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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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95-3359658
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1100 San Leandro Blvd., Suite 400, San Leandro, CA
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94577
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
(do not check if a smaller reporting company)
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Smaller reporting company
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o
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•
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multi-state payroll processing and tax administration;
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employee benefits programs, including health insurance and retirement plans;
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workers compensation insurance and claims management;
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federal, state and local labor, employment and benefit law compliance;
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risk mitigation, including employment practices claims management;
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expense and time management; and
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human capital consulting.
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remittance to WSEs of salaries, wages and certain other compensation, as reported and paid to us by the client, related tax reporting and remittance to tax authorities and processing of garnishment and wage deduction orders. Unlike a payroll service provider, we issue each WSE a payroll check drawn on our bank accounts;
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maintenance of workers compensation insurance and workers compensation claims processing;
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provision and administration of group health, welfare, and retirement benefits to WSEs, based on our clients’ elections, under TriNet-sponsored insurance plans;
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compliance with applicable law for employee benefits offered to WSEs;
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processing of unemployment claims; and
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provision of certain HR policies, including an employee handbook describing the co-employment relationship.
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day-to-day management of their worksites and WSEs;
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compliance with laws associated with the classification of employees as exempt or non-exempt, such as overtime pay and minimum wage law compliance;
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accurate and timely reporting to TriNet of compensation and deduction information, including information relating to hours worked, rates of pay, salaries, wages and certain other compensation;
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accurate and timely reporting to TriNet of information relating to workplace injuries, employee hires and termination, and certain other information relevant to TriNet’s services;
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provision and administration of any employee benefits not provided by TriNet (e.g., equity incentive plans);
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compliance with all laws and regulations applicable to the client’s workplace and business, including work eligibility laws, laws relating to workplace safety or the environment, laws relating to family and medical leave, laws pertaining to employee organizing efforts and collective bargaining and employee termination notice requirements;
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payment of TriNet invoices which include wages to WSEs and applicable employment taxes and service fees; and
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all other matters for which TriNet does not assume responsibility under the client service agreement, such as intellectual property ownership and protection and liability for products produced and/or services provided.
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multi-tenant system enabling multiple clients and WSEs to share one version of our system while isolating each client’s and WSE’s data;
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rule-based provisioning ensuring that all users are authenticated, authorized and validated before they can access our systems;
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redundant processing centers to protect client data from loss;
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integrated benefits and payroll processing for faster, more accurate data; and
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flexible and extensible platform architecture.
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HR and information systems departments and personnel of companies that perform their own administration of employee benefits, payroll and HR;
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providers of certain endpoint HR services, including payroll, employee benefits and business process outsourcers with high-volume transaction and administrative capabilities, such as Automatic Data Processing, Inc., Paychex, Inc. and other third-party administrators;
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employee benefit exchanges that provide benefits administration services over the Internet to companies that otherwise maintain their own employee benefit plans; and
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insurance brokers who allow third party HR systems to integrate with their platform.
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level of client satisfaction;
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ease of client setup and on-boarding;
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breadth and depth of benefit plans;
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vertical market expertise;
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total cost of service;
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brand awareness and reputation;
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ability to innovate and respond to client needs rapidly;
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online and mobile functionality; and
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subject matter expertise.
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the number and severity of health and workers compensation insurance claims by WSEs and the timing of claims information provided by our insurance carriers;
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the amount and timing of our insurance costs, operating expenses and capital expenditures;
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the number of our new clients initiating service and the number of WSEs employed by each new client;
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the loss of existing clients;
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reduction in the number of WSEs employed by existing clients;
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the timing of client payments and payment defaults by clients;
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costs associated with our acquisitions of companies, assets and technologies;
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payments or drawdowns on our credit facility, or any amendments to our obligations under our credit facility;
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unanticipated expenses such as litigation or other dispute-related settlement payments;
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expenses we incur for geographic and service expansion;
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our regulatory compliance costs;
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changes in our effective tax rate; and
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the impact of new accounting pronouncements.
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effectively recruit, integrate, train and motivate new employees, while retaining our existing employees, maintaining the beneficial aspects of our corporate culture and effectively executing our business plan;
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satisfy our existing clients and identify and acquire new clients;
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enhance the breadth and quality of our services;
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continue to improve our operational, financial and management controls; and
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make sound business decisions in light of the scrutiny associated with operating as a public company.
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HR and information systems departments and personnel of companies that perform their own administration of employee benefits, payroll and HR;
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providers of certain endpoint HR services, including payroll, employee benefits and business process outsourcers with high-volume transaction and administrative capabilities, such as Automatic Data Processing, Inc., Paychex, Inc. and other third-party administrators;
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employee benefit exchanges that provide benefits administration services over the Internet to companies that otherwise maintain their own employee benefit plans; and
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insurance brokers who allow third party HR systems to integrate with their platform.
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the effectiveness of our marketing efforts;
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•
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our ability to attract and retain new sales personnel to expand our direct sales force;
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our ability to retain our existing clients and attract new clients;
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•
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the quality and perceived value of our services;
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our ability to successfully differentiate our services from those of our competitors;
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actions of our competitors and other third parties;
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positive or negative publicity about us or our industry in general;
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timeliness of our filings with the SEC,
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•
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interruptions, delays or attacks on our platform or mobile applications; and
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litigation or regulatory developments.
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difficulties integrating the operations, systems, technologies, services and personnel of the acquired companies, including the migration of WSEs from an acquired company’s technology platform to ours;
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challenges associated with establishing or maintaining internal controls, procedures and policies relating to the acquired systems and processes, including the potential for actual or perceived control weaknesses associated with or arising from the acquisitions and integration of acquired systems;
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diversion of management’s attention from other business concerns;
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over-valuation by us of acquired companies;
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litigation resulting from activities of the acquired company, including claims from terminated employees, clients, former stockholders and other third parties;
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insufficient revenues to offset increased expenses associated with the acquisitions and unanticipated liabilities of the acquired companies;
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insufficient indemnification or security from the selling parties for legal liabilities that we may assume in connection with our acquisitions;
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entering markets in which we have no prior experience and may not succeed;
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risks associated with foreign acquisitions, such as communication and integration problems resulting from geographic dispersion and language and cultural differences, compliance with foreign laws and regulations and general economic or political conditions in other countries or regions;
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potential loss of key employees of the acquired companies; and
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•
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impairment of relationships with clients and employees of the acquired companies or our clients and employees as a result of the integration of acquired operations and new management personnel.
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•
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we will have to use a portion of our cash flows from operating activities for debt service rather than for other operational activities;
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we may not be able to borrow additional funds or obtain additional financing for future working capital, acquisitions, capital expenditures or other corporate purposes, or may have to pay more for such financing;
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some or all of the indebtedness under our current or future credit facilities bears interest at variable interest rates, making us more vulnerable to interest rate increases;
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•
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we could be less able to take advantage of significant business opportunities, such as acquisition opportunities, and to react to changes in market or industry conditions; and
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•
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we may be more vulnerable to general adverse economic and industry conditions as a result of our inability to reduce our debt service costs in response to reduced revenues.
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•
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incur, assume or guarantee additional debt;
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pay dividends or distributions or redeem or repurchase capital stock;
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incur or assume liens;
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•
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make loans, investments and acquisitions;
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•
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engage in sales of assets and subsidiary stock;
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enter into sale-leaseback transactions;
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enter into certain transactions with affiliates;
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complete dividends, loans or asset transfers from our subsidiaries;
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enter into new lines of business;
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prepay other indebtedness;
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transfer all or substantially all of our assets or enter into merger or consolidation transactions with another person; and
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make capital expenditures.
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actual or anticipated fluctuations in our results of operations;
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any financial projections we provide to the public, any changes in these projections or our failure to meet these projections;
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failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
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ratings changes by any securities analysts who follow our company;
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•
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announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures or capital commitments;
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•
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changes in operating performance and stock market valuations of other business services companies generally, or those in our industry in particular;
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•
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price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;
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•
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changes in our board of directors or management;
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•
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sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders;
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•
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lawsuits threatened or filed against us;
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•
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short sales, hedging and other derivative transactions involving our capital stock;
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•
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general economic conditions in the United States and abroad; and
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•
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other events or factors, including those resulting from war, incidents of terrorism or responses to these events.
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•
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establish a classified board of directors so that not all members of our board of directors are elected at one time;
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•
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permit our board of directors to establish the number of directors;
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•
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provide that directors may only be removed “for cause”;
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•
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require super-majority voting to amend some provisions in our certificate of incorporation and bylaws;
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authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;
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eliminate the ability of our stockholders to call special meetings of stockholders;
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prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;
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provide that our board of directors is expressly authorized to make, alter or repeal our bylaws; and
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•
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establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
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Year Ended December 31, 2015:
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High
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Low
|
||||
First Quarter
|
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$
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37.88
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$
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30.04
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Second Quarter
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$
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37.27
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$
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25.23
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Third Quarter
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$
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26.88
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$
|
16.33
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Fourth Quarter
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$
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20.05
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$
|
16.79
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||||
Year Ended December 31, 2014:
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High
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Low
|
||||
First Quarter
|
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$
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23.44
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|
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$
|
17.28
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Second Quarter
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$
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27.78
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$
|
18.81
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Third Quarter
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$
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29.96
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|
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$
|
21.79
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Fourth Quarter
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$
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32.79
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$
|
24.38
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Period
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Total Number of
Shares Purchased
|
|
Average Price
Paid Per Share
|
|
Total Number of
Shares Purchased as Part of Publicly
Announced Plans (1)
|
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Approximate Dollar Value
of Shares that May Yet be Purchased
Under the Plans (1)
|
|||||
October 1 - October 31, 2015
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
31,628,073
|
|
November 1 - November 30, 2015
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
31,628,073
|
|
December 1 - December 31, 2015
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
31,628,073
|
|
Total
|
—
|
|
|
|
|
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(1)
|
In May 2014, our board of directors authorized a program to repurchase in the aggregate up to $15 million of our outstanding common stock. Our board of directors subsequently approved incremental increases to our ongoing stock repurchase program of $30 million in November 2014 and $50 million on June 29, 2015. In 2014 and 2015, we repurchased approximately $15 million and approximately $49.2 million, respectively, of our outstanding common stock. As of December 31, 2015 we had approximately $31.6 million remaining for repurchases under our stock repurchase program. Stock repurchases under the program are primarily intended to offset the dilutive effect of share-based employee incentive compensation.
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|
Year Ended December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
(in thousands, except share and per share data)
|
||||||||||||||||||
Consolidated Statement of Operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Professional service revenues
|
$
|
401,287
|
|
|
$
|
342,074
|
|
|
$
|
272,372
|
|
|
$
|
148,233
|
|
|
$
|
113,279
|
|
Insurance service revenues
|
2,258,001
|
|
|
1,851,457
|
|
|
1,371,903
|
|
|
870,828
|
|
|
727,111
|
|
|||||
Total revenues
|
2,659,288
|
|
|
2,193,531
|
|
|
1,644,275
|
|
|
1,019,061
|
|
|
840,390
|
|
|||||
Costs and operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance costs
|
2,112,376
|
|
|
1,686,315
|
|
|
1,226,585
|
|
|
750,025
|
|
|
651,094
|
|
|||||
Cost of providing services (exclusive of depreciation and amortization of intangible assets)
(1)
|
150,694
|
|
|
134,256
|
|
|
106,661
|
|
|
63,563
|
|
|
59,388
|
|
|||||
Sales and marketing
(1)
|
166,759
|
|
|
139,997
|
|
|
109,183
|
|
|
59,931
|
|
|
38,087
|
|
|||||
General and administrative
(1)
|
69,626
|
|
|
53,926
|
|
|
52,455
|
|
|
37,879
|
|
|
31,421
|
|
|||||
Systems development and programming costs
(1)
|
27,558
|
|
|
26,101
|
|
|
19,948
|
|
|
16,718
|
|
|
15,646
|
|
|||||
Amortization of intangible assets
|
39,346
|
|
|
52,302
|
|
|
51,369
|
|
|
17,441
|
|
|
12,388
|
|
|||||
Depreciation
|
14,612
|
|
|
13,843
|
|
|
11,737
|
|
|
11,676
|
|
|
9,201
|
|
|||||
Restructuring
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,358
|
|
|||||
Total costs and operating expenses
|
2,580,971
|
|
|
2,106,740
|
|
|
1,577,938
|
|
|
957,233
|
|
|
819,583
|
|
|||||
Operating income
|
78,317
|
|
|
86,791
|
|
|
66,337
|
|
|
61,828
|
|
|
20,807
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense and bank fees
|
(19,449
|
)
|
|
(54,193
|
)
|
|
(45,724
|
)
|
|
(9,709
|
)
|
|
(751
|
)
|
|||||
Other, net
|
1,142
|
|
|
478
|
|
|
471
|
|
|
57
|
|
|
127
|
|
|||||
Income before provision for income taxes
|
60,010
|
|
|
33,076
|
|
|
21,084
|
|
|
52,176
|
|
|
20,183
|
|
|||||
Provision for income taxes
|
28,315
|
|
|
17,579
|
|
|
7,937
|
|
|
20,344
|
|
|
5,421
|
|
|||||
Net income
|
$
|
31,695
|
|
|
$
|
15,497
|
|
|
$
|
13,147
|
|
|
$
|
31,832
|
|
|
$
|
14,762
|
|
Net income per share attributable to common stock:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.45
|
|
|
$
|
0.24
|
|
|
$
|
0.26
|
|
|
$
|
0.66
|
|
|
$
|
0.32
|
|
Diluted
|
$
|
0.44
|
|
|
$
|
0.22
|
|
|
$
|
0.24
|
|
|
$
|
0.63
|
|
|
$
|
0.31
|
|
Weighted average common stock outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
70,228,159
|
|
|
56,160,539
|
|
|
12,353,047
|
|
|
9,805,384
|
|
|
7,842,682
|
|
|||||
Diluted
|
72,618,069
|
|
|
59,566,773
|
|
|
15,731,807
|
|
|
12,476,091
|
|
|
10,103,979
|
|
(1)
|
Includes stock-based compensation expense as follows:
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Cost of providing services
|
$
|
4,244
|
|
|
$
|
2,658
|
|
|
$
|
1,193
|
|
|
$
|
516
|
|
|
$
|
438
|
|
Sales and marketing
|
4,490
|
|
|
2,755
|
|
|
1,284
|
|
|
500
|
|
|
637
|
|
|||||
General and administrative
|
7,501
|
|
|
4,517
|
|
|
3,220
|
|
|
3,144
|
|
|
3,590
|
|
|||||
Systems development and programming costs
|
1,688
|
|
|
1,030
|
|
|
416
|
|
|
200
|
|
|
160
|
|
|||||
Total stock-based compensation expense
|
$
|
17,923
|
|
|
$
|
10,960
|
|
|
$
|
6,113
|
|
|
$
|
4,360
|
|
|
$
|
4,825
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Insurance Service Revenues
(1)
|
$
|
145,625
|
|
|
$
|
165,142
|
|
|
$
|
145,318
|
|
|
$
|
120,803
|
|
|
$
|
76,017
|
|
Net Service Revenues
(2)
|
$
|
546,912
|
|
|
$
|
507,216
|
|
|
$
|
417,690
|
|
|
$
|
269,036
|
|
|
$
|
189,296
|
|
Adjusted EBITDA
(3)
|
$
|
151,340
|
|
|
$
|
165,319
|
|
|
$
|
136,027
|
|
|
$
|
95,362
|
|
|
$
|
47,348
|
|
Adjusted Net Income
(4)
|
$
|
70,720
|
|
|
$
|
74,392
|
|
|
$
|
57,456
|
|
|
$
|
47,431
|
|
|
$
|
27,626
|
|
(1)
|
Net Insurance Service Revenues is a non-GAAP financial measure that we calculate as insurance service revenues less insurance costs. For more information about Net Insurance Service Revenues and a reconciliation of Net Insurance Service Revenues to insurance service revenues, the most directly comparable financial measure calculated and presented in accordance with GAAP, see “Non-GAAP Financial Measures.”
|
(2)
|
Net Service Revenues is a non-GAAP financial measure that we calculate as the sum of professional service revenues and Net Insurance Service Revenues. For more information about Net Service Revenues and a reconciliation of Net Service Revenues to total revenues, the most directly comparable financial measure calculated and presented in accordance with GAAP, see “Non-GAAP Financial Measures.”
|
(3)
|
Adjusted EBITDA is a non-GAAP financial measure that we calculate as net income, excluding the effects of our income tax provision, interest expense, depreciation, amortization of intangible assets, stock-based compensation expense and, in 2014, certain costs related to a public offering of shares of our common stock. For more information about Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, see “Non-GAAP Financial Measures.”
|
(4)
|
Adjusted Net Income is a non-GAAP financial measure that we calculate as net income, excluding the effects of our effective income tax rate, stock-based compensation, amortization of intangible assets, non-cash interest expense, debt prepayment premium and the income tax effect (at our effective tax rate) of these pre-tax adjustments and, in 2014, certain costs related to a public offering of our shares of common stock. For purposes of our non-GAAP financial presentation, as a result of a 2015 increase in New York City tax rates and an increase in blended state rates, we have adjusted the effective tax rate to 41.5% for the year ended December 31, 2015, from 39.5% for year ended December 31, 2014. For more information about Adjusted Net Income and a reconciliation of Adjusted Net Income to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, see “Non-GAAP Financial Measures.”
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
166,178
|
|
|
$
|
134,341
|
|
|
$
|
94,356
|
|
|
$
|
63,749
|
|
|
$
|
31,620
|
|
Working capital
(1)
|
$
|
112,428
|
|
|
$
|
121,290
|
|
|
$
|
81,528
|
|
|
$
|
61,340
|
|
|
$
|
26,944
|
|
Total assets
(1)
|
$
|
2,098,230
|
|
|
$
|
2,340,580
|
|
|
$
|
1,434,738
|
|
|
$
|
887,727
|
|
|
$
|
334,849
|
|
Notes payable and borrowings under capital leases
|
$
|
499,716
|
|
|
$
|
545,150
|
|
|
$
|
818,877
|
|
|
$
|
301,334
|
|
|
$
|
1,683
|
|
Total liabilities
(1)
|
$
|
2,090,149
|
|
|
$
|
2,366,339
|
|
|
$
|
1,705,100
|
|
|
$
|
830,407
|
|
|
$
|
241,251
|
|
Convertible preferred stock
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
122,878
|
|
|
$
|
122,878
|
|
|
$
|
122,878
|
|
Total stockholders’ equity (deficit)
|
$
|
8,081
|
|
|
$
|
(25,759
|
)
|
|
$
|
(393,240
|
)
|
|
$
|
(65,558
|
)
|
|
$
|
(29,280
|
)
|
•
|
Net Insurance Service Revenues and Net Service Revenues are reduced by the premiums that we pay to the insurance carriers and any reimbursements we pay to the insurance carriers and third-party administrators for claims payments made on our behalf within our insurance deductible layer, where applicable;
|
•
|
Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt;
|
•
|
Adjusted EBITDA does not reflect the amounts we paid in taxes or other components of our tax provision;
|
•
|
Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
|
•
|
Adjusted EBITDA and Adjusted Net Income do not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
Adjusted EBITDA and Adjusted Net Income do not reflect the non-cash component of employee compensation;
|
•
|
Although depreciation and amortization of intangible assets are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
|
•
|
Other companies in our industry may calculate these measures or similar measures differently than we do, limiting their usefulness as a comparative measure.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Insurance service revenues
|
$
|
2,258,001
|
|
|
$
|
1,851,457
|
|
|
$
|
1,371,903
|
|
|
$
|
870,828
|
|
|
$
|
727,111
|
|
Less: Insurance costs
|
2,112,376
|
|
|
1,686,315
|
|
|
1,226,585
|
|
|
750,025
|
|
|
651,094
|
|
|||||
Net Insurance Service Revenues
|
$
|
145,625
|
|
|
$
|
165,142
|
|
|
$
|
145,318
|
|
|
$
|
120,803
|
|
|
$
|
76,017
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Total revenues
|
$
|
2,659,288
|
|
|
$
|
2,193,531
|
|
|
$
|
1,644,275
|
|
|
$
|
1,019,061
|
|
|
$
|
840,390
|
|
Less: Insurance costs
|
2,112,376
|
|
|
1,686,315
|
|
|
1,226,585
|
|
|
750,025
|
|
|
651,094
|
|
|||||
Net Service Revenues
|
$
|
546,912
|
|
|
$
|
507,216
|
|
|
$
|
417,690
|
|
|
$
|
269,036
|
|
|
$
|
189,296
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Net income
|
$
|
31,695
|
|
|
$
|
15,497
|
|
|
$
|
13,147
|
|
|
$
|
31,832
|
|
|
$
|
14,762
|
|
Provision for income taxes
|
28,315
|
|
|
17,579
|
|
|
7,937
|
|
|
20,344
|
|
|
5,421
|
|
|||||
Stock-based compensation
|
17,923
|
|
|
10,960
|
|
|
6,113
|
|
|
4,360
|
|
|
4,825
|
|
|||||
Interest expense and bank fees
|
19,449
|
|
|
54,193
|
|
|
45,724
|
|
|
9,709
|
|
|
751
|
|
|||||
Depreciation
|
14,612
|
|
|
13,843
|
|
|
11,737
|
|
|
11,676
|
|
|
9,201
|
|
|||||
Amortization of intangible assets
|
39,346
|
|
|
52,302
|
|
|
51,369
|
|
|
17,441
|
|
|
12,388
|
|
|||||
Secondary offering costs
|
—
|
|
|
945
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Adjusted EBITDA
|
$
|
151,340
|
|
|
$
|
165,319
|
|
|
$
|
136,027
|
|
|
$
|
95,362
|
|
|
$
|
47,348
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Net income
|
$
|
31,695
|
|
|
$
|
15,497
|
|
|
$
|
13,147
|
|
|
$
|
31,832
|
|
|
$
|
14,762
|
|
Effective income tax rate adjustment
|
3,411
|
|
|
4,514
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
17,923
|
|
|
10,960
|
|
|
6,113
|
|
|
4,360
|
|
|
4,825
|
|
|||||
Amortization of intangible assets
|
39,346
|
|
|
52,302
|
|
|
51,369
|
|
|
17,441
|
|
|
12,388
|
|
|||||
Non-cash interest expense
|
3,610
|
|
|
21,880
|
|
|
13,577
|
|
|
3,768
|
|
|
375
|
|
|||||
Debt prepayment premium
|
—
|
|
|
3,800
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Secondary Offering Costs
|
—
|
|
|
945
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Income tax impact of pre-tax adjustments
|
(25,265
|
)
|
|
(35,506
|
)
|
|
(26,750
|
)
|
|
(9,970
|
)
|
|
(4,724
|
)
|
|||||
Adjusted Net Income
|
$
|
70,720
|
|
|
$
|
74,392
|
|
|
$
|
57,456
|
|
|
$
|
47,431
|
|
|
$
|
27,626
|
|
|
Year Ended December 31,
|
||||||||||
Key Financial and Operating Metrics:
|
2015
|
|
2014
|
|
2013
|
||||||
Net Insurance Service Revenues (in thousands)
|
$
|
145,625
|
|
|
$
|
165,142
|
|
|
$
|
145,318
|
|
Net Service Revenues (in thousands)
|
$
|
546,912
|
|
|
$
|
507,216
|
|
|
$
|
417,690
|
|
Total WSEs
|
324,399
|
|
|
288,312
|
|
|
231,203
|
|
|||
Total Sales Representatives
|
481
|
|
|
385
|
|
|
300
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Consolidated Statement of Operations:
|
|
|
|
|
|
||||||
Professional service revenues
|
$
|
401,287
|
|
|
$
|
342,074
|
|
|
$
|
272,372
|
|
Insurance service revenues
|
2,258,001
|
|
|
1,851,457
|
|
|
1,371,903
|
|
|||
Total revenues
|
2,659,288
|
|
|
2,193,531
|
|
|
1,644,275
|
|
|||
Costs and operating expenses:
|
|
|
|
|
|
||||||
Insurance costs
|
2,112,376
|
|
|
1,686,315
|
|
|
1,226,585
|
|
|||
Cost of providing services (exclusive of depreciation and
amortization of intangible assets) (1) |
150,694
|
|
|
134,256
|
|
|
106,661
|
|
|||
Sales and marketing
(1)
|
166,759
|
|
|
139,997
|
|
|
109,183
|
|
|||
General and administrative
(1)
|
69,626
|
|
|
53,926
|
|
|
52,455
|
|
|||
Systems development and programming costs
(1)
|
27,558
|
|
|
26,101
|
|
|
19,948
|
|
|||
Amortization of intangible assets
|
39,346
|
|
|
52,302
|
|
|
51,369
|
|
|||
Depreciation
|
14,612
|
|
|
13,843
|
|
|
11,737
|
|
|||
Total costs and operating expenses
|
2,580,971
|
|
|
2,106,740
|
|
|
1,577,938
|
|
|||
Operating income
|
78,317
|
|
|
86,791
|
|
|
66,337
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense and bank fees
|
(19,449
|
)
|
|
(54,193
|
)
|
|
(45,724
|
)
|
|||
Other, net
|
1,142
|
|
|
478
|
|
|
471
|
|
|||
Income before provision for income taxes
|
60,010
|
|
|
33,076
|
|
|
21,084
|
|
|||
Provision for income taxes
|
28,315
|
|
|
17,579
|
|
|
7,937
|
|
|||
Net income
|
$
|
31,695
|
|
|
$
|
15,497
|
|
|
$
|
13,147
|
|
(1)
|
Includes stock-based compensation expense as follows:
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Cost of providing services
|
$
|
4,244
|
|
|
$
|
2,658
|
|
|
$
|
1,193
|
|
Sales and marketing
|
4,490
|
|
|
2,755
|
|
|
1,284
|
|
|||
General and administrative
|
7,501
|
|
|
4,517
|
|
|
3,220
|
|
|||
Systems development and programming costs
|
1,688
|
|
|
1,030
|
|
|
416
|
|
|||
Total stock-based compensation expense
|
$
|
17,923
|
|
|
$
|
10,960
|
|
|
$
|
6,113
|
|
|
Year Ended December 31,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Percentage of total revenues:
|
|
|
|
|
|
|||
Professional service revenues
|
15
|
%
|
|
16
|
%
|
|
17
|
%
|
Insurance service revenues
|
85
|
%
|
|
84
|
%
|
|
83
|
%
|
Total revenues
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Costs and operating expenses:
|
|
|
|
|
|
|||
Insurance costs
|
79
|
%
|
|
77
|
%
|
|
75
|
%
|
Cost of providing services (exclusive of depreciation and amortization of intangible assets)
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
Sales and marketing
|
6
|
%
|
|
6
|
%
|
|
7
|
%
|
General and administrative
|
3
|
%
|
|
2
|
%
|
|
3
|
%
|
Systems development and programming costs
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
Amortization of intangible assets
|
1
|
%
|
|
2
|
%
|
|
3
|
%
|
Depreciation
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
Total costs and operating expenses
|
97
|
%
|
|
96
|
%
|
|
96
|
%
|
Operating income
|
3
|
%
|
|
4
|
%
|
|
4
|
%
|
Other income (expense):
|
|
|
|
|
|
|||
Interest expense and bank fees
|
(1
|
)%
|
|
(2
|
)%
|
|
(3
|
)%
|
Other, net
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Income before provision for income taxes
|
2
|
%
|
|
2
|
%
|
|
1
|
%
|
Provision for income taxes
|
1
|
%
|
|
1
|
%
|
|
0
|
%
|
Net income
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
|
Year Ended December 31,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Percentage of Net Service Revenues:
|
|
|
|
|
|
|||
Professional service revenues
|
73
|
%
|
|
67
|
%
|
|
65
|
%
|
Net Insurance Service Revenues
|
27
|
%
|
|
33
|
%
|
|
35
|
%
|
Net Service Revenues
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Other operating expenses:
|
|
|
|
|
|
|||
Cost of providing services (exclusive of depreciation and amortization of intangible assets)
|
28
|
%
|
|
26
|
%
|
|
26
|
%
|
Sales and marketing
|
30
|
%
|
|
28
|
%
|
|
26
|
%
|
General and administrative
|
13
|
%
|
|
11
|
%
|
|
13
|
%
|
Systems development and programming costs
|
5
|
%
|
|
5
|
%
|
|
5
|
%
|
Amortization of intangible assets
|
7
|
%
|
|
10
|
%
|
|
12
|
%
|
Depreciation
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
Total other operating expenses
|
86
|
%
|
|
83
|
%
|
|
84
|
%
|
Operating income
|
14
|
%
|
|
17
|
%
|
|
16
|
%
|
Other income (expense):
|
|
|
|
|
|
|||
Interest expense and bank fees
|
(4
|
)%
|
|
(11
|
)%
|
|
(11
|
)%
|
Other, net
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Income before provision for income taxes
|
11
|
%
|
|
7
|
%
|
|
5
|
%
|
Provision for income taxes
|
5
|
%
|
|
3
|
%
|
|
2
|
%
|
Net income
|
6
|
%
|
|
3
|
%
|
|
3
|
%
|
|
Year Ended
December 31, |
|
Change
2015 vs. 2014 |
|
Change
2014 vs. 2013 |
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Professional service revenues
|
$
|
401,287
|
|
|
$
|
342,074
|
|
|
$
|
272,372
|
|
|
$
|
59,213
|
|
|
17
|
%
|
|
$
|
69,702
|
|
|
26
|
%
|
Insurance service revenues
|
2,258,001
|
|
|
1,851,457
|
|
|
1,371,903
|
|
|
406,544
|
|
|
22
|
%
|
|
479,554
|
|
|
35
|
%
|
|||||
Total revenues
|
$
|
2,659,288
|
|
|
$
|
2,193,531
|
|
|
$
|
1,644,275
|
|
|
$
|
465,757
|
|
|
21
|
%
|
|
$
|
549,256
|
|
|
33
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Year Ended
December 31, |
|
Change
2015 vs. 2014 |
|
Change
2014 vs. 2013 |
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Key operating metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total WSEs
|
324,399
|
|
|
288,312
|
|
|
231,203
|
|
|
36,087
|
|
|
13
|
%
|
|
57,109
|
|
|
25
|
%
|
|||||
Total Sales Representatives
|
481
|
|
|
385
|
|
|
300
|
|
|
96
|
|
|
25
|
%
|
|
85
|
|
|
28
|
%
|
|
Year Ended
December 31, |
|
Change
2015 vs. 2014 |
|
Change
2014 vs. 2013 |
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Insurance costs
|
$
|
2,112,376
|
|
|
$
|
1,686,315
|
|
|
$
|
1,226,585
|
|
|
$
|
426,061
|
|
|
25
|
%
|
|
$
|
459,730
|
|
|
37
|
%
|
|
Year Ended
December 31, |
|
Change
2015 vs. 2014 |
|
Change
2014 vs. 2013 |
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Insurance service revenues
|
$
|
2,258,001
|
|
|
$
|
1,851,457
|
|
|
$
|
1,371,903
|
|
|
$
|
406,544
|
|
|
22
|
%
|
|
$
|
479,554
|
|
|
35
|
%
|
Less: Insurance costs
|
2,112,376
|
|
|
1,686,315
|
|
|
1,226,585
|
|
|
426,061
|
|
|
25
|
%
|
|
459,730
|
|
|
37
|
%
|
|||||
Net Insurance Service Revenues
|
$
|
145,625
|
|
|
$
|
165,142
|
|
|
$
|
145,318
|
|
|
$
|
(19,517
|
)
|
|
(12
|
)%
|
|
$
|
19,824
|
|
|
14
|
%
|
|
Year Ended
December 31, |
|
Change
2015 vs. 2014 |
|
Change
2014 vs. 2013 |
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Total revenues
|
$
|
2,659,288
|
|
|
$
|
2,193,531
|
|
|
$
|
1,644,275
|
|
|
$
|
465,757
|
|
|
21
|
%
|
|
$
|
549,256
|
|
|
33
|
%
|
Less: Insurance costs
|
2,112,376
|
|
|
1,686,315
|
|
|
1,226,585
|
|
|
426,061
|
|
|
25
|
%
|
|
459,730
|
|
|
37
|
%
|
|||||
Net Service Revenues
|
$
|
546,912
|
|
|
$
|
507,216
|
|
|
$
|
417,690
|
|
|
$
|
39,696
|
|
|
8
|
%
|
|
$
|
89,526
|
|
|
21
|
%
|
|
Year Ended
December 31, |
|
Change
2015 vs. 2014 |
|
Change
2014 vs. 2013 |
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Cost of providing services
|
$
|
150,694
|
|
|
$
|
134,256
|
|
|
$
|
106,661
|
|
|
$
|
16,438
|
|
|
12
|
%
|
|
$
|
27,595
|
|
|
26
|
%
|
Sales and marketing
|
166,759
|
|
|
139,997
|
|
|
109,183
|
|
|
26,762
|
|
|
19
|
%
|
|
30,814
|
|
|
28
|
%
|
|||||
General and administrative
|
69,626
|
|
|
53,926
|
|
|
52,455
|
|
|
15,700
|
|
|
29
|
%
|
|
1,471
|
|
|
3
|
%
|
|||||
Systems development and programming costs
|
27,558
|
|
|
26,101
|
|
|
19,948
|
|
|
1,457
|
|
|
6
|
%
|
|
6,153
|
|
|
31
|
%
|
|||||
Amortization of intangible assets
|
39,346
|
|
|
52,302
|
|
|
51,369
|
|
|
(12,956
|
)
|
|
(25
|
)%
|
|
933
|
|
|
2
|
%
|
|||||
Depreciation
|
14,612
|
|
|
13,843
|
|
|
11,737
|
|
|
769
|
|
|
6
|
%
|
|
2,106
|
|
|
18
|
%
|
|||||
Total operating expenses
|
$
|
468,595
|
|
|
$
|
420,425
|
|
|
$
|
351,353
|
|
|
$
|
48,170
|
|
|
11
|
%
|
|
$
|
69,072
|
|
|
20
|
%
|
|
Year Ended
December 31, |
|
Change
2015 vs. 2014 |
|
Change
2014 vs. 2013 |
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Compensation-related costs
|
$
|
110,658
|
|
|
$
|
97,423
|
|
|
$
|
75,941
|
|
|
$
|
13,235
|
|
|
14
|
%
|
|
$
|
21,482
|
|
|
28
|
%
|
Facilities
|
7,585
|
|
|
7,149
|
|
|
5,615
|
|
|
436
|
|
|
6
|
%
|
|
1,534
|
|
|
27
|
%
|
|||||
Information technology and
communication |
9,693
|
|
|
8,948
|
|
|
8,482
|
|
|
745
|
|
|
8
|
%
|
|
466
|
|
|
5
|
%
|
|||||
Other expenses
|
22,758
|
|
|
20,736
|
|
|
16,623
|
|
|
2,022
|
|
|
10
|
%
|
|
4,113
|
|
|
25
|
%
|
|||||
Total cost of providing services
|
$
|
150,694
|
|
|
$
|
134,256
|
|
|
$
|
106,661
|
|
|
$
|
16,438
|
|
|
12
|
%
|
|
$
|
27,595
|
|
|
26
|
%
|
|
Year Ended
December 31, |
|
Change
2015 vs. 2014 |
|
Change
2014 vs. 2013 |
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Compensation-related costs
|
$
|
113,718
|
|
|
$
|
96,903
|
|
|
$
|
73,901
|
|
|
$
|
16,815
|
|
|
17
|
%
|
|
$
|
23,002
|
|
|
31
|
%
|
Marketing and advertising
|
22,097
|
|
|
19,667
|
|
|
15,863
|
|
|
2,430
|
|
|
12
|
%
|
|
3,804
|
|
|
24
|
%
|
|||||
Facilities
|
4,511
|
|
|
3,832
|
|
|
3,155
|
|
|
679
|
|
|
18
|
%
|
|
677
|
|
|
21
|
%
|
|||||
Other expenses
|
26,433
|
|
|
19,595
|
|
|
16,264
|
|
|
6,838
|
|
|
35
|
%
|
|
3,331
|
|
|
20
|
%
|
|||||
Total sales and marketing
|
$
|
166,759
|
|
|
$
|
139,997
|
|
|
$
|
109,183
|
|
|
$
|
26,762
|
|
|
19
|
%
|
|
$
|
30,814
|
|
|
28
|
%
|
|
Year Ended
December 31, |
|
Change
2015 vs. 2014 |
|
Change
2014 vs. 2013 |
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Compensation-related costs
|
$
|
36,694
|
|
|
$
|
32,697
|
|
|
$
|
31,934
|
|
|
$
|
3,997
|
|
|
12
|
%
|
|
$
|
763
|
|
|
2
|
%
|
Legal, accounting and other professional fees
|
16,798
|
|
|
6,969
|
|
|
6,910
|
|
|
9,829
|
|
|
141
|
%
|
|
59
|
|
|
1
|
%
|
|||||
Other expenses
|
16,134
|
|
|
14,260
|
|
|
13,611
|
|
|
1,874
|
|
|
13
|
%
|
|
649
|
|
|
5
|
%
|
|||||
Total general and administrative
|
$
|
69,626
|
|
|
$
|
53,926
|
|
|
$
|
52,455
|
|
|
$
|
15,700
|
|
|
29
|
%
|
|
$
|
1,471
|
|
|
3
|
%
|
|
Year Ended
December 31, |
|
Change
2015 vs. 2014 |
|
Change
2014 vs. 2013 |
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Compensation-related costs
|
$
|
18,826
|
|
|
$
|
20,766
|
|
|
$
|
15,493
|
|
|
$
|
(1,940
|
)
|
|
(9
|
)%
|
|
$
|
5,273
|
|
|
34
|
%
|
Other expenses
|
8,732
|
|
|
5,335
|
|
|
4,455
|
|
|
3,397
|
|
|
64
|
%
|
|
880
|
|
|
20
|
%
|
|||||
Total systems development and
programming costs |
$
|
27,558
|
|
|
$
|
26,101
|
|
|
$
|
19,948
|
|
|
$
|
1,457
|
|
|
6
|
%
|
|
$
|
6,153
|
|
|
31
|
%
|
|
Year Ended
December 31, |
|
Change
2015 vs. 2014 |
|
Change
2014 vs. 2013 |
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Amortization of intangible assets
|
$
|
39,346
|
|
|
$
|
52,302
|
|
|
$
|
51,369
|
|
|
$
|
(12,956
|
)
|
|
(25
|
)%
|
|
$
|
933
|
|
|
2
|
%
|
Depreciation
|
$
|
14,612
|
|
|
$
|
13,843
|
|
|
$
|
11,737
|
|
|
$
|
769
|
|
|
6
|
%
|
|
$
|
2,106
|
|
|
18
|
%
|
|
Year Ended
December 31, |
|
Change
2015 vs. 2014 |
|
Change
2014 vs. 2013 |
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Interest expense and bank fees
|
$
|
(19,449
|
)
|
|
$
|
(54,193
|
)
|
|
$
|
(45,724
|
)
|
|
$
|
34,744
|
|
|
(64
|
)%
|
|
$
|
(8,469
|
)
|
|
19
|
%
|
Other, net
|
$
|
1,142
|
|
|
$
|
478
|
|
|
$
|
471
|
|
|
$
|
664
|
|
|
139
|
%
|
|
$
|
7
|
|
|
1
|
%
|
|
Year Ended
December 31, |
|
Change
2015 vs. 2014 |
|
Change
2014 vs. 2013 |
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands, except percentages)
|
||||||||||||||||||||||||
Provision for income taxes
|
$
|
28,315
|
|
|
$
|
17,579
|
|
|
$
|
7,937
|
|
|
$
|
10,736
|
|
|
61
|
%
|
|
$
|
9,642
|
|
|
121
|
%
|
Effective Income Tax Rate
|
47.2
|
%
|
|
53.2
|
%
|
|
37.6
|
%
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Cash and cash equivalents
|
$
|
166,178
|
|
|
$
|
134,341
|
|
Working capital:
|
|
|
|
|
|
||
Corporate working capital
(1)
|
108,539
|
|
|
116,709
|
|
||
WSE-related assets, net of WSE-related liabilities
|
3,889
|
|
|
4,581
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
130,599
|
|
|
$
|
151,899
|
|
|
$
|
100,721
|
|
Investing activities
|
(37,689
|
)
|
|
(45,427
|
)
|
|
(212,438
|
)
|
|||
Financing activities
|
(60,752
|
)
|
|
(66,372
|
)
|
|
142,377
|
|
|||
Effect of exchange rates on cash and cash equivalents
|
(321
|
)
|
|
(115
|
)
|
|
(53
|
)
|
|||
Net increase in cash and cash equivalents
|
$
|
31,837
|
|
|
$
|
39,985
|
|
|
$
|
30,607
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
Long-term debt obligations
|
$
|
499,563
|
|
|
$
|
35,289
|
|
|
$
|
192,399
|
|
|
$
|
271,875
|
|
|
$
|
—
|
|
Interest on debt obligations
|
53,078
|
|
|
17,597
|
|
|
29,144
|
|
|
6,337
|
|
|
—
|
|
|||||
Workers compensation liabilities
|
198,274
|
|
|
70,888
|
|
|
46,218
|
|
|
23,077
|
|
|
58,091
|
|
|||||
Capital lease obligations
|
268
|
|
|
82
|
|
|
145
|
|
|
41
|
|
|
—
|
|
|||||
Operating lease obligations
|
50,323
|
|
|
11,882
|
|
|
20,072
|
|
|
15,762
|
|
|
2,607
|
|
|||||
Purchase obligations
|
14,116
|
|
|
8,587
|
|
|
5,529
|
|
|
—
|
|
|
—
|
|
|||||
Uncertain tax positions
|
616
|
|
|
18
|
|
|
598
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
816,238
|
|
|
$
|
144,343
|
|
|
$
|
294,105
|
|
|
$
|
317,092
|
|
|
$
|
60,698
|
|
•
|
Prior to our IPO in March 2014, because our common stock was not publicly traded, we estimated the fair value of our common stock. Our board of directors considered numerous objective and subjective factors to determine the fair market value of our common stock at each meeting at which awards were granted and approved. These factors included, but were not limited to: (i) contemporaneous third-party valuations of our common stock; (ii) our performance, growth rate, financial condition and future financial projections; (iii) the value of our peer companies; (iv) changes to our business and our prospects; (v) lack of marketability of our common stock; (vi) the likelihood of achieving a liquidity event; and (vii) the rights, preferences and privileges of our preferred stock relative to those of our common stock. After the completion of our IPO, the fair value of our common stock has been based on the closing price of our common stock on the New York Stock Exchange.
|
•
|
Risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term of the options.
|
•
|
Expected term represents the period that our share-based awards are expected to be outstanding. We estimated the expected term for a “plain vanilla” option using the simplified method allowed under current guidance, which uses the midpoint between the graded vesting period and the contractual termination date.
|
•
|
Expected volatility is determined by taking the average historical volatilities of our peer group based on daily price observations over a period equivalent to the expected term of the option. Our peer group consists of public companies primarily in HR service industry and are similar to us in size, stage of life cycle, and financial leverage. We intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own common stock share price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.
|
•
|
We declared special dividends in May 2011, March 2012, August 2013 and December 2013. These dividends are considered extraordinary and non-recurring. Consequently, we used an expected dividend yield of zero.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Expected volatility
|
39
|
%
|
|
58
|
%
|
|
48
|
%
|
|||
Expected term (in years)
|
6.08
|
|
|
6.05
|
|
|
6.04
|
|
|||
Risk-free interest rate
|
1.73
|
%
|
|
1.80
|
%
|
|
1.26
|
%
|
|||
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Weighted-average grant-date fair value of stock options
|
$
|
12.73
|
|
|
$
|
7.18
|
|
|
$
|
4.11
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
Consolidated Balance Sheets
|
|
|
Consolidated Statements of Operations
|
|
|
Consolidated Statements of Comprehensive Income
|
|
|
Consolidated Statements of Stockholders’ Equity (Deficit)
|
|
|
Consolidated Statements of Cash Flows
|
|
|
Notes to Consolidated Financial Statements
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
166,178
|
|
|
$
|
134,341
|
|
Restricted cash
|
14,557
|
|
|
14,543
|
|
||
Prepaid income taxes
|
4,105
|
|
|
26,711
|
|
||
Prepaid expenses
|
8,579
|
|
|
9,336
|
|
||
Deferred loan costs and other current assets
|
3,715
|
|
|
4,271
|
|
||
Worksite employee related assets
|
1,373,386
|
|
|
1,635,136
|
|
||
Total current assets
|
1,570,520
|
|
|
1,824,338
|
|
||
Workers compensation receivable
|
29,204
|
|
|
31,905
|
|
||
Restricted cash and investments
|
101,806
|
|
|
69,447
|
|
||
Property and equipment, net
|
37,844
|
|
|
32,298
|
|
||
Goodwill
|
289,207
|
|
|
288,857
|
|
||
Other intangible assets, net
|
46,772
|
|
|
81,718
|
|
||
Deferred loan costs and other assets
|
22,877
|
|
|
12,017
|
|
||
Total assets
|
$
|
2,098,230
|
|
|
$
|
2,340,580
|
|
Liabilities and stockholders’ equity (deficit)
|
|
|
|
|
|||
Current liabilities:
|
|
|
|
|
|||
Accounts payable
|
$
|
12,904
|
|
|
$
|
12,273
|
|
Accrued corporate wages
|
28,963
|
|
|
29,179
|
|
||
Current portion of notes payable and borrowings under capital leases
|
35,326
|
|
|
20,738
|
|
||
Other current liabilities
|
11,402
|
|
|
10,303
|
|
||
Worksite employee related liabilities
|
1,369,497
|
|
|
1,630,555
|
|
||
Total current liabilities
|
1,458,092
|
|
|
1,703,048
|
|
||
Notes payable and borrowings under capital leases, less current portion
|
464,390
|
|
|
524,412
|
|
||
Workers compensation liabilities
|
105,481
|
|
|
75,448
|
|
||
Deferred income taxes
|
54,641
|
|
|
58,529
|
|
||
Other liabilities
|
7,545
|
|
|
4,902
|
|
||
Total liabilities
|
2,090,149
|
|
|
2,366,339
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
|
|
||
Stockholders’ equity (deficit):
|
|
|
|
||||
Preferred stock, $.000025 per share stated value; 20,000,000 shares authorized;
no shares issued and outstanding at December 31, 2015 and December 31, 2014
|
—
|
|
|
—
|
|
||
Common stock, $.000025 per share stated value; 750,000,000 shares authorized;
70,371,425 and 69,811,326 shares issued and outstanding at December 31, 2015
and December 31, 2014, respectively
|
494,397
|
|
|
442,682
|
|
||
Accumulated deficit
|
(485,595
|
)
|
|
(468,127
|
)
|
||
Accumulated other comprehensive loss
|
(721
|
)
|
|
(314
|
)
|
||
Total stockholders’ equity (deficit)
|
8,081
|
|
|
(25,759
|
)
|
||
Total liabilities and stockholders’ equity (deficit)
|
$
|
2,098,230
|
|
|
$
|
2,340,580
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Professional service revenues
|
$
|
401,287
|
|
|
$
|
342,074
|
|
|
$
|
272,372
|
|
Insurance service revenues
|
2,258,001
|
|
|
1,851,457
|
|
|
1,371,903
|
|
|||
Total revenues
|
2,659,288
|
|
|
2,193,531
|
|
|
1,644,275
|
|
|||
Costs and operating expenses:
|
|
|
|
|
|
||||||
Insurance costs
|
2,112,376
|
|
|
1,686,315
|
|
|
1,226,585
|
|
|||
Cost of providing services (exclusive of depreciation and
amortization of intangible assets)
|
150,694
|
|
|
134,256
|
|
|
106,661
|
|
|||
Sales and marketing
|
166,759
|
|
|
139,997
|
|
|
109,183
|
|
|||
General and administrative
|
69,626
|
|
|
53,926
|
|
|
52,455
|
|
|||
Systems development and programming costs
|
27,558
|
|
|
26,101
|
|
|
19,948
|
|
|||
Amortization of intangible assets
|
39,346
|
|
|
52,302
|
|
|
51,369
|
|
|||
Depreciation
|
14,612
|
|
|
13,843
|
|
|
11,737
|
|
|||
Total costs and operating expenses
|
2,580,971
|
|
|
2,106,740
|
|
|
1,577,938
|
|
|||
Operating income
|
78,317
|
|
|
86,791
|
|
|
66,337
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense and bank fees
|
(19,449
|
)
|
|
(54,193
|
)
|
|
(45,724
|
)
|
|||
Other, net
|
1,142
|
|
|
478
|
|
|
471
|
|
|||
Income before provision for income taxes
|
60,010
|
|
|
33,076
|
|
|
21,084
|
|
|||
Provision for income taxes
|
28,315
|
|
|
17,579
|
|
|
7,937
|
|
|||
Net income
|
$
|
31,695
|
|
|
$
|
15,497
|
|
|
$
|
13,147
|
|
Net income per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.45
|
|
|
$
|
0.24
|
|
|
$
|
0.26
|
|
Diluted
|
$
|
0.44
|
|
|
$
|
0.22
|
|
|
$
|
0.24
|
|
Weighted average shares:
|
|
|
|
|
|
||||||
Basic
|
70,228,159
|
|
|
56,160,539
|
|
|
12,353,047
|
|
|||
Diluted
|
72,618,069
|
|
|
59,566,773
|
|
|
15,731,807
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net income
|
$
|
31,695
|
|
|
$
|
15,497
|
|
|
$
|
13,147
|
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
||||||
Unrealized losses on investments
|
(86
|
)
|
|
(8
|
)
|
|
(9
|
)
|
|||
Unrealized gains on interest rate cap
|
—
|
|
|
—
|
|
|
66
|
|
|||
Foreign currency translation adjustments
|
(321
|
)
|
|
(115
|
)
|
|
(53
|
)
|
|||
Total other comprehensive income (loss), net of tax
|
(407
|
)
|
|
(123
|
)
|
|
4
|
|
|||
Comprehensive income
|
$
|
31,288
|
|
|
$
|
15,374
|
|
|
$
|
13,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
||||||||||||||||
|
Preferred Stock–
|
|
Preferred Stock–
|
|
|
|
|
|
|
|
Other
|
|
Total
|
||||||||||||||||||||
|
Series G
|
|
Series H
|
|
Common Stock
|
|
Accumulated
|
|
Comprehensive
|
|
Stockholders’
|
||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Deficit
|
|
Loss
|
|
Equity (Deficit)
|
||||||||||||||||
Balance at December 31, 2012
|
5,391,441
|
|
|
$
|
59,059
|
|
|
4,124,986
|
|
|
$
|
63,819
|
|
|
10,709,224
|
|
|
$
|
45,488
|
|
|
$
|
(110,851
|
)
|
|
$
|
(195
|
)
|
|
$
|
(65,558
|
)
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,147
|
|
|
—
|
|
|
13,147
|
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|||||||
Issuance of common stock from vested restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,512
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Issuance of common stock from exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,730,544
|
|
|
7,109
|
|
|
—
|
|
|
—
|
|
|
7,109
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,953
|
|
|
—
|
|
|
—
|
|
|
5,953
|
|
|||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(407,728
|
)
|
|
—
|
|
|
(3,342
|
)
|
|
—
|
|
|
(3,342
|
)
|
|||||||
Awards effectively repurchased for required employee withholding taxes
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(809,012
|
)
|
|
—
|
|
|
(8,643
|
)
|
|
—
|
|
|
(8,643
|
)
|
||||||
Excess tax benefit from equity incentive plan activity
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,610
|
|
|
—
|
|
|
—
|
|
|
15,610
|
|
|||||||
Special dividend
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(357,520
|
)
|
|
—
|
|
|
(357,520
|
)
|
|||||||
Balance at December 31, 2013
|
5,391,441
|
|
|
59,059
|
|
|
4,124,986
|
|
|
63,819
|
|
|
15,259,540
|
|
|
74,160
|
|
|
(467,209
|
)
|
|
(191
|
)
|
|
(393,240
|
)
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,497
|
|
|
—
|
|
|
15,497
|
|
|||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(123
|
)
|
|
(123
|
)
|
|||||||
Issuance of common stock from vested restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,250
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Issuance of common stock for employee stock purchase plan
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
249,494
|
|
|
3,393
|
|
|
—
|
|
|
—
|
|
|
3,393
|
|
|||||||
Conversion of preferred stock
|
(5,391,441
|
)
|
|
(59,059
|
)
|
|
(4,124,986
|
)
|
|
(63,819
|
)
|
|
38,065,708
|
|
|
122,878
|
|
|
—
|
|
|
—
|
|
|
122,878
|
|
|||||||
Issuance of common stock from exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,712,278
|
|
|
2,193
|
|
|
—
|
|
|
—
|
|
|
2,193
|
|
|||||||
Issuance of common stock, net of initial public offering cost
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,091,074
|
|
|
217,796
|
|
|
|
|
|
|
217,796
|
|
|||||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,660
|
|
|
—
|
|
|
—
|
|
|
10,660
|
|
|||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(490,419
|
)
|
|
—
|
|
|
(15,009
|
)
|
|
—
|
|
|
(15,009
|
)
|
|||||||
Awards effectively repurchased for required employee withholding taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(80,599
|
)
|
|
—
|
|
|
(1,431
|
)
|
|
—
|
|
|
(1,431
|
)
|
|||||||
Excess tax benefit from equity incentive plan activity
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,663
|
|
|
—
|
|
|
—
|
|
|
9,663
|
|
|||||||
Realized tax benefit of deductible IPO transaction costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,939
|
|
|
—
|
|
|
—
|
|
|
1,939
|
|
|||||||
Special dividend
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
25
|
|
|||||||
Balance at December 31, 2014
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69,811,326
|
|
|
442,682
|
|
|
(468,127
|
)
|
|
(314
|
)
|
|
(25,759
|
)
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,695
|
|
|
—
|
|
|
31,695
|
|
|||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(407
|
)
|
|
(407
|
)
|
|||||||
Issuance of common stock from vested restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
106,136
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Issuance of common stock for employee stock purchase plan
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
272,836
|
|
|
5,315
|
|
|
—
|
|
|
—
|
|
|
5,315
|
|
|||||||
Issuance of common stock from exercise of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,112,131
|
|
|
7,166
|
|
|
—
|
|
|
—
|
|
|
7,166
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,742
|
|
|
—
|
|
|
—
|
|
|
17,742
|
|
|||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,895,625
|
)
|
|
—
|
|
|
(48,364
|
)
|
|
—
|
|
|
(48,364
|
)
|
|||||||
Awards effectively repurchased for required employee withholding taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35,379
|
)
|
|
—
|
|
|
(799
|
)
|
|
—
|
|
|
(799
|
)
|
|||||||
Excess tax benefit from equity incentive plan activity
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,670
|
|
|
—
|
|
|
—
|
|
|
20,670
|
|
|||||||
Realized tax benefit of deductible IPO transaction costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
822
|
|
|
—
|
|
|
—
|
|
|
822
|
|
|||||||
Balance at December 31, 2015
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
70,371,425
|
|
|
$
|
494,397
|
|
|
$
|
(485,595
|
)
|
|
$
|
(721
|
)
|
|
$
|
8,081
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
31,695
|
|
|
$
|
15,497
|
|
|
$
|
13,147
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
52,817
|
|
|
84,403
|
|
|
73,838
|
|
|||
Deferred income taxes
|
14,954
|
|
|
43,842
|
|
|
(6,680
|
)
|
|||
Stock-based compensation
|
17,923
|
|
|
10,960
|
|
|
6,113
|
|
|||
Excess tax benefit from equity incentive plan activity
|
(20,670
|
)
|
|
(9,663
|
)
|
|
(15,610
|
)
|
|||
Accretion of workers compensation and leases fair value adjustment
|
(639
|
)
|
|
(1,090
|
)
|
|
(1,427
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Restricted cash and investments
|
(17,991
|
)
|
|
(6,880
|
)
|
|
(6,118
|
)
|
|||
Prepaid expenses and other current assets
|
1,313
|
|
|
(7,389
|
)
|
|
(7,723
|
)
|
|||
Workers compensation receivables
|
3,152
|
|
|
(5,413
|
)
|
|
9,876
|
|
|||
Other assets
|
(14,527
|
)
|
|
8,004
|
|
|
4,052
|
|
|||
Accounts payable
|
287
|
|
|
5,212
|
|
|
976
|
|
|||
Prepaid income taxes
|
24,494
|
|
|
(23,387
|
)
|
|
6,394
|
|
|||
Other current liabilities
|
5,616
|
|
|
7,749
|
|
|
13,186
|
|
|||
Other liabilities
|
31,483
|
|
|
29,822
|
|
|
4,149
|
|
|||
Worksite employee related assets
|
261,750
|
|
|
(862,699
|
)
|
|
(304,265
|
)
|
|||
Worksite employee related liabilities
|
(261,058
|
)
|
|
862,931
|
|
|
310,813
|
|
|||
Net cash provided by operating activities
|
130,599
|
|
|
151,899
|
|
|
100,721
|
|
|||
Investing activities
|
|
|
|
|
|
||||||
Acquisitions of businesses
|
(4,750
|
)
|
|
—
|
|
|
(194,998
|
)
|
|||
Purchase of debt securities
|
(41,939
|
)
|
|
(24,875
|
)
|
|
(7,750
|
)
|
|||
Proceeds from maturity of debt securities
|
27,557
|
|
|
—
|
|
|
1,000
|
|
|||
Purchase of property and equipment
|
(18,557
|
)
|
|
(20,552
|
)
|
|
(10,690
|
)
|
|||
Net cash used in investing activities
|
(37,689
|
)
|
|
(45,427
|
)
|
|
(212,438
|
)
|
|||
Financing activities
|
|
|
|
|
|
||||||
Proceeds from issuance of common stock, net of issuance costs
|
—
|
|
|
217,796
|
|
|
—
|
|
|||
Realized tax benefit of deductible IPO transaction costs
|
822
|
|
|
1,939
|
|
|
—
|
|
|||
Proceeds from issuance of common stock on exercised options
|
7,166
|
|
|
2,193
|
|
|
7,109
|
|
|||
Proceeds from issuance of common stock on employee stock purchase plan
|
5,315
|
|
|
3,393
|
|
|
—
|
|
|||
Excess tax benefit from equity incentive plan activity
|
20,670
|
|
|
9,663
|
|
|
15,610
|
|
|||
Borrowings under notes payable
|
—
|
|
|
—
|
|
|
970,000
|
|
|||
Repayment of notes payable
|
(45,312
|
)
|
|
(273,550
|
)
|
|
(451,679
|
)
|
|||
Payment of debt issuance costs
|
—
|
|
|
(11,060
|
)
|
|
(25,697
|
)
|
|||
Payments of special dividend
|
—
|
|
|
—
|
|
|
(357,582
|
)
|
|||
Repayments under capital leases
|
(250
|
)
|
|
(306
|
)
|
|
(778
|
)
|
|||
Repurchase of common stock
|
(48,364
|
)
|
|
(15,009
|
)
|
|
(5,963
|
)
|
|||
Awards effectively repurchased for required employee withholding taxes
|
(799
|
)
|
|
(1,431
|
)
|
|
(8,643
|
)
|
|||
Net cash provided by (used in) financing activities
|
(60,752
|
)
|
|
(66,372
|
)
|
|
142,377
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(321
|
)
|
|
(115
|
)
|
|
(53
|
)
|
|||
Net increase in cash and cash equivalents
|
31,837
|
|
|
39,985
|
|
|
30,607
|
|
|||
Cash and cash equivalents at beginning of period
|
134,341
|
|
|
94,356
|
|
|
63,749
|
|
|||
Cash and cash equivalents at end of period
|
$
|
166,178
|
|
|
$
|
134,341
|
|
|
$
|
94,356
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
15,224
|
|
|
$
|
32,051
|
|
|
$
|
30,534
|
|
Cash paid for income taxes, net
|
$
|
2,005
|
|
|
$
|
(3,809
|
)
|
|
$
|
8,070
|
|
Supplemental schedule of noncash investing and financing activities
|
|
|
|
|
|
||||||
Payable for purchase of property and equipment
|
$
|
344
|
|
|
$
|
1,290
|
|
|
$
|
1,302
|
|
Allowance for tenant improvements
|
$
|
1,257
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
December 31, 2015
|
|
December 31,
2014 |
||||
Worksite employee-related assets:
|
|
|
|
||||
Restricted cash
|
$
|
92,917
|
|
|
$
|
64,890
|
|
Restricted investments
|
3,819
|
|
|
4,555
|
|
||
Payroll funds collected
|
859,322
|
|
|
1,336,994
|
|
||
Unbilled revenue, net of advance collections of $11,875
and $113,190 at December 31, 2015 and December 31, 2014,
respectively
|
213,837
|
|
|
203,599
|
|
||
Accounts receivable, net of allowance for doubtful accounts of
$1,158 and $388 at December 31, 2015 and December 31, 2014,
respectively
|
5,060
|
|
|
5,193
|
|
||
Prepaid health plan expenses
|
8,088
|
|
|
4,932
|
|
||
Refundable workers compensation premiums
|
2,428
|
|
|
7,975
|
|
||
Prepaid workers compensation expenses
|
744
|
|
|
1,256
|
|
||
Other payroll assets
|
187,171
|
|
|
5,742
|
|
||
Total worksite employee-related assets
|
$
|
1,373,386
|
|
|
$
|
1,635,136
|
|
Worksite employee-related liabilities:
|
|
|
|
|
|||
Unbilled wages accrual
|
$
|
202,396
|
|
|
$
|
292,906
|
|
Payroll taxes payable
|
883,608
|
|
|
1,119,427
|
|
||
Health benefits payable
|
128,028
|
|
|
104,220
|
|
||
Customer prepayments
|
57,758
|
|
|
53,770
|
|
||
Workers compensation payable
|
66,174
|
|
|
36,778
|
|
||
Other payroll deductions
|
31,533
|
|
|
23,454
|
|
||
Total worksite employee-related liabilities
|
$
|
1,369,497
|
|
|
$
|
1,630,555
|
|
|
Year Ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
Programs where assets are held by the Company to cover claims liabilities
|
|
|
|
||||
Liability for unpaid claims and claims adjustment at beginning of period
|
$
|
92,406
|
|
|
$
|
58,610
|
|
|
|
|
|
||||
Incurred related to:
|
|
|
|
||||
Current year
|
88,438
|
|
|
61,669
|
|
||
Prior years
|
4,880
|
|
|
(4,725
|
)
|
||
Total incurred
|
93,318
|
|
|
56,944
|
|
||
Paid related to:
|
|
|
|
||||
Current year
|
(16,076
|
)
|
|
(11,003
|
)
|
||
Prior years
|
(30,453
|
)
|
|
(12,145
|
)
|
||
Total paid
|
(46,529
|
)
|
|
(23,148
|
)
|
||
|
|
|
|
||||
Reclassification from workers compensation receivable
|
5,045
|
|
|
—
|
|
||
Liability for unpaid claims and claims adjustment at end of period
|
$
|
144,240
|
|
|
$
|
92,406
|
|
|
|
|
|
||||
Programs where assets are held by third parties to cover claims liabilities
|
|
|
|
||||
Liability for unpaid claims and claims adjustment at the beginning of period
|
$
|
55,628
|
|
|
$
|
62,129
|
|
Incurred related to:
|
|
|
|
||||
Current year
|
699
|
|
|
1,708
|
|
||
Prior years
|
21,511
|
|
|
20,126
|
|
||
Total incurred
|
22,210
|
|
|
21,834
|
|
||
Paid related to:
|
|
|
|
||||
Current year
|
(300
|
)
|
|
(2,083
|
)
|
||
Prior years
|
(26,631
|
)
|
|
(26,252
|
)
|
||
Total paid
|
(26,931
|
)
|
|
(28,335
|
)
|
||
|
|
|
|
||||
Reclassification to workers compensation liability
|
(5,045
|
)
|
|
—
|
|
||
Liability for unpaid claims and claims adjustment at end of period
|
$
|
45,862
|
|
|
$
|
55,628
|
|
|
|
|
|
||||
Total liability for unpaid claims and claims adjustment at end of period
|
190,102
|
|
|
148,034
|
|
||
|
|
|
|
||||
Assets held by third parties to cover claim liabilities
|
(58,522
|
)
|
|
(95,372
|
)
|
||
Workers compensation premiums and other liabilities
|
9,455
|
|
|
19,820
|
|
||
Other workers compensation assets
|
(1,012
|
)
|
|
(136
|
)
|
||
Total net workers compensation liabilities
|
$
|
140,023
|
|
|
$
|
72,346
|
|
|
|
|
|
||||
Location on Consolidated Balance Sheet:
|
|
|
|
||||
Workers compensation liabilities
|
|
|
|
||||
Current portion included in worksite employee-related liability
|
$
|
66,174
|
|
|
$
|
36,778
|
|
Long term portion
|
105,481
|
|
|
75,448
|
|
||
Total
|
$
|
171,655
|
|
|
$
|
112,226
|
|
|
|
|
|
||||
Workers compensation receivables
|
|
|
|
||||
Current portion included in worksite employee-related asset
|
$
|
2,428
|
|
|
$
|
7,975
|
|
Long term portion
|
29,204
|
|
|
31,905
|
|
Total
|
$
|
31,632
|
|
|
$
|
39,880
|
|
|
December 31,
2015 |
|
December 31,
2014 |
||||
Software
|
$
|
64,727
|
|
|
$
|
53,349
|
|
Office equipment, including data processing equipment
|
20,044
|
|
|
18,550
|
|
||
Leasehold improvements
|
9,874
|
|
|
7,092
|
|
||
Furniture, fixtures, and equipment
|
7,911
|
|
|
6,450
|
|
||
Projects in progress
|
7,407
|
|
|
6,786
|
|
||
|
109,963
|
|
|
92,227
|
|
||
Accumulated depreciation
|
(72,119
|
)
|
|
(59,929
|
)
|
||
Property and equipment, net
|
$
|
37,844
|
|
|
$
|
32,298
|
|
|
December 31, 2015
|
||||||||||||
|
Weighted Average Amortization Period
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
Carrying Amount
|
||||||
Goodwill
|
|
|
$
|
289,207
|
|
|
$
|
—
|
|
|
$
|
289,207
|
|
Amortizable intangibles:
|
|
|
|
|
|
|
|
||||||
Customer contracts
|
5 years
|
|
209,850
|
|
|
(167,968
|
)
|
|
41,882
|
|
|||
Trademark
|
3 years
|
|
16,900
|
|
|
(16,467
|
)
|
|
433
|
|
|||
Developed technology
|
5 years
|
|
5,400
|
|
|
(1,173
|
)
|
|
4,227
|
|
|||
Noncompete agreements
|
3 years
|
|
1,940
|
|
|
(1,710
|
)
|
|
230
|
|
|||
|
5 years
|
|
234,090
|
|
|
(187,318
|
)
|
|
46,772
|
|
|||
Total
|
|
|
$
|
523,297
|
|
|
$
|
(187,318
|
)
|
|
$
|
335,979
|
|
|
December 31, 2014
|
||||||||||||
|
Weighted Average Amortization Period
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
Carrying Amount
|
||||||
Goodwill
|
—
|
|
$
|
288,857
|
|
|
$
|
—
|
|
|
$
|
288,857
|
|
Amortizable intangibles:
|
|
|
|
|
|
|
|
||||||
Customer contracts
|
5 years
|
|
209,850
|
|
|
(134,454
|
)
|
|
75,396
|
|
|||
Trademark
|
3 years
|
|
16,900
|
|
|
(11,761
|
)
|
|
5,139
|
|
|||
Developed technology
|
5 years
|
|
1,000
|
|
|
(533
|
)
|
|
467
|
|
|||
Noncompete agreements
|
3 years
|
|
1,940
|
|
|
(1,224
|
)
|
|
716
|
|
|||
|
5 years
|
|
229,690
|
|
|
(147,972
|
)
|
|
81,718
|
|
|||
Total
|
|
|
$
|
518,547
|
|
|
$
|
(147,972
|
)
|
|
$
|
370,575
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
||||||||
December 31, 2015:
|
|
|
|
|
|
|
|
||||||||
U.S. treasuries
|
$
|
64,226
|
|
|
$
|
9
|
|
|
$
|
(144
|
)
|
|
$
|
64,091
|
|
Mutual funds
|
500
|
|
|
4
|
|
|
—
|
|
|
504
|
|
||||
Total investments
|
$
|
64,726
|
|
|
$
|
13
|
|
|
$
|
(144
|
)
|
|
$
|
64,595
|
|
December 31, 2014:
|
|
|
|
|
|
|
|
||||||||
U.S. treasuries
|
$
|
50,075
|
|
|
$
|
22
|
|
|
$
|
(15
|
)
|
|
$
|
50,082
|
|
Mutual funds
|
500
|
|
|
6
|
|
|
—
|
|
|
506
|
|
||||
Total investments
|
$
|
50,575
|
|
|
$
|
28
|
|
|
$
|
(15
|
)
|
|
$
|
50,588
|
|
•
|
Level I—observable inputs such as quoted prices in active markets
|
•
|
Level II—inputs other than the quoted prices in active markets that are observable either directly or indirectly
|
•
|
Level III—unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions
|
|
Total
Fair Value
|
|
Level I
|
|
Level II
|
|
Level III
|
||||||||
December 31, 2015:
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
$
|
2,319
|
|
|
$
|
2,319
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. treasuries
|
64,091
|
|
|
64,091
|
|
|
—
|
|
|
—
|
|
||||
Mutual funds
|
504
|
|
|
504
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
66,914
|
|
|
$
|
66,914
|
|
|
$
|
—
|
|
|
$
|
—
|
|
December 31, 2014:
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
$
|
2,318
|
|
|
$
|
2,318
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. treasuries
|
50,082
|
|
|
50,082
|
|
|
—
|
|
|
—
|
|
||||
Mutual funds
|
506
|
|
|
506
|
|
|
—
|
|
|
—
|
|
||||
Interest rate cap
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Total
|
$
|
52,907
|
|
|
$
|
52,906
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
December 31,
2015 |
|
December 31,
2014 |
||||
Notes payable under credit facility
|
$
|
499,563
|
|
|
$
|
544,875
|
|
Capital leases
|
153
|
|
|
275
|
|
||
Less current portion
|
(35,326
|
)
|
|
(20,738
|
)
|
||
|
$
|
464,390
|
|
|
$
|
524,412
|
|
Equity Incentive Plan Activity
|
Shares Available for Grant
|
|
Balance at December 31, 2014
|
2,708,524
|
|
Authorized
|
3,141,509
|
|
Granted
|
(1,569,865
|
)
|
Forfeited
|
674,786
|
|
Expired
|
1,250
|
|
Shares withheld for taxes and not issued
|
35,379
|
|
Balance at December 31, 2015
|
4,991,583
|
|
Stock Options Activity
|
Number
of Shares |
|
Weighted
Average Exercise Price |
|
Weighted
Average Remaining Contractual Term |
|
Aggregate
Intrinsic Value (in thousands) |
|||||
Balance at December 31, 2014
|
6,892,810
|
|
|
$
|
6.13
|
|
|
8.22
|
|
$
|
173,338
|
|
Granted
|
312,200
|
|
|
31.66
|
|
|
|
|
|
|||
Exercised
|
(2,112,131
|
)
|
|
3.44
|
|
|
|
|
|
|||
Forfeited
|
(645,480
|
)
|
|
7.84
|
|
|
|
|
|
|||
Expired
|
(1,250
|
)
|
|
10.98
|
|
|
|
|
|
|||
Balance at December 31, 2015
|
4,446,149
|
|
|
$
|
8.96
|
|
|
7.56
|
|
$
|
52,108
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable at December 31, 2015
|
2,100,591
|
|
|
$
|
6.20
|
|
|
7.16
|
|
$
|
28,922
|
|
Vested and expected to vest at December 31, 2015
|
4,257,065
|
|
|
$
|
8.70
|
|
|
7.53
|
|
$
|
50,675
|
|
Restricted Stock Unit Activity
|
Number of Units
|
|
Weighted-Average
Grant Date
Fair Value
|
|||
Nonvested at December 31, 2014
|
7,750
|
|
|
$
|
13.21
|
|
Granted
|
1,084,379
|
|
|
28.73
|
|
|
Vested
|
(106,136
|
)
|
|
32.83
|
|
|
Forfeited
|
(29,306
|
)
|
|
32.70
|
|
|
Nonvested at December 31, 2015
|
956,687
|
|
|
$
|
28.03
|
|
Performance Based Restricted Stock Unit Activity
|
Number of Units
|
|
Weighted-Average
Grant Date Fair Value |
|||
Outstanding units at December 31, 2014
|
—
|
|
|
$
|
—
|
|
Granted
|
173,286
|
|
|
33.51
|
|
|
Units converted
|
—
|
|
|
—
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
Outstanding units at December 31, 2015
|
173,286
|
|
|
$
|
33.51
|
|
ESPP Assumptions
|
Year Ended December 31,
|
||||||
|
2015
|
|
2014
|
|
2013
|
||
Expected term (in years)
|
0.50
|
|
|
0.50
|
|
|
n/a
|
Expected volatility
|
34-76%
|
|
|
33-58%
|
|
|
n/a
|
Risk-free interest rate
|
0.07-0.33%
|
|
|
0.06-0.07%
|
|
|
n/a
|
Expected dividend yield
|
0
|
%
|
|
0
|
%
|
|
n/a
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Cost of providing services
|
$
|
4,244
|
|
|
$
|
2,658
|
|
|
$
|
1,193
|
|
Sales and marketing
|
4,490
|
|
|
2,755
|
|
|
1,284
|
|
|||
General and administrative
|
7,501
|
|
|
4,517
|
|
|
3,220
|
|
|||
Systems development and programming costs
|
1,688
|
|
|
1,030
|
|
|
416
|
|
|||
|
$
|
17,923
|
|
|
$
|
10,960
|
|
|
$
|
6,113
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Numerator (basic)
|
|
|
|
|
|
||||||
Net income
|
$
|
31,695
|
|
|
$
|
15,497
|
|
|
$
|
13,147
|
|
Less net income allocated to participating securities
|
—
|
|
|
(2,224
|
)
|
|
(9,926
|
)
|
|||
Net income attributable to common stock
|
$
|
31,695
|
|
|
$
|
13,273
|
|
|
$
|
3,221
|
|
Denominator (basic)
|
|
|
|
|
|
||||||
Weighted average shares of common stock outstanding
|
70,228
|
|
|
56,161
|
|
|
12,353
|
|
|||
Basic EPS
|
$
|
0.45
|
|
|
$
|
0.24
|
|
|
$
|
0.26
|
|
Numerator (diluted)
|
|
|
|
|
|
||||||
Net income
|
$
|
31,695
|
|
|
$
|
15,497
|
|
|
$
|
13,147
|
|
Less net income allocated to participating securities
|
—
|
|
|
(2,114
|
)
|
|
(9,303
|
)
|
|||
Net income attributable to common stock
|
$
|
31,695
|
|
|
$
|
13,383
|
|
|
$
|
3,844
|
|
Denominator (diluted)
|
|
|
|
|
|
||||||
Weighted average shares of common stock
|
70,228
|
|
|
56,161
|
|
|
12,353
|
|
|||
Dilutive effect of stock options and restricted stock units
|
2,390
|
|
|
3,406
|
|
|
3,379
|
|
|||
Weighted average shares of common stock outstanding
|
72,618
|
|
|
59,567
|
|
|
15,732
|
|
|||
Diluted EPS
|
$
|
0.44
|
|
|
$
|
0.22
|
|
|
$
|
0.24
|
|
|
|
|
|
|
|
||||||
Common stock equivalents excluded from income per diluted
share because of their anti-dilutive effect |
1,004
|
|
|
526
|
|
|
1,389
|
|
|
Year Ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating losses (federal and state)
|
$
|
2,508
|
|
|
$
|
2,996
|
|
Accrued expenses
|
9,908
|
|
|
9,381
|
|
||
Accrued workers compensation costs
|
18,823
|
|
|
13,964
|
|
||
Stock-based compensation
|
4,643
|
|
|
2,508
|
|
||
Tax benefits relating to uncertain positions
|
29
|
|
|
20
|
|
||
Tax credits (federal and state)
|
6,272
|
|
|
9,865
|
|
||
Other
|
113
|
|
|
354
|
|
||
Total
|
42,296
|
|
|
39,088
|
|
||
Valuation allowance
|
(5,276
|
)
|
|
(6,945
|
)
|
||
Total deferred tax assets
|
37,020
|
|
|
32,143
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation and amortization
|
(3,277
|
)
|
|
(10,643
|
)
|
||
Deferred service revenues
|
(85,263
|
)
|
|
(77,827
|
)
|
||
Prepaid health plan expenses
|
(3,121
|
)
|
|
(2,202
|
)
|
||
Total deferred tax liabilities
|
(91,661
|
)
|
|
(90,672
|
)
|
||
Net non-current deferred tax liabilities
|
$
|
(54,641
|
)
|
|
$
|
(58,529
|
)
|
|
Year Ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
Net current deferred tax liabilities
|
$
|
—
|
|
|
$
|
—
|
|
Net non-current deferred tax liabilities
|
(54,641
|
)
|
|
(58,529
|
)
|
||
Net current deferred tax assets
|
—
|
|
|
—
|
|
||
Net non-current deferred tax assets
|
—
|
|
|
—
|
|
||
Net deferred tax liabilities
|
$
|
(54,641
|
)
|
|
$
|
(58,529
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
9,189
|
|
|
$
|
(31,111
|
)
|
|
$
|
11,319
|
|
Foreign
|
378
|
|
|
230
|
|
|
217
|
|
|||
State
|
3,794
|
|
|
4,618
|
|
|
3,081
|
|
|||
|
13,361
|
|
|
(26,263
|
)
|
|
14,617
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
11,528
|
|
|
38,297
|
|
|
(5,659
|
)
|
|||
Foreign
|
(24
|
)
|
|
—
|
|
|
—
|
|
|||
State
|
320
|
|
|
2,951
|
|
|
(1,344
|
)
|
|||
Revaluation due to state legislative changes
|
3,130
|
|
|
2,594
|
|
|
323
|
|
|||
|
14,954
|
|
|
43,842
|
|
|
(6,680
|
)
|
|||
|
$
|
28,315
|
|
|
$
|
17,579
|
|
|
$
|
7,937
|
|
|
Year Ended December 31,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
U.S. federal statutory tax rate
|
35.00
|
%
|
|
35.00
|
%
|
|
35.00
|
%
|
State income taxes, net of federal benefit
|
6.6
|
|
|
3.8
|
|
|
3.8
|
|
Tax rate change
|
5.2
|
|
|
7.8
|
|
|
1.5
|
|
Nondeductible transaction costs
|
—
|
|
|
0.9
|
|
|
—
|
|
Nondeductible meals, entertainment and penalties
|
3.3
|
|
|
4.3
|
|
|
4.1
|
|
Stock-based compensation
|
1.3
|
|
|
4.5
|
|
|
(0.1
|
)
|
Uncertain tax positions
|
0.2
|
|
|
0.8
|
|
|
(2.3
|
)
|
Tax credits
|
(2.2
|
)
|
|
(3.6
|
)
|
|
(4.3
|
)
|
Other
|
(2.2
|
)
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
47.20
|
%
|
|
53.20
|
%
|
|
37.60
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Unrecognized tax benefits at January 1
|
$
|
2,471
|
|
|
$
|
2,300
|
|
|
$
|
2,710
|
|
Additions for tax positions of prior periods
|
—
|
|
|
25
|
|
|
—
|
|
|||
Additions for tax positions of current period
|
167
|
|
|
182
|
|
|
286
|
|
|||
Reductions for tax positions of prior period:
|
|
|
|
|
|
||||||
Settlements with taxing authorities
|
—
|
|
|
—
|
|
|
(406
|
)
|
|||
Lapse of applicable statute of limitations
|
—
|
|
|
—
|
|
|
(290
|
)
|
|||
Adjustments to tax positions
|
(20
|
)
|
|
(36
|
)
|
|
—
|
|
|||
Unrecognized tax benefits at December 31
|
$
|
2,618
|
|
|
$
|
2,471
|
|
|
$
|
2,300
|
|
|
Capital
Leases |
|
Operating Leases
|
||||
Year ending December 31:
|
|
|
|
||||
2016
|
$
|
82
|
|
|
$
|
11,882
|
|
2017
|
80
|
|
|
10,466
|
|
||
2018
|
65
|
|
|
9,606
|
|
||
2019
|
41
|
|
|
8,119
|
|
||
2020
|
—
|
|
|
7,643
|
|
||
Thereafter
|
—
|
|
|
2,607
|
|
||
Minimum lease payments
|
268
|
|
|
$
|
50,323
|
|
|
Less current portion of minimum lease payments
|
(37
|
)
|
|
|
|||
Less interest
|
(115
|
)
|
|
|
|||
Long term portion of capital leases
|
$
|
116
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Beginning balance
|
$
|
644
|
|
|
$
|
1,374
|
|
|
$
|
2,200
|
|
Provision
|
—
|
|
|
—
|
|
|
—
|
|
|||
Change in estimate
|
—
|
|
|
—
|
|
|
—
|
|
|||
Payments
|
(644
|
)
|
|
(730
|
)
|
|
(826
|
)
|
|||
Ending Balance
|
$
|
—
|
|
|
$
|
644
|
|
|
$
|
1,374
|
|
|
Quarter ended
|
||||||||||||||
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
2015
|
|
|
|
|
|
|
|
||||||||
Total revenues
|
$
|
625,578
|
|
|
$
|
640,007
|
|
|
$
|
668,008
|
|
|
$
|
725,695
|
|
Insurance costs
|
$
|
483,203
|
|
|
$
|
517,994
|
|
|
$
|
534,481
|
|
|
$
|
576,698
|
|
Operating income
|
$
|
31,041
|
|
|
$
|
5,985
|
|
|
$
|
11,682
|
|
|
$
|
29,609
|
|
Net income (loss)
|
$
|
15,811
|
|
|
$
|
(1,308
|
)
|
|
$
|
3,097
|
|
|
$
|
14,095
|
|
Basic net income (loss) per share
|
$
|
0.23
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.04
|
|
|
$
|
0.20
|
|
Diluted net income (loss) per share
|
$
|
0.22
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.04
|
|
|
$
|
0.20
|
|
2014
|
|
|
|
|
|
|
|
||||||||
Total revenues
|
$
|
508,912
|
|
|
$
|
525,006
|
|
|
$
|
555,951
|
|
|
$
|
603,662
|
|
Insurance costs
|
$
|
381,157
|
|
|
$
|
400,195
|
|
|
$
|
428,184
|
|
|
$
|
476,779
|
|
Operating income
|
$
|
25,277
|
|
|
$
|
20,029
|
|
|
$
|
21,246
|
|
|
$
|
20,239
|
|
Net income
|
$
|
1,540
|
|
|
$
|
6,221
|
|
|
$
|
725
|
|
(1)
|
$
|
7,011
|
|
Basic net income per share
|
$
|
0.03
|
|
|
$
|
0.09
|
|
|
$
|
0.01
|
|
|
$
|
0.10
|
|
Diluted net income per share
|
$
|
0.03
|
|
|
$
|
0.09
|
|
|
$
|
0.01
|
|
|
$
|
0.10
|
|
•
|
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with appropriate authorizations; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.
|
•
|
Computer Operations
|
•
|
Access Controls
|
•
|
Change Management
|
•
|
Ineffective information technology (IT) general controls
|
•
|
Ineffective control environment and risk assessment
|
•
|
Ineffective management review controls and controls over system-generated reports
|
•
|
Ineffective controls over payroll operations
|
•
|
Ineffective controls over health and workers compensation liabilities and related expenses
|
•
|
Ineffective controls over validating accuracy of payroll tax liabilities
|
•
|
Ineffective authorization controls over procurement processes
|
•
|
designing, adopting or implementing IT governance policies, procedures and general controls across all technology platforms;
|
•
|
improving the design and operation of control activities and procedures associated with monitoring of batch processing and system interfaces to ensure the completeness and accuracy of data movement;
|
•
|
establishing a more comprehensive review and approval process for authorizing user access to IT systems , including both preventive and detective control activities;
|
•
|
improving the design and operation of program change management control activities such as change management control setting configurations across the affected IT systems, including tracking of access and history of change; and
|
•
|
augmenting and hiring additional IT resources and professionals.
|
•
|
defining and assessing the control deficiency for each of the material weaknesses to ensure a thorough understanding of the “as-is” state, identify relevant process owners, and define and address gaps in the control deficiency;
|
•
|
designing and evaluating a remediation plan for each of the material weaknesses to validate or improve the related policy and procedures, assess and improve skills of the process owners with regards to the policy and make necessary adjustments as required;
|
•
|
implementing the remediation plan for each of the material weaknesses and training process owners, evaluating process adoption and monitoring results;
|
•
|
testing and measuring the design and effectiveness of the remediation plan, and the updated controls;
|
•
|
management review and acceptance of the remediation effort; and
|
•
|
augmenting and hiring additional accounting, actuarial, finance and internal audit resources and professionals.
|
|
|
Balance at
|
|
Credited/
|
|
|
|
Charges
|
|
Balance at
|
||||||||||
|
|
Beginning of
|
|
Charged to
|
|
Balance
|
|
Utilized/
|
|
End of
|
||||||||||
(in thousands)
|
|
Period
|
|
Net Income
|
|
Acquired
|
|
Write-Offs
|
|
Period
|
||||||||||
Allowances for Doubtful Accounts and Authorized Credits
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year ended December 31, 2015
|
|
$
|
388
|
|
|
$
|
2,085
|
|
|
$
|
—
|
|
|
$
|
(1,315
|
)
|
|
$
|
1,158
|
|
Year ended December 31, 2014
|
|
$
|
865
|
|
|
$
|
947
|
|
|
$
|
—
|
|
|
$
|
(1,424
|
)
|
|
$
|
388
|
|
Year ended December 31, 2013
|
|
$
|
819
|
|
|
$
|
839
|
|
|
$
|
—
|
|
|
$
|
(793
|
)
|
|
$
|
865
|
|
Tax Valuation Allowance
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year ended December 31, 2015
|
|
$
|
6,945
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,669
|
)
|
|
$
|
5,276
|
|
Year ended December 31, 2014
|
|
$
|
5,194
|
|
|
$
|
1,751
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,945
|
|
Year ended December 31, 2013
|
|
$
|
1,547
|
|
|
$
|
2,451
|
|
|
$
|
1,196
|
|
|
$
|
—
|
|
|
$
|
5,194
|
|
|
TRINET GROUP, INC.
|
||
|
|
||
Date: March 31, 2016
|
|
By:
|
/s/ Burton M. Goldfield
|
|
|
|
Burton M. Goldfield
|
|
|
|
Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ B
URTON
M. G
OLDFIELD
|
|
Chief Executive Officer (
principal executive officer
)
|
|
March 31, 2016
|
Burton M. Goldfield
|
|
|
||
|
|
|
|
|
/s/ W
ILLIAM
P
ORTER
|
|
Chief Financial Officer
(principal financial and accounting officer)
|
|
March 31, 2016
|
William Porter
|
|
|
||
|
|
|
|
|
/s/ Katherine August-deWilde
|
|
Director
|
|
March 31, 2016
|
Katherine August-deWilde
|
|
|
||
|
|
|
|
|
/s/ Martin Babinec
|
|
Director
|
|
March 31, 2016
|
Martin Babinec
|
|
|
||
|
|
|
|
|
/s/ H. Raymond Bingham
|
|
Director
|
|
March 31, 2016
|
H. Raymond Bingham
|
|
|
||
|
|
|
|
|
/s/ Paul Chamberlain
|
|
Director
|
|
March 31, 2016
|
Paul Chamberlain
|
|
|
||
|
|
|
|
|
/s/ Kenneth Goldman
|
|
Director
|
|
March 31, 2016
|
Kenneth Goldman
|
|
|
||
|
|
|
|
|
/s/ David C. Hodgson
|
|
Director
|
|
March 31, 2016
|
David C. Hodgson
|
|
|
||
|
|
|
|
|
/s/ John H. Kispert
|
|
Director
|
|
March 31, 2016
|
John H. Kispert
|
|
|
||
|
|
|
|
|
/s/ Wayne B. Lowell
|
|
Director
|
|
March 31, 2016
|
Wayne B. Lowell
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit
No.
|
|
Description of Exhibit
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|||||||
2.1
|
|
Equity Purchase Agreement by and among TriNet Group, Inc., Ambrose Employer Group, LLC and Gregory Slamowitz, John Iorillo and Marc Dwek, dated July 1, 2013.
|
|
S-1
|
|
333-192465
|
|
2.1
|
|
|
11/21/2013
|
|
|
|
|
|
|
|
|
|
|||||||
2.2
|
|
Agreement and Plan of Merger by and among TriNet Group, Inc., Champ Acquisition Corporation, SOI Holdings, Inc. and SOI Stockholder Representative, LLC, dated August 24, 2012.
|
|
S-1
|
|
333-192465
|
|
2.2
|
|
|
11/21/2013
|
|
|
|
|
|
|
|
|
|
|||||||
3.1
|
|
Amended and Restated Certificate of Incorporation of TriNet Group, Inc.
|
|
8-K
|
|
001-36373
|
|
3.1
|
|
|
4/1/2014
|
|
|
|
|
|
|
|
|
|
|||||||
3.2
|
|
Amended and Restated Bylaws of TriNet Group, Inc.
|
|
S-1/A
|
|
333-192465
|
|
3.4
|
|
|
3/4/2014
|
|
|
|
|
|
|
|
|
|
|||||||
4.1
|
|
Amended and Restated Registration Rights Agreement, by and among TriNet Group, Inc., GA TriNet LLC and HR Acquisitions, LLC, dated June 1, 2009.
|
|
S-1
|
|
333-192465
|
|
4.2
|
|
|
11/21/2013
|
|
|
|
|
|
|
|
|
|
|||||||
10.1*
|
|
Amended and Restated 2000 Equity Incentive Plan.
|
|
S-1
|
|
333-192465
|
|
10.1
|
|
|
11/21/2013
|
|
|
|
|
|
|
|
|
|
|||||||
10.2*
|
|
Forms of Option Agreement and Option Grant Notice under the Amended and Restated 2000 Equity Incentive Plan.
|
|
S-1
|
|
333-192465
|
|
10.2
|
|
|
11/21/2013
|
|
|
|
|
|
|
|
|
|
|||||||
10.3*
|
|
Amended and Restated 2009 Equity Incentive Plan.
|
|
S-1/A
|
|
333-192465
|
|
10.3
|
|
|
3/14/2014
|
|
|
|
|
|
|
|
|
|
|||||||
10.4*
|
|
Form of Performance-Based Restricted Stock Unit Award Agreement and Performance-Based Restricted Stock Unit Grant Notice under the Amended and Restated 2009 Equity Incentive Plan.
|
|
10-Q
|
|
001-36373
|
|
10.X
|
|
|
5/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5*
|
|
Form of Option Agreement and Option Grant Notice under the Amended and Restated 2009 Equity Incentive Plan.
|
|
S-1/A
|
|
333-192465
|
|
10.4
|
|
|
3/4/2014
|
|
|
|
|
|
|
|
|
|
|||||||
10.6*
|
|
Form of Restricted Stock Unit Agreement and Restricted Stock Unit Award Notice under the Amended and Restated 2009 Equity Incentive Plan.
|
|
S-1/A
|
|
333-192465
|
|
10.6
|
|
|
3/4/2014
|
|
|
|
|
|
|
|
|
|
|||||||
10.7*
|
|
2014 Employee Stock Purchase Plan.
|
|
S-1/A
|
|
333-192465
|
|
10.7
|
|
|
3/14/2014
|
|
|
|
|
|
|
|
|
|
|||||||
10.8*
|
|
2015 Executive Bonus Plan.
|
|
8-K
|
|
001-36373
|
|
N/A
|
|
|
3/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9*
|
|
Amended and Restated Non-Employee Director Compensation Policy.
|
|
DEF 14A
|
|
001-36373
|
|
N/A
|
|
|
4/2/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.10*
|
|
Severance Benefit Plan.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.11*
|
|
Form of Indemnification Agreement made by and between TriNet Group, Inc. and each of its directors and executive officers.
|
|
S-1/A
|
|
333-192465
|
|
10.8
|
|
|
3/4/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12*
|
|
Employment Agreement, dated November 9, 2009, between Burton M. Goldfield and TriNet Group, Inc.
|
|
S-1/A
|
|
333-192465
|
|
10.9
|
|
|
2/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.13*
|
|
Letter Agreement, dated June 22, 2015, between Gregory Hammond and TriNet Group, Inc.
|
|
10-Q
|
|
001-36373
|
|
10.1
|
|
|
8/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRINET GROUP, INC.
Signature:
Printed Name:
Title:
PARTICIPANT
Signature:
Printed Name:
|
|
PARTICIPANT
Signature:
Printed Name:
|
|
PARTICIPANT
Signature:
Printed Name:
|
|
PARTICIPANT
Signature:
Printed Name:
|
Company Name
|
|
DBA/AKA
|
|
Incorporation
Jurisdiction
|
TriNet Group, Inc.
|
|
TriNet
|
|
Delaware
|
TriNet HR Corporation
|
|
TriNet
|
|
California
|
TriNet HR II, Inc.
|
|
TriNet
|
|
Delaware
|
TriNet HR V, Inc.
|
|
TriNet
|
|
Delaware
|
TriNet Employer Group Canada, Inc.
|
|
TriNet
|
|
Ontario
|
TriNet Insurance Services, Inc.
|
|
|
|
California
|
TriNet Employee Benefit Insurance Trust
|
|
|
|
a Grantor Trust
|
Archimedes Risk Solutions, Ltd.
|
|
|
|
Bermuda
|
Gevity Insurance Agency, Inc.
|
|
|
|
Delaware
|
App7, Inc.
|
|
ExpenseCloud
|
|
Delaware
|
210 Park Avenue Holding, Inc.
|
|
|
|
Oklahoma
|
Accord Human Resources, Inc.
|
|
Accord
|
|
Oklahoma
|
Accord Human Resources 2, Inc.
|
|
Accord Human Resources of Florida II, Inc.
|
|
Florida
|
Accord Human Resources 8, Inc.
|
|
Accord Human Resources of Georgia, Inc.
|
|
Oklahoma
|
Accord Human Resources 10, Inc.
|
|
|
|
Florida
|
Accord Human Resources 11, Inc.
|
|
Accord Human Resources of California, Inc.
|
|
California
|
Accord Human Resources 12, Inc.
|
|
Accord Human Resources of Florida, Inc.
|
|
Florida
|
Accord Human Resources 13, Inc.
|
|
Accord Human Resources of New York II, Inc.
|
|
New York
|
Accord Human Resources 14, Inc.
|
|
Accord Human Resources of New York, Inc.
|
|
New York
|
Accord Human Resources 15, Inc.
|
|
Accord Human Resources of California II, Inc.
|
|
California
|
Accord Human Resources 16, Inc.
|
|
Accord Human Resources of Texas, Inc.
|
|
Texas
|
Accord Human Resources 17, Inc.
|
|
Accord Human Resources of Colorado, Inc.
|
|
Colorado
|
Accord Human Resources 18, Inc.
|
|
Accord Human Resources of New York III, Inc.
|
|
New York
|
Accord Human Resources 19, Inc.
|
|
Accord Personnel Services, Inc.
|
|
Florida
|
Accord Human Resources 20, Inc.
|
|
CEO, Inc.
|
|
Indiana
|
Accord Technology, LLC
|
|
|
|
Oklahoma
|
Mosaic By Accord, LLC
|
|
|
|
Oklahoma
|
SOI Holdings, Inc.
|
|
|
|
Delaware
|
Strategic Outsourcing, Inc.
|
|
SOI
|
|
Delaware
|
SOI, Inc.
|
|
|
|
Delaware
|
Amlease Corporation
|
|
|
|
Delaware
|
Summit Services, Inc.
|
|
|
|
New Jersey
|
Company Name
|
|
DBA/AKA
|
|
Incorporation
Jurisdiction
|
Summit Services of Georgia, Inc.
|
|
|
Georgia
|
|
Amlease of PA, Inc.
|
|
|
Pennsylvania
|
|
SOI-17 of TN, Inc.
|
|
|
Tennessee
|
|
SOI-23 of FL, Inc.
|
|
|
Florida
|
|
Real Solutions, Inc.
|
|
|
Arizona
|
|
SOI-27 of CA, Inc.
|
|
|
California
|
|
SOI-28 of TX, Inc.
|
|
|
Texas
|
|
SOI-29 of AR, Inc.
|
|
|
Arkansas
|
|
SOI-31 of AR, Inc.
|
|
|
Arkansas
|
|
ALSUB-36, Inc.
|
|
|
Alabama
|
|
Strategic Outsourced HR, Inc.
|
|
|
Indiana
|
|
Star Outsourcing, Inc.
|
|
|
Arizona
|
|
AZSUB-51, Inc.
|
|
|
Arizona
|
|
NYSUB-54, Inc.
|
|
|
New York
|
|
NYSUB-55, Inc.
|
|
|
New York
|
|
SOI-59 of TX, Inc.
|
|
|
Texas
|
|
FLSUB-62, Inc.
|
|
|
Florida
|
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TXSUB-64, Inc.
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Texas
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Route 66 HR Outsourcing, Inc.
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California
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Mayberry HR Outsourcing, Inc.
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North Carolina
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Rocky Top HR Outsourcing, Inc.
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Tennessee
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HR Complete, Inc.
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Delaware
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ASOI, Inc.
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Delaware
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Affiliated Risk Management, Inc.
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North Carolina
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Ambrose Employer Group, LLC
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Ambrose
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New York
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Ambrose Advisory Services, LLC
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New York
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(a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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(a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Burton M. Goldfield
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Burton M. Goldfield
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President and Chief Executive Officer
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(a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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(a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ William Porter
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William Porter
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Chief Financial Officer
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(1)
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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March 31, 2016
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/s/ Burton M. Goldfield
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Burton M. Goldfield
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Chief Executive Officer
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/s/ William Porter
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Date:
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March 31, 2016
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William Porter
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Chief Financial Officer
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