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On May 11, 2009,
reported that its Q1 FY09 net loss widened, hurt by a reduction in the average number of client employees paid, cost alignment charges and merger-related expenses. Net loss for the quarter stood at $3.71 million or $0.15 per share compared to $1.62 million or $0.07 per share in the prior year's quarter. The consensus estimate for the latest quarterly results was a profit of $0.06 per share.
Total revenue slipped 8.5% to $129.58 million from $141.70 million a year ago due to a drop in revenue in most businesses. Professional services fees dropped 22.6% to $23.09 million from $29.83 million in Q1 FY08, as a result of a 10.5% decrease in client employees. Revenue from employee health and welfare benefits declined 6.5% to $78.39 million from $83.81 million. Revenue from workers' compensation dipped 22.8% to $12.23 million from $15.85 million in the year-ago quarter. On the positive side, state unemployment taxes and others advanced 30.0% to $15.87 million from $12.21 million. Client employees were 94,379, down 11.6% from 106,784 at the end of Q1 FY08. Gevity also witnessed a 10.7% drop in the number of clients to 5,607. Average number of client employees paid reduced 10.5% to 89,591. Similarly, annualized professional service fees per average number of client employees paid declined 13.5% year-over-year to $1,031.
During Q1 FY09, Gevity signed a definitive merger agreement with TriNet Group Inc. to sell its outstanding stock in an all cash transaction valued at $4.00 per share. Additionally, the company paid a cash dividend of $0.05 per share of its common stock. Moreover, the company is implementing actions to reduce its FY09 annual operating cost structure by approximately $19.00 million or 16.0% compared to FY08 levels by way of 10.0% reduction in its internal headcount.