ADP Reports 17% EPS Increase in Fourth Quarter, 16% in Fiscal Year 2000.

Business Editors

ROSELAND, N.J.--(BUSINESS WIRE)--Aug. 14, 2000

Expects 16% - 18% EPS Growth in Fiscal 2001

Automatic Data Processing, Inc. (NYSE:AUD) achieved record revenues and earnings in its fourth quarter and fiscal year ended June 30, 2000, Arthur F. Weinbach, chairman and chief executive officer, announced today.

This represents ADP's 39th consecutive year of double-digit earnings per share growth and the 156th consecutive quarter of record highs in both revenues and earnings per share since becoming a public company in 1961.

For fiscal 2000, revenues grew 13% to about $6.3 billion. Pretax earnings increased 21%, excluding the impact of several prior year, non-recurring transactions. Net earnings increased 18% on a higher effective tax rate caused by a change in investment mix to more taxable vs. non-taxable investments. Diluted earnings per share, on increased shares outstanding, increased 16% to $1.31 from $1.13 last year.

Commenting on overall results, Mr. Weinbach said, "We had a good year in 2000. Revenue growth for the year in Employer Services was 11%, reflecting strong new business sales and internal revenue growth, but impacted by prior year dispositions. Brokerage revenue growth was 29%, aided by strong Brokerage trade volumes. Dealer Services revenue for the year was roughly flat with the previous year due to the impact of dispositions, slower international installations and lower consulting revenue. Claims revenue growth was 18%, aided by strong growth in our medical claims review business. Margins increased primarily from the impact of prior year dispositions and increased operating efficiencies in each of our core businesses. We also benefited from increasing interest rates.

"We are especially pleased that we achieved our excellent results after absorbing over $45 million of strategic investments, primarily new business and internet-related, that were not originally planned in fiscal 2000. We were also able to increase the liquidity of our investment portfolio by transitioning a portion of the portfolio from tax-exempt to taxable instruments. Approximately $2.6 billion of tax exempt instruments were sold prior to maturity, at a pretax loss of approximately $32 million, and the proceeds were reinvested at higher prevailing interest rates, which will benefit future periods.

"Our market leadership, positive momentum and significant potential in our core businesses position us well for the future. We expect revenue growth of about 13 to 15% in 2001 and our 40th consecutive year of double-digit earnings per share growth. Pretax earnings growth should exceed 20%. With a higher tax rate and increased shares outstanding in 2001, we expect diluted EPS growth of 16% to 18% over the $1.31 reported for fiscal 2000," Mr. Weinbach concluded.

      Below is a summary of comparative results:

                          Three Months Ended              Years Ended
                              June 30,                      June 30,
                         2000       1999                2000      1999
                                                       (A)
                          (000's omitted except per share data)

Revenues(R)        $ 1,724,201  $ 1,470,687  $ 6,287,512   $ 5,540,141
Earnings before
 income taxes(R)   $   348,760  $   292,683  $ 1,289,600 $1,084,500(A)
Provision for income
 taxes             $   124,970  $   100,894  $   448,800 $  387,660(A)
Net earnings(R)    $   223,790  $   191,789  $   840,800 $  696,840(A)
Average shares
 outstanding           627,890      620,786      626,766       615,630
Basic earnings
 per share(R)      $       .36  $       .31  $      1.34 $     1.13(A)
Diluted net
 earnings(R)       $   224,494  $   192,551  $   843,712 $     700,447
Diluted shares
 outstanding           646,550      640,415      646,098       636,892
Diluted earnings
 per share (R)     $       .35  $       .30  $      1.31 $     1.10(A)
Revenues by business
 unit (B)
 Employer Services  $  902,000  $   802,000  $ 3,620,000 $   3,269,000
 Brokerage Services $  505,000  $   392,000  $ 1,479,000 $   1,150,000
 Dealer Services    $  174,000  $   188,000  $   736,000 $     733,000
Pre-tax earnings by
 business unit (B)
 Employer Services  $  153,000  $   147,000  $   776,000 $     674,000
 Brokerage Services $  118,000  $    97,000  $   334,000 $     222,000
 Dealer Services    $   24,000  $    24,000  $   115,000 $     107,000

(A) During fiscal 1999 the company sold several businesses and decided to exit several other businesses and contracts. The combination of these transactions and certain other non-recurring charges resulted in approximately $37 million of pretax income and a $40 million provision for income taxes. 1999 also includes approximately $21 million of transaction costs and other non-recurring adjustments ($14 million after tax) related to an acquisition.

(B) Prior year results were restated using the FY '00 budgeted foreign exchange rates.

(R) Record high

ADP, with over $6 billion in revenues and 500,000 clients, is one of the largest independent computing services firms in the world.

This release contains "forward-looking statements" based on management's expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ from those expressed. Factors that could cause differences include: ADP's success in obtaining, retaining and selling additional services to clients; the pricing of products and services; overall economic trends, including interest rate and foreign currency trends; stock market activity; auto sales and related industry changes; employment levels; changes in technology; availability of skilled technical associates; and the impact of new acquisitions.