/2H0       d 1$&%**'Statements of Consolidated Earnings7'Automatic Data Processing, Inc. and Subsidiaries/'(In thousands, except per share amounts)'Years ended June 30, ^2000 ^1999 ^1998='Revenues other than interest on funds held for clients'and PEO revenues"$5,729,042"$5,110,262"$4,543,335) 'Interest on funds held for clients "348,596 "269,496 "245,901= 'PEO revenues (net of pass-through costs of $2,197,323,/ '$1,748,841 and $1,293,866, respectively) "209,874 "160,383 "136,720"----------"----------"----------'Total revenues"6,287,512"5,540,141"4,925,956"----------"----------"----------'Operating expenses"2,564,496"2,376,172"2,149,3433'General, administrative and selling expenses"1,643,360"1,379,026"1,239,4640'Systems development and programming costs"460,275"412,380"376,485$'Depreciation and amortization"284,282"272,807"247,625'Interest expense "13,140 "19,090 "24,3835'Realized (gains)/losses on sale of investments "32,359"(3,834)"(2,061)"----------"----------"----------"4,997,912"4,455,641"4,035,239"----------"----------"----------#'Earnings before income taxes"1,289,600"1,084,500"890,717!'Provision for income taxes"448,800"387,660"282,455"----------"----------"---------- 'Net earnings "$ 840,800 "$ 696,840 "$ 608,262!"----------!"----------!"----------""----------""----------""----------$'Basic earnings per share$"$ 1.34$"$ 1.13$"$ 1.01%"----------%"----------%"----------!&'Diluted earnings per share&"$ 1.31&"$ 1.10&"$ .98'"----------'"----------'"----------)'Basic shares outstanding)"626,766)"615,630)"600,803*"----------*"----------*"----------!+'Diluted shares outstanding+"646,098+"636,892+"628,196,"----------,"----------,"-----------"-----------"-----------"----------6/'See notes to consolidated financial statements."1'Consolidated Balance Sheets72'Automatic Data Processing, Inc. and Subsidiaries/3'(In thousands, except per share amounts)4'Years ended June 30, 4^2000 4^1999 5'Assets6'Current assets: 7'Cash and cash equivalents7"$ 1,227,6377"$ 861,280'8'Short-term marketable securities8"596,7928"231,2149'Accounts receivable9"899,3149"860,836:'Other current assets:"340,709:"240,927;"-----------;"-----------<'Total current assets<"3,064,452<"2,194,257&>'Long-term marketable securities>"628,120>"1,076,546?'Long-term receivables?"245,249?"213,413%@'Property, plant and equipment:A'Land and buildingsA"439,022A"400,189 B'Data processing equipmentB"612,608B"550,757&C'Furniture, leaseholds and otherC"498,354C"449,862D"-----------D"-----------E"1,549,984E"1,400,808$F'Less accumulated depreciationF"(952,715)F"(821,514)G"-----------G"-----------H"597,269H"579,294I'Other assetsI"271,136I"228,936J'IntangiblesJ"1,623,701J"1,532,374K"-----------K"-----------1L'Total assets before funds held for clientsL"6,429,927L"5,824,820M'Funds held for clientsM"10,420,889M"7,014,733N"-----------N"-----------O'Total assetsO"$16,850,816O"$12,839,553P"===========P"===========+R'Liabilities and Shareholders' EquityS'Current liabilities:T'Notes payableT"$ 21,523T"$ 66,952U'Accounts payableU"129,436U"130,4565V'Accrued expenses and other current liabilitiesV"1,044,002V"952,326W'Income taxesW"101,707W"136,659X"-----------X"----------- Y'Total current liabilitiesY"1,296,668Y"1,286,393['Long-term debt["132,017["145,765\'Other liabilities\"171,843\"132,081]'Deferred income taxes]"151,337]"138,236^'Deferred revenue ^"95,361^"114,404_"-----------_"-----------8`'Total liabilities before client funds obligations`"1,847,226`"1,816,879a'Client fund obligationsa"10,420,772a"7,014,733b"-----------b"-----------c'Total Liabilitiesc"12,267,998c"8,831,612d"-----------d"-----------f'Shareholders' equity:(g'Preferred stock, $1.00 par value:+h'Authorized, 300 shares; issued, none h"-- h"--$i'Common stock, $.10 par value:>j'Authorized, 1,000,000 shares; issued, 631,443 shares at1k'June 30, 2000 and 628,576 at June 30, 1999 k"63,144 k"62,858%l'Capital in excess of par valuel"402,767l"421,333m'Retained earningsm"4,477,141m"3,848,421En'Treasury stock -- at cost 2,697 and 4,949 shares, respectivelyn"(130,800)n"(189,204)-o'Accumulated other comprehensive incomeo"(229,434)o"(135,467)p"-----------p"-----------!q'Total shareholders' equityq"4,582,818q"4,007,941r"-----------r"-----------1s'Total liabilities and shareholders' equitys"$16,850,816s"$12,839,553t"-----------t"-----------u"-----------u"-----------6w'See notes to consolidated financial statements.6y'Statements of Consolidated Shareholders' Equity7z'Automatic Data Processing, Inc. and Subsidiaries/{'(In thousands, except per share amounts)|^Accumulated}^Common Stock}^Common Stock}^Capital in }^Other~^----------~^---------~^Excess of~^Retained~^Treasury~^Comprehensive~^Comprehensive ^Shares ^Amount^Par Value^Earnings ^Stock ^Income ^Income^----------^---------^-------------^---------------^-------------^----------------^----------------'Balance, July 1, 1997"628,576"$62,858"$359,345"$2,917,915"$(577,164)'$ (73,539)'Net earnings "-- "-- "--"608,262 "--'$ 608,262 '--'Currency translation'(26,531)'(26,531)$'Unrealized loss on securities'(1,550)'(1,550)'---------'Comprehensive income'$ 580,181'---------'---------'Employee stock plans and'related tax benefits "-- "-- "68,050 "-- "61,714-'Treasury stock acquired (1,792 shares) "-- "-- "-- "--"(40,907)"'Acquisitions (1,911 shares) "-- "--"(15,841)"(1,004) "29,431&'Debt conversion (11,850 shares) "-- "-- "64,583 "--"156,202$'Dividends ($.25625 per share) "-- "-- "--"(152,888) "--'Other transactions "-- "-- "549 "(38) "--"----------"---------"-------------"---------------"-------------'----------------'----------------'Balance, June 30, 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)'$(229,434)"----------"---------"---------"----------"----------'---------"----------"---------"---------"----------"----------'---------6'See notes to consolidated financial statements.,'Statements of Consolidated Cash Flows7'Automatic Data Processing, Inc. and Subsidiaries'(In thousands)'Years ended June 30, ^2000 ^1999 ^1998+'Cash Flows From Operating Activities'Net earnings"$ 840,800"$ 696,840"$ 608,262>'Adjustments to reconcile net earnings to net cash flows('provided by operating activities:$'Depreciation and amortization"284,282"272,807"247,625'Deferred income taxes "8,885"(23,235)"(3,020)/'Increase in receivables and other assets"(149,913)"(155,132)"(207,819)8'Increase in accounts payable and accrued expenses "39,339"100,057"103,028 'Other "46,708"(37,476) "35,277"---------"---------"---------6'Net cash flows provided by operating activities"1,070,101"853,861"783,353"---------"---------"---------+'Cash Flows From Investing Activities)'Purchases of marketable securities"(7,372,892)"(1,882,411)"(2,622,477)2'Proceeds from sale of marketable securities"4,001,848"1,064,810"1,836,569,'Net change in client fund obligations"3,406,039"486,293"718,644'Capital expenditures"(166,012)"(177,700)"(202,169)'Additions to intangibles"(67,303)"(62,360)"(95,797)7'Acquisitions of businesses, net of cash acquired"(175,248)"(107,317)"(338,436)'Disposals of businesses "14,634"276,035 "59,171 'Other"(11,664) "10,590 "13,634"---------"---------"---------2'Net cash flows used in investing activities"(370,598)"(392,060)"(630,861)"---------"---------"---------+'Cash Flows From Financing Activities'Payments of debt"(106,090)"(289,141)"(7,681)&'Proceeds from issuance of notes "13,940 "91,696"120,986"'Repurchases of common stock"(201,007)"(85,365)"(40,907)-'Proceeds from issuance of common stock"172,589"100,359 "81,111'Dividends paid"(212,578)"(181,133)"(152,888) 'Other "-- "--"(1,845)"---------"---------"---------2'Net cash flows used in financing activities"(333,146)"(363,584)"(1,224)"---------"---------"---------.'Net change in cash and cash equivalents"366,357 "98,217"151,2688'Cash and cash equivalents, at beginning of period"861,280"763,063"611,795"---------"---------"---------2'Cash and cash equivalents, at end of period"$1,227,637"$ 861,280"$ 763,063"---------"---------"---------"---------"---------"---------6'See notes to consolidated financial statements.