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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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Emerging growth company
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o
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Form 10-Q
Cross Reference
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Page
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Part I, Item 1.
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Part I, Item 2.
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Part I, Item 3.
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Part I, Item 4.
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Part II, Item 1.
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Part II, Item 1A.
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Part II, Item 2.
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Part II, Item 3.
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Part II, Item 4.
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Part II, Item 5.
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Part II, Item 6.
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FORWARD LOOKING STATEMENTS AND OTHER FINANCIAL INFORMATION
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MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
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|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
served over
14,000
clients, co-employed
Average WSEs
of
324,000
, consistent when compared to the same period in 2016, and
|
•
|
processed approximately
$8.0 billion
in payroll and payroll tax payments for our clients, an increase of
2%
over the same period in
2016
.
|
•
|
Total revenues
increased
7%
to
$800.5 million
, due to increased insurance service revenues from higher health coverage participation by our WSEs combined with insurance services price increases, while
Net Service Revenues
increased
35%
to
$201.0 million
primarily due to the insurance service revenues increases noted above.
|
•
|
Operating income
increased
116%
to
$56.8 million
primarily due to improvement in our insurance service revenues, partially offset by an
increase
in other operating expenses incurred to support our growth.
|
•
|
Net income
increased
225%
to
$40.0 million
, or
$0.56
per diluted share,
Adjusted Net Income
increased
88%
to
$36.7 million
and
Adjusted EBITDA
increased
70%
to
$72.4 million
primarily due to increased operating income as described above.
|
•
|
co-employed
Average WSEs
of
326,000
, a
2%
increase over the same period in 2016,
|
•
|
processed approximately $
17.8 billion
in payroll and payroll tax payments for our clients, an increase of
3%
over the same period in
2016
, and
|
•
|
increased
Cash and cash equivalents
$49.9 million
, or
27%
, to
$233.9 million
.
|
•
|
Total revenues
increased
9%
to $
1.6 billion
, while
Net Service Revenues
increased
28%
to
$400.0 million
primarily due to higher health coverage participation by our WSEs and insurance services price increases as well as a
2%
increase in
Average WSEs
.
Net Service Revenues
also benefited from slower growth in insurance costs as compared to growth in insurance service revenues primarily due to reductions in related premium and claim costs.
|
•
|
Operating income
increased
103%
to $
106.3 million
primarily due to increases in insurance service revenues and moderated growth in insurance costs described above, partially offset by an
increase
in other operating expenses to support our growth.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
Net income
increased
188%
to
$68.7 million
, or
$0.97
per diluted share,
Adjusted Net Income
increased
75%
to
$68.3 million
and
Adjusted EBITDA
increased
60%
to
$135.7 million
primarily due to increased operating income.
|
•
|
Cash provided by operating activities
increased
138%
to
$104.1 million
as a result of increased operating income, reductions in payment of our workers' compensation collateral held by insurance carriers and reduction in cash taxes paid.
|
|
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|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
Percent Change
|
|||||||||||||||
(in thousands,
except per share and operating metrics data)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Q2 2017 vs. 2016
|
YTD 2017 vs. 2016
|
||||||||||
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total revenues
|
$
|
800,541
|
|
|
$
|
745,846
|
|
|
$
|
1,608,151
|
|
|
$
|
1,478,785
|
|
|
7
|
%
|
9
|
%
|
Operating income
|
56,835
|
|
|
26,367
|
|
|
106,322
|
|
|
52,269
|
|
|
116
|
|
103
|
|
||||
Net income
|
39,951
|
|
|
12,282
|
|
|
68,688
|
|
|
23,859
|
|
|
225
|
|
188
|
|
||||
Diluted net income per share of common stock
|
0.56
|
|
|
0.17
|
|
|
0.97
|
|
|
0.33
|
|
|
229
|
|
194
|
|
||||
Non-GAAP measures
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net Service Revenues
(1)
|
201,006
|
|
|
149,173
|
|
|
399,974
|
|
|
312,423
|
|
|
35
|
|
28
|
|
||||
Net Insurance Service Revenues
(1)
|
92,364
|
|
|
39,580
|
|
|
171,211
|
|
|
90,427
|
|
|
133
|
|
89
|
|
||||
Adjusted EBITDA
(1)
|
72,372
|
|
|
42,602
|
|
|
135,715
|
|
|
84,755
|
|
|
70
|
|
60
|
|
||||
Adjusted Net Income
(1)
|
36,691
|
|
|
19,466
|
|
|
68,268
|
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38,999
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|
|
88
|
|
75
|
|
||||
|
|
|
|
|
|
|
|
|
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|
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|
||||||||
Operating Metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total WSEs payroll and payroll taxes processed (in millions)
|
$
|
7,958
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$
|
7,811
|
|
|
$
|
17,774
|
|
|
$
|
17,213
|
|
|
2
|
%
|
3
|
%
|
Average WSEs
|
324,194
|
|
|
322,881
|
|
|
325,999
|
|
|
321,152
|
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—
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|
2
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(1)
|
Refer to Non-GAAP Financial Measures section below for definitions and reconciliations from GAAP measures.
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Six Months Ended
June 30,
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Percent
|
|||||||
(in thousands, except operating metrics data)
|
2017
|
|
2016
|
|
Change
|
|||||
Operating Metrics:
|
|
|
|
|
|
|
||||
Total WSEs at period end
|
329,095
|
|
|
325,466
|
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|
1
|
%
|
||
Cash Flow Data:
|
|
|
|
|
|
|
||||
Net cash provided by operating activities
|
$
|
104,113
|
|
|
$
|
43,667
|
|
|
138
|
|
Net cash used in investing activities
|
(9,256
|
)
|
|
(6,975
|
)
|
|
33
|
|
||
Net cash used in financing activities
|
(45,141
|
)
|
|
(36,230
|
)
|
|
25
|
|
(in thousands)
|
June 30,
2017 |
|
December 31,
2016 |
|
Percent
Change
|
|
|||||
Balance Sheet Data:
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
233,883
|
|
|
$
|
184,004
|
|
|
27
|
|
%
|
Working capital
|
168,681
|
|
|
156,771
|
|
|
8
|
|
|
||
Total assets
|
1,758,695
|
|
|
2,095,143
|
|
|
(16
|
)
|
|
||
Notes and capital leases payable
|
440,805
|
|
|
459,054
|
|
|
(4
|
)
|
|
||
Total liabilities
|
1,667,182
|
|
|
2,060,553
|
|
|
(19
|
)
|
|
||
Total stockholders’ equity
|
91,513
|
|
|
34,590
|
|
|
165
|
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
Non-GAAP Measure
|
Definition
|
How We Use The Measure
|
Net Service Revenues
|
• Sum of professional service revenues and Net Insurance Service Revenues, or total revenues less insurance costs.
|
• Provides a comparable basis of revenues on a net basis. Professional service revenues are represented net of client payroll costs whereas insurance service revenues are presented gross of insurance costs for financial reporting purposes.
• Acts as the basis to allocate resources to different functions and evaluates the effectiveness of our business strategies by each business function.
• Provides a measure, among others, used in the determination of incentive compensation for management.
|
Net Insurance Service Revenues
|
• Insurance revenues less insurance costs.
|
• Is a component of Net Service Revenues.
• Provides a comparable basis of revenues on a net basis. Professional service revenues are represented net of client payroll costs whereas insurance service revenues are presented gross of insurance costs for financial reporting purposes. Promotes an understanding of our insurance services business by evaluating insurance service revenues net of our WSE related costs which are substantially pass-through for the benefit of our WSEs. Under GAAP, insurance service revenues and costs are recorded gross as we have latitude in establishing the price, service and supplier specifications.
|
Adjusted EBITDA
|
• Net income, excluding the effects of:
- income tax provision,
- interest expense,
- depreciation,
- amortization of intangible assets, and
- stock-based compensation expense.
|
• Provides period-to-period comparisons on a consistent basis and an understanding as to how our management evaluates the effectiveness of our business strategies by excluding certain non-cash charges such as depreciation and amortization, and stock-based compensation recognized based on the estimated fair values. We believe these charges are not directly resulting from our core operations or indicative of our ongoing operations.
• Enhances comparisons to prior periods and, accordingly, facilitates the development of future projections and earnings growth prospects.
• Provides a measure, among others, used in the determination of incentive compensation for management.
|
Adjusted Net Income
|
• Net income, excluding the effects of:
- effective income tax rate
(1)
,
- stock-based compensation,
- amortization of intangible assets,
- non-cash interest expense
(2)
, and
- the income tax effect (at our effective tax rate
(1)
) of these pre-tax adjustments.
|
• Provides information to our stockholders and board of directors to understand how our management evaluates our business, to monitor and evaluate our operating results, and analyze profitability of our ongoing operations and trends on a consistent basis by excluding certain non-cash charges.
|
(1)
|
We have adjusted the non-GAAP effective tax rate to
40.5%
for 2017 from
42.5%
for 2016 due to a decrease in state income taxes from an increase in excludable income for state income tax purposes. These non-GAAP effective tax rates exclude the income tax impact from stock-based compensation and changes in uncertain tax positions.
|
(2)
|
Non-cash interest expense represents amortization and write-off of our debt issuance costs.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30,
|
||||||||||
(in thousands)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Total revenues
|
$
|
800,541
|
|
$
|
745,846
|
|
|
$
|
1,608,151
|
|
$
|
1,478,785
|
|
Less: Insurance costs
|
599,535
|
|
596,673
|
|
|
1,208,177
|
|
1,166,362
|
|
||||
Net Service Revenues
|
$
|
201,006
|
|
$
|
149,173
|
|
|
$
|
399,974
|
|
$
|
312,423
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||
(in thousands)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Insurance service revenues
|
$
|
691,899
|
|
$
|
636,253
|
|
|
$
|
1,379,388
|
|
$
|
1,256,789
|
|
Less: Insurance costs
|
599,535
|
|
596,673
|
|
|
1,208,177
|
|
1,166,362
|
|
||||
Net Insurance Service Revenues
|
$
|
92,364
|
|
$
|
39,580
|
|
|
$
|
171,211
|
|
$
|
90,427
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||
(in thousands)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Net income
|
$
|
39,951
|
|
$
|
12,282
|
|
|
$
|
68,688
|
|
$
|
23,859
|
|
Provision for income taxes
|
12,298
|
|
9,210
|
|
|
28,451
|
|
18,451
|
|
||||
Stock-based compensation
|
7,499
|
|
6,508
|
|
|
13,706
|
|
13,905
|
|
||||
Interest expense and bank fees
|
4,857
|
|
5,038
|
|
|
9,605
|
|
10,080
|
|
||||
Depreciation
|
6,451
|
|
4,559
|
|
|
12,599
|
|
8,475
|
|
||||
Amortization of intangible assets
|
1,316
|
|
5,005
|
|
|
2,666
|
|
9,985
|
|
||||
Adjusted EBITDA
|
$
|
72,372
|
|
$
|
42,602
|
|
|
$
|
135,715
|
|
$
|
84,755
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||
(in thousands)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Net income
|
$
|
39,951
|
|
$
|
12,282
|
|
|
$
|
68,688
|
|
$
|
23,859
|
|
Effective income tax rate adjustment
|
(8,863
|
)
|
76
|
|
|
(10,890
|
)
|
469
|
|
||||
Stock-based compensation
|
7,499
|
|
6,508
|
|
|
13,706
|
|
13,905
|
|
||||
Amortization of intangible assets
|
1,316
|
|
5,005
|
|
|
2,666
|
|
9,985
|
|
||||
Non-cash interest expense
|
602
|
|
849
|
|
|
1,224
|
|
1,624
|
|
||||
Income tax impact of pre-tax adjustments
|
(3,814
|
)
|
(5,254
|
)
|
|
(7,126
|
)
|
(10,843
|
)
|
||||
Adjusted Net Income
|
$
|
36,691
|
|
$
|
19,466
|
|
|
$
|
68,268
|
|
$
|
38,999
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
Insurance service revenues grew
9%
over the same quarter in
2016
to
$691.9 million
.
|
•
|
Professional service revenues decreased
1%
over the same quarter in
2016
to
$108.6 million
.
|
•
|
Insurance service revenues grew
10%
over the same period in
2016
to $
1.4 billion
.
|
•
|
Professional service revenues increased
3%
over the same period in
2016
to
$228.8 million
.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
Compensation costs for our corporate employees including payroll, payroll taxes, stock-based compensation, bonuses, commissions and other payroll and benefits related costs,
increased
$10.6 million
or
13%
primarily due to increased headcount related to investments in client service and technology functions to support product delivery and platform integration.
|
•
|
Consulting expenses
increased
$4.8 million
and included costs associated with enhancing our product offerings as well as payroll tax compliance initiatives.
|
•
|
Accounting and other professional fees
increased
$4.8 million
in the
second
quarter of
2017
primarily as a result of increased professional fees to support our internal control remediation efforts.
|
•
|
Total compensation costs
increased
$15.1 million
, or
9%
, and consulting expenses
increased
$8.8 million
primarily due to the factors described above.
|
•
|
Accounting and other professional fees
increased
$2.6 million
primarily as a result of the timing of professional fees to support our internal control remediation efforts.
|
•
|
Other expenses
increased
$10.2 million
primarily due to additional compliance costs and external sales costs.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
a decrease of
12.0%
, or
$6.5 million
, attributable to tax benefits recognized from the adoption of Accounting Standards Update 2016-09 - Stock Compensation (ASU 2016-09) additionally described in Note 1 of our condensed consolidated financial statements and related notes,
|
•
|
a decrease of
4.3%
in state income taxes from an increase in excludable income for state income tax purposes and changes in apportionment and statutory tax rates,
|
•
|
a decrease of
2.3%
in non-deductible expenses due to the abatement of penalties previously assessed by the Internal Revenue Service (IRS), and
|
•
|
a decrease of
0.8%
resulting from an increase in tax credits and decrease in non-deductible stock-based compensation.
|
•
|
a decrease of 10.1%, or $10.1 million, attributable to tax benefits recognized from the adoption of ASU 2016-09,
|
•
|
a decrease of 3.8% in state income taxes from an increase in excludable income for state income tax purposes and changes in apportionment and statutory tax rates,
|
•
|
a decrease of 2.4% resulting from an increase in tax credits and decrease in both non-deductible stock-based compensation and non-deductible expenses, partially offset by a
|
•
|
an increase of 2.0% due to changes in uncertain tax positions where we may not prevail in our position associated with state income tax audits.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
(in thousands)
|
June 30,
2017 |
December 31,
2016 |
||||
Cash and cash equivalents
|
$
|
233,883
|
|
$
|
184,004
|
|
Working capital:
|
|
|
||||
Corporate working capital
|
163,195
|
|
151,295
|
|
||
WSE related assets, net of WSE related liabilities
|
5,486
|
|
5,476
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
Six Months Ended
June 30, |
|||||
(in thousands)
|
2017
|
2016
|
||||
Net cash provided by (used in):
|
|
|
||||
Operating activities
|
$
|
104,113
|
|
$
|
43,667
|
|
Investing activities
|
(9,256
|
)
|
(6,975
|
)
|
||
Financing activities
|
(45,141
|
)
|
(36,230
|
)
|
||
Effect of exchange rates on cash and cash equivalents
|
163
|
|
24
|
|
||
Net increase in cash and cash equivalents
|
$
|
49,879
|
|
$
|
486
|
|
|
Six Months Ended
June 30, |
|||||
(in thousands)
|
2017
|
2016
|
||||
Net income
|
$
|
68,688
|
|
$
|
23,859
|
|
Depreciation and amortization
|
16,496
|
|
17,919
|
|
||
Stock-based compensation expense
|
13,706
|
|
13,905
|
|
||
Payment of interest
|
(8,006
|
)
|
(8,091
|
)
|
||
Income tax (payments) refunds, net
|
169
|
|
(21,374
|
)
|
||
Collateral (paid to) refunded from insurance carriers, net
|
4,729
|
|
(14,053
|
)
|
||
Changes in other operating assets and liabilities
|
8,331
|
|
31,502
|
|
||
Net cash provided by operating activities
|
$
|
104,113
|
|
$
|
43,667
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
Six Months Ended
June 30, |
|||||
(in thousands)
|
2017
|
2016
|
||||
Capital expenditures:
|
|
|
||||
Software and hardware
|
$
|
13,279
|
|
$
|
12,870
|
|
Office furniture, equipment and leasehold improvements
|
7,446
|
|
3,844
|
|
||
Cash used in capital expenditures
|
$
|
20,725
|
|
$
|
16,714
|
|
|
|
|
||||
Investments:
|
|
|
||||
Purchases of restricted investments
|
$
|
—
|
|
$
|
(14,959
|
)
|
Proceeds from maturity of restricted investments
|
11,469
|
|
24,998
|
|
||
Cash provided by investments
|
$
|
11,469
|
|
$
|
10,039
|
|
|
|
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
AND CONTROLS AND PROCEDURES
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
(in thousands, except share and per share data)
|
June 30,
2017 |
December 31,
2016 |
||||
Assets
|
|
|
||||
Current assets:
|
|
|
||||
Cash and cash equivalents
|
$
|
233,883
|
|
$
|
184,004
|
|
Restricted cash and cash equivalents
|
14,589
|
|
14,569
|
|
||
Prepaid income taxes
|
14,716
|
|
42,381
|
|
||
Prepaid expenses
|
13,013
|
|
10,784
|
|
||
Other current assets
|
2,172
|
|
2,145
|
|
||
Worksite employee related assets
|
898,596
|
|
1,281,471
|
|
||
Total current assets
|
1,176,969
|
|
1,535,354
|
|
||
Workers' compensation collateral receivable
|
27,063
|
|
31,883
|
|
||
Restricted cash, cash equivalents and investments
|
150,939
|
|
130,501
|
|
||
Property and equipment, net
|
66,827
|
|
58,622
|
|
||
Goodwill
|
289,207
|
|
289,207
|
|
||
Other intangible assets, net
|
28,408
|
|
31,074
|
|
||
Other assets
|
19,282
|
|
18,502
|
|
||
Total assets
|
$
|
1,758,695
|
|
$
|
2,095,143
|
|
Liabilities and stockholders’ equity
|
|
|
|
|||
Current liabilities:
|
|
|
|
|||
Accounts payable
|
$
|
26,599
|
|
$
|
22,541
|
|
Accrued corporate wages
|
38,196
|
|
30,937
|
|
||
Notes and capital leases payable, net
|
36,648
|
|
36,559
|
|
||
Other current liabilities
|
13,735
|
|
12,551
|
|
||
Worksite employee related liabilities
|
893,110
|
|
1,275,995
|
|
||
Total current liabilities
|
1,008,288
|
|
1,378,583
|
|
||
Notes and capital leases payable, net, noncurrent
|
404,157
|
|
422,495
|
|
||
Workers' compensation loss reserves
(net of collateral paid of $22,911 and $22,377 at June 30, 2017 and December 31, 2016, respectively) |
151,837
|
|
159,301
|
|
||
Deferred income taxes
|
91,828
|
|
92,373
|
|
||
Other liabilities
|
11,072
|
|
7,801
|
|
||
Total liabilities
|
1,667,182
|
|
2,060,553
|
|
||
Commitments and contingencies (see Note 9)
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|||
Preferred stock
($0.000025 par value per share; 20,000,000 shares authorized; no shares issued and outstanding at June 30, 2017 and December 31, 2016) |
—
|
|
—
|
|
||
Common stock and additional paid-in capital
($0.000025 par value per share; 750,000,000 shares authorized; 69,429,088 and 69,015,690 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively) |
557,183
|
|
535,132
|
|
||
Accumulated deficit
|
(465,146
|
)
|
(499,938
|
)
|
||
Accumulated other comprehensive loss
|
(524
|
)
|
(604
|
)
|
||
Total stockholders’ equity
|
91,513
|
|
34,590
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,758,695
|
|
$
|
2,095,143
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||
(in thousands, except share and per share data)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Professional service revenues
|
$
|
108,642
|
|
$
|
109,593
|
|
|
$
|
228,763
|
|
$
|
221,996
|
|
Insurance service revenues
|
691,899
|
|
636,253
|
|
|
1,379,388
|
|
1,256,789
|
|
||||
Total revenues
|
800,541
|
|
745,846
|
|
|
1,608,151
|
|
1,478,785
|
|
||||
Insurance costs
|
599,535
|
|
596,673
|
|
|
1,208,177
|
|
1,166,362
|
|
||||
Cost of providing services (exclusive of depreciation and amortization of intangible assets)
|
50,825
|
|
44,034
|
|
|
107,275
|
|
89,739
|
|
||||
Sales and marketing
|
45,940
|
|
43,800
|
|
|
95,131
|
|
92,508
|
|
||||
General and administrative
|
28,224
|
|
18,951
|
|
|
53,526
|
|
46,601
|
|
||||
Systems development and programming
|
11,415
|
|
6,457
|
|
|
22,455
|
|
12,846
|
|
||||
Amortization of intangible assets
|
1,316
|
|
5,005
|
|
|
2,666
|
|
9,985
|
|
||||
Depreciation
|
6,451
|
|
4,559
|
|
|
12,599
|
|
8,475
|
|
||||
Total costs and operating expenses
|
743,706
|
|
719,479
|
|
|
1,501,829
|
|
1,426,516
|
|
||||
Operating income
|
56,835
|
|
26,367
|
|
|
106,322
|
|
52,269
|
|
||||
Other income (expense):
|
|
|
|
|
|
||||||||
Interest expense and bank fees
|
(4,857
|
)
|
(5,038
|
)
|
|
(9,605
|
)
|
(10,080
|
)
|
||||
Other, net
|
271
|
|
163
|
|
|
422
|
|
121
|
|
||||
Income before provision for income taxes
|
52,249
|
|
21,492
|
|
|
97,139
|
|
42,310
|
|
||||
Income tax expense
|
12,298
|
|
9,210
|
|
|
28,451
|
|
18,451
|
|
||||
Net income
|
$
|
39,951
|
|
$
|
12,282
|
|
|
$
|
68,688
|
|
$
|
23,859
|
|
Other comprehensive income, net of tax
|
68
|
|
74
|
|
|
80
|
|
425
|
|
||||
Comprehensive income
|
$
|
40,019
|
|
$
|
12,356
|
|
|
$
|
68,768
|
|
$
|
24,284
|
|
|
|
|
|
|
|
||||||||
Net income per share:
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.58
|
|
$
|
0.17
|
|
|
$
|
1.00
|
|
$
|
0.34
|
|
Diluted
|
$
|
0.56
|
|
$
|
0.17
|
|
|
$
|
0.97
|
|
$
|
0.33
|
|
Weighted average shares:
|
|
|
|
|
|
|
|||||||
Basic
|
69,029,749
|
|
70,728,934
|
|
|
68,770,976
|
|
70,625,000
|
|
||||
Diluted
|
71,167,177
|
|
72,319,992
|
|
|
71,101,716
|
|
72,022,065
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Six Months Ended
June 30, |
|||||
(in thousands)
|
2017
|
2016
|
||||
Operating activities
|
|
|
||||
Net income
|
$
|
68,688
|
|
$
|
23,859
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
||||
Depreciation and amortization
|
16,496
|
|
17,919
|
|
||
Stock-based compensation
|
13,706
|
|
13,905
|
|
||
Changes in operating assets and liabilities:
|
|
|
||||
Restricted cash and cash equivalents
|
(31,982
|
)
|
(21,041
|
)
|
||
Prepaid income taxes
|
27,665
|
|
(2,863
|
)
|
||
Prepaid expenses and other current assets
|
(2,601
|
)
|
(5,033
|
)
|
||
Workers' compensation collateral receivable
|
4,820
|
|
(10,599
|
)
|
||
Other assets
|
91
|
|
238
|
|
||
Accounts payable
|
4,002
|
|
2,488
|
|
||
Accrued corporate wages and other current liabilities
|
8,299
|
|
(719
|
)
|
||
Workers' compensation loss reserves and other non-current liabilities
|
(5,061
|
)
|
25,792
|
|
||
Worksite employee related assets
|
382,875
|
|
425,815
|
|
||
Worksite employee related liabilities
|
(382,885
|
)
|
(426,094
|
)
|
||
Net cash provided by operating activities
|
104,113
|
|
43,667
|
|
||
Investing activities
|
|
|
||||
Acquisitions of businesses
|
—
|
|
(300
|
)
|
||
Purchases of marketable securities
|
—
|
|
(14,959
|
)
|
||
Proceeds from maturity of marketable securities
|
11,469
|
|
24,998
|
|
||
Acquisitions of property and equipment
|
(20,725
|
)
|
(16,714
|
)
|
||
Net cash used in investing activities
|
(9,256
|
)
|
(6,975
|
)
|
||
Financing activities
|
|
|
||||
Repurchase of common stock
|
(29,510
|
)
|
(16,459
|
)
|
||
Proceeds from issuance of common stock on exercised options
|
5,586
|
|
2,220
|
|
||
Proceeds from issuance of common stock on employee stock purchase plan
|
2,441
|
|
2,304
|
|
||
Awards effectively repurchased for required employee withholding taxes
|
(4,507
|
)
|
(1,485
|
)
|
||
Repayment of notes and capital leases payable
|
(19,151
|
)
|
(22,810
|
)
|
||
Net cash used in financing activities
|
(45,141
|
)
|
(36,230
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
163
|
|
24
|
|
||
Net increase in cash and cash equivalents
|
49,879
|
|
486
|
|
||
Cash and cash equivalents at beginning of period
|
184,004
|
|
166,178
|
|
||
Cash and cash equivalents at end of period
|
$
|
233,883
|
|
$
|
166,664
|
|
|
|
|
||||
Supplemental disclosures of cash flow information
|
|
|
||||
Interest paid
|
$
|
8,006
|
|
$
|
8,091
|
|
Income taxes paid (refunded), net
|
(169
|
)
|
21,374
|
|
||
Supplemental schedule of noncash investing and financing activities
|
|
|
||||
Payable for purchase of property and equipment
|
$
|
1,580
|
|
$
|
1,581
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
•
|
compensation through wages and salaries,
|
•
|
employer payroll-related taxes payment,
|
•
|
employee payroll-related taxes withholding and payment,
|
•
|
employee benefit programs including health and life insurance, and others, and
|
•
|
workers' compensation coverage.
|
•
|
liability for unpaid losses and loss adjustment expenses (loss reserves) related to workers' compensation and workers' compensation collateral receivable,
|
•
|
health insurance loss reserves,
|
•
|
liability for insurance premiums payable,
|
•
|
impairments of goodwill and other intangible assets,
|
•
|
income tax assets and liabilities, and
|
•
|
liability for legal contingencies.
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
June 30, 2017
|
December 31, 2016
|
||||||||||||||||||||||
(in thousands)
|
Cash and cash equivalents
|
Available for sale marketable securities
|
Certificate
of
deposits
|
Total
|
Cash and cash equivalents
|
Available for sale marketable securities
|
Certificate
of
deposits
|
Total
|
||||||||||||||||
Cash and cash equivalents
|
$
|
233,883
|
|
$
|
—
|
|
$
|
—
|
|
$
|
233,883
|
|
$
|
184,004
|
|
$
|
—
|
|
$
|
—
|
|
$
|
184,004
|
|
Restricted cash and cash equivalents
|
14,589
|
|
—
|
|
—
|
|
14,589
|
|
14,569
|
|
—
|
|
—
|
|
14,569
|
|
||||||||
Restricted cash, cash equivalents and investments, noncurrent
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Collateral for workers' compensation claims
|
111,141
|
|
39,798
|
|
—
|
|
150,939
|
|
78,672
|
|
51,829
|
|
—
|
|
130,501
|
|
||||||||
Worksite employee related assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Restricted cash, cash equivalents and investments, current
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Collateral for health benefits claims
|
68,907
|
|
—
|
|
—
|
|
68,907
|
|
65,022
|
|
—
|
|
—
|
|
65,022
|
|
||||||||
Collateral for workers' compensation claims
|
83,555
|
|
507
|
|
—
|
|
84,062
|
|
64,773
|
|
—
|
|
—
|
|
64,773
|
|
||||||||
Collateral to secure standby letter of credit
|
—
|
|
—
|
|
2,322
|
|
2,322
|
|
—
|
|
—
|
|
2,320
|
|
2,320
|
|
||||||||
Total WSE related restricted cash, cash equivalents and investments, current
|
152,462
|
|
507
|
|
2,322
|
|
155,291
|
|
129,795
|
|
—
|
|
2,320
|
|
132,115
|
|
||||||||
Payroll funds collected
|
462,902
|
|
—
|
|
—
|
|
462,902
|
|
825,958
|
|
—
|
|
—
|
|
825,958
|
|
||||||||
Total
|
$
|
974,977
|
|
$
|
40,305
|
|
$
|
2,322
|
|
$
|
1,017,604
|
|
$
|
1,232,998
|
|
$
|
51,829
|
|
$
|
2,320
|
|
$
|
1,287,147
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
•
|
Payroll funds collected, which represents cash collected from clients in advance to fund payroll and payroll taxes, and other payroll related liabilities;
|
•
|
Other payroll assets, which primarily include payroll tax receivables;
|
•
|
Client deposits, which represents indemnity guarantee payments received from clients and collections from clients in excess of payroll and other payroll related liabilities;
|
•
|
Other payroll withholdings, which primarily includes withholdings under 401(k) plans and flexible benefit plans.
|
(in thousands)
|
June 30,
2017 |
December 31,
2016 |
||||
Worksite employee related assets:
|
|
|
||||
Restricted cash, cash equivalents and investments
|
$
|
155,291
|
|
$
|
132,115
|
|
Payroll funds collected
|
462,902
|
|
825,958
|
|
||
Unbilled revenue (net of advance collections of $17,420
and $8,602 at June 30, 2017 and December 31, 2016, respectively) |
247,751
|
|
293,192
|
|
||
Accounts receivable (net of allowance for doubtful accounts of
$160 and $292 at June 30, 2017 and December 31, 2016, respectively) |
7,644
|
|
4,854
|
|
||
Prepaid insurance premiums
|
15,253
|
|
12,805
|
|
||
Workers' compensation collateral receivable
|
190
|
|
2,136
|
|
||
Other payroll assets
|
9,565
|
|
10,411
|
|
||
Total worksite employee related assets
|
$
|
898,596
|
|
$
|
1,281,471
|
|
|
|
|
||||
Worksite employee related liabilities:
|
|
|
|
|||
Accrued wages
|
$
|
246,802
|
|
$
|
272,966
|
|
Client deposits
|
35,147
|
|
56,182
|
|
||
Payroll tax liabilities
|
352,184
|
|
692,460
|
|
||
Unpaid losses and loss adjustment expenses (less than 1 year):
|
|
|
||||
Health benefits loss reserves
|
125,241
|
|
129,430
|
|
||
Workers' compensation loss reserves (net of collateral paid of $9,124 and $9,234 at June 30, 2017 and December 31, 2016, respectively)
|
70,812
|
|
63,702
|
|
||
Insurance premiums and other payables
|
17,264
|
|
14,223
|
|
||
Other payroll withholdings
|
45,660
|
|
47,032
|
|
||
Total worksite employee related liabilities
|
$
|
893,110
|
|
$
|
1,275,995
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||
(in thousands)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Total loss reserves, beginning of period
|
$
|
260,308
|
|
$
|
200,152
|
|
|
$
|
254,614
|
|
$
|
190,102
|
|
Incurred
|
|
|
|
|
|
||||||||
Current year
|
20,191
|
|
28,572
|
|
|
47,127
|
|
51,346
|
|
||||
Prior years
|
896
|
|
2,741
|
|
|
1,497
|
|
8,004
|
|
||||
Total incurred
|
21,087
|
|
31,313
|
|
|
48,624
|
|
59,350
|
|
||||
Paid
|
|
|
|
|
|
||||||||
Current year
|
(5,377
|
)
|
(1,567
|
)
|
|
(5,637
|
)
|
(2,278
|
)
|
||||
Prior years
|
(21,334
|
)
|
(15,187
|
)
|
|
(42,917
|
)
|
(32,463
|
)
|
||||
Total paid
|
(26,711
|
)
|
(16,754
|
)
|
|
(48,554
|
)
|
(34,741
|
)
|
||||
Total loss reserves, end of period
|
$
|
254,684
|
|
$
|
214,711
|
|
|
$
|
254,684
|
|
$
|
214,711
|
|
(in thousands)
|
June 30,
2017 |
December 31,
2016 |
||||
Total loss reserves, end of period
|
$
|
254,684
|
|
$
|
254,614
|
|
Collateral paid to carriers and offset against loss reserves
|
(32,035
|
)
|
(31,611
|
)
|
||
Total loss reserves, net of carrier collateral offset
|
$
|
222,649
|
|
$
|
223,003
|
|
|
|
|
||||
Payable in less than 1 year
(1)
(net of collateral paid to carriers of $9,124 and $9,234 at June 30, 2017 and December 31, 2016, respectively) |
$
|
70,812
|
|
$
|
63,702
|
|
Payable in more than 1 year
(net of collateral paid to carriers of $22,911 and $22,377 at June 30, 2017 and December 31, 2016, respectively) |
151,837
|
|
159,301
|
|
||
Total loss reserves, net of carrier collateral offset
|
$
|
222,649
|
|
$
|
223,003
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
(in thousands)
|
Maturity
(in years)
|
Amortized Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair Value
|
||||||||
June 30, 2017
|
|
|
|
|
|
||||||||
Level 1:
|
|
|
|
|
|
||||||||
Investments:
|
|
|
|
|
|
||||||||
U.S. treasuries
|
< 3
|
$
|
39,900
|
|
$
|
5
|
|
$
|
(107
|
)
|
$
|
39,798
|
|
Mutual funds
|
N/A
|
500
|
|
7
|
|
—
|
|
507
|
|
||||
Total investments
|
|
$
|
40,400
|
|
$
|
12
|
|
$
|
(107
|
)
|
$
|
40,305
|
|
Level 2:
|
|
|
|
|
|
||||||||
Certificates of deposit
|
< 1
|
$
|
2,322
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,322
|
|
Total
|
|
$
|
42,722
|
|
$
|
12
|
|
$
|
(107
|
)
|
$
|
42,627
|
|
|
|
|
|
|
|
||||||||
December 31, 2016
|
|
|
|
|
|
||||||||
Level 1:
|
|
|
|
|
|
||||||||
Investments:
|
|
|
|
|
|
||||||||
U.S. treasuries
|
< 3
|
$
|
51,376
|
|
$
|
25
|
|
$
|
(77
|
)
|
$
|
51,324
|
|
Mutual funds
|
N/A
|
500
|
|
5
|
|
—
|
|
505
|
|
||||
Total investments
|
|
$
|
51,876
|
|
$
|
30
|
|
$
|
(77
|
)
|
$
|
51,829
|
|
Level 2:
|
|
|
|
|
|
||||||||
Certificates of deposit
|
< 1
|
$
|
2,320
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,320
|
|
Total
|
|
$
|
54,196
|
|
$
|
30
|
|
$
|
(77
|
)
|
$
|
54,149
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Number
of Shares |
|
Balance at December 31, 2016
|
2,815,224
|
|
Granted
|
—
|
|
Exercised
|
(1,041,720
|
)
|
Forfeited
|
(53,413
|
)
|
Expired
|
—
|
|
Balance at June 30, 2017
|
1,720,091
|
|
Exercisable at June 30, 2017
|
1,320,866
|
|
|
RSUs
|
PSUs
|
||||||||
|
Number of Units
|
Weighted-Average
Grant Date
Fair Value
|
Number of Units
|
Weighted-Average
Grant Date
Fair Value
|
||||||
Nonvested at December 31, 2016
|
2,323,051
|
|
$
|
20.32
|
|
149,412
|
|
$
|
33.51
|
|
Granted
|
966,329
|
|
27.88
|
|
239,792
|
|
28.43
|
|
||
Vested
|
(549,248
|
)
|
19.46
|
|
(7,518
|
)
|
33.51
|
|
||
Forfeited
|
(147,674
|
)
|
23.25
|
|
(18,894
|
)
|
33.51
|
|
||
Nonvested at June 30, 2017
|
2,592,458
|
|
$
|
23.15
|
|
362,792
|
|
$
|
30.15
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||
(in thousands)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Cost of providing services
|
$
|
2,031
|
|
$
|
1,624
|
|
|
$
|
3,643
|
|
$
|
3,439
|
|
Sales and marketing
|
1,621
|
|
1,643
|
|
|
2,923
|
|
3,628
|
|
||||
General and administrative
|
2,744
|
|
2,644
|
|
|
5,035
|
|
5,617
|
|
||||
Systems development and programming costs
|
1,103
|
|
597
|
|
|
2,105
|
|
1,221
|
|
||||
Total stock-based compensation expense
|
$
|
7,499
|
|
$
|
6,508
|
|
|
$
|
13,706
|
|
$
|
13,905
|
|
Income tax benefit related to stock-based compensation expense
|
$
|
2,682
|
|
$
|
2,248
|
|
|
$
|
4,808
|
|
$
|
4,828
|
|
Tax benefit realized from stock options exercised and similar awards
|
$
|
10,525
|
|
$
|
427
|
|
|
$
|
16,034
|
|
$
|
2,415
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||
(in thousands, except per share data)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Net income
|
$
|
39,951
|
|
$
|
12,282
|
|
|
$
|
68,688
|
|
$
|
23,859
|
|
Weighted average shares of common stock outstanding
|
69,030
|
|
70,729
|
|
|
68,771
|
|
70,625
|
|
||||
Basic EPS
|
$
|
0.58
|
|
$
|
0.17
|
|
|
$
|
1.00
|
|
$
|
0.34
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
39,951
|
|
$
|
12,282
|
|
|
$
|
68,688
|
|
$
|
23,859
|
|
Weighted average shares of common stock
|
69,030
|
|
70,729
|
|
|
68,771
|
|
70,625
|
|
||||
Dilutive effect of stock options and restricted stock units
|
2,137
|
|
1,591
|
|
|
2,331
|
|
1,397
|
|
||||
Weighted average shares of common stock outstanding
|
71,167
|
|
72,320
|
|
|
71,102
|
|
72,022
|
|
||||
Diluted EPS
|
$
|
0.56
|
|
$
|
0.17
|
|
|
$
|
0.97
|
|
$
|
0.33
|
|
|
|
|
|
|
|
||||||||
Common stock equivalents excluded from income per diluted share because of their anti-dilutive effect
|
279
|
|
949
|
|
|
288
|
|
1,184
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
|
|
OTHER INFORMATION
|
|
Period
|
Total Number of
Shares
Purchased
(1)
|
|
Weighted Average Price
Paid Per Share |
|
Total Number of
Shares Purchased as Part of Publicly Announced Plans (2) |
|
Approximate Dollar Value
of Shares that May Yet be Purchased Under the Plans (2) |
||||||
April 1 - April 30, 2017
|
3,620
|
|
|
$
|
27.69
|
|
|
—
|
|
|
$
|
32,428,386
|
|
May 1 - May 31, 2017
|
77,421
|
|
|
$
|
30.83
|
|
|
—
|
|
|
$
|
32,428,386
|
|
June 1 - June 30, 2017
|
67,109
|
|
|
$
|
32.02
|
|
|
59,709
|
|
|
$
|
30,512,973
|
|
Total
|
148,150
|
|
|
|
|
59,709
|
|
|
|
|
|
|
SIGNATURES
|
|
|
TRINET GROUP, INC.
|
||
|
|
||
Date: July 31, 2017
|
|
By:
|
/s/ Burton M. Goldfield
|
|
|
|
Burton M. Goldfield
|
|
|
|
Chief Executive Officer
|
|
|
|
|
Date: July 31, 2017
|
|
By:
|
/s/ Richard Beckert
|
|
|
|
Richard Beckert
|
|
|
|
Chief Financial Officer
|
|
|
|
|
Date: July 31, 2017
|
|
By:
|
/s/ Michael P. Murphy
|
|
|
|
Michael P. Murphy
|
|
|
|
Chief Accounting Officer
|
|
|
|
EXHIBITS
|
|
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Exhibit No.
|
|
Exhibit
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Filed Herewith
|
10.1**
|
|
Employment Agreement, dated March 31, 2017, between Richard Beckert and TriNet Group, Inc.
|
|
|
|
|
|
|
|
|
|
X
|
10.2**
|
|
Second Amended and Restated Employment Agreement, dated December 28, 2016, between Edward Griese and TriNet Group, Inc.
|
|
|
|
|
|
|
|
|
|
X
|
10.3**
|
|
TriNet Group, Inc. Amended and Restated Executive Severance Benefit Plan
|
|
8-K
|
|
001-36373
|
|
10.1
|
|
5/23/2017
|
|
|
31.1
|
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
31.2
|
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
32.1*
|
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Linkbase Document
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Document has been furnished, is deemed not filed and is not to be incorporated by reference into any of TriNet Group, Inc.’s filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, irrespective of any general incorporation language contained in any such filing.
|
|
**
|
Constitutes a management contract or compensatory plan or arrangement.
|
|
|
|
1.
|
EMPLOYMENT BY THE COMPANY
|
2.
|
COMPENSATION.
|
17.
Governing Law
.
|
If I am a United States employee, this Agreement will be governed by the laws of the State of California, without regard to conflicts of law principles. If I am a Canadian employee, this Agreement will be governed by the laws of the Province of Ontario and the federal laws of Canada applicable in that Province, without regard to conflicts of law principles.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of TriNet Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
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;
|
(b)
|
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;
|
(c)
|
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
|
(d)
|
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
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
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
|
(b)
|
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.
|
Date: July 31, 2017
|
|
|
/s/ Burton M. Goldfield
|
Burton M. Goldfield
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of TriNet Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
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;
|
(b)
|
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;
|
(c)
|
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
|
(d)
|
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
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
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
|
(b)
|
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.
|
Date: July 31, 2017
|
|
|
/s/ Richard Beckert
|
Richard Beckert
|
Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; andwhen
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: July 31, 2017
|
/s/ Burton M. Goldfield
|
|
Burton M. Goldfield
|
|
Chief Executive Officer
|
|
|
|
|
Date: July 31, 2017
|
/s/ Richard Beckert
|
|
Richard Beckert
|
|
Chief Financial Officer
|