• Revenues increase 31.3% to $476 million
• Net loss consistent with historical pattern

HOUSTON, TX – April 21, 1999 – Administaff, Inc. (NYSE: ASF), a leading Professional Employer Organization (PEO), today announced results for the first quarter ended March 31, 1999. The company reported a net loss and diluted net loss per share of $2.1 million and $0.14, versus losses of $742,000 and $0.05 for the first quarter of 1998. Historically, the company’s earnings pattern includes losses in the first quarter, followed by improved profitability in subsequent quarters throughout the year. This pattern is due to the effects of employment-related taxes which are based on the individual employees’ cumulative earnings up to specified wage levels, causing employment-related taxes to be largest in the first quarter and then decline over the course of the year.

"Our first quarter results indicate that the key metrics that drive our business model are in line with our expectations," said Richard G. Rawson, executive vice president of administration and chief financial officer. "The combination of strong gross profit per worksite employee and the higher than expected average payroll cost per worksite employee is encouraging as it relates to the level of profitability for the balance of the year."

For the quarter ended March 31, 1999, revenues increased 31.3% to $476 million, primarily due to a 21.8% increase in the number of worksite employees paid and an 8.4% increase in payroll cost per worksite employee. Gross profit increased 21.3% to $13.6 million. The average gross profit per worksite employee per month was $118 in the first quarter of 1998 and 1999, as changes in the company’s direct cost structure were successfully matched with changes in the comprehensive service fees charged by the company. Operating expenses increased 33.3% over the 1998 period, and increased from $140 per worksite employee per month in the 1998 period to $153 per month in the 1999 period. This increase was the result of the continued investment in sales, service and technology infrastructure in the form of higher compensation costs, depreciation and general and administrative expenses. The resulting operating loss for the first quarter of 1999 was $4.1 million, compared to an operating loss of $2.0 million in the first quarter of 1998.

"One of the highlights of our first quarter was the completion of our sales expansion for 1999 with the opening of our second San Francisco office and a two-office complex in New York City," commented Paul J. Sarvadi, president and chief executive officer. "Our long-term growth prospects are strong as we continue to execute our organic growth and expansion plan."

In other developments, through April 20, 1999, the company has repurchased 875,000 of the one million shares authorized for repurchase by the board of directors in January 1999. The total cost of the shares repurchased was $12.3 million.

The company also announced two changes in its board and management team. Gerald M. McIntosh, co-founder and member of the board of directors of Administaff, will resign from the company’s board effective May 4, 1999. In addition, Jerald L. Broussard, senior vice president of business development, will resign that office effective May 28, 1999.

"These two leaders have contributed greatly to Administaff’s success," said Sarvadi. "We appreciate their valuable contributions in helping guide the company’s growth during its early years, and we wish them all the best going forward."

McIntosh, who retired in April 1997 as Administaff’s senior vice president of research and development, said, "Being part of this dynamic business since its inception in 1986 has been both personally and professionally rewarding. Although my personal interests are taking me in a new direction, I trust that Administaff will continue building its industry leadership well into the future."

Broussard commented, "The past 10 years with Administaff have been both exciting and fulfilling. The foundation for ongoing excellence is in place, and I am convinced that the company will continue changing and improving the way small business does business."

Administaff has no immediate plans to fill the board vacancy created by McIntosh’s departure or the management team position resulting from Broussard’s departure.

Administaff will be hosting a conference call today at 11:00 a.m. EDT to discuss these results. To listen in, call 1-800-360-0001.

Administaff provides small and medium-sized businesses with a comprehensive Personnel Management System that includes benefits and payroll administration, medical and workers’ compensation insurance programs, personnel records management, employer liability management, employee recruiting and selection, performance management, and training and development services. The company currently has 25 offices in 15 major markets and serves clients and worksite employees throughout the United States. For additional information, visit the company’s web site at www.administaff.com.

(NOTE: The statements contained in this press release that are not historical facts are forward-looking statements that involve a number of risks and uncertainties. Therefore, the actual results of future events described in such forward-looking statements could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are: (i) regulatory and tax developments; (ii) changes in the company’s direct costs and operating expenses; (iii) the effectiveness of the company’s sales and marketing efforts, including its marketing agreement with American Express, American Express’ ability to set qualified appointments and the company’s ability to convert those appointments into sales; (iv) the estimated costs and effectiveness of capital projects and investments in technology and infrastructure; (v) changes in the competitive environment in the PEO industry; and (vi) the effectiveness and estimated costs of the company’s Year 2000 conversion and contingency plans. These factors are described in further detail in the company’s filings with the Securities and Exchange Commission.)