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AND SUBSIDIARIES)^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,'REVENUES: ^2002 ^2001 ^2002 ^2001# 'Revenues, other than interest 'on funds held for clients 'and PEO revenues "$1,510,396 "$1,508,922 "$2,986,820 "$2,942,398 'Interest on funds held for 'clients "87,762 "110,072 "177,627 "223,260'PEO revenues (A) "84,837 "62,034 "165,233 "123,253'TOTAL REVENUES"1,682,995"1,681,028"3,329,680"3,288,911'EXPENSES:'Operating expenses "702,716 "691,970"1,411,184"1,368,322'Selling, general, and'administrative'expenses "402,005 "393,558 "849,958 "850,119'Systems development and'programming costs "121,380 "117,540 "241,278 "233,369#!'Depreciation and amortization !"68,699 !"68,449 !"136,383 !"137,912#'Other income, net#"(35,255)#"(20,389)#"(72,973)#"(50,911)&'TOTAL EXPENSES&"1,259,545&"1,251,128&"2,565,830&"2,538,811")'EARNINGS BEFORE INCOME TAXES )"423,450 )"429,900 )"763,850 )"750,100 +'Provision for income taxes +"161,760 +"165,300 +"291,760 +"288,900.'NET EARNINGS."$ 261,690."$ 264,600."$ 472,090."$ 461,2001'BASIC EARNINGS PER SHARE1"$ 0.441"$ 0.431"$ 0.781"$ 0.75 4'DILUTED EARNINGS PER SHARE4"$ 0.434"$ 0.424"$ 0.784"$ 0.73 8'Dividends per common share8"$ 0.12008"$ 0.11508"$ 0.23508"$ 0.2175<<'(A) Net of pass-through costs of $873,488 and $649,939>=' for the three months ended December 31, 2002 and 2001, :>'respectively, and $1,636,867 and $1,246,401 for the @?'six months ended December 31, 2002 and 2001, respectively.9A'See notes to the consolidated financial statements.6E'AUTOMATIC DATA PROCESSING, INC. AND SUBSIDIARIES!F'CONSOLIDATED BALANCE SHEETS.G'(In thousands, except per share amounts)J^(Unaudited)K^December 31,K^June 30, L'Assets L^2002 L^2002N'Current assets:O'Cash and cash equivalentsO"$ 971,482O"$ 798,810&P'Short-term marketable securities P"593,023 P"677,005Q'Accounts receivable, net Q"988,865Q"1,045,170R'Other current assets R"339,984 R"296,272T'Total current assetsT"2,893,354T"2,817,257%V'Long-term marketable securities V"897,402V"1,273,768W'Long-term receivables W"175,037 W"192,769$Y'Property, plant and equipment:Z'Land and buildings Z"456,510 Z"458,478['Data processing equipment ["734,789 ["696,829%\'Furniture, leaseholds and other \"561,537 \"540,217^"1,752,836^"1,695,524#_'Less accumulated depreciation_"(1,183,728)_"(1,099,073) a"569,108 a"596,451c'Other assets c"432,808 c"293,808d'Goodwilld"1,444,615d"1,375,654e'Intangible assets, net e"509,300 e"501,5440g'Total assets before funds held for clientsg"6,921,624g"7,051,251h'Funds held for clientsh"12,081,319h"11,225,271j'Total assetsj"$19,002,943j"$18,276,522*m'Liabilities and Shareholders' Equity*n'------------------------------------o'Current liabilities:p'Accounts payablep"$ 126,505p"$ 148,694*q'Accrued expenses & other liabilitiesq"1,039,919q"1,035,389r'Income taxes payable r"170,456 r"227,019t'Total current liabilitiest"1,336,880t"1,411,102v'Long-term debt v"82,446 v"90,648w'Other liabilities w"262,216 w"233,671x'Deferred income taxes x"337,413 x"237,633y'Deferred revenue y"243,975 y"138,893+{'Total liabilities before client funds|'obligations|"2,262,930|"2,111,947}'Client funds obligations}"11,760,904}"11,050,370'Total liabilities"14,023,834"13,162,317'Shareholders' equity:.'Common stock, par value $0.10 per share:/'authorized 1,000,000 shares; issued 638,7"02'shares, respectively "63,870 "63,870$'Capital in excess of par value "254,001 "333,371'Retained earnings"6,307,973"5,977,3180'Treasury stock, at cost: 39,108 and 22,385'shares, respectively"(1,664,463)"(1,142,041)1'Accumulated other comprehensive income (los"s) 17,728"(118,313) 'Total shareholders' equity"4,979,109"5,114,2050'Total liabilities and shareholders' equity"$19,002,943"$18,276,5229'See notes to the consolidated financial statements.6'AUTOMATIC DATA PROCESSING, INC. AND SUBSIDIARIES+'CONSOLIDATED STATEMENTS OF CASH FLOWS'(In thousands)'(Unaudited)^Six Months Ended^Six Months Ended^December 31,^December 31, ^2002 ^2001*'Cash Flows from Operating Activities'Net earnings"$ 472,090"$ 461,200+'Adjustments to reconcile net earnings-'to net cash flows provided by operating'activities:+'Expenses not requiring outlay of cash "170,481 "188,909%'Changes in operating net assets"(26,159) "62,1885'Net cash flows provided by operating activities "616,412 "712,297*'Cash Flows from Investing Activities('Purchases of marketable securities"(1,697,556)"(2,058,862)1'Proceeds from sale of marketable securities"2,095,677"1,125,255-'Net (purchases) proceeds of client fund'money market securities"(618,834)"1,352,586,'Net change in client funds obligations "710,534"(411,144)'Capital expenditures"(56,936)"(65,515)'Additions to intangibles"(44,396)"(47,601)6'Acquisitions of businesses, net of cash acquired"(38,928)"(122,274) 'Other "3,616 "6,381*'Net cash flows provided by (used in)'investing activities "353,177"(221,174)*'Cash Flows from Financing Activities-'Net proceeds from short-term borrowings "766 "49,803'Payments of debt "(826) "(3,299)-'Proceeds from exercise of stock options "64,419 "107,661!'Repurchases of common stock"(719,840)"(459,143)'Dividends paid"(141,436)"(134,534)1'Net cash flows used in financing activities"(796,917)"(439,512)/'Net increase in cash and cash equivalents "172,672 "51,6114'Cash and cash equivalents, beginning of period "798,810"1,275,356.'Cash and cash equivalents, end of period"$ 971,482"$1,326,9679'See notes to the consolidated financial statements. 6Sheet1 6Sheet2 6Sheet3d_ Arial  O4!*d"""dFM3FM3 PropertyWK3WK3 Property  PC A@C