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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
|
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
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
served approximately
15,000
clients and co-employed
Average WSEs
of
324,000
, a
2%
decrease
in
Average WSEs
compared to the same period in 2016, and
|
•
|
processed approximately
$8.1 billion
in payroll and payroll tax payments for our clients, an increase of
5%
over the same period in
2016
.
|
•
|
Total revenues
increased
6%
to
$819.3 million
, due to increased insurance service revenues from higher participation in our health plans combined with an equal increase in health insurance service fees per plan participant, while
Net Service Revenues
increased
28%
to
$205.9 million
primarily due to an increase in insurance service revenues noted above.
|
•
|
Operating income
increased
117%
to
$62.8 million
primarily due to improvement in our
Net Service Revenues
, partially offset by an
increase
in other operating expenses incurred to support our initiatives.
|
•
|
Net income
increased
194%
to
$42.8 million
, or
$0.60
per diluted share,
Adjusted Net Income
increased
94%
to
$40.3 million
and
Adjusted EBITDA
increased
77%
to
$80.3 million
primarily due to increased operating income as described above.
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|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
co-employed
Average WSEs
of
325,000
, consistent with the same period in 2016,
|
•
|
processed approximately $
25.8 billion
in payroll and payroll tax payments for our clients, an increase of
4%
over the same period in
2016
, and
|
•
|
increased
Cash and cash equivalents
$79.5 million
, or
43%
, to
$263.5 million
.
|
•
|
Total revenues
increased
8%
to $
2.4 billion
, while
Net Service Revenues
increased
28%
to
$605.9 million
attributable primarily to increased participation in our health plans combined with an increase in health insurance fees per plan participant.
Net Service Revenues
also benefited from slower growth in insurance claims costs and reduced administrative costs.
|
•
|
Operating income
increased
108%
to $
169.1 million
primarily due to increases in
Net Service Revenues
, partially offset by an
increase
in other operating expenses to support our initiatives.
|
•
|
Net income
increased
190%
to
$111.5 million
, or
$1.57
per diluted share,
Adjusted Net Income
increased
82%
to
$108.6 million
and
Adjusted EBITDA
increased
66%
to
$216.0 million
primarily due to increased operating income as described above.
|
•
|
Cash provided by operating activities
increased
97%
to
$159.0 million
primarily as a result of increased operating income as described above, decreased payments of our tax liabilities, and a decrease in payments of collateral to our workers' compensation insurance carriers.
|
|
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|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
Percent Change
|
||||||||||||||||
(in thousands,
except per share and operating metrics data)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Q3 2017 vs. 2016
|
YTD 2017 vs. 2016
|
|||||||||||
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total revenues
|
$
|
819,293
|
|
|
$
|
770,457
|
|
|
$
|
2,427,444
|
|
|
$
|
2,249,242
|
|
|
6
|
|
%
|
8
|
%
|
Operating income
|
62,759
|
|
|
28,972
|
|
|
169,081
|
|
|
81,241
|
|
|
117
|
|
|
108
|
|
||||
Net income
|
42,836
|
|
|
14,581
|
|
|
111,524
|
|
|
38,440
|
|
|
194
|
|
|
190
|
|
||||
Diluted net income per share of common stock
|
0.60
|
|
|
0.20
|
|
|
1.57
|
|
|
0.53
|
|
|
200
|
|
|
196
|
|
||||
Non-GAAP measures
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net Service Revenues
(1)
|
205,896
|
|
|
161,035
|
|
|
605,870
|
|
|
473,458
|
|
|
28
|
|
|
28
|
|
||||
Net Insurance Service Revenues
(1)
|
93,366
|
|
|
50,542
|
|
|
264,577
|
|
|
140,969
|
|
|
85
|
|
|
88
|
|
||||
Adjusted EBITDA
(1)
|
80,283
|
|
|
45,399
|
|
|
215,998
|
|
|
130,154
|
|
|
77
|
|
|
66
|
|
||||
Adjusted Net Income
(1)
|
40,297
|
|
|
20,800
|
|
|
108,565
|
|
|
59,798
|
|
|
94
|
|
|
82
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating Metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total WSEs payroll and payroll taxes processed (in millions)
|
$
|
8,061
|
|
|
$
|
7,703
|
|
|
$
|
25,835
|
|
|
$
|
24,916
|
|
|
5
|
|
%
|
4
|
%
|
Average WSEs
|
324,043
|
|
|
331,652
|
|
|
325,347
|
|
|
324,652
|
|
|
(2
|
)
|
|
—
|
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(1)
|
Refer to Non-GAAP Financial Measures section below for definitions and reconciliations from GAAP measures.
|
|
Nine Months Ended
September 30,
|
|
Percent
|
||||||||
(in thousands, except operating metrics data)
|
2017
|
|
2016
|
|
Change
|
||||||
Operating Metrics:
|
|
|
|
|
|
|
|||||
Total WSEs at period end
|
325,138
|
|
|
333,778
|
|
|
(3
|
)
|
%
|
||
Cash Flow Data:
|
|
|
|
|
|
|
|||||
Net cash provided by operating activities
|
$
|
158,951
|
|
|
$
|
80,699
|
|
|
97
|
|
|
Net cash used in investing activities
|
(14,763
|
)
|
|
(17,411
|
)
|
|
(15
|
)
|
|
||
Net cash used in financing activities
|
(65,063
|
)
|
|
(68,998
|
)
|
|
(6
|
)
|
|
(in thousands)
|
September 30,
2017 |
|
December 31,
2016 |
|
Percent
Change
|
|
|||||
Balance Sheet Data:
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
263,527
|
|
|
$
|
184,004
|
|
|
43
|
|
%
|
Working capital
|
186,842
|
|
|
156,771
|
|
|
19
|
|
|
||
Total assets
|
1,836,925
|
|
|
2,095,143
|
|
|
(12
|
)
|
|
||
Notes and capital leases payable
|
431,690
|
|
|
459,054
|
|
|
(6
|
)
|
|
||
Total liabilities
|
1,705,066
|
|
|
2,060,553
|
|
|
(17
|
)
|
|
||
Total stockholders’ equity
|
131,859
|
|
|
34,590
|
|
|
281
|
|
|
|
|
|
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
September 30, |
|
Nine Months Ended September 30,
|
||||||||||
(in thousands)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Total revenues
|
$
|
819,293
|
|
$
|
770,457
|
|
|
$
|
2,427,444
|
|
$
|
2,249,242
|
|
Less: Insurance costs
|
613,397
|
|
609,422
|
|
|
1,821,574
|
|
1,775,784
|
|
||||
Net Service Revenues
|
$
|
205,896
|
|
$
|
161,035
|
|
|
$
|
605,870
|
|
$
|
473,458
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||
(in thousands)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Insurance service revenues
|
$
|
706,763
|
|
$
|
659,964
|
|
|
$
|
2,086,151
|
|
$
|
1,916,753
|
|
Less: Insurance costs
|
613,397
|
|
609,422
|
|
|
1,821,574
|
|
1,775,784
|
|
||||
Net Insurance Service Revenues
|
$
|
93,366
|
|
$
|
50,542
|
|
|
$
|
264,577
|
|
$
|
140,969
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||
(in thousands)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Net income
|
$
|
42,836
|
|
$
|
14,581
|
|
|
$
|
111,524
|
|
$
|
38,440
|
|
Provision for income taxes
|
15,268
|
|
9,107
|
|
|
43,719
|
|
27,558
|
|
||||
Stock-based compensation
|
7,700
|
|
6,264
|
|
|
21,406
|
|
20,169
|
|
||||
Interest expense and bank fees
|
5,425
|
|
5,597
|
|
|
15,030
|
|
15,677
|
|
||||
Depreciation
|
7,754
|
|
5,188
|
|
|
20,353
|
|
13,663
|
|
||||
Amortization of intangible assets
|
1,300
|
|
4,662
|
|
|
3,966
|
|
14,647
|
|
||||
Adjusted EBITDA
|
$
|
80,283
|
|
$
|
45,399
|
|
|
$
|
215,998
|
|
$
|
130,154
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||
(in thousands)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Net income
|
$
|
42,836
|
|
$
|
14,581
|
|
|
$
|
111,524
|
|
$
|
38,440
|
|
Effective income tax rate adjustment
|
(8,264
|
)
|
(960
|
)
|
|
(19,154
|
)
|
(491
|
)
|
||||
Stock-based compensation
|
7,700
|
|
6,264
|
|
|
21,406
|
|
20,169
|
|
||||
Amortization of intangible assets
|
1,300
|
|
4,662
|
|
|
3,966
|
|
14,647
|
|
||||
Non-cash interest expense
|
622
|
|
1,559
|
|
|
1,846
|
|
3,183
|
|
||||
Income tax impact of pre-tax adjustments
|
(3,897
|
)
|
(5,306
|
)
|
|
(11,023
|
)
|
(16,150
|
)
|
||||
Adjusted Net Income
|
$
|
40,297
|
|
$
|
20,800
|
|
|
$
|
108,565
|
|
$
|
59,798
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
Insurance service revenues grew
7%
over the same quarter in
2016
to
$706.8 million
.
|
•
|
Professional service revenues
increased
2%
over the same quarter in
2016
to
$112.5 million
.
|
•
|
Insurance service revenues grew
9%
over the same period in
2016
to $
2,086.2 million
.
|
•
|
Professional service revenues increased
3%
over the same period in
2016
to
$341.3 million
.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
Accounting and other professional fees
increased
$8.1 million
primarily as a result of increased professional fees to support our internal control remediation efforts.
|
•
|
Consulting expenses
increased
$3.8 million
and included costs associated with enhancing our product offerings.
|
•
|
Compensation costs for our corporate employees
increased
$3.5 million
primarily due to increased headcount related to investments in technology, sales and client services functions to support product delivery and platform integration.
|
•
|
Other expenses
decreased
$3.5 million
primarily due to a reduction in local tax compliance costs.
|
•
|
Total compensation costs
increased
$18.9 million
, or
8%
, primarily due to increased headcount related to investments in technology and client services functions to support product delivery and platform integration as well as an increase in sales related compensation costs associated with a new sales performance incentive program.
|
•
|
Consulting expenses
increased
$11.9 million
due to the factors described above and also included costs associated with payroll tax compliance initiatives.
|
•
|
Accounting and other professional fees
increased
$11.4 million
primarily as a result of the professional fees to support our internal control remediation efforts.
|
•
|
Other expenses
increased
$6.4 million
primarily due to additional compliance costs and external sales costs.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
(in thousands)
|
September 30,
2017 |
December 31,
2016 |
||||
Cash and cash equivalents
|
$
|
263,527
|
|
$
|
184,004
|
|
Working capital:
|
|
|
||||
Corporate working capital
|
180,497
|
|
151,295
|
|
||
WSE related assets, net of WSE related liabilities
|
6,345
|
|
5,476
|
|
|
Nine Months Ended
September 30, |
|||||
(in thousands)
|
2017
|
2016
|
||||
Net cash provided by (used in):
|
|
|
||||
Operating activities
|
$
|
158,951
|
|
$
|
80,699
|
|
Investing activities
|
(14,763
|
)
|
(17,411
|
)
|
||
Financing activities
|
(65,063
|
)
|
(68,998
|
)
|
||
Effect of exchange rates on cash and cash equivalents
|
398
|
|
90
|
|
||
Net increase in cash and cash equivalents
|
$
|
79,523
|
|
$
|
(5,620
|
)
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
Nine Months Ended
September 30, |
|||||
(in thousands)
|
2017
|
2016
|
||||
Net income
|
$
|
111,524
|
|
$
|
38,440
|
|
Depreciation and amortization
|
26,177
|
|
27,810
|
|
||
Stock-based compensation expense
|
21,406
|
|
20,169
|
|
||
Payment of interest
|
(12,186
|
)
|
(11,651
|
)
|
||
Income tax (payments) refunds, net
|
138
|
|
(27,650
|
)
|
||
Collateral (paid to) refunded from insurance carriers, net
|
(3,163
|
)
|
(22,911
|
)
|
||
Changes in other operating assets and liabilities
|
15,055
|
|
56,492
|
|
||
Net cash provided by operating activities
|
$
|
158,951
|
|
$
|
80,699
|
|
|
Nine Months Ended
September 30, |
|||||
(in thousands)
|
2017
|
2016
|
||||
Capital expenditures:
|
|
|
||||
Software and hardware
|
$
|
22,816
|
|
$
|
21,515
|
|
Office furniture, equipment and leasehold improvements
|
6,394
|
|
6,427
|
|
||
Cash used in capital expenditures
|
$
|
29,210
|
|
$
|
27,942
|
|
|
|
|
||||
Investments:
|
|
|
||||
Purchases of restricted investments
|
$
|
—
|
|
$
|
(14,959
|
)
|
Proceeds from maturity of restricted investments
|
14,447
|
|
25,790
|
|
||
Cash provided by investments
|
$
|
14,447
|
|
$
|
10,831
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
|
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
AND CONTROLS AND PROCEDURES
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
(in thousands, except share and per share data)
|
September 30,
2017 |
December 31,
2016 |
||||
Assets
|
|
|
||||
Current assets:
|
|
|
||||
Cash and cash equivalents
|
$
|
263,527
|
|
$
|
184,004
|
|
Restricted cash and cash equivalents
|
15,445
|
|
14,569
|
|
||
Prepaid income taxes
|
—
|
|
42,381
|
|
||
Prepaid expenses
|
11,013
|
|
10,784
|
|
||
Other current assets
|
2,360
|
|
2,145
|
|
||
Worksite employee related assets
|
941,213
|
|
1,281,471
|
|
||
Total current assets
|
1,233,558
|
|
1,535,354
|
|
||
Workers' compensation collateral receivable
|
39,931
|
|
31,883
|
|
||
Restricted cash, cash equivalents and investments
|
160,207
|
|
130,501
|
|
||
Property and equipment, net
|
68,470
|
|
58,622
|
|
||
Goodwill
|
289,207
|
|
289,207
|
|
||
Other intangible assets, net
|
27,108
|
|
31,074
|
|
||
Other assets
|
18,444
|
|
18,502
|
|
||
Total assets
|
$
|
1,836,925
|
|
$
|
2,095,143
|
|
Liabilities and stockholders’ equity
|
|
|
|
|||
Current liabilities:
|
|
|
|
|||
Accounts payable
|
$
|
28,995
|
|
$
|
22,541
|
|
Accrued corporate wages
|
31,814
|
|
30,937
|
|
||
Notes and capital leases payable, net
|
36,718
|
|
36,559
|
|
||
Other current liabilities
|
14,321
|
|
12,551
|
|
||
Worksite employee related liabilities
|
934,868
|
|
1,275,995
|
|
||
Total current liabilities
|
1,046,716
|
|
1,378,583
|
|
||
Notes and capital leases payable, net, noncurrent
|
394,972
|
|
422,495
|
|
||
Workers' compensation loss reserves
(net of collateral paid of $20,307 and $22,377 at September 30, 2017 and December 31, 2016, respectively) |
157,999
|
|
159,301
|
|
||
Deferred income taxes
|
90,845
|
|
92,373
|
|
||
Other liabilities
|
14,534
|
|
7,801
|
|
||
Total liabilities
|
1,705,066
|
|
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 September 30, 2017 and December 31, 2016) |
—
|
|
—
|
|
||
Common stock and additional paid-in capital
($0.000025 par value per share; 750,000,000 shares authorized; 69,536,268 and 69,015,690 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively) |
567,971
|
|
535,132
|
|
||
Accumulated deficit
|
(435,739
|
)
|
(499,938
|
)
|
||
Accumulated other comprehensive loss
|
(373
|
)
|
(604
|
)
|
||
Total stockholders’ equity
|
131,859
|
|
34,590
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,836,925
|
|
$
|
2,095,143
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||
(in thousands, except share and per share data)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Professional service revenues
|
$
|
112,530
|
|
$
|
110,493
|
|
|
$
|
341,293
|
|
$
|
332,489
|
|
Insurance service revenues
|
706,763
|
|
659,964
|
|
|
2,086,151
|
|
1,916,753
|
|
||||
Total revenues
|
819,293
|
|
770,457
|
|
|
2,427,444
|
|
2,249,242
|
|
||||
Insurance costs
|
613,397
|
|
609,422
|
|
|
1,821,574
|
|
1,775,784
|
|
||||
Cost of providing services (exclusive of depreciation and amortization of intangible assets)
|
49,989
|
|
50,142
|
|
|
157,264
|
|
139,881
|
|
||||
Sales and marketing
|
44,407
|
|
41,470
|
|
|
139,538
|
|
133,978
|
|
||||
General and administrative
|
28,505
|
|
22,477
|
|
|
82,031
|
|
69,078
|
|
||||
Systems development and programming
|
11,182
|
|
8,124
|
|
|
33,637
|
|
20,970
|
|
||||
Amortization of intangible assets
|
1,300
|
|
4,662
|
|
|
3,966
|
|
14,647
|
|
||||
Depreciation
|
7,754
|
|
5,188
|
|
|
20,353
|
|
13,663
|
|
||||
Total costs and operating expenses
|
756,534
|
|
741,485
|
|
|
2,258,363
|
|
2,168,001
|
|
||||
Operating income
|
62,759
|
|
28,972
|
|
|
169,081
|
|
81,241
|
|
||||
Other income (expense):
|
|
|
|
|
|
||||||||
Interest expense and bank fees
|
(5,425
|
)
|
(5,597
|
)
|
|
(15,030
|
)
|
(15,677
|
)
|
||||
Other, net
|
770
|
|
313
|
|
|
1,192
|
|
434
|
|
||||
Income before provision for income taxes
|
58,104
|
|
23,688
|
|
|
155,243
|
|
65,998
|
|
||||
Income tax expense
|
15,268
|
|
9,107
|
|
|
43,719
|
|
27,558
|
|
||||
Net income
|
$
|
42,836
|
|
$
|
14,581
|
|
|
$
|
111,524
|
|
$
|
38,440
|
|
Other comprehensive income, net of tax
|
151
|
|
(125
|
)
|
|
231
|
|
300
|
|
||||
Comprehensive income
|
$
|
42,987
|
|
$
|
14,456
|
|
|
$
|
111,755
|
|
$
|
38,740
|
|
|
|
|
|
|
|
||||||||
Net income per share:
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.62
|
|
$
|
0.21
|
|
|
$
|
1.62
|
|
$
|
0.55
|
|
Diluted
|
$
|
0.60
|
|
$
|
0.20
|
|
|
$
|
1.57
|
|
$
|
0.53
|
|
Weighted average shares:
|
|
|
|
|
|
|
|||||||
Basic
|
69,498,218
|
|
70,187,989
|
|
|
69,016,054
|
|
70,478,266
|
|
||||
Diluted
|
71,499,591
|
|
71,964,603
|
|
|
71,138,743
|
|
72,126,060
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Nine Months Ended
September 30, |
|||||
(in thousands)
|
2017
|
2016
|
||||
Operating activities
|
|
|
||||
Net income
|
$
|
111,524
|
|
$
|
38,440
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
||||
Depreciation and amortization
|
26,177
|
|
27,810
|
|
||
Stock-based compensation
|
21,406
|
|
20,169
|
|
||
Changes in operating assets and liabilities:
|
|
|
||||
Restricted cash and cash equivalents
|
(45,570
|
)
|
(31,409
|
)
|
||
Prepaid income taxes
|
42,448
|
|
386
|
|
||
Prepaid expenses and other current assets
|
(961
|
)
|
(5,253
|
)
|
||
Workers' compensation collateral receivable
|
(8,048
|
)
|
(11,374
|
)
|
||
Other assets
|
925
|
|
438
|
|
||
Accounts payable
|
5,505
|
|
4,538
|
|
||
Accrued corporate wages and other current liabilities
|
2,331
|
|
4,548
|
|
||
Workers' compensation loss reserves and other non-current liabilities
|
3,574
|
|
33,510
|
|
||
Worksite employee related assets
|
340,767
|
|
525,841
|
|
||
Worksite employee related liabilities
|
(341,127
|
)
|
(526,945
|
)
|
||
Net cash provided by operating activities
|
158,951
|
|
80,699
|
|
||
Investing activities
|
|
|
||||
Acquisitions of businesses
|
—
|
|
(300
|
)
|
||
Purchases of marketable securities
|
—
|
|
(14,959
|
)
|
||
Proceeds from maturity of marketable securities
|
14,447
|
|
25,790
|
|
||
Acquisitions of property and equipment
|
(29,210
|
)
|
(27,942
|
)
|
||
Net cash used in investing activities
|
(14,763
|
)
|
(17,411
|
)
|
||
Financing activities
|
|
|
||||
Repurchase of common stock
|
(39,347
|
)
|
(43,747
|
)
|
||
Proceeds from issuance of common stock on exercised options
|
8,678
|
|
3,584
|
|
||
Proceeds from issuance of common stock on employee stock purchase plan
|
2,441
|
|
2,304
|
|
||
Awards effectively repurchased for required employee withholding taxes
|
(8,100
|
)
|
(2,672
|
)
|
||
Proceeds from issuance of notes payable
|
—
|
|
57,978
|
|
||
Payments for extinguishment of debt
|
—
|
|
(57,563
|
)
|
||
Repayment of notes and capital leases payable
|
(28,735
|
)
|
(27,506
|
)
|
||
Payment of debt issuance costs
|
—
|
|
(1,376
|
)
|
||
Net cash used in financing activities
|
(65,063
|
)
|
(68,998
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
398
|
|
90
|
|
||
Net increase in cash and cash equivalents
|
79,523
|
|
(5,620
|
)
|
||
Cash and cash equivalents at beginning of period
|
184,004
|
|
166,178
|
|
||
Cash and cash equivalents at end of period
|
$
|
263,527
|
|
$
|
160,558
|
|
|
|
|
||||
Supplemental disclosures of cash flow information
|
|
|
||||
Interest paid
|
$
|
12,186
|
|
$
|
11,651
|
|
Income taxes paid (refunded), net
|
(138
|
)
|
27,650
|
|
||
Supplemental schedule of noncash investing and financing activities
|
|
|
||||
Payable for purchase of property and equipment
|
$
|
2,450
|
|
$
|
1,363
|
|
|
|
|
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
|
|
|
September 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
|
$
|
263,527
|
|
$
|
—
|
|
$
|
—
|
|
$
|
263,527
|
|
$
|
184,004
|
|
$
|
—
|
|
$
|
—
|
|
$
|
184,004
|
|
Restricted cash and cash equivalents
|
15,445
|
|
—
|
|
—
|
|
15,445
|
|
14,569
|
|
—
|
|
—
|
|
14,569
|
|
||||||||
Restricted cash, cash equivalents and investments, noncurrent
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Collateral for workers' compensation claims
|
123,366
|
|
36,841
|
|
—
|
|
160,207
|
|
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
|
85,284
|
|
508
|
|
—
|
|
85,792
|
|
64,773
|
|
—
|
|
—
|
|
64,773
|
|
||||||||
Collateral to secure standby letter of credit
|
—
|
|
—
|
|
2,324
|
|
2,324
|
|
—
|
|
—
|
|
2,320
|
|
2,320
|
|
||||||||
Total WSE related restricted cash, cash equivalents and investments, current
|
154,191
|
|
508
|
|
2,324
|
|
157,023
|
|
129,795
|
|
—
|
|
2,320
|
|
132,115
|
|
||||||||
Payroll funds collected
|
455,494
|
|
—
|
|
—
|
|
455,494
|
|
825,958
|
|
—
|
|
—
|
|
825,958
|
|
||||||||
Total
|
$
|
1,012,023
|
|
$
|
37,349
|
|
$
|
2,324
|
|
$
|
1,051,696
|
|
$
|
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)
|
September 30,
2017 |
December 31,
2016 |
||||
Worksite employee related assets:
|
|
|
||||
Restricted cash, cash equivalents and investments
|
$
|
157,023
|
|
$
|
132,115
|
|
Payroll funds collected
|
455,494
|
|
825,958
|
|
||
Unbilled revenue (net of advance collections of $10,038
and $8,602 at September 30, 2017 and December 31, 2016, respectively) |
284,136
|
|
293,192
|
|
||
Accounts receivable (net of allowance for doubtful accounts of
$304 and $292 at September 30, 2017 and December 31, 2016, respectively) |
5,912
|
|
4,854
|
|
||
Prepaid insurance premiums
|
27,200
|
|
12,805
|
|
||
Workers' compensation collateral receivable
|
1,417
|
|
2,136
|
|
||
Other payroll assets
|
10,031
|
|
10,411
|
|
||
Total worksite employee related assets
|
$
|
941,213
|
|
$
|
1,281,471
|
|
|
|
|
||||
Worksite employee related liabilities:
|
|
|
|
|||
Accrued wages
|
$
|
274,123
|
|
$
|
272,966
|
|
Client deposits
|
28,096
|
|
56,182
|
|
||
Payroll tax liabilities
|
368,207
|
|
692,460
|
|
||
Unpaid losses and loss adjustment expenses (less than 1 year):
|
|
|
||||
Health benefits loss reserves
|
129,681
|
|
129,430
|
|
||
Workers' compensation loss reserves (net of collateral paid of
$7,105
and $9,234 at September 30, 2017 and December 31, 2016, respectively)
|
63,683
|
|
63,702
|
|
||
Insurance premiums and other payables
|
25,654
|
|
14,223
|
|
||
Other payroll withholdings
|
45,424
|
|
47,032
|
|
||
Total worksite employee related liabilities
|
$
|
934,868
|
|
$
|
1,275,995
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||
(in thousands)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Total loss reserves, beginning of period
|
$
|
254,684
|
|
$
|
214,711
|
|
|
$
|
254,614
|
|
$
|
190,102
|
|
Incurred
|
|
|
|
|
|
||||||||
Current year
|
22,618
|
|
26,717
|
|
|
69,745
|
|
78,063
|
|
||||
Prior years
|
(4,294
|
)
|
4,947
|
|
|
(2,797
|
)
|
12,951
|
|
||||
Total incurred
|
18,324
|
|
31,664
|
|
|
66,948
|
|
91,014
|
|
||||
Paid
|
|
|
|
|
|
||||||||
Current year
|
(3,464
|
)
|
(6,738
|
)
|
|
(9,101
|
)
|
(9,016
|
)
|
||||
Prior years
|
(20,450
|
)
|
(17,130
|
)
|
|
(63,367
|
)
|
(49,593
|
)
|
||||
Total paid
|
(23,914
|
)
|
(23,868
|
)
|
|
(72,468
|
)
|
(58,609
|
)
|
||||
Total loss reserves, end of period
|
$
|
249,094
|
|
$
|
222,507
|
|
|
$
|
249,094
|
|
$
|
222,507
|
|
(in thousands)
|
September 30,
2017 |
December 31,
2016 |
||||
Total loss reserves, end of period
|
$
|
249,094
|
|
$
|
254,614
|
|
Collateral paid to carriers and offset against loss reserves
|
(27,412
|
)
|
(31,611
|
)
|
||
Total loss reserves, net of carrier collateral offset
|
$
|
221,682
|
|
$
|
223,003
|
|
|
|
|
||||
Payable in less than 1 year
(1)
(net of collateral paid to carriers of $7,105 and $9,234 at September 30, 2017 and December 31, 2016, respectively) |
$
|
63,683
|
|
$
|
63,702
|
|
Payable in more than 1 year
(net of collateral paid to carriers of $20,307 and $22,377 at September 30, 2017 and December 31, 2016, respectively) |
157,999
|
|
159,301
|
|
||
Total loss reserves, net of carrier collateral offset
|
$
|
221,682
|
|
$
|
223,003
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
(in thousands)
|
Maturity
(in years)
|
Amortized Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair Value
|
||||||||
September 30, 2017
|
|
|
|
|
|
||||||||
Level 1:
|
|
|
|
|
|
||||||||
Investments:
|
|
|
|
|
|
||||||||
U.S. treasuries
|
< 3
|
$
|
36,916
|
|
$
|
—
|
|
$
|
(75
|
)
|
$
|
36,841
|
|
Mutual funds
|
N/A
|
500
|
|
8
|
|
—
|
|
508
|
|
||||
Total investments
|
|
$
|
37,416
|
|
$
|
8
|
|
$
|
(75
|
)
|
$
|
37,349
|
|
Level 2:
|
|
|
|
|
|
||||||||
Certificates of deposit
|
< 1
|
$
|
2,324
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,324
|
|
Total
|
|
$
|
39,740
|
|
$
|
8
|
|
$
|
(75
|
)
|
$
|
39,673
|
|
|
|
|
|
|
|
||||||||
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
|
(1,280,726
|
)
|
Cancelled
|
(12,297
|
)
|
Forfeited
|
(57,540
|
)
|
Expired
|
—
|
|
Balance at September 30, 2017
|
1,464,661
|
|
Exercisable at September 30, 2017
|
1,192,694
|
|
|
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
|
1,119,525
|
|
28.68
|
|
330,674
|
|
29.69
|
|
||
Vested
|
(795,856
|
)
|
20.41
|
|
(7,518
|
)
|
33.51
|
|
||
Forfeited
|
(232,727
|
)
|
23.38
|
|
(18,894
|
)
|
33.51
|
|
||
Nonvested at September 30, 2017
|
2,413,993
|
|
$
|
23.87
|
|
453,674
|
|
$
|
30.72
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||
(in thousands)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Cost of providing services
|
$
|
1,845
|
|
$
|
1,605
|
|
|
$
|
5,488
|
|
$
|
5,044
|
|
Sales and marketing
|
1,524
|
|
1,491
|
|
|
4,447
|
|
5,119
|
|
||||
General and administrative
|
3,259
|
|
2,544
|
|
|
8,294
|
|
8,161
|
|
||||
Systems development and programming costs
|
1,072
|
|
624
|
|
|
3,177
|
|
1,845
|
|
||||
Total stock-based compensation expense
|
$
|
7,700
|
|
$
|
6,264
|
|
|
$
|
21,406
|
|
$
|
20,169
|
|
Income tax benefit related to stock-based compensation expense
|
$
|
2,813
|
|
$
|
2,267
|
|
|
$
|
7,621
|
|
$
|
7,095
|
|
Tax benefit realized from stock options exercised and similar awards
|
$
|
5,942
|
|
$
|
1,721
|
|
|
$
|
21,976
|
|
$
|
4,136
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||
(in thousands, except per share data)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Net income
|
$
|
42,836
|
|
$
|
14,581
|
|
|
$
|
111,524
|
|
$
|
38,440
|
|
Weighted average shares of common stock outstanding
|
69,498
|
|
70,188
|
|
|
69,016
|
|
70,478
|
|
||||
Basic EPS
|
$
|
0.62
|
|
$
|
0.21
|
|
|
$
|
1.62
|
|
$
|
0.55
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
42,836
|
|
$
|
14,581
|
|
|
$
|
111,524
|
|
$
|
38,440
|
|
Weighted average shares of common stock
|
69,498
|
|
70,188
|
|
|
69,016
|
|
70,478
|
|
||||
Dilutive effect of stock options and restricted stock units
|
2,002
|
|
1,777
|
|
|
2,123
|
|
1,648
|
|
||||
Weighted average shares of common stock outstanding
|
71,500
|
|
71,965
|
|
|
71,139
|
|
72,126
|
|
||||
Diluted EPS
|
$
|
0.60
|
|
$
|
0.20
|
|
|
$
|
1.57
|
|
$
|
0.53
|
|
|
|
|
|
|
|
||||||||
Common stock equivalents excluded from income per diluted share because of their anti-dilutive effect
|
482
|
|
817
|
|
|
1,856
|
|
912
|
|
|
|
|
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) |
||||||
July 1 - July 31, 2017
|
110,375
|
|
|
$
|
33.11
|
|
|
107,992
|
|
|
$
|
26,938,775
|
|
August 1 - August 31, 2017
|
172,162
|
|
|
$
|
37.53
|
|
|
85,066
|
|
|
$
|
23,819,702
|
|
September 1 - September 30, 2017
|
95,897
|
|
|
$
|
34.55
|
|
|
90,865
|
|
|
$
|
20,677,472
|
|
Total
|
378,434
|
|
|
|
|
283,923
|
|
|
|
|
|
|
EXHIBITS
|
|
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Exhibit No.
|
|
Exhibit
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Filed Herewith
|
3.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.1*
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
SIGNATURES
|
|
|
TRINET GROUP, INC.
|
||
|
|
||
Date: November 2, 2017
|
|
By:
|
/s/ Burton M. Goldfield
|
|
|
|
Burton M. Goldfield
|
|
|
|
Chief Executive Officer
|
|
|
|
|
Date: November 2, 2017
|
|
By:
|
/s/ Richard Beckert
|
|
|
|
Richard Beckert
|
|
|
|
Chief Financial Officer
|
|
|
|
|
Date: November 2, 2017
|
|
By:
|
/s/ Michael P. Murphy
|
|
|
|
Michael P. Murphy
|
|
|
|
Chief Accounting Officer
|
|
|
|
By:
|
/s/ Brady Mickelsen
Name: Brady Mickelsen |
Title:
|
Chief Legal 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: November 2, 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: November 2, 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; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: November 2, 2017
|
/s/ Burton M. Goldfield
|
|
Burton M. Goldfield
|
|
Chief Executive Officer
|
|
|
|
|
Date: November 2, 2017
|
/s/ Richard Beckert
|
|
Richard Beckert
|
|
Chief Financial Officer
|