"

Compensation programs associated with higher shareholder returns
The HCI study also found that companies that differentiate employee
bonuses based on performance and use stock-based compensation financially
outperform those that do not.

About Watson Wyatt
Watson Wyatt Worldwide (NYSE: WW) is a global human capital and financial
management consulting firm.
Gross profit increased slightly to $197.4 million in the
2003 period to $46.75 - $46." The conference
call script will be available at the same website later today. The webcast will be archived for one year .7% (2,093) (2,176) (3.6% $4,407,063 $3,938,021 11.3%

Payroll cost
per worksite
employee
(GAAP) $5,217 $4,869 7.

novated cased

Companies that
fill positions within two weeks provided total return to shareholders (TRS) of
59 percent between 2002 and 2004 versus 11 percent at companies that required
at least seven weeks to fill positions. "Since new employees already know someone at
the organization, they tend to be familiar with their new employer and are
likely to develop a greater level of commitment.
On a per worksite employee per month basis, operating expenses decreased 2.
Sharp, vice president of finance and chief financial officer.3 million over
2003, due primarily to lower capitalized software development costs in 2004
and a 2.administaff .administaff.829 billion,
less worksite
employee payroll
cost of
$1.086 million,
$4.4% 49,283 50,033 (1.2%
Discontinued
operations:
Loss from
discontinued
operations --- (1,161) --- --- (3,264) ---
Income tax
expense
(benefit) --- (407 ) --- --- (1,143) ---
Net loss from
discontinued
operations --- (754) --- --- (2,121) ---
Net income $3,549 $8,036 (55.

fennell payrolls

-- Too much and too little turnover is unhealthy for an organization. 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 confident in our ability to fund future double-digit unit growth
and continue our share repurchase and dividend programs," said Douglas S .5 million, even after share repurchases
of $17 million.0)%
Advertising 4,066 2 ,288 77.7% 10,021 8,581 16.03) --- $--- $(0.

cased refine

The firm specializes in employee benefits, human
capital strategies, technology solutions, and insurance and financial services
and has 6,000 associates in 32 countries.0 million and $0.9% increase in revenues per worksite
employee per month and a 3.
Operating expenses increased 1. Gross profit and gross
profit per worksite employee per month were $57.6 million in the 2003
period resulting from the receipt of an unemployment tax assessment from the
State of California.1 million in the 2004 period. A replay of
the conference call will be available at 888-286-8010, passcode 33806037, for
two weeks after the call.7)%
Operating
expenses per
worksite
employee per
month 190 195 (2.5%

(A) Gross billings of $6,241, $5,893, $5,749 and $5,363 per worksite
employee per month less payroll cost of $5,217, $4,869, $4,712 and
$4,373 per worksite employee per month, respectively.

novated deferred

32 in the 2003 period. Beginning in 2004, substantially all of the
company's client base was invoiced in accordance with this contractual change,
compared to only 20% in 2003.1 million compared to $24.938 billion,
respectively) $248,723 $228,265 9.9)% 197,694 197,105 0.5% 2,449 1,910 28.6)% $19,210 $14,985 28.0% $4,014 ,154 $3,607,118 11.1% $4,712 $4,373 7.

cased remuneration

0% over the 2003
period to $248.
Gross profit for the fourth quarter was $51.515 billion,
$1.8%
Direct costs:
Payroll taxes,
benefits and
workers'
compensation
costs 197,280 170,540 15.3%
Gross profit 51,443 57,725 (10.7% 10,447 10 ,656 (2. As a result,
Administaff management refers to non-bonus payroll cost in analyzing,
reporting and forecasting the company's workers' compensation costs.

rightfully lipis

Effective Recruiting Tied to Stronger Financial Performance

Sarvadi,
Administaff chairman and chief executive officer.
(B) The high end of the full year operating expense range assumes a
higher accrual for incentive compensation based upon achieving
higher unit growth and gross profit goals.6%
General and
administrative
expenses 12,280 11,997 2.8)%
Other income
(expense):
Interest income 829 737 12.

gainsharing daco

"While it is possible to find good candidates from any source, there are
several advantages to hiring new employees using referrals from existing
employees," said Ilene Gochman, national practice leader for organization
effectiveness at Watson Wyatt. Companies that make sharper distinctions in
bonus payouts based on employee performance achieved a three-year TRS of 47
percent, versus a negative 2 percent TRS for companies with a less
differentiated compensation structure. "We have
generated EBITDA in excess of $40 million in each of the past two years and
ended 2004 with working capital of $47.9 % increase in the
average number of worksite employees paid per month, offset by the increases
referenced above.4 - $0. The call will also be webcast at
http://www.3%
Operating
expenses:
Salaries, wages
and payroll
taxes 23,137 21,880 5.72 $0.6)% 24 27 (11.1%

Non-bonus payroll cost represents payroll cost excluding the impact of
bonus payrolls paid to the company's worksite employees.

serp novated

(NYSE: ASF),
the nation 's leading Professional Employer Organization (PEO), today announced
results for the full year and fourth quarter 2004.2 million and $0. 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.3%.6

(A) Includes $250,000 and $2.com .2%
Interest
expense (527) (508) 3.6)% 188 192 (2.1)%
Net income
from
continuing
operations
per worksite
employee per
month 15 39 (61.

generalists rightfully

Watson Wyatt's 2005 Human Capital Index(R) Also Links Performance - and Stock-
Based Compensation Programs With Higher Shareholder Returns

WASHINGTON , Organizations with superior
recruiting practices - such as filling jobs quickly, hiring their first -choice
candidate and using employee referrals - financially outperform those with
less effective programs, according to a new study by Watson Wyatt, a leading
human capital consulting firm.
From its continuing operations, the company reported fourth quarter net
income and diluted earnings per share of $3.7 million.0 - $185.6 26.407 billion
and
$3.08) ---
Diluted net income
per share of
common stock $0.47 53.2% 392 ,909 330,903 18.3% $4,292 $4,006 7.

payscale deferred

Watson Wyatt's Human Capital Index (HCI) study found that successful
recruiting is a strong indicator of higher shareholder value. For the year ended
Dec. The 2004 results include
proceeds from the Aetna settlement of $8.6 million.

"

Fourth Quarter Results
Revenues for the fourth quarter of 2004 increased 9.0 (B)
Net interest income
(in millions) $0. ET to
discuss these results, give guidance for the first quarter and full year 2005,
and answer questions from investment analysts.6%
Operating income 5,375 14,317 (62.6%
Income tax expense 2,128 5 ,738 (62.4% 420 367 14.

generalists vinings

"
Employee referrals can be a much more efficient way to find new workers,
according to the study.8% to
$969.8 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.3% 38. For additional information, visit Administaff's Web site at
http://www.314 billion,
$5.7% 771,833 693,754 11.7% 88,298 82,802 6.9)% 30,736 24,470 25.

deferred boeck

"An organization's first opportunity to increase value is effective
recruiting," said Paul Platten, global director of human capital consulting at
Watson Wyatt. Companies that hire more than one-third of new
employees through employee referrals generated more than twice the total
return to shareholders (48 percent ) of employers that hired less than 10
percent of employees through referrals (23 percent). The study also revealed that firms with the widest eligibility for
restricted stock plans (where 36 percent of executives and managers are
eligible) had a three-year TRS of 50 percent, more than double that of firms
with lower rates of eligibility.

About Watson Wyatt's Human Capital Index (HCI ) Study
Initially launched in 1999, the Watson Wyatt HCI study identifies human
resource policies and practices that are associated with superior financial
performance.72, versus
$15. 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 2004.1%
to $188 compared to $192 in the 2003 period. This increase was due
primarily to a $1.
Summary Financial Information
(in thousands, except per share amounts and statistical data)

December 31,
2004 2003

Assets
Cash and cash equivalents $81,740 $104,728
Restricted cash 18,511 4,584
Marketable securities 27,950 23,989
Accounts receivable 67,210 61,744
Prepaid expenses and other current assets 18,409 30,022
Income taxes receivable 489 ---
Deferred income taxes --- 3,423
Total current assets 214,309 228,490

Property and equipment 163,449 160,993
Accumulated depreciation (94,392) (82,224)
Net property and equipment 69 ,057 78,769

Deposits 70,593 39,671
Other assets 679 1,141
Total assets $354,638 $348,071

Liabilities and Stockholders' Equity
Accounts payable $2,380 $4,319
Payroll taxes and other payroll deductions
payable 64,471 65,310
Accrued worksite employee payroll expense 59,277 65,503
Accrued health insurance costs 1,991 6,559
Accrued workers' compensation costs 19,349 5,489
Other accrued liabilities 17 ,461 15,898
Income taxes payable --- 7,520
Deferred income taxes 231 ---
Current portion of long-term debt 1,649 1,860
Total current liabilities 166,809 172,458

Long-term debt 34,890 40,502
Accrued workers' compensation costs 22,912 7,417
Deferred income taxes 3,498 5,060
Total noncurrent liabilities 61,300 52,979

Stockholders' equity:
Common stock 309 309
Additional paid-in capital 101,623 101,681
Treasury stock, cost (63 ,925) (48,795)
Accumulated other comprehensive income,
net of tax (127) ---
Retained earnings 88,649 69,439
Total stockholders' equity 126,529 122 ,634
Total liabilities and stockholders'
equity $354,638 $348,071

Administaff, Inc.377 billion
and
$4.8)% 17,514 20,759 (15.14 $0.1)%
Operating
income per
worksite
employee per
month 22 64 (65.

Administaff, Inc.

novated veba

9% increase in the number of worksite employees
paid .m.com . The company operates 38 sales offices in
21 major markets.5)% 22,131 24,274 (8.8 )% $19,210 $12,864 49.3%
Diluted net income
per share of
common stock:
Income from
continuing
operations $0.

payrolls deferred

8 million and $0. As a
result , revenue per worksite employee per month increased by 4.7 million and $259 in the 2003
period.

Business Outlook
Administaff also provided its outlook for the first quarter and full year
2005.6 - $2. Therefore, the actual results of future events described in
such forward-looking statements could differ materially from those stated in
such forward-looking statements.3)% $0 .2%
Diluted weighted
average common
shares
outstanding 26,099 27,444 26,859 27,253

Administaff, Inc.9%
Revenues per
worksite
employee
per month(A) $1,024 $1,024 - -- $1,037 $989 4.

cased omura

Those that use discounted stock purchase plans had a three-year TRS of 57
percent, 30 points higher than that of firms that do not use such incentive
plans.
"As our study confirms, employers that incorporate effective reward
programs will maximize the value of their human capital as well as their
financial performance," said Platten. HOUSTON, Administaff , Inc.0
Effective income tax rate 38.)

Administaff, Inc.
Summary Financial Information (continued)
(in thousands , except per share amounts and statistical data)

Three months ended Year ended
December 31, December 31,
2004 2003 Change 2004 2003 Change

Operating results:
Revenues (gross
billings of
$1.32 (56.55 30.7%
Non-bonus
payroll
cost $1,087,003 $921,441 18.8%
Less: Bonus
payroll cost
per worksite
employee 740 737 0. Non-bonus payroll and EBITDA should not be considered as a
substitute for, or superior to, measures of financial performance prepared in
accordance with GAAP.

omura vinings

31, 2004, the company reported net income and diluted net earnings per
share from continuing operations of $19. "Achieving our stated goal
of double-digit unit growth by year end lays a strong foundation for growth
and profitability in 2005.9% 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.4 million, with an average
gross profit per worksite employee per month of $212.2 million in stock-based compensation
expense, in the first quarter and full year, respectively. To access the webcast, click on the Investor
Relations section of the website and select "Live Webcast. These factors are described in further detail in
Administaff 's filings with the Securities and Exchange Commission.14 $0. Bonus payroll cost
varies from period to period, but has no direct impact to the company's
ultimate workers' compensation costs under the current program.

boeck fiss

"Companies that minimize the disruption and lost productivity
caused by turnover create a significant advantage that allows them to
outperform their competition financially. "The top-performing companies in our
study are those that have robust stock-based incentives and are not afraid to
make substantial pay distinctions based on performance. Firms that fill fewer
positions (12 percent) tend to have the lowest returns (negative 2
percent), while those that fill the most non-entry-level positions
internally (80 percent or more) also have lower performance (32
percent).14, versus
$8. 31, 2004 decreased 8.8% to
$22.9% 77,936 75,036 3.
Summary Financial Information (continued)
(in thousands , except per share amounts and statistical data)
(Unaudited)

GAAP to Non-GAAP Reconciliation Tables

Three months ended Year ended
December 31, December 31,
2004 2003 Change 2004 2003 Change

Payroll cost
(GAAP) $1,266,466 $1,085,805 16.

remuneration salary

3 million in the 2003 period, with an average
monthly operating income per worksite employee of $24 in 2004 compared to
$27 in 2003.

Administaff is a leading personnel management company that serves as a
full-service human resources department for small and medium-sized businesses
throughout the United States.266 million,
$1.

deferred daco

9%, while
direct costs per worksite employee per month increased by 7. This increase was due to an 8.

(Note: The statements contained in this press release that are not
historical facts, including those that are identified with the words
"outlook," "plan," "expect," "predict, " "appears," "indicator" and similar
words, are forward-looking statements that involve a number of risks and
uncertainties.29 (51.9%
Less: Bonus
payroll cost 179,463 164,364 9. Administaff includes non-bonus payroll and EBITDA in
this press release because the company believes they are useful to investors
in allowing for greater transparency related to the costs incurred under the
company's workers' compensation program and the company's operating
performance during the periods presented.

compensate veba

25 million, or $5.
"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.6% over the 2003 period to $175.
Operating income for the year ended Dec.25 $183.

Administaff will be hosting a conference call today at 10 a.8%
Depreciation
and
amortization 4,017 4,717 (14.7)% $0.9%
Gross profit
per worksite
employee
per month 212 259 (18. Administaff management
believes EBITDA is often a useful measure of the company 's operating
performance, as it allows for additional analysis of the company's operating
results separate from the impact of taxes and capital and financing
transactions on earnings.

worksite curvilinear

Additionally , companies that
typically fill a position after just one offer is made had a three-year TRS of
44 percent versus 32 percent for companies that typically have to make two or
more offers to fill an opening.
Firms that make greater use of stock-based incentives also perform better.
In addition , in 2004 corporate salaries and wages increased $1.6% to $190 in the 2004 period from
$195 in the 2003 period. To listen in, call
800-599-9795 and use passcode 64708872.5)%
Commissions 2,568 2,526 1.9)% 11,526 9,485 21. Investors are encouraged to review
the reconciliation of the non-GAAP financial measures used in this press
release to their most directly comparable GAAP financial measures as provided
in the tables above.

boeck fiss

The study also found that pay-for-performance
and stock-based compensation programs are associated with higher shareholder
returns. The 2005 HCI study is based on a comprehensive survey of human
resource practices at 147 large North American companies with a track record
of at least three years of total return to shareholders (TRS), 1,000 or more
employees and a minimum of $100 million in revenues or market value.2 million and
$0.5 million and $0."

Full Year Results
For the year ended Dec. 31, 2004, revenues increased 8.5 million, primarily due to a 4. The 2004 and 2003 results are not comparable due to the invoicing
changes referenced above and a payroll tax accrual of $5.5% increase in average pay.

First Quarter Full Year

Average worksite employees
paid per month 83,000 - 83,250 86,000 - 87,000
Gross profit per worksite
employee per month $202 - $204 $200 - $204
Operating expenses
(in millions) (A) $45. Among the factors that could cause actual
results to differ materially are the factors cited above as challenges and
concerns and: (i) changes in general economic conditions; (ii) regulatory and
tax developments, including possible adverse application of various federal,
state and local regulations; (iii) changes in Administaff's direct costs and
operating expenses, including, but not limited to, increases in health
insurance and workers' compensation premiums and underlying claims trends,
state unemployment tax rates, liabilities for employee and client actions or
payroll-related claims, changes in the costs of expanding into new markets,
and failure to manage growth of Administaff's operations; (iv) the
effectiveness of Administaff 's retirement services operation; (v) changes in
the competitive environment in the Professional Employer Organization
industry; (vi) Administaff's liability for worksite employee payroll and
benefits costs; and (vii) an adverse final judgment or settlement of claims
against Administaff.1% 175,563 172,831 1.0)% 8,249 462 ---
302 211 43.72 $0.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)

Three months ended Year ended
December 31, December 31,
2004 2003 Change 2004 2003 Change

Statistical data:
Average number
of worksite
employees paid
per month 80,926 74,332 8.

Year ended December 31,
2004 2003

Net income (GAAP) $19,210 $14,985
Interest expense 2,093 2,176
Income tax expense 11,526 9,485
Depreciation and amortization 17,514 20,759
EBITDA $50,343 $47,405
Aetna settlement (8,250) ---
Adjusted EBITDA $42,093 $47,405

EBITDA represents net income; computed in accordance with generally
accepted accounting principles ("GAAP"), plus interest expense, income tax
expense, depreciation and amortization expense.

Non-bonus payroll and EBITDA are not financial measures prepared in
accordance with GAAP and may be different from similar measures used by other
companies.

vinings fennell

The
survey data are matched to objective financial measures of a company 's worth,
including its market value, three- and five-year TRS, and its Tobin's Q, which
measures a company's ability to create economic value beyond its physical
assets.

Administaff Announces Full Year and Fourth Quarter 2004 Results; Unit Growth Accelerates to 10% By Year-End

On a per worksite employee per month
basis, operating expenses decreased 2.5 $1.6)%
46,068 43,408 6.9%
Loss from
discontinued
operations $--- $(0.1)% 211 219 (3.

serp vinings

"

Additional findings:
-- The best firms take a more balanced approach to hiring non-entry-level
positions, filling roughly half of these positions internally, which
resulted in a three-year TRS of 56 percent.
Firms with more moderate turnover (around 15 percent on average) had a
three-year TRS of 43 percent, outperforming those with higher and
lower turnover by at least 9 percentage points .55 for the same period in 2003.19 per share after taxes.7 million, as the 3.9% increase in the
average number of worksite employees paid per month, while revenues per
worksite employee per month remained constant.
Operating expenses for the quarter increased from $43. This decrease was due to the 8.3%
Average outstanding shares
(in millions) 26.0% $969,527 $890,859 8.8)%
Other, net --- (18) (100.1% 8,605 196 ---
Income before
income taxes 5,677 14,528 (60.5%
Net income from
continuing
operations $3,549 $8,790 (59.5)% 21 17 23.4%
Non-bonus
payroll cost
per worksite
employee $4,477 $4,132 8.

salary serp

---

- - kjjkjk

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