/2 H@     d 1$&%**'Statements of Consolidated Earnings7'Automatic Data Processing, Inc. and Subsidiaries/'(In thousands, except per share amounts)'Years ended June 30, ^2001 ^2000 ^1999='Revenues other than interest on funds held for clients'and PEO revenues"$6,264,030"$5,729,042"$5,110,262) 'Interest on funds held for clients "518,956 "348,596 "269,496 'PEO revenues(A) "234,584 "209,874 "160,383'Total revenues"7,017,570"6,287,512"5,540,141'Operating expenses"2,900,124"2,564,496"2,376,1723'General, administrative and selling expenses"1,665,447"1,643,360"1,379,0260'Systems development and programming costs"514,279"460,275"412,380$'Depreciation and amortization"320,856"284,282"272,807'Interest expense "14,260 "13,140 "19,090,'Realized(gains)/losses on investments "77,594 "32,359"(3,834)"5,492,560"4,997,912"4,455,641#'Earnings before income taxes"1,525,010"1,289,600"1,084,500!'Provision for income taxes"600,290"448,800"387,660'Net earnings"$ 924,720"$ 840,800"$ 696,840!'Basic earnings per share!"$ 1.47!"$ 1.34!"$ 1.13!#'Diluted earnings per share#"$ 1.44#"$ 1.31#"$ 1.10&'Basic shares outstanding&"629,035&"626,766&"615,630!('Diluted shares outstanding("645,989("646,098("636,892O+'(A) Net of pass-through costs of $2,446,768, $2,197,323, and $1,748,841,,'respectively.6/'See notes to consolidated financial statements."1'Consolidated Balance Sheets72'Automatic Data Processing, Inc. and Subsidiaries/4'(In thousands, except per share amounts)5'Years ended June 30, 5^2001 5^2000 7'Assets8'Current assets: 9'Cash and cash equivalents9"$ 1,275,3569"$ 1,227,637':'Short-term marketable securities:"515,245:"596,792;'Accounts receivable;"976,638;"899,314<'Other current assets<"316,221<"340,709>'Total current assets>"3,083,460>"3,064,452&@'Long-term marketable securities@"806,363@"628,120A'Long-term receivablesA"224,964A"245,249%B'Property, plant and equipment:C'Land and buildingsC"457,110C"439,022 D'Data processing equipmentD"653,641D"612,608&E'Furniture, leaseholds and otherE"533,883E"498,354G"1,644,634G"1,549,984$H'Less accumulated depreciationH"(1,029,984)H"(952,715)J"614,650J"597,269K'Other assetsK"219,133K"271,136L'IntangiblesL"1,601,410L"1,623,7011N'Total assets before funds held for clientsN"6,549,980N"6,429,927O'Funds held for clientsO"11,339,110O"10,420,889Q'Total assetsQ"$17,889,090Q"$16,850,816+T'Liabilities and Shareholders' EquityU'Current liabilities:V'Notes payableV"$ -V"$ 21,523W'Accounts payableW"156,324W"129,4365X'Accrued expenses and other current liabilitiesX"1,032,273X"1,044,002Y'Income taxesY"147,676Y"101,707 ['Total current liabilities["1,336,273["1,296,668\'Long-term debt\"110,227\"132,017]'Other liabilities]"208,880]"171,843^'Deferred income taxes^"207,928^"151,337_'Deferred revenue _"85,931 _"95,3618a'Total liabilities before client funds obligationsa"1,949,239a"1,847,226b'Client funds obligationsb"11,238,854b"10,420,772d'Total liabilitiesd"13,188,093d"12,267,998g'Shareholders' equity:(h'Preferred stock, $1.00 par value:+i'Authorized, 300 shares; issued, none i"-- i"--$j'Common stock, $.10 par value:4k'Authorized, 1,000,000 shares; issued, 638,702(l'and 631,443 shares , respectively l"63,870 l"63,144%m'Capital in excess of par valuem"553,927m"402,767n'Retained earningsn"5,153,408n"4,477,141Eo'Treasury stock - at cost 14,766 and 2,697 shares, respectivelyo"(837,244)o"(130,800)-p'Accumulated other comprehensive incomep"(232,964)p"(229,434)!r'Total shareholders' equityr"4,700,997r"4,582,8181t'Total liabilities and shareholders' equityt"$17,889,090t"$16,850,8166v'See notes to consolidated financial statements.6x'Statements of Consolidated Shareholders' Equity7y'Automatic Data Processing, Inc. and Subsidiaries/{'(In thousands, except per share amounts) |"Common |"Stock|"Capital in |"Other}"Excess of}"Retained}"Treasury}"Comprehensive}"Comprehensive ~"Shares ~"Amount~"Par Value~"Earnings ~"Stock ~"Income ~"Income'Balance, July 1, 1998"628,576"$62,858"$476,686"$3,372,247"$(370,724)"$(101,620)'Net earnings "-- "-- "--"696,840 "--"$ 696,840 "--'Currency translation"(47,674)"(47,674)'Unrealized gain on'securities "13,827 "13,827'Comprehensive income"$ 662,993'Employee stock plans'and related tax'benefits "-- "-- "44,163 "-- "95,086'Treasury stock'acquired (2,550 shares) "-- "-- "-- "--"(85,365)#'Acquisitions (4,316 shares)  " -- "--"(97,594)"(39,533)"119,583'Debt conversion'(2,623 shares) "-- "--"(1,922) "-- "52,216'Dividends'($.295 per share) "-- "-- "--"(181,133) "--'Balance, June 30, 1999"628,576 "62,858"421,333"3,848,421"(189,204)"(135,467)'Net earnings "-- "-- "--"840,800 "--"$ 840,800 "--'Currency translation"(86,277)"(86,277)'Unrealized loss on'securities"(7,690)"(7,690)'Comprehensive income"$ 746,833'Employee stock plans'and related'tax benefits "2,867 "286"(7,841) "498"207,322'Treasury stock acquired'(4,648 shares) "-- "-- "-- "--"(201,007)'Acquisitions'(478 shares) "-- "-- "4,359 "-- "20,122'Debt conversion'(808 shares) "-- "--"(15,084) "-- "31,967'Dividends'($.33875 per share) "-- "-- "--"(212,578) "--'Balance, June 30, 2000"631,443 "63,144"402,767"4,477,141"(130,800)"(229,434)'Net earnings "-- "-- "--"924,720 "--"$ 924,720 "--'Currency translation"(80,816)"(80,816)'Unrealized gain on'securities "77,286 "77,286'Comprehensive income"$ 921,190'Employee stock plans'and related'tax benefits "6,878 "688"163,464 "--"187,058'Treasury stock acquired'(16,558 shares) "-- "-- "-- "--"(935,064)'Acquisitions (22 shares) "-- "-- "234 "-- "839'Debt conversion'(1,303 shares) "381 "38"(12,538) "-- "40,723'Dividends'($.395 per share) "-- "-- "--"(248,453) "--'Balance, June 30, 2001"638,702"$63,870"$553,927"$5,153,408"$(837,244)"$(232,964)6'See notes to consolidated financial statements.,'Statements of Consolidated Cash Flows7'Automatic Data Processing, Inc. and Subsidiaries'(In thousands)'Years ended June 30, ^2001 ^2000 ^1999+'Cash Flows From Operating Activities'Net earnings"$ 924,720"$840,800"$ 696,840>'Adjustments to reconcile net earnings to net cash flows('provided by operating activities:$'Depreciation and amortization"320,856"284,282"272,807('Write-off of investment in Bridge "90,000"-"-'Deferred income taxes "29,450 "8,885"(23,235)/'Increase in receivables and other assets"(70,699)"(149,913)"(155,132)8'Increase in accounts payable and accrued expenses"182,634 "39,339"100,057 'Other "14,063 "46,708"(37,476)6'Net cash flows provided by operating activities"1,491,024"1,070,101"853,861+'Cash Flows From Investing Activities)'Purchases of marketable securities"(3,973,434)"(7,372,892)"(1,882,411)2'Proceeds from sale of marketable securities"3,087,406"4,001,848"1,064,810,'Net change in client fund obligations"818,082"3,406,039"486,293'Capital expenditures"(185,406)"(166,012)"(177,700)'Additions to intangibles"(97,448)"(67,303)"(62,360)7'Acquisitions of businesses, net of cash acquired"(73,667)"(175,248)"(107,317)'Disposals of businesses "900 "14,634"276,035 'Other"(32,267)"(11,664) "10,5902'Net cash flows used in investing activities"(455,834)"(370,598)"(392,060)+'Cash Flows From Financing Activities'Payments of debt"(48,567)"(106,090)"(289,141)&'Proceeds from issuance of notes "26,435 "13,940 "91,696"'Repurchases of common stock"(935,064)"(201,007)"(85,365)-'Proceeds from issuance of common stock"218,178"172,589"100,359'Dividends paid"(248,453)"(212,578)"(181,133)2'Net cash flows used in financing activities"(987,471)"(333,146)"(363,584).'Net change in cash and cash equivalents "47,719"366,357 "98,2178'Cash and cash equivalents, at beginning of period"1,227,637"861,280"763,0632'Cash and cash equivalents, at end of period"$1,275,356"$1,227,637"$ 861,280'See notes to consolidated financial statements. Notes to Consolidated Financial Statements Automatic Data Processing, Inc. and Subsidiaries