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 29, 1999
                        (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 29, 1999, which reports its
  financial results for the fiscal year ended May 31, 1999, 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, 1999, 1998 and 1997, and its financial condition at May 31, 1999.
  
  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 1999 Form 10-K and the
  Annual Report to Shareholders is expected to be mailed in August 1999, 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, 1999, 1998 and 1997, and its financial condition at
  May 31, 1999.
  
  
  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 29, 1999                 /s/ B. Thomas Golisano
                                          -----------------------
                                          B. Thomas Golisano
                                          Chairman, President and
                                          Chief Executive Officer
  
  Date:     June 29, 1999                 /s/ John M. Morphy
                                          -----------------------
                                          John M. Morphy
                                          Vice President, Chief
                                          Financial Officer and
                                          Secretary
  
  FOR IMMEDIATE RELEASE
  
  	John M. Morphy, Chief Financial Officer
  	Paychex, Inc.		716-383-3406
  	        or
  	Jan Shuler		716-383-3406
  	Paychex, Inc.
       Access Paychex, Inc. News Releases 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 29, 1999 -- Paychex, Inc. (NASDAQ: PAYX) today announced
  record net income of $139.1 million or $.56 diluted earnings per share for the
  year ended May 31, 1999, a 36% increase over net income of $102.2 million or
  $.41 diluted earnings per share for the same period last year.  Total service
  revenues were $597.3 million, an increase of 21% over $493.7 million for the
  previous fiscal year.
  
  For the quarter ended May 31, 1999, net income increased 35% to $37.9 million
  or $.15 diluted earnings per share as compared to net income of $28.1 million
  or $.11 diluted earnings per share for the same period last year.  Total
  service revenues were $156.6 million, an increase of 19% over $131.7 million
  for the same period last year.
  
  PAYROLL SEGMENT
  For the year ended May 31, 1999, operating income from payroll services
  increased 31% to $235.7 million from $180.3 million for the same period last
  year.  Payroll service revenue was $545.2  million, an increase of 20% over
  $455.2 million for the same period last year.
  
  For the quarter ended May 31, 1999, operating income from payroll services
  increased 37% to $64.2 million from $46.7 million for the fourth quarter last
  year.  Payroll service revenue was $142.0 million, an increase of 19% over
  $119.6 million for the fourth quarter last year.
  
  The increases in revenues and operating income were the result of a 10%
  year-over-year increase in the Company's Payroll client base and continued
  growth of the Taxpay and Direct Deposit products.  Paychex currently services
  322,600 Payroll clients, with 254,300 utilizing Taxpay, the Company's tax
  filing and payment feature, 135,400 taking advantage of the Company's Direct
  Deposit product and 39,500 using the Company's Check Signing option.
  
  HRS-PEO SEGMENT
  For the year ended May 31, 1999, operating income for the segment increased
  90% from $6.6 million to $12.6 million.  HRS-PEO service revenue rose to $52.0
  million, an increase of 35% over $38.5 million for the same period last year.
  
  For the quarter ended May 31, 1999, operating income for the segment increased
  6% from $3.9 million to $4.2 million.  HRS-PEO service revenue rose to $14.7
  million, an increase of 21% over $12.1 million for the fourth quarter last
  year.
  
  The increases in service revenue for the year and the quarter are primarily
  related to increasing 401(k) plan recordkeeping and section 125 clients.  The
  increases in operating income for the year and the quarter are due to service
  revenue gains and continued leveraging of operating expenses.  The lower than
  normal year-over-year growth in fourth quarter operating income was due to a
  comparison to an exceptionally strong fourth quarter in fiscal 1998.  The
  full-year percentage increase in operating income is more indicative of
  expected future results for the HRS-PEO segment.
  
  As of May 31, 1999, the segment had 10,100 401(k) plan recordkeeping clients,
  20,200 section 125 clients and 18,300 PEO worksite employees.  The number of
  worksite employees represents a 5% decline over a year ago.  During fiscal
  1999, additions to worksite employees exceeded expectations, but were offset
  by the loss of two large PEO clients during November 1998.  The loss of these
  clients did not have a material impact on operating income.
  
  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, 1999, Corporate expenses increased
  16% from $52.2 million to $60.7 million.  For the quarter ended May 31, 1999,
  Corporate expenses increased 16% from $13.7 million to $15.9 million.  The
  period increases are primarily due to additional employees required to support
  the continued growth of the Company's business segments.
  
  INCOME TAXES
  The effective income tax rates for the year and quarter ended May 31, 1999,
  were 30.5% and 32.3%, respectively, compared with 29.1% for the same periods
  last year.  The increase in the annual effective rate was due to the growth in
  taxable income exceeding the growth in tax-exempt income, which is derived
  primarily from the Taxpay and Direct Deposit services that provide investment
  revenue.  The higher effective rate for the fourth quarter of fiscal 1999 was
  due to higher than anticipated investments in taxable financial instruments,
  which were yielding a higher net of tax return than tax-exempt investments.
  The effective tax rate for fiscal 2000 is expected to range between 30.5% and
  31.0%.
  
  B. Thomas Golisano, Chairman, President, and Chief Executive Officer of
  Paychex said,  "We are proud to have completed another successful year.
  Fiscal 1999 was our ninth consecutive year of record service revenues and net
  income, and our eighth consecutive year of net income growth of 36% or more.
  We look forward to fiscal 2000 as we continue to execute our formula for
  growth:  increasing client counts, increasing utilization of ancillary
  services, and leveraging our operating expense base."
  
                                  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,
                              1999           1998            1999          1998
  Service revenues:
    Payroll               $141,975       $119,595      $  545,249    $  455,227
    HRS-PEO                 14,661         12,116          52,047        38,477
                           -------        -------       ---------     ---------
  Total service revenues   156,636        131,711         597,296       493,704
  PEO direct costs
    billed (A)             148,309        136,575         578,132       499,741
                           -------        -------       ---------     ---------
  Total revenue            304,945        268,286       1,175,428       993,445
  
  PEO direct costs (A)     148,309        136,575         578,132       499,741
  Operating costs           38,219         34,187         151,956       131,731
  Selling, general and
    administrative
    expenses                65,987         60,605         257,778       227,273
                           -------        -------       ---------     ---------
  Operating income          52,430         36,919         187,562       134,700
  
  Investment income          3,541          2,645          12,581         9,473
                           -------        -------       ---------     ---------
  Income before income
    taxes                   55,971         39,564         200,143       144,173
  
  Income taxes              18,081         11,513          61,044        41,954
                           -------        -------       ---------     ---------
  Net income              $ 37,890       $ 28,051      $  139,099    $  102,219
                           =======        =======       =========     =========
  Basic earnings
    per share (B)         $    .15       $    .11      $      .57    $      .42
                           =======        =======       =========     =========
  Diluted earnings
    per share (B)         $    .15       $    .11      $      .56    $      .41
                           =======        =======       =========     =========
  Weighted-average
    common shares
    outstanding (B)        246,153        244,743         245,521       244,514
                           =======        =======       =========     =========
  Weighted-average
    shares assuming
    dilution (B)           249,103        247,989         248,788       247,219
                           =======        =======       =========     =========
  Cash dividends per
    common share (B)      $    .06       $    .04      $      .22    $      .15
                           =======        =======       =========     =========
  (A)  Wages and payroll taxes of PEO worksite employees and their related
  benefit premiums and claims.
  (B)   Financial information for the periods ended May 31, 1998, have been
  adjusted for a three-for-two stock split distributed in May 1999.
  
                                  PAYCHEX, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
  May 31,                                                 1999              1998
  ASSETS
  
  Cash and cash equivalents                         $   52,692        $   35,571
  Investments                                          290,555           214,967
  Interest receivable                                   18,045            13,227
  Accounts receivable                                   62,941            54,596
  Deferred income taxes                                  1,364             1,525
  Prepaid expenses and other current assets              6,000             4,391
                                                     ---------         ---------
  Current assets before ENS investments                431,597           324,277
  ENS investments                                    1,361,523         1,154,501
                                                     ---------         ---------
  Total current assets                               1,793,120         1,478,778
                                                     ---------         ---------
  Property and equipment - net                          65,931            64,698
  Deferred income taxes                                  1,417               517
  Other assets                                          12,633             5,794
                                                     ---------         ---------
  Total assets                                      $1,873,101        $1,549,787
                                                     =========         =========
  LIABILITIES
  
  Accounts payable                                  $   10,328        $   10,496
  Accrued compensation and related items                36,574            33,649
  Deferred revenue                                       4,643             4,443
  Accrued income taxes                                   4,281             2,628
  Other current liabilities                             17,905            13,960
                                                     ---------         ---------
  Current liabilities before ENS client deposits        73,731            65,176
  ENS client deposits                                1,358,605         1,150,484
                                                     ---------         ---------
  Total current liabilities                          1,432,336         1,215,660
  Other long-term liabilities                            4,965             4,520
                                                     ---------         ---------
  Total liabilities                                  1,437,301         1,220,180
                                                     =========         =========
  STOCKHOLDERS' EQUITY
  
  Common stock, $.01 par value,
    300,000 authorized shares
    Issued: 246,326/1999 and 163,188/1998                2,463             1,632
  Additional paid-in capital                            68,238            46,463
  Retained earnings                                    362,269           278,107
  Accumulated other comprehensive income                 2,830             3,405
                                                     ---------         ---------
  Total stockholders' equity                           435,800           329,607
                                                     ---------         ---------
  Total liabilities and stockholders' equity        $1,873,101        $1,549,787
                                                     =========         =========
  
  
                                  PAYCHEX, INC.
                          BUSINESS SEGMENT INFORMATION
                                 (In thousands)
  
  The Company has two business segments: Payroll and Human Resource
  Services-Professional Employer Organization (HRS-PEO).  The Payroll segment is
  engaged in the preparation of payroll checks, internal accounting records, all
  federal, state and local payroll tax returns, and collection and remittance of
  payroll obligations for small- to medium-sized businesses.  The HRS-PEO
  segment specializes in providing small- and medium-sized businesses with
  cost-effective outsourcing solutions for their employee benefits.  HRS-PEO
  products include 401(k) plan recordkeeping services, section 125 plans,
  workers' compensation, group benefits, and state unemployment insurance
  services, employee handbooks and management services.  As an outsourcing
  solution, HRS-PEO relieves the business owner of human resource
  administration, employment regulatory compliance, workers' compensation
  coverage, health care and other employee-related responsibilities.  Consistent
  with PEO industry practice, HRS-PEO revenue includes all amounts billed to
  clients for the services provided.  Corporate expenses are primarily related
  to the Information Technology, Organizational Development, Finance, 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,
                               1999         1998             1999          1998
  Total revenue:
    Payroll                $141,975     $119,595       $  545,249      $455,227
    HRS-PEO revenue:
      Service revenue        14,661       12,116           52,047        38,477
      PEO direct costs
        billed (A)          148,309      136,575          578,132       499,741
                            -------      -------        ---------       -------
      Total HRS-PEO
        revenue             162,970      148,691          630,179       538,218
                            -------      -------        ---------       -------
  Total revenue             304,945      268,286        1,175,428       993,445
  PEO direct costs (A)      148,309      136,575          578,132       499,741
                            -------      -------        ---------       -------
  Total revenue less PEO
    direct costs           $156,636     $131,711       $  597,296      $493,704
                            =======      =======        =========       =======
  Investment revenue
    included in Payroll
    revenue                $ 13,800     $ 12,624       $   52,335      $ 43,429
                            =======      =======        =========       =======
  Operating income:
    Payroll                $ 64,154     $ 46,707       $  235,710      $180,265
    HRS-PEO                   4,176        3,948           12,598         6,642
                            -------      -------        ---------       -------
    Segment operating
      income                 68,330       50,655          248,308       186,907
    Corporate expenses       15,900       13,736           60,746        52,207
                            -------      -------        ---------       -------
    Total operating income   52,430       36,919          187,562       134,700
  
  Investment income           3,541        2,645           12,581         9,473
                            -------      -------        ---------       -------
  Income before income
    taxes                  $ 55,971     $ 39,564       $  200,143      $144,173
                            =======      =======        =========       =======
  (A)  Wages and payroll taxes of PEO worksite employees and their related
  benefit premiums and claims.
  
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
  Management's Discussion and Analysis reviews the Company's operating results
  for the three years ended May 31, 1999 (fiscal 1999, 1998 and 1997), and its
  financial condition at May 31, 1999.  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 29, 1999
  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 1999 Form 10-K and the
  Annual Report to Shareholders is expected to be mailed in August 1999, 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, 1999, 1998 and 1997, and its financial condition at
  May 31, 1999.
  
  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)         1999   Change      1998   Change      1997
  ------------------------------------------------------------------------------
  Service revenues                $597,296    21.0%  $493,704    23.5%  $399,733
  Operating income                $187,562    39.2%  $134,700    39.4%  $ 96,625
  Income before income taxes      $200,143    38.8%  $144,173    39.1%  $103,656
  Net income                      $139,099    36.1%  $102,219    36.0%  $ 75,150
  Basic earnings per share        $    .57    35.7%  $    .42    35.5%  $    .31
  Diluted earnings per share      $    .56    36.6%  $    .41    32.3%  $    .31
  ==============================================================================
  
  The financial results for Paychex, Inc., in 1999, reflect the ninth
  consecutive year of record service revenues and net income, and the eighth
  consecutive year of net income growth of 36% or more.  The Company's ability
  to continually grow its client base, increase client utilization of ancillary
  services, implement modest price increases, and decrease operating expenses as
  a percent of service revenues has resulted in nine years of average compounded
  annual growth in service revenues of 19% and net income of 36%.
  
                                Payroll segment
  
  (In thousands)                      1999   Change      1998   Change      1997
  ------------------------------------------------------------------------------
  Payroll service revenue         $545,249    19.8%  $455,227    23.4%  $368,855
  Investment revenue included in
    Payroll service revenue       $ 52,335    20.5%  $ 43,429    27.3%  $ 34,105
  Payroll operating income        $235,710    30.8%  $180,265    33.2%  $135,364
  ==============================================================================
  Payroll clients                    322.6     9.9%     293.6    11.8%     262.7
  Taxpay clients                     254.3    15.2%     220.7    22.0%     180.9
  Direct Deposit clients             135.4    29.7%     104.4    36.5%      76.5
  Check Signing clients               39.5    17.9%      33.5    23.2%      27.2
  ==============================================================================
  
  Revenues:  Payroll service revenue includes service fees and investment
  revenue.  Service fee revenue is earned primarily from Payroll, Taxpay, Direct
  Deposit, Check Signing and other ancillary services.  Investment revenue is
  earned during the period between collecting client funds and remitting the
  funds to the applicable tax authorities for Taxpay clients and employees of
  Direct Deposit clients.  Investment revenue also includes net realized gains
  and losses from the sale of available-for-sale securities.
  
  The increases in service revenue for 1999 and 1998 are primarily related to
  the growth of the Payroll client base, including improvement in client
  retention, and increased utilization of ancillary services such as Taxpay,
  Direct Deposit and Check Signing by both new and existing clients.  During
  1998 and 1997, the growth of the Taxpay client base was accelerated by the
  Internal Revenue Service's Electronic Federal Tax Payment System mandate,
  which required many small businesses to remit payroll tax payments
  electronically as of July 1, 1997.  Remitting payroll tax payments
  electronically by the Company, results in the payments becoming "good funds"
  one day earlier, and a one day reduction in investment revenue.
  
  At May 31, 1999, 79% of Payroll clients utilized the Taxpay service, compared
  with 75% at the end of 1998, and 69% at the end of 1997.  Client utilization
  of this product is expected to mature within the next several years within a
  range of 82% to 87%.  Client utilization of Direct Deposit was 42% at May 31,
  1999, versus 36% and 29% at May 31, 1998 and 1997, respectively.  At May 31,
  1999, only 25% of the total employees paid by the Company's payroll service
  utilize direct deposit.  This service is expected to provide growth
  opportunities for fiscal 2000 and beyond.
  
  The decrease in year-over-year percentage growth in Payroll service revenue in
  1999 compared to 1998 reflects the impact of lower interest rates and the
  maturing of Taxpay.  Fiscal 2000's percentage growth in Payroll revenue is
  expected to be within the long-term historical range of 17% to 19%. Additional
  discussion on interest rates and related risk is included in the Liquidity and
  Capital Resources section of this review under the caption "Investments and
  ENS investments".
  
  Operating income:  Operating income for 1999 and 1998 increased as a result of
  continued growth of the client base, record levels of client retention,
  increased utilization of ancillary services, modest price increases, and
  leveraging of the segment's operating expense base, as evidenced by the
  increases in the segment's operating margins year-over-year.
  
                                HRS-PEO segment
  
  (In thousands)                     1999   Change      1998    Change      1997
  ------------------------------------------------------------------------------
  HRS-PEO service revenue        $ 52,047    35.3%  $ 38,477     24.6%  $ 30,878
  PEO direct costs billed         578,132    15.7%   499,741     49.2%   334,966
                                  ----------------------------------------------
  Total HRS-PEO revenue           630,179    17.1%   538,218     47.1%   365,844
  PEO direct costs                578,132    15.7%   499,741     49.2%   334,966
  HRS-PEO operating income       $ 12,598    89.7%  $  6,642     18.7%  $  5,596
  ==============================================================================
  401(k) Recordkeeping clients       10.1    68.3%       6.0    100.0%       3.0
  401(k) client funds managed
    externally (in millions)     $  757.6    97.7%  $  383.3    177.2%  $  138.3
  Section 125 clients                20.2    23.2%      16.4     24.2%      13.2
  PEO worksite employees             18.3    -4.7%      19.2     39.1%      13.8
  ==============================================================================
  
  Revenues:  The significant increases in service revenue for 1999 and 1998 are
  primarily related to the benefits of developing and growing a recurring
  revenue stream from 401(k) recordkeeping clients, section 125 cafeteria plan
  clients, and the number of Professional Employer Organization (PEO) worksite
  employees.  During fiscal 1999, additions to worksite employees exceeded
  expectations, but were offset by the loss of two large PEO clients during
  November 1998.  Fiscal 2000's growth in HRS-PEO service revenue is expected to
  be comparable to 1999's rate and continue to grow at a rate higher than
  Payroll segment revenue.
  
  PEO direct costs billed and PEO direct costs:  Consistent with PEO industry
  practice, total PEO revenues reported in the Consolidated Statements of Income
  include the Company's service fee, plus the PEO direct costs billed to clients
  for the wages and payroll taxes of worksite employees, their related benefit
  premiums and claims and other direct costs of employment.  The lower
  percentage growth in 1999 for PEO direct costs billed and PEO direct costs is
  primarily due to the loss of the two large clients discussed above.
  
  Operating income:  For 1999 and 1998, the increases in operating income are
  primarily related to gains in service revenue and leveraging operating
  expenses.  Fiscal 1999 also benefited from the February 1998 consolidation of
  the PEO administrative functions from Florida to Rochester, New York.  During
  the first half of 1999, the segment increased its 401(k) recordkeeping sales
  force by approximately 50 individuals to attain the goal of servicing more
  than 10,000 clients by the end of 1999, and to build a selling infrastructure
  for future years.
  
  Full-year fiscal 2000's HRS-PEO service revenue and operating income are
  anticipated to continue to grow at a rate that is higher than the Payroll
  segment's.  Fiscal 2000'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)                        1999   Change     1998   Change     1997
  ------------------------------------------------------------------------------
  Corporate expenses                 $60,746    16.4%  $52,207    17.8%  $44,335
  ==============================================================================
  
  For 1999 and 1998, the increases in expenses are primarily due to additional
  employees required to support the continued growth of the Company's business
  segments.  In addition, 1999 and 1998 expenses reflect increased national
  marketing efforts, which began in the latter part of the third quarter of
  fiscal 1998.  Fiscal 2000's expenses are expected to increase at a rate
  slightly lower than 1999's growth rate.
  
                               Investment income
  
  (In thousands)                        1999   Change     1998   Change     1997
  ------------------------------------------------------------------------------
  Investment income                  $12,581    32.8%  $ 9,473    34.7%  $ 7,031
  ==============================================================================
  
  Investment income earned from the Company's Investments, which does not
  include the investment revenue earned from ENS investments, has grown mainly
  as a result of increases in investment balances generated from increases in
  overall cash flows.  Fiscal 1999's growth was slightly impacted by lower
  comparable interest rates.  Additional discussion on interest rates and
  related risk is included in the Liquidity and Capital Resources section of
  this review under the caption "Investments and ENS investments".  Investment
  income for fiscal 2000, subject to changes in market rates of interest, is
  expected to grow at a rate slightly lower than the Company's net income
  growth.
  
                                  Income taxes
  
  (In thousands)                        1999   Change     1998   Change     1997
  ------------------------------------------------------------------------------
  Income taxes                       $61,044    45.5%  $41,954    47.2%  $28,506
  Effective income tax rate            30.5%     1.4     29.1%     1.6     27.5%
  ==============================================================================
  
  For 1999 and 1998, 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 the Taxpay and Direct Deposit
  services that provide investment revenue. In addition, the higher effective
  rate for 1999 was due to higher than anticipated investments in taxable
  financial instruments, which were yielding a higher net of tax return than
  tax-exempt investments.  Fiscal 2000's effective income tax rate is expected
  to range from 30.5% to 31.0%, as taxable income is expected to grow at a
  faster rate than tax-exempt income.
  
                         LIQUIDITY AND CAPITAL RESOURCES
  
                              Operating activities
  
  (In thousands)                      1999   Change      1998   Change      1997
  ------------------------------------------------------------------------------
  Operating cash flows            $174,120    27.3%  $136,761    27.8%  $107,027
  ==============================================================================
  
  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 $343.2 million in available cash and investments and $297.5
  million of available, uncommitted, unsecured lines of credit.
  
                              Investing activities
  
  (In thousands)                   1999   Change       1998    Change       1997
  ------------------------------------------------------------------------------
  Net Investments and
    ENS activities            $ (82,724)   -6.8%  $ (88,728)   152.4%   $(35,151)
  Purchases of P&E, net         (22,104)  -21.6%    (28,197)    56.6%    (18,008)
  Purchases of other assets      (3,590)  599.8%       (513)   -73.5%     (1,935)
  ------------------------------------------------------------------------------
  Net cash used in investing
    activities                $(108,418)   -7.7%  $(117,438)   113.2%   $(55,094)
  ==============================================================================
  
  Investments and ENS investments:
  
  (In thousands)                           May 31, 1999            May 31, 1998
                                 ----------------------   ---------------------
                                       COST  FAIR VALUE        COST  FAIR VALUE
  Type of issue:
    Money market securities and
      other cash equivalents     $  770,648  $  770,648  $  714,941  $  714,941
    Available-for-sale
      securities:
        General obligation
          municipal bonds           313,485     314,636     212,222     213,940
        Pre-refunded municipal
          bonds                     295,359     297,621     236,151     238,462
        Revenue municipal bonds     266,264     267,290     199,545     200,850
        Other securities                 21          73          21          65
                                  ---------   ---------   ---------   ---------
    Total available-for-sale
      securities                    875,129     879,620     647,939     653,317
    Other                             1,424       1,810       1,210       1,210
                                  ---------   ---------   ---------   ---------
  Total Investments and
    ENS investments              $1,647,201  $1,652,078  $1,364,090  $1,369,468
                                  =========   =========   =========   =========
  Classification of investments
    on Consolidated Balance
    Sheets:
      Investments                $  288,596  $  290,555  $  213,606  $  214,967
      ENS investments             1,358,605   1,361,523   1,150,484   1,154,501
                                  ---------   ---------   ---------   ---------
                                 $1,647,201  $1,652,078  $1,364,090  $1,369,468
                                  =========   =========   =========   =========
  
  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 Direct Deposit clients.
  
  At May 31, 1999, the Company had $770.6 million of ENS funds and $47.6 million
  of Corporate cash equivalents invested in money market securities and other
  cash equivalents with an average maturity of less than 30 days, and $879.6
  million invested in available-for-sale securities with an average duration of
  2.5 years.  At May 31, 1999, the market value of the available-for-sale
  securities exceeded their cost basis by $4.5 million compared to $5.4 million
  at the end of May 1998.
  
  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 does not utilize derivative financial instruments to manage
  interest rate risk.  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.
  
  During the fiscal 1999 quarter ended November 30, 1998, the federal funds rate
  was reduced by 75 basis points to 4.75%.  The earnings impact of these rate
  reductions 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, 1999, the Company had $879.6 million invested in
  available-for-sale securities at fair value, with a weighted-average yield to
  maturity of 4.10%.  Assuming a hypothetical increase in interest rates of 75
  basis points given the May 31, 1999 portfolio of securities, the resulting
  potential decrease in fair value would be approximately $16.2 million, or
  approximately 2% of the portfolio.  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, 1998.
  
  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,
  1999, approximately 96% 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.
  
  Purchases of property and equipment, net:  In addition to the $22.1 million of
  purchases of property and equipment for the year ended May 31, 1999, the
  Company had committed to purchase approximately $4.0 million of additional
  items at May 31, 1999.  To support the Company's continued client and
  ancillary product growth, significant purchases and commitments were made in
  1999 and 1998 for data processing and personal computer equipment, and for the
  expansion and upgrade of various operating facilities.  Purchases of property
  and equipment in fiscal 2000 are expected to range from $27 million to $30
  million.
  
                              Financing activities
  
  (In thousands,
    except per share amounts)        1999    Change      1998   Change      1997
  ------------------------------------------------------------------------------
  Dividends paid                 $(54,055)    50.7%  $(35,871)   48.7%  $(24,117)
  Proceeds from exercise of
    stock options                   5,535    178.1%     1,990    -8.7%     2,180
  Other                               (61)      --        (84)     --        218
  ------------------------------------------------------------------------------
  Net cash used in financing
    activities                   $(48,581)    43.0%  $(33,965)   56.4%  $(21,719)
  ------------------------------------------------------------------------------
  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 seven 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 last five fiscal years.
  
  Proceeds from exercise of stock options:  The increase in proceeds from
  exercise of stock options reflects the issuance of 1,032,000 shares of common
  stock for stock option exercises in 1999, versus 277,000 shares in 1998 and
  267,000 shares in 1997, on a pre-split-adjusted basis.
  
                                      OTHER
  
  Recently issued accounting standards:  Through the end of 1999, the Company
  expensed as incurred certain costs to develop and enhance its internal
  computer programs and software.  Expenditures for vendor-provided software
  were capitalized and amortized by the straight-line method over their
  estimated useful lives, ranging from 3 to 5 years.  In March 1998, the
  Accounting Standards Executive Committee issued 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.  The Company will adopt the SOP as of June 1, 1999.  The effect
  of adopting the SOP is expected to increase net income by approximately $2.0
  million to $3.0 million for the year ended May 31, 2000.
  
  Year 2000 readiness disclosure:  The Company is actively pursuing resolution
  of year 2000 issues.  The year 2000 problem originated with the advent of
  computers, when dates were stored without century indicators, in an effort to
  reduce the need for expensive storage space used for input, output and storage
  media.  In order to process and calculate dates correctly, internal computer
  systems must be changed to handle the year 2000 and beyond.  Year 2000 efforts
  extend past the Company's internal computer systems and require coordination
  with clients, vendors, government entities, financial institutions and other
  third parties to understand their plans for making systems and related
  interfaces compliant.
  
  In response to year 2000 issues, the Company initiated a program to manage
  progress in year 2000 compliance efforts.  The managers of the Company's year
  2000 compliance program report directly to the Vice President of Information
  Technology and provide regular reports to the Company's Senior Management and
  the Board of Directors.
  
  Processes and procedures are in place to ensure the following: all future
  internal development and testing follows year 2000 development and testing
  standards, all projects undertaken in the interim deliver year 2000 compliant
  solutions, all future third-party hardware and software acquisitions are year
  2000 compliant, and all commercial third-party service providers are being
  queried regarding their year 2000 compliance plans.  In addition, the Company
  is actively working with all government agency partners to determine their
  year 2000 compliance plans, and has been making year 2000 changes based on
  their mandates.
  
  The Company's internal mission-critical systems were year 2000 compliant by
  the end of the first quarter of calendar year 1999.  The remainder of calendar
  year 1999 will be used to assess and address year 2000 issues for internal
  desktop computers and software, complete interface testing with external
  agencies and partners, enhance existing normal business contingency plans to
  address any identified year 2000 issues, and to react to yet unknown changes
  dictated by third parties, such as government agencies, hardware and software
  vendors, financial institutions, or utility companies.  Third-party interface
  testing and resolution of year 2000 issues with external agencies and partners
  is dependent upon those third parties completing their own year 2000
  remediation efforts.
  
  The Company expects minimal business disruption will occur as a result of year
  2000 issues for systems that the Company directly controls.  The Company is in
  the process of enhancing existing normal business contingency plans to address
  any identified year 2000 issues based on actual testing experience with third
  parties and assessment of outside risks.  There can be no assurance that there
  will not be an adverse effect on the Company if third parties, such as
  government agencies, hardware and software vendors, financial institutions or
  utility companies, do not convert their systems in a timely manner and in a
  way that is compatible with the Company's systems.  However, management
  believes that ongoing communication with and assessment of these third parties
  will minimize these risks, and expects minimal business disruption at the turn
  of the century.
  
  The Company currently anticipates expenditures for year 2000 efforts to
  approximate $5 million, with approximately eighty percent spent through May
  31, 1999.  The remaining twenty percent will be spent on desktop computers and
  software, continued interface testing with external agencies and partners,
  enhancing existing contingency plans, and to react to yet unknown changes
  dictated by third parties.  The cost of the project and the date on which the
  Company plans to complete the year 2000 modifications are based on
  management's best estimates.  These estimates were derived from internal
  assessments and assumptions of future events.  The estimates may be adversely
  affected by the continued availability of personnel and system resources, as
  well as the failure of third-party vendors, service providers, and agencies to
  properly address year 2000 issues.  There is no guarantee that these estimates
  will be achieved, and actual results could differ significantly from those
  anticipated.
  
  EXHIBIT 99:  "Safe Harbor" Statement under the Private Securities Litigation
               Reform Act of 1995.
  
              "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 "expects", "is expected to be" and
  "could be."  Because they are forward-looking, they should be evaluated in
  light of important risk factors.  These risk factors include general market
  conditions, including demand for the Company's products and services,
  competition and price levels; changes in the laws regulating collection and
  payment of payroll taxes, professional employer organizations, and employee
  benefits, including 401(k) plans, workers' compensation, state unemployment,
  and section 125 plans; delays in the development, timing of the introduction,
  and marketing of new products and services; the possibility of catastrophic
  events that could impact the Company's operating facilities, computer
  technology and communication systems, including Year 2000 issues; and changes
  in short- and long-term interest rates and the credit rating of cash, cash
  equivalents, and securities held in the Company's investment portfolios.
metadata_documents: [{"type": "8-K", "sequence": "1", "secsgml_size_bytes": 48298}]
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": "99654201"}, "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 29, 1999
                        (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 29, 1999, which reports its
  financial results for the fiscal year ended May 31, 1999, 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, 1999, 1998 and 1997, and its financial condition at May 31, 1999.
  
  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 1999 Form 10-K and the
  Annual Report to Shareholders is expected to be mailed in August 1999, 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, 1999, 1998 and 1997, and its financial condition at
  May 31, 1999.
  
  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 29, 1999                 /s/ B. Thomas Golisano
                                          -----------------------
                                          B. Thomas Golisano
                                          Chairman, President and
                                          Chief Executive Officer
  
  Date:     June 29, 1999                 /s/ John M. Morphy
                                          -----------------------
                                          John M. Morphy
                                          Vice President, Chief
                                          Financial Officer and
                                          Secretary
  
  FOR IMMEDIATE RELEASE
  
  	John M. Morphy, Chief Financial Officer
  	Paychex, Inc.		716-383-3406
  	        or
  	Jan Shuler		716-383-3406
  	Paychex, Inc.
       Access Paychex, Inc. News Releases 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 29, 1999 -- Paychex, Inc. (NASDAQ: PAYX) today announced
  record net income of $139.1 million or $.56 diluted earnings per share for the
  year ended May 31, 1999, a 36% increase over net income of $102.2 million or
  $.41 diluted earnings per share for the same period last year.  Total service
  revenues were $597.3 million, an increase of 21% over $493.7 million for the
  previous fiscal year.
  
  For the quarter ended May 31, 1999, net income increased 35% to $37.9 million
  or $.15 diluted earnings per share as compared to net income of $28.1 million
  or $.11 diluted earnings per share for the same period last year.  Total
  service revenues were $156.6 million, an increase of 19% over $131.7 million
  for the same period last year.
  
  PAYROLL SEGMENT
  For the year ended May 31, 1999, operating income from payroll services
  increased 31% to $235.7 million from $180.3 million for the same period last
  year.  Payroll service revenue was $545.2  million, an increase of 20% over
  $455.2 million for the same period last year.
  
  For the quarter ended May 31, 1999, operating income from payroll services
  increased 37% to $64.2 million from $46.7 million for the fourth quarter last
  year.  Payroll service revenue was $142.0 million, an increase of 19% over
  $119.6 million for the fourth quarter last year.
  
  The increases in revenues and operating income were the result of a 10%
  year-over-year increase in the Company's Payroll client base and continued
  growth of the Taxpay and Direct Deposit products.  Paychex currently services
  322,600 Payroll clients, with 254,300 utilizing Taxpay, the Company's tax
  filing and payment feature, 135,400 taking advantage of the Company's Direct
  Deposit product and 39,500 using the Company's Check Signing option.
  
  HRS-PEO SEGMENT
  For the year ended May 31, 1999, operating income for the segment increased
  90% from $6.6 million to $12.6 million.  HRS-PEO service revenue rose to $52.0
  million, an increase of 35% over $38.5 million for the same period last year.
  
  For the quarter ended May 31, 1999, operating income for the segment increased
  6% from $3.9 million to $4.2 million.  HRS-PEO service revenue rose to $14.7
  million, an increase of 21% over $12.1 million for the fourth quarter last
  year.
  
  The increases in service revenue for the year and the quarter are primarily
  related to increasing 401(k) plan recordkeeping and section 125 clients.  The
  increases in operating income for the year and the quarter are due to service
  revenue gains and continued leveraging of operating expenses.  The lower than
  normal year-over-year growth in fourth quarter operating income was due to a
  comparison to an exceptionally strong fourth quarter in fiscal 1998.  The
  full-year percentage increase in operating income is more indicative of
  expected future results for the HRS-PEO segment.
  
  As of May 31, 1999, the segment had 10,100 401(k) plan recordkeeping clients,
  20,200 section 125 clients and 18,300 PEO worksite employees.  The number of
  worksite employees represents a 5% decline over a year ago.  During fiscal
  1999, additions to worksite employees exceeded expectations, but were offset
  by the loss of two large PEO clients during November 1998.  The loss of these
  clients did not have a material impact on operating income.
  
  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, 1999, Corporate expenses increased
  16% from $52.2 million to $60.7 million.  For the quarter ended May 31, 1999,
  Corporate expenses increased 16% from $13.7 million to $15.9 million.  The
  period increases are primarily due to additional employees required to support
  the continued growth of the Company's business segments.
  
  INCOME TAXES
  The effective income tax rates for the year and quarter ended May 31, 1999,
  were 30.5% and 32.3%, respectively, compared with 29.1% for the same periods
  last year.  The increase in the annual effective rate was due to the growth in
  taxable income exceeding the growth in tax-exempt income, which is derived
  primarily from the Taxpay and Direct Deposit services that provide investment
  revenue.  The higher effective rate for the fourth quarter of fiscal 1999 was
  due to higher than anticipated investments in taxable financial instruments,
  which were yielding a higher net of tax return than tax-exempt investments.
  The effective tax rate for fiscal 2000 is expected to range between 30.5% and
  31.0%.
  
  B. Thomas Golisano, Chairman, President, and Chief Executive Officer of
  Paychex said,  "We are proud to have completed another successful year.
  Fiscal 1999 was our ninth consecutive year of record service revenues and net
  income, and our eighth consecutive year of net income growth of 36% or more.
  We look forward to fiscal 2000 as we continue to execute our formula for
  growth:  increasing client counts, increasing utilization of ancillary
  services, and leveraging our operating expense base."
  
                                  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,
                              1999           1998            1999          1998
  Service revenues:
    Payroll               $141,975       $119,595      $  545,249    $  455,227
    HRS-PEO                 14,661         12,116          52,047        38,477
                           -------        -------       ---------     ---------
  Total service revenues   156,636        131,711         597,296       493,704
  PEO direct costs
    billed (A)             148,309        136,575         578,132       499,741
                           -------        -------       ---------     ---------
  Total revenue            304,945        268,286       1,175,428       993,445
  
  PEO direct costs (A)     148,309        136,575         578,132       499,741
  Operating costs           38,219         34,187         151,956       131,731
  Selling, general and
    administrative
    expenses                65,987         60,605         257,778       227,273
                           -------        -------       ---------     ---------
  Operating income          52,430         36,919         187,562       134,700
  
  Investment income          3,541          2,645          12,581         9,473
                           -------        -------       ---------     ---------
  Income before income
    taxes                   55,971         39,564         200,143       144,173
  
  Income taxes              18,081         11,513          61,044        41,954
                           -------        -------       ---------     ---------
  Net income              $ 37,890       $ 28,051      $  139,099    $  102,219
                           =======        =======       =========     =========
  Basic earnings
    per share (B)         $    .15       $    .11      $      .57    $      .42
                           =======        =======       =========     =========
  Diluted earnings
    per share (B)         $    .15       $    .11      $      .56    $      .41
                           =======        =======       =========     =========
  Weighted-average
    common shares
    outstanding (B)        246,153        244,743         245,521       244,514
                           =======        =======       =========     =========
  Weighted-average
    shares assuming
    dilution (B)           249,103        247,989         248,788       247,219
                           =======        =======       =========     =========
  Cash dividends per
    common share (B)      $    .06       $    .04      $      .22    $      .15
                           =======        =======       =========     =========
  (A)  Wages and payroll taxes of PEO worksite employees and their related
  benefit premiums and claims.
  (B)   Financial information for the periods ended May 31, 1998, have been
  adjusted for a three-for-two stock split distributed in May 1999.
  
                                  PAYCHEX, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
  May 31,                                                 1999              1998
  ASSETS
  
  Cash and cash equivalents                         $   52,692        $   35,571
  Investments                                          290,555           214,967
  Interest receivable                                   18,045            13,227
  Accounts receivable                                   62,941            54,596
  Deferred income taxes                                  1,364             1,525
  Prepaid expenses and other current assets              6,000             4,391
                                                     ---------         ---------
  Current assets before ENS investments                431,597           324,277
  ENS investments                                    1,361,523         1,154,501
                                                     ---------         ---------
  Total current assets                               1,793,120         1,478,778
                                                     ---------         ---------
  Property and equipment - net                          65,931            64,698
  Deferred income taxes                                  1,417               517
  Other assets                                          12,633             5,794
                                                     ---------         ---------
  Total assets                                      $1,873,101        $1,549,787
                                                     =========         =========
  LIABILITIES
  
  Accounts payable                                  $   10,328        $   10,496
  Accrued compensation and related items                36,574            33,649
  Deferred revenue                                       4,643             4,443
  Accrued income taxes                                   4,281             2,628
  Other current liabilities                             17,905            13,960
                                                     ---------         ---------
  Current liabilities before ENS client deposits        73,731            65,176
  ENS client deposits                                1,358,605         1,150,484
                                                     ---------         ---------
  Total current liabilities                          1,432,336         1,215,660
  Other long-term liabilities                            4,965             4,520
                                                     ---------         ---------
  Total liabilities                                  1,437,301         1,220,180
                                                     =========         =========
  STOCKHOLDERS' EQUITY
  
  Common stock, $.01 par value,
    300,000 authorized shares
    Issued: 246,326/1999 and 163,188/1998                2,463             1,632
  Additional paid-in capital                            68,238            46,463
  Retained earnings                                    362,269           278,107
  Accumulated other comprehensive income                 2,830             3,405
                                                     ---------         ---------
  Total stockholders' equity                           435,800           329,607
                                                     ---------         ---------
  Total liabilities and stockholders' equity        $1,873,101        $1,549,787
                                                     =========         =========
  
                                  PAYCHEX, INC.
                          BUSINESS SEGMENT INFORMATION
                                 (In thousands)
  
  The Company has two business segments: Payroll and Human Resource
  Services-Professional Employer Organization (HRS-PEO).  The Payroll segment is
  engaged in the preparation of payroll checks, internal accounting records, all
  federal, state and local payroll tax returns, and collection and remittance of
  payroll obligations for small- to medium-sized businesses.  The HRS-PEO
  segment specializes in providing small- and medium-sized businesses with
  cost-effective outsourcing solutions for their employee benefits.  HRS-PEO
  products include 401(k) plan recordkeeping services, section 125 plans,
  workers' compensation, group benefits, and state unemployment insurance
  services, employee handbooks and management services.  As an outsourcing
  solution, HRS-PEO relieves the business owner of human resource
  administration, employment regulatory compliance, workers' compensation
  coverage, health care and other employee-related responsibilities.  Consistent
  with PEO industry practice, HRS-PEO revenue includes all amounts billed to
  clients for the services provided.  Corporate expenses are primarily related
  to the Information Technology, Organizational Development, Finance, 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,
                               1999         1998             1999          1998
  Total revenue:
    Payroll                $141,975     $119,595       $  545,249      $455,227
    HRS-PEO revenue:
      Service revenue        14,661       12,116           52,047        38,477
      PEO direct costs
        billed (A)          148,309      136,575          578,132       499,741
                            -------      -------        ---------       -------
      Total HRS-PEO
        revenue             162,970      148,691          630,179       538,218
                            -------      -------        ---------       -------
  Total revenue             304,945      268,286        1,175,428       993,445
  PEO direct costs (A)      148,309      136,575          578,132       499,741
                            -------      -------        ---------       -------
  Total revenue less PEO
    direct costs           $156,636     $131,711       $  597,296      $493,704
                            =======      =======        =========       =======
  Investment revenue
    included in Payroll
    revenue                $ 13,800     $ 12,624       $   52,335      $ 43,429
                            =======      =======        =========       =======
  Operating income:
    Payroll                $ 64,154     $ 46,707       $  235,710      $180,265
    HRS-PEO                   4,176        3,948           12,598         6,642
                            -------      -------        ---------       -------
    Segment operating
      income                 68,330       50,655          248,308       186,907
    Corporate expenses       15,900       13,736           60,746        52,207
                            -------      -------        ---------       -------
    Total operating income   52,430       36,919          187,562       134,700
  
  Investment income           3,541        2,645           12,581         9,473
                            -------      -------        ---------       -------
  Income before income
    taxes                  $ 55,971     $ 39,564       $  200,143      $144,173
                            =======      =======        =========       =======
  (A)  Wages and payroll taxes of PEO worksite employees and their related
  benefit premiums and claims.
  
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
  Management's Discussion and Analysis reviews the Company's operating results
  for the three years ended May 31, 1999 (fiscal 1999, 1998 and 1997), and its
  financial condition at May 31, 1999.  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 29, 1999
  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 1999 Form 10-K and the
  Annual Report to Shareholders is expected to be mailed in August 1999, 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, 1999, 1998 and 1997, and its financial condition at
  May 31, 1999.
  
  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)         1999   Change      1998   Change      1997
  ------------------------------------------------------------------------------
  Service revenues                $597,296    21.0%  $493,704    23.5%  $399,733
  Operating income                $187,562    39.2%  $134,700    39.4%  $ 96,625
  Income before income taxes      $200,143    38.8%  $144,173    39.1%  $103,656
  Net income                      $139,099    36.1%  $102,219    36.0%  $ 75,150
  Basic earnings per share        $    .57    35.7%  $    .42    35.5%  $    .31
  Diluted earnings per share      $    .56    36.6%  $    .41    32.3%  $    .31
  ==============================================================================
  
  The financial results for Paychex, Inc., in 1999, reflect the ninth
  consecutive year of record service revenues and net income, and the eighth
  consecutive year of net income growth of 36% or more.  The Company's ability
  to continually grow its client base, increase client utilization of ancillary
  services, implement modest price increases, and decrease operating expenses as
  a percent of service revenues has resulted in nine years of average compounded
  annual growth in service revenues of 19% and net income of 36%.
  
                                Payroll segment
  
  (In thousands)                      1999   Change      1998   Change      1997
  ------------------------------------------------------------------------------
  Payroll service revenue         $545,249    19.8%  $455,227    23.4%  $368,855
  Investment revenue included in
    Payroll service revenue       $ 52,335    20.5%  $ 43,429    27.3%  $ 34,105
  Payroll operating income        $235,710    30.8%  $180,265    33.2%  $135,364
  ==============================================================================
  Payroll clients                    322.6     9.9%     293.6    11.8%     262.7
  Taxpay clients                     254.3    15.2%     220.7    22.0%     180.9
  Direct Deposit clients             135.4    29.7%     104.4    36.5%      76.5
  Check Signing clients               39.5    17.9%      33.5    23.2%      27.2
  ==============================================================================
  
  Revenues:  Payroll service revenue includes service fees and investment
  revenue.  Service fee revenue is earned primarily from Payroll, Taxpay, Direct
  Deposit, Check Signing and other ancillary services.  Investment revenue is
  earned during the period between collecting client funds and remitting the
  funds to the applicable tax authorities for Taxpay clients and employees of
  Direct Deposit clients.  Investment revenue also includes net realized gains
  and losses from the sale of available-for-sale securities.
  
  The increases in service revenue for 1999 and 1998 are primarily related to
  the growth of the Payroll client base, including improvement in client
  retention, and increased utilization of ancillary services such as Taxpay,
  Direct Deposit and Check Signing by both new and existing clients.  During
  1998 and 1997, the growth of the Taxpay client base was accelerated by the
  Internal Revenue Service's Electronic Federal Tax Payment System mandate,
  which required many small businesses to remit payroll tax payments
  electronically as of July 1, 1997.  Remitting payroll tax payments
  electronically by the Company, results in the payments becoming "good funds"
  one day earlier, and a one day reduction in investment revenue.
  
  At May 31, 1999, 79% of Payroll clients utilized the Taxpay service, compared
  with 75% at the end of 1998, and 69% at the end of 1997.  Client utilization
  of this product is expected to mature within the next several years within a
  range of 82% to 87%.  Client utilization of Direct Deposit was 42% at May 31,
  1999, versus 36% and 29% at May 31, 1998 and 1997, respectively.  At May 31,
  1999, only 25% of the total employees paid by the Company's payroll service
  utilize direct deposit.  This service is expected to provide growth
  opportunities for fiscal 2000 and beyond.
  
  The decrease in year-over-year percentage growth in Payroll service revenue in
  1999 compared to 1998 reflects the impact of lower interest rates and the
  maturing of Taxpay.  Fiscal 2000's percentage growth in Payroll revenue is
  expected to be within the long-term historical range of 17% to 19%. Additional
  discussion on interest rates and related risk is included in the Liquidity and
  Capital Resources section of this review under the caption "Investments and
  ENS investments".
  
  Operating income:  Operating income for 1999 and 1998 increased as a result of
  continued growth of the client base, record levels of client retention,
  increased utilization of ancillary services, modest price increases, and
  leveraging of the segment's operating expense base, as evidenced by the
  increases in the segment's operating margins year-over-year.
  
                                HRS-PEO segment
  
  (In thousands)                     1999   Change      1998    Change      1997
  ------------------------------------------------------------------------------
  HRS-PEO service revenue        $ 52,047    35.3%  $ 38,477     24.6%  $ 30,878
  PEO direct costs billed         578,132    15.7%   499,741     49.2%   334,966
                                  ----------------------------------------------
  Total HRS-PEO revenue           630,179    17.1%   538,218     47.1%   365,844
  PEO direct costs                578,132    15.7%   499,741     49.2%   334,966
  HRS-PEO operating income       $ 12,598    89.7%  $  6,642     18.7%  $  5,596
  ==============================================================================
  401(k) Recordkeeping clients       10.1    68.3%       6.0    100.0%       3.0
  401(k) client funds managed
    externally (in millions)     $  757.6    97.7%  $  383.3    177.2%  $  138.3
  Section 125 clients                20.2    23.2%      16.4     24.2%      13.2
  PEO worksite employees             18.3    -4.7%      19.2     39.1%      13.8
  ==============================================================================
  
  Revenues:  The significant increases in service revenue for 1999 and 1998 are
  primarily related to the benefits of developing and growing a recurring
  revenue stream from 401(k) recordkeeping clients, section 125 cafeteria plan
  clients, and the number of Professional Employer Organization (PEO) worksite
  employees.  During fiscal 1999, additions to worksite employees exceeded
  expectations, but were offset by the loss of two large PEO clients during
  November 1998.  Fiscal 2000's growth in HRS-PEO service revenue is expected to
  be comparable to 1999's rate and continue to grow at a rate higher than
  Payroll segment revenue.
  
  PEO direct costs billed and PEO direct costs:  Consistent with PEO industry
  practice, total PEO revenues reported in the Consolidated Statements of Income
  include the Company's service fee, plus the PEO direct costs billed to clients
  for the wages and payroll taxes of worksite employees, their related benefit
  premiums and claims and other direct costs of employment.  The lower
  percentage growth in 1999 for PEO direct costs billed and PEO direct costs is
  primarily due to the loss of the two large clients discussed above.
  
  Operating income:  For 1999 and 1998, the increases in operating income are
  primarily related to gains in service revenue and leveraging operating
  expenses.  Fiscal 1999 also benefited from the February 1998 consolidation of
  the PEO administrative functions from Florida to Rochester, New York.  During
  the first half of 1999, the segment increased its 401(k) recordkeeping sales
  force by approximately 50 individuals to attain the goal of servicing more
  than 10,000 clients by the end of 1999, and to build a selling infrastructure
  for future years.
  
  Full-year fiscal 2000's HRS-PEO service revenue and operating income are
  anticipated to continue to grow at a rate that is higher than the Payroll
  segment's.  Fiscal 2000'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)                        1999   Change     1998   Change     1997
  ------------------------------------------------------------------------------
  Corporate expenses                 $60,746    16.4%  $52,207    17.8%  $44,335
  ==============================================================================
  
  For 1999 and 1998, the increases in expenses are primarily due to additional
  employees required to support the continued growth of the Company's business
  segments.  In addition, 1999 and 1998 expenses reflect increased national
  marketing efforts, which began in the latter part of the third quarter of
  fiscal 1998.  Fiscal 2000's expenses are expected to increase at a rate
  slightly lower than 1999's growth rate.
  
                               Investment income
  
  (In thousands)                        1999   Change     1998   Change     1997
  ------------------------------------------------------------------------------
  Investment income                  $12,581    32.8%  $ 9,473    34.7%  $ 7,031
  ==============================================================================
  
  Investment income earned from the Company's Investments, which does not
  include the investment revenue earned from ENS investments, has grown mainly
  as a result of increases in investment balances generated from increases in
  overall cash flows.  Fiscal 1999's growth was slightly impacted by lower
  comparable interest rates.  Additional discussion on interest rates and
  related risk is included in the Liquidity and Capital Resources section of
  this review under the caption "Investments and ENS investments".  Investment
  income for fiscal 2000, subject to changes in market rates of interest, is
  expected to grow at a rate slightly lower than the Company's net income
  growth.
  
                                  Income taxes
  
  (In thousands)                        1999   Change     1998   Change     1997
  ------------------------------------------------------------------------------
  Income taxes                       $61,044    45.5%  $41,954    47.2%  $28,506
  Effective income tax rate            30.5%     1.4     29.1%     1.6     27.5%
  ==============================================================================
  
  For 1999 and 1998, 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 the Taxpay and Direct Deposit
  services that provide investment revenue. In addition, the higher effective
  rate for 1999 was due to higher than anticipated investments in taxable
  financial instruments, which were yielding a higher net of tax return than
  tax-exempt investments.  Fiscal 2000's effective income tax rate is expected
  to range from 30.5% to 31.0%, as taxable income is expected to grow at a
  faster rate than tax-exempt income.
  
                         LIQUIDITY AND CAPITAL RESOURCES
  
                              Operating activities
  
  (In thousands)                      1999   Change      1998   Change      1997
  ------------------------------------------------------------------------------
  Operating cash flows            $174,120    27.3%  $136,761    27.8%  $107,027
  ==============================================================================
  
  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 $343.2 million in available cash and investments and $297.5
  million of available, uncommitted, unsecured lines of credit.
  
                              Investing activities
  
  (In thousands)                   1999   Change       1998    Change       1997
  ------------------------------------------------------------------------------
  Net Investments and
    ENS activities            $ (82,724)   -6.8%  $ (88,728)   152.4%   $(35,151)
  Purchases of P&E, net         (22,104)  -21.6%    (28,197)    56.6%    (18,008)
  Purchases of other assets      (3,590)  599.8%       (513)   -73.5%     (1,935)
  ------------------------------------------------------------------------------
  Net cash used in investing
    activities                $(108,418)   -7.7%  $(117,438)   113.2%   $(55,094)
  ==============================================================================
  
  Investments and ENS investments:
  
  (In thousands)                           May 31, 1999            May 31, 1998
                                 ----------------------   ---------------------
                                       COST  FAIR VALUE        COST  FAIR VALUE
  Type of issue:
    Money market securities and
      other cash equivalents     $  770,648  $  770,648  $  714,941  $  714,941
    Available-for-sale
      securities:
        General obligation
          municipal bonds           313,485     314,636     212,222     213,940
        Pre-refunded municipal
          bonds                     295,359     297,621     236,151     238,462
        Revenue municipal bonds     266,264     267,290     199,545     200,850
        Other securities                 21          73          21          65
                                  ---------   ---------   ---------   ---------
    Total available-for-sale
      securities                    875,129     879,620     647,939     653,317
    Other                             1,424       1,810       1,210       1,210
                                  ---------   ---------   ---------   ---------
  Total Investments and
    ENS investments              $1,647,201  $1,652,078  $1,364,090  $1,369,468
                                  =========   =========   =========   =========
  Classification of investments
    on Consolidated Balance
    Sheets:
      Investments                $  288,596  $  290,555  $  213,606  $  214,967
      ENS investments             1,358,605   1,361,523   1,150,484   1,154,501
                                  ---------   ---------   ---------   ---------
                                 $1,647,201  $1,652,078  $1,364,090  $1,369,468
                                  =========   =========   =========   =========
  
  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 Direct Deposit clients.
  
  At May 31, 1999, the Company had $770.6 million of ENS funds and $47.6 million
  of Corporate cash equivalents invested in money market securities and other
  cash equivalents with an average maturity of less than 30 days, and $879.6
  million invested in available-for-sale securities with an average duration of
  2.5 years.  At May 31, 1999, the market value of the available-for-sale
  securities exceeded their cost basis by $4.5 million compared to $5.4 million
  at the end of May 1998.
  
  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 does not utilize derivative financial instruments to manage
  interest rate risk.  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.
  
  During the fiscal 1999 quarter ended November 30, 1998, the federal funds rate
  was reduced by 75 basis points to 4.75%.  The earnings impact of these rate
  reductions 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, 1999, the Company had $879.6 million invested in
  available-for-sale securities at fair value, with a weighted-average yield to
  maturity of 4.10%.  Assuming a hypothetical increase in interest rates of 75
  basis points given the May 31, 1999 portfolio of securities, the resulting
  potential decrease in fair value would be approximately $16.2 million, or
  approximately 2% of the portfolio.  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, 1998.
  
  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,
  1999, approximately 96% 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.
  
  Purchases of property and equipment, net:  In addition to the $22.1 million of
  purchases of property and equipment for the year ended May 31, 1999, the
  Company had committed to purchase approximately $4.0 million of additional
  items at May 31, 1999.  To support the Company's continued client and
  ancillary product growth, significant purchases and commitments were made in
  1999 and 1998 for data processing and personal computer equipment, and for the
  expansion and upgrade of various operating facilities.  Purchases of property
  and equipment in fiscal 2000 are expected to range from $27 million to $30
  million.
  
                              Financing activities
  
  (In thousands,
    except per share amounts)        1999    Change      1998   Change      1997
  ------------------------------------------------------------------------------
  Dividends paid                 $(54,055)    50.7%  $(35,871)   48.7%  $(24,117)
  Proceeds from exercise of
    stock options                   5,535    178.1%     1,990    -8.7%     2,180
  Other                               (61)      --        (84)     --        218
  ------------------------------------------------------------------------------
  Net cash used in financing
    activities                   $(48,581)    43.0%  $(33,965)   56.4%  $(21,719)
  ------------------------------------------------------------------------------
  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 seven 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 last five fiscal years.
  
  Proceeds from exercise of stock options:  The increase in proceeds from
  exercise of stock options reflects the issuance of 1,032,000 shares of common
  stock for stock option exercises in 1999, versus 277,000 shares in 1998 and
  267,000 shares in 1997, on a pre-split-adjusted basis.
  
                                      OTHER
  
  Recently issued accounting standards:  Through the end of 1999, the Company
  expensed as incurred certain costs to develop and enhance its internal
  computer programs and software.  Expenditures for vendor-provided software
  were capitalized and amortized by the straight-line method over their
  estimated useful lives, ranging from 3 to 5 years.  In March 1998, the
  Accounting Standards Executive Committee issued 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.  The Company will adopt the SOP as of June 1, 1999.  The effect
  of adopting the SOP is expected to increase net income by approximately $2.0
  million to $3.0 million for the year ended May 31, 2000.
  
  Year 2000 readiness disclosure:  The Company is actively pursuing resolution
  of year 2000 issues.  The year 2000 problem originated with the advent of
  computers, when dates were stored without century indicators, in an effort to
  reduce the need for expensive storage space used for input, output and storage
  media.  In order to process and calculate dates correctly, internal computer
  systems must be changed to handle the year 2000 and beyond.  Year 2000 efforts
  extend past the Company's internal computer systems and require coordination
  with clients, vendors, government entities, financial institutions and other
  third parties to understand their plans for making systems and related
  interfaces compliant.
  
  In response to year 2000 issues, the Company initiated a program to manage
  progress in year 2000 compliance efforts.  The managers of the Company's year
  2000 compliance program report directly to the Vice President of Information
  Technology and provide regular reports to the Company's Senior Management and
  the Board of Directors.
  
  Processes and procedures are in place to ensure the following: all future
  internal development and testing follows year 2000 development and testing
  standards, all projects undertaken in the interim deliver year 2000 compliant
  solutions, all future third-party hardware and software acquisitions are year
  2000 compliant, and all commercial third-party service providers are being
  queried regarding their year 2000 compliance plans.  In addition, the Company
  is actively working with all government agency partners to determine their
  year 2000 compliance plans, and has been making year 2000 changes based on
  their mandates.
  
  The Company's internal mission-critical systems were year 2000 compliant by
  the end of the first quarter of calendar year 1999.  The remainder of calendar
  year 1999 will be used to assess and address year 2000 issues for internal
  desktop computers and software, complete interface testing with external
  agencies and partners, enhance existing normal business contingency plans to
  address any identified year 2000 issues, and to react to yet unknown changes
  dictated by third parties, such as government agencies, hardware and software
  vendors, financial institutions, or utility companies.  Third-party interface
  testing and resolution of year 2000 issues with external agencies and partners
  is dependent upon those third parties completing their own year 2000
  remediation efforts.
  
  The Company expects minimal business disruption will occur as a result of year
  2000 issues for systems that the Company directly controls.  The Company is in
  the process of enhancing existing normal business contingency plans to address
  any identified year 2000 issues based on actual testing experience with third
  parties and assessment of outside risks.  There can be no assurance that there
  will not be an adverse effect on the Company if third parties, such as
  government agencies, hardware and software vendors, financial institutions or
  utility companies, do not convert their systems in a timely manner and in a
  way that is compatible with the Company's systems.  However, management
  believes that ongoing communication with and assessment of these third parties
  will minimize these risks, and expects minimal business disruption at the turn
  of the century.
  
  The Company currently anticipates expenditures for year 2000 efforts to
  approximate $5 million, with approximately eighty percent spent through May
  31, 1999.  The remaining twenty percent will be spent on desktop computers and
  software, continued interface testing with external agencies and partners,
  enhancing existing contingency plans, and to react to yet unknown changes
  dictated by third parties.  The cost of the project and the date on which the
  Company plans to complete the year 2000 modifications are based on
  management's best estimates.  These estimates were derived from internal
  assessments and assumptions of future events.  The estimates may be adversely
  affected by the continued availability of personnel and system resources, as
  well as the failure of third-party vendors, service providers, and agencies to
  properly address year 2000 issues.  There is no guarantee that these estimates
  will be achieved, and actual results could differ significantly from those
  anticipated.
  
  EXHIBIT 99:  "Safe Harbor" Statement under the Private Securities Litigation
               Reform Act of 1995.
  
              "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 "expects", "is expected to be" and
  "could be."  Because they are forward-looking, they should be evaluated in
  light of important risk factors.  These risk factors include general market
  conditions, including demand for the Company's products and services,
  competition and price levels; changes in the laws regulating collection and
  payment of payroll taxes, professional employer organizations, and employee
  benefits, including 401(k) plans, workers' compensation, state unemployment,
  and section 125 plans; delays in the development, timing of the introduction,
  and marketing of new products and services; the possibility of catastrophic
  events that could impact the Company's operating facilities, computer
  technology and communication systems, including Year 2000 issues; and changes
  in short- and long-term interest rates and the credit rating of cash, cash
  equivalents, and securities held in the Company's investment portfolios.