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Gevity profit falls 97%, dropping non-PEO offering

February 26 2008

Gevity HR Inc. (NASD: GVHR) said its earnings took a hit from a noncash charge of $8.5 million for impairment of goodwill over its acquisition of HRAmerica Inc. as well as a $1.6 million charge for executive severance. Former CEO Erik Vonk left the company in October.

The Bradenton FL-based professional employer organization reported a  97.2% drop in fourth-quarter net income to $301,000 compared with $10.6 million in the same period last year.

Fourth-quarter revenue fell 6.1% to $147.0 million compared with $156.5 million in the same period in the previous year. Gross margin slipped to 34.9% from 35.3%.

Gevity said it plans to do away with its Gevity Edge Select non-PEO offering and, instead, concentrate on its PEO services. The company's PEO client portfolio fell 9.5% in 2007 to 115,600 client employees.

Full-year 2007 net income fell 71.8% to almost $10.0 million from $35.3 million in 2006, while 2007 revenue slipped 6.6% to $605.0 million from $648.0 million in 2006. Gross margin slipped to 31.3% from 31.4%.

Gevity HR Inc. (NASD: GVHR)
For the fourth quarter ended Dec. 31, 2007, compared with the same period in 2006.
Revenue: $147.0 million, -6.1%
Net income: $301,000, -97.2%

For full-year 2007 ended Dec. 31, 2007, compared with the previous year.
Revenue: $605.0 million, -6.6%
Net income: $10.0 million, -71.8%

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