Note 7. Payroll And Payroll Tax Filing Services

As part of its integrated payroll and payroll tax filing services, the Company collects funds for federal, state and local employment taxes from approximately 285,000 clients, files annually over 13.0 million returns, handles all regulatory correspondence, amendments, and penalty and interest disputes, remits the funds to the appropriate tax agencies, and handles other employer related services. In addition to fees paid by clients for these services, the Company receives interest during the interval between the receipt and disbursement of funds by investing the funds primarily in AA or better rated fixed income municipal instruments, with no more than $80 million in any single instrument. The amount of collected but unremitted funds varies significantly during the year and averaged approximately $4.5 billion in fiscal 1997, $3.7 billion in fiscal 1996 and $3.3 billion in fiscal 1995. The amount of such funds was $5.8 billion as of June 30, 1997, of which $1 billion was supported by a letter of credit and a related ADP guarantee, and $5.0 billion as of June 30, 1996. Interest on collected but unremitted funds amounted to approximately $213 million in fiscal 1997, $178 million in 1996, and $148 million in 1995.