ADP Reports Record First Fiscal Quarter; EPS Increases by 11%.

Business Editors

ROSELAND, N.J.--(BUSINESS WIRE)--Oct. 17, 2001

Automatic Data Processing, Inc. (NYSE:ADP) achieved record revenues and earnings in its first quarter of fiscal 2002, Arthur F. Weinbach, chairman and chief executive officer, announced today. This represents ADP's 161st consecutive quarter of record highs in both revenues and earnings per share since becoming a public company in 1961.

ADP has adopted SFAS 142 beginning in the first quarter of fiscal 2002 which eliminates goodwill amortization. Results are compared to the pro forma results for fiscal 2001, which is the most appropriate way to view ADP's growth.

Revenues approximated $1.6 billion in the quarter ended September 30, 2001, up 4% from last year. Pretax earnings and net earnings both increased 7%. Diluted earnings per share, on fewer shares outstanding, increased 11% to $.31 from $.28 last year.

Commenting on the quarter, Mr. Weinbach said, "Revenue growth in Employer Services slowed to 8%, as the impact of a weaker economy resulted in lower pays per control, client retention and new business sales. Brokerage revenues were roughly equivalent to last year resulting from flat trades per day in our back office processing business and lower demand for research and other print services in our Investor Communication business. Both were impacted directly by the September 11th terrorist attacks. Dealer Services revenue growth was 6% and Claims Services revenue growth was 2% in the quarter.

"Given the tragic events this quarter, the steep interest rate declines and the overall economic conditions, we are proud of how our businesses performed. Our ongoing cost control actions have been timely and effective and, as a result, we have margin improvements in each of our core businesses.

"In the first quarter of fiscal year 2002 we invested over $430 million by acquiring approximately 9 million shares of ADP stock reflecting our financial strength and our confidence in the future.

"Our previously announced forecast remains unchanged. Revenue growth for the full year is expected to grow in the mid single digits and we project double digit earnings per share growth over FY'01 pro forma results of $1.59," Mr. Weinbach concluded.

ADP, with approximately $7 billion in revenues and 500,000 clients, is one of the largest independent computing services firms in the world.

Below is a summary of unaudited comparative results.

                                          Three Months Ended
                                             September 30,

                                      2001                  2000(A)(B)
                                 (000's omitted except per share data)

Revenues (R)                        $ 1,607,883           $ 1,544,129
Earnings before income taxes(R)       $ 320,200             $ 299,090
Provision for incomes taxes           $ 123,600             $ 114,830
Net Earnings(R)                       $ 196,600             $ 184,260
Average shares outstanding              620,561               629,991
Pro forma Basic EPS(R)                   $ 0.32                $ 0.29
As reported, Basic EPS(R)                                      $ 0.28

Diluted net earnings(R)               $ 197,076             $ 184,935
Diluted shares outstanding              632,576               649,096
Pro forma Diluted EPS(R)                 $ 0.31                $ 0.28
As reported, Diluted EPS(R)                                    $ 0.27

Revenues by business unit
       Employer Services              $ 972,000             $ 901,000
       Brokerage Services             $ 360,000             $ 359,000
       Dealer Services                $ 175,000             $ 165,000

Pre-tax earnings by business unit
       Employer Services              $ 215,000             $ 176,000
       Brokerage Services              $ 66,000              $ 63,000
       Dealer Services                 $ 27,000              $ 21,000


      (A) Prior year's results include certain reclassifications to
        conform to the current presentation. Results are restated
        using the FY'02 budgeted foreign exchange rates.

      (B) Prior year's results reflect the pro forma impact of adopting
        SFAS No. 142, which eliminates goodwill amortization. Business
        unit results for both years include certain allocations and
        are not impacted by SFAS No. 142.

      (R) Record high

This release contains "forward-looking statements" based on management's expectations and assumptions that 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; changes in laws regulating payroll taxes and employee benefits; 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. ADP disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.