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: December 19, 2001
                          (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)
  
                                   (585) 385-6666
                (Registrant's telephone number, including area code)
  
  
  
  <PAGE>
  
  
  
  ITEM 9.  REGULATION FD DISCLOSURE
  
  The registrant's press release dated December 19, 2001 is attached. This release
  announces the Company's results of operations for the second quarter ended
  November 30, 2001.
  
  
  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:     December 19, 2001               /s/ B. Thomas Golisano
                                            -----------------------
                                            B. Thomas Golisano
                                            Chairman, President and
                                            Chief Executive Officer
  
  Date:     December 19, 2001               /s/ John M. Morphy
                                            -----------------------
                                            John M. Morphy
                                            Vice President, Chief
                                            Financial Officer and
                                            Secretary
  
  
  <PAGE>
  
  
  FOR IMMEDIATE RELEASE
  
           John M. Morphy, Chief Financial Officer or Jan Shuler 585-383-3406
  
           Access the Webcast of the Paychex, Inc. Second Quarter Earnings Release
               Conference Call scheduled for December 19, 2001 at 11:00 a.m.
               Eastern Standard Time at http://www.paychex.com at the Investor
               Relations home page.
           Paychex, Inc. news releases, current financial information, related
               SEC filings and Investor Relations presentation are accessible at
               the same Web site.
  
                 PAYCHEX, INC. REPORTS RECORD SECOND QUARTER RESULTS
  
  ROCHESTER, NY, December 19, 2001 -- Paychex, Inc. (NASDAQ: PAYX) today announced
  net income of $68.7 million, or $.18 diluted earnings per share, for the quarter
  ended November 30, 2001, an 11% increase over net income of $62.1 million, or
  $.16 diluted earnings per share, for the same period last year. Total revenues
  were $233.0 million, a 12% increase over $208.1 million for the second quarter
  last year.
  
  For the six months ended November 30, 2001, the Company reported record net
  income of $138.9 million, or $.37 diluted earnings per share, a 15% increase
  over $120.8 million, or $.32 diluted earnings per share, for the same period
  last year. Total revenues were $467.8 million, an increase of 14% over $412.0
  million for the same period last year.
  
  ECONOMIC CONDITIONS
  
  The Company first experienced the effects of the recession during the first
  quarter of fiscal 2002, and these effects have heightened during the second
  quarter. In response to the declining economic conditions, the Federal Reserve
  has lowered the Federal Funds rate eleven times for a cumulative 475 basis point
  affect on interest rates.  The short- and long-term effect of changing interest
  rates is disclosed in detail in the Company's financial statements and recent
  SEC filings, which are accessible at the Company's Web site.
  
  After the effects of volatile interest rates, the most significant impact of a
  recessionary economy is lower checks per client as existing clients reduce the
  size of their work force. During the second quarter of fiscal 2002, the Company
  experienced a 4.3% decline in checks per client compared to 2.6% in the first
  quarter. During the recession of the early 1990's, the Company experienced an
  approximate 3% total reduction in checks per client.
  
  Despite the above factors, income before taxes remained strong at 43% of
  revenues during the first half of the year compared with 42% for the same period
  last year. If the interest rates and checks per client conditions experienced in
  fiscal 2000 had prevailed through fiscal 2001 and the first half of fiscal 2002,
  net income growth in fiscal 2001 would have been approximately 25% compared with
  a reported 34% growth. Net income growth for the first half of fiscal 2002 would
  also have been approximately 25% compared with a reported 15%.
  
  SERVICE REVENUES
  
  For the quarter ended November 30, 2001, service revenues, which are comprised
  of the Payroll and Human Resource and Benefits product lines, were $217.5
  million, an increase of 14% over $190.7 million for the prior year quarter. For
  the six months ended November 30, 2001, service revenues were $433.7 million, an
  increase of 15% over $377.2 million for the same period last year.
  
  Payroll service revenue increased 13% to $188.5 million from $167.1 million for
  the prior year second quarter. For the six-month period, Payroll service revenue
  increased 14% to $377.9 million from $331.7 million for the prior year period.
  The increases in Payroll service revenue reflect growth in the client base,
  increased utilization of ancillary services and price increases. As of November
  30, 2001, 84% of Paychex clients utilized Taxpay(Registered Trademark), the
  Company's tax filing and payment feature. The Company's Employee Pay Services,
  which includes Direct Deposit, Readychex(Service Mark) and Access Card products,
  was utilized by 55% of its clients. Major Market Services revenue increased 56%
  and 59% for the second quarter and six-month periods to $16.6 million and $32.2
  million, respectively.
  <PAGE>
  
  Human Resource and Benefits service revenue was $29.0 million, an increase of
  23% over $23.6 million for the second quarter last year. For the six-month
  period, Human Resource and Benefits service revenue increased 22% to $55.8
  million from $45.6 million for the prior year period. The increases are related
  primarily to growth in clients for Retirement Services and in client employees
  served by the Company's comprehensive Paychex Administrative Services (PAS) and
  Professional Employer Organization (PEO) bundled services. Retirement Services
  revenue increased 30% and 28% in the second quarter and six-month periods to
  $13.6 million and $25.9 million, respectively.
  
  INTEREST ON FUNDS HELD FOR CLIENTS
  
  For the quarter ended November 30, 2001, interest on funds held for clients was
  $15.5 million, an 11% decrease from $17.4 million for the second quarter last
  year. For the six months ended November 30, 2001, interest on funds held for
  clients decreased 2% to $34.1 million from $34.8 million. The decreases are the
  result of lower interest rates earned in fiscal 2002 offset by net realized
  gains on the sale of available-for-sale securities and higher average portfolio
  balances. Net realized gains included in interest on funds held for clients were
  $2.2 million and $5.4 million for the second quarter and six-month periods of
  fiscal 2002 compared with net realized losses of $.1 million and $.2 million for
  the respective prior year periods.
  
  OPERATING INCOME
  
  For the quarter ended November 30, 2001, operating income was $91.1 million, a
  9% increase over $83.4 million for the second quarter last year. For the six
  months ended November 30, 2001, operating income increased 14% to $184.8 million
  from $162.3 million in the prior year period. Combined operating and selling,
  general and administrative expenses increased 14% in the second quarter and 13%
  for the six-month period over the prior year periods. These increases reflect
  increases in personnel, information technology and facility costs necessary to
  support the growth of the Company.
  
  INVESTMENT INCOME
  
  Investment income for the quarter ended November 30, 2001 increased 37% to $8.2
  million from $6.0 million in the second quarter of last year. Investment income
  for the six-month period increased 37% to $15.7 million from $11.5 million in
  the prior year period. The increases are due to net realized gains on the sale
  of available-for-sale securities and higher average daily invested balances
  offset by the impact of lower interest rates in fiscal 2002. Net realized gains
  included in investment income were $1.8 million and $2.8 million for the second
  quarter and six-month periods of fiscal 2002 compared with net realized losses
  of $.1 million and $.2 million for the respective prior year periods.
  
  
  B. Thomas Golisano, Chairman, President and Chief Executive Officer of Paychex,
  said, "Given the significant decreases in interest rates and declining economic
  conditions, which continue to impact average checks per client, we are pleased
  with our results for the second quarter. During these challenging conditions, we
  remain focused on increasing our client base, utilization of ancillary services
  and controlling expenses. For fiscal 2002, we expect to produce record revenue
  and net income with revenue growth in the range of 9% to 11%."
  
  "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
  1995 Certain written and oral statements made by Paychex, Inc. (the "Company")
  management may constitute "forward-looking statements" as defined in the Private
  Securities Litigation Reform Act of 1995. Forward-looking statements are
  identified by such words and phrases as "we expect," "expected to," "estimates,"
  "we look forward to," "would equate to," "projects," "projected to be,"
  "anticipates," "we believe," "could be," and other similar phrases. Because they
  are forward-looking, they should be evaluated in light of important risk
  factors. These risk factors include, but are not limited to, general market and
  economic conditions, including demand for the Company's products and services,
  availability of internal and external resources, executing expansion plans,
  competition, and price levels; changes in the laws regulating collection and
  payment of payroll taxes, professional employer organizations, and employee
  benefits, including 401(k) plans, workers' compensation, state unemployment, and
  section 125 plans; delays in the development, timing of the introduction, and
  marketing of new products and services; changes in technology, including use of
  the Internet; the possibility of catastrophic events that could impact the
  Company's operating facilities, computer technology, and communication systems;
  stock volatility; and changes in short- and long-term interest rates, changes in
  market value of available-for-sale securities, and the credit rating of cash,
  cash equivalents, and securities held in the Company's investment portfolios,
  all of which could cause actual results to differ materially from anticipated
  results. The information provided in this document is based upon the facts and
  circumstances known at this time. The Company assumes no obligation to update
  this document for new information subsequent to its issuance.
  
  
  <PAGE>
  
  <TABLE>
  
  
                                    PAYCHEX, INC.
                          CONSOLIDATED STATEMENTS OF INCOME
                      (In thousands, except per share amounts)
  <CAPTION>
  
  --------------------------------------------------------------------------------
                           For the three months ended     For the six months ended
                            November 30,  November 30,  November 30,  November 30,
                                    2001          2000          2001          2000
  --------------------------------------------------------------------------------
  <S>                           <C>           <C>           <C>           <C>
  Revenues:
    Service revenues            $217,509      $190,745      $433,685      $377,215
    Interest on funds held
     for clients                  15,479        17,353        34,117        34,766
  --------------------------------------------------------------------------------
    Total revenues               232,988       208,098       467,802       411,981
  
  Operating costs                 54,731        47,095       108,487        93,022
  Selling, general and
   administrative expenses        87,174        77,578       174,470       156,708
  --------------------------------------------------------------------------------
  Operating income                91,083        83,425       184,845       162,251
  
  Investment income                8,191         5,965        15,718        11,499
  --------------------------------------------------------------------------------
  Income before income taxes      99,274        89,390       200,563       173,750
  
  Income taxes                    30,576        27,264        61,672        52,994
  --------------------------------------------------------------------------------
  Net income                    $ 68,698      $ 62,126      $138,891      $120,756
  ================================================================================
  
  Basic earnings per share      $    .18      $    .17      $    .37      $    .32
  --------------------------------------------------------------------------------
  
  Diluted earnings per share    $    .18      $    .16      $    .37      $    .32
  --------------------------------------------------------------------------------
  
  Weighted-average common shares
   outstanding                    374,512      372,618       374,237       372,326
  --------------------------------------------------------------------------------
  
  Weighted-average shares
   assuming dilution              377,614      377,839       377,672       377,511
  --------------------------------------------------------------------------------
  
  Cash dividends per common
   share                        $     .11     $    .09      $    .20      $    .15
  --------------------------------------------------------------------------------
  <FN>
  
  (A)  Certain amounts for the three- and six-month periods ended November 30,
       2000 have been reclassified to conform to the current year presentation. In
       addition, the Company has changed its segment reporting from two segments
       to one segment in fiscal 2002.
  (B)  Further information on interest on funds held for clients and investment
       income can be found in the Company's SEC filings, including recent Form
       10-Qs, under the caption "Management's Discussion and Analysis of Financial
       Condition and Results of Operations" and subheadings "Results of
       Operations" and "Market Risk Factors." These SEC filings are accessible at
       the Company's Web site.
  </FN>
  </TABLE>
  
  
  <PAGE>
  <TABLE>
  
  
  
                                    PAYCHEX, INC.
                             CONSOLIDATED BALANCE SHEETS
                                   (In thousands)
  <CAPTION>
  
  --------------------------------------------------------------------------------
                                                    November 30,           May 31,
                                                            2001              2001
  --------------------------------------------------------------------------------
  <S>                                                 <C>               <C>
  ASSETS
  Cash and cash equivalents                           $   96,290        $   45,784
  Corporate investments                                  563,893           568,217
  Interest receivable                                     24,646            28,281
  Accounts receivable                                    112,911           100,640
  Prepaid expenses and other current assets                8,330             7,306
  --------------------------------------------------------------------------------
  Current assets before funds held for clients           806,070           750,228
  
  Funds held for clients                               1,841,370         2,041,045
  --------------------------------------------------------------------------------
  Total current assets                                 2,647,440         2,791,273
  
  Property and equipment - net                           107,071            96,078
  Intangible assets - net                                  9,316             9,612
  Deferred income taxes                                       --             1,361
  Other assets                                             8,713             8,872
  --------------------------------------------------------------------------------
  Total assets                                        $2,772,540        $2,907,196
  ================================================================================
  
  LIABILITIES
  Accounts payable                                    $   12,179        $   16,377
  Accrued compensation and related items                  38,718            57,418
  Deferred revenue                                         3,344             4,421
  Accrued income taxes                                     3,196             9,783
  Deferred income taxes                                   17,843             4,996
  Other current liabilities                               15,203            19,282
  --------------------------------------------------------------------------------
  Current liabilities before client fund deposits         90,483           112,277
  
  Client fund deposits                                 1,829,619         2,031,565
  --------------------------------------------------------------------------------
  Total current liabilities                            1,920,102         2,143,842
  Long-term liabilities                                    5,866             5,512
  --------------------------------------------------------------------------------
  Total liabilities                                    1,925,968         2,149,354
  
  STOCKHOLDERS' EQUITY
  Common stock, $.01 par value, 600,000 authorized
    shares
    Issued:  374,740 at November 30, 2001 and
    373,647 at May 31, 2001                                3,747             3,736
  Additional paid-in capital                             161,535           139,897
  Retained earnings                                      665,145           601,142
  Accumulated other comprehensive income                  16,145            13,067
  --------------------------------------------------------------------------------
  Total stockholders' equity                             846,572           757,842
  --------------------------------------------------------------------------------
  Total liabilities and stockholders' equity          $2,772,540        $2,907,196
  ================================================================================
  <FN>
  
  (A) The combined funds held for clients and corporate investment portfolio
      balances reflected unrealized gains of $25.3 million at November 30, 2001
      compared with $20.5 million at May 31, 2001. Intermediate-term interest
      rates have increased slightly since November 30, 2001 resulting in a decline
      in the unrealized gain position to approximately $16 million at December
      17, 2001.
  </FN>
  </TABLE>
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text: SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
                                      FORM 8-K
  
                                   CURRENT REPORT
                         PURSUANT TO SECTION 13 OR 15(d) OF
                         THE SECURITIES EXCHANGE ACT OF 1934
  
                          Date of Report: December 19, 2001
                          (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)
  
                                   (585) 385-6666
                (Registrant's telephone number, including area code)
  ITEM 9.  REGULATION FD DISCLOSURE
  
  The registrant's press release dated December 19, 2001 is attached. This release
  announces the Company's results of operations for the second quarter ended
  November 30, 2001.
  
  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:     December 19, 2001               /s/ B. Thomas Golisano
                                            -----------------------
                                            B. Thomas Golisano
                                            Chairman, President and
                                            Chief Executive Officer
  
  Date:     December 19, 2001               /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 585-383-3406
  
           Access the Webcast of the Paychex, Inc. Second Quarter Earnings Release
               Conference Call scheduled for December 19, 2001 at 11:00 a.m.
               Eastern Standard Time at http://www.paychex.com at the Investor
               Relations home page.
           Paychex, Inc. news releases, current financial information, related
               SEC filings and Investor Relations presentation are accessible at
               the same Web site.
  
                 PAYCHEX, INC. REPORTS RECORD SECOND QUARTER RESULTS
  
  ROCHESTER, NY, December 19, 2001 -- Paychex, Inc. (NASDAQ: PAYX) today announced
  net income of $68.7 million, or $.18 diluted earnings per share, for the quarter
  ended November 30, 2001, an 11% increase over net income of $62.1 million, or
  $.16 diluted earnings per share, for the same period last year. Total revenues
  were $233.0 million, a 12% increase over $208.1 million for the second quarter
  last year.
  
  For the six months ended November 30, 2001, the Company reported record net
  income of $138.9 million, or $.37 diluted earnings per share, a 15% increase
  over $120.8 million, or $.32 diluted earnings per share, for the same period
  last year. Total revenues were $467.8 million, an increase of 14% over $412.0
  million for the same period last year.
  
  ECONOMIC CONDITIONS
  
  The Company first experienced the effects of the recession during the first
  quarter of fiscal 2002, and these effects have heightened during the second
  quarter. In response to the declining economic conditions, the Federal Reserve
  has lowered the Federal Funds rate eleven times for a cumulative 475 basis point
  affect on interest rates.  The short- and long-term effect of changing interest
  rates is disclosed in detail in the Company's financial statements and recent
  SEC filings, which are accessible at the Company's Web site.
  
  After the effects of volatile interest rates, the most significant impact of a
  recessionary economy is lower checks per client as existing clients reduce the
  size of their work force. During the second quarter of fiscal 2002, the Company
  experienced a 4.3% decline in checks per client compared to 2.6% in the first
  quarter. During the recession of the early 1990's, the Company experienced an
  approximate 3% total reduction in checks per client.
  
  Despite the above factors, income before taxes remained strong at 43% of
  revenues during the first half of the year compared with 42% for the same period
  last year. If the interest rates and checks per client conditions experienced in
  fiscal 2000 had prevailed through fiscal 2001 and the first half of fiscal 2002,
  net income growth in fiscal 2001 would have been approximately 25% compared with
  a reported 34% growth. Net income growth for the first half of fiscal 2002 would
  also have been approximately 25% compared with a reported 15%.
  
  SERVICE REVENUES
  
  For the quarter ended November 30, 2001, service revenues, which are comprised
  of the Payroll and Human Resource and Benefits product lines, were $217.5
  million, an increase of 14% over $190.7 million for the prior year quarter. For
  the six months ended November 30, 2001, service revenues were $433.7 million, an
  increase of 15% over $377.2 million for the same period last year.
  
  Payroll service revenue increased 13% to $188.5 million from $167.1 million for
  the prior year second quarter. For the six-month period, Payroll service revenue
  increased 14% to $377.9 million from $331.7 million for the prior year period.
  The increases in Payroll service revenue reflect growth in the client base,
  increased utilization of ancillary services and price increases. As of November
  30, 2001, 84% of Paychex clients utilized Taxpay(Registered Trademark), the
  Company's tax filing and payment feature. The Company's Employee Pay Services,
  which includes Direct Deposit, Readychex(Service Mark) and Access Card products,
  was utilized by 55% of its clients. Major Market Services revenue increased 56%
  and 59% for the second quarter and six-month periods to $16.6 million and $32.2
  million, respectively.
  Human Resource and Benefits service revenue was $29.0 million, an increase of
  23% over $23.6 million for the second quarter last year. For the six-month
  period, Human Resource and Benefits service revenue increased 22% to $55.8
  million from $45.6 million for the prior year period. The increases are related
  primarily to growth in clients for Retirement Services and in client employees
  served by the Company's comprehensive Paychex Administrative Services (PAS) and
  Professional Employer Organization (PEO) bundled services. Retirement Services
  revenue increased 30% and 28% in the second quarter and six-month periods to
  $13.6 million and $25.9 million, respectively.
  
  INTEREST ON FUNDS HELD FOR CLIENTS
  
  For the quarter ended November 30, 2001, interest on funds held for clients was
  $15.5 million, an 11% decrease from $17.4 million for the second quarter last
  year. For the six months ended November 30, 2001, interest on funds held for
  clients decreased 2% to $34.1 million from $34.8 million. The decreases are the
  result of lower interest rates earned in fiscal 2002 offset by net realized
  gains on the sale of available-for-sale securities and higher average portfolio
  balances. Net realized gains included in interest on funds held for clients were
  $2.2 million and $5.4 million for the second quarter and six-month periods of
  fiscal 2002 compared with net realized losses of $.1 million and $.2 million for
  the respective prior year periods.
  
  OPERATING INCOME
  
  For the quarter ended November 30, 2001, operating income was $91.1 million, a
  9% increase over $83.4 million for the second quarter last year. For the six
  months ended November 30, 2001, operating income increased 14% to $184.8 million
  from $162.3 million in the prior year period. Combined operating and selling,
  general and administrative expenses increased 14% in the second quarter and 13%
  for the six-month period over the prior year periods. These increases reflect
  increases in personnel, information technology and facility costs necessary to
  support the growth of the Company.
  
  INVESTMENT INCOME
  
  Investment income for the quarter ended November 30, 2001 increased 37% to $8.2
  million from $6.0 million in the second quarter of last year. Investment income
  for the six-month period increased 37% to $15.7 million from $11.5 million in
  the prior year period. The increases are due to net realized gains on the sale
  of available-for-sale securities and higher average daily invested balances
  offset by the impact of lower interest rates in fiscal 2002. Net realized gains
  included in investment income were $1.8 million and $2.8 million for the second
  quarter and six-month periods of fiscal 2002 compared with net realized losses
  of $.1 million and $.2 million for the respective prior year periods.
  
  B. Thomas Golisano, Chairman, President and Chief Executive Officer of Paychex,
  said, "Given the significant decreases in interest rates and declining economic
  conditions, which continue to impact average checks per client, we are pleased
  with our results for the second quarter. During these challenging conditions, we
  remain focused on increasing our client base, utilization of ancillary services
  and controlling expenses. For fiscal 2002, we expect to produce record revenue
  and net income with revenue growth in the range of 9% to 11%."
  
  "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
  1995 Certain written and oral statements made by Paychex, Inc. (the "Company")
  management may constitute "forward-looking statements" as defined in the Private
  Securities Litigation Reform Act of 1995. Forward-looking statements are
  identified by such words and phrases as "we expect," "expected to," "estimates,"
  "we look forward to," "would equate to," "projects," "projected to be,"
  "anticipates," "we believe," "could be," and other similar phrases. Because they
  are forward-looking, they should be evaluated in light of important risk
  factors. These risk factors include, but are not limited to, general market and
  economic conditions, including demand for the Company's products and services,
  availability of internal and external resources, executing expansion plans,
  competition, and price levels; changes in the laws regulating collection and
  payment of payroll taxes, professional employer organizations, and employee
  benefits, including 401(k) plans, workers' compensation, state unemployment, and
  section 125 plans; delays in the development, timing of the introduction, and
  marketing of new products and services; changes in technology, including use of
  the Internet; the possibility of catastrophic events that could impact the
  Company's operating facilities, computer technology, and communication systems;
  stock volatility; and changes in short- and long-term interest rates, changes in
  market value of available-for-sale securities, and the credit rating of cash,
  cash equivalents, and securities held in the Company's investment portfolios,
  all of which could cause actual results to differ materially from anticipated
  results. The information provided in this document is based upon the facts and
  circumstances known at this time. The Company assumes no obligation to update
  this document for new information subsequent to its issuance.
  PAYCHEX, INC.
                          CONSOLIDATED STATEMENTS OF INCOME
                      (In thousands, except per share amounts)
  --------------------------------------------------------------------------------
                           For the three months ended     For the six months ended
                            November 30,  November 30,  November 30,  November 30,
                                    2001          2000          2001          2000
  --------------------------------------------------------------------------------
  Revenues:
    Service revenues            $217,509      $190,745      $433,685      $377,215
    Interest on funds held
     for clients                  15,479        17,353        34,117        34,766
  --------------------------------------------------------------------------------
    Total revenues               232,988       208,098       467,802       411,981
  
  Operating costs                 54,731        47,095       108,487        93,022
  Selling, general and
   administrative expenses        87,174        77,578       174,470       156,708
  --------------------------------------------------------------------------------
  Operating income                91,083        83,425       184,845       162,251
  
  Investment income                8,191         5,965        15,718        11,499
  --------------------------------------------------------------------------------
  Income before income taxes      99,274        89,390       200,563       173,750
  
  Income taxes                    30,576        27,264        61,672        52,994
  --------------------------------------------------------------------------------
  Net income                    $ 68,698      $ 62,126      $138,891      $120,756
  ================================================================================
  
  Basic earnings per share      $    .18      $    .17      $    .37      $    .32
  --------------------------------------------------------------------------------
  
  Diluted earnings per share    $    .18      $    .16      $    .37      $    .32
  --------------------------------------------------------------------------------
  
  Weighted-average common shares
   outstanding                    374,512      372,618       374,237       372,326
  --------------------------------------------------------------------------------
  
  Weighted-average shares
   assuming dilution              377,614      377,839       377,672       377,511
  --------------------------------------------------------------------------------
  
  Cash dividends per common
   share                        $     .11     $    .09      $    .20      $    .15
  --------------------------------------------------------------------------------
  (A)  Certain amounts for the three- and six-month periods ended November 30,
       2000 have been reclassified to conform to the current year presentation. In
       addition, the Company has changed its segment reporting from two segments
       to one segment in fiscal 2002.
  (B)  Further information on interest on funds held for clients and investment
       income can be found in the Company's SEC filings, including recent Form
       10-Qs, under the caption "Management's Discussion and Analysis of Financial
       Condition and Results of Operations" and subheadings "Results of
       Operations" and "Market Risk Factors." These SEC filings are accessible at
       the Company's Web site.
  PAYCHEX, INC.
                             CONSOLIDATED BALANCE SHEETS
                                   (In thousands)
  --------------------------------------------------------------------------------
                                                    November 30,           May 31,
                                                            2001              2001
  --------------------------------------------------------------------------------
  ASSETS
  Cash and cash equivalents                           $   96,290        $   45,784
  Corporate investments                                  563,893           568,217
  Interest receivable                                     24,646            28,281
  Accounts receivable                                    112,911           100,640
  Prepaid expenses and other current assets                8,330             7,306
  --------------------------------------------------------------------------------
  Current assets before funds held for clients           806,070           750,228
  
  Funds held for clients                               1,841,370         2,041,045
  --------------------------------------------------------------------------------
  Total current assets                                 2,647,440         2,791,273
  
  Property and equipment - net                           107,071            96,078
  Intangible assets - net                                  9,316             9,612
  Deferred income taxes                                       --             1,361
  Other assets                                             8,713             8,872
  --------------------------------------------------------------------------------
  Total assets                                        $2,772,540        $2,907,196
  ================================================================================
  
  LIABILITIES
  Accounts payable                                    $   12,179        $   16,377
  Accrued compensation and related items                  38,718            57,418
  Deferred revenue                                         3,344             4,421
  Accrued income taxes                                     3,196             9,783
  Deferred income taxes                                   17,843             4,996
  Other current liabilities                               15,203            19,282
  --------------------------------------------------------------------------------
  Current liabilities before client fund deposits         90,483           112,277
  
  Client fund deposits                                 1,829,619         2,031,565
  --------------------------------------------------------------------------------
  Total current liabilities                            1,920,102         2,143,842
  Long-term liabilities                                    5,866             5,512
  --------------------------------------------------------------------------------
  Total liabilities                                    1,925,968         2,149,354
  
  STOCKHOLDERS' EQUITY
  Common stock, $.01 par value, 600,000 authorized
    shares
    Issued:  374,740 at November 30, 2001 and
    373,647 at May 31, 2001                                3,747             3,736
  Additional paid-in capital                             161,535           139,897
  Retained earnings                                      665,145           601,142
  Accumulated other comprehensive income                  16,145            13,067
  --------------------------------------------------------------------------------
  Total stockholders' equity                             846,572           757,842
  --------------------------------------------------------------------------------
  Total liabilities and stockholders' equity          $2,772,540        $2,907,196
  ================================================================================
  (A) The combined funds held for clients and corporate investment portfolio
      balances reflected unrealized gains of $25.3 million at November 30, 2001
      compared with $20.5 million at May 31, 2001. Intermediate-term interest
      rates have increased slightly since November 30, 2001 resulting in a decline
      in the unrealized gain position to approximately $16 million at December
      17, 2001.