• Fourth quarter earnings per share increases 52%
• Fourth quarter revenue and gross profit growth surpass 40%
• Fourth quarter unit growth continues acceleration, exceeding 25%

HOUSTON – Feb. 15, 2000 – Administaff, Inc. (NYSE: ASF), a leading Professional Employer Organization (PEO), today announced record results for the fourth quarter and year ended December 31, 1999. For the fourth quarter, the company reported net income and diluted earnings per share of $5.5 million and $0.41, versus $3.9 million and $0.27 for the fourth quarter of 1998, an increase of 41% and 52%, respectively. For the year ended December 31, 1999, the company reported net income and diluted earnings per share of $9.4 million and $0.68, versus $9.1 million and $0.62 in 1998.

"An exceptional fall sales campaign combined with outstanding year-end client retention has propelled Administaff past the 50,000 worksite employee milestone in January 2000," commented Paul J. Sarvadi, president and chief executive officer. "As a result, we anticipate record levels in both unit and revenue growth during 2000."

Revenues for the fourth quarter of 1999 increased 44.6% to $716 million, primarily due to a 25.2% increase in the number of worksite employees paid, an 11.0% increase in fee payroll cost per worksite employee and an 87.3% increase in bonus payroll revenue. Gross profit increased 41.7% to $29.9 million, with an average monthly gross profit per worksite employee of $211 in the 1999 period compared to $186 in the 1998 period.

"Our 13.4% increase in average gross profit per worksite employee per month demonstrates the strong demand for Administaff’s premium PEO solution," commented Richard G. Rawson, executive vice president of administration and chief financial officer. "We enter 2000 with confidence in both our pricing strategy and our direct cost management."

The fourth quarter 1999 results include the effects of two unrelated non-recurring items, which when aggregated, reduced net income by $68,000 but did not affect diluted earnings per share. Operating expenses increased 49.3% over the fourth quarter of 1998, including the effect of a non-recurring charge of $1.4 million ($920,000 net of tax) to write off certain capitalized software development costs. Excluding this charge, operating expenses increased 40.2% and increased approximately $17 per worksite employee per month, due to increased depreciation, compensation costs and administrative expenses. Excluding the effect of the non-recurring charge, operating income for the fourth quarter of 1999 increased 46.2% to $7.9 million. Interest and other income was $1.7 million in the fourth quarter of 1999, including the effects of a settlement of non-discrimination testing issues related to the Administaff 401(k) Plan. The settlement amount with the Internal Revenue Service was significantly lower than the original estimate and accrual made in 1996, resulting in a non-recurring gain of $932,000 ($852,000 net of tax).

For the year ended December 31, 1999, revenues increased 34.3% to $2.3 billion, primarily due to a 22.0% increase in the number of worksite employees paid and a 9.0% increase in fee payroll cost per worksite employee. Gross profit increased 30.5% to $89.5 million. The average gross profit per worksite employee per month was $176 in 1999, compared to $164 in 1998, an increase of 7.3%. Operating expenses increased 37.6% over 1998 (35.1% excluding the write-off of software development costs). This increase was related to higher corporate and sales staff levels, depreciation expense and administrative expenses. Excluding the effect of the non-recurring software development cost write-off, operating income increased 7.1% to $12.0 million.

Historically, the company’s earnings pattern has included 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. The results for the fourth quarter and year ended December 31, 1999 reflect the effect of this pattern.

Administaff will be hosting a conference call today at 11:00 a.m. EST to discuss these results. To listen in, call 1-888-481-9034. You may also access the conference call via the Internet at www.administaff.com or www.streetfusion.com.

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. Administaff ranks number 765 on the Fortune 1000 list. The company also was named in 1999 to Fortune magazine's list of "America's Most Admired Companies'' and the InformationWeek 500 list as one of the top users of information technology. 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 Administaff’s direct costs and operating expenses; (iii) the effectiveness of Administaff’s sales and marketing efforts, including its marketing agreement with American Express, American Express’ ability to set qualified appointments and Administaff’s ability to convert those appointments into sales; (iv) the estimated costs and effectiveness of capital projects and investments in technology and infrastructure; (v) Administaff’s ability to effectively implement its eBusiness strategy, including identifying and reaching agreements with strategic alliance partners, timely rollout of and attraction of clients and worksite employees to its eCommerce portal, effective generation of revenues from eBusiness initiatives and unanticipated development costs of eBusiness initiatives; and (vi) changes in the competitive environments in the PEO industry. These factors are described in further detail in Administaff’s filings with the Securities and Exchange Commission.)

Administaff, Inc.
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1. Excluding the effects of two unrelated non-recurring items, operating income, net income and earnings per share would have been $7.9 million, $5.6 million and $0.41, respectively, for the three months ended December 31, 1999.
2. Excluding the effects of two unrelated non-recurring items, operating income, net income and earnings per share would have been $12.0 million, $9.4 million and $0.68, respectively, for the year ended December 31, 1999.

Administaff, Inc.
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