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): November 1, 2007

Administaff, Inc.

(Exact name of registrant as specified in its charter)

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

19001 Crescent Springs Drive

Kingwood, Texas 77339

(Address of principal executive offices and zip code)

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

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 (see General Instruction A.2 below):

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 November 1, 2007, Administaff, Inc. issued a press release announcing the company’s financial and operating results for the quarter and nine months ended September 30, 2007. 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 November 1, 2007.

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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
	Vice President of Legal, General Counsel and Secretary

Date: November 1, 2007

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EXHIBIT INDEX

Exhibit
No.		Description
99.1	—	Press release issued by Administaff, Inc. on November 1, 2007.

4

EX-99.1

Administaff, Inc.

Page 1

Exhibit 99.1

ADMINISTAFF ANNOUNCES SOLID THIRD QUARTER RESULTS

· Revenues increase 13% on 10% unit growth

· Operating expense per worksite employee declines 3%

· Share repurchases continue on strong cash flow

HOUSTON - Nov. 1, 2007 - Administaff, Inc. (NYSE: ASF), a leading provider of human resources services for small and medium-sized businesses, today announced results for the third quarter and nine months ended September 30, 2007. The company reported third quarter net income of $12.2 million in the 2007 period, up from $12.1 million in the 2006 period. Diluted earnings per share increased to $0.45 from $0.43 in the 2006 period.

Third Quarter Results

Revenues for the third quarter of 2007 increased 13.3% over the 2006 period to $383.4 million, due to a 9.7% increase in the average number of worksite employees paid per month and a 3.3% increase in revenues per worksite employee per month.

“We are pleased with the unit growth acceleration we experienced during the quarter,” said Paul J. Sarvadi, Administaff chairman and chief executive officer. “Our fall selling and retention campaign is off to a good start as we lay the foundation for a successful 2008.”

Gross profit increased 4.4% over the third quarter of 2006 to $75.0 million, due primarily to the growth in the average number of worksite employees paid. As expected, the average gross profit per worksite employee per month of $222 declined on higher benefits costs compared to the 2006 period; however, exceeded the high end of our forecasted range for the quarter.

Operating expenses for the quarter increased 6.6% to $59.2 million, and included the planned addition of sales and service personnel and an accrual for incentive compensation due to better-than-expected operating results. Operating expenses per worksite employee per month declined 2.8% from $181 in the 2006 period to $176 in the 2007 period.

Operating income for the third quarter of 2007 decreased 3.1% to $15.8 million, with an average operating income per worksite employee per month of $47 compared to $53 in the 2006 period.

EBITDA for the third quarter was $22.6 million. Cash outlays included capital expenditures of $4.0 million, dividends of $2.9 million and share repurchases of $13.4 million.

Administaff, Inc.

Page 2

Year-to-Date Results

For the nine months ended September 30, 2007, the company reported a 3.1% increase in net income to $34.2 million compared to $33.2 million in the same period in 2006. Diluted earnings per share increased to $1.24 from $1.17 in the 2006 period.

Year-to-date revenues were $1.2 billion, a 12.6% increase over the 2006 period, which resulted from a 9.2% increase in the average number of worksite employees paid per month and a 3.2% increase in revenues per worksite employee per month. Gross profit for the nine months ended September 30, 2007 increased 6.5% to $221.6 million. The average gross profit per worksite employee per month was $227, a 2.2% decrease compared to the 2006 period.

Year-to-date operating expenses increased 8.6% to $177.4 million. On a per worksite employee per month basis, operating expenses were $182 compared to $183 in the 2006 period. The resulting operating income for the nine months ended September 30, 2007, was $44.1 million compared to $44.7 million in 2006.

EBITDA for the first nine months of the year was $64.3 million. Cash outlays included capital expenditures of $9.5 million, dividends of $9.0 million and share repurchases of $61.3 million.

“Our strong cash flow has given us the opportunity to repurchase over 6% of our shares since the beginning of the year,” said Douglas S. Sharp, vice-president of finance, chief financial officer and treasurer. “The accretive impact of these share repurchases, coupled with $9 million in dividends, demonstrates significant return to shareholders while we continue to invest in the growth of the company.”

Administaff will be hosting a conference call today at 10 a.m. EDT to discuss these results, give guidance for the fourth quarter of 2007, provide some preliminary commentary on 2008 and answer questions from investment analysts. To listen in, call 800-573-4752 and use passcode 64345408. 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 for the fourth quarter of 2007 will be available at the same Web site later today. A replay of the conference call will be available at 888-286-8010, passcode 97180098, for two weeks after the call. The webcast will be archived for one year.

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 47 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, including but not limited to the California State Unemployment Tax matter; (iii) changes in our direct costs and operating expenses including, but not limited to, 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; (iv) the effectiveness of our sales and marketing efforts; (v) changes in the competitive environment in the PEO industry, including the entrance of new competitors and our ability to renew or replace client companies; (vi) our liability for worksite employee payroll and benefits costs; and (vii) 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.

Administaff, Inc.

Page 3

Administaff, Inc.

Summary Financial Information

(in thousands, except per share amounts and statistical data)

	September 30,			December 31,
	2007			2006
	(Unaudited)
Assets
Cash and cash equivalents	$	114,926		$	148,416
Restricted cash		36,195			37,405
Marketable securities		89,034			85,617
Accounts receivable		142,907			122,723
Prepaid expenses and other current assets		21,666			15,233
Income taxes receivable		—			3,193
Deferred income taxes		2,878			2,492
Total current assets		407,606			415,079
Property and equipment, net		79,491			81,120
Deposits		53,548			59,890
Other assets		5,774			5,426
Total assets	$	546,419		$	561,515
Liabilities and Stockholders’ Equity
Accounts payable	$	4,600		$	3,802
Payroll taxes and other payroll deductions payable		85,533			116,926
Accrued worksite employee payroll expense		130,669			94,818
Accrued health insurance costs		13,945			2,824
Accrued workers’ compensation costs		38,093			39,035
Income tax payable		2,369			—
Other accrued liabilities		21,588			28,690
Current portion of long-term debt		617			583
Total current liabilities		297,414			286,678
Long-term debt		618			1,166
Accrued workers’ compensation costs		39,729			40,019
Deferred income taxes		5,915			5,207
Total noncurrent liabilities		46,262			46,392
Stockholders’ equity:
Common stock		309			309
Additional paid-in capital		138,681			135,942
Treasury stock, cost		(108,949	)		(55,405	)
Accumulated other comprehensive income, net of tax		(222	)		(131	)
Retained earnings		172,924			147,730
Total stockholders’ equity		202,743			228,445
Total liabilities and stockholders’ equity	$	546,419		$	561,515

Administaff, Inc.

Page 4

Administaff, Inc.

Summary Financial Information (continued)

(in thousands, except per share amounts and statistical data)

(Unaudited)

	Three months ended September 30,									Nine months ended September 30,
	2007			2006			Change			2007			2006			Change
Operating results:
Revenues (gross billings of $2.316 billion, $1.990 billion, $6.781 billion and $5.813 billion, less worksite employee payroll cost of $1.932 billion, $1.652 billion, $5.613 billion and $4.776 billion, respectively)	$	383,380		$	338,421			13.3	%	$	1,167,896		$	1,036,835			12.6	%
Direct costs:
Payroll taxes, benefits and workers’ compensation costs		308,338			266,557			15.7	%		946,320			828,762			14.2	%
Gross profit		75,042			71,864			4.4	%		221,576			208,073			6.5	%
Operating expenses:
Salaries, wages and payroll taxes		31,774			30,393			4.5	%		96,895			88,057			10.0	%
Stock-based compensation		1,885			1,011			86.4	%		5,628			2,368			137.7	%
General and administrative expenses		15,576			14,722			5.8	%		45,798			44,573			2.7	%
Commissions		3,104			2,722			14.0	%		8,727			8,264			5.6	%
Advertising		3,074			2,819			9.0	%		9,134			8,521			7.2	%
Depreciation and amortization		3,827			3,896			(1.8	)%		11,251			11,620			(3.2	)%
Total operating expenses		59,240			55,563			6.6	%		177,433			163,403			8.6	%
Operating income		15,802			16,301			(3.1	)%		44,143			44,670			(1.2	)%
Other income (expense):
Interest income		2,957			2,567			15.2	%		8,941			8,384			6.6	%
Interest expense		(26	)		(14	)		85.7	%		(87	)		(1,076	)		(91.9	)%
Other, net		4			13			(69.2	)%		13			125			(89.6	)%
Income before income tax expense		18,737			18,867			(0.7	)%		53,010			52,103			1.7	%
Income tax expense		6,583			6,754			(2.5	)%		18,819			18,952			(0.7	)%
Net income	$	12,154		$	12,113			0.3	%	$	34,191		$	33,151			3.1	%
Diluted net income per share of common stock	$	0.45		$	0.43			4.7	%	$	1.24		$	1.17			6.0	%
Diluted weighted average common shares outstanding		26,873			28,259						27,518			28,402

Administaff, Inc.

Page 5

Administaff, Inc.

Summary Financial Information (continued)

(in thousands, except per share amounts and statistical data)

(Unaudited)

	Three months ended							Nine months ended
	September 30,							September 30,
	2007		2006		Change			2007		2006		Change
Statistical data:
Average number of worksite employees paid per month		112,496		102,530		9.7	%		108,571		99,459		9.2	%
Revenues per worksite employee per month (1)	$	1,136	$	1,100		3.3	%	$	1,195	$	1,158		3.2	%
Gross profit per worksite employee per month		222		234		(5.1	)%		227		232		(2.2	)%
Operating expenses per worksite employee per month		176		181		(2.8	)%		182		183		(0.5	)%
Operating income per worksite employee per month		47		53		(11.3	)%		45		50		(10.0	)%
Net income per worksite employee per month		36		39		(7.7	)%		35		37		(5.4	)%

⁽¹⁾ Gross billings of $6,862, $6,470, $6,940 and $6,494 per worksite employee per month, less payroll cost of $5,726, $5,370, $5,745 and $5,335 per worksite employee per month, respectively.

Administaff, Inc.

Page 6

Administaff, Inc.

Summary Financial Information (continued)

(in thousands, except per share amounts and statistical data)

(Unaudited)

GAAP to Non-GAAP Reconciliation Tables

	Three months ended							Nine months ended
	September 30,							September 30,
	2007		2006		Change			2007		2006		Change
Payroll cost (GAAP)	$	1,932,491	$	1,651,694		17.0	%	$	5,613,354	$	4,775,737		17.5	%
Less: Bonus payroll cost		142,231		120,620		17.9	%		499,006		382,728		30.4	%
Non-bonus payroll cost	$	1,790,260	$	1,531,074		16.9	%	$	5,114,348	$	4,393,009		16.4	%
Payroll cost per worksite employee (GAAP)	$	5,726	$	5,370		6.6	%	$	5,745	$	5,335		7.7	%
Less: Bonus payroll cost per worksite employee		421		392		7.4	%		511		427		19.7	%
Non-bonus payroll cost per worksite employee	$	5,305	$	4,978		6.6	%	$	5,234	$	4,908		6.6	%

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 September 30,				Nine months ended September 30,
	2007		2006		2007		2006
Net income (GAAP)	$	12,154	$	12,113	$	34,191	$	33,151
Interest expense		26		14		87		1,076
Income tax expense		6,583		6,754		18,819		18,952
Depreciation and amortization		3,827		3,896		11,251		11,620
EBITDA	$	22,590	$	22,777	$	64,348	$	64,799

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.

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.

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