This growth was generated from the following:                 **As of May 31:** ** **  **%**  ** **  **%** **$ in billions** **2011**  **Change**  **2010**  **Change**(1)  Paychex HR Solutions client employees (2)  567,000   13%  502,000   11%Paychex HR Solutions clients (2)  21,000   9%  19,000   8%Insurance services clients(3)  100,000   8%  92,000   7%Health and benefits services applicants  99,000   23%  80,000   38%Retirement services clients (4)  57,000   12%  51,000   3%Asset value of retirement services client employees’ funds(4) $15.3   35% $11.3   33% (1) Percent change compared to balances as of May 31, 2009. (2) Includes Paychex HR Essentials as of May 31, 2011. (3) Includes workers’ compensation insurance services clients and health and benefits servicesclients. (4) Includes ePlan Services, Inc. (“ePlan”) as of May 31, 2011. Excluding ePlanclients, retirement services clients would have increased 5% for fiscal 2011.     Human Resource Services revenue growth for fiscal 2011 reflects modest improvements in economic conditions,the client growth noted above, and price increases. Paychex HR Solutions revenue forfiscal 2011 was positively impacted by increases in both clients and client employees.Contributing to this growth in the clients and client employees is our new product offering,Paychex HR Essentials, which provides support to our clients online or over the phone to helpmanage employee-related topics. Human Resource Services revenue was also positively impacted bygrowth in certain products that primarily support our Major Market Services clients. Also,insurance services revenue continued to grow as a result of increasesin both health and benefitsservices and workers’ compensation insurance services revenue. Health and benefits servicesrevenue continued its accelerated growth since inception, increasing 29% to $42.0 million forfiscal 2011, driven primarily by the number of applicants.     Total expenses increased 2% to $1.3 billion for fiscal 2011 compared to fiscal 2010. Duringthe third quarter last year, an expense charge of $18.7 million was recognized to increase thelitigation reserve. Excluding this expense charge, total expenses would have increased 3%. Thisincrease was primarily driven by personnel-related costs. In addition, we continue to invest inour product development and the supporting technology. Improvements in operations productivitywith related lower headcount have somewhat offset this increase.     For fiscal 2011, our operating income was $786.4 million, an increase of 8% from fiscal 2010.We continue to closely manage expenses, generating an increase in operating income, net of certainitems (see Note 1 on page 4 for further description of this non-GAAP measure) of 7% for fiscal 2011compared to fiscal 2010.                           **For the three months ended**     **For the twelve months ended**      **May 31,**  **%**  **May 31,**  **%** **$ in millions** **2011**  **2010**  **Change**  **2011**  **2010**  **Change**  Operating income $182.8  $173.6   5% $786.4  $724.8   8%Excluding:                        Interest onfunds held forclients  (12.3)  (13.7)  (10%)  (48.1)  (55.0)  (13%)Expense chargeto increase thelitigationreserve  —   —       —   18.7   (100%)             Operating income,net of certainitems $170.5  $159.9   7% $738.3  $688.5   7%             Operating income,net of certainitems, as a percentof total servicerevenue  33.4%  33.1%      36.3%  35.4%         For fiscal 2011, interest on funds held for clients decreased 13% to $48.1 million due tolower average interest rates earned, offset somewhat by a 6% increase in average investmentbalances. The increase in average investment balances was the result of increases in stateunemployment insurance rates for the 2011 calendar year and the increase in checks per client, offsetsomewhat by the lingering effects of the difficult economic conditions on our client base.
Page 2 of 9

 
     Investment income, net increased 29% to $5.8 million for fiscal 2011. This increase wasprimarily the result of higher average investment balances, and a slight increase in averageinterest rates earned. Average investment balances for corporate investments increased 1% forfiscal 2011 as a result of investment of cash generated from operations. This was offset by cashutilized to fund the acquisitions of SurePayroll and ePlan during the second half of fiscal2011, which resulted in a decline in average investment balances during the three months ended May 31, 2011(the “fourth quarter”). The increase in the average interest rates earned on corporate investmentswas primarily driven by higher yields on funds invested into our longer-term investment portfoliocompared to the prior year.     Average investment balances and interest rates are summarized below:                           **For the three months ended**      **For the twelve months ended**      **May 31,**   **%**  **May 31,**   **%** **$ in millions** **2011**  **2010**  **Change**  **2011**  **2010**  **Change**  Average investment balances:                        Funds held for clients $3,895.2  $3,511.2   11% $3,350.3  $3,167.9   6%Corporate investments $642.8  $697.6   (8%) $662.4  $653.8   1%                         Average interest ratesearned (exclusive of netrealized gains):                        Funds held for clients  1.2%  1.5%      1.4%  1.6%    Corporate investments  0.9%  0.8%      0.9%  0.8%                             Net realized gains:                        Funds held for clients $0.9  $0.9      $1.3  $3.2     Corporate investments $—  $—      $—  $—          Our investment strategy focuses on optimizing liquidity and protecting principal. Yields onhigh quality financial instruments remain low, negatively impacting our income earned on funds heldfor clients and corporate investments. We invest primarily in high credit quality securities withAAA and AA ratings and short-term securities with A-1/P-1 ratings, with more than 95% of ourportfolio rated AA or better. We limit the amounts that can be invested in any single issuer. Weinvest predominantly in municipal bonds — general obligation bonds; pre-refunded bonds, which aresecured by a United States (“U.S.”) government escrow; and essential services revenue bonds.Starting in November 2009, we began to invest in select A-1/P-1-rated variable rate demand notes(“VRDNs”) and we have gradually increased our investment in VRDNs to $828.3 million as of May 31,2011, up from $226.3 million as of May 31, 2010. During fiscal 2011, we earned an after-tax rateof approximately 0.23% on VRDNs compared to approximately 0.06% on U.S. agency discount notes,which have been our primary short-term investment vehicle.     The available-for-sale securities within the funds held for clients and corporate investmentportfolios reflected a net unrealized gain of $59.3 million as of May 31, 2011, compared with a netunrealized gain of $66.6 million as of May 31, 2010. During fiscal 2011, the net unrealized gainon our investment portfolios ranged from $41.4 million to $86.2 million. The net unrealized gainon our investment portfolios was approximately $59.4 million as of June 17, 2011.**FOURTH QUARTER FISCAL 2011 HIGHLIGHTS**     Payroll service revenue growth was higher for the fourth quarter compared to the full yeargrowth as a result of revenue from SurePayroll, which was acquired in February 2011. ExcludingSurePayroll, payroll service revenue would have increased 3% for the fourth quarter compared to thesame period last year.     The acquisition of ePlan during the fourth quarter positively impacted Human Resource Servicesgrowth. Excluding ePlan, Human Resource Services revenue would have increased 8% for the fourthquarter. This growth rate was less than experienced in the first nine months due to fluctuationsin revenue growth from our professional employerorganization (“PEO”). PEO net service revenue is more variable quarter to quarter than ourother revenue streams due to fluctuations in adding and retaining client employees as healthcarerates change.     Total expenses for the fourth quarter were impacted by the expenses of the newly acquiredentities, which are included in our financial results since their dates of acquisition.
Page 3 of 9

 
     The highlights for the fourth quarter are as follows: **•** Payroll service revenue increased 5% to $356.9 million.  **•** Human Resource Services revenue increased 9% to $153.5 million.  **•** Total service revenue increased 6% to $510.4 million.  **•** Total revenue increased 5% to $522.7 million.  **•** Combined interest on funds held for clients and investment income, net decreased $1.3 million, or 9%.  **•** Operating income increased 5% to $182.8 million, and operating income, net of certainitems, increased 7% to $170.5 million.  **•** Net income and diluted earnings per share increased 3% to $118.9 million and $0.33 pershare, respectively.**OUTLOOK**     Our outlook for the fiscal year ending May 31, 2012 (“fiscal 2012”) is based upon currenteconomic and interest rate conditions continuing with no significant changes. Consistentwith our policy regarding guidance, our projections do not anticipate or speculate on futurechanges to interest rates. Our fiscal 2012 guidance reflects anticipated results for SurePayrolland ePlan. The anticipated service revenue impact is approximately 2% and the earnings dilution isexpected to be approximately $0.01 per share, mainly due to amortization of acquired intangibleassets. Our fiscal 2012 guidance is as follows:               **Low**     **High**Payroll service revenue  5%  —   7%Human Resource Services revenue  12%  —   15%Total service revenue  7%  —   9%Interest on funds held for clients  (14%)  —   (12%)Investment income, net  —   —   2%Net income  5%  —   7%     Operating income, net of certain items, as a percentage of total service revenue is expectedto be in the range of 35% to 36% for fiscal 2012. The effective income tax rate is expected toapproximate 35% for fiscal 2012.     Interest on funds held for clients and investment income for fiscal 2012 are expected to be impacted by the continuinglow interest rate environment. As investments in our long-term portfolio mature, the proceeds arebeing reinvested at lower average interest rates. Investment income is expected to benefit fromongoing investment of cash generated from operations. Combined interest on funds held for clientsand investment income, net are expected to decrease approximately 11% for fiscal 2012.Note 1: In addition to reporting operating income, a U.S. generally accepted accountingprinciple (“GAAP”) measure, we present operating income, net of certain items, which is a non-GAAPmeasure. We believe operating income, net of certain items, is an appropriate additional measure,as it is an indicator of our core business operations performance period over period. It is alsothe basis of the measure used internally for establishing the following year’s targets andmeasuring management’s performance in connection with certain performance-based compensationpayments and awards. Operating income, net of certain items, excludes interest on funds held forclients and the expense charge in fiscal 2010 to increase the litigation reserve. Interest onfunds held for clients is an adjustment to operating income due to the volatility of interestrates, which are not within the control of management. The expense charge to increase thelitigation reserve is also an adjustment to operating income due to its unusual and infrequentnature. It is outside the normal course of our operations and obscures the comparability ofperformance period over period. Operating income, net of certain items, is not calculated throughthe application of GAAP and is not the required form of disclosure by the Securities and ExchangeCommission (“SEC”). As such, it should not be considered as a substitute for the GAAP measure ofoperating income and, therefore, should not be used in isolation of, but in conjunction with, theGAAP measure. The use of any non-GAAP measure may produce results that vary from the GAAP measureand may not be comparable to a similarly defined non-GAAP measure used by other companies.
Page 4 of 9

 
**CURRENT REPORT ON FORM 8-K**     We will file a Current Report on Form 8-K (“Form 8-K”) by the close of business on the sameday as this press release is issued, and this will be available at www.paychex.com. The Form 8-Kwill furnish as exhibits this press release and a preliminary discussion and analysisof financial condition and results of operations. This press release should be read inconjunction with the preliminary discussion and analysis. The discussion and analysis furnished with the Form 8-K is preliminary and isnot a complete discussion and analysis intended to satisfy the requirements of Item 303 ofRegulation S-K promulgated by the SEC. We expect to file our fiscal 2011 Annual Report on Form10-K (“Form 10-K”) with the SEC within 60 days following our May 31, 2011 fiscal year end. Thefiscal 2011 Form 10-K will contain a complete set of audited consolidated financial statements,notes to consolidated financial statements, and complete Management’s Discussion and Analysis of Financial Condition and Results of Operations that will satisfy the requirement ofItem 303 of Regulation S-K.**CONFERENCE CALL**     Interested parties may access the webcast of our Earnings Release Conference Call, scheduledfor June 23, 2011 at 10:30 a.m. Eastern Time, at www.paychex.com on the Investor Relations page.The webcast will also be archived on the Investor Relations page for approximately one month. Ournews releases, current financial information, SEC filings, and investor presentation are alsoaccessible at www.paychex.com. For more information, contact:     Investor Relations: John Morphy, Vice President of Finance, or  Terri Allen 585-383-3406Media Inquiries: Laura Saxby Lynch 585-383-3074**ABOUT PAYCHEX**     Paychex, Inc. is a leading provider of payroll, human resource, and benefits outsourcingsolutions for small- to medium-sized businesses. The company offers comprehensive payrollservices, including payroll processing, payroll tax administration, and employee pay services,including direct deposit, check signing, and Readychex®. Human Resource Services include401(k) plan recordkeeping, section 125 plans, a professional employer organization, time andattendance solutions, and other administrative services for business. A variety of businessinsurance products, including group health and workers’ compensation, are made available throughPaychex Insurance Agency, Inc. Paychex, Inc. was founded in 1971. With headquarters in Rochester,New York, the company has more than 100 offices and serves approximately 564,000 payroll clientsnationwide as of May 31, 2011. For more information about Paychex, Inc. and our products, visitwww.paychex.com.
Page 5 of 9

 
     **“SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995**     Certain written and oral statements made by us may constitute “forward-looking statements” asdefined in the Private Securities Litigation Reform Act of 1995 (the “Reform Act”).Forward-looking statements are identified by such words and phrases as “we expect,” “expected to,”“estimates,” “estimated,” “current outlook,” “we look forward to,” “would equate to,” “projects,”“projections,” “projected to be,” “anticipates,” “anticipated,” “we believe,” “could be,” and othersimilar phrases. All statements addressing operating performance, events, or developments that weexpect or anticipate will occur in the future, including statements relating to revenue growth,earnings, earnings-per-share growth, or similar projections, are forward-looking statements withinthe meaning of the Reform Act. Because they are forward-looking, they should be evaluated in lightof important risk factors. These risk factors include, but are not limited to, the followingrisks, as well as those that are described in our periodic filings with the SEC: **•** general market and economic conditions including, among others, changes in U.S.employment and wage levels, changes in new hiring trends, legislative changes to stimulatethe economy, changes in short- and long-term interest rates, changes in the fair value andthe credit rating of securities held by us, and accessibility of financing;  **•** changes in demand for our services and products, ability to develop and market newservices and products effectively, pricing changes and the impact of competition, and theavailability of skilled workers;  **•** changes in the laws regulating collection and payment of payroll taxes, professionalemployer organizations, and employee benefits, including retirement plans, workers’compensation, health insurance, state unemployment, and section 125 plans;  **•** changes in workers’ compensation rates and underlying claims trends;  **•** the possibility of failure to keep pace with technological changes and providetimely enhancements to services and products;  **•** the possibility of failure of our operating facilities, computer systems, andcommunication systems during a catastrophic event;  **•** the possibility of third-party service providers failing to perform their functions;  **•** the possible failure of internal controls or our inability to implement businessprocessing improvements; and  **•** potentially unfavorable outcomes related to pending legal matters.     Any of these factors could cause our actual results to differ materially from our anticipatedresults. The information provided in this document is based upon the facts and circumstances knownat this time. We undertake no obligation to update these forward-looking statements after the dateof issuance of this release to reflect events or circumstances after such date, or to reflect theoccurrence of unanticipated events.
Page 6 of 9

 
**PAYCHEX, INC.**