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 26, 2000
                        (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 26, 2000, which reports its
  financial results for the fiscal year ended May 31, 2000, is attached.  In
  addition, this report includes Management's Discussion and Analysis of
  Financial Condition and Results of Operations for the three years ended May
  31, 2000, 1999 and 1998, and its financial condition at May 31, 2000.
  
  This review is not a complete and comprehensive discussion and analysis as
  required by the Securities and Exchange Commission for Annual Reports filed on
  Form 10-K or quarterly reports filed on Form 10-Q. The 2000 Form 10-K and the
  Annual Report to Shareholders is expected to be mailed in August 2000, and
  will contain a complete set of audited Consolidated Financial Statements,
  Notes to Consolidated Financial Statements, and an updated Management's
  Discussion and Analysis of Financial Condition and Results of Operations for
  the years ended May 31, 2000, 1999 and 1998, and its financial condition at
  May 31, 2000.
  
  All information included in this Form 8-K is qualified by the cautionary
  statement in Exhibit 99.
  
  
                                   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 26, 2000                 /s/ B. Thomas Golisano
                                          -----------------------
                                          B. Thomas Golisano
                                          Chairman, President and
                                          Chief Executive Officer
  
  Date:     June 26, 2000                 /s/ John M. Morphy
                                          -----------------------
                                          John M. Morphy
                                          Vice President, Chief
                                          Financial Officer and
                                          Secretary
  
  FOR IMMEDIATE RELEASE
  	John M. Morphy, Chief Financial Officer
  	        Or
  	Jan Shuler		716-383-3406
       Access Paychex, Inc. News Releases, current financial information and
       related SEC filings at http://www.paychex.com/paychex/finance/finance.html
  
                     PAYCHEX, INC. REPORTS RECORD YEAR-END AND
                              FOURTH QUARTER RESULTS
  
  ROCHESTER, NY, June 26, 2000 -- Paychex, Inc. (NASDAQ: PAYX) today announced
  record net income of $190.0 million or $.51 diluted earnings per share for the
  fiscal year ended May 31, 2000, a 37% increase over net income of $139.1
  million or $.37 diluted earnings per share for the prior fiscal year.  Total
  service revenues were $728.1 million, an increase of 22% over $597.3 million
  for the previous year.
  
  For the fourth quarter ended May 31, 2000, net income increased 36% to $51.6
  million or $.14 diluted earnings per share as compared with net income of $37.9
  million or $.10 diluted earnings per share for the same period last year.
  Total service revenues were $197.2 million, an increase of 26% over $156.6
  million for the prior year fourth quarter.
  
  PAYROLL SEGMENT
  
  For the year ended May 31, 2000, operating income for the Payroll segment
  increased 28% to $303.4 million from $237.2 million for the prior fiscal year.
  Payroll service revenue was $653.2 million, an increase of 20% over $545.2
  million for the prior year.
  
  For the fourth quarter ended May 31, 2000, operating income from Payroll
  services increased 25% to $80.9 million from $64.5 million for the same period
  last year.  Payroll service revenue was $175.6 million, an increase of 24% over
  $142.0 million for the prior year quarter.
  
  The increases in service revenue and operating income were primarily the result
  of continued growth in the Payroll client base, utilization of ancillary
  services and leveraging of operating expenses. In addition, fourth quarter
  payroll revenue growth benefited from higher interest rates and the timing of
  billing days during the quarter.
  
  Paychex currently services 351,900 Payroll clients, a 9.1% increase over last
  year.  Our Major Market Services client base increased 40% to over 6,000
  clients.  As of the end of the fiscal year, 285,900 clients were using the
  Taxpay(Registered Trademark) product, the Company's tax filing and payment
  feature, and 165,700 clients were taking advantage of the Company's Employee
  Pay Services, which include Direct Deposit, ReadychexSM and Access Card
  products.
  
  HRS-PEO SEGMENT
  
  For the year ended May 31, 2000, operating income for the HRS-PEO segment
  increased 111% from $11.1 million to $23.4 million.  HRS-PEO service revenue
  was $74.9 million, an increase of 44% over $52.0 million for the prior fiscal
  year.
  
  For the fourth quarter ended May 31, 2000, operating income for the HRS-PEO
  segment increased 67% from $3.8 million to $6.3 million.  HRS-PEO service
  revenue was $21.6 million, an increase of 47% over $14.7 million for the fourth
  quarter last year.
  
  The increases in service revenue and operating income are primarily related to
  increasing 401(k) Recordkeeping, Workers' Compensation Insurance and Section
  125 clients.  As of May 31, 2000, the segment serviced 14,700 401(k)
  Recordkeeping clients, 10,400 Workers' Compensation Insurance clients, and
  23,900 Section 125 Administration Plans.
  
  CORPORATE EXPENSES
  
  Corporate expenses are primarily related to the Information Technology,
  Organizational Development, Finance, Marketing and Senior Management functions
  of the Company.  For the year ended May 31, 2000, Corporate expenses increased
  12% from $60.7 million to $67.9 million.  For the quarter ended May 31, 2000,
  Corporate expenses increased 10% from $15.9 million to $17.5 million.  The
  increases are primarily due to additional employees and other expenditures to
  support the continued growth of the Company.
  
  INVESTMENT INCOME
  
  Investment income for fiscal year 2000 increased 31% to $16.5 million from
  $12.6 million in the prior year.  For the fourth quarter, investment income was
  $4.9 million, an increase of 39% over $3.5 million for the fourth quarter of
  fiscal 1999.  The increases in investment income are due to higher average
  rates of return and higher cash flows from operations invested during the
  period.
  
  B. Thomas Golisano, Chairman, President and Chief Executive Officer of Paychex
  said, "We are pleased to complete another successful year. Fiscal 2000 was our
  tenth  consecutive year of record service revenues and net income, and our
  ninth consecutive year of net income growth in excess of 36%.  We look forward
  to Fiscal 2001 as we continue our growth in payroll and human resource
  outsourcing, expand Major Market Services and increase utilization of our
  ancillary products such as Employee Pay Services, 401(K) Recordkeeping and
  Workers' Compensation Insurance. At the same time we are excited to be
  introducing numerous internet based product enhancements which will be utilized
  by both CPAs and our clients."
  
  
  <TABLE>
                                   PAYCHEX, INC.
                         CONSOLIDATED STATEMENTS OF INCOME
                     (In thousands, except per share amounts)
  <CAPTION>
                         For the three months ended    For the twelve months ended
                               May 31,       May 31,         May 31,       May 31,
                                 2000          1999            2000          1999
  <S>                        <C>           <C>             <C>           <C>
  Service revenues:
    Payroll                  $175,606      $141,975        $653,245      $545,249
    HRS-PEO (A)                21,580        14,661          74,874        52,047
                             --------      --------        --------      --------
    Total service revenues    197,186       156,636         728,119       597,296
  
  Operating costs              46,795        38,219         173,481       151,956
  Selling, general and
    administrative
    expenses                   80,593        65,987         295,745       257,778
                             --------      --------        --------      --------
  Operating income             69,798        52,430         258,893       187,562
  
  Investment income             4,925         3,541          16,479        12,581
                             --------      --------        --------      --------
  Income before income
    taxes                      74,723        55,971         275,372       200,143
  
  Income taxes                 23,164        18,081          85,365        61,044
                             --------      --------        --------      --------
  Net income                 $ 51,559      $ 37,890        $190,007      $139,099
                             ========      ========        ========      ========
  
  Basic earnings
    per share (B)            $    .14      $    .10        $    .51      $    .38
                             ========      ========        ========      ========
  Diluted earnings
    per share (B)            $    .14      $    .10        $    .51      $    .37
                             ========      ========        ========      ========
  Weighted-average
    common shares
    outstanding (B)           371,576       369,229         370,603       368,282
                             ========      ========        ========      ========
  Weighted-average
    shares assuming
    dilution (B)              376,407       373,654         375,081       373,182
                             ========      ========        ========      ========
  Cash dividends per
    common share (B)         $    .06      $    .04        $    .22      $    .15
                             ========      ========        ========      ========
  <FN>
  
  (A) Net of PEO direct costs billed and incurred of $216,176 and $148,309 for
  the three months ended May 31, 2000 and 1999, respectively and $731,266 and
  $578,132 for the twelve months ended May 31, 2000 and 1999, respectively.  PEO
  direct costs billed to clients are equal to PEO direct costs incurred for the
  wages and payroll taxes of worksite employees and their related benefit
  premiums and claims.
  
  (B) Financial information for the periods ended May 31, 1999 have been adjusted
  for a three-for-two stock split distributed in May 2000.
  </FN>
  </TABLE>
  
  <TABLE>
                                   PAYCHEX, INC.
                            CONSOLIDATED BALANCE SHEETS
                                  (In thousands)
  <CAPTION>
  
  May 31,                                               2000                  1999
  ASSETS
  <S>                                             <C>                   <C>
  Cash and cash equivalents                       $   47,136            $   52,692
  Investments                                        412,357               290,555
  Interest receivable                                 22,436                18,045
  Accounts receivable                                 87,608                62,941
  Deferred income taxes                                9,539                 1,364
  Prepaid expenses and other current assets            6,531                 6,000
                                                  ----------            ----------
  Current assets before ENS investments              585,607               431,597
  ENS investments                                  1,776,968             1,361,523
                                                  ----------            ----------
  Total current assets                             2,362,575             1,793,120
                                                  ----------            ----------
  Property and equipment - net                        75,375                65,931
  Goodwill and intangible assets - net                 5,584                 4,418
  Deferred income taxes                                2,494                 1,417
  Other assets                                         9,549                 8,215
                                                  ----------            ----------
  Total assets                                    $2,455,577            $1,873,101
                                                  ==========            ==========
  LIABILITIES
  
  Accounts payable                                $   17,086            $   10,328
  Accrued compensation and related items              52,631                36,574
  Deferred revenue                                     4,719                 4,643
  Accrued income taxes                                 2,969                 4,281
  Other current liabilities                           24,400                17,905
                                                  ----------            ----------
  Current liabilities before ENS client deposits     101,805                73,731
  ENS client deposits                              1,785,140             1,358,605
                                                  ----------            ----------
  Total current liabilities                        1,886,945             1,432,336
  Long-term liabilities                                5,200                 4,965
                                                  ----------            ----------
  Total liabilities                                1,892,145             1,437,301
  
  STOCKHOLDERS' EQUITY
  
  Common stock, $.01 par value,
    600,000 authorized shares
    Issued: 371,769/May 31, 2000 and
    246,326/May 31, 1999                               3,718                 2,463
  Additional paid-in capital                          98,904                68,238
  Retained earnings                                  469,385               362,269
  Accumulated other comprehensive income/(loss)       (8,575)                2,830
                                                  ----------            ----------
  Total stockholders' equity                         563,432               435,800
                                                  ----------            ----------
  Total liabilities and stockholders' equity      $2,455,577            $1,873,101
                                                  ==========            ==========
  </TABLE>
  
                                   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,
  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- to medium-sized businesses with cost-effective
  outsourcing solutions for their employee benefits.  HRS-PEO products include
  401(k) Plan Recordkeeping, Workers' Compensation Insurance, Section 125 Plan
  Administration, Paychex Administrative Services, Professional Employer
  Organization (PEO), Group Benefits, State Unemployment Insurance, and Employee
  Management services.  Corporate expenses are primarily related to the
  Information Technology, Organizational Development, Finance, Marketing and
  Senior Management functions of the Company.
  
  <TABLE>
  <CAPTION>
                          For the three months ended  For the twelve months ended
                                May 31,       May 31,       May 31,        May 31,
                                  2000          1999          2000           1999
  <S>                         <C>           <C>           <C>            <C>
  Service revenues:
    Payroll                   $175,606      $141,975      $653,245       $545,249
    HRS-PEO (A)                 21,580        14,661        74,874         52,047
                              --------      --------      --------       --------
    Total service revenues    $197,186      $156,636      $728,119       $597,296
                              ========      ========      ========       ========
  ENS investment revenue
    included in Payroll
    revenue                   $ 18,205      $ 13,800      $ 58,800       $ 52,335
                              ========      ========      ========       ========
  Operating income:
    Payroll (B)               $ 80,926      $ 64,536      $303,360       $237,236
    HRS-PEO (B)                  6,331         3,794        23,395         11,072
                              --------      --------      --------       --------
    Segment operating income    87,257        68,330       326,755        248,308
  
    Corporate expenses          17,459        15,900        67,862         60,746
                              --------      --------      --------       ---------
    Total operating income      69,798        52,430       258,893        187,562
  
  Investment income              4,925         3,541        16,479         12,581
                              --------      --------      --------       --------
  Income before income taxes  $ 74,723      $ 55,971      $275,372       $200,143
                              ========      ========      ========       ========
  <FN>
  (A) Net of PEO directs costs billed and incurred of $216,176 and $148,309 for
  the three months ended May 31, 2000 and 1999, respectively, and $731,266 and
  $578,132 for the twelve months ended May 31, 2000 and 1999, respectively.  PEO
  direct costs billed to clients are equal to PEO direct costs incurred for the
  wages and payroll taxes of worksite employees and their related benefit
  premiums and claims.
  
  (B) In 2000, the Company began allocating a portion of operating facilities
  costs from the Payroll segment to the HRS-PEO segment. Prior year's segment
  results have been restated to reflect the allocation of these facilities costs
  with no impact to total Segment operating income.  The total amounts of these
  allocations were $413,000 and $382,000 for the three months ended May 31, 2000
  and 1999, respectively, and $1,650,000 and $1,526,000 for the twelve months
  ended May 31, 2000 and 1999, respectively.
  </FN>
  </TABLE>
  
  
                       MANAGEMENT'S DISCUSSION AND ANALYSIS
                 OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
  Management's Discussion and Analysis reviews the Company's operating results
  for each of the three fiscal years in the period ended May 31, 2000 (fiscal
  2000, 1999 and 1998), and its financial condition at May 31, 2000.  The focus
  of this review is on the underlying business reasons for significant changes
  and trends affecting revenues, net income and financial condition.  This review
  provides additional analysis and disclosure than that contained in the
  Company's June 26, 2000 press release, which precedes this discussion.
  
  This review is not a complete and comprehensive discussion and analysis as
  required by the Securities and Exchange Commission for Annual Reports filed on
  Form 10-K or quarterly reports filed on Form 10-Q.  The 2000 Form 10-K and the
  Annual Report to Shareholders is expected to be mailed in August 2000, and will
  contain a complete set of audited Consolidated Financial Statements, and an
  updated Management's Discussion and Analysis of Financial Condition and Results
  of Operations for the years ended May 31, 2000, 1999 and 1998, and its
  financial condition at May 31, 2000.
  
  Forward-looking statements in this Management's Discussion and Analysis are
  qualified by the cautionary statement in Exhibit 99, contained in this Form
  8-K.
  
  <TABLE>
                               Results of Operations
  <CAPTION>
  In thousands,
    except per share amounts        2000   Change        1999   Change        1998
  <S>                           <C>         <C>      <C>         <C>      <C>
  --------------------------------------------------------------------------------
  Service revenues              $728,119    21.9%    $597,296    21.0%    $493,704
  Operating income              $258,893    38.0%    $187,562    39.2%    $134,700
  Operating margin                 35.6%                31.4%                27.3%
  Income before income taxes    $275,372    37.6%    $200,143    38.8%    $144,173
  Net income                    $190,007    36.6%    $139,099    36.1%    $102,219
  % of service revenues            26.1%                23.3%                20.7%
  Basic earnings per share      $    .51    34.2%    $    .38    35.7%    $    .28
  Diluted earnings per share    $    .51    37.8%    $    .37    37.0%    $    .28
  ================================================================================
  </TABLE>
  
  The financial results for Paychex, Inc., in 2000, reflect the tenth consecutive
  year of record service revenues and net income, and the ninth consecutive year
  of net income growth of 36% or more.  The Company's ability to continually grow
  its client base, add new services, increase client utilization of ancillary
  services, implement price increases and decrease operating expenses as a
  percent of service revenues has resulted in ten years of average compounded
  annual growth in service revenues of 20% and net income of 36%.
  
  The Company has two reportable business segments:  Payroll and Human Resource
  Services - Professional Employer Organization (HRS-PEO).
  
  <TABLE>
  <CAPTION>
                                  Payroll segment
  
  In thousands                      2000   Change        1999   Change        1998
  <S>                           <C>         <C>      <C>         <C>      <C>
  --------------------------------------------------------------------------------
  Payroll service revenue       $653,245    19.8%    $545,249    19.8%    $455,227
  ENS investment revenue
    included in Payroll
    service revenue             $ 58,800    12.4%    $ 52,335    20.5%    $ 43,429
  Payroll operating income      $303,360    27.9%    $237,236    30.6%    $181,585
  Payroll operating margin         46.4%                43.5%                39.9%
  --------------------------------------------------------------------------------
  Payroll clients                  351.9     9.1%       322.6     9.9%       293.6
  Taxpay clients                   285.9    12.4%       254.3    15.2%       220.7
  Employee Pay Services clients    165.7    22.4%       135.4    29.7%       104.4
  ================================================================================
  </TABLE>
  
  Revenues:  Payroll service revenue includes service fees and investment
  revenue.  Service fee revenue is earned primarily from Payroll, Taxpay,
  Employee Pay Services and other ancillary services.  Employee Pay Services
  include the Direct Deposit, Readychex and Access Card products.  ENS investment
  revenue is earned during the period between collecting client funds (ENS
  investments) and remitting the funds to the applicable tax authorities for
  Taxpay clients and employees of Employee Pay Services clients.  ENS investment
  revenue also includes net realized gains and losses from the sale of
  available-for-sale securities.
  
  The increases in Payroll service revenue for 2000 and 1999 are primarily
  related to the addition of new clients, new services, price increases and
  increased utilization of ancillary services, such as Taxpay and Employee Pay
  Services, by both new and existing clients.  At May 31, 2000, 81% of Payroll
  clients utilized the Taxpay service, compared with 79% at the end of 1999 and
  75% at the end of 1998.  Client utilization of this product is expected to
  mature within a range of 82% to 87%.  Client utilization of Employee Pay
  Services was 47% at May 31, 2000, versus 42% and 36% at May 31, 1999 and 1998,
  
  respectively.  At May 31, 2000, only 27% of the total employees paid by the
  Company's core payroll service utilized Employee Pay Services.  These services
  are expected to provide growth opportunities for fiscal 2001 and beyond.
  
  ENS investment revenue, which is included in Payroll service revenue, has
  increased due to more clients utilizing Taxpay and Employee Pay Services and
  higher daily client balances. The growth rate in ENS investment revenue is also
  affected by factors such as the maturing of the Taxpay product, volatile
  interest rate movements in both fiscal 2000 and 1999, and the level of realized
  gains and losses.  Average daily ENS investment portfolio balances were
  approximately $1.4 billion, $1.1 billion and $1.0 billion in fiscal 2000, 1999
  and 1998, respectively. The first half of fiscal 2000 reflected lower
  comparable rates of return while, the second half of fiscal 2000, especially
  the fourth quarter, benefited from increasing interest rates. In fiscal 2000,
  ENS investments incurred realized losses of $2.9 million compared with realized
  gains of $2.4 million and $0.8 million in fiscal 1999 and 1998, respectively.
  
  Payroll revenue growth for the fourth quarter of fiscal 2000 was 23.7% compared
  to 19.8% for the full year.  The higher than normal growth was due to higher
  interest rates and the timing of billing days in the quarter.  Fiscal 2001's
  percentage growth in Payroll revenue is expected to be towards the upper end of
  a range of 18% to 20%.
  
  Operating income: Operating income for 2000 and 1999 increased as a result of
  increased revenue and leveraging of the segment's operating expense base, as
  evidenced by the increases in the segment's operating margins year-over-year.
  
  Effective September 1, 1999, the Company increased its sales force compensation
  package to increase the retention and quality of its payroll sales
  representatives.  This compensation increase resulted in additional annualized
  pre-tax expense of approximately $6.0 million, of which $4.5 million was
  reflected in fiscal 2000. Sales related expenses were also impacted in the
  fourth quarter of fiscal 2000 as the Company accelerated the hiring and
  training of Payroll sales representatives for fiscal 2001 selling efforts.
  
  During fiscal 2000, the Company continued expansion of its Major Market
  Services payroll product offering to include forty-four of the slightly more
  than one hundred sales territories covered by its core Payroll product.  The
  Major Market Services product now services over 6,000 clients and generated
  approximately $30 million in revenue for fiscal 2000.  The Company will
  continue to expand into new cities for the next several years.
  
  <TABLE>
  <CAPTION>
                                  HRS-PEO segment
  
  In thousands                      2000   Change        1999   Change        1998
  <S>                           <C>        <C>        <C>       <C>        <C>
  --------------------------------------------------------------------------------
  HRS-PEO service revenue       $ 74,874    43.9%     $52,047    35.3%     $38,477
  HRS-PEO operating income      $ 23,395   111.3%     $11,072   108.0%     $ 5,322
  HRS-PEO operating margin         31.2%                21.3%                13.8%
  --------------------------------------------------------------------------------
  401(k) Recordkeeping
    clients                         14.7    45.5%        10.1    68.3%         6.0
  401(k) client funds managed
    externally (in millions)    $1,337.5    76.5%     $ 757.6    97.7%     $ 383.3
  Section 125 clients               23.9    18.3%        20.2    23.2%        16.4
  Workers' Compensation
    Insurance clients               10.4   160.0%         4.0   100.0%          --
  PEO worksite employees            20.2    10.4%        18.3    -4.7%        19.2
  ================================================================================
  </TABLE>
  
  Revenues:  The significant increases in service revenue for 2000 and 1999 are
  primarily related to the benefits of growing a recurring revenue stream from
  401(k) Recordkeeping clients, Workers' Compensation Insurance clients, Section
  125 clients, and the number of Professional Employer Organization (PEO)
  worksite employees.  The increase in 401(k) clients reflects the continuing
  interest of small- to medium-sized businesses to offer retirement savings
  benefits to their employees.  During the first quarter of fiscal 1999, the
  Company began a national rollout of its Workers' Compensation Insurance
  Product, which provides insurance for qualified clients through several leading
  insurance providers and a method to enhance their cash flows. The decline in
  PEO worksite employees in 1999 was caused by the loss of two large PEO clients
  which offset additions to worksite employees.  The loss of these clients did
  not have a material impact on fiscal 2000 or 1999.
  
  Operating income:  For 2000 and 1999, the increases in operating income are
  primarily related to gains in recurring service revenue and leveraging of
  operating expenses.
  
  In fiscal 2000, the Company began a nationwide expansion of Paychex
  Administrative Services (PAS), a combined payroll and human resource
  outsourcing solution designed to make it easier for small businesses to manage
  their payroll and benefit costs.   The Company also added SIMPLE IRA Plans to
  its retirement services product line and continued to expand the Workers'
  Compensation Insurance product.
  
  Full-year fiscal 2001's HRS-PEO service revenue and operating income are
  expected to grow at a rate lower than fiscal 2000's rate, but at a rate much
  higher than the Payroll segment's growth rate.  Fiscal 2001's
  quarter-over-quarter percentage comparisons in HRS-PEO service revenue and
  operating income may vary significantly throughout the year, and any one
  particular quarter's results may not be indicative of expected full-year
  results.
  
  <TABLE>
  <CAPTION>
                                Corporate expenses
  
  In thousands                      2000   Change        1999   Change        1998
  <S>                            <C>        <C>       <C>        <C>       <C>
  --------------------------------------------------------------------------------
  Corporate expenses             $67,862    11.7%     $60,746    16.4%     $52,207
  ================================================================================
  </TABLE>
  
  Corporate expenses are primarily related to the Information Technology,
  Organizational Development, Finance, Marketing and Senior Management functions
  of the Company.  For 2000 and 1999, the increases in expenses are primarily due
  to additional employees and other expenditures required to support the
  continued growth of the Company's business segments.  In fiscal 2000, the
  Company also continued to invest in numerous internet-based product
  enhancements which will be utilized by both CPAs and clients in fiscal 2001. In
  fiscal 2000, these increases were offset by lower spending on national
  marketing efforts during the last half of the year and by the internal
  payroll-related costs capitalized for the development of internal-use software.
  These capitalized costs are in accordance with the adoption of Statement of
  Position 98-1 (SOP 98-1), "Accounting for the Costs of Computer Software
  Developed or Obtained for Internal Use", which became effective for the Company
  on June 1, 1999.
  
  In fiscal 2001, Corporate expenses are expected to grow at a rate lower than in
  fiscal 2000.
  
  <TABLE>
  <CAPTION>
                                 Investment income
  
  In thousands                      2000   Change        1999   Change        1998
  <S>                            <C>        <C>       <C>        <C>        <C>
  --------------------------------------------------------------------------------
  Investment income              $16,479    31.0%     $12,581    32.8%      $9,473
  ================================================================================
  </TABLE>
  
  Investment income primarily represents earnings from the Company's cash and
  cash equivalents and investments in available-for-sale securities.  Investment
  income does not include earnings from the ENS investments, which are recorded
  as ENS investment revenue within the Payroll segment.  The increases in
  Investment income are primarily due to the increases in the average daily
  invested balances generated from increases in overall cash flows.  In fiscal
  2000, these increases were offset by realized losses of $0.8 million on
  available-for-sale securities compared with realized gains of $0.5 million and
  $0.1 million in fiscal 1999 and 1998, respectively. For fiscal 2000, the
  twelve-month average long-term rate of return was slightly higher than the
  average rate of return earned in fiscal 1999, reflecting lower comparable rates
  of return in the first half of fiscal 2000 and higher comparable rates in the
  second half of the fiscal year.   Investment income for fiscal 2001, subject to
  changes in market rates of interest, is expected to grow at a rate higher than
  fiscal 2000, reflecting the expected benefit of higher comparable rates of
  return.
  
  <TABLE>
  <CAPTION>
                                   Income taxes
  
  In thousands                      2000   Change        1999   Change        1998
  <S>                            <C>        <C>       <C>        <C>       <C>
  --------------------------------------------------------------------------------
  Income taxes                   $85,365    39.8%     $61,044    45.5%     $41,954
  Effective income tax rate        31.0%                30.5%                29.1%
  ================================================================================
  </TABLE>
  
  For 2000 and 1999, the increases in the effective income tax rate are due to
  the growth in taxable income exceeding the growth in tax-exempt income.
  Tax-exempt income is derived primarily from income earned on municipal debt
  securities.  Fiscal 2001's effective income tax rate is expected to be in the
  range of rates experienced in fiscal 2000 and 1999.
  
                          LIQUIDITY AND CAPITAL RESOURCES
  
  <TABLE>
  <CAPTION>
                               Operating activities
  
  In thousands                      2000   Change        1999   Change        1998
  <S>                           <C>         <C>      <C>         <C>      <C>
  --------------------------------------------------------------------------------
  Operating cash flows          $249,028    43.0%    $174,120    27.3%    $136,761
  ================================================================================
  </TABLE>
  
  The increases in operating cash flows resulted primarily from the consistent
  achievement of record net income.  Projected operating cash flows are expected
  to adequately support normal business operations, forecasted growth, purchases
  of property and equipment and dividend payments.  Furthermore, at year-end, the
  Company had $459 million in available cash and investments.  The Company also
  had $140 million of available, uncommitted, unsecured lines of credit and $350
  million available under an uncommitted, secured line of credit which was
  entered into during the third quarter of fiscal 2000.
  
  <TABLE>
  <CAPTION>
                               Investing activities
  
  In thousands                      2000   Change        1999    Change       1998
  <S>                          <C>          <C>     <C>         <C>     <C>
  --------------------------------------------------------------------------------
  Net investments and ENS
    activities                 $(144,322)   74.5%   $ (82,724)    -6.8% $ (88,728)
  Purchases of P&E, net          (32,888)   48.8%     (22,104)   -21.6%   (28,197)
  Purchases of other assets       (6,964)   94.0%      (3,590)   599.8%      (513)
  --------------------------------------------------------------------------------
  Net cash used in investing
    activities                 $(184,174)   69.9%   $(108,418)    -7.7% $(117,438)
  ================================================================================
  </TABLE>
  
  Corporate investments and ENS investments:  Corporate investments are primarily
  available-for-sale debt securities.  ENS investments are primarily short-term
  funds and available-for-sale debt securities.
  
  Corporate investments have increased due to the investment of increasing cash
  balances provided by operating activities less purchases of property and
  equipment and dividend payments. The reported amount of ENS investments will
  vary significantly based upon the timing of collecting client funds, and
  remitting the funds to the applicable tax authorities for Taxpay clients and
  employees of clients utilizing the Employee Payment Services.
  
  At May 31, 2000, the Company had $1,202.7 million of cost and fair value
  invested in money market securities and other cash equivalents with an average
  maturity of less than 30 days, and $984.3 million of fair value invested in
  available-for-sale securities with an average duration of 2.4 years.  At May
  31, 2000, the market value of the available-for-sale securities was lower than
  their cost basis by $13.4 million compared to a market value exceeding cost
  basis by $4.5 million at the end of May 1999.
  
  Additional discussion of interest rates and related risks is included in the
  Market and Risk Factors section of this review.
  
  Purchases of property and equipment, net:  In fiscal 2000, the Company made net
  purchases of property and equipment of $32.9 million.  During the past year,
  the Company sold an office facility in California for approximately $1.2
  million and purchased a branch office facility in Pennsylvania for $6.1
  million. Purchases of property and equipment in fiscal 2001 are expected to
  range from $30 million to $35 million. In addition, the Company is in the
  process of evaluating the construction of an additional facility at Corporate
  headquarters with a cost ranging from $20 million to $30 million. The proposed
  building would primarily be occupied by employees who are currently occupying
  leased facilities and would be completed in the summer of 2002.
  
  Effective June 1, 1999 the Company adopted Statement of Position (SOP) 98-1,
  "Accounting for the Costs of Computer Software Developed or Obtained for
  Internal Use."  The SOP requires the capitalization of internal use computer
  software costs if certain criteria are met, including all external direct costs
  for materials and services and certain payroll and related fringe benefit
  costs. Prior to fiscal 2000, the Company expensed as incurred certain payroll
  and related fringe benefit costs to develop and enhance its internal computer
  programs and software.  The effect of adopting the SOP increased net income by
  approximately $2.4 million for the year ended May 31, 2000.
  
  <TABLE>
  <CAPTION>
                               Financing activities
  
  In thousands, except
    per share amounts               2000   Change        1999    Change       1998
  <S>                          <C>        <C>       <C>          <C>     <C>
  --------------------------------------------------------------------------------
  Dividends paid               $(81,583)    50.9%   $(54,055)     50.7%  $(35,871)
  Proceeds from exercise of
    stock options                11,242    103.1%      5,535     178.1%     1,990
  Other                             (69)    13.1%        (61)    -27.4%       (84)
  --------------------------------------------------------------------------------
  Net cash used in
    financing activities       $(70,410)    44.9%   $(48,581)     43.0%  $(33,965)
  ================================================================================
  Cash dividends per common
    share                      $    .22     46.7%   $    .15      50.0%  $    .10
  ================================================================================
  </TABLE>
  
  Dividends paid:  The Company has increased its quarterly cash dividend rate per
  share by 50% in each of the last eight fiscal years.  The Company has
  distributed three-for-two stock splits effected in the form of 50% stock
  dividends on outstanding shares each May in the past six fiscal years.
  
  Proceeds from exercise of stock options:  The increase in proceeds from
  exercise of stock options reflects the issuance of 1,532,000 shares of common
  stock for stock option exercises in 2000, versus 1,032,000 shares in 1999 and
  277,000 shares in 1998, on a pre-split-adjusted basis.   In May 1999, 50% of
  the November 1996 broad based incentive stock option grant vested, resulting in
  an increase in shares available for exercise.
  
                               MARKET RISK FACTORS:
  
  Interest rate risk: The Company's available-for-sale debt securities are
  exposed to market risk from changes in interest rates, as rate volatility will
  cause fluctuations in the market value of held investments.  Increases in
  interest rates normally decrease the market value of the available-for-sale
  securities, while decreases in interest rates increase the market value of the
  available-for-sale securities.
  
  In addition, the Company's available-for-sale securities and short-term funds
  are exposed to earnings risk from changes in interest rates, as rate volatility
  
  will cause fluctuations in the earnings potential of future investments.
  Increases in interest rates quickly increase earnings from short-term funds,
  and over time increase earnings from the available-for-sale securities
  portfolio.  Earnings from the available-for-sale securities do not reflect
  changes in rates until the investments are sold or mature, and the proceeds are
  reinvested at current rates.  Decreases in interest rates have the opposite
  earnings effect on the available-for-sale securities and short-term funds.
  
  The Company directs investments towards high credit-quality, tax-exempt
  securities to mitigate the risk that earnings from the portfolio could be
  adversely impacted by changes in interest rates in the near term.  The Company
  invests in short- to intermediate-term, fixed-rate municipal and government
  securities, which typically have lower interest rate volatility, and manages
  the securities portfolio to a benchmark duration of 2.5 to 3.0 years. The
  Company does not utilize derivative financial instruments to manage interest
  rate risk.
  
  Over the twelve-month period of fiscal 2000, the federal funds rate increased a
  total of 175 basis points.  The following table summarizes the federal funds
  rate activity over the last three years.
  
  <TABLE>
  <CAPTION>
                                                     2000      1999      1998
  <S>                                               <C>       <C>       <C>
  --------------------------------------------------------------------------------
  Federal funds rate - beginning of fiscal year    	4.75%	    5.50%    	5.50%
  Rate increase/(decrease):
    First quarter                                    .50         -         -
    Second quarter                                   .25      (.75)        -
    Third quarter                                    .25         -         -
    Fourth quarter                                   .75         -         -
  --------------------------------------------------------------------------------
  Federal funds rate - end of fiscal year           6.50%     4.75%     5.50%
  ================================================================================
  </TABLE>
  
  The earnings impact of these rate changes is not precisely quantifiable because
  many factors influence the return on the Company's portfolio.  These factors
  include, among others, daily interest rate changes, the proportional mix of
  taxable and tax-exempt investments, and changes in tax-exempt and taxable
  investment rates, which are not synchronized, nor do they change
  
  simultaneously.  Subject to the aforementioned factors, a 25 basis point change
  normally affects the Company's tax-exempt interest rates by approximately 17
  basis points.
  
  As of May 31, 2000 and May 31, 1999, the Company had approximately $984.3
  million and $879.6 million, respectively, invested in available-for-sale
  securities at fair value, with weighted-average yields to maturity of 4.5% and
  4.1%, respectively.  Assuming a hypothetical increase in interest rates of 25
  basis points given the May 31, 2000 and May 31, 1999 portfolios of securities,
  the resulting potential decrease in fair value would be approximately $6.0
  million and $5.4 million, respectively.  Conversely, a corresponding decrease
  in interest rates would result in a comparable increase in fair value.  This
  hypothetical increase or decrease in the fair value of the portfolio would be
  recorded as an adjustment to the portfolio's recorded value, with an offsetting
  amount recorded in stockholders' equity, and with no related or immediate
  impact to the results of operations.  The Company's interest rate risk exposure
  has not changed materially since May 31, 1999.
  
  Credit risk:  The Company is exposed to credit risk in connection with these
  investments through the possible inability of the borrowers to meet the terms
  of the bonds.  The Company attempts to limit credit risk by investing primarily
  in AAA and AA rated securities, A-1 rated short-term securities and by limiting
  amounts that can be invested in any single instrument.  At May 31, 2000,
  approximately 99% of the available-for-sale securities held an AA rating or
  better and all short-term securities classified as cash equivalents held an A-1
  or equivalent rating.
  
                                      OTHER:
  
  Recently Issued Accounting Standards: In December 1999, the Securities and
  Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101, "Revenue
  Recognition in Financial Statements."  This SAB formalizes the SEC's position
  on application of revenue recognition rules.  Adoption of this SAB is for
  fiscal years beginning after March 15, 2000.   The Company believes that
  adoption of the provisions of this SAB will not have a material impact on the
  Company's results of operations.
metadata_documents: [{"type": "8-K", "sequence": "1", "filename": "0001.txt", "description": "FORM 8-K", "secsgml_size_bytes": 46251}]
metadata_filer: {"company-data": {"conformed-name": "PAYCHEX INC", "cik": "0000723531", "assigned-sic": "8700", "irs-number": "161124166", "state-of-incorporation": "DE", "fiscal-year-end": "0531"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-11330", "film-number": "660379"}, "business-address": {"street1": "911 PANORAMA TRAIL S", "city": "ROCHESTER", "state": "NY", "zip": "14625-0397", "phone": "7163856666"}, "mail-address": {"street1": "911 PANORAMA TRAIL SOUTH", "city": "ROCHESTER", "state": "NY", "zip": "14625-0397"}}
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 26, 2000
                        (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 26, 2000, which reports its
  financial results for the fiscal year ended May 31, 2000, is attached.  In
  addition, this report includes Management's Discussion and Analysis of
  Financial Condition and Results of Operations for the three years ended May
  31, 2000, 1999 and 1998, and its financial condition at May 31, 2000.
  
  This review is not a complete and comprehensive discussion and analysis as
  required by the Securities and Exchange Commission for Annual Reports filed on
  Form 10-K or quarterly reports filed on Form 10-Q. The 2000 Form 10-K and the
  Annual Report to Shareholders is expected to be mailed in August 2000, and
  will contain a complete set of audited Consolidated Financial Statements,
  Notes to Consolidated Financial Statements, and an updated Management's
  Discussion and Analysis of Financial Condition and Results of Operations for
  the years ended May 31, 2000, 1999 and 1998, and its financial condition at
  May 31, 2000.
  
  All information included in this Form 8-K is qualified by the cautionary
  statement in Exhibit 99.
  
                                   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 26, 2000                 /s/ B. Thomas Golisano
                                          -----------------------
                                          B. Thomas Golisano
                                          Chairman, President and
                                          Chief Executive Officer
  
  Date:     June 26, 2000                 /s/ John M. Morphy
                                          -----------------------
                                          John M. Morphy
                                          Vice President, Chief
                                          Financial Officer and
                                          Secretary
  
  FOR IMMEDIATE RELEASE
  	John M. Morphy, Chief Financial Officer
  	        Or
  	Jan Shuler		716-383-3406
       Access Paychex, Inc. News Releases, current financial information and
       related SEC filings at http://www.paychex.com/paychex/finance/finance.html
  
                     PAYCHEX, INC. REPORTS RECORD YEAR-END AND
                              FOURTH QUARTER RESULTS
  
  ROCHESTER, NY, June 26, 2000 -- Paychex, Inc. (NASDAQ: PAYX) today announced
  record net income of $190.0 million or $.51 diluted earnings per share for the
  fiscal year ended May 31, 2000, a 37% increase over net income of $139.1
  million or $.37 diluted earnings per share for the prior fiscal year.  Total
  service revenues were $728.1 million, an increase of 22% over $597.3 million
  for the previous year.
  
  For the fourth quarter ended May 31, 2000, net income increased 36% to $51.6
  million or $.14 diluted earnings per share as compared with net income of $37.9
  million or $.10 diluted earnings per share for the same period last year.
  Total service revenues were $197.2 million, an increase of 26% over $156.6
  million for the prior year fourth quarter.
  
  PAYROLL SEGMENT
  
  For the year ended May 31, 2000, operating income for the Payroll segment
  increased 28% to $303.4 million from $237.2 million for the prior fiscal year.
  Payroll service revenue was $653.2 million, an increase of 20% over $545.2
  million for the prior year.
  
  For the fourth quarter ended May 31, 2000, operating income from Payroll
  services increased 25% to $80.9 million from $64.5 million for the same period
  last year.  Payroll service revenue was $175.6 million, an increase of 24% over
  $142.0 million for the prior year quarter.
  
  The increases in service revenue and operating income were primarily the result
  of continued growth in the Payroll client base, utilization of ancillary
  services and leveraging of operating expenses. In addition, fourth quarter
  payroll revenue growth benefited from higher interest rates and the timing of
  billing days during the quarter.
  
  Paychex currently services 351,900 Payroll clients, a 9.1% increase over last
  year.  Our Major Market Services client base increased 40% to over 6,000
  clients.  As of the end of the fiscal year, 285,900 clients were using the
  Taxpay(Registered Trademark) product, the Company's tax filing and payment
  feature, and 165,700 clients were taking advantage of the Company's Employee
  Pay Services, which include Direct Deposit, ReadychexSM and Access Card
  products.
  
  HRS-PEO SEGMENT
  
  For the year ended May 31, 2000, operating income for the HRS-PEO segment
  increased 111% from $11.1 million to $23.4 million.  HRS-PEO service revenue
  was $74.9 million, an increase of 44% over $52.0 million for the prior fiscal
  year.
  
  For the fourth quarter ended May 31, 2000, operating income for the HRS-PEO
  segment increased 67% from $3.8 million to $6.3 million.  HRS-PEO service
  revenue was $21.6 million, an increase of 47% over $14.7 million for the fourth
  quarter last year.
  
  The increases in service revenue and operating income are primarily related to
  increasing 401(k) Recordkeeping, Workers' Compensation Insurance and Section
  125 clients.  As of May 31, 2000, the segment serviced 14,700 401(k)
  Recordkeeping clients, 10,400 Workers' Compensation Insurance clients, and
  23,900 Section 125 Administration Plans.
  
  CORPORATE EXPENSES
  
  Corporate expenses are primarily related to the Information Technology,
  Organizational Development, Finance, Marketing and Senior Management functions
  of the Company.  For the year ended May 31, 2000, Corporate expenses increased
  12% from $60.7 million to $67.9 million.  For the quarter ended May 31, 2000,
  Corporate expenses increased 10% from $15.9 million to $17.5 million.  The
  increases are primarily due to additional employees and other expenditures to
  support the continued growth of the Company.
  
  INVESTMENT INCOME
  
  Investment income for fiscal year 2000 increased 31% to $16.5 million from
  $12.6 million in the prior year.  For the fourth quarter, investment income was
  $4.9 million, an increase of 39% over $3.5 million for the fourth quarter of
  fiscal 1999.  The increases in investment income are due to higher average
  rates of return and higher cash flows from operations invested during the
  period.
  
  B. Thomas Golisano, Chairman, President and Chief Executive Officer of Paychex
  said, "We are pleased to complete another successful year. Fiscal 2000 was our
  tenth  consecutive year of record service revenues and net income, and our
  ninth consecutive year of net income growth in excess of 36%.  We look forward
  to Fiscal 2001 as we continue our growth in payroll and human resource
  outsourcing, expand Major Market Services and increase utilization of our
  ancillary products such as Employee Pay Services, 401(K) Recordkeeping and
  Workers' Compensation Insurance. At the same time we are excited to be
  introducing numerous internet based product enhancements which will be utilized
  by both CPAs and our clients."
  
                                   PAYCHEX, INC.
                         CONSOLIDATED STATEMENTS OF INCOME
                     (In thousands, except per share amounts)
  For the three months ended    For the twelve months ended
                               May 31,       May 31,         May 31,       May 31,
                                 2000          1999            2000          1999
  Service revenues:
    Payroll                  $175,606      $141,975        $653,245      $545,249
    HRS-PEO (A)                21,580        14,661          74,874        52,047
                             --------      --------        --------      --------
    Total service revenues    197,186       156,636         728,119       597,296
  
  Operating costs              46,795        38,219         173,481       151,956
  Selling, general and
    administrative
    expenses                   80,593        65,987         295,745       257,778
                             --------      --------        --------      --------
  Operating income             69,798        52,430         258,893       187,562
  
  Investment income             4,925         3,541          16,479        12,581
                             --------      --------        --------      --------
  Income before income
    taxes                      74,723        55,971         275,372       200,143
  
  Income taxes                 23,164        18,081          85,365        61,044
                             --------      --------        --------      --------
  Net income                 $ 51,559      $ 37,890        $190,007      $139,099
                             ========      ========        ========      ========
  
  Basic earnings
    per share (B)            $    .14      $    .10        $    .51      $    .38
                             ========      ========        ========      ========
  Diluted earnings
    per share (B)            $    .14      $    .10        $    .51      $    .37
                             ========      ========        ========      ========
  Weighted-average
    common shares
    outstanding (B)           371,576       369,229         370,603       368,282
                             ========      ========        ========      ========
  Weighted-average
    shares assuming
    dilution (B)              376,407       373,654         375,081       373,182
                             ========      ========        ========      ========
  Cash dividends per
    common share (B)         $    .06      $    .04        $    .22      $    .15
                             ========      ========        ========      ========
  (A) Net of PEO direct costs billed and incurred of $216,176 and $148,309 for
  the three months ended May 31, 2000 and 1999, respectively and $731,266 and
  $578,132 for the twelve months ended May 31, 2000 and 1999, respectively.  PEO
  direct costs billed to clients are equal to PEO direct costs incurred for the
  wages and payroll taxes of worksite employees and their related benefit
  premiums and claims.
  
  (B) Financial information for the periods ended May 31, 1999 have been adjusted
  for a three-for-two stock split distributed in May 2000.
  PAYCHEX, INC.
                            CONSOLIDATED BALANCE SHEETS
                                  (In thousands)
  May 31,                                               2000                  1999
  ASSETS
  Cash and cash equivalents                       $   47,136            $   52,692
  Investments                                        412,357               290,555
  Interest receivable                                 22,436                18,045
  Accounts receivable                                 87,608                62,941
  Deferred income taxes                                9,539                 1,364
  Prepaid expenses and other current assets            6,531                 6,000
                                                  ----------            ----------
  Current assets before ENS investments              585,607               431,597
  ENS investments                                  1,776,968             1,361,523
                                                  ----------            ----------
  Total current assets                             2,362,575             1,793,120
                                                  ----------            ----------
  Property and equipment - net                        75,375                65,931
  Goodwill and intangible assets - net                 5,584                 4,418
  Deferred income taxes                                2,494                 1,417
  Other assets                                         9,549                 8,215
                                                  ----------            ----------
  Total assets                                    $2,455,577            $1,873,101
                                                  ==========            ==========
  LIABILITIES
  
  Accounts payable                                $   17,086            $   10,328
  Accrued compensation and related items              52,631                36,574
  Deferred revenue                                     4,719                 4,643
  Accrued income taxes                                 2,969                 4,281
  Other current liabilities                           24,400                17,905
                                                  ----------            ----------
  Current liabilities before ENS client deposits     101,805                73,731
  ENS client deposits                              1,785,140             1,358,605
                                                  ----------            ----------
  Total current liabilities                        1,886,945             1,432,336
  Long-term liabilities                                5,200                 4,965
                                                  ----------            ----------
  Total liabilities                                1,892,145             1,437,301
  
  STOCKHOLDERS' EQUITY
  
  Common stock, $.01 par value,
    600,000 authorized shares
    Issued: 371,769/May 31, 2000 and
    246,326/May 31, 1999                               3,718                 2,463
  Additional paid-in capital                          98,904                68,238
  Retained earnings                                  469,385               362,269
  Accumulated other comprehensive income/(loss)       (8,575)                2,830
                                                  ----------            ----------
  Total stockholders' equity                         563,432               435,800
                                                  ----------            ----------
  Total liabilities and stockholders' equity      $2,455,577            $1,873,101
                                                  ==========            ==========
  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,
  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- to medium-sized businesses with cost-effective
  outsourcing solutions for their employee benefits.  HRS-PEO products include
  401(k) Plan Recordkeeping, Workers' Compensation Insurance, Section 125 Plan
  Administration, Paychex Administrative Services, Professional Employer
  Organization (PEO), Group Benefits, State Unemployment Insurance, and Employee
  Management services.  Corporate expenses are primarily related to the
  Information Technology, Organizational Development, Finance, Marketing and
  Senior Management functions of the Company.
  For the three months ended  For the twelve months ended
                                May 31,       May 31,       May 31,        May 31,
                                  2000          1999          2000           1999
  Service revenues:
    Payroll                   $175,606      $141,975      $653,245       $545,249
    HRS-PEO (A)                 21,580        14,661        74,874         52,047
                              --------      --------      --------       --------
    Total service revenues    $197,186      $156,636      $728,119       $597,296
                              ========      ========      ========       ========
  ENS investment revenue
    included in Payroll
    revenue                   $ 18,205      $ 13,800      $ 58,800       $ 52,335
                              ========      ========      ========       ========
  Operating income:
    Payroll (B)               $ 80,926      $ 64,536      $303,360       $237,236
    HRS-PEO (B)                  6,331         3,794        23,395         11,072
                              --------      --------      --------       --------
    Segment operating income    87,257        68,330       326,755        248,308
  
    Corporate expenses          17,459        15,900        67,862         60,746
                              --------      --------      --------       ---------
    Total operating income      69,798        52,430       258,893        187,562
  
  Investment income              4,925         3,541        16,479         12,581
                              --------      --------      --------       --------
  Income before income taxes  $ 74,723      $ 55,971      $275,372       $200,143
                              ========      ========      ========       ========
  (A) Net of PEO directs costs billed and incurred of $216,176 and $148,309 for
  the three months ended May 31, 2000 and 1999, respectively, and $731,266 and
  $578,132 for the twelve months ended May 31, 2000 and 1999, respectively.  PEO
  direct costs billed to clients are equal to PEO direct costs incurred for the
  wages and payroll taxes of worksite employees and their related benefit
  premiums and claims.
  
  (B) In 2000, the Company began allocating a portion of operating facilities
  costs from the Payroll segment to the HRS-PEO segment. Prior year's segment
  results have been restated to reflect the allocation of these facilities costs
  with no impact to total Segment operating income.  The total amounts of these
  allocations were $413,000 and $382,000 for the three months ended May 31, 2000
  and 1999, respectively, and $1,650,000 and $1,526,000 for the twelve months
  ended May 31, 2000 and 1999, respectively.
  MANAGEMENT'S DISCUSSION AND ANALYSIS
                 OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
  Management's Discussion and Analysis reviews the Company's operating results
  for each of the three fiscal years in the period ended May 31, 2000 (fiscal
  2000, 1999 and 1998), and its financial condition at May 31, 2000.  The focus
  of this review is on the underlying business reasons for significant changes
  and trends affecting revenues, net income and financial condition.  This review
  provides additional analysis and disclosure than that contained in the
  Company's June 26, 2000 press release, which precedes this discussion.
  
  This review is not a complete and comprehensive discussion and analysis as
  required by the Securities and Exchange Commission for Annual Reports filed on
  Form 10-K or quarterly reports filed on Form 10-Q.  The 2000 Form 10-K and the
  Annual Report to Shareholders is expected to be mailed in August 2000, and will
  contain a complete set of audited Consolidated Financial Statements, and an
  updated Management's Discussion and Analysis of Financial Condition and Results
  of Operations for the years ended May 31, 2000, 1999 and 1998, and its
  financial condition at May 31, 2000.
  
  Forward-looking statements in this Management's Discussion and Analysis are
  qualified by the cautionary statement in Exhibit 99, contained in this Form
  8-K.
  
                               Results of Operations
  In thousands,
    except per share amounts        2000   Change        1999   Change        1998
  --------------------------------------------------------------------------------
  Service revenues              $728,119    21.9%    $597,296    21.0%    $493,704
  Operating income              $258,893    38.0%    $187,562    39.2%    $134,700
  Operating margin                 35.6%                31.4%                27.3%
  Income before income taxes    $275,372    37.6%    $200,143    38.8%    $144,173
  Net income                    $190,007    36.6%    $139,099    36.1%    $102,219
  % of service revenues            26.1%                23.3%                20.7%
  Basic earnings per share      $    .51    34.2%    $    .38    35.7%    $    .28
  Diluted earnings per share    $    .51    37.8%    $    .37    37.0%    $    .28
  ================================================================================
  The financial results for Paychex, Inc., in 2000, reflect the tenth consecutive
  year of record service revenues and net income, and the ninth consecutive year
  of net income growth of 36% or more.  The Company's ability to continually grow
  its client base, add new services, increase client utilization of ancillary
  services, implement price increases and decrease operating expenses as a
  percent of service revenues has resulted in ten years of average compounded
  annual growth in service revenues of 20% and net income of 36%.
  
  The Company has two reportable business segments:  Payroll and Human Resource
  Services - Professional Employer Organization (HRS-PEO).
  Payroll segment
  
  In thousands                      2000   Change        1999   Change        1998
  --------------------------------------------------------------------------------
  Payroll service revenue       $653,245    19.8%    $545,249    19.8%    $455,227
  ENS investment revenue
    included in Payroll
    service revenue             $ 58,800    12.4%    $ 52,335    20.5%    $ 43,429
  Payroll operating income      $303,360    27.9%    $237,236    30.6%    $181,585
  Payroll operating margin         46.4%                43.5%                39.9%
  --------------------------------------------------------------------------------
  Payroll clients                  351.9     9.1%       322.6     9.9%       293.6
  Taxpay clients                   285.9    12.4%       254.3    15.2%       220.7
  Employee Pay Services clients    165.7    22.4%       135.4    29.7%       104.4
  ================================================================================
  Revenues:  Payroll service revenue includes service fees and investment
  revenue.  Service fee revenue is earned primarily from Payroll, Taxpay,
  Employee Pay Services and other ancillary services.  Employee Pay Services
  include the Direct Deposit, Readychex and Access Card products.  ENS investment
  revenue is earned during the period between collecting client funds (ENS
  investments) and remitting the funds to the applicable tax authorities for
  Taxpay clients and employees of Employee Pay Services clients.  ENS investment
  revenue also includes net realized gains and losses from the sale of
  available-for-sale securities.
  
  The increases in Payroll service revenue for 2000 and 1999 are primarily
  related to the addition of new clients, new services, price increases and
  increased utilization of ancillary services, such as Taxpay and Employee Pay
  Services, by both new and existing clients.  At May 31, 2000, 81% of Payroll
  clients utilized the Taxpay service, compared with 79% at the end of 1999 and
  75% at the end of 1998.  Client utilization of this product is expected to
  mature within a range of 82% to 87%.  Client utilization of Employee Pay
  Services was 47% at May 31, 2000, versus 42% and 36% at May 31, 1999 and 1998,
  
  respectively.  At May 31, 2000, only 27% of the total employees paid by the
  Company's core payroll service utilized Employee Pay Services.  These services
  are expected to provide growth opportunities for fiscal 2001 and beyond.
  
  ENS investment revenue, which is included in Payroll service revenue, has
  increased due to more clients utilizing Taxpay and Employee Pay Services and
  higher daily client balances. The growth rate in ENS investment revenue is also
  affected by factors such as the maturing of the Taxpay product, volatile
  interest rate movements in both fiscal 2000 and 1999, and the level of realized
  gains and losses.  Average daily ENS investment portfolio balances were
  approximately $1.4 billion, $1.1 billion and $1.0 billion in fiscal 2000, 1999
  and 1998, respectively. The first half of fiscal 2000 reflected lower
  comparable rates of return while, the second half of fiscal 2000, especially
  the fourth quarter, benefited from increasing interest rates. In fiscal 2000,
  ENS investments incurred realized losses of $2.9 million compared with realized
  gains of $2.4 million and $0.8 million in fiscal 1999 and 1998, respectively.
  
  Payroll revenue growth for the fourth quarter of fiscal 2000 was 23.7% compared
  to 19.8% for the full year.  The higher than normal growth was due to higher
  interest rates and the timing of billing days in the quarter.  Fiscal 2001's
  percentage growth in Payroll revenue is expected to be towards the upper end of
  a range of 18% to 20%.
  
  Operating income: Operating income for 2000 and 1999 increased as a result of
  increased revenue and leveraging of the segment's operating expense base, as
  evidenced by the increases in the segment's operating margins year-over-year.
  
  Effective September 1, 1999, the Company increased its sales force compensation
  package to increase the retention and quality of its payroll sales
  representatives.  This compensation increase resulted in additional annualized
  pre-tax expense of approximately $6.0 million, of which $4.5 million was
  reflected in fiscal 2000. Sales related expenses were also impacted in the
  fourth quarter of fiscal 2000 as the Company accelerated the hiring and
  training of Payroll sales representatives for fiscal 2001 selling efforts.
  
  During fiscal 2000, the Company continued expansion of its Major Market
  Services payroll product offering to include forty-four of the slightly more
  than one hundred sales territories covered by its core Payroll product.  The
  Major Market Services product now services over 6,000 clients and generated
  approximately $30 million in revenue for fiscal 2000.  The Company will
  continue to expand into new cities for the next several years.
  HRS-PEO segment
  
  In thousands                      2000   Change        1999   Change        1998
  --------------------------------------------------------------------------------
  HRS-PEO service revenue       $ 74,874    43.9%     $52,047    35.3%     $38,477
  HRS-PEO operating income      $ 23,395   111.3%     $11,072   108.0%     $ 5,322
  HRS-PEO operating margin         31.2%                21.3%                13.8%
  --------------------------------------------------------------------------------
  401(k) Recordkeeping
    clients                         14.7    45.5%        10.1    68.3%         6.0
  401(k) client funds managed
    externally (in millions)    $1,337.5    76.5%     $ 757.6    97.7%     $ 383.3
  Section 125 clients               23.9    18.3%        20.2    23.2%        16.4
  Workers' Compensation
    Insurance clients               10.4   160.0%         4.0   100.0%          --
  PEO worksite employees            20.2    10.4%        18.3    -4.7%        19.2
  ================================================================================
  Revenues:  The significant increases in service revenue for 2000 and 1999 are
  primarily related to the benefits of growing a recurring revenue stream from
  401(k) Recordkeeping clients, Workers' Compensation Insurance clients, Section
  125 clients, and the number of Professional Employer Organization (PEO)
  worksite employees.  The increase in 401(k) clients reflects the continuing
  interest of small- to medium-sized businesses to offer retirement savings
  benefits to their employees.  During the first quarter of fiscal 1999, the
  Company began a national rollout of its Workers' Compensation Insurance
  Product, which provides insurance for qualified clients through several leading
  insurance providers and a method to enhance their cash flows. The decline in
  PEO worksite employees in 1999 was caused by the loss of two large PEO clients
  which offset additions to worksite employees.  The loss of these clients did
  not have a material impact on fiscal 2000 or 1999.
  
  Operating income:  For 2000 and 1999, the increases in operating income are
  primarily related to gains in recurring service revenue and leveraging of
  operating expenses.
  
  In fiscal 2000, the Company began a nationwide expansion of Paychex
  Administrative Services (PAS), a combined payroll and human resource
  outsourcing solution designed to make it easier for small businesses to manage
  their payroll and benefit costs.   The Company also added SIMPLE IRA Plans to
  its retirement services product line and continued to expand the Workers'
  Compensation Insurance product.
  
  Full-year fiscal 2001's HRS-PEO service revenue and operating income are
  expected to grow at a rate lower than fiscal 2000's rate, but at a rate much
  higher than the Payroll segment's growth rate.  Fiscal 2001's
  quarter-over-quarter percentage comparisons in HRS-PEO service revenue and
  operating income may vary significantly throughout the year, and any one
  particular quarter's results may not be indicative of expected full-year
  results.
  Corporate expenses
  
  In thousands                      2000   Change        1999   Change        1998
  --------------------------------------------------------------------------------
  Corporate expenses             $67,862    11.7%     $60,746    16.4%     $52,207
  ================================================================================
  Corporate expenses are primarily related to the Information Technology,
  Organizational Development, Finance, Marketing and Senior Management functions
  of the Company.  For 2000 and 1999, the increases in expenses are primarily due
  to additional employees and other expenditures required to support the
  continued growth of the Company's business segments.  In fiscal 2000, the
  Company also continued to invest in numerous internet-based product
  enhancements which will be utilized by both CPAs and clients in fiscal 2001. In
  fiscal 2000, these increases were offset by lower spending on national
  marketing efforts during the last half of the year and by the internal
  payroll-related costs capitalized for the development of internal-use software.
  These capitalized costs are in accordance with the adoption of Statement of
  Position 98-1 (SOP 98-1), "Accounting for the Costs of Computer Software
  Developed or Obtained for Internal Use", which became effective for the Company
  on June 1, 1999.
  
  In fiscal 2001, Corporate expenses are expected to grow at a rate lower than in
  fiscal 2000.
  Investment income
  
  In thousands                      2000   Change        1999   Change        1998
  --------------------------------------------------------------------------------
  Investment income              $16,479    31.0%     $12,581    32.8%      $9,473
  ================================================================================
  Investment income primarily represents earnings from the Company's cash and
  cash equivalents and investments in available-for-sale securities.  Investment
  income does not include earnings from the ENS investments, which are recorded
  as ENS investment revenue within the Payroll segment.  The increases in
  Investment income are primarily due to the increases in the average daily
  invested balances generated from increases in overall cash flows.  In fiscal
  2000, these increases were offset by realized losses of $0.8 million on
  available-for-sale securities compared with realized gains of $0.5 million and
  $0.1 million in fiscal 1999 and 1998, respectively. For fiscal 2000, the
  twelve-month average long-term rate of return was slightly higher than the
  average rate of return earned in fiscal 1999, reflecting lower comparable rates
  of return in the first half of fiscal 2000 and higher comparable rates in the
  second half of the fiscal year.   Investment income for fiscal 2001, subject to
  changes in market rates of interest, is expected to grow at a rate higher than
  fiscal 2000, reflecting the expected benefit of higher comparable rates of
  return.
  Income taxes
  
  In thousands                      2000   Change        1999   Change        1998
  --------------------------------------------------------------------------------
  Income taxes                   $85,365    39.8%     $61,044    45.5%     $41,954
  Effective income tax rate        31.0%                30.5%                29.1%
  ================================================================================
  For 2000 and 1999, the increases in the effective income tax rate are due to
  the growth in taxable income exceeding the growth in tax-exempt income.
  Tax-exempt income is derived primarily from income earned on municipal debt
  securities.  Fiscal 2001's effective income tax rate is expected to be in the
  range of rates experienced in fiscal 2000 and 1999.
  
                          LIQUIDITY AND CAPITAL RESOURCES
  Operating activities
  
  In thousands                      2000   Change        1999   Change        1998
  --------------------------------------------------------------------------------
  Operating cash flows          $249,028    43.0%    $174,120    27.3%    $136,761
  ================================================================================
  The increases in operating cash flows resulted primarily from the consistent
  achievement of record net income.  Projected operating cash flows are expected
  to adequately support normal business operations, forecasted growth, purchases
  of property and equipment and dividend payments.  Furthermore, at year-end, the
  Company had $459 million in available cash and investments.  The Company also
  had $140 million of available, uncommitted, unsecured lines of credit and $350
  million available under an uncommitted, secured line of credit which was
  entered into during the third quarter of fiscal 2000.
  Investing activities
  
  In thousands                      2000   Change        1999    Change       1998
  --------------------------------------------------------------------------------
  Net investments and ENS
    activities                 $(144,322)   74.5%   $ (82,724)    -6.8% $ (88,728)
  Purchases of P&E, net          (32,888)   48.8%     (22,104)   -21.6%   (28,197)
  Purchases of other assets       (6,964)   94.0%      (3,590)   599.8%      (513)
  --------------------------------------------------------------------------------
  Net cash used in investing
    activities                 $(184,174)   69.9%   $(108,418)    -7.7% $(117,438)
  ================================================================================
  Corporate investments and ENS investments:  Corporate investments are primarily
  available-for-sale debt securities.  ENS investments are primarily short-term
  funds and available-for-sale debt securities.
  
  Corporate investments have increased due to the investment of increasing cash
  balances provided by operating activities less purchases of property and
  equipment and dividend payments. The reported amount of ENS investments will
  vary significantly based upon the timing of collecting client funds, and
  remitting the funds to the applicable tax authorities for Taxpay clients and
  employees of clients utilizing the Employee Payment Services.
  
  At May 31, 2000, the Company had $1,202.7 million of cost and fair value
  invested in money market securities and other cash equivalents with an average
  maturity of less than 30 days, and $984.3 million of fair value invested in
  available-for-sale securities with an average duration of 2.4 years.  At May
  31, 2000, the market value of the available-for-sale securities was lower than
  their cost basis by $13.4 million compared to a market value exceeding cost
  basis by $4.5 million at the end of May 1999.
  
  Additional discussion of interest rates and related risks is included in the
  Market and Risk Factors section of this review.
  
  Purchases of property and equipment, net:  In fiscal 2000, the Company made net
  purchases of property and equipment of $32.9 million.  During the past year,
  the Company sold an office facility in California for approximately $1.2
  million and purchased a branch office facility in Pennsylvania for $6.1
  million. Purchases of property and equipment in fiscal 2001 are expected to
  range from $30 million to $35 million. In addition, the Company is in the
  process of evaluating the construction of an additional facility at Corporate
  headquarters with a cost ranging from $20 million to $30 million. The proposed
  building would primarily be occupied by employees who are currently occupying
  leased facilities and would be completed in the summer of 2002.
  
  Effective June 1, 1999 the Company adopted Statement of Position (SOP) 98-1,
  "Accounting for the Costs of Computer Software Developed or Obtained for
  Internal Use."  The SOP requires the capitalization of internal use computer
  software costs if certain criteria are met, including all external direct costs
  for materials and services and certain payroll and related fringe benefit
  costs. Prior to fiscal 2000, the Company expensed as incurred certain payroll
  and related fringe benefit costs to develop and enhance its internal computer
  programs and software.  The effect of adopting the SOP increased net income by
  approximately $2.4 million for the year ended May 31, 2000.
  Financing activities
  
  In thousands, except
    per share amounts               2000   Change        1999    Change       1998
  --------------------------------------------------------------------------------
  Dividends paid               $(81,583)    50.9%   $(54,055)     50.7%  $(35,871)
  Proceeds from exercise of
    stock options                11,242    103.1%      5,535     178.1%     1,990
  Other                             (69)    13.1%        (61)    -27.4%       (84)
  --------------------------------------------------------------------------------
  Net cash used in
    financing activities       $(70,410)    44.9%   $(48,581)     43.0%  $(33,965)
  ================================================================================
  Cash dividends per common
    share                      $    .22     46.7%   $    .15      50.0%  $    .10
  ================================================================================
  Dividends paid:  The Company has increased its quarterly cash dividend rate per
  share by 50% in each of the last eight fiscal years.  The Company has
  distributed three-for-two stock splits effected in the form of 50% stock
  dividends on outstanding shares each May in the past six fiscal years.
  
  Proceeds from exercise of stock options:  The increase in proceeds from
  exercise of stock options reflects the issuance of 1,532,000 shares of common
  stock for stock option exercises in 2000, versus 1,032,000 shares in 1999 and
  277,000 shares in 1998, on a pre-split-adjusted basis.   In May 1999, 50% of
  the November 1996 broad based incentive stock option grant vested, resulting in
  an increase in shares available for exercise.
  
                               MARKET RISK FACTORS:
  
  Interest rate risk: The Company's available-for-sale debt securities are
  exposed to market risk from changes in interest rates, as rate volatility will
  cause fluctuations in the market value of held investments.  Increases in
  interest rates normally decrease the market value of the available-for-sale
  securities, while decreases in interest rates increase the market value of the
  available-for-sale securities.
  
  In addition, the Company's available-for-sale securities and short-term funds
  are exposed to earnings risk from changes in interest rates, as rate volatility
  
  will cause fluctuations in the earnings potential of future investments.
  Increases in interest rates quickly increase earnings from short-term funds,
  and over time increase earnings from the available-for-sale securities
  portfolio.  Earnings from the available-for-sale securities do not reflect
  changes in rates until the investments are sold or mature, and the proceeds are
  reinvested at current rates.  Decreases in interest rates have the opposite
  earnings effect on the available-for-sale securities and short-term funds.
  
  The Company directs investments towards high credit-quality, tax-exempt
  securities to mitigate the risk that earnings from the portfolio could be
  adversely impacted by changes in interest rates in the near term.  The Company
  invests in short- to intermediate-term, fixed-rate municipal and government
  securities, which typically have lower interest rate volatility, and manages
  the securities portfolio to a benchmark duration of 2.5 to 3.0 years. The
  Company does not utilize derivative financial instruments to manage interest
  rate risk.
  
  Over the twelve-month period of fiscal 2000, the federal funds rate increased a
  total of 175 basis points.  The following table summarizes the federal funds
  rate activity over the last three years.
  2000      1999      1998
  --------------------------------------------------------------------------------
  Federal funds rate - beginning of fiscal year    	4.75%	    5.50%    	5.50%
  Rate increase/(decrease):
    First quarter                                    .50         -         -
    Second quarter                                   .25      (.75)        -
    Third quarter                                    .25         -         -
    Fourth quarter                                   .75         -         -
  --------------------------------------------------------------------------------
  Federal funds rate - end of fiscal year           6.50%     4.75%     5.50%
  ================================================================================
  The earnings impact of these rate changes is not precisely quantifiable because
  many factors influence the return on the Company's portfolio.  These factors
  include, among others, daily interest rate changes, the proportional mix of
  taxable and tax-exempt investments, and changes in tax-exempt and taxable
  investment rates, which are not synchronized, nor do they change
  
  simultaneously.  Subject to the aforementioned factors, a 25 basis point change
  normally affects the Company's tax-exempt interest rates by approximately 17
  basis points.
  
  As of May 31, 2000 and May 31, 1999, the Company had approximately $984.3
  million and $879.6 million, respectively, invested in available-for-sale
  securities at fair value, with weighted-average yields to maturity of 4.5% and
  4.1%, respectively.  Assuming a hypothetical increase in interest rates of 25
  basis points given the May 31, 2000 and May 31, 1999 portfolios of securities,
  the resulting potential decrease in fair value would be approximately $6.0
  million and $5.4 million, respectively.  Conversely, a corresponding decrease
  in interest rates would result in a comparable increase in fair value.  This
  hypothetical increase or decrease in the fair value of the portfolio would be
  recorded as an adjustment to the portfolio's recorded value, with an offsetting
  amount recorded in stockholders' equity, and with no related or immediate
  impact to the results of operations.  The Company's interest rate risk exposure
  has not changed materially since May 31, 1999.
  
  Credit risk:  The Company is exposed to credit risk in connection with these
  investments through the possible inability of the borrowers to meet the terms
  of the bonds.  The Company attempts to limit credit risk by investing primarily
  in AAA and AA rated securities, A-1 rated short-term securities and by limiting
  amounts that can be invested in any single instrument.  At May 31, 2000,
  approximately 99% of the available-for-sale securities held an AA rating or
  better and all short-term securities classified as cash equivalents held an A-1
  or equivalent rating.
  
                                      OTHER:
  
  Recently Issued Accounting Standards: In December 1999, the Securities and
  Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101, "Revenue
  Recognition in Financial Statements."  This SAB formalizes the SEC's position
  on application of revenue recognition rules.  Adoption of this SAB is for
  fiscal years beginning after March 15, 2000.   The Company believes that
  adoption of the provisions of this SAB will not have a material impact on the
  Company's results of operations.