ADP Reports Record Second Fiscal Quarter; EPS Increases 29% After Prior Year's Non-recurring Items; EPS Increases 15% Before Prior Year's Non-recurring Items.

Business Editors

ROSELAND, N.J.--(BUSINESS WIRE)--January 18, 2000

Automatic Data Processing, Inc. (NYSE:AUD) achieved record revenues and earnings in its second quarter of fiscal 2000, Arthur F. Weinbach, chairman and chief executive officer, announced today. This represents ADP's 154th consecutive quarter of record highs in both revenues and earnings per share since becoming a public company in 1961.

Revenues grew 14% to $1.5 billion in the quarter ended December 31, 1999, aided by a single large company mailing in our Brokerage Investor Communications business. Without the $35 million of revenue from this distribution, revenue growth would have been 11%. Excluding the impact of several prior year, non-recurring transactions, pretax earnings increased 20%; net earnings increased 17% on a higher effective tax rate; and diluted earnings per share, on increased shares outstanding, increased 15% to $.31 from $.27 last year. After the prior year's non-recurring transactions, earnings per share increased by 29%.

Commenting on the second quarter, Mr. Weinbach said, "The highlight of the strong second quarter was very high Brokerage trade volumes. Brokerage revenue growth in the quarter was 43%. Without the single large mailing in the Investor Communications business, Brokerage grew 27%. Employer Services revenue growth, impacted by prior year dispositions, was 10%. Employer Services new business sales, while still up 17% year-to-date, grew at a slower pace in November and December as a result of Y2K related decision deferrals. Revenue growth in Dealer and Claims Services was 4% and 24%, respectively. Margins in the quarter 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.

"Fiscal 2000 is off to a stronger than anticipated start and we are pleased with our results and outlook. We have accelerated $25 million of investments to benefit future years that were not originally planned in fiscal 2000. The investments, primarily new business and Internet related, will be expensed in the current fiscal year. We remain very comfortable with our previous forecast of revenue growth for the full year of about 10% and EPS growth of about 15% above the $1.13 reported prior to non-recurring items in fiscal 1999," Mr. Weinbach concluded.

Below is a summary of unaudited comparative results.

                       Three Months Ended      Six Months Ended
                           December 31,          December 31,
                       1999           1998   1999           1998
                         (000's omitted except per share data)

Revenues (R)         $1,492,486  $1,310,196   $2,843,581  $2,555,322
Earnings before
 income taxes (R)    $  303,200  $  254,442(A)$  525,390  $  440,217(A)
Provision for
 income taxes        $  103,700  $  100,465(A)$  179,690  $  160,816(A)
Net earnings (R)     $  199,500  $  153,977(A)$  345,700  $  279,401(A)
Average shares
 outstanding            625,665     611,978      625,031     612,230
Basic earnings
 per share (R)             $.32        $.25(A)      $.55       $. 46(A)

Diluted net
 earnings(R)         $  200,237  $  154,906    $ 347,190  $  281,399
Diluted shares
 outstanding            645,658     633,620      644,253     634,096
Diluted earnings
 per share (R)             $.31        $.24(A)      $.54        $.44(A)

Revenues by
 business unit (B)
  Employer Services  $  873,000  $  794,000    $1,682,000 $ 1,514,000
  Brokerage Services $  314,000  $  220,000    $  572,000 $   471,000
  Dealer Services    $  191,000  $  183,000    $  378,000 $   362,000

Pre-tax earnings by
 business unit (B)
  Employer Services  $  181,000  $  145,000    $  328,000 $   256,000
  Brokerage Services $   63,000  $   37,000    $  117,000 $    67,000
  Dealer Services    $   32,000  $   29,000    $   62,000 $    53,000

(A) The quarter ended December 31, 1998 includes a pretax gain of approximately $22 million, a provision for income taxes of approximately $25 million, and a net loss of approximately $3 million resulting from the sale of the Brokerage Services "front office" market data business. The quarter ended December 31, 1998 also includes approximately $21 million of transaction costs and other non-recurring adjustments ($14 million after tax) recorded by Vincam prior to the March 1999 pooling transaction.

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

(R) Record high

ADP, with over $5 billion in revenue and more than 450,000 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; impact of Year 2000; 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.

The information and opinions contained in this release have been furnished and approved by Automatic Data Processing, Inc. We are retained by them as investor relations counsel.