EXHIBIT 99.1: PRESS RELEASE OF PAYCHEX, INC. DATED DECEMBER 21, 2005

PAYCHEX, INC. REPORTS RECORD SECOND QUARTER RESULTS

December 21, 2005

Second Quarter Fiscal 2006 Highlights:

	•		Increase of 30% in both net income and diluted earnings per share to $112.6 million and $0.30, respectively.
	•		Total revenues up 15%.
	•		Payroll service revenue up 9% to $303.9 million.
	•		Major Market Services revenue increased 26% to $53.4 million.
	•		Retirement Services revenue grew 15%.
	•		Administrative fee revenue from Paychex Premier (SM) increased 66%.
	•		Quarterly cash dividend per share increased to $0.16 per share from $0.13 per share.

     ROCHESTER, NY, December 21, 2005 — Paychex, Inc. (the “Company” or “Paychex”) (NASDAQ:PAYX) today announced record net income of $112.6 million, or $0.30 diluted earnings per share, for the three months ended November 30, 2005 (“the second quarter”), a 30% increase over net income of $86.9 million, or $0.23 diluted earnings per share, for the same period last year. Total revenues were $399.8 million, a 15% increase over $347.3 million for the same period last year.

     “We are very pleased with the positive results achieved in our second quarter. They were in line with our expectations and position us very well to achieve our full year guidance. Client base growth and increased ancillary penetration were the key drivers for our 9% increase in second quarter Payroll service revenue. This, coupled with Major Market Services second quarter revenue growth of 26%, leaves us very optimistic about the year,” commented Jonathan J. Judge, President and Chief Executive Officer of Paychex.

     Human Resource Services revenue increased 32% to $75.1 million for the second quarter. This increase reflects growth in our clients for Retirement Services and growth in client employees served by our Paychex Premier ^(SM) Human Resources (previously referred to as Paychex Administrative Services or “PAS”) and Professional Employer Organization (“PEO”) services. Retirement Services revenue increased 15% for the second quarter to $25.8 million. Administrative fee revenue from Paychex Premier ^(SM) increased 66% for the second quarter to $12.8 million. Revenue from our PEO products increased 37% in the second quarter to $14.3 million.

     We continue to leverage our business as demonstrated by a drop in total expenses in the second quarter as a percentage of total service revenues to 64%, down from 66% in the same period last year. Our investments to support revenue growth contributed to a moderate increase in total operating and selling, general and administrative expenses. For the second quarter, our operating income was $158.6 million, an increase of 25% over the same period last year.

     Increases in interest on funds held for clients and corporate investment income were attributable to average interest rate and average investment balance comparisons as follows:

		For the three months ended								For the six months ended
		November 30,								November 30,
$ in millions		2005				2004				2005				2004
Average investment balances:
Funds held for clients		$	2,733.9			$	2,410.3			$	2,738.0			$	2,442.7
Corporate investments		$	798.0			$	556.6			$	764.3			$	543.8
Average interest rates earned:
Funds held for clients			3.0	%			2.0	%			2.9	%			1.9	%
Corporate investments			2.7	%			2.0	%			2.7	%			1.9	%

Year-to-Date Fiscal 2006 Highlights:

     The highlights for the six months ended November 30, 2005 are as follows:

	•		Record net income of $227.6 million, or $0.60 diluted earnings per share.
	•		Net income and diluted earnings per share increased 30%, respectively.
	•		Total revenues increased 16% to $803.5 million.
	•		Payroll service revenue was up 10% to $612.5 million.
	•		Major Market Services revenue increased 27% to $105.7 million.
	•		Retirement Services revenue grew 16% to $50.4 million.
	•		Administrative fee revenue from Paychex Premier (SM) increased 69% to $25.0 million.
	•		Total expenses were 63% of total service revenues compared with 65% in the same period last year.
	•		Operating income increased 26% to $321.4 million.
	•		Cash flow from operations was $234.8 million.
	•		Utilization of tax filing and payment services and employee payment services as of November 30, 2005 was 91% and 67%, respectively.

Outlook:

     Our current outlook for the full fiscal year ended May 31, 2006 is the same as provided in our Form 10-Q for the quarter ended August 31, 2005, except for the inclusion of the effect of the Federal Funds rate increases on November 1, 2005 and December 13, 2005.

CONFERENCE CALL

     Access the webcast of the Paychex, Inc. Second Quarter Earnings Release Conference Call, scheduled for December 22, 2005 at 10:30 a.m. Eastern Time, at www.paychex.com at the Investor Relations page. Paychex, Inc.’s news releases, current financial information, SEC filings, and investor presentations are also accessible at www.paychex.com. For more information, contact:

		Investor Relations:		John Morphy, CFO, or Terri Allen		585-383-3406
		Media Inquiries:		Laura Saxby Lynch		585-383-3074

ABOUT PAYCHEX

     Paychex, Inc. is a leading provider of payroll, human resource, and benefits outsourcing solutions for small- to medium-sized businesses. The company offers comprehensive payroll services, including payroll processing, payroll tax administration, time and attendance solutions and employee pay services, including direct deposit, check signing, and Readychex^®. Human Resource Services include 401(k) plan recordkeeping, workers’ compensation administration, section 125 plans, a professional employer organization, and other administrative services for business. Paychex was founded in 1971. With headquarters in Rochester, New York, the company has more than 100 offices and serves approximately 522,000 payroll clients nationwide. For more information about Paychex and our products, visit www.paychex.com.

“SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

     Certain written and oral statements made by management of Paychex, Inc. and its wholly owned subsidiaries (the “Company” or “Paychex”) may constitute “forward-looking statements” as defined 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 other similar phrases. All statements addressing operating performance, events, or developments that the Company expects or anticipates will occur in the future, including statements relating to revenue growth, earnings, earnings-per-share growth, or similar projections, are forward-looking statements within the meaning of the Reform Act. Because they are forward-looking, they should be evaluated in light of important risk factors. These risk factors include, but are not limited to, the following or those that are described in the Company’s filings with the Securities and Exchange Commission, including the Company’s most recent Form 10-K filed on July 22, 2005: changes in demand for the Company’s products and services, ability to develop and market new products and services effectively, pricing changes and impact of competition, and the availability of skilled workforce; general market and economic conditions, including, among others, changes in United States employment and wage levels, changes in new hiring trends, changes in short- and long-term interest rates, and changes in the market value and the credit rating of securities held by the Company; changes in the laws regulating collection and payment of payroll taxes, professional employer organizations, and employee benefits, including 401(k) plans, workers’ compensation, state unemployment, and section 125 plans; changes in technology, including use of the Internet; the possibility of failure of the Company’s operating facilities, computer systems, and communication systems during a catastrophic event; the possibility of third-party service providers failing to perform their functions; the possibility of penalties and losses resulting from errors and omissions in performing services; the possible inability of clients to meet payroll obligations; the possibility of failure in internal controls or the inability to implement business processing improvements; and potentially unfavorable outcomes related to pending legal matters. All of these factors could cause the Company’s actual results to differ materially from its anticipated results. The information provided in this document is based upon the facts and circumstances known at this time. The Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of issuance of this release, or to reflect occurrence of unanticipated events.

PAYCHEX, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)

		For the three months ended													For the six months ended
		November 30,												November 30,
										%												%
		2005				2004				Change				2005				2004				Change
Revenues:
Payroll service revenue		$	303,922			$	277,908				9	%		$	612,520			$	557,713				10	%
Human Resource Services revenue			75,106				56,968				32	%			150,923				111,366				36	%
Total service revenues			379,028				334,876				13	%			763,443				669,079				14	%
Interest on funds held for clients (A)			20,787				12,409				68	%			40,087				23,181				73	%
Total revenues			399,815				347,285				15	%			803,530				692,260				16	%
Expenses:
Operating expenses (B)			135,350				122,852				10	%			268,771				244,444				10	%
Selling, general and administrative expenses (B)			105,860				97,535				9	%			213,334				192,250				11	%
Total expenses			241,210				220,387				9	%			482,105				436,694				10	%
Operating income			158,605				126,898				25	%			321,425				255,566				26	%
Investment income, net (A)			5,552				2,751				102	%			10,411				5,010				108	%
Income before income taxes			164,157				129,649				27	%			331,836				260,576				27	%
Income taxes			51,545				42,784				20	%			104,196				85,990				21	%
Net income		$	112,612			$	86,865				30	%		$	227,640			$	174,586				30	%
Basic earnings per share		$	0.30			$	0.23				30	%		$	0.60			$	0.46				30	%
Diluted earnings per share		$	0.30			$	0.23				30	%		$	0.60			$	0.46				30	%
Weighted-average common shares outstanding			379,268				378,265								379,046				378,185
Weighted-average common shares outstanding, assuming dilution			381,256				379,696								380,725				379,699
Cash dividends per common share		$	0.16			$	0.13				23	%		$	0.29			$	0.25				16	%

(A)

Further information on interest on funds held for clients and investment income, net, and the short- and long-term effects of changing interest rates can be found in the Company’s filings with the Securities and Exchange Commission, including the Company’s Forms 10-K, 10-Q, and 8-K, as applicable, under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and subheadings “Results of Operations” and “Market Risk Factors.” These filings are accessible at the Company’s website www.paychex.com.

(B)

Expenses have been reclassified between operating expenses and selling, general and administrative expenses to more appropriately reflect the Company’s current way of conducting business.

PAYCHEX, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except per share amount)

		November 30,				May 31,
		2005				2005
ASSETS
Cash and cash equivalents			$   315,816			$	280,944
Corporate investments (A)			476,691				426,666
Interest receivable			29,328				31,108
Accounts receivable, net of allowance for doubtful accounts			210,401				161,849
Deferred income taxes			21,330				21,374
Prepaid income taxes			4,455				5,781
Prepaid expenses and other current assets			24,513				20,587
Current assets before funds held for clients			1,082,534				948,309
Funds held for clients (A)			2,339,747				2,740,761
Total current assets			3,422,281				3,689,070
Property and equipment, net of accumulated depreciation			218,900				205,319
Intangible assets, net of accumulated amortization (B)			66,480				71,458
Goodwill (B)			405,842				405,992
Other long-term assets			6,525				7,277
Total assets			$4,120,028			$	4,379,116
LIABILITIES
Accounts payable			$     25,346			$	30,385
Accrued compensation and related items			105,778				106,635
Deferred revenue			3,505				4,271
Legal reserve			22,623				25,271
Other current liabilities			32,498				28,391
Current liabilities before client fund deposits			189,750				194,953
Client fund deposits			2,352,684				2,746,871
Total current liabilities			2,542,434				2,941,824
Deferred income taxes			17,056				17,759
Other long-term liabilities			39,420				33,858
Total liabilities			2,598,910				2,993,441
STOCKHOLDERS’ EQUITY
Common stock, $.01 par value; Authorized: 600,000 shares; Issued and outstanding: 379,596 shares at November 30, 2005, and 378,629 shares at May 31, 2005, respectively			3,796				3,786
Additional paid-in capital			264,966				240,700
Retained earnings			1,265,291				1,147,611
Accumulated other comprehensive loss			(12,935	)			(6,422	)
Total stockholders’ equity			1,521,118				1,385,675
Total liabilities and stockholders’ equity			$4,120,028			$	4,379,116

(A)

The available-for-sale securities within the funds held for clients and corporate investment portfolios reflected a net unrealized loss position of $19.9 million at November 30, 2005, compared with a net unrealized loss position of $9.9 million at May 31, 2005. During the six months ended November 30, 2005, the net unrealized loss position ranged from $21.6 million to $6.1 million. The net unrealized loss position of the Company’s combined investment portfolios was approximately $19.3 million at December 15, 2005.

(B)

Intangible assets primarily represent client lists and license agreements with associate offices, which are amortized over periods ranging from five to twelve years using either accelerated or straight-line methods. Goodwill recorded from the fiscal 2003 and fiscal 2004 acquisitions is not amortized, but is tested for impairment on an ongoing basis. The Company’s business is largely homogeneous and substantially all of the goodwill is associated with one reporting unit.