interest income on funds held for clients could be adversely impacted by changes in government regulations mandating tax withholding amounts or remittance timing[89](index=89&type=chunk) - Debt agreements contain covenants (e.g., maximum leverage ratio of **3.5:1.0**, minimum interest coverage ratio of **2.0:1.0**) that, if not complied with, could materially affect financial condition[91](index=91&type=chunk) [Legal, Regulatory and Political Risks](index=17&type=section&id=Legal,%20Regulatory%20and%20Political%20Risks) Risks stem from changes in government regulations, non-compliance with laws (e.g., data privacy), inability to protect intellectual property, and potential litigation - Changes in government regulations and policies, particularly in payroll tax administration, employee benefits, and PEO services, could reduce demand for services or increase operating costs[92](index=92&type=chunk) - Failure to comply with U.S. and foreign laws and regulations (e.g., ACA, anti-money laundering, OFAC sanctions, FCPA) could result in penalties, reputational damage, and adverse business impacts[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - Non-compliance with evolving data privacy laws and regulations (e.g., GDPR, CCPA) could lead to litigation, regulatory fines, and reputational harm[96](index=96&type=chunk)[97](index=97&type=chunk) - Inability to effectively protect intellectual property rights or costly litigation to defend against infringement claims could harm the company's competitive position and brand[98](index=98&type=chunk) - Involvement in litigation from customers, employees, or third parties could result in substantial judgments, fines, or legal fees[99](index=99&type=chunk) [General Risk Factors](index=18&type=section&id=General%20Risk%20Factors) General risks include the ongoing impact of macroeconomic events like the COVID-19 pandemic and inflation, political volatility, talent retention issues, and negative publicity - The business remains vulnerable to the impacts of the COVID-19 pandemic and other macroeconomic events, including inflationary pressures, which could lead to reduced client spending, workforce decreases, and pricing pressure[100](index=100&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) - Volatility in political and economic environments, including credit market constriction, could impact investment returns on client funds and corporate investments, and limit access to financing[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) - Failure to attract and retain qualified personnel could impact service quality and customer satisfaction[106](index=106&type=chunk) - Negative publicity, whether justified or not, could harm the company's reputation, brand value, and ability to attract and retain clients and talent[107](index=107&type=chunk)[108](index=108&type=chunk) [Unresolved Staff Comments](index=20&type=section&id=Item%201B%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - No unresolved staff comments[109](index=109&type=chunk) [Properties](index=20&type=section&id=Item%202%20Properties) As of May 31, 2022, Paychex owned **1,042,000 square feet** and leased **1,543,000 square feet** of facilities across the U.S. and internationally for various operational functions Owned and Leased Properties (as of May 31, 2022) | Category | Square feet | | :--- | :--- | | Owned facilities: | | | Rochester, New York | 1,012,000 | | Other U.S. locations | 30,000 | | **Total owned facilities** | **1,042,000** | | Leased facilities: | | | Rochester, New York | 90,000 | | Other U.S. locations | 1,307,000 | | International locations | 146,000 | | **Total leased facilities** | **1,543,000** | - Facilities in Rochester, NY, house distribution, processing, technology, and back-office functions, while other U.S. locations contain service centers, fulfillment centers, and sales; International locations support European operations and IT/service/sales in India[110](index=110&type=chunk) [Legal Proceedings](index=20&type=section&id=Item%203%20Legal%20Proceedings) Paychex is involved in various claims and legal matters arising in the normal course of business, with additional details in Note P of the Consolidated Financial Statements - The company is involved in various claims and legal matters that arise in the normal course of business, with additional details available in Note P of the Consolidated Financial Statements[111](index=111&type=chunk) [Mine Safety Disclosures](index=20&type=section&id=Item%204%20Mine%20Safety%20Disclosures) This item is not applicable to Paychex - Not applicable[112](index=112&type=chunk) [PART II](index=21&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=21&type=section&id=Item%205%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Paychex common stock trades on NASDAQ under 'PAYX', with **359,906,888 shares outstanding** as of June 30, 2022, supported by quarterly dividends and an active share repurchase program - Paychex common stock trades on the **NASDAQ Global Select Market** under the symbol 'PAYX'[2](index=2&type=chunk) - As of June 30, 2022, **359,906,888 shares** of common stock were outstanding[5](index=5&type=chunk) - The Board authorized a share repurchase program of up to **$400.0 million** in July 2021, expiring January 31, 2024; in fiscal 2022, **1.2 million shares** were repurchased for **$145.2 million**[117](index=117&type=chunk) Issuer Purchases of Equity Securities (Fiscal 2022) | Period | Total Number of Shares Purchased (millions) | Average Price Paid Per Share | Total Dollars (millions) | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (millions) | | :--- | :--- | :--- | :--- | :--- | | First quarter | — | $ — | $ — | $ 472.4 | | Second quarter | — | $ — | $ — | $ 472.4 | | Third quarter | — | $ — | $ — | $ 472.4 | | March 1 to March 31, 2022 | — | $ — | $ — | $ 472.4 | | April 1 to April 30, 2022 | — | $ — | $ — | $ 472.4 | | May 1 to May 31, 2022 | 1.2 | $ 118.82 | $ 145.2 | $ 327.2 | | **Fiscal year** | **1.2** | **$ 118.82** | **$ 145.2** | | Five-Year Cumulative Total Returns (May 31, 2017 = $100) | Index | May 31, 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Paychex | $ 100.00 | $ 114.41 | $ 154.51 | $ 134.38 | $ 193.73 | $ 242.82 | | S&P 500 | $ 100.00 | $ 114.37 | $ 118.69 | $ 133.90 | $ 187.86 | $ 187.27 | | Peer Group - new | $ 100.00 | $ 126.76 | $ 149.01 | $ 166.82 | $ 214.56 | $ 200.32 | [Reserved](index=21&type=section&id=Item%206%20%5BReserved%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%207%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews Paychex's fiscal year 2022 operating results and financial condition, detailing revenue growth, expense management, profitability, and liquidity, while addressing the COVID-19 pandemic's impact - Paychex is a leading HCM software and services company, offering integrated solutions for HR, payroll, benefits, and insurance services for small- to medium-sized businesses[126](index=126&type=chunk) - The company's strategy focuses on providing industry-leading, integrated technology; increasing client satisfaction; expanding leadership in HR; growing its client base; and engaging in strategic acquisitions[129](index=129&type=chunk) - Ongoing investments in platforms and service capabilities have enabled adaptation to business and regulatory environments, maintaining strong service delivery, client satisfaction, and retention[131](index=131&type=chunk) [Fiscal 2022 Business Highlights](index=25&type=section&id=Fiscal%202022%20Business%20Highlights) Fiscal 2022 highlights include strong financial performance with **14% total revenue growth** and **27% net income growth**, alongside increased dividends paid to stockholders Fiscal Year Financial Highlights (in millions, except per share amounts) | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Total service revenue | $ 4,554.0 | $ 3,997.5 | 14 % | | Total revenue | $ 4,611.7 | $ 4,056.8 | 14 % | | Operating income | $ 1,840.0 | $ 1,460.7 | 26 % | | Net income | $ 1,392.8 | $ 1,097.5 | 27 % | | Adjusted net income | $ 1,367.8 | $ 1,102.4 | 24 % | | Diluted earnings per share | $ 3.84 | $ 3.03 | 27 % | | Adjusted diluted earnings per share | $ 3.77 | $ 3.04 | 24 % | | Dividends paid to stockholders | $ 999.6 | $ 908.7 | 10 % | - Dividends paid to stockholders represented approximately **72%** of net income for fiscal 2022, compared to approximately **83%** for fiscal 2021[133](index=133&type=chunk) [Business Outlook and Product Development](index=25&type=section&id=Business%20Outlook) The client base grew to over **730,000** as of May 31, 2022, with **84% client retention** and continued investment in technology and solution developments - The payroll and PEO client base grew to over **730,000 clients** as of May 31, 2022, up from **710,000** in fiscal 2021, with client retention at approximately **84%** for fiscal 2022[134](index=134&type=chunk) Growth in Selected HR Product Offerings (as of May 31, in thousands) | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Paychex HR Solutions and PEO client worksite employees | 1,977 | 1,680 | 18 % | | Paychex HR Solutions and PEO clients | 66 | 62 | 8 % | | Health and benefits services applicants | 210 | 205 | 2 % | | Retirement services plans | 104 | 96 | 9 % | - Fiscal 2022 technology and solution developments included **Paychex Pre-Check**, **Retention Insights**, **ERTC Service**, **Talent Dashboard**, acquisition of benefits administration software, and **Vaccination Management** tools[135](index=135&type=chunk)[143](index=143&type=chunk) [COVID-19 Impact and Support](index=26&type=section&id=COVID-19%20Update) The COVID-19 pandemic continues to pose economic challenges, but Paychex supported clients by securing over **$8.0 billion** in employee retention tax credits - The COVID-19 pandemic continues to present challenges, including economic uncertainty, supply chain disruptions, and labor/cost inflation, but Paychex maintains health and safety standards and provides flexibility to employees[139](index=139&type=chunk) - Paychex proactively supported clients through the pandemic, notably with the **Paychex ERTC Service**, which helped over **40,000 customers** secure more than **$8.0 billion** in combined employee retention tax credits and paid leave credits as of May 31, 2022[140](index=140&type=chunk)[141](index=141&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Total revenue increased by **14%** to **$4.61 billion** in fiscal 2022, driven by growth in Management Solutions and PEO/Insurance Solutions, leading to a **26% increase in operating income** Summary of Results of Operations (in millions, except per share amounts) | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | **Revenue:** | | | | | Management Solutions | $ 3,442.7 | $ 3,023.4 | 14 % | | PEO and Insurance Solutions | $ 1,111.3 | $ 974.1 | 14 % | | Total service revenue | $ 4,554.0 | $ 3,997.5 | 14 % | | Interest on funds held for clients | $ 57.7 | $ 59.3 | (3) % | | **Total revenue** | **$ 4,611.7** | **$ 4,056.8** | **14 %** | | Total expenses | $ 2,771.7 | $ 2,596.1 | 7 % | | Operating income | $ 1,840.0 | $ 1,460.7 | 26 % | | Income before income taxes | $ 1,824.6 | $ 1,434.2 | 27 % | | Income taxes | $ 431.8 | $ 336.7 | 28 % | | Effective income tax rate | 23.7 % | 23.5 % | | | **Net income** | **$ 1,392.8** | **$ 1,097.5** | **27 %** | | **Diluted earnings per share** | **$ 3.84** | **$ 3.03** | **27 %** | - Management Solutions revenue increased by **14%** due to growth in the payroll client base, product penetration, higher employment levels, price realization, and expansion of HCM ancillary services[146](index=146&type=chunk) - PEO and Insurance Solutions revenue increased by **14%** driven by growth in average worksite employees, higher average wages, increased PEO health insurance revenue, and higher state unemployment insurance revenues[146](index=146&type=chunk) - Interest on funds held for clients decreased by **3%** due to lower average interest rates, partially offset by higher average investment balances[146](index=146&type=chunk) Average Investment Balances and Interest Rates Earned (in millions) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | **Average investment balances:** | | | | Funds held for clients | $ 4,354.8 | $ 3,941.9 | | Corporate cash equivalents and investments | $ 1,303.3 | $ 1,043.3 | | **Total** | **$ 5,658.1** | **$ 4,985.2** | | **Average interest rates earned:** | | | | Funds held for clients | 1.3 % | 1.5 % | | Corporate cash equivalents and investments | 0.2 % | 0.2 % | | Combined funds held for clients and corporate cash equivalents and investments | 1.1 % | 1.2 % | - Total expenses increased by **7%**, primarily due to higher compensation costs (**7% increase**) from headcount growth, higher wage rates, and performance-based compensation, and a **15% increase** in PEO insurance costs due to growth in worksite employees and health insurance revenue[149](index=149&type=chunk)[154](index=154&type=chunk) - Operating income increased by **26%** to **$1.8 billion**, with the operating margin improving from **36.0%** in fiscal 2021 to **39.9%** in fiscal 2022[150](index=150&type=chunk) - The effective income tax rate was **23.7%** for fiscal 2022, impacted by net discrete tax benefits from stock option exercises and a tax benefit related to research and development expenses[151](index=151&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=30&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures like adjusted operating income and adjusted net income are presented to reflect core business performance, excluding specific one-time costs and tax benefits Non-GAAP Financial Measures (in millions) | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Operating income | $ 1,840.0 | $ 1,460.7 | 26 % | | Non-GAAP adjustments: | | | | | Cost-saving initiatives | — | 32.2 | | | **Adjusted operating income** | **$ 1,840.0** | **$ 1,492.9** | **23 %** | | Net income | $ 1,392.8 | $ 1,097.5 | 27 % | | Non-GAAP adjustments: | | | | | Excess tax benefit related to employee stock-based compensation payments | (18.9) | (19.4) | | | Tax benefit derived from research and development costs | (6.1) | — | | | Cost-saving initiatives | — | 24.3 | | | **Adjusted net income** | **$ 1,367.8** | **$ 1,102.4** | **24 %** | | Diluted earnings per share | $ 3.84 | $ 3.03 | 27 % | | Non-GAAP adjustments: | | | | | Excess tax benefit related to employee stock-based compensation payments | (0.05) | (0.05) | | | Tax benefit derived from research and development costs | (0.02) | — | | | Cost-saving initiatives | — | 0.07 | | | **Adjusted diluted earnings per share** | **$ 3.77** | **$ 3.04** | **24 %** | | EBITDA | $ 2,050.1 | $ 1,659.7 | 24 % | | Adjusted EBITDA | $ 2,050.1 | $ 1,691.9 | 21 % | - Adjusted operating income, adjusted net income, adjusted diluted earnings per share, EBITDA, and adjusted EBITDA are presented as non-GAAP measures to indicate core business operations performance, excluding one-time costs and certain tax benefits[155](index=155&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) As of May 31, 2022, Paychex maintained a strong financial position with **$1.3 billion** in cash and investments, **$1.5 billion** in operating cash flow, and **$2.0 billion** in available credit facilities - As of May 31, 2022, Paychex maintained a strong financial position with **$1.3 billion** in cash, restricted cash, and total corporate investments, and total borrowings of **$806.4 million**[157](index=157&type=chunk) - Cash flows from operations were **$1.5 billion** for fiscal 2022, supporting business operations and **$1.0 billion** in dividend payments[157](index=157&type=chunk) - The company has committed and unsecured credit facilities totaling **$2.0 billion** available as of May 31, 2022, with **$8.7 million** outstanding under the PNC credit facility[160](index=160&type=chunk)[161](index=161&type=chunk) - Long-term financing includes **$800.0 million** in Senior Notes (Series A and B) with fixed interest rates of **4.07%** and **4.25%**, respectively, maturing in 2026 and 2029[165](index=165&type=chunk)[379](index=379&type=chunk) - Other long-term contractual obligations include operating leases (**$105.2 million**), purchase obligations (**$189.4 million**), workers' compensation estimated obligations (**$189.7 million**), and long-term debt obligations (**$800.0 million** plus interest)[169](index=169&type=chunk) [Cash Flow Activities](index=33&type=section&id=Operating,%20Investing,%20and%20Financing%20Cash%20Flow%20Activities) Operating cash flow increased by **$245.2 million** in fiscal 2022, while investing and financing activities saw increased cash outflows, resulting in a net decrease in cash and equivalents Summary of Cash Flow Activities (in millions) | Activity | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $ 1,505.5 | $ 1,260.3 | $ 245.2 | | Net cash used in investing activities | $ (1,420.9) | $ (460.6) | $ (960.3) | | Net cash used in financing activities | $ (979.3) | $ (636.4) | $ (342.9) | | Net change in cash, restricted cash, and equivalents | $ (894.7) | $ 163.3 | $ (1,058.0) | | Cash dividends per common share | $ 2.77 | $ 2.52 | | - Operating cash flow increased due to higher net income, changes in income tax reserves, and a decrease in income tax payments, partially offset by increased costs to obtain and fulfill customer contracts and higher corporate payroll outflows[175](index=175&type=chunk) - Investing cash flow saw a significant increase in cash used, primarily related to increased purchases of **Variable Rate Demand Notes (VRDNs)** and additional investment in internal-use software enhancements[175](index=175&type=chunk) - Financing cash flow increased outflows due to higher net cash outflows from changes in client fund obligations, increased dividends paid (**$2.77 per share** in 2022 vs. **$2.52** in 2021), and decreased cash inflows from equity-based plans, partially offset by fewer common share repurchases[178](index=178&type=chunk) [Other Disclosures](index=34&type=section&id=Other) Recently issued accounting pronouncements, ASU No. 2021-10 and ASU No. 2021-08, are expected to improve transparency without material impact on financial statements - Recently issued accounting pronouncements, **ASU No. 2021-10** and **ASU No. 2021-08**, are expected to improve transparency of government assistance and clarify accounting for contract assets/liabilities in business combinations, with no material impact on consolidated financial statements expected from **ASU No. 2021-10**[303](index=303&type=chunk)[304](index=304&type=chunk) [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies and estimates involve revenue recognition, contract costs, PEO insurance reserves, goodwill impairment, stock-based compensation, and income taxes - Key accounting policies and estimates include revenue recognition (service fees, insurance commissions, PEO solutions net of pass-through costs, interest on funds held for clients), assets recognized from costs to obtain and fulfill contracts, PEO insurance reserves (workers' compensation and health insurance), goodwill and other intangible assets impairment testing, impairment of long-lived assets, stock-based compensation costs, and income taxes (deferred taxes and uncertain tax positions)[180](index=180&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk)[186](index=186&type=chunk)[189](index=189&type=chunk)[191](index=191&type=chunk)[193](index=193&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) - Estimates for PEO insurance reserves are based on independent actuarial projections and historical loss experience, subject to change due to economic trends and legal factors[186](index=186&type=chunk)[188](index=188&type=chunk) - Goodwill and intangible assets are tested for impairment annually, with no impairment loss recognized in fiscal 2022 or 2021[189](index=189&type=chunk)[190](index=190&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%207A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details Paychex's exposure to interest rate and credit risks from investment activities, managed through a strategy prioritizing principal protection, liquidity, and high-quality, short- to intermediate-term securities - Paychex is exposed to interest rate risk from its investments in funds held for clients and corporate investments, which can affect earnings and the fair value of longer-term available-for-sale (AFS) securities[201](index=201&type=chunk) - The investment strategy prioritizes principal protection and liquidity, with a substantial portion of portfolios in high credit quality securities (**AA or higher**) and short- to intermediate-term instruments[201](index=201&type=chunk) - The average interest rate earned on combined funds held for clients and corporate investments was **1.1%** in fiscal 2022, down from **1.2%** in fiscal 2021; a **25-basis-point change** in short-term interest rates could impact after-tax earnings by approximately **$4.5 million to $5.0 million** annually[203](index=203&type=chunk)[209](index=209&type=chunk) AFS Securities by Expected Maturity (as of May 31, 2022, in millions) | Maturity Date | Amortized Cost | Fair Value | | :--- | :--- | :--- | | Due in one year or less | $ 295.6 | $ 296.3 | | Due after one year through three years | $ 743.2 | $ 737.1 | | Due after three years through five years | $ 1,304.4 | $ 1,235.4 | | Due after five years | $ 1,822.3 | $ 1,760.4 | | **Total** | **$ 4,165.5** | **$ 4,029.2** | - As of May 31, 2022, AFS securities reflected net unrealized losses of **$136.3 million**, primarily due to changes in interest rates rather than credit risk, with most securities holding an **AA rating or better**[211](index=211&type=chunk)[214](index=214&type=chunk) - A hypothetical **25-basis-point increase** in longer-term interest rates could result in a **$20.0 million to $25.0 million decrease** in the fair value of the AFS securities portfolio, recorded in stockholders' equity without immediate impact on operations unless impairment is recognized[213](index=213&type=chunk) - Credit risk exposure exists from investments and purchased accounts receivable (for temporary staffing clients), but is diversified and regularly reviewed, with no single client having a material impact[214](index=214&type=chunk)[215](index=215&type=chunk) [Financial Statements and Supplementary Data](index=40&type=section&id=Item%208%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Paychex's audited consolidated financial statements for fiscal years 2020-2022, including management's assessment of effective internal controls and the independent auditor's unqualified opinion - Management assessed the effectiveness of the Company's internal control over financial reporting as of May 31, 2022, and determined it to be effective based on **COSO criteria**[223](index=223&type=chunk) - PricewaterhouseCoopers LLP, the independent registered public accounting firm, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of May 31, 2022[228](index=228&type=chunk) - A critical audit matter identified was the significant judgment involved in determining PEO insurance reserves, specifically workers' compensation insurance reserves, due to the complexity of actuarial estimates and assumptions[236](index=236&type=chunk)[237](index=237&type=chunk) Consolidated Statements of Income and Comprehensive Income (in millions, except per share amounts) | Year ended May 31, | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Revenue: | | | | | Management Solutions | $ 3,442.7 | $ 3,023.4 | $ 2,963.0 | | PEO and Insurance Solutions | 1,111.3 | 974.1 | 990.6 | | Total service revenue | 4,554.0 | 3,997.5 | 3,953.6 | | Interest on funds held for clients | 57.7 | 59.3 | 86.9 | | Total revenue | 4,611.7 | 4,056.8 | 4,040.5 | | Expenses: | | | | | Cost of service revenue | 1,356.3 | 1,271.2 | 1,280.8 | | Selling, general and administrative expenses | 1,415.4 | 1,324.9 | 1,299.2 | | Total expenses | 2,771.7 | 2,596.1 | 2,580.0 | | Operating income | 1,840.0 | 1,460.7 | 1,460.5 | | Other expense, net | (15.4) | (26.5) | (23.4) | | Income before income taxes | 1,824.6 | 1,434.2 | 1,437.1 | | Income taxes | 431.8 | 336.7 | 339.0 | | Net income | $ 1,392.8 | $ 1,097.5 | $ 1,098.1 | | Other comprehensive (loss)/income, net of tax | (185.7) | (4.7) | 56.4 | | Comprehensive income | $ 1,207.1 | $ 1,092.8 | $ 1,154.5 | | Basic earnings per share | $ 3.86 | $ 3.05 | $ 3.06 | | Diluted earnings per share | $ 3.84 | $ 3.03 | $ 3.04 | | Weighted-average common shares outstanding | 360.6 | 359.9 | 358.5 | | Weighted-average common shares outstanding, assuming dilution | 363.1 | 362.1 | 361.0 | Consolidated Balance Sheets (as of May 31, in millions, except per share amounts) | Asset/Liability | 2022 | 2021 | | :--- | :--- | :--- | | **Assets:** | | | | Cash and cash equivalents | $ 370.0 | $ 995.2 | | Restricted cash | 50.3 | 51.3 | | Corporate investments | 853.9 | 36.7 | | Accounts receivable, net | 723.8 | 578.3 | | PEO unbilled receivables, net | 572.1 | 450.9 | | Funds held for clients | 3,682.9 | 3,750.0 | | Total current assets | 6,581.6 | 6,169.5 | | Property and equipment, net | 401.3 | 395.8 | | Intangible assets, net | 224.6 | 275.8 | | Goodwill | 1,831.5 | 1,820.7 | | Total assets | $ 9,635.2 | $ 9,227.2 | | **Liabilities:** | | | | Accounts payable | $ 105.7 | $ 89.0 | | Accrued corporate compensation | 225.4 | 209.7 | | Accrued worksite employee compensation | 683.4 | 586.4 | | Short-term borrowings | 8.7 | 7.4 | | Client fund obligations | 3,819.2 | 3,671.0 | | Total current liabilities | 5,269.2 | 4,938.2 | | Long-term borrowings, net | 797.7 | 797.3 | | Total liabilities | 6,550.0 | 6,279.2 | | **Stockholders' Equity:** | | | | Total stockholders' equity | $ 3,085.2 | $ 2,948.0 | | Total liabilities and stockholders' equity | $ 9,635.2 | $ 9,227.2 | Consolidated Statements of Cash Flows (in millions) | Year ended May 31, | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $ 1,505.5 | $ 1,260.3 | $ 1,440.9 | | Net cash used in investing activities | $ (1,420.9) | $ (460.6) | $ 771.9 | | Net cash used in financing activities | $ (979.3) | $ (636.4) | $ (1,488.2) | | Net change in cash, restricted cash, and equivalents | $ (894.7) | $ 163.3 | $ 724.6 | | Cash, restricted cash, and equivalents, end of fiscal year | $ 928.4 | $ 1,823.1 | $ 1,659.8 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=74&type=section&id=Item%209%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There were no changes in or disagreements with accountants on accounting and financial disclosure - No changes in and disagreements with accountants on accounting and financial disclosure[395](index=395&type=chunk) [Controls and Procedures](index=74&type=section&id=Item%209A%20Controls%20and%20Procedures) Paychex's management concluded that disclosure controls and procedures were effective as of May 31, 2022, with no material changes in internal control over financial reporting - The Company's disclosure controls and procedures were effective as of May 31, 2022[397](index=397&type=chunk) - No changes in internal control over financial reporting occurred during the fiscal quarter ended May 31, 2022, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[398](index=398&type=chunk) [Other Information](index=74&type=section&id=Item%209B%20Other%20Information) There is no other information to report under this item - No other information[400](index=400&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=74&type=section&id=Item%209C%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to Paychex - Not applicable[401](index=401&type=chunk) [PART III](index=75&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=75&type=section&id=Item%2010%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) This section provides information on Paychex's executive officers as of May 31, 2022, with additional details on directors and corporate governance incorporated by reference from the proxy statement - Martin Mucci serves as Chairman of the Board and Chief Executive Officer, Efrain Rivera as Senior Vice President, Chief Financial Officer, and Treasurer, and John B. Gibson as President and Chief Operating Officer[404](index=404&type=chunk) - Other key executive officers include Mark A. Bottini (SVP of Sales), Michael E. Gioja (SVP of Information Technology and Product Development), Karen E. Saunders McClendon (VP and Chief Human Resources Officer), Stephanie L. Schaeffer (VP and Chief Legal Officer), and Robert L. Schrader (VP and Controller)[404](index=404&type=chunk)[405](index=405&type=chunk) - Additional information on directors, corporate governance, and the code of business ethics is incorporated by reference from the definitive proxy statement for the 2022 Annual Meeting of Stockholders[405](index=405&type=chunk) [Executive Compensation](index=76&type=section&id=Item%2011%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's definitive proxy statement for its 2022 Annual Meeting of Stockholders - Executive compensation details are incorporated by reference from the Company's definitive proxy statement for its 2022 Annual Meeting of Stockholders[406](index=406&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=76&type=section&id=Item%2012%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details securities authorized under Paychex's equity compensation plans as of May 31, 2022, with additional beneficial ownership information incorporated by reference from the proxy statement Securities Authorized for Issuance Under Equity Compensation Plans (as of May 31, 2022) | Category | Number of securities to be issued upon exercise of outstanding options (millions) | Weighted-average exercise price of outstanding options | Number of securities remaining available for future issuance under equity compensation plans (millions) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 3.7 | $ 69.46 | 15.6 | - The **2002 Stock Incentive Plan** authorizes grants of various equity awards, with **15.6 million shares** available for future grants as of May 31, 2022[323](index=323&type=chunk)[410](index=410&type=chunk) - Further information on beneficial ownership is incorporated by reference from the Company's definitive proxy statement for its 2022 Annual Meeting of Stockholders[407](index=407&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=77&type=section&id=Item%2013%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's definitive proxy statement for its 2022 Annual Meeting of Stockholders - Details on certain relationships, related transactions, and director independence are incorporated by reference from the Company's definitive proxy statement for its 2022 Annual Meeting of Stockholders[411](index=411&type=chunk) [Principal Accounting Fees and Services](index=77&type=section&id=Item%2014%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the company's definitive proxy statement for its 2022 Annual Meeting of Stockholders - Information on principal accounting fees and services is incorporated by reference from the Company's definitive proxy statement for its 2022 Annual Meeting of Stockholders[412](index=412&type=chunk) [PART IV](index=78&type=section&id=PART%20IV) [Exhibits and Financial Statement Schedules](index=78&type=section&id=Item%2015%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statement schedules and exhibits filed as part of the Form 10-K, including Schedule II – Valuation and Qualifying Accounts and a comprehensive list of various agreements and certifications - Financial statement schedules include **Schedule II — Valuation and Qualifying Accounts**[415](index=415&type=chunk) - A comprehensive list of exhibits is provided, including stock purchase agreements, organizational documents, senior notes forms, equity compensation plans, indemnity agreements, credit agreements, and various certifications[415](index=415&type=chunk)[416](index=416&type=chunk) [Form 10-K Summary](index=80&type=section&id=Item%2016%20Form%2010-K%20Summary) This item indicates that no summary is included in the Form 10-K - No Form 10-K Summary is provided[418](index=418&type=chunk)

Paychex, Inc. (NASDAQ:PAYX) Q4 2022 Earnings Conference Call June 29, 2022 9:30 AM ET Company Participants Martin Mucci - Chairman and CEO Efrain Rivera - Chief Financial Officer John Gibson - President and COO Conference Call Participants David Togut - Evercore ISI Kevin McVeigh - Credit Suisse Bryan Bergin - Cowen Ramsey El-Assal - Barclays Jason Kupferberg - Bank of America Bryan Keane - Deutsche Bank Andrew Nicholas - William Blair Kartik Mehta - Northcoast Research Peter Christiansen - Citigroup Jonath ...

Financial Performance - Service revenues increased by 11% to $1,130 million in Q4 FY22, compared to $1,015 million in Q4 FY21[8] - Adjusted operating income increased by 11% to $394 million in Q4 FY22, compared to $354 million in Q4 FY21[8] - Adjusted diluted EPS increased by 13% to $0.81 in Q4 FY22, compared to $0.72 in Q4 FY21[10] - Total service revenue for the twelve months ended May 31, 2022, was $4,554 million, a 14% increase[37] - Adjusted diluted EPS for the twelve months ended May 31, 2022, was $3.77, a 24% increase[37] Business Highlights - The company achieved double-digit revenue and earnings growth[18] - Client retention remains above pre-pandemic levels, with revenue retention near record levels[18] - The quarterly dividend was raised by 20% to $0.79 a share[19] - $430 million was returned to shareholders in the form of dividends and share repurchases[19] Fiscal Year 2023 Outlook - Management Solutions Revenue is expected to grow by 5% - 7% year-over-year[32] - PEO & Insurance Solutions Revenue is expected to grow by 8% - 10% year-over-year[32] - Total Revenue is expected to grow by 7% - 8% year-over-year[32] - Adjusted Diluted EPS is expected to grow by 9% - 10% year-over-year[32]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________________________ FORM 10-Q _________________________________________ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 2022 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from __________to __________ Commission file number 0-11330 _______________________________ ...