content: SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
  
                                    FORM 8-K
  
                                 CURRENT REPORT
                       PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
  
                         Date of Report:  June 30, 1998
                        (Date of earliest event reported)
  
                                  PAYCHEX, INC.
        (Exact name of registrant as specified in its charter)
  
  DELAWARE                       0-11330                   16-1124166
  (State of incorporation)     (Commission               (IRS Employer
                               File Number)           Identification Number)
  
  911 PANORAMA TRAIL SOUTH, ROCHESTER, NEW YORK            14625-0397
  (Address of principal executive offices)                 (Zip Code)
  
                                  (716)385-6666
              (Registrant's telephone number, including area code)
  <PAGE>
  <PAGE>
  ITEM 5.  OTHER EVENTS
  The registrant's press release dated June 30, 1998, regarding its financial
  results for the fiscal year ended May 31, 1998, is attached as EXHIBIT A.
  
  The registrant also includes the restated segment information reflecting the
  adoption of Statement of Financial Accounting Standards No. 131, "Disclosures
  about Segments of an Enterprise and Related Information" for the four quarters
  and years ended May 31, 1998 and 1997.  The release with the restated
  information is attached as EXHIBIT B.
  
                                   SIGNATURES
  
  Pursuant to the requirements of the Securities Exchange Act of 1934, the
  registrant has duly caused this report to be signed on its behalf by the
  undersigned thereunto duly authorized.
  
                                          PAYCHEX, INC.
  
  Date:     June 30, 1998                 /s/ B. Thomas Golisano
                                          -----------------------
                                          B. Thomas Golisano
                                          Chairman, President and
                                          Chief Executive Officer
  
  Date:     June 30, 1998                 /s/ John M. Morphy
                                          -----------------------
                                          John M. Morphy
                                          Vice President, Chief
                                          Financial Officer and
                                          Secretary
  <PAGE>
  <PAGE>
  EXHIBIT A
  
  FOR IMMEDIATE RELEASE
  
  John M. Morphy, Chief Financial Officer
  Paychex, Inc.           716-383-3406
  	        or
  Jan Shuler              716-383-3406
  Paychex, Inc.
  Access Paychex, Inc. News Releases on the WORLD WIDE WEB
  http://www.paychex.com   or   http://www.prnewswire.com
  
                          PAYCHEX, INC. REPORTS RECORD
                       YEAR END AND FOURTH QUARTER RESULTS
  
  ROCHESTER, NY, June 30, 1998 -- Paychex, Inc. (NASDAQ: PAYX) today announced
  record net income of $102.2 million or $.62 diluted earnings per share for the
  year ended May 31, 1998, a 36% increase over net income of $75.2 million or
  $.46 diluted earnings per share for the same period last year.  Total service
  revenues were $493.7 million, an increase of 24% over $399.7 million for the
  previous fiscal year.
  
  For the quarter ended May 31, 1998, net income increased 35% to $28.1 million
  or $.17 diluted earnings per share as compared to net income of $20.7 million
  or $.13 diluted earnings per share for the same period last year.  Total
  service revenues were $131.7 million, an increase of 23% over $106.8 million
  for the same period last year.
  
  Effective May 31, 1998, Paychex, Inc., adopted Statement of Financial
  Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
  Related Information". The Statement requires the Company to report segment
  financial information consistent with the presentation made to the Company's
  management for decision-making purposes.  Prior quarter and year segment
  disclosures have been restated to be consistent with the fourth quarter and
  year ended May 31, 1998.
  
  PAYROLL SEGMENT
  For the year ended May 31, 1998, operating income from payroll services
  increased 33% to $180.3 million from $135.4 million for the same period last
  year.  Payroll service revenue was $455.2  million, an increase of 23% over
  $368.9 million for the same period last year.
  
  For the quarter ended May 31, 1998, operating income from payroll services
  increased 29% to $46.7 million from $36.2 million for the fourth quarter last
  year.  Payroll service revenue was $119.6 million, an increase of 21% over
  $98.9 million for the fourth quarter last year.
  
  The increases in revenues and operating income were the result of a 12% year
  over year increase in the Company's payroll client base and continued growth
  of the Taxpay and Direct Deposit products.  Paychex currently services
  293,600 payroll clients, with 220,700 utilizing Taxpay, the Company's tax
  filing and payment feature, 104,400 taking advantage of the Company's Direct
  Deposit product and 33,500 using the Company's Check Signing option.
  <PAGE>
  <PAGE>
  HRS-PEO SEGMENT
  For the year ended May 31, 1998, operating income for the segment increased
  from $5.6 million to $6.6 million.  HRS-PEO service revenue rose to $38.5
  million, an increase of 25% over $30.9 million for the same period last year.
  
  For the quarter ended May 31, 1998, operating income for the HRS-PEO segment
  increased from $.5 million to $3.9 million.  HRS-PEO service revenue rose to
  $12.1 million, an increase of 53% over $7.9 million for the fourth quarter
  last year.
  
  The increased revenue for the year and the quarter is directly related to the
  continued growth of the segment's client bases.  As of May 31, 1998, the
  segment had 6,000 401(k) recordkeeping clients, 16,400 section 125 clients,
  and 19,200 PEO worksite employees, which represent an increase of 100%, 24%,
  and 39%, respectively, over the same period last year.  The segment's increase
  in operating income for the quarter ended May 31, 1998, is due to increased
  revenue and the benefits of consolidating the PEO administrative functions in
  Rochester, NY. This consolidation was completed at the end of February, 1998.
  
  CORPORATE EXPENSES
  Corporate expenses include the Information Technology, Organizational
  Development, Finance and Senior Management functions of the Company.  For the
  year ended May 31, 1998, operating expenses increased 18% from $44.3 million
  to $52.2 million.  For the quarter ended May 31, 1998, operating expenses
  increased 30% from $10.6 million to $13.7 million.  The year's increase in
  expenses is primarily due to additional employees necessary to support the
  growth of the Company's business segments. The fourth quarter increase relates
  to additional personnel and increased national marketing efforts, which were
  commenced in the third quarter of 1998.
  
  B. Thomas Golisano, Chairman, President, and Chief Executive Officer of
  Paychex said,  "We are pleased with our excellent financial results for both
  the year and fourth quarter of fiscal 1998. These results reflect our seventh
  consecutive year of net income growth of 36% or more. Outstanding new payroll
  client growth was accompanied by increased utilization of Taxpay, Direct
  Deposit and other ancillary products.  We see growing acceptance of our
  HRS-PEO products and, as evidenced by our fourth quarter results, anticipate
  excellent opportunities from this combination of resources and client
  experience.  We look forward to continued success as we expand our client base
  in the Payroll and HRS-PEO divisions."
  <PAGE>
  <PAGE>
                                  PAYCHEX, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                    (In thousands, except per share amounts)
  
                                             For the                     For the
                                  three months ended         twelve months ended
                                May 31,       May 31,       May 31,       May 31,
                                  1998          1997          1998          1997
  Service revenues:
    Payroll                   $119,595      $ 98,910      $455,227      $368,855
    HRS-PEO                     12,116         7,930        38,477        30,878
                               -------       -------       -------       -------
  Total service revenues       131,711       106,840       493,704       399,733
  PEO direct costs billed (A)  136,575        96,756       499,741       334,966
                               -------       -------       -------       -------
  Total revenue                268,286       203,596       993,445       734,699
  
  PEO direct costs (A)         136,575        96,756       499,741       334,966
  Operating costs               34,187        30,178       131,731       115,034
  Selling, general and
    administrative expenses     60,605        50,505       227,273       188,074
                               -------       -------       -------       -------
  Operating income              36,919        26,157       134,700        96,625
  Investment income              2,645         2,037         9,473         7,031
                               -------       -------       -------       -------
  Income before income taxes    39,564        28,194       144,173       103,656
  Income taxes                  11,513         7,471        41,954        28,506
                                ------       -------       -------       -------
  Net income                  $ 28,051      $ 20,723      $102,219      $ 75,150
                               =======       =======       =======       =======
  Basic earnings per share (B)$    .17      $    .13      $    .63      $    .46
                               =======       =======       =======       =======
  Diluted earnings
    per share (B)             $    .17      $    .13      $    .62      $    .46
                               =======       =======       =======       =======
  Weighted-average common
    shares outstanding (B)     163,162       162,730       163,009       162,002
                               =======       =======       =======       =======
  Weighted-average shares
    assuming dilution (B)      165,326       164,275       164,813       163,757
                               =======       =======       =======       =======
  Cash dividends per share (B)$    .06      $    .04      $    .22      $    .15
                               =======       =======       =======       =======
  
  (A)  Wages and payroll taxes of PEO worksite employees and their related
  benefit premiums and claims.
  (B)  Financial information for the periods ended May 31, 1997, have been
  adjusted for a three-for-two stock split distributed in May 1998.
  <PAGE>
  <PAGE>
                                  PAYCHEX, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
  
  May 31,                                                  1998           1997
  ASSETS
  Current assets:
    Cash and cash equivalents                        $   35,571     $   50,213
    Investments                                         214,967        132,780
    Interest receivable                                  13,227         10,462
    Accounts receivable                                  54,596         45,527
    Deferred income taxes                                 1,525          2,560
    Prepaid expenses and other current assets             4,391          2,486
                                                      ---------      ---------
  Current assets before ENS investments                 324,277        244,028
    Electronic Network Services investments           1,154,501        896,633
                                                      ---------      ---------
  Total current assets                                1,478,778      1,140,661
  Property and equipment - net                           64,698         54,178
  Deferred income taxes                                     517             72
  Other assets                                            5,794          6,412
                                                      ---------      ---------
  Total assets                                       $1,549,787     $1,201,323
                                                      =========      =========
  LIABILITIES
  Current liabilities:
    Accounts payable                                 $   10,496     $    5,649
    Accrued compensation and related items               33,649         26,969
    Deferred revenue                                      4,443          4,335
    Accrued income taxes                                  2,628          1,774
    Other current liabilities                            13,960         11,240
                                                      ---------      ---------
  Current liabilities before ENS client deposits         65,176         49,967
    Electronic Network Services client deposits       1,150,484        896,080
                                                      ---------      ---------
  Total current liabilities                           1,215,660        946,047
    Other long-term liabilities                           4,520          3,734
                                                      ---------      ---------
  Total liabilities                                   1,220,180        949,781
  
  STOCKHOLDERS' EQUITY
  Common stock, $.01 par value,
    authorized 300,000 shares
    Issued: 163,188/1998 and 108,519/1997                 1,632          1,085
  Additional paid-in capital                             46,463         37,531
  Retained earnings                                     278,107        212,387
  Accumulated other comprehensive income                  3,405            539
                                                      ---------      ---------
  Total stockholders' equity                            329,607        251,542
                                                      ---------      ---------
  Total liabilities and stockholders' equity         $1,549,787     $1,201,323
                                                      =========      =========
  Note:  Accumulated other comprehensive income is related to the Company's
  early adoption of Statement of Financial Accounting Standards No. 130,
  "Reporting Comprehensive Income."  The adoption of the Statement did not have
  an effect on the Company's results of operations or financial position.
  <PAGE>
                                  PAYCHEX, INC.
                          BUSINESS SEGMENT INFORMATION
                                 (In thousands)
  
  The Company has two business segments: Payroll and Human Resource
  Services-Professional Employer Organization (HRS-PEO).  The Payroll segment is
  engaged in the preparation of payroll checks, internal accounting records, all
  federal, state and local payroll tax returns, and collection and remittance of
  payroll obligations for small- to medium-sized businesses. The HRS-PEO segment
  specializes in providing small- and medium-sized businesses with
  cost-effective outsourcing solutions for their employee benefits.  HRS-PEO
  products include 401(k) plan recordkeeping services, group benefits and
  workers' compensation insurance services, section 125 plans, employee
  handbooks and management services.  As an outsourcing solution, HRS-PEO
  relieves the business owner of human resource administration, employment
  regulatory compliance, workers' compensation coverage, health care and other
  employee related responsibilities.  Consistent with PEO industry practice,
  HRS-PEO revenue includes all amounts billed to clients for the services
  provided.  Corporate expenses are primarily related to the Information
  Technology, Organizational Development, Finance and Senior Management
  functions of the Company.
                                               For the                   For the
                                    three months ended       twelve months ended
                                    May 31,     May 31,       May 31,     May 31,
                                      1998        1997          1998        1997
  Total revenue:
    Payroll                       $119,595    $ 98,910      $455,227    $368,855
    HRS-PEO revenue:
      Service revenue               12,116       7,930        38,477      30,878
      PEO direct costs billed (A)  136,575      96,756       499,741     334,966
                                   -------     -------       -------     -------
    Total HRS-PEO revenue          148,691     104,686       538,218     365,844
                                   -------     -------       -------     -------
    Total revenue                  268,286     203,596       993,445     734,699
  PEO direct costs (A)             136,575      96,756       499,741     334,966
                                   -------     -------       -------     -------
  Total revenue less
    PEO direct costs               131,711     106,840       493,704     399,733
                                   =======     =======       =======     =======
  Operating income:
    Payroll                         46,707      36,228       180,265     135,364
    HRS-PEO                          3,948         480         6,642       5,596
                                   -------     -------       -------     -------
    Total operating income          50,655      36,708       186,907     140,960
  
  Corporate expenses                13,736      10,551        52,207      44,335
  Investment income                  2,645       2,037         9,473       7,031
                                   -------     -------       -------     -------
  Income before income taxes      $ 39,564    $ 28,194      $144,173    $103,656
                                   =======     =======       =======     =======
  (A)     Wages and payroll taxes of PEO worksite employees and their related
  benefit premiums and claims.
  <PAGE>
  <PAGE>
              "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES
                          LITIGATION REFORM ACT OF 1995
  Certain written and oral statements made by the Company's management may
  constitute "forward-looking statements" as defined in the Private Securities
  Litigation Reform Act of 1995.  Forward-looking statements are identified by
  such words and phrases as "expects" and "could be."  Because they are
  forward-looking, they should be evaluated in light of important risk factors.
  These risk factors include general market conditions, including demand for the
  Company's products and services, competition and price levels; changes in the
  laws regulating collection and payment of payroll taxes, professional employer
  organizations, and employee benefits, including 401(k) plans, workers'
  compensation, and section 125 plans; delays in the development and marketing
  of new products and services; the possibility of catastrophic events that
  could impact the Company's operating facilities, computer technology and
  communication systems, including Year 2000 issues; and changes in short- and
  long-term interest rates and the credit rating of securities held in the
  Company's investment portfolios.
  <PAGE>
  <PAGE>
  EXHIBIT B
                PAYCHEX, INC. RESTATED QUARTERLY SEGMENT RESULTS
                   IN ACCORDANCE WITH ADOPTION OF SFAS No. 131
  
  During the fourth quarter of fiscal year 1998, Paychex, Inc., adopted
  Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosures about
  Segments of an Enterprise and Related Information".  The Statement requires
  the Company to report segment financial information consistent with the
  presentation made to the Company's management for decision-making purposes.
  Previously reported prior quarter and year segment disclosures have been
  restated to be consistent with the fourth quarter and year ended May 31, 1998.
  Adoption of SFAS No. 131 required the Company's Corporate expenses to be
  displayed separately.  Previous segment disclosure requirements required
  Corporate expenses to be allocated to the reported segments.
  
  Segment information reflecting the adoption of SFAS No. 131 for the four
  quarters and years ended May 31, 1998 and 1997, is as follows.
  
  The Company has two business segments: Payroll and Human Resource
  Services-Professional Employer Organization (HRS-PEO).  The Payroll segment is
  engaged in the preparation of payroll checks, internal accounting records, all
  federal, state and local payroll tax returns, and collection and remittance of
  payroll obligations for small- to medium-sized businesses. The HRS-PEO segment
  specializes in providing small- and medium-sized businesses with
  cost-effective outsourcing solutions for their employee benefits.  HRS-PEO
  products include 401(k) plan recordkeeping services, group benefits and
  workers' compensation insurance services, section 125 plans, employee
  handbooks and management services.  As an outsourcing solution, HRS-PEO
  relieves the business owner of human resource administration, employment
  regulatory compliance, workers' compensation coverage, health care and other
  employee related responsibilities.  Consistent with PEO industry practice,
  HRS-PEO revenue includes all amounts billed to clients for the services
  provided.  Corporate expenses are primarily related to the Information
  Technology, Organizational Development, Finance and Senior Management
  functions of the Company.
  <PAGE>
  <PAGE>
                                  PAYCHEX, INC.
                          BUSINESS SEGMENT INFORMATION
                      RESTATED FOR ADOPTION OF SFAS No. 131
                                 (In thousands)
  
  Year ended May 31, 1998                                                For the
                                                                          twelve
                                                                          months
                      /----------For the three months ended-----------/    ended
                      August 31,  November 30,  February 28,    May 31,   May 31,
                           1997          1997          1998       1998      1998
  Total revenue:
    Payroll            $104,865      $108,528      $122,239   $119,595  $455,227
    HRS-PEO revenue:
      Service revenue     8,082         8,645         9,634     12,116    38,477
      PEO direct costs
        billed (A)      105,636       118,048       139,482    136,575   499,741
                        -------       -------       -------    -------   -------
    Total HRS-PEO
      revenue           113,718       126,693       149,116    148,691   538,218
                        -------       -------       -------    -------   -------
    Total revenue       218,583       235,221       271,355    268,286   993,445
  PEO direct costs (A)  105,636       118,048       139,482    136,575   499,741
                        -------       -------       -------    -------   -------
  Total revenue less
    PEO direct costs    112,947       117,173       131,873    131,711   493,704
                        =======       =======       =======    =======   =======
  Operating income:
    Payroll              41,234        44,230        48,094     46,707   180,265
    HRS-PEO               1,204           994           496      3,948     6,642
                        -------       -------       -------    -------   -------
    Total operating
      income             42,438        45,224        48,590     50,655   186,907
  
  Corporate expenses     12,081        12,652        13,738     13,736    52,207
  Investment income       2,188         2,291         2,349      2,645     9,473
                        -------       -------       -------    -------   -------
  Income before
    income taxes       $ 32,545      $ 34,863      $ 37,201   $ 39,564  $144,173
                        =======       =======       =======    =======   =======
  (A)  Wages and payroll taxes of PEO worksite employees and their related
  benefit premiums and claims.
  
  <PAGE>
  <PAGE>
                                  PAYCHEX, INC.
                          BUSINESS SEGMENT INFORMATION
                      RESTATED FOR ADOPTION OF SFAS No. 131
                                 (In thousands)
  Year ended May 31, 1998                                                For the
                                                                          twelve
                                                                          months
                      /----------For the three months ended-----------/    ended
                      August 31,  November 30,  February 28,    May 31,   May 31,
                           1996          1996          1997       1997      1997
  Total revenue:
    Payroll            $ 84,307      $ 87,704      $ 97,934   $ 98,910  $368,855
    HRS-PEO revenue:
      Service revenue     6,966         7,562         8,420      7,930    30,878
      PEO direct costs
        billed (A)       74,769        74,233        89,208     96,756   334,966
                        -------       -------       -------    -------   -------
    Total HRS-PEO
      revenue            81,735        81,795        97,628    104,686   365,844
                        -------       -------       -------    -------   -------
    Total revenue       166,042       169,499       195,562    203,596   734,699
  PEO direct costs (A)   74,769        74,233        89,208     96,756   334,966
  Total revenue less
    PEO direct costs     91,273        95,266       106,354    106,840   399,733
                        =======       =======       =======    =======   =======
  Operating income:
    Payroll              31,301        32,583        35,252     36,228   135,364
    HRS-PEO               1,539         2,356         1,221        480     5,596
                        -------       -------       -------    -------   -------
    Total operating
      income             32,840        34,939        36,473     36,708   140,960
  
  Corporate expenses     10,743        11,590        11,451     10,551    44,335
  Investment income       1,485         1,745         1,764      2,037     7,031
                        -------       -------       -------    -------   -------
  Income before
    income taxes       $ 23,582      $ 25,094      $ 26,786   $ 28,194  $103,656
                        =======       =======       =======    =======   =======
  
  (A)  Wages and payroll taxes of PEO worksite employees and their related
  benefit premiums and claims.
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text: SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
  
                                    FORM 8-K
  
                                 CURRENT REPORT
                       PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
  
                         Date of Report:  June 30, 1998
                        (Date of earliest event reported)
  
                                  PAYCHEX, INC.
        (Exact name of registrant as specified in its charter)
  
  DELAWARE                       0-11330                   16-1124166
  (State of incorporation)     (Commission               (IRS Employer
                               File Number)           Identification Number)
  
  911 PANORAMA TRAIL SOUTH, ROCHESTER, NEW YORK            14625-0397
  (Address of principal executive offices)                 (Zip Code)
  
                                  (716)385-6666
              (Registrant's telephone number, including area code)
  ITEM 5.  OTHER EVENTS
  The registrant's press release dated June 30, 1998, regarding its financial
  results for the fiscal year ended May 31, 1998, is attached as EXHIBIT A.
  
  The registrant also includes the restated segment information reflecting the
  adoption of Statement of Financial Accounting Standards No. 131, "Disclosures
  about Segments of an Enterprise and Related Information" for the four quarters
  and years ended May 31, 1998 and 1997.  The release with the restated
  information is attached as EXHIBIT B.
  
                                   SIGNATURES
  
  Pursuant to the requirements of the Securities Exchange Act of 1934, the
  registrant has duly caused this report to be signed on its behalf by the
  undersigned thereunto duly authorized.
  
                                          PAYCHEX, INC.
  
  Date:     June 30, 1998                 /s/ B. Thomas Golisano
                                          -----------------------
                                          B. Thomas Golisano
                                          Chairman, President and
                                          Chief Executive Officer
  
  Date:     June 30, 1998                 /s/ John M. Morphy
                                          -----------------------
                                          John M. Morphy
                                          Vice President, Chief
                                          Financial Officer and
                                          Secretary
  EXHIBIT A
  
  FOR IMMEDIATE RELEASE
  
  John M. Morphy, Chief Financial Officer
  Paychex, Inc.           716-383-3406
  	        or
  Jan Shuler              716-383-3406
  Paychex, Inc.
  Access Paychex, Inc. News Releases on the WORLD WIDE WEB
  http://www.paychex.com   or   http://www.prnewswire.com
  
                          PAYCHEX, INC. REPORTS RECORD
                       YEAR END AND FOURTH QUARTER RESULTS
  
  ROCHESTER, NY, June 30, 1998 -- Paychex, Inc. (NASDAQ: PAYX) today announced
  record net income of $102.2 million or $.62 diluted earnings per share for the
  year ended May 31, 1998, a 36% increase over net income of $75.2 million or
  $.46 diluted earnings per share for the same period last year.  Total service
  revenues were $493.7 million, an increase of 24% over $399.7 million for the
  previous fiscal year.
  
  For the quarter ended May 31, 1998, net income increased 35% to $28.1 million
  or $.17 diluted earnings per share as compared to net income of $20.7 million
  or $.13 diluted earnings per share for the same period last year.  Total
  service revenues were $131.7 million, an increase of 23% over $106.8 million
  for the same period last year.
  
  Effective May 31, 1998, Paychex, Inc., adopted Statement of Financial
  Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
  Related Information". The Statement requires the Company to report segment
  financial information consistent with the presentation made to the Company's
  management for decision-making purposes.  Prior quarter and year segment
  disclosures have been restated to be consistent with the fourth quarter and
  year ended May 31, 1998.
  
  PAYROLL SEGMENT
  For the year ended May 31, 1998, operating income from payroll services
  increased 33% to $180.3 million from $135.4 million for the same period last
  year.  Payroll service revenue was $455.2  million, an increase of 23% over
  $368.9 million for the same period last year.
  
  For the quarter ended May 31, 1998, operating income from payroll services
  increased 29% to $46.7 million from $36.2 million for the fourth quarter last
  year.  Payroll service revenue was $119.6 million, an increase of 21% over
  $98.9 million for the fourth quarter last year.
  
  The increases in revenues and operating income were the result of a 12% year
  over year increase in the Company's payroll client base and continued growth
  of the Taxpay and Direct Deposit products.  Paychex currently services
  293,600 payroll clients, with 220,700 utilizing Taxpay, the Company's tax
  filing and payment feature, 104,400 taking advantage of the Company's Direct
  Deposit product and 33,500 using the Company's Check Signing option.
  HRS-PEO SEGMENT
  For the year ended May 31, 1998, operating income for the segment increased
  from $5.6 million to $6.6 million.  HRS-PEO service revenue rose to $38.5
  million, an increase of 25% over $30.9 million for the same period last year.
  
  For the quarter ended May 31, 1998, operating income for the HRS-PEO segment
  increased from $.5 million to $3.9 million.  HRS-PEO service revenue rose to
  $12.1 million, an increase of 53% over $7.9 million for the fourth quarter
  last year.
  
  The increased revenue for the year and the quarter is directly related to the
  continued growth of the segment's client bases.  As of May 31, 1998, the
  segment had 6,000 401(k) recordkeeping clients, 16,400 section 125 clients,
  and 19,200 PEO worksite employees, which represent an increase of 100%, 24%,
  and 39%, respectively, over the same period last year.  The segment's increase
  in operating income for the quarter ended May 31, 1998, is due to increased
  revenue and the benefits of consolidating the PEO administrative functions in
  Rochester, NY. This consolidation was completed at the end of February, 1998.
  
  CORPORATE EXPENSES
  Corporate expenses include the Information Technology, Organizational
  Development, Finance and Senior Management functions of the Company.  For the
  year ended May 31, 1998, operating expenses increased 18% from $44.3 million
  to $52.2 million.  For the quarter ended May 31, 1998, operating expenses
  increased 30% from $10.6 million to $13.7 million.  The year's increase in
  expenses is primarily due to additional employees necessary to support the
  growth of the Company's business segments. The fourth quarter increase relates
  to additional personnel and increased national marketing efforts, which were
  commenced in the third quarter of 1998.
  
  B. Thomas Golisano, Chairman, President, and Chief Executive Officer of
  Paychex said,  "We are pleased with our excellent financial results for both
  the year and fourth quarter of fiscal 1998. These results reflect our seventh
  consecutive year of net income growth of 36% or more. Outstanding new payroll
  client growth was accompanied by increased utilization of Taxpay, Direct
  Deposit and other ancillary products.  We see growing acceptance of our
  HRS-PEO products and, as evidenced by our fourth quarter results, anticipate
  excellent opportunities from this combination of resources and client
  experience.  We look forward to continued success as we expand our client base
  in the Payroll and HRS-PEO divisions."
  PAYCHEX, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                    (In thousands, except per share amounts)
  
                                             For the                     For the
                                  three months ended         twelve months ended
                                May 31,       May 31,       May 31,       May 31,
                                  1998          1997          1998          1997
  Service revenues:
    Payroll                   $119,595      $ 98,910      $455,227      $368,855
    HRS-PEO                     12,116         7,930        38,477        30,878
                               -------       -------       -------       -------
  Total service revenues       131,711       106,840       493,704       399,733
  PEO direct costs billed (A)  136,575        96,756       499,741       334,966
                               -------       -------       -------       -------
  Total revenue                268,286       203,596       993,445       734,699
  
  PEO direct costs (A)         136,575        96,756       499,741       334,966
  Operating costs               34,187        30,178       131,731       115,034
  Selling, general and
    administrative expenses     60,605        50,505       227,273       188,074
                               -------       -------       -------       -------
  Operating income              36,919        26,157       134,700        96,625
  Investment income              2,645         2,037         9,473         7,031
                               -------       -------       -------       -------
  Income before income taxes    39,564        28,194       144,173       103,656
  Income taxes                  11,513         7,471        41,954        28,506
                                ------       -------       -------       -------
  Net income                  $ 28,051      $ 20,723      $102,219      $ 75,150
                               =======       =======       =======       =======
  Basic earnings per share (B)$    .17      $    .13      $    .63      $    .46
                               =======       =======       =======       =======
  Diluted earnings
    per share (B)             $    .17      $    .13      $    .62      $    .46
                               =======       =======       =======       =======
  Weighted-average common
    shares outstanding (B)     163,162       162,730       163,009       162,002
                               =======       =======       =======       =======
  Weighted-average shares
    assuming dilution (B)      165,326       164,275       164,813       163,757
                               =======       =======       =======       =======
  Cash dividends per share (B)$    .06      $    .04      $    .22      $    .15
                               =======       =======       =======       =======
  
  (A)  Wages and payroll taxes of PEO worksite employees and their related
  benefit premiums and claims.
  (B)  Financial information for the periods ended May 31, 1997, have been
  adjusted for a three-for-two stock split distributed in May 1998.
  PAYCHEX, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
  
  May 31,                                                  1998           1997
  ASSETS
  Current assets:
    Cash and cash equivalents                        $   35,571     $   50,213
    Investments                                         214,967        132,780
    Interest receivable                                  13,227         10,462
    Accounts receivable                                  54,596         45,527
    Deferred income taxes                                 1,525          2,560
    Prepaid expenses and other current assets             4,391          2,486
                                                      ---------      ---------
  Current assets before ENS investments                 324,277        244,028
    Electronic Network Services investments           1,154,501        896,633
                                                      ---------      ---------
  Total current assets                                1,478,778      1,140,661
  Property and equipment - net                           64,698         54,178
  Deferred income taxes                                     517             72
  Other assets                                            5,794          6,412
                                                      ---------      ---------
  Total assets                                       $1,549,787     $1,201,323
                                                      =========      =========
  LIABILITIES
  Current liabilities:
    Accounts payable                                 $   10,496     $    5,649
    Accrued compensation and related items               33,649         26,969
    Deferred revenue                                      4,443          4,335
    Accrued income taxes                                  2,628          1,774
    Other current liabilities                            13,960         11,240
                                                      ---------      ---------
  Current liabilities before ENS client deposits         65,176         49,967
    Electronic Network Services client deposits       1,150,484        896,080
                                                      ---------      ---------
  Total current liabilities                           1,215,660        946,047
    Other long-term liabilities                           4,520          3,734
                                                      ---------      ---------
  Total liabilities                                   1,220,180        949,781
  
  STOCKHOLDERS' EQUITY
  Common stock, $.01 par value,
    authorized 300,000 shares
    Issued: 163,188/1998 and 108,519/1997                 1,632          1,085
  Additional paid-in capital                             46,463         37,531
  Retained earnings                                     278,107        212,387
  Accumulated other comprehensive income                  3,405            539
                                                      ---------      ---------
  Total stockholders' equity                            329,607        251,542
                                                      ---------      ---------
  Total liabilities and stockholders' equity         $1,549,787     $1,201,323
                                                      =========      =========
  Note:  Accumulated other comprehensive income is related to the Company's
  early adoption of Statement of Financial Accounting Standards No. 130,
  "Reporting Comprehensive Income."  The adoption of the Statement did not have
  an effect on the Company's results of operations or financial position.
  PAYCHEX, INC.
                          BUSINESS SEGMENT INFORMATION
                                 (In thousands)
  
  The Company has two business segments: Payroll and Human Resource
  Services-Professional Employer Organization (HRS-PEO).  The Payroll segment is
  engaged in the preparation of payroll checks, internal accounting records, all
  federal, state and local payroll tax returns, and collection and remittance of
  payroll obligations for small- to medium-sized businesses. The HRS-PEO segment
  specializes in providing small- and medium-sized businesses with
  cost-effective outsourcing solutions for their employee benefits.  HRS-PEO
  products include 401(k) plan recordkeeping services, group benefits and
  workers' compensation insurance services, section 125 plans, employee
  handbooks and management services.  As an outsourcing solution, HRS-PEO
  relieves the business owner of human resource administration, employment
  regulatory compliance, workers' compensation coverage, health care and other
  employee related responsibilities.  Consistent with PEO industry practice,
  HRS-PEO revenue includes all amounts billed to clients for the services
  provided.  Corporate expenses are primarily related to the Information
  Technology, Organizational Development, Finance and Senior Management
  functions of the Company.
                                               For the                   For the
                                    three months ended       twelve months ended
                                    May 31,     May 31,       May 31,     May 31,
                                      1998        1997          1998        1997
  Total revenue:
    Payroll                       $119,595    $ 98,910      $455,227    $368,855
    HRS-PEO revenue:
      Service revenue               12,116       7,930        38,477      30,878
      PEO direct costs billed (A)  136,575      96,756       499,741     334,966
                                   -------     -------       -------     -------
    Total HRS-PEO revenue          148,691     104,686       538,218     365,844
                                   -------     -------       -------     -------
    Total revenue                  268,286     203,596       993,445     734,699
  PEO direct costs (A)             136,575      96,756       499,741     334,966
                                   -------     -------       -------     -------
  Total revenue less
    PEO direct costs               131,711     106,840       493,704     399,733
                                   =======     =======       =======     =======
  Operating income:
    Payroll                         46,707      36,228       180,265     135,364
    HRS-PEO                          3,948         480         6,642       5,596
                                   -------     -------       -------     -------
    Total operating income          50,655      36,708       186,907     140,960
  
  Corporate expenses                13,736      10,551        52,207      44,335
  Investment income                  2,645       2,037         9,473       7,031
                                   -------     -------       -------     -------
  Income before income taxes      $ 39,564    $ 28,194      $144,173    $103,656
                                   =======     =======       =======     =======
  (A)     Wages and payroll taxes of PEO worksite employees and their related
  benefit premiums and claims.
  "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES
                          LITIGATION REFORM ACT OF 1995
  Certain written and oral statements made by the Company's management may
  constitute "forward-looking statements" as defined in the Private Securities
  Litigation Reform Act of 1995.  Forward-looking statements are identified by
  such words and phrases as "expects" and "could be."  Because they are
  forward-looking, they should be evaluated in light of important risk factors.
  These risk factors include general market conditions, including demand for the
  Company's products and services, competition and price levels; changes in the
  laws regulating collection and payment of payroll taxes, professional employer
  organizations, and employee benefits, including 401(k) plans, workers'
  compensation, and section 125 plans; delays in the development and marketing
  of new products and services; the possibility of catastrophic events that
  could impact the Company's operating facilities, computer technology and
  communication systems, including Year 2000 issues; and changes in short- and
  long-term interest rates and the credit rating of securities held in the
  Company's investment portfolios.
  EXHIBIT B
                PAYCHEX, INC. RESTATED QUARTERLY SEGMENT RESULTS
                   IN ACCORDANCE WITH ADOPTION OF SFAS No. 131
  
  During the fourth quarter of fiscal year 1998, Paychex, Inc., adopted
  Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosures about
  Segments of an Enterprise and Related Information".  The Statement requires
  the Company to report segment financial information consistent with the
  presentation made to the Company's management for decision-making purposes.
  Previously reported prior quarter and year segment disclosures have been
  restated to be consistent with the fourth quarter and year ended May 31, 1998.
  Adoption of SFAS No. 131 required the Company's Corporate expenses to be
  displayed separately.  Previous segment disclosure requirements required
  Corporate expenses to be allocated to the reported segments.
  
  Segment information reflecting the adoption of SFAS No. 131 for the four
  quarters and years ended May 31, 1998 and 1997, is as follows.
  
  The Company has two business segments: Payroll and Human Resource
  Services-Professional Employer Organization (HRS-PEO).  The Payroll segment is
  engaged in the preparation of payroll checks, internal accounting records, all
  federal, state and local payroll tax returns, and collection and remittance of
  payroll obligations for small- to medium-sized businesses. The HRS-PEO segment
  specializes in providing small- and medium-sized businesses with
  cost-effective outsourcing solutions for their employee benefits.  HRS-PEO
  products include 401(k) plan recordkeeping services, group benefits and
  workers' compensation insurance services, section 125 plans, employee
  handbooks and management services.  As an outsourcing solution, HRS-PEO
  relieves the business owner of human resource administration, employment
  regulatory compliance, workers' compensation coverage, health care and other
  employee related responsibilities.  Consistent with PEO industry practice,
  HRS-PEO revenue includes all amounts billed to clients for the services
  provided.  Corporate expenses are primarily related to the Information
  Technology, Organizational Development, Finance and Senior Management
  functions of the Company.
  PAYCHEX, INC.
                          BUSINESS SEGMENT INFORMATION
                      RESTATED FOR ADOPTION OF SFAS No. 131
                                 (In thousands)
  
  Year ended May 31, 1998                                                For the
                                                                          twelve
                                                                          months
                      /----------For the three months ended-----------/    ended
                      August 31,  November 30,  February 28,    May 31,   May 31,
                           1997          1997          1998       1998      1998
  Total revenue:
    Payroll            $104,865      $108,528      $122,239   $119,595  $455,227
    HRS-PEO revenue:
      Service revenue     8,082         8,645         9,634     12,116    38,477
      PEO direct costs
        billed (A)      105,636       118,048       139,482    136,575   499,741
                        -------       -------       -------    -------   -------
    Total HRS-PEO
      revenue           113,718       126,693       149,116    148,691   538,218
                        -------       -------       -------    -------   -------
    Total revenue       218,583       235,221       271,355    268,286   993,445
  PEO direct costs (A)  105,636       118,048       139,482    136,575   499,741
                        -------       -------       -------    -------   -------
  Total revenue less
    PEO direct costs    112,947       117,173       131,873    131,711   493,704
                        =======       =======       =======    =======   =======
  Operating income:
    Payroll              41,234        44,230        48,094     46,707   180,265
    HRS-PEO               1,204           994           496      3,948     6,642
                        -------       -------       -------    -------   -------
    Total operating
      income             42,438        45,224        48,590     50,655   186,907
  
  Corporate expenses     12,081        12,652        13,738     13,736    52,207
  Investment income       2,188         2,291         2,349      2,645     9,473
                        -------       -------       -------    -------   -------
  Income before
    income taxes       $ 32,545      $ 34,863      $ 37,201   $ 39,564  $144,173
                        =======       =======       =======    =======   =======
  (A)  Wages and payroll taxes of PEO worksite employees and their related
  benefit premiums and claims.
  PAYCHEX, INC.
                          BUSINESS SEGMENT INFORMATION
                      RESTATED FOR ADOPTION OF SFAS No. 131
                                 (In thousands)
  Year ended May 31, 1998                                                For the
                                                                          twelve
                                                                          months
                      /----------For the three months ended-----------/    ended
                      August 31,  November 30,  February 28,    May 31,   May 31,
                           1996          1996          1997       1997      1997
  Total revenue:
    Payroll            $ 84,307      $ 87,704      $ 97,934   $ 98,910  $368,855
    HRS-PEO revenue:
      Service revenue     6,966         7,562         8,420      7,930    30,878
      PEO direct costs
        billed (A)       74,769        74,233        89,208     96,756   334,966
                        -------       -------       -------    -------   -------
    Total HRS-PEO
      revenue            81,735        81,795        97,628    104,686   365,844
                        -------       -------       -------    -------   -------
    Total revenue       166,042       169,499       195,562    203,596   734,699
  PEO direct costs (A)   74,769        74,233        89,208     96,756   334,966
  Total revenue less
    PEO direct costs     91,273        95,266       106,354    106,840   399,733
                        =======       =======       =======    =======   =======
  Operating income:
    Payroll              31,301        32,583        35,252     36,228   135,364
    HRS-PEO               1,539         2,356         1,221        480     5,596
                        -------       -------       -------    -------   -------
    Total operating
      income             32,840        34,939        36,473     36,708   140,960
  
  Corporate expenses     10,743        11,590        11,451     10,551    44,335
  Investment income       1,485         1,745         1,764      2,037     7,031
                        -------       -------       -------    -------   -------
  Income before
    income taxes       $ 23,582      $ 25,094      $ 26,786   $ 28,194  $103,656
                        =======       =======       =======    =======   =======
  
  (A)  Wages and payroll taxes of PEO worksite employees and their related
  benefit premiums and claims.