For the fourth quarter, the company reported net income and diluted earnings per share of $9.2 million and $0.31, versus $5.5 million and $0.20 in the 1999 period. For the year ended December 31, 2000, the company reported net income and diluted earnings per share of $16.9 million and $0.58, versus $9.4 million and $0.34 for the same period in 1999. These results reflect the two-for-one stock split effected October 16, 2000.
Administaff’s record-setting results for 2000 clearly demonstrate our ability to grow the company and add shareholder value, commented Paul J. Sarvadi, president and chief executive officer. While we expect to return to historical growth rates in 2001, our successful business model, combined with our industry-leading position and extraordinary market opportunity, make the company’s long-term prospects for growth and profitability extremely bright.
Revenues for the fourth quarter of 2000 increased 57.2% to $1.1 billion, primarily due to a 43.9% increase in the average number of worksite employees paid per month and a 14.5% increase in fee payroll cost per worksite employee per month. Gross profit increased 55.4% to $46.4 million. The average gross profit per worksite employee per month increased 8.1% to $228 in the fourth quarter of 2000, versus $211 in the 1999 period, as pricing strength experienced throughout the year continued through the fourth quarter.
Operating expenses increased 43.1% over the 1999 period to $33.5 million. On a per worksite employee basis, operating expenses decreased 0.6% to $164 per month in the 2000 period from $165 per month in the 1999 period. As a result, operating income for the fourth quarter of 2000 increased 100.3% to $12.9 million. On a per worksite employee basis, operating income increased 40.0% to $63 per month.
In 2000 we demonstrated our ability to generate significant revenues, profit and cash flow while continuing to invest in our future, said Richard G. Rawson, executive vice president and chief financial officer. With working capital exceeding $50 million and no long-term debt, we are poised to respond to near-term economic challenges while maintaining our focus on long-term objectives.
For the year ended December 31, 2000 revenues increased 64.0% to $3.7 billion, primarily due to a 46.3% increase in the average number of worksite employees paid per month and a 14.0% increase in fee payroll cost per worksite employee per month. Gross profit increased 54.7% to $138.5 million, with an average monthly gross profit per worksite employee of $186 in the 2000 period compared to $176 in the 1999 period. Operating expenses increased 47.3% over the 1999 period to $116.3 million, and increased to $156 per worksite employee per month from $155 in the 1999 period. As a result, operating income increased 110.6% to $22.2 million. On a per worksite employee basis, operating income increased from $21 per month in 1999 to $30 in 2000, an increase of 42.9%.
The fourth quarter 1999 results included the effects of two unrelated non-recurring items, which when aggregated, reduced the prior year’s net income by $68,000 but did not affect diluted earnings per share. In the fourth quarter of 1999, the company incurred a non-recurring charge of $1.4 million ($920,000 net of tax) to write off certain capitalized software development costs. In addition, interest and other income in the fourth quarter of 1999 included the effects of a settlement of non-discrimination testing issues related to the Administaff 401(k) Plan. The settlement amount with the Internal Revenue Service was significantly lower than the original estimate and accrual made in 1996, resulting in a non-recurring gain of $932,000 ($852,000 net of tax). Excluding the effects of the 1999 software write-off, operating expenses in the fourth quarter of 2000 increased 52.5%, while operating income increased 63.7%. For the full year, operating expenses increased 50.0%, excluding the write-off, while operating income increased 85.3%.
