ADP Reports Record Third Fiscal Quarter; EPS Increases by 17% Prior to Non-cash Write-off.

Business Editors

ROSELAND, N.J.--(BUSINESS WIRE)--April 16, 2001

Automatic Data Processing, Inc. (NYSE: ADP) achieved record revenues and earnings in its third quarter of fiscal 2001, Arthur F. Weinbach, chairman and chief executive officer, announced today.

This represents ADP's 159th consecutive quarter of record highs in both revenues and earnings per share since becoming a public company in 1961.

Revenues approximated $1.9 billion in the quarter ended March 31, 2001, up 10% from last year. In February, ADP announced a $45 million write-off ($27 million after tax) of its remaining investment in Bridge Information Systems, Inc. (An initial $45 million write-down of the Bridge investment had previously been recorded in the second quarter.) Pretax earnings increased 25% prior to this non-cash, non-operating write-down, and net earnings increased 16 % on a higher effective tax rate. Both the pretax earnings growth and the increased tax rate have been impacted by the previously discussed change in investment mix from non-taxable to taxable investments. Prior to the write-down diluted earnings per share increased 17% to $.49 from $.42 last year.

Commenting on the quarter, Mr. Weinbach said, "Earnings growth in the third quarter was strong, despite slower revenue growth. Overall revenue growth of 10% was lower than previous quarters as a result of weaker economic conditions and lower interest rates.

"Employer Services revenue growth was 11%, and margins were up 1.1% from last year. Client retention for the quarter continued at excellent levels, although new business sales were slower than expected. As a result of the recent Cunningham Graphics acquisition, Brokerage revenue grew 11%, although trades processed per day were lower than the very high activity of last year's third quarter. Dealer Services revenue decreased 2% and Claims revenue growth was 9%.

"As a result of the weaker economic conditions, we have instituted a series of initiatives to bring our expense structure in line with lower revenue expectations. We expect these actions to result in about $150 million of lower annual expense run rate by June 30th than would otherwise have been the case."

"Our current forecast for the full year is for revenue growth of about 12% and EPS growth of 16% to 17%, prior to considering the non-cash Bridge write-off," Mr. Weinbach concluded.

Below is a summary of unaudited comparative results.

                         Three Months Ended       Nine Months Ended
                              March 31,                  March 31,
                            2001(B)      2000     2001(B)      2000
                                (000's omitted except per share data)

Revenues (R)             $1,894,320 $1,719,730  $5,164,482 $4,563,311
Earnings before
 income taxes (R)        $  475,400 $  415,450  $1,104,910 $  940,840
Provision for
 income taxes            $  186,520 $  144,140  $  435,190 $  323,830
                         ---------- ----------  ---------- ----------
Net earnings (R)         $  288,880 $  271,310  $  669,720 $  617,010
Average shares
 outstanding                629,905    629,144     630,669    626,401
Basic earnings
 per share (R)                 $.46       $.43       $1.06       $.99

Diluted net
 earnings (R)            $  289,416 $  272,028  $  671,570 $  619,218
Diluted shares
 outstanding                645,674    647,759     648,787    645,307
Diluted earnings
 per share (R)                 $.45       $.42       $1.04       $.96

Revenues by
 business unit (A)
  Employer Services      $1,141,000 $1,025,000  $3,037,000 $2,688,000
  Brokerage Services     $  446,000 $  401,000  $1,178,000 $  972,000
  Dealer Services        $  177,000 $  181,000  $  515,000 $  553,000

Pre-tax earnings by
 business unit (A)
  Employer Services      $  340,000 $  295,000  $  741,000 $  624,000
  Brokerage Services     $   80,000 $   99,000  $  206,000 $  216,000
  Dealer Services        $   27,000 $   29,000  $   75,000 $   90,000


(A) Prior year's business unit results were restated using FY '01
    budgeted foreign exchange rates.

(B) A $45 million write down ($27 million after tax) of the Company's
    investment in Bridge Information Systems, Inc. was recorded in
    both the quarter ended March 31, 2001 and the quarter ended
    December 31, 2000. The Company has no remaining investment in
    Bridge.

(R) Record high

An analyst conference call to review the first quarter results will be held at 3:30 PM on April 16th. A live audio webcast of the call will be available to the public on a listen-only basis. To listen to the webcast go to www.adp.com and click on the Web Conferencing icon.

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 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.