EXHIBIT 99.1

PRESS RELEASE OF PAYCHEX, INC. DATED DECEMBER 20, 2006

PAYCHEX, INC. REPORTS RECORD SECOND QUARTER RESULTS

December 20, 2006

SECOND QUARTER FISCAL 2007 HIGHLIGHTS

	•		Increase of 18% in net income to $132.7 million.
	•		Diluted earnings per share was $0.35, an increase of 17%.
	•		Total revenue up 14%.
	•		Payroll service revenue up 9% to $332.2 million.
	•		Human Resource Services revenue grew 24% to $93.0 million.
	•		Increase of 31% in the Company’s regular quarterly dividend to $0.21 per share.

     ROCHESTER, NY, December 20, 2006 — Paychex, Inc. (“we,” “our,” or “us”) (NASDAQ:PAYX) today announced record net income of $132.7 million, or $0.35 diluted earnings per share, for the three months ended November 30, 2006 (the “second quarter”), an 18% increase over net income of $112.6 million, or $0.30 diluted earnings per share, for the same period last year. Total revenue was $454.9 million, a 14% increase over $399.8 million for the same period last year.

     “Fiscal 2007 continues to meet our expectations with another excellent quarter generating record financial results. We are particularly pleased with our growth in service revenue of slightly over 12%, driven by a stable economy and continued growth in our Human Resource Services revenue. Our operating income margins, excluding interest on funds held for clients and stock-based compensation costs, were again higher in the second quarter of fiscal 2007 as compared to the same period last year,” commented Jonathan J. Judge, President and Chief Executive Officer of Paychex.

     Human Resource Services revenue increased 24% to $93.0 million for the second quarter from the same period last year. The growth was generated from the following: retirement services client base increased 14% to 41,000 clients; client employees for our comprehensive human resource outsourcing services increased 31% to 328,000 client employees; and workers’ compensation insurance services client base increased 18% to 56,000 clients. Additionally, the asset value of the retirement services client employees’ funds increased 25% to $7.2 billion.

     Total expenses increased 13% to $272.6 million for the second quarter from the same period last year. Growth in total expenses was a result of increases in personnel and other costs related to retaining clients, promoting new services, and creating more efficient systems for selling and servicing through new and enhanced technology. Additionally, we incurred $5.8 million of stock-based compensation costs for the second quarter. Total expense growth would have been 11% excluding stock-based compensation costs.

     For the second quarter, our operating income was $182.3 million, an increase of 15% over the same period last year. Operating income excluding interest on funds held for clients and stock-based compensation costs increased 15% to $158.4 million and improved as a percent of service revenue to 37% from 36% for the same period last year.

     For the second quarter, interest on funds held for clients increased 43% to $29.7 million and corporate investment income increased 79% to $9.9 million, attributable to higher average interest rates and higher average investment balances, as summarized below:

		For the three months ended								For the six months ended
		November 30,								November 30,
$ in millions		2006				2005				2006				2005
Average investment balances:
Funds held for clients		$	2,894.2			$	2,733.9			$	2,931.7			$	2,738.0
Corporate investments		$	1,070.8			$	798.0			$	1,035.9			$	764.3
Average interest rates earned:
Funds held for clients			4.0	%			3.0	%			4.0	%			2.9	%
Corporate investments			3.7	%			2.7	%			3.7	%			2.7	%

YEAR-TO-DATE FISCAL 2007 HIGHLIGHTS

     The highlights for the six months ended November 30, 2006 are as follows:

	•		Record net income of $267.7 million, or $0.70 diluted earnings per share.
	•		Net income and diluted earnings per share increased 18% and 17%, respectively.
	•		Total revenue increased 14% to $914.3 million.
	•		Payroll service revenue was up 9% to $667.5 million.
	•		Human Resource Services revenue increased 24% to $187.3 million.
	•		Total expenses grew 13% to $545.6 million. Excluding stock-based compensation costs of $12.3 million, total expense growth would have been 11%.
	•		Operating income increased 15% to $368.7 million.
	•		Cash flow from operations was $278.8 million.
	•		Utilization of our payroll tax administration services and employee payment services as of November 30, 2006 was 92% and 70%, respectively.

OUTLOOK

     Our current outlook for the full fiscal year ending May 31, 2007 is unchanged from the guidance provided in our Quarterly Report on Form 10-Q for the quarter ended August 31, 2006.

	•		Total service revenue growth is projected to be in the range of 11% to 13%.
	•		Interest on funds held for clients is expected to increase approximately 30% to 35%.
	•		Total revenue growth is estimated to be in the range of 12% to 14%.
	•		Corporate investment income is anticipated to increase approximately 55% to 60%.
	•		Stock-based compensation costs will be primarily included in selling, general and administrative expenses, and are expected to be in the range of $25.0 million to $30.0 million.
	•		Net income growth is expected to be in the range of 13% to 15%.

     Our projections are based on current economic and interest rate conditions continuing with no significant changes.

CONFERENCE CALL

     Interested parties may access the webcast of our Earnings Release Conference Call, scheduled for December 21, 2006 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. Our 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

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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, and employee pay services, including direct deposit, Readychex^®, and check signing. Human Resource Services include 401(k) plan recordkeeping, workers’ compensation administration, section 125 plans, a professional employer organization, time and attendance solutions, and other administrative services for business. Paychex, Inc. was founded in 1971. With headquarters in Rochester, New York, the company has more than 100 offices and serves approximately 543,000 payroll clients nationwide. For more information about Paychex, Inc. 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 us 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 we expect 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 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, those that are described in our filings with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K filed on July 21, 2006. Any of these factors could cause our actual results to differ materially from our anticipated results. The information provided in this document is based upon the facts and circumstances known at this time. We undertake 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.

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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,
										%												%
		2006				2005				Change				2006				2005				Change
Revenue:
Payroll service revenue		$	332,208			$	303,922				9	%		$	667,447			$	612,520				9	%
Human Resource Services revenue			93,038				75,106				24	%			187,342				150,923				24	%
Total service revenue			425,246				379,028				12	%			854,789				763,443				12	%
Interest on funds held for clients (A)			29,709				20,787				43	%			59,540				40,087				49	%
Total revenue			454,955				399,815				14	%			914,329				803,530				14	%
Expenses:
Operating expenses (B)			150,870				135,350				11	%			298,954				268,771				11	%
Selling, general and administrative expenses (B)			121,757				105,860				15	%			246,693				213,334				16	%
Total expenses			272,627				241,210				13	%			545,647				482,105				13	%
Operating income			182,328				158,605				15	%			368,682				321,425				15	%
Investment income, net (A)			9,941				5,552				79	%			19,357				10,411				86	%
Income before income taxes			192,269				164,157				17	%			388,039				331,836				17	%
Income taxes			59,603				51,545				16	%			120,292				104,196				15	%
Net income		$	132,666			$	112,612				18	%		$	267,747			$	227,640				18	%
Basic earnings per share		$	0.35			$	0.30				17	%		$	0.70			$	0.60				17	%
Diluted earnings per share		$	0.35			$	0.30				17	%		$	0.70			$	0.60				17	%
Weighted-average common shares outstanding			380,747				379,268								380,571				379,046
Weighted-average common shares outstanding, assuming dilution			382,433				381,256								382,172				380,725
Cash dividends per common share		$	0.21			$	0.16				31	%		$	0.37			$	0.29				28	%

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

		November 30,				May 31,
		2006				2006
ASSETS
Cash and cash equivalents		$	129,269			$	137,423
Corporate investments (A)			389,831				440,007
Interest receivable			41,919				38,139
Accounts receivable, net of allowance for doubtful accounts			215,563				189,835
Deferred income taxes			4,049				18,314
Prepaid income taxes			11,168				7,574
Prepaid expenses and other current assets			23,989				21,398
Current assets before funds held for clients			815,788				852,690
Funds held for clients (A)			3,770,229				3,591,611
Total current assets			4,586,017				4,444,301
Long-term corporate investments (A)			543,827				384,481
Property and equipment, net of accumulated depreciation			246,638				234,664
Intangible assets, net of accumulated amortization			69,241				60,704
Goodwill			405,842				405,842
Deferred income taxes			12,257				12,783
Other long-term assets			7,417				6,527
Total assets		$	5,871,239			$	5,549,302
LIABILITIES
Accounts payable		$	39,908			$	46,668
Accrued compensation and related items			107,655				130,069
Deferred revenue			5,288				5,809
Legal reserve			19,766				15,625
Other current liabilities			39,908				34,008
Current liabilities before client fund deposits			212,525				232,179
Client fund deposits			3,772,928				3,606,193
Total current liabilities			3,985,453				3,838,372
Deferred income taxes			13,240				15,481
Other long-term liabilities			44,939				40,606
Total liabilities			4,043,632				3,894,459
STOCKHOLDERS’ EQUITY
Common stock, $.01 par value; Authorized: 600,000 shares; Issued and outstanding: 381,106 shares at November 30, 2006, and 380,303 shares at May 31, 2006, respectively			3,811				3,803
Additional paid-in capital			317,849				284,395
Retained earnings			1,507,826				1,380,971
Accumulated other comprehensive loss			(1,879	)			(14,326	)
Total stockholders’ equity			1,827,607				1,654,843
Total liabilities and stockholders’ equity		$	5,871,239			$	5,549,302

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