8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 3, 2009

Administaff, Inc.

(Exact name of registrant as specified in its charter)

Delaware	1-13998	76-0479645
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

19001 Crescent Springs Drive Kingwood, Texas	77339
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (281) 358-8986

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

On August 3, 2009, Administaff, Inc. issued a press release announcing the company’s financial and operating results for the quarter ended June 30, 2009. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated by reference.

Item 9.01. Financial Statements and Exhibits

(c) Exhibits

99.1 — Press release issued by Administaff, Inc. on August 3, 2009.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

ADMINISTAFF, INC.
By:	/s/ Daniel D. Herink
	Daniel D. Herink
	Senior Vice President of Legal, General Counsel and Secretary

Date: August 3, 2009

3

EXHIBIT INDEX

Exhibit
No.			Description
	99.1	—	Press release issued by Administaff, Inc. on August 3, 2009.

4

EX-99.1

Exhibit 99.1

ADMINISTAFF ANNOUNCES SECOND QUARTER RESULTS

• Worksite employee count in line with expectations

• Gross profit lower than expected due to increased COBRA participation

• Operating expenses decline 7.5% on effective cost containment

• Working capital increases $21 million to $126 million

HOUSTON – Aug. 3, 2009 – Administaff, Inc. (NYSE: ASF), a leading provider of human resources services for small and medium-sized businesses, today reported results for the second quarter and six months ended June 30, 2009. For the second quarter 2009, the company reported net income of $5.4 million, or $0.22 earnings per diluted share. For the six months ended June 30, 2009, the company reported net income of $13.6 million and earnings per diluted share of $0.54.

“We are pleased with our continuing profitability and ongoing support of our small business client base as we help them contend with unprecedented economic pressures,” said Paul J. Sarvadi, chairman of the board and chief executive officer. “Our strong financial condition allows us to continue our long-term plan, which is focused on unit growth, expanding our service offerings, and increasing profitability as an economic recovery emerges.”

Second Quarter Results

Revenues for the second quarter of 2009 decreased 3.8% compared to the 2008 period to $404.3 million, due to an expected 6.5% decrease in the average number of worksite employees paid per month, partially offset by a 2.9% increase in revenues per worksite employee per month.

(more)

Administaff, Inc.
Page 2

Gross profit for the second quarter 2009 decreased 14.4% to $72.0 million compared to the 2008 period. This decline was primarily the result of higher benefits costs in the 2009 period. These costs were higher than expected due to increased COBRA participation resulting from layoffs related to the severity of the recession and recent federal legislation. Additionally, the 2008 period included particularly low workers’ compensation costs and an unemployment tax credit. The average gross profit per worksite employee per month decreased 8.3% to $221 in the second quarter 2009 from $241 in the second quarter 2008.

Operating expenses for the quarter decreased 7.5% to $63.4 million, and on a per worksite employee per month basis decreased from $197 to $195. The resulting operating income for the second quarter of 2009 was $8.6 million, compared to $15.6 million in the same period last year.

“We continue to manage effectively through a tough economic environment, as demonstrated by relatively stable pricing and operating expense management,” said Douglas S. Sharp, senior vice-president of finance, chief financial officer and treasurer. “Higher benefits costs resulting from increased COBRA participation, and associated higher claims trends for these participants, led to earnings at the low end of our expected range.”

Year-to-Date Results

Year-to-date revenues were $866.3 million, a 1.2% decrease compared to the 2008 period, due to a 4.1% decrease in the average number of worksite employees paid per month, partially offset by a 3.1% increase in revenues per worksite employee per month. Gross profit for the six months ended June 30, 2009 decreased 8.9% to $155.5 million. The average gross profit per worksite employee per month decreased 5.2% compared to the 2008 period to $235.

Year-to-date operating expenses decreased 2.2% to $134.0 million. On a per worksite employee per month basis, operating expenses increased 2.0% compared to the 2008 period. As a result, operating income for the six months ended June 30, 2009, was $21.5 million compared to $33.6 million in the 2008 period.

Working capital increased by $27.2 million during the first half of the year to $125.6 million at June 30, 2009. During this period, EBITDA totaled $30.9 million and the company returned $8.6 million to shareholders, including share repurchases of $2.0 million and dividends of $6.6 million. Additionally, the company received a scheduled return of $14.2 million in excess funding from its workers’ compensation program during the second quarter of 2009.

Administaff will be hosting a conference call today at 10 a.m. EST to discuss these results, give guidance for the third quarter and full year 2009 and answer questions from investment analysts. To listen in, call 800-688-0796 and use passcode 86476848. The call will also be webcast at http://www.administaff.com. To access the webcast, click on the Investor Relations section of the Web site and select “Live Webcast.” The conference call script and company guidance will be available at the same Web site later today. A replay of the conference call will be available at 888-286-8010, passcode 85103690, for two weeks after the call. The webcast will be archived for one year.

(more)

Administaff, Inc.
Page 3

Administaff is the nation’s leading professional employer organization (PEO), serving as a full-service human resources department that provides small and medium-sized businesses with administrative relief, big-company benefits, reduced liabilities and a systematic way to improve productivity. The company operates 50 sales offices in 23 major markets. For additional information, visit Administaff’s Web site at http://www.administaff.com.

The statements contained herein that are not historical facts are forward-looking statements within the meaning of the federal securities laws (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). You can identify such forward-looking statements by the words “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “likely,” “possibly,” “probably,” “goal,” “objective,” “target,” “assume,” “outlook,” “guidance,” “predicts,” “appears,” “indicator” and similar expressions. Forward-looking statements involve a number of risks and uncertainties. In the normal course of business, Administaff, Inc., in an effort to help keep our stockholders and the public informed about our operations, may from time to time issue such forward-looking statements, either orally or in writing. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of such plans or strategies, or projections involving anticipated revenues, earnings, unit growth, profit per worksite employee, pricing, operating expenses or other aspects of operating results. We base the forward-looking statements on our current expectations, estimates and projections. These statements are not guarantees of future performance and involve risks and uncertainties that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Therefore, the actual results of the 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 and possible adverse application of various federal, state and local regulations; (iii) the ability to secure competitive replacement contracts for health insurance and workers’ compensation contracts at expiration of current contracts; (iv) increases in health insurance costs and workers’ compensation rates and underlying claims trends, financial solvency of workers’ compensation carriers and other insurers, 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 our operations; (v) the effectiveness of our sales and marketing efforts; (vi) changes in the competitive environment in the PEO industry, including the entrance of new competitors and our ability to renew or replace client companies; (vii) our liability for worksite employee payroll and benefits costs; (viii) our liability for disclosure of sensitive or private information; and (ix) an adverse final judgment or settlement of claims against Administaff. These factors are discussed in further detail in Administaff’s filings with the U.S. Securities and Exchange Commission. Any of these factors, or a combination of such factors, could materially affect the results of our operations and whether forward-looking statements we make ultimately prove to be accurate.

(more)

Administaff, Inc.
Page 4

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

	June 30,			December 31,
	2009			2008
	(Unaudited)
Assets
Cash and cash equivalents	$	181,590		$	252,190
Restricted cash		35,276			36,466
Marketable securities		—			225
Accounts receivable		169,390			125,093
Prepaid expenses and other current assets		27,644			35,646
Income taxes receivable		768			—
Total current assets		414,668			449,620
Property and equipment, net		85,505			89,339
Deposits		61,686			68,020
Other assets		9,860			9,861
Total assets	$	571,719		$	616,840
Liabilities and Stockholders’ Equity
Accounts payable	$	872		$	3,007
Payroll taxes and other payroll deductions payable		74,469			123,666
Accrued worksite employee payroll expense		145,009			129,954
Accrued health insurance costs		6,127			14,715
Accrued workers’ compensation costs		37,061			38,028
Other accrued liabilities		23,776			35,187
Capital lease obligations		205			537
Income tax payable		—			4,157
Deferred income taxes		1,506			1,956
Total current liabilities		289,025			351,207
Accrued workers’ compensation costs		51,348			46,589
Deferred income taxes		11,310			10,565
Total noncurrent liabilities		62,658			57,154
Stockholders’ equity:
Common stock		309			309
Additional paid-in capital		138,751			139,415
Treasury stock, cost		(142,662	)		(147,952	)
Retained earnings		223,638			216,707
Total stockholders’ equity		220,036			208,479
Total liabilities and stockholders’ equity	$	571,719		$	616,840

(more)

Administaff, Inc.
Page 5

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

	Three months ended								Six months ended
	June 30,								June 30,
	2009		2008			Change			2009		2008			Change
Operating results:
Revenues (gross billings of $2.343 billion, $2.456 billion, $4.901 billion and $5.010 billion, less worksite employee payroll cost of $1.939 billion, $2.036 billion, $4.035 billion and $4.133 billion, respectively)	$	404,312	$	420,469			(3.8	)%	$	866,291	$	876,535			(1.2	)%
Direct costs:
Payroll taxes, benefits and workers’ compensation costs		332,345		336,408			(1.2	)%		710,763		705,867			0.7	%
Gross profit		71,967		84,061			(14.4	)%		155,528		170,668			(8.9	)%
Operating expenses:
Salaries, wages and payroll taxes		35,644		37,427			(4.8	)%		74,296		74,406			(0.1	)%
Stock-based compensation		2,911		2,908			0.1	%		5,697		5,293			7.6	%
General and administrative expenses		14,228		16,923			(15.9	)%		32,000		35,662			(10.3	)%
Commissions		2,896		3,274			(11.5	)%		6,169		6,368			(3.1	)%
Advertising		3,439		4,158			(17.3	)%		7,425		7,936			(6.4	)%
Depreciation and amortization		4,244		3,799			11.7	%		8,439		7,445			13.4	%
Total operating expenses		63,362		68,489			(7.5	)%		134,026		137,110			(2.2	)%
Operating income		8,605		15,572			(44.7	)%		21,502		33,558			(35.9	)%
Other income (expense):
Interest income		345		1,876			(81.6	)%		917		4,383			(79.1	)%
Other, net		13		(7	)		285.7	%		20		(40	)		(150.0	)%
Income before income tax expense		8,963		17,441			(48.6	)%		22,439		37,901			(40.8	)%
Income tax expense		3,578		6,454			(44.6	)%		8,888		13,758			(35.4	)%
Net income	$	5,385	$	10,987			(51.0	)%	$	13,551	$	24,143			(43.9	)%
Diluted net income per share of common stock	$	0.22	$	0.43			(48.8	)%	$	0.54	$	0.94			(42.6	)%
Diluted weighted average common shares outstanding		25,039		25,785						24,942		25,770

(more)

Administaff, Inc.
Page 6

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

	Three months ended							Six months ended
	June 30,							June 30,
	2009		2008		Change			2009		2008		Change
Statistical data:
Average number of worksite employees paid per month		108,551		116,149		(6.5	)%		110,147		114,845		(4.1	)%
Revenues per worksite employee per month (1)	$	1,242	$	1,207		2.9	%	$	1,311	$	1,272		3.1	%
Gross profit per worksite employee per month		221		241		(8.3	)%		235		248		(5.2	)%
Operating expenses per worksite employee per month		195		197		(1.0	)%		203		199		2.0	%
Operating income per worksite employee per month		26		45		(42.2	)%		33		49		(32.7	)%
Net income per worksite employee per month		17		32		(46.9	)%		21		35		(40.0	)%

⁽¹⁾ Gross billings of $7,196, $7,049, $7,416 and $7,270 per worksite employee per month, less payroll cost of $5,954, $5,842, $6,105 and $5,998 per worksite employee per month, respectively.

(more)

Administaff, Inc.
Page 7

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

	Three months ended							Six months ended
	June 30,							June 30,
	2009		2008		Change			2009		2008		Change
Payroll cost (GAAP)	$	1,939,150	$	2,035,626		(4.7	)%	$	4,034,904	$	4,133,215		(2.4	)%
Less: Bonus payroll cost		101,753		111,393		(8.7	)%		317,625		345,918		(8.2	)%
Non-bonus payroll cost	$	1,837,397	$	1,924,233		(4.5	)%	$	3,717,279	$	3,787,297		(1.8	)%
Payroll cost per worksite employee (GAAP)	$	5,954	$	5,842		1.9	%	$	6,105	$	5,998		1.8	%
Less: Bonus payroll cost per worksite employee		312		320		(2.5	)%		481		502		(4.2	)%
Non-bonus payroll cost per worksite employee	$	5,642	$	5,522		2.2	%	$	5,624	$	5,496		2.3	%

Non-bonus payroll cost represents payroll cost excluding the impact of bonus payrolls paid to the company’s worksite employees. 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. As a result, Administaff management refers to non-bonus payroll cost in analyzing, reporting and forecasting the company’s workers’ compensation costs.

	Three months ended							Six months ended
	June 30,							June 30,
	2009		2008		Change			2009		2008		Change
Net income (GAAP)	$	5,385	$	10,987		(51.0	)%	$	13,551	$	24,143		(43.9	)%
Interest expense		6		18		(66.7	)%		15		39		(61.5	)%
Income tax expense		3,578		6,454		(44.6	)%		8,888		13,758		(35.4	)%
Depreciation and amortization		4,244		3,799		11.7	%		8,439		7,445		13.4	%
EBITDA	$	13,213	$	21,258		(37.8	)%	$	30,893	$	45,385		(31.9	)%

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

(more)

Administaff, Inc.
Page 8

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. 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. 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. 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.

###