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Most of our comments today, however, will be based upon gross revenues and various relationships to gross revenues, as management believes such information is one, more informative as to the level of our business activity; two, more useful in managing and analyzing our operations and three, adds more transparency to the trends within our business. Comments related to gross revenues as compared to a net revenue basis of reporting have no effect on gross margin dollars, SG&A expenses or net income.Turning now to the second quarter results, as reported the company earned $0.22 per diluted share in the 2010 second quarter as compared to a $0.65 loss per share for the second quarter of 2009. Total gross revenues for the 2010 second quarter of $297.1 million increased $48.9 million or 19.7% over the 2009 second quarter. The $297.1 million represents a new quarterly high for gross revenues. California, which comprised approximately 80% of our overall second quarter gross revenues, increased 23.3% owing to continued growth in PEO revenues. Staffing revenues for the second quarter of 2010 increased $4 million or 14.2% over the second quarter of 2009, primarily due to an increase in demand for our staffing services from existing customers in our Northwest and Intermountain markets, while our new staffing business during the quarter slightly exceeded the loss of business from former customers. The increase in staffing revenues from existing customers represents the second quarter in a row of existing customer growth. PEO gross revenues increased $45 million or 20.4% on a quarter-over-quarter basis primarily due to the addition of new customers. Our new PEO business during the quarter from customers added since July 1st of 2009 doubled the amount of lost PEO business from the second quarter of 2009 from former customers. Our PEO revenues from existing customers experienced a small increase on a quarter-over-quarter basis. This increase in PEO revenues from existing customers reverses a trend of declines over the past seven quarters. Bill will comment further on the growth from new PEO customers in a few minutes.
First margin dollars to the 2010 second quarter of $11.7 million increased approximately $14 million over the 2009 second quarter, primarily due to the 19.7% increase in revenues and to the inclusion in the 2009 second quarter of an $11.8 million increase in workers' compensation expense resulting from the company's change in estimate of its workers' compensation reserves. Gross margin percent on a gross revenue basis was 4% for the 2009 second quarter.Direct payroll costs increased 14 basis points over the 2009 second quarter, primarily attributable to an increase in our mix of PEO services, which typically have a much higher payroll cost component than staffing services. Payroll taxes and benefits for the 2010 second quarter as a percentage of gross revenues decreased from 7.8% to 7.7%, primarily resulting from the Company changing to client specific state unemployment wage reporting in California for all of our PEO clients. The change resulted in a decline in the company's overall average effective California state unemployment rate. This decrease was partially offset by higher state unemployment rates in various other states the company does business in. Workers' compensation expense for the second quarter of 2010 as a percentage of gross revenues was 3.3% as compared to the 2009 second quarter of 8.1%, which included the $11.8 million additional expense from the company's change in estimate to its workers' compensation reserves. The company experienced similar loss levels for the 2010 second quarter in relationship to business volume as compared to the past several quarters. Selling, general and administrative or SG&A expenses of $8.4 million increased $71,000 over the 2009 second quarter. The small increase was primarily due to the increased level of business activity. Read the rest of this transcript for free on seekingalpha.com