&/2H4       d 1$&%**'Statements of Consolidated Earnings7'Automatic Data Processing, Inc. and Subsidiaries/'(In thousands, except per share amounts)'Years ended June 30, "1999 "1998 "1997"----------"----------"----------'Revenues, other than PEO"$5,379,758"$4,789,236"$4,109,708<'PEO revenues (net of pass-through costs of $1,748,841-'$1,293,866 and $723,429, respectively)"160,383"136,720 "83,739 "---------- "---------- "---------- 'Total revenues "5,540,141 "4,925,956 "4,193,447 "---------- "---------- "---------- 'Operating expenses "2,376,172 "2,149,343 "1,765,9593'General, administrative and selling expenses"1,375,192"1,237,403"1,150,1210'Systems development and programming costs"412,380"376,485"297,794$'Depreciation and amortization"272,807"247,625"224,910'Interest expense "19,090 "24,383 "28,224"----------"----------"----------"4,455,641"4,035,239"3,467,008"----------"----------"----------#'Earnings before income taxes"1,084,500"890,717"726,439!'Provision for income taxes"387,660"282,455"211,195"----------"----------"----------'Net earnings"$ 696,840"$ 608,262"$ 515,244"----------"----------"----------"----------"----------"----------'Basic earnings per share"$ 1.13"$ 1.01"$ .88"----------"----------"----------!'Diluted earnings per share"$ 1.10"$ .98"$ .85 "---------- "---------- "----------"'Basic shares outstanding""615,630""600,803""588,112#"----------#"----------#"----------!$'Diluted shares outstanding$"636,892$"628,196$"620,117%"----------%"----------%"----------&"----------&"----------&"----------6''See notes to consolidated financial statements.")'Consolidated Balance Sheets7*'Automatic Data Processing, Inc. and Subsidiaries/,'(In thousands, except per share amounts)-'June 30, -"1999 -"1998."-----------."----------- /'Assets0'Current assets: 1'Cash and cash equivalents1"$ 861,2801"$ 763,063'2'Short-term marketable securities2"231,2142"144,9363'Accounts receivable3"860,8363"751,6094'Other current assets4"240,9274"220,9265"-----------5"-----------6'Total current assets6"2,194,2576"1,880,534&8'Long-term marketable securities8"1,076,5468"765,2729'Long-term receivables9"213,4139"177,9460:'Property, plant and equipment -- at cost:;'Land and buildings;"400,189;"388,315 <'Data processing equipment<"550,757<"702,268&='Furniture, leaseholds and other="449,862="436,040>"----------->"-----------?"1,400,808?"1,526,623$@'Less accumulated depreciation@"(821,514)@"(936,309)A"-----------A"-----------B"579,294B"590,314C'Other assetsC"228,936C"168,609D'IntangiblesD"1,532,374D"1,660,192E"-----------E"-----------F"$ 5,824,820F"$ 5,242,867G"-----------G"-----------H"-----------H"-----------+J'Liabilities and Shareholders' EquityK'Current liabilities:L'Notes payableL"$ 66,952L"$ 239,811M'Accounts payableM"130,456M"126,2075N'Accrued expenses and other current liabilitiesN"952,326N"834,187O'Income taxesO"136,659 O"54,266P"-----------P"----------- Q'Total current liabilitiesQ"1,286,393Q"1,254,471S'Long-term debtS"145,765S"192,063T'Other liabilitiesT"132,081T"104,142U'Deferred income taxesU"138,236U"147,397V'Deferred revenueV"114,404V"105,347W'Shareholders' equity:(X'Preferred stock, $1.00 par value:+Y'Authorized, 300 shares; issued, none Y"-- Y"--$Z'Common stock, $.10 par value:;['Authorized, 1,000,000 shares; issued, 628,576 shares ["62,858 ["62,858%\'Capital in excess of par value\"421,333\"476,686]'Retained earnings]"3,848,421]"3,372,247F^'Treasury stock -- at cost 4,949 and 17,188 shares, respectively^"(189,204)^"(370,724)-_'Accumulated other comprehensive income_"(135,467)_"(101,620)`"-----------`"-----------!a'Total shareholders' equitya"4,007,941a"3,439,447b"-----------b"-----------c"$ 5,824,820c"$ 5,242,867d"-----------d"-----------e"-----------e"-----------6f'See notes to consolidated financial statements.6h'Statements of Consolidated Shareholders' Equity7i'Automatic Data Processing, Inc. and Subsidiaries/k'(In thousands, except per share amounts)l"Accumulated m"Common m"Stockm"Capital in m"Othern"----------n"---------n"Excess ofn"Retainedn"Treasuryn"Comprehensiven"Comprehensive o"Shares o"Amounto"Par Valueo"Earnings o"Stock o"Income o"Incomep"----------p"---------p"-------------p"---------------p"-------------p"----------------p"----------------q'Balance, July 1, 1996q"628,554q"$62,856 qLA qqQCAq"$(581,725)q"$ (11,013)r'Net earnings r"-- r"-- r"-- rrA r"--r"$ 515,244 r"--s'Currency translations"(61,523)s"(61,523)$t'Unrealized loss on securitiest"(1,003)t"(1,003)u"---------v'Comprehensive incomev"$ 452,718 v"--w"---------x"---------y'Employee stock plans andz'related tax benefits z"-- z"-- z`U@ z"-- z"44,204 z"---{'Treasury stock acquired (4,241 shares) {"-- {"-- { {"--{"(85,532) {"--"|'Acquisitions (5,956 shares) |"-- |"-- |G | |"35,727 |"--%}'Debt conversion (1,258 shares) }"22}"2 }R3 }"-- }"10,162 }"--#~'Dividends ($.2225 per share) ~"-- ~"-- ~"-- ~` ~"-- ~"--'Other transactions "-- "-- "--  "-- "--"----------"---------"-------------"---------------"-------------"----------------"----------------'Balance, June 30, 1997"628,576 "62,858 A  CFA"(577,164)"(73,539)'Net earnings "-- "-- "--  "A "--"$ 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 "-- "--  @ "-- "61,714 "---'Treasury stock acquired (1,792 shares) "-- "-- "-- "--"(40,907) "--"'Acquisitions (1,911 shares) "-- "--   "29,431 "--&'Debt conversion (11,850 shares) "-- "-- @ "--"156,202 "--$'Dividends ($.25625 per share) "-- "-- "--  "-- "--'Other transactions "-- "-- %  "-- "--"----------"---------"-------------"---------------"-------------"----------------"----------------'Balance, June 30, 1998"628,576 "62,858 8A kIA"(370,724)"(101,620)'Net earnings "-- "-- "-- D%A "--"$ 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 "-- "-- `@ "-- "95,086 "---'Treasury stock acquired (2,550 shares) "-- "-- "-- "--"(85,365) "--"'Acquisitions (4,316 shares) "-- "--  M"119,583 "--%'Debt conversion (2,623 shares) "-- "-- ~ "-- "52,216 "--"'Dividends ($.295 per share) "-- "-- "-- h "-- "--"----------"---------"-------------"---------------"-------------"----------------"----------------'Balance, June 30, 1999"628,576"$62,858 TA r\MA"$(189,204)"$(135,467)"----------"---------"--------"----------"---------"---------6'See notes to consolidated financial statements.,'Statements of Consolidated Cash Flows7'Automatic Data Processing, Inc. and Subsidiaries'(In thousands)'Years ended June 30, "1999 "1998 "1997"------------"----------------"-------------+'Cash Flows From Operating Activities'Net earnings"$ 696,840"$ 608,262"$ 515,244>'Adjustments to reconcile net earnings to net cash flows('provided by operating activities:$'Depreciation and amortization"272,807"247,625"224,910'Deferred income taxes"(23,235)"(3,020)"(35,767)/'Increase in receivables and other assets"(155,132)"(207,819)"(157,860)8'Increase in accounts payable and accrued expenses "20,698 "47,931 "51,440 'Other "41,883 "90,374 "81,580"---------"---------"---------6'Net cash flows provided by operating activities"853,861"783,353"679,547"---------"---------"---------+'Cash Flows From Investing Activities('Purchase of marketable securities"(608,300)"(617,669)"(659,835)2'Proceeds from sale of marketable securities"276,992"550,405"627,176'Capital expenditures"(177,700)"(202,169)"(177,861)'Additions to intangibles"(62,360)"(95,797)"(15,321)7'Acquisitions of businesses, net of cash acquired"(107,317)"(338,436)"(118,223)'Disposals of businesses"276,035 "59,171 "39,529 'Other "10,590 "13,634 "38,433"---------"---------"---------2'Net cash flows used in investing activities"(392,060)"(630,861)"(266,102)"---------"---------"---------+'Cash Flows From Financing Activities'Payments of debt"(289,141)"(7,681)"(3,371)&'Proceeds from issuance of notes "91,696"120,986 "47,731"'Repurchases of common stock"(85,365)"(40,907)"(127,709)-'Proceeds from issuance of common stock"100,359 "81,111 "98,244'Dividends paid"(181,133)"(152,888)"(129,814) 'Other "--"(1,845)"(3,920)"---------"---------"---------2'Net cash flows used in financing activities"(363,584)"(1,224)"(118,839)"---------"---------"---------.'Net change in cash and cash equivalents "98,217"151,268"294,6068'Cash and cash equivalents, at beginning of period"763,063"611,795"317,189"---------"---------"---------2'Cash and cash equivalents, at end of period"$ 861,280"$ 763,063"$ 611,795"---------"---------"---------"---------"---------"---------6'See notes to consolidated financial statements.