Administaff Announces Results of Business Survey and Compensation Data

Business Wire, Nov 7, 2007

HOUSTON -- More than half of owners and managers of small businesses are optimistic about the future despite current economic jitters, according to the latest Business Confidence Survey released today by Administaff (NYSE:ASF), a leading provider of human resource services for small and medium-sized businesses.

In the survey conducted late last month, 55 percent of respondents said they are "somewhat optimistic" or "very optimistic" about the economy heading into 2008. Nearly 55 percent also said they expect to experience a higher growth rate in their businesses next year compared with 2007.

That confidence is expected to translate into higher salaries and employment levels. Almost 50 percent say they plan to increase compensation in 2008, while 54.6 percent said they plan to add positions or employees.

Despite the upbeat mood of many business owners, expectations are more tempered than this time last year. In a similar survey conducted in Oct. 2006, 79 percent of respondents said they were somewhat or very optimistic about the economy's future performance. Seventy percent said they were expecting to see stronger business growth and were planning to increase employment.

"Small businesses across the country continue to exhibit a positive outlook and can-do spirit despite today's economic uncertainties," said Paul Sarvadi, Administaff's chairman and chief executive officer. "It speaks highly about their dedication and ability to adjust quickly to changing market conditions."

Administaff also announced compensation data from its base of more than 5,900 small and medium-sized businesses. Compared to the third quarter data from 2006, average compensation is up 6 percent in 2007, bonuses are up 5 percent and commissions - an indication of the sales pipeline for small business - are up 12.6 percent. In addition, overtime pay is running 10.7 percent of regular pay.

Other highlights of the survey:

* 58.8 percent said they would boost efforts to retain workers. Strategies include increasing benefits, salaries, bonuses and other incentives; offering work-from-home programs and flexible work hours; improving training programs and employee communications; and cultivating a friendlier work environment.

* 66.9 percent expect to pay about the same amount of overtime in 2008 compared with 2007; 4.1 percent expect to pay more overtime, while 11.5 percent said they would pay less.

* 32.6 percent of the respondents plan to increase capital spending in 2008.

Although a majority of survey respondents are optimistic about 2008, they also cited areas of concern. For example, 53.3 percent listed controlling costs as the top-ranked issue going into 2008 versus 45.8 percent last year. While hiring the right people was the primary concern last fall at 54.8 percent, the same challenge dropped to third this year at 45 percent. Expectedly, small-business owners and managers ranked the economy as the second-most important issue at 45.8 percent compared to 33.3 percent last year. Finally, 44.6 percent named rising health-care costs as a leading concern, a slight decrease from 45.8 percent in 2006.

About the Business Confidence Survey

Respondents to the Administaff Business Confidence Survey are among the small and medium-sized companies Administaff serves throughout the country. The questions were designed to measure the pulse of the small-business community and gauge the expectations of business owners going into 2008.

Administaff conducted the survey Oct. 23-25 of chief executive officers, chief financial officers and other executives in a variety of industries at its client companies throughout the United States. The overall sampling error is /- 5 percent at the 95 percent confidence level.

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.