EXHIBIT 99.1
[ADMINISTAFF LOGO]
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News Release
INVESTOR RELATIONS CONTACT:
Richard G. Rawson
Executive Vice President and Chief Financial Officer
(281) 348-3225
richard_rawson@administaff.com
NEWS MEDIA CONTACT:
Alan Dodd
Director, Corporate Communications
(281) 348-3105
alan_dodd@administaff.com
ADMINISTAFF ANNOUNCES FIRST QUARTER RESULTS
o REVENUES INCREASE 15%
o GROSS PROFIT INCREASES 18%
o NET LOSS CONSISTENT WITH HISTORICAL FIRST
QUARTER PATTERN
HOUSTON - May 1, 2003 - Administaff, Inc. (NYSE: ASF), the nation's leading
Professional Employer Organization, today announced results for the first
quarter ended March 31, 2003. From its continuing operations, the company
reported a first quarter net loss and a diluted net loss per share of $4.1
million and $0.15, versus a loss of $5.4 million and $0.19 in the 2002 period.
The company reported a net loss from its discontinued operations of an
additional $0.01 per share in both periods. 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 that are based on each employee's
cumulative earnings up to specified wage levels, causing employment-related
taxes to be highest in the first quarter and then decline over the course of the
year.
Revenues for the first quarter of 2003 increased to $225.5 million, an increase
of 15.1% over the 2002 period. This increase was due to a 10.7% increase in
revenue per worksite employee per month and a 4.0% increase in the average
number of paid worksite employees per month. Gross profit increased 18.2% to
$36.0 million compared to the first quarter of 2002. The average gross profit
per worksite employee per month increased 13.8% to $157 per month in the 2003
period, versus $138 per month in the 2002 period. These results reflect
increases of $53 in benefits costs, $13 in workers' compensation costs, and $10
in payroll taxes and other direct costs per worksite employee per month, which
were exceeded by an increase in the revenue per worksite employee per month of
$95.
"Now that we have successfully matched pricing with direct costs for two
consecutive quarters, we are focused on regaining our sales momentum and growing
our core business," said Paul J.
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Sarvadi, president and chief executive officer. "We expect increasing sales
activity combined with moderating price increases during the second quarter to
lead to improvement in new sales and client retention during the third and
fourth quarters."
Operating expenses increased 6.1% over the 2002 period to $42.5 million. On a
per worksite employee basis, operating expenses increased $4 per month, from
$182 to $186. The operating loss for the first quarter of 2003 was $6.6 million,
compared to $9.7 million in the 2002 period. On a per worksite employee basis,
the operating loss improved to $29 per month compared to $44 per month for the
first quarter of 2002.
"Although we experienced a sequential decline in worksite employees during the
quarter, the impact to gross profit was more than offset by strong pricing for
both new and renewing clients," said Richard G. Rawson, executive vice president
of administration and chief financial officer. "In addition, our plan to control
rising healthcare insurance costs through benefit plan design changes initiated
in January contributed to these positive results."
Other Matters
o Share repurchase program expanded. During the quarter, Administaff
announced that the company's board of directors had authorized the
repurchase of up to one million additional shares of the company's
outstanding common stock, bringing the total amount authorized under the
program to six million shares. Administaff has repurchased a total of
5,341,523 shares since 1999.
o American Express transaction. The company repurchased 1,286,252 shares of
the company's common stock from American Express Travel Related Services
Company ("American Express") at a price of $6.00 per share. Concurrent with
the repurchase, the companies agreed to extend their joint marketing
agreement through 2006 for all new Administaff markets opened by the end of
2005.
o Open market purchase. The company repurchased 87,000 shares in the open
market under the company's share repurchase program at an average price of
$5.93 per share.
Administaff will be hosting a conference call today at 11:00 a.m. EDT to discuss
the quarterly results and business trends, and answer questions from investment
analysts. To listen in, call 800-299-0148 and use passcode 767994. The call will
also be webcast at www.administaff.com. To access the webcast, click on the
Investor Relations section of the website and select "Live Webcast." The
conference call script will be available at the same website later today. A
replay of the conference call will be available at 888-286-8010, passcode
9092088, for two weeks after the call. The webcast will be archived for one
year.
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. The company operates 38 sales offices in 21 major
markets. For additional information, visit Administaff's web site at
www.administaff.com.
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(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) changes in general economic conditions; (ii)
regulatory and tax developments, including, but not limited to, the computation
of the final official unemployment tax rate for 2002 from the State of Texas,
Administaff's ability to comply with Revenue Procedure 2002-21, and 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 premiums, increases in underlying
health insurance claims trends, workers' compensation rates and 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 estimated costs
and effectiveness of capital projects and investments in technology and
infrastructure, including Administaff's ability to maintain adequate financing
for such projects; (v) Administaff's ability to effectively implement its 401(k)
recordkeeping services; (vi) the effectiveness of Administaff's sales and
marketing efforts, including the company's marketing arrangements with other
companies; (vii) the failure to sell Administaff Financial Management Services,
Inc.; (viii) changes in the competitive environment in the Professional Employer
Organization industry; (ix) Administaff's liability for worksite employee
payroll and benefits costs; and (x) an adverse final judgment or settlement in
the Aetna lawsuit. These factors are described in further detail in
Administaff's filings with the Securities and Exchange Commission.)
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ADMINISTAFF, INC.
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND STATISTICAL DATA)
(UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
2003 2002 CHANGE
---- ---- ------
Operating results:
Revenues (gross billings of $1.2 billion and $1.1
billion less worksite employee payroll cost of
$971 million and $953 million, respectively) $ 225,520 $ 195,958 15.1%
Direct costs:
Payroll taxes, benefits and workers'
compensation costs 189,539 165,505 14.5%
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Gross profit 35,981 30,453 18.2%
Operating expenses:
Salaries, wages and payroll taxes 20,344 18,498 10.0%
General and administrative expenses 11,704 11,829 (1.1)%
Commissions 2,886 3,141 (8.1)%
Advertising 2,210 1,620 36.4%
Depreciation and amortization 5,405 5,016 7.8%
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Total operating expenses 42,549 40,104 6.1%
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Operating loss (6,568) (9,651) 31.9%
Other income (expense):
Interest income 315 735 (57.1)%
Interest expense (568) --
Other, net 8 (44)
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Loss before income tax benefit (6,813) (8,960) 24.0%
Income tax benefit 2,691 3,539 (24.0)%
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Net loss from continuing operations (4,122) (5,421) 24.0%
Discontinued operations:
Loss from operations of discontinued division (396) (467) 15.2%
Income tax benefit 157 184 (14.7)%
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Loss on discontinued operations (239) (283) 15.5%
Net loss $ (4,361) $ (5,704) 23.5%
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Basic and diluted net loss per share of common stock:
Loss from continuing operations $ (0.15) $ (0.19) 21.1%
Loss from discontinued operations (0.01) (0.01) --
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Net loss $ (0.16) $ (0.20) 20.0%
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Basic and diluted weighted average
common shares outstanding 27,427 27,946
</Table>
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ADMINISTAFF, INC.
SUMMARY FINANCIAL INFORMATION (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND STATISTICAL DATA)
(UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
2003 2002 CHANGE
---- ---- ------
Statistical data:
Average number of worksite employees paid per month 76,425 73,488 4.0%
Revenues per worksite employee per month $ 984 $ 889 10.7%
Gross profit per worksite employee per month 157 138 13.8%
Operating expenses per worksite employee per month 186 182 2.2%
Operating loss per worksite employee per month (29) (44) 34.1%
Net loss from continuing operations per
worksite employee per month (18) (25) 28.0%
</Table>
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ADMINISTAFF, INC.
SUMMARY FINANCIAL INFORMATION (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND STATISTICAL DATA)
<Table>
<Caption>
MARCH 31, DECEMBER 31,
2003 2002
----------- ------------
(UNAUDITED)
Assets
Cash and cash equivalents $ 56,406 $ 71,799
Marketable securities 18,026 14,714
Accounts receivable 86,756 82,475
Prepaid expenses and other current assets 18,705 22,535
Deferred income taxes 750 641
Income tax receivable 2,151 --
Operations held for sale 1,250 1,282
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Total current assets 184,044 193,446
Property and equipment 154,317 153,173
Accumulated depreciation (67,314) (62,078)
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Net property and equipment 87,003 91,095
Deposits 26,379 26,552
Other assets 3,865 4,071
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Total assets $ 301,291 $ 315,164
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Liabilities and Stockholders' Equity
Accounts payable $ 1,792 $ 3,069
Payroll taxes and other payroll deductions payable 52,287 57,196
Accrued worksite employee payroll expense 76,876 69,676
Accrued health insurance costs 5,091 5,815
Other accrued liabilities 12,439 13,034
Income taxes payable -- 348
Current portion of long-term debt 1,793 1,676
Operations held for sale 113 112
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Total current liabilities 150,391 150,926
Long-term debt 41,927 42,493
Deferred income taxes 5,042 5,396
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Total noncurrent liabilities 46,969 47,889
Stockholders' equity:
Common stock 309 309
Additional paid-in capital 102,020 102,315
Treasury stock, cost (50,730) (43,003)
Accumulated other comprehensive income, net of tax 118 153
Retained earnings 52,214 56,575
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Total stockholders' equity 103,931 116,349
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Total liabilities and stockholders' equity $ 301,291 $ 315,164
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</Table>
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