BRADENTON, Fla., Feb. 26, 2008 (PRIME NEWSWIRE) -- Gevity (Nasdaq:GVHR), which serves as the full-service human resources department for small and mid-sized businesses, today reported earnings of $0.01 per diluted share, for its fourth quarter of 2007. These earnings were negatively impacted by the items listed below. Excluding the effects of these items, Gevity's underlying earnings for its fourth quarter were $0.27 per diluted share.
* A non-cash charge of $8.5 million, or $0.22 per diluted share,
related to the impairment of goodwill, intangibles and fixed
assets associated with the company's February 2007 acquisition
of HRAmerica, Inc. ("HRAmerica Charge")
* A $1.6 million charge, or $0.04 per diluted share, related to
a previously announced executive severance charge
Strategic Focus
Gevity has completed a comprehensive strategic review of its non co-employed offering, Gevity Edge Select(tm), with a decision to exit this market effective immediately in order to pursue profitable growth in its core PEO business.
"This decision further reinforces our stated focus to concentrate on Gevity Edge, our core PEO offering," commented Michael J. Lavington, Gevity's Chairman and Chief Executive Officer Designate. "We have a well-established position and track record in the PEO market, on which we are determined to capitalize for the long-term benefit of all stakeholders."
The company is working closely with its existing non co-employed clients to provide a smooth transition to either its core Gevity Edge offering or an alternative service provider. As a consequence of this decision, the company expects to take pre-tax charges of $4.5 million to $5.5 million in the first half of 2008 related to the write-off of assets as well as the accrual of other exit costs.
Fourth Quarter Results
Gevity's sales production improved during the fourth quarter of 2007. The company produced sales of 7,100 client employees compared to 4,400 client employees acquired in the third quarter of 2007 and 6,900 client employee sales in the fourth quarter of 2006. For the core PEO business, the company produced sales of 5,000 client employees, which is a 16.3% increase over the 4,300 client employees produced in the third quarter of 2007.
Client employee attrition during the fourth quarter of 2007 was 10,300, higher than the 7,400 in the third quarter of 2007, but significantly better than the 14,000 in the fourth quarter of 2006. In total, Gevity's client portfolio declined by 2.1% during the fourth quarter of 2007 to 132,600 client employees compared to the third quarter of 2007. On a year-over-year basis, the company's number of client employees served increased by 3.3%. In its core PEO business, Gevity's client portfolio declined 9.5% during 2007 to 115,600 client employees.
Commenting on Gevity's fourth quarter, Mr. Lavington said, "The changes we have made within our sales organization are beginning to translate into positive results, as can be seen by our improved productivity. This is particularly encouraging given the current economic environment."
Fourth quarter gross profit of $51.2 million represents a 13.7% improvement on the $45.1 million achieved in the third quarter of 2007, and compares to $55.3 million in the fourth quarter of 2006. During the fourth quarter of 2007, a reduction in professional service fees, due to the smaller client portfolio, was outweighed by the continuing strong performance of Gevity's workers' compensation program. Workers' compensation related margins of $16.4 million in the fourth quarter of 2007 represented a 60.8% improvement on the $10.2 million reported for the third quarter of 2007. For the full year 2007, the company earned gross profit of $189.3 million.
The impact of cost saving initiatives made during 2007 was more than offset in the fourth quarter by the HRAmerica Charge and the executive severance charge. These items led to an overall increase in operating expenses to $49.4 million. Excluding the effects of the HRAmerica Charge and the executive severance charge, operating expenses decreased from $40.8 million in the third quarter of 2007 to $39.3 million in the fourth quarter of 2007. On a year-over-year basis, fourth quarter operating expenses, excluding the effects of the HRAmerica Charge and the executive severance charge, improved 8.2%. For the full year 2007, the company reported operating expenses of $171.5 million. Excluding the effects of the HRAmerica Charge and the executive severance charge, operating expenses for 2007 were $161.4 million.
Gevity's fourth quarter earnings of $0.01 were largely impacted by the HRAmerica Charge and the executive severance charge. Excluding the effects of these items, fourth quarter underlying earnings were $0.27 per diluted share, which compares to $0.10 per diluted share in the third quarter of 2007. This sequential increase in underlying earnings was driven by a greater contribution from workers' compensation. Gevity earned $0.41 per diluted share in the fourth quarter of 2006. For the full year 2007, the company reported $0.41 per diluted share. Excluding the effects of the HRAmerica Charge and the executive severance charge, Gevity earned $0.67 per diluted share in 2007.
Mr. Lavington continued, "We are pleased with the contribution of our workers' compensation program, as its performance further validates our decision to reinforce our core PEO offering. Additionally, we continued to make progress in realigning our cost structure during the period, which we believe will be demonstrated in our 2008 results."
Outlook
In 2008, Gevity has refocused itself strategically on driving sustainable profitable growth from its PEO business. This marks a return to the company's core strengths.
Although Gevity enters 2008 with a lower client portfolio, its new leadership team is focused on executing its strategy and has a clear set of priorities for enabling profitable growth, including:
* A continued focus on sales productivity and training. Early
indicators of the improvements made within the company's
sales organization are positive, and the company expects
further productivity increases beyond those experienced in
the fourth quarter.
* Further improvements to client experience. Gevity expects
investments in 2008 to support the client facing aspects
of its technology platform. The company anticipates these
investments will contribute to higher retention levels.
* Enhancements to insurance offering. Gevity expects
strengthening its health plans to benefit client retention
levels during the annual benefit renewal period in October
and to support the acceleration of sales production in the
second half of 2008.
* Increasing client profitability. As previously stated,
Gevity's earnings were negatively impacted in 2007 by
unprofitable clients. The company has taken action in early
2008 to address this portion of the client portfolio.
* Alignment of cost base. The company anticipates an ongoing
focus on appropriately aligning its costs while balancing
the need to invest in growth drivers. Gevity has recently
taken action to improve the company's cost structure,
including the closing of unprofitable branches and reducing
staffing levels. This restructuring is expected to result
in a $2.5 million charge in the first half of 2008.
In the near-term, the impact of the above initiatives is expected to be outweighed by Gevity's reduced starting client portfolio. This is largely a function of the effects of 2007 working through. However, the company expects to demonstrate improving results during the year, as the above initiatives begin to deliver a more effective and scalable growth model. Upon executing its repositioning plan in 2008, Gevity anticipates meeting its long-term plan of double digit annual client employee growth beginning in 2009. Given this early stage of its strategic repositioning and in light of the current economic environment, the company believes it is prudent to refrain from providing any additional guidance about its financial performance for 2008.
Dividend
Gevity's Board of Directors declared a dividend of $0.05 per share of common stock, taking into account: an appropriate level of payout of 2007 earnings, sustainability given the 2008 plan and investments needed for the company's repositioning, and the alignment with Gevity's growth expectations beyond 2008. The dividend will be payable on April 30, 2008 to shareholders of record as of April 15, 2008.
Fourth Quarter Earnings Call
Gevity will discuss its fourth quarter 2007 results during a live conference call today, February 26, 2008, at 10:30 a.m. Eastern Time. To participate in the call, dial (800) 289-0528. Ask for the Gevity conference call and provide the following pass code: 5042553. Allow five to ten minutes before 10:30 a.m. Eastern Time to secure the line. Listen to a live webcast or replay of the call by visiting the 'Investor Relations' section of gevity.com. Allow five to ten minutes before 10:30 a.m. Eastern Time to register (Minimum requirements to listen to broadcast: Windows Media Player software, downloadable free from Microsoft, and at least a 28.8 KBPS connection to the Internet).
Use of Non-GAAP Financial Measures
This press release presents operating expenses and earnings per share for the fourth quarter and full year of 2007 excluding the effects of the HRAmerica Charge and the executive severance charge. In addition, the company presents in the attachments to this press release a condensed consolidated statement of operations on an adjusted basis that is not consistent with GAAP.
Gevity excluded from its fourth quarter and full year results for 2007 the effect of the HRAmerica Charge. The $8.5 million charge resulted from the impairment of long-lived and intangible assets related to the 2007 acquisition of HRAmerica, Inc. The company evaluated the long-lived and intangible assets for impairment in the fourth quarter of 2007 based upon various factors including the accumulation of costs significantly in excess of amounts originally anticipated, current period operating losses and the forecast of continuing operating losses. The company also excluded the executive severance charge from its fourth quarter earnings results because its previously stated expectations were exclusive of this charge.
The company has included non-GAAP financial information for the fourth quarter and full year of 2007 because it believes generally that such information provides management and investors a more complete and transparent understanding of Gevity's results and trends and allows management and investors to compare the financial results on a consistent basis with the prior period. In addition, management uses the non-GAAP financial information for forecasting, budgeting and other analytical purposes. The company presented its results excluding the HRAmerica Charge because it does not believe that this non-cash item was representative of the company's fourth quarter and annual results of its continuing business strategy. Gevity also excluded the executive severance charge from its fourth quarter results because its previously stated expectations were exclusive of this charge.
The non-GAAP financial information provided in this press release may not be the same as similarly titled measures used by other companies, should not be construed as alternatives to their nearest GAAP equivalents, and should be only used in conjunction with results reported in accordance with GAAP. See the GAAP to Non-GAAP reconciliation included in the attached table.
About Gevity
Thousands of small and mid-sized businesses nationwide leverage the flexibility and scalability of Gevity's human resources (HR) solution to help them maximize the return on investment in their people. Essentially, Gevity serves as the full-service HR department for these businesses, providing each employee with support previously only available at much larger companies. Gevity delivers the Gevity Edge(tm), a comprehensive solution comprised of innovative management and administration services, helping employers to streamline HR administration, optimize HR practices, and maximize people and performance. This solution enables both businesses and their employees to achieve their full potential, giving them an edge over competitors. Gevity's unique approach features Gevity OnSite(tm), experienced HR Consultants based in local markets backed by nationwide resources and easy-to-use technology, including Gevity OnLine(tm) and Gevity OnCall(tm). For more information, call 1.800.2GEVITY (1.800.243.8489) or visit gevity.com.
(Tables Attached)
A copy of this press release can be found on the company's Web site at gevity.com.
Pursuant to the Private Securities Litigation Reform Act of 1995, the company is hereby providing cautionary statements to identify important factors that could cause the company's actual results to differ materially from forward-looking statements contained in, or implied by, this press release. Forward-looking statements are those that express expectations, beliefs, plans, objectives, assumptions or future events or performance that are not historical facts. They are often expressed through the use of words or phrases such as "will result," "are expected to," "anticipated," "plans," "intends," "will continue," "estimated," "projection," "preliminary," "forecast" and similar expressions. The results or events contemplated by forward-looking statements are affected by known and unknown risks that may cause the actual results of the company to differ materially from any future results expressed or implied by such forward-looking statements. Many of these risks are beyond the ability of the company to control or predict, such as risks relating to the following: to the company's guidance, including the challenges to achieving the company's growth strategy in general, gaining new client employees while passing on increased pricing, increasing professional service fees, resolving issues with the multi-carrier choice program, retaining clients through annual benefit enrollment, penetrating the middle market and opening new geographic offices, and its long-term performance standards, our dependence on technology services, the adequacy of our insurance-related loss reserves, the availability of insurance coverage for workers' compensation and medical benefits, damage due to hurricanes and other natural disasters, risks inherent in our acquisition strategy, our dependence on third party technology licenses, our dependence on key personnel, qualified service consultants and sales associates, fluctuations in our quarterly results and sustaining our growth, variability in health insurance claims, state unemployment tax rates and workers' compensation rates, liabilities resulting from our co-employment relationship with our clients, credit risks of our large clients, short termination provisions in our professional services agreements, financial related concerns at clients which result in fewer employees or a termination of the relationship, our geographic market concentration, collateral requirements of our insurance, regulatory compliance, Internet and related security risks, potential liabilities due to potentially being an "employer" due to ERISA and tax regulations and litigation, challenges to expansion due to varying state regulatory requirements, competition and risks relating to recovering insurance premiums paid to a Bermuda reinsurance company. These and other factors are described in the company's filings with the Securities and Exchange Commission, including under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report on Form 10-K. Any forward-looking statement speaks only as of the date on which such statement is made and you should not place undue reliance on any forward-looking statement. The company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.
GEVITY HR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in $000's, except per share data)
For the Three For the
Months Ended Year Ended
December 31, December 31,
--------------------- --------------------
2007 2006 2007 2006
--------------------- --------------------
Revenues $146,961 $156,455 $604,992 $ 647,967
Cost of services
(exclusive of
depreciation
and amortization
shown below) 95,717 101,181 415,738 444,190
----------------------------------------------
Gross profit 51,244 55,274 189,254 203,777
--------------------- --------------------
Operating expenses:
Salaries, wages
and commissions 22,342 24,293 86,837 85,624
Other general and
administrative 14,418 15,112 59,896 54,746
Impairment loss 8,477 -- 8,477 --
Reinsurance
contract
loss, net -- -- -- 1,650
Depreciation and
amortization 4,169 3,472 16,270 13,878
--------------------- --------------------
Total operating
expenses 49,406 42,877 171,480 155,898
--------------------- --------------------
Operating income 1,838 12,397 17,774 47,879
Interest (expense)
income, net (362) 493 (1,731) 727
Other expense, net (538) (21) (558) (169)
--------------------- --------------------
Income before
income taxes 938 12,869 15,485 48,437
Income tax provision 637 2,261 5,526 13,174
--------------------- --------------------
Net income $ 301 $ 10,608 $ 9,959 $ 35,263
===================== ====================
Net income per
common share -
diluted $ 0.01 $ 0.41 $ 0.41 $ 1.32
===================== ====================
Weighted average
common shares
outstanding -
diluted 23,607 25,706 24,247 26,790
===================== ====================
GEVITY HR, INC. AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(in $000's, except per share data, unaudited)
The table below reconciles the results of operations discussed in
the attached press release and the following table that are presented
on a non-GAAP basis to their nearest GAAP equivalent. See "Use of
Non-GAAP Financial Measures" in the attached press release.
For the Three For the
Months Ended Year Ended
December 31, December 31,
-------------------- -------------------
2007 2006 2007 2006
-------------------- -------------------
Salaries, wages and
commissions - GAAP $22,342 $24,293 $ 86,837 $85,624
Chief executive
severance (a) (1,589) -- (1,589) --
-------------------- -------------------
Salaries, wages and
commissions -
non-GAAP $20,753 $24,293 $ 85,248 $85,624
==================== ===================
Operating expenses -
GAAP $49,406 $42,877 $171,480 $155,898
Chief executive
severance (a) (1,589) -- (1,589) --
Impairment loss (b) (8,477) -- (8,477) --
Reinsurance contract
loss, net (c) -- -- -- (1,650)
-------------------- -------------------
Operating expenses -
non-GAAP $39,340 $42,877 $161,414 154,248
==================== ===================
Operating income -
GAAP $ 1,838 $12,397 $ 17,774 $47,879
Chief executive
severance (a) 1,589 -- 1,589 --
Impairment loss (b) 8,477 -- 8,477 --
Reinsurance contract
loss, net (c) -- -- -- 1,650
-------------------- -------------------
Operating income -
non-GAAP $11,904 $12,397 $ 27,840 $ 49,529
==================== ===================
Income before income
taxes - GAAP $ 938 $12,869 $ 15,485 $ 48,437
Chief executive
severance (a) 1,589 -- 1,589 --
Impairment loss (b) 8,477 -- 8,477 --
Reinsurance contract
loss, net (c) -- -- -- 1,650
-------------------- -------------------
Income before income
taxes -non-GAAP $11,004 $12,869 $ 25,551 $ 50,087
==================== ===================
Income tax provision
- GAAP $ 637 $ 2,261 $ 5,526 $ 13,174
Chief executive
severance (a) 604 -- 604 --
Impairment loss (b) 3,221 -- 3,221 --
Reinsurance contract
loss, net (c) -- -- -- 627
-------------------- -------------------
Income tax provision
- non-GAAP $ 4,462 $ 2,261 $ 9,351 $ 13,801
==================== ===================
Net income - GAAP $ 301 $10,608 $ 9,959 $ 35,263
Chief executive
severance (a) 985 -- 985 --
Impairment loss (b) 5,256 -- 5,256 --
Reinsurance contract
loss, net (c) -- -- -- 1,023
-------------------- -------------------
Net income - non-GAAP $ 6,542 $10,608 $ 16,200 $ 36,286
==================== ===================
Net income per common
share - diluted -
GAAP $ 0.01 $ 0.41 $ 0.41 $ 1.32
Chief executive
severance (a) 0.04 -- 0.04 --
Impairment loss (b) 0.22 -- 0.22 --
Reinsurance contract
loss, net (c) -- -- -- 0.03
-------------------- -------------------
Net income per common
share - diluted -
non-GAAP $ 0.27 $ 0.41 $ 0.67 $ 1.35
==================== ===================
(a) Results for the three months and year ended December 31, 2007, on
a non-GAAP basis, exclude the effect of a $1,589 severance charge
(and the related tax benefit of $604) related to a previously
announced executive severance agreement with our former Chief
Executive Officer during the fourth quarter of 2007.
(b) Results for the three months and year ended December 31, 2007,
on a non-GAAP basis, exclude the effect of a $8,477 impairment
charge (and the related tax benefit of $3,221) related to the
fourth quarter 2007 impairment of long-lived and intangible
assets related to the 2007 acquisition of HRAmerica, Inc.
(c) Results for the year ended December 31, 2006 on a non-GAAP basis,
exclude the effect of a $1,650 net loss (and the related income
tax benefit of $627) that the Company recorded during the second
and third quarters of 2006 in connection with the liquidation
proceedings of the company's reinsurance provider for its
workers' compensation program.
GEVITY HR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP
(in $000's, except per share data, unaudited)
The following condensed consolidated statements of operations are
not presented in accordance with GAAP. Each of the items labeled as
"non-GAAP" has been reconciled to its nearest GAAP equivalent in the
preceding table. As a result, the following should not be construed
as an alternative to the statements presented in accordance with
GAAP and should only be used in conjunction with results reported in
accordance with GAAP. See "Use of Non-GAAP Financial Measures" in
the attached press release.
For the Three For the
Months Ended Year Ended
December 31, December 31,
--------------------- ---------------------
2007 2006 2007 2006
--------------------- ---------------------
Revenues $146,961 $156,455 $604,992 $647,967
Cost of services
(exclusive of
depreciation
and amortization
shown below) 95,717 101,181 415,738 444,190
--------------------- ---------------------
Gross profit 51,244 55,274 189,254 203,777
--------------------- ---------------------
Operating expenses:
Salaries, wages
and commissions
(non-GAAP) (a) 20,753 24,293 85,248 85,624
Other general and
administrative 14,418 15,112 59,896 54,746
Impairment loss
(non-GAAP) (a) -- -- -- --
Reinsurance
contract loss,
net (non-GAAP) (a) -- -- -- --
Depreciation and
amortization 4,169 3,472 16,270 13,878
--------------------- ---------------------
Total operating
expenses
(non-GAAP) (a) 39,340 42,877 161,414 154,248
--------------------- ---------------------
Operating income
(non-GAAP) (a) 11,904 12,397 27,840 49,529
Interest (expense)
income, net (362) 493 (1,731) 727
Other expense, net (538) (21) (558) (169)
--------------------- ---------------------
Income before
income taxes
(non-GAAP) (a) 11,004 12,869 25,551 50,087
Income tax
provision
(non-GAAP) (a) 4,462 2,261 9,351 13,801
--------------------- ---------------------
Net income
(non-GAAP) (a) $ 6,542 $ 10,608 $ 16,200 $ 36,286
===================== =====================
Net income per
common share -
diluted
(non-GAAP)(a) $ 0.27 $ 0.41 $ 0.67 $ 1.35
===================== =====================
Weighted average
common shares
outstanding -
diluted 23,607 25,706 24,247 26,790
===================== =====================
(a) See the preceding GAAP to Non-GAAP Reconciliation table for a
discussion of the non-GAAP items and for the reconciliation to
the nearest GAAP equivalent.
GEVITY HR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in $000's)
Dec. 31, Dec. 31,
2007 2006
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 9,950 $ 36,291
Marketable securities -- restricted 6,102 4,478
Accounts receivable, net 130,209 126,936
Short-term workers' compensation
receivable, net 16,950 35,354
Other current assets 14,515 15,927
--------- ---------
Total current assets 177,726 218,986
Property and equipment, net 22,176 23,847
Long-term marketable securities --
restricted 3,934 3,747
Long-term workers' compensation
receivable, net 105,321 85,872
Intangible assets, net 11,386 20,856
Goodwill and other assets 21,368 21,252
--------- ---------
Total assets $ 341,911 $ 374,560
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accrued payroll and payroll taxes $ 149,076 $ 163,410
Accrued insurance premiums and health
reserves 13,557 17,287
Customer deposits and prepayments 15,610 11,893
Deferred tax liability, net 11,674 24,583
Accounts payable and other accrued
liabilities 13,977 12,466
--------- ---------
Total current liabilities 203,894 229,639
Revolving credit facility 17,367 --
Other long-term liabilities 5,088 2,869
--------- ---------
Total liabilities 226,349 232,508
Total shareholders' equity 115,562 142,052
--------- ---------
Total liabilities and shareholders'
equity $ 341,911 $ 374,560
========= =========
GEVITY HR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in $000's)
For the Year Ended
December 31,
--------------------
2007 2006
------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,959 $ 35,263
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 16,270 13,878
Impairment loss 8,477 --
Deferred tax benefit, net (15,217) (7,368)
Stock-based compensation 2,079 3,684
Excess tax benefits from share-based
arrangements (56) (3,349)
Provision for bad debts 1,764 855
Other 581 226
Changes in operating working capital (12,453) 11,180
------- --------
Net cash provided by operating activities 11,404 54,369
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities and
certificates of deposit (1,811) (363)
Maturity of certificates of deposit -- 34
Capital expenditures (5,889) (14,198)
Business acquisition (9,495) --
------- --------
Net cash used in investing activities (17,195) (14,527)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving
credit facility 17,367 --
Capital lease payments (130) --
Proceeds from exercise of stock options 1,033 6,755
Excess tax benefits from share-based
arrangements 56 3,349
Dividends paid (8,586) (8,913)
Purchase of treasury stock (30,290) (57,267)
------- --------
Net cash used in financing activities (20,550) (56,076)
------- --------
Net decrease in cash and cash equivalents (26,341) (16,234)
Cash and cash equivalents -
beginning of period 36,291 52,525
------- --------
Cash and cash equivalents - end
of period $ 9,950 $ 36,291
======= ========
GEVITY HR, INC. AND SUBSIDIARIES
STATISTICAL DATA
(unaudited)
4th 4th
Quarter Quarter Percentage
2007 2006 Change
-------- -------- ----------
Client employees at period end (a) 132,646 128,427 3.3%
Clients at period end (a),(b) 6,894 7,411 -7.0%
Average number of client
employees/clients at period end (a) 19.24 17.33 11.0%
Average number of client employees
paid by month (a),(c) 123,586 122,405 1.0%
Annualized professional service
fees per average number of client
employees paid by month
(a),(d),(e) $ 1,109 $ 1,306 -15.1%
Annualized total gross profit per
average number of client
employees paid by month (a),(d) $ 1,659 $ 1,806 -8.1%
Annualized operating income per
average number of client
employees paid by month (a),(d) $ 59 $ 405 -85.4%
Annualized adjusted operating
income per average number of
client employees paid by
month (a),(d),(f) $ 385 $ 405 -4.9%
(a) Statistics include the impact of the February 16, 2007 acquisition
of HRAmerica, Inc. Approximately 145 clients (as measured by
Federal Employer Identification Number (FEIN)) with approximately
16,000 client employees were acquired.
(b) Client accounts as measured by individual client FEIN.
(c) The average number of client employees paid by month is
calculated based upon the sum of the number of paid client
employees at the end of each month divided by the number of months
in the period.
(d) Annualized statistical information is based upon actual
quarter-to-date amounts which have been annualized (divided by 3
and multiplied by 12) and then divided by the average number of
client employees paid by month.
(e) The annualized professional service fees are based upon
information from the following table (in thousands):
4th Quarter 4th Quarter
2007 2006
----------- -----------
Revenues:
Professional service fees $ 34,265 $ 39,974
Employee health and welfare benefits 89,112 86,805
Workers' compensation 20,875 26,336
State unemployment taxes and other 2,709 3,340
------------------------
Total revenues $ 146,961 $ 156,455
========================
(f) The fourth quarter of 2007 is adjusted to exclude the effect of
$8.5 million impairment loss and the effect of a $1.6 million
executive severance charge. See the related GAAP to Non-GAAP
reconciliation table and "Use of Non-GAAP Financial Measures"
in the attached press release.
GEVITY HR, INC. AND SUBSIDIARIES
STATISTICAL DATA
(unaudited)
Twelve Twelve
Months Months Percentage
2007 2006 Change
-------- -------- -----------
Client employees at period end (a) 132,646 128,427 3.3%
Clients at period end (a),(b) 6,894 7,411 -7.0%
Average number of client
employees/ clients at period
end (a) 19.24 17.33 11.0%
Average number of client
employees paid by month (a),(c) 127,597 126,584 0.8%
Professional service fees per
average number of client
employees paid by month
(a),(d),(e) $ 1,131 $ 1,288 -12.2%
Total gross profit per average
number of client employees paid
by month (a), (d) $ 1,483 $ 1,610 -7.9%
Operating income per average
number of client employees paid
by month (a),(d) $ 139 $ 378 -63.2%
Adjusted operating income per
average number of client
employees paid by
month (a),(d),(f) $ 218 $ 391 -44.2%
(a) Statistics include the impact of the February 16, 2007
acquisition of HRAmerica, Inc. Approximately 145 clients (as
measured by Federal Employer Identification Number (FEIN)) with
approximately 16,000 client employees were acquired.
(b) Client accounts as measured by individual client FEIN.
(c) The average number of client employees paid by month is
calculated based upon the sum of the number of paid client
employees at the end of each month divided by the number of months
in the period.
(d) Statistical information is based upon actual year-to-date amounts
divided by the average number of client employees paid by month.
(e) Professional service fees are based upon information from the
following table (in thousands):
Twelve Twelve
Months Months
2007 2006
--------- ---------
Revenues:
Professional service fees $ 144,274 $ 163,025
Employee health and welfare benefits 350,966 352,017
Workers' compensation 84,513 106,075
State unemployment taxes and other 25,239 26,850
-----------------------
Total revenues $ 604,992 $ 647,967
=======================
(f) The twelve months of 2007 is adjusted to exclude the effect of
$8.5 million impairment loss and the effect of a $1.6 million
executive severance charge. The twelve months of 2006 is
adjusted to exclude the effect of the $1.65 million net loss on
a reinsurance contract as a result of the liquidation proceedings
of the Company's reinsurer for its workers' compensation program.
See the related GAAP to Non-GAAP reconciliation table and "Use
of Non-GAAP Financial Measures" in the attached press release.