/2H)d 1$&%*$'PART I. FINANCIAL INFORMATION*'CONSOLIDATED STATEMENTS OF EARNINGS/'(In thousands, except per share amounts)'(Unaudited)^Three Months Ended^Three Months Ended^Six Months Ended^Six Months Ended^December 31,^December 31,^December 31,^December 31, ^2001 ^2000 ^2001 ^2000$'Revenues, other than interest 'on funds held for clients 'and PEO revenues "$1,508,922 "$1,450,633 "$2,942,398 "$2,823,471! 'Interest on funds held for 'clients "110,072 "129,918 "223,260 "245,557'PEO revenues (A) "62,034 "59,271"123,253"114,923'Total revenues"1,681,028"1,639,822"3,288,911"3,183,951'Operating expenses"691,970"677,102"1,368,322"1,337,060"'General, administrative and'selling expenses"393,558"410,627"850,119"846,062'Systems development and'programming costs"117,540"127,503"233,369"246,577$'Depreciation and amortization "68,449 "78,524"137,912"160,068'Other(income)expense"(20,389)" 3,166"(50,911)"(35,326)"1,251,128"1,296,922"2,538,811"2,554,441# 'EARNINGS BEFORE INCOME TAXES "429,900 "342,900 "750,100 "629,510!"'Provision for income taxes""165,300""135,460""288,900""248,670$'NET EARNINGS$"$ 264,600$"$ 207,440$"$ 461,200$"$ 380,840&'BASIC EARNINGS PER SHARE&"$ 0.43&"$ 0.33&"$ 0.75&"$ 0.60!('DILUTED EARNINGS PER SHARE("$ 0.42("$ 0.32("$ 0.73("$ 0.59*'Dividends per share*"$ 0.1150*"$ 0.1025*"$ 0.2175*"$ 0.19000,'(A) Net of pass-through costs of $649,939>-' and $651,151, $1,246,401 and $1,243,398, respectively.:/'See notes to the consolidated financial statements."1'CONSOLIDATED BALANCE SHEETS2'(In thousands)3'(Unaudited)4^December 31,4^June 30, 5'Assets 5^2001 5^2001 7'Cash and cash equivalents7"$ 1,326,9677"$ 1,275,356'8'Short-term marketable securities8"407,8028"515,2459'Accounts receivable9"929,3709"976,638:'Other current assets:"275,026:"316,221<'Total current assets<"2,939,165<"3,083,460&>'Long-term marketable securities>"896,477>"806,363?'Long-term receivables?"213,724?"224,964A'Land and buildingsA"468,367A"457,110 B'Data processing equipmentB"679,873B"653,641&C'Furniture, leaseholds and otherC"528,916C"533,883E"1,677,156E"1,644,634$F'Less accumulated depreciationF"(1,074,068)F"(1,029,984)*H'Total property, plant and equipmentH"603,088H"614,650J'Other assetsJ"230,934J"219,133L'GoodwillL"1,293,620L"1,151,874M'Other intangiblesM"448,579M"449,5361O'Total assets before funds held for clientsO"6,625,587O"6,549,980P'Funds held for clientsP"10,995,695P"11,339,110R'Total assetsR"$17,621,282R"$17,889,090+T'Liabilities and Shareholders' EquityV'Accounts payableV"$ 150,115V"$ 156,324'W'Accrued expenses & other currentX'liabilitiesX"984,031X"1,032,273Y'Income taxesY"131,387Y"147,676 ['Total current liabilities["1,265,533["1,336,273]'Long-term debt ]"94,895]"110,227^'Other liabilities^"243,855^"208,880_'Deferred income taxes_"238,299_"207,928`'Deferred revenue `"83,921 `"85,931-b'Total liabilities before clients fundsc'obligationsc"1,926,503c"1,949,239d'Client funds obligationsd"10,827,710d"11,238,854f'Total liabilitiesf"12,754,213f"13,188,093h'Shareholders' equity:i'Common stock i"63,870 i"63,870%j'Capital in excess of par valuej"420,177j"553,927k'Retained earningsk"5,480,074k"5,153,408l'Treasury stockl"(946,448)l"(837,244)-m'Accumulated other comprehensive incomem"(150,604)m"(232,964)!o'Total shareholders' equityo"4,867,069o"4,700,9971q'Total liabilities and shareholders' equityq"$17,621,282q"$17,889,090:t'See notes to the consolidated financial statements.,v'CONSOLIDATED STATEMENTS OF CASH FLOWSw'(In thousands)x'(Unaudited)y^Six Months Endedy^Six Months Endedz^December 31,z^December 31, {^2001 {^2000,|'Cash Flows From Operating Activities:~'Net earnings~"$ 461,200~"$ 380,840,'Expenses not requiring outlay of cash"188,909"183,417&'Changes in operating net assets "62,188"(19,150)6'Net cash flows provided by operating activities"712,297"545,107,'Cash Flows From Investing Activities:('Purchase of marketable securities"(2,058,862)"(5,578,302)2'Proceeds from sale of marketable securities"2,477,841"1,581,357,'Net change in client fund obligations"(411,144)"3,744,974'Capital expenditures"(65,515)"(90,915)'Additions to intangibles"(47,601)"(43,543)7'Acquisitions of businesses, net of cash acquired"(122,274)"(45,314) 'Other "6,381"(10,261)2'Net cash flows used in investing activities"(221,174)"(442,004),'Cash Flows From Financing Activities:.'Net proceeds from short-term borrowings "49,803 "26,253'Payments of debt"(3,299)"(43,317)-'Proceeds from issuance of common stock"107,661"100,541"'Repurchases of common stock"(459,143)"-'Dividends paid"(134,534)"(120,003)2'Net cash flows used in financing activities"(439,512)"(36,526).'Net change in cash and cash equivalents "51,611 "66,5775'Cash and cash equivalents, beginning of period"1,275,356"1,227,637/'Cash and cash equivalents, end of period"$1,326,967"$1,294,214:'See notes to the consolidated financial statements.