2: I5 Arial5! Arial5" Arial5# Arial5$ Arial5%  Arial5&  Arial !!""            !!!"!#!$!%%&%'& (% )%*%+%,& -&.& @ @   @   @   @   @   @   @   @  @ @  @  @ @  @ @  @ @  @ @  @ @   @  @ @   @  @ @  @ @  @ @  @ @  @ @  @ @   @  !@ @  " @  #@ @  %@ @  & @  (@ @  *@ @  ,@ @  - @  .@ @  0@ @  2@ @  4@ @  5@ @  6@ @  7@ @  8@ @  9 @  ; @  < @  = @  > @ ? @ @ @  @ @  A@ @  B@ @  C@ @  D@ @  E@ @  F@ @  G@ @  H @  I@ @  K@ @  L@ @  M@ @  N@ @  O@ @  P@ @  Q @  R@ @  S@ @  T @  U@ @  V @  W@ @  X@ @  Y@ @  Z@ @  [@ @  \@ @  ] @  ^@ @  `@ @  a@ @  b@ @  c@ @  d @  e@ @  f@ @  g@ @  h @  i@ @  k@ @  l@ @  m@ @  n@ @  o@ @  p@ @  q@ @  r@ @  s @  t@ @  u @  v@ @  w@ @  x@ @  z @  { @  | @  } @  ~ @   @  @  @  @  @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @ @  @  @ @  @ @  q@' q@' q@'q0* -6'AUTOMATIC DATA PROCESSING, INC. AND SUBSIDIARIES)^CONSOLIDATED STATEMENTS OF EARNINGS.^(In thousands, except per share amounts)^(Unaudited)^Three Months Ended^Three Months Ended^Nine Months Ended^Nine Months Ended^March 31,^March 31,^March 31,^March 31,'REVENUES: ^2003 ^2002 ^2003 ^2002= 'Revenues, other than interest on funds held for clients ' and PEO revenues "$1,704,454 "$1,691,261 "$4,691,274 "$4,633,659( 'Interest on funds held for clients "99,108 "107,880 "276,735 "331,140'PEO revenues (A) "102,216 "70,895 "267,449 "194,148'TOTAL REVENUES"1,905,778"1,870,036"5,235,458"5,158,947'EXPENSES:'Operating expenses "796,580 "772,492"2,207,764"2,140,8143'Selling, general, and administrative expenses "412,793 "369,217"1,262,751"1,219,3360' Systems development and programming costs "123,401 "116,387 "364,679 "349,756#'Depreciation and amortization "67,503 "73,203 "203,886 "211,115'Other income, net"(27,499)" (33,113)"(100,472)"(84,024)!'TOTAL EXPENSES!"1,372,778!"1,298,186!"3,938,608!"3,836,997"#'EARNINGS BEFORE INCOME TAXES #"533,000 #"571,850#"1,296,850#"1,321,950 %'Provision for income taxes %"203,610 %"219,590 %"495,370 %"508,490('NET EARNINGS("$ 329,390("$ 352,260("$ 801,480("$ 813,460*'BASIC EARNINGS PER SHARE*"$ 0.55*"$ 0.57*"$ 1.33*"$ 1.31 ,'DILUTED EARNINGS PER SHARE,"$ 0.54,"$ 0.56,"$ 1.32,"$ 1.29'.' Basic average shares outstanding ."600,217 ."620,118 ."601,737 ."619,344(0'Diluted average shares outstanding 0"605,340 0"632,307 0"607,911 0"631,706 2'Dividends per common share2"$ 0.12002"$ 0.11502"$ 0.35502"$ 0.3325@4'(A) Net of pass-through costs of $904,391 and $676,409 H5'for the three months ended March 31, 2003 and 2002, respectively, ,6'and $2,541,258 and $1,922,810 for the >7'nine months ended March 31, 2003 and 2002, respectively.99'See notes to the consolidated financial statements.6;^AUTOMATIC DATA PROCESSING, INC. AND SUBSIDIARIES!<^CONSOLIDATED BALANCE SHEETS.=^(In thousands, except per share amounts)?^(Unaudited)@^March 31,@^June 30, A'Assets A^2003 A^2002C'Current assets:"D' Cash and cash equivalentsD"$ 1,188,660D"$ 798,810)E' Short-term marketable securities E"933,670 E"677,005!F' Accounts receivable, netF"1,022,367F"1,045,170G' Other current assets G"348,869 G"296,272 I' Total current assetsI"3,493,566I"2,817,257%K'Long-term marketable securities K"601,872K"1,273,768L'Long-term receivables L"176,751 L"192,769(M'Property, plant and equipment, net M"561,644 M"596,451N'Other assets N"523,194 N"293,808O'GoodwillO"1,511,423O"1,375,654P'Intangible assets, net P"528,425 P"501,5443R' Total assets before funds held for clientsR"7,396,875R"7,051,251S'Funds held for clientsS"12,932,524S"11,225,271U'Total assetsU"$20,329,399U"$18,276,522*W'Liabilities and Shareholders' EquityY'Current liabilities:Z' Accounts payableZ"$ 148,663Z"$ 148,694/[' Accrued expenses and other liabilities["1,165,452["1,035,389\' Income taxes payable \"195,925 \"227,019%^' Total current liabilities^"1,510,040^"1,411,102`'Long-term debt `"81,930 `"90,648a'Other liabilities a"237,142 a"233,671b'Deferred income taxes b"332,798 b"237,633c'Deferred revenue c"334,890 c"138,893>f' Total liabilities before client funds obligationsf"2,496,800f"2,111,947g'Client funds obligationsg"12,604,743g"11,050,370i' Total liabilitiesi"15,101,543i"13,162,317k'Shareholders' equity:1l' Common stock, par value $0.10 per share:Lm' authorized 1,000,000 shares; issued 638,702 shares, respectively m"63,870 m"63,870'n' Capital in excess of par value n"220,397 n"333,371o' Retained earningso"6,565,569o"5,977,3183p' Treasury stock, at cost: 40,673 and 22,385 q' shares, respectivelyq"(1,678,217)q"(1,142,041)6r' Accumulated other comprehensive income (loss)r" 56,237r"(118,313))t' Total shareholders' equityt"5,227,856t"5,114,2050v'Total liabilities and shareholders' equityv"$20,329,399v"$18,276,5229x'See notes to the consolidated financial statements.6z^AUTOMATIC DATA PROCESSING, INC. AND SUBSIDIARIES+{^CONSOLIDATED STATEMENTS OF CASH FLOWS|^(In thousands)~^(Unaudited)^Nine Months Ended^Nine Months Ended^March 31,^March 31, ^2003 ^2002*'Cash Flows From Operating Activities'Net earnings"$ 801,480"$ 813,4602'Adjustments to reconcile net earnings to net5' cash flows provided by operating activities:1' Expenses not requiring outlay of cash "276,464 "247,280+' Changes in operating net assets "88,448 "124,1888' Net cash flows provided by operating activities"1,166,392"1,184,928*'Cash Flows From Investing Activities('Purchases of marketable securities"(2,828,261)"(4,410,232)1'Proceeds from sale of marketable securities"3,012,380"3,017,6542'Net (purchases of) proceeds from client fund ' money market securities"(1,310,516) "40,128,'Net change in client funds obligations"1,554,373"1,038,602'Capital expenditures"(85,164)"(100,328)'Additions to intangibles"(64,916)"(78,538)6'Acquisitions of businesses, net of cash acquired"(99,759)"(148,260) 'Other "4,394 "12,677?'Net cash flows provided by (used in) investing activities "182,531"(628,297)*'Cash Flows From Financing Activities)'Proceeds from short-term borrowings "864 "264'Payments of debt "(1,254) "(3,764)F'Proceeds from stock purchase plan and exercises of stock options "71,649 "206,038!'Repurchases of common stock"(817,104)"(624,704)'Dividends paid"(213,228)"(205,855)1'Net cash flows used in financing activities"(959,073)"(628,021)-'Net change in cash and cash equivalents "389,850"(71,390)4'Cash and cash equivalents, beginning of period "798,810"1,275,356.'Cash and cash equivalents, end of period"$1,188,660"$1,203,9669'See notes to the consolidated financial statements. 6Sheet1 6Sheet2 6Sheet3d_ Arial  O4!*d"""dFM3FM3 PropertyWK3WK3 Property  l2 0\2 X20K2 G2CMHdrl2