ADMINISTAFF ANNOUNCES FULL YEAR AND FOURTH QUARTER 2004 RESULTS

HOUSTON - Feb. 16, 2005 - Administaff, Inc. (NYSE: ASF), the nation’s leading Professional Employer Organization (PEO), today announced results for the full year and fourth quarter 2004. For the year ended Dec. 31, 2004, the company reported net income and diluted net earnings per share from continuing operations of $19.2 million and $0.72, versus $15.0 million and $0.55 for the same period in 2003. The 2004 results include proceeds from the Aetna settlement of $8.25 million, or $5.2 million and $0.19 per share after taxes.

From its continuing operations, the company reported fourth quarter net income and diluted earnings per share of $3.5 million and $0.14, versus $8.8 million and $0.32 in the 2003 period. Quarter-over-quarter results for 2004 and 2003 are not comparable due to a contractual change with clients allowing the company to invoice its comprehensive service fee at a higher rate earlier in the year to more closely reflect the annual pattern of employer-related payroll tax costs. Beginning in 2004, substantially all of the company’s client base was invoiced in accordance with this contractual change, compared to only 20% in 2003. Prior to 2004, the company’s earnings pattern included losses in the first quarter, followed by improved profitability in subsequent quarters throughout the year.

“We are pleased with the success of our fall campaign selling and retention efforts, which resulted in 81,426 paid worksite employees in December, an increase of 10% over December 2003,” said Paul J. Sarvadi, Administaff chairman and chief executive officer. “Achieving our stated goal of double-digit unit growth by year end lays a strong foundation for growth and profitability in 2005.”

Full Year Results

For the year ended Dec. 31, 2004, revenues increased 8.8% to $969.5 million, primarily due to a 4.9% increase in revenues per worksite employee per month and a 3.9% increase in the number of worksite employees paid.

Gross profit increased slightly to $197.7 million, as the 3.9% increase in the number of worksite employees paid offset a decline in the average monthly gross profit per worksite employee, from $219 in the 2003 period to $211 in the 2004 period. This expected decrease in gross profit per worksite employee per month was reflective of the company’s decision to moderate healthcare allocation increases in our comprehensive service fee, relative to expected cost increases over the last half of 2003 and first half of 2004. As a result, revenue per worksite employee per month increased by 4.9%, while direct costs per worksite employee per month increased by 7.3%.

Operating expenses increased 1.6% over the 2003 period to $175.6 million. On a per worksite employee per month basis, operating expenses decreased 2.1% to $188 compared to $192 in the 2003 period.

Operating income for the year ended Dec. 31, 2004 decreased 8.8% to $22.1 million compared to $24.3 million in the 2003 period, with an average monthly operating income per worksite employee of $24 in 2004 compared to $27 in 2003.

“We are confident in our ability to fund future double-digit unit growth and continue our share repurchase and dividend programs,” said Douglas S. Sharp, vice president of finance and chief financial officer. “We have generated EBITDA in excess of $40 million in each of the past two years and ended 2004 with working capital of $47.5 million, even after share repurchases of $17 million.”

Fourth Quarter Results

Revenues for the fourth quarter of 2004 increased 9.0% over the 2003 period to $248.7 million. This increase was due to an 8.9% increase in the average number of worksite employees paid per month, while revenues per worksite employee per month remained constant.

Gross profit for the fourth quarter was $51.4 million, with an average gross profit per worksite employee per month of $212. Gross profit and gross profit per worksite employee per month were $57.7 million and $259 in the 2003 period. The 2004 and 2003 results are not comparable due to the invoicing changes referenced above and a payroll tax accrual of $5.6 million in the 2003 period resulting from the receipt of an unemployment tax assessment from the State of California.

Operating expenses for the quarter increased from $43.4 million in the 2003 period to $46.1 million in the 2004 period. This increase was due primarily to a $1.8 million increase in marketing and advertising costs associated with the launch of the company’s new brand identity, which included the inaugural Administaff Small Business Classic professional golf tournament. In addition, in 2004 corporate salaries and wages increased $1.3 million over 2003, due primarily to lower capitalized software development costs in 2004 and a 2.5% increase in average pay. On a per worksite employee per month basis, operating expenses decreased 2.6% to $190 in the 2004 period from $195 in the 2003 period. This decrease was due to the 8.9% increase in the average number of worksite employees paid per month, offset by the increases referenced above.

Business Outlook

Administaff also provided its outlook for the first quarter and full year 2005.

Administaff will be hosting a conference call today at 10 a.m. ET to discuss these results, give guidance for the first quarter and full year 2005, and answer questions from investment analysts. To listen in, call 800-599-9795 and use passcode 64708872. The call will also be webcast at http://www.administaff.com . To access the webcast, click on the Investor Relations section of the website and select “Live Webcast.” The conference call script w