• Unit growth exceeds 50%
• Revenue growth exceeds 70%
• EPS growth exceeds 81%

HOUSTON, TX – August 1, 2000 – Administaff, Inc. (NYSE: ASF), the leading Professional Employer Organization (PEO), today announced results for the second quarter and six months ended June 30, 2000. For the second quarter, the company reported net income and diluted earnings per share of $2.8 million and $0.20, versus $1.5 million and $0.11 in the 1999 period. For the six months ended June 30, 2000, the company reported net income and diluted earnings per share of $329,000 and $0.02, versus a net loss and diluted net loss per share of $(543,000) and $(0.04) for the same period in 1999.

"During the past year we have successfully refined our strategies and processes to increase our rate of growth while maintaining our high-quality service standards," said Paul J. Sarvadi, president and chief executive officer. "With our recent success, we are more confident than ever in our ability to continue capitalizing on our market opportunities – both in our core PEO service and our eBusiness initiatives."

Revenues for the second quarter of 2000 increased 70.9% to $864 million, primarily due to a 50.8% increase in the average number of worksite employees paid per month and a 14.0% increase in fee payroll cost per worksite employee per month. Gross profit increased 57.3% to $31.3 million. The average gross profit per worksite employee per month increased 4.3% to $171 in the second quarter of 2000, versus $164 in the 1999 period, due to effective pricing and direct cost management.

Operating expenses increased 53.8% over the 1999 period to $27.9 million. On a per worksite employee basis, operating expenses increased 2.0% to $152 per month in the 2000 period from $149 per month in the 1999 period. As a result, operating income for the second quarter of 2000 increased 93.2% to $3.5 million compared to $1.8 million in the 1999 period.

"Better-than-expected unit growth for the second consecutive quarter has positioned the company for strong profitability in the second half of 2000," commented Richard G. Rawson, executive vice president of administration and chief financial officer. "We now have an opportunity to accelerate our national sales and service expansion plan, enhancing our prospects for long-term growth without sacrificing near-term profitability."

For the six months ended June 30, 2000 revenues increased 65.0% to $1.6 billion, primarily due to a 45.7% increase in the average number of worksite employees paid per month and a 13.1% increase in fee payroll cost per worksite employee per month. Gross profit increased 55.5% to $52.0 million, with an average monthly gross profit per worksite employee of $151 in the 2000 period compared to $142 in the 1999 period. Operating expenses increased 49.1% over the 1999 period, and increased to $155 per worksite employee per month from $151 in the 1999 period. The resulting operating loss for the six months ended June 30, 2000, was $1.2 million compared to an operating loss of $2.3 million in the 1999 period.

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 each employee’s 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.

Administaff will be hosting a conference call today at 10:00 a.m. EDT to discuss these results. To listen in, call 1-888-287-2552. You may also access the conference call via the Internet at www.administaff.com or www.streetfusion.com.

Administaff serves as an off-site, full-service human resources department for small and medium-sized businesses throughout the United States. The company ranks number 615 on the Fortune 1000 list, is included for the second consecutive year on Fortune’s list of "America’s Most Admired Companies," and ranks number 83 on the Information Week 500 list of leading information technology innovators.

Administaff’s Personnel Management System includes employment administration, benefits management, government compliance, recruiting and selection, employer liability management, training and development, performance management and owner support. These core services are complemented by an eBusiness strategy that includes Administaff Assistant ^SM, an eService platform that provides clients and worksite employees with information and resources to help maximize the benefit of their Administaff services; and bizzport^SM, an eCommerce portal that features value-added products and services from best-of-class providers such as American Express, Aon Insurance Services, AT&T, Bank One, Dell, Forrester Research, IBM, MobShop, Inc., and works.com.

Headquartered in Houston, Texas, Administaff has 28 district sales offices in 16 major markets. 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 estimated costs and effectiveness of capital projects and investments in technology and infrastructure; (iv) Administaff’s ability to effectively implement its eBusiness strategy; (v) the effectiveness of Administaff’s sales and marketing efforts, including the company’s marketing arrangements with other companies; 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.)

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