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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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One Park Place, Suite 600, Dublin, CA
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94568
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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-K
Cross Reference
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Page
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Part I, Item 1.
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Part I, Item 1A.
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Part I, Item 1B.
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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 5.
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Part II, Item 6.
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Part II, Item 7.
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Part II, Item 7A.
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Part II, Item 8.
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Part II, Item 9.
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Part II, Item 9A.
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Part II, Item 9B.
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Part III, Item 10.
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Part III, Item 11.
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Part III, Item 12.
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Part III, Item 13.
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Part III, Item 14.
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Part IV, Item 15.
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Part IV, Item 16.
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GLOSSARY
|
|
ACA
|
The Patient Protection and Affordable Care Act
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ACH
|
Automated Clearinghouse Transaction
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AFS
|
Available-for-sale
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ASC
|
Accounting standards codification
|
ASU
|
Accounting standards update
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CCPA
|
California Consumer Privacy Act of 2018
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COBRA
|
Consolidated Omnibus Budget Reconciliation Act
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COPS
|
Cost of providing services
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COSO
|
Committee of Sponsoring Organizations of Treadway Commission
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DOL
|
U.S. Department of Labor
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EBITDA
|
Earnings before interest expense, taxes, depreciation and amortization of intangible assets
|
EPLI
|
Employment Practices Liability Insurance
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EPS
|
Earnings Per Share
|
ERISA
|
Employee Retirement Income Security Act of 1974
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ESAC
|
Employer Services Assurance Corporation
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ESPP
|
Employee stock purchase plan
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ETR
|
Effective tax rate
|
FASB
|
Financial Accounting Standards Board
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G&A
|
General and administrative
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GAAP
|
Generally Accepted Accounting Principles in the United States
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HIPAA
|
Health Insurance Portability and Accountability Act of 1996
|
HITECH Act
|
Health Information Technology for Economic and Clinical Health Act of 2009
|
HR
|
Human Resources
|
IBNP
|
Incurred but not yet reported
|
IBNR
|
Incurred but not reported
|
IGP
|
Indemnity Guarantee Payment
|
IRS
|
Internal Revenue Service
|
ISR
|
Insurance service revenues
|
LDF
|
Loss development factor
|
LIBOR
|
London Inter-bank Offered Rate
|
MD&A
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
NISR
|
Net Insurance Service Revenues
|
NSR
|
Net service revenues
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OE
|
Operating expenses
|
PCAOB
|
Public Company Accounting Oversight Board
|
PEO
|
Professional Employer Organization
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PFC
|
Payroll funds collected
|
PHI
|
Protected Health Information
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PSR
|
Professional service revenues
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|
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GLOSSARY
|
|
RSA
|
Restricted Stock Award
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RSU
|
Restricted Stock Unit
|
SBC
|
Stock Based Compensation
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S&M
|
Sales and marketing
|
S&P 500
|
Standard and Poor's 500 Stock Index
|
SD&P
|
Systems development and programming
|
SEC
|
Securities and Exchange Commission
|
SMB
|
Small to midsize business
|
SOX
|
Sarbanes-Oxley Act of 2002
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TCJA
|
Tax Cuts and Jobs Act of 2017
|
U.S.
|
United States
|
UTP
|
Uncertain tax position
|
WSE
|
Worksite employee
|
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BUSINESS
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BUSINESS
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|
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HR EXPERTISE
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ACCESS TO BENEFITS
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PAYROLL SERVICES
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RISK MITIGATION
|
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TECHNOLOGY
PLATFORM |
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BUSINESS
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BUSINESS
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•
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remittance to WSEs of salaries, wages and certain other compensation (as reported and paid to us by our client), related tax reporting and remittance to tax authorities, and processing of garnishment and wage deduction orders. Unlike a payroll service provider, we pay WSEs from our own bank accounts,
|
•
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reporting of wages, withholding and deposit of associated payroll taxes as the employer for regulatory reporting and payroll tax returns,
|
•
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provision and maintenance of workers' compensation insurance and workers' compensation claims processing,
|
•
|
provision of access to, and administration of, group health, welfare, and retirement benefits to WSEs under TriNet-sponsored insurance plans,
|
•
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compliance with applicable law for certain 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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•
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day-to-day management of their worksites and WSEs,
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•
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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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•
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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 such as equity incentive plans,
|
•
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compliance with all laws and regulations applicable to the clients' 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 salary, wages and other relevant compensation to WSEs and applicable employment taxes and service fees, and
|
•
|
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 services provided by the client company to its own customers.
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|
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BUSINESS
|
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|
BUSINESS
|
|
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BUSINESS
|
|
•
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PEOs that compete directly with us,
|
•
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HR and information systems departments and personnel of companies that administer employee benefits, payroll and HR for their companies in-house,
|
•
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providers of certain endpoint HR services, including payroll, employee benefits, business process outsourcers with high-volume transaction and administrative capabilities, and other third-party administrators,
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•
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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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•
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insurance brokers who allow third-party HR systems to integrate with their technology platform.
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BUSINESS
|
|
|
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|
RISK FACTORS
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RISK FACTORS
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RISK FACTORS
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|
RISK FACTORS
|
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|
RISK FACTORS
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|
•
|
the volume and severity of health and workers' compensation insurance claims by our WSEs, recorded as part of our insurance costs, and the timing of related claims information provided by our insurance carriers,
|
•
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the amount and timing of our other insurance costs, operating expenses and capital expenditures,
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•
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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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•
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the retention, loss or merger of existing clients,
|
•
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a reduction in the number of WSEs employed by existing clients,
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•
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the timing of client payments and payment defaults by clients,
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•
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the costs associated with our acquisitions of companies, assets and technologies,
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•
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any payments or draw downs on our credit facility,
|
•
|
any unanticipated expenses, such as litigation or other dispute-related settlement payments,
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•
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any expenses we incur for geographic and service expansion,
|
•
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any changes in laws or adverse interpretation of laws, which may require us to change the manner in which we operate and/or increase our regulatory compliance costs,
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•
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any changes in our effective tax rate, and
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•
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the impact of new accounting pronouncements.
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•
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the overall performance of the equity markets,
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•
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any trading activity, or a market expectation regarding such activity, by our directors, executive officers and significant stockholders,
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•
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the economy as a whole, and its impact on SMBs and our clients,
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•
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the performance and market perception of companies that investors believe are similar to us, and
|
•
|
any significant changes in the liquidity of our common stock.
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RISK FACTORS
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RISK FACTORS
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|
•
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identifying attractive acquisition candidates,
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•
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over-valuing and over-paying for acquisition candidates,
|
•
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integrating the operations, systems, technologies, services and personnel of the acquired companies, which may include the migration of WSEs from the technology platform and service providers used by the acquired company to our own,
|
•
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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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•
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litigation resulting from activities of the acquired company, including claims from terminated employees, clients, former stockholders and other third parties,
|
•
|
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,
|
•
|
entering markets in which we have no prior experience and may not succeed,
|
•
|
potential loss of key employees of the acquired companies, and
|
•
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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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RISK FACTORS
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RISK FACTORS
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RISK FACTORS
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|
•
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incur, assume or guarantee additional debt,
|
•
|
pay dividends or distributions or redeem or repurchase capital stock,
|
•
|
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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•
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enter into sale-leaseback transactions,
|
•
|
enter into certain transactions with affiliates,
|
•
|
enter into certain hedging agreements,
|
•
|
enter into new lines of business,
|
|
|
|
RISK FACTORS
|
|
•
|
prepay certain indebtedness,
|
•
|
transfer all or substantially all of our assets or enter into merger or consolidation transactions with another person, and
|
•
|
enter into agreements that prohibit the incurrence of liens or the payment by our subsidiaries of dividends and distributions.
|
|
|
|
PROPERTIES, LEGAL PROCEEDINGS AND MINE SAFETY DISCLOSURES
|
Corporate:
|
Client Service Centers:
|
• Dublin, California
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• Bradenton, Florida
|
|
• Reno, Nevada
|
|
• Fort Mill, South Carolina
|
|
• New York, New York
|
|
|
|
STOCK ACTIVITIES
|
|
|
|
|
STOCK ACTIVITIES
|
|
Automatic Data Processing, Inc.
|
Insperity, Inc.
|
Paychex, Inc.
|
Barrett Business Services, Inc.
|
Intuit, Inc.
|
|
|
|
|
STOCK ACTIVITIES
|
|
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
(in millions)
(2)
|
||||||
October 1 - October 31, 2018
|
136,944
|
|
$
|
50.57
|
|
135,026
|
|
$
|
83
|
|
November 1 - November 30, 2018
|
242,679
|
|
$
|
45.07
|
|
158,563
|
|
$
|
75
|
|
December 1 - December 31, 2018
|
79,375
|
|
$
|
41.30
|
|
1,707
|
|
$
|
75
|
|
Total
|
458,998
|
|
|
295,296
|
|
|
|
|
|
SELECTED FINANCIAL DATA
|
|
|
Year Ended December 31,
|
||||||||||||||
(in millions, except per share data)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Income Statement Data:
|
|
|
|
|
|
||||||||||
Total revenues
|
$
|
3,503
|
|
$
|
3,275
|
|
$
|
3,060
|
|
$
|
2,659
|
|
$
|
2,194
|
|
Net income
|
192
|
|
178
|
|
61
|
|
32
|
|
15
|
|
|||||
Diluted net income per share of common stock
|
2.65
|
|
2.49
|
|
0.85
|
|
0.44
|
|
0.22
|
|
|||||
Non-GAAP measures
(1)
:
|
|
|
|
|
|
||||||||||
Net Service Revenues
|
893
|
|
809
|
|
646
|
|
547
|
|
508
|
|
|||||
Net Insurance Service Revenues
|
406
|
|
351
|
|
199
|
|
146
|
|
166
|
|
|||||
Adjusted EBITDA
|
347
|
|
285
|
|
185
|
|
151
|
|
165
|
|
|||||
Adjusted Net Income
|
218
|
|
142
|
|
87
|
|
71
|
|
74
|
|
|||||
|
|
|
|
|
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
228
|
|
$
|
336
|
|
$
|
184
|
|
$
|
166
|
|
$
|
134
|
|
Working capital
|
221
|
|
234
|
|
156
|
|
112
|
|
121
|
|
|||||
Total assets
|
2,435
|
|
2,593
|
|
2,095
|
|
2,092
|
|
2,341
|
|
|||||
Long-term debt
|
413
|
|
423
|
|
459
|
|
494
|
|
545
|
|
|||||
Total liabilities
|
2,060
|
|
2,387
|
|
2,060
|
|
2,084
|
|
2,366
|
|
|||||
Total stockholders’ equity (deficit)
|
375
|
|
206
|
|
35
|
|
8
|
|
(25
|
)
|
|||||
|
|
|
|
|
|
||||||||||
Cash Flow Data:
|
|
|
|
|
|
||||||||||
Net cash (used in) provided by operating activities
(2)
|
$
|
(104
|
)
|
$
|
606
|
|
$
|
192
|
|
$
|
(281
|
)
|
$
|
1,038
|
|
Net cash (used in) provided by investing activities
|
(200
|
)
|
(24
|
)
|
(27
|
)
|
(38
|
)
|
(45
|
)
|
|||||
Net cash (used in) financing activities
(2)
|
(85
|
)
|
(77
|
)
|
(104
|
)
|
(81
|
)
|
(76
|
)
|
|||||
Non-GAAP measures
(1)
:
|
|
|
|
|
|
||||||||||
Corporate operating cash flows
|
234
|
|
299
|
|
189
|
|
169
|
|
143
|
|
(1)
|
Refer to Non-GAAP Financial Measures section on the following pages for definitions and reconciliations from GAAP measures.
|
(2)
|
Prior year balances were retrospectively adjusted for ASU 2016-18. Refer to Note 1 in Item 8: Financial Statements and Supplementary Data, of this Form 10-K for details.
|
|
|
|
SELECTED FINANCIAL DATA
|
|
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.
• We also sometimes refer to Net Insurance Service Margin, which is the ratio of Net Insurance Revenue to Insurance Service Revenue.
|
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 either not directly resulting from our core operations or not 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. • We also sometimes refer to Adjusted EBITDA margin, which is the ratio of Adjusted EBITDA to Net Service Revenue. |
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.
|
|
|
|
SELECTED FINANCIAL DATA
|
|
Corporate Operating Cash Flows
|
• Net cash (used in) provided by operating activities, excluding the effects of:
- Assets associated with WSEs (accounts receivable, unbilled revenue, prepaid expenses and other current assets) and
- Liabilities associated with WSEs (client deposits, accrued wages, payroll tax liabilities and other payroll withholdings, accrued health benefit costs, accrued workers' compensation costs, insurance premiums and other payables, and other current liabilities).
|
• Provides information that our stockholders and management can use to evaluate our cash flows from operations independent of the current assets and liabilities associated with our WSEs.
• Enhances comparisons to prior periods and, accordingly, used as a liquidity measure to manage liquidity between corporate and WSE related activities, and to help determine and plan our cash flow and capital strategies.
|
(1)
|
We have adjusted our non-GAAP effective tax rate to
26%
,
41%
,
43%
,
42%
and
40%
for
2018
,
2017
,
2016
,
2015
and
2014
, respectively. The change in 2018 is due primarily to a decrease in the statutory tax rate from 35% to 21%. The changes in 2017, 2016, 2015 and 2014 are a result of changes in state income taxes from an increase in excludable income for state income tax purposes or state legislative changes. These non-GAAP effective tax rates exclude the income tax impact from stock-based compensation, changes in uncertain tax positions and nonrecurring benefits or expenses from federal legislative changes.
|
(2)
|
Non-cash interest expense represents amortization and write-off of our debt issuance costs.
|
|
Year Ended December 31,
|
||||||||||||||
(in millions)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Total revenues
|
$
|
3,503
|
|
$
|
3,275
|
|
$
|
3,060
|
|
$
|
2,659
|
|
$
|
2,194
|
|
Less: Insurance costs
|
2,610
|
|
2,466
|
|
2,414
|
|
2,112
|
|
1,686
|
|
|||||
Net Service Revenues
|
$
|
893
|
|
$
|
809
|
|
$
|
646
|
|
$
|
547
|
|
$
|
508
|
|
|
Year Ended December 31,
|
||||||||||||||
(in millions)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Insurance service revenues
|
$
|
3,016
|
|
$
|
2,817
|
|
$
|
2,613
|
|
$
|
2,258
|
|
$
|
1,852
|
|
Less: Insurance costs
|
2,610
|
|
2,466
|
|
2,414
|
|
2,112
|
|
1,686
|
|
|||||
Net Insurance Service Revenues
|
$
|
406
|
|
$
|
351
|
|
$
|
199
|
|
$
|
146
|
|
$
|
166
|
|
Net Insurance Service Revenue Margin
|
13
|
%
|
12
|
%
|
8
|
%
|
6
|
%
|
9
|
%
|
|
Year Ended December 31,
|
||||||||||||||
(in millions)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Net income
|
$
|
192
|
|
$
|
178
|
|
$
|
61
|
|
$
|
32
|
|
$
|
15
|
|
Provision for income taxes
|
49
|
|
22
|
|
43
|
|
28
|
|
18
|
|
|||||
Stock-based compensation
|
44
|
|
32
|
|
26
|
|
18
|
|
11
|
|
|||||
Interest expense and bank fees
|
22
|
|
20
|
|
20
|
|
19
|
|
54
|
|
|||||
Depreciation
|
35
|
|
28
|
|
19
|
|
15
|
|
14
|
|
|||||
Amortization of intangible assets
|
5
|
|
5
|
|
16
|
|
39
|
|
52
|
|
|||||
Secondary offering costs
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
|||||
Adjusted EBITDA
|
$
|
347
|
|
$
|
285
|
|
$
|
185
|
|
$
|
151
|
|
$
|
165
|
|
Adjusted EBITDA Margin
|
39
|
%
|
35
|
%
|
29
|
%
|
28
|
%
|
33
|
%
|
|
|
|
SELECTED FINANCIAL DATA
|
|
|
Year Ended December 31,
|
||||||||||||||
(in millions)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Net income
|
$
|
192
|
|
$
|
178
|
|
$
|
61
|
|
$
|
32
|
|
$
|
15
|
|
Effective income tax rate adjustment
|
(13
|
)
|
(59
|
)
|
(1
|
)
|
3
|
|
5
|
|
|||||
Stock-based compensation
|
44
|
|
32
|
|
26
|
|
18
|
|
11
|
|
|||||
Amortization of intangible assets
|
5
|
|
5
|
|
16
|
|
39
|
|
52
|
|
|||||
Debt prepayment premium
|
—
|
|
—
|
|
—
|
|
—
|
|
4
|
|
|||||
Secondary offering costs
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
|||||
Non-cash interest expense
|
4
|
|
2
|
|
4
|
|
4
|
|
22
|
|
|||||
Income tax impact of pre-tax adjustments
|
(14
|
)
|
(16
|
)
|
(19
|
)
|
(25
|
)
|
(36
|
)
|
|||||
Adjusted Net Income
|
$
|
218
|
|
$
|
142
|
|
$
|
87
|
|
$
|
71
|
|
$
|
74
|
|
|
Year Ended December 31,
|
||||||||||||||
(in millions)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Net cash (used in) provided by operating activities
|
$
|
(104
|
)
|
$
|
606
|
|
$
|
192
|
|
$
|
(281
|
)
|
$
|
1,038
|
|
Change in WSE related other current assets
|
33
|
|
35
|
|
(96
|
)
|
188
|
|
(32
|
)
|
|||||
Change in WSE related liabilities
|
305
|
|
(342
|
)
|
93
|
|
262
|
|
(863
|
)
|
|||||
Corporate Operating Cash Flows
|
$
|
234
|
|
$
|
299
|
|
$
|
189
|
|
$
|
169
|
|
$
|
143
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
Continuing to invest in our efforts to enhance our clients' experience through operational and process improvements,
|
•
|
Launching a marketing and branding campaign in September 2018 to improve our brand awareness and enhance our sales efforts,
|
•
|
Launching TriNet Professional Services, our sixth vertical product,
|
•
|
Completing the migration of existing clients from our legacy SOI platform onto our single technology platform,
|
•
|
Continuing to benefit from changes for one of our health insurance carrier contracts, where we converted from a guaranteed-cost to risk-based plan in late 2017,
|
•
|
Investing corporate funds and enhancing our investment strategy to generate interest income which improved our future interest income, net income, and our Adjusted EBITDA, accordingly,
|
•
|
Refinancing our term loans during the second quarter of 2018, and
|
•
|
Continuing to invest in improving our internal control environment to support our ongoing compliance with the requirements of the Sarbanes-Oxley Act of 2002 (SOX).
|
|
325,616
|
|
317,104
|
|
$37.7B
|
|||||
|
Total WSE
|
|
Average WSE
|
|
Payroll and payroll tax payments
|
|||||
|
|
Flat
|
|
2
|
%
|
reduction
|
|
1
|
%
|
increase
|
|
|
|
|
|
|
|
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
Year Ended December 31,
|
% Change
|
|||||||||||
(in millions, except operating metrics data)
|
2018
|
2017
|
2016
|
2018 vs. 2017
|
2017 vs. 2016
|
||||||||
Income Statement Data:
|
|
|
|
|
|
||||||||
Professional service revenues
|
$
|
487
|
|
$
|
458
|
|
$
|
447
|
|
6
|
%
|
3
|
%
|
Insurance service revenues
|
3,016
|
|
2,817
|
|
2,613
|
|
7
|
|
8
|
|
|||
Total revenues
|
3,503
|
|
3,275
|
|
3,060
|
|
7
|
|
7
|
|
|||
Insurance costs
|
2,610
|
|
2,466
|
|
2,414
|
|
6
|
|
2
|
|
|||
Operating expenses
|
642
|
|
592
|
|
522
|
|
8
|
|
13
|
|
|||
Total costs and operating expenses
|
3,252
|
|
3,058
|
|
2,936
|
|
6
|
|
4
|
|
|||
Operating income
|
251
|
|
217
|
|
124
|
|
15
|
|
75
|
|
|||
Other income (expense)
|
(10
|
)
|
(17
|
)
|
(20
|
)
|
48
|
|
10
|
|
|||
Income before provision for income taxes
|
241
|
|
200
|
|
104
|
|
21
|
|
91
|
|
|||
Income tax expense
|
49
|
|
22
|
|
43
|
|
128
|
|
(50
|
)
|
|||
Net income
|
$
|
192
|
|
$
|
178
|
|
$
|
61
|
|
8
|
%
|
190
|
%
|
|
|
|
|
|
|
||||||||
Non-GAAP measures
(1)
:
|
|
|
|
|
|
||||||||
Net Service Revenues
|
$
|
893
|
|
$
|
809
|
|
$
|
646
|
|
10
|
%
|
25
|
%
|
Net Insurance Service Revenues
|
406
|
|
351
|
|
199
|
|
16
|
|
76
|
|
|||
Adjusted EBITDA
|
347
|
|
285
|
|
185
|
|
22
|
|
53
|
|
|||
Adjusted Net income
|
218
|
|
142
|
|
87
|
|
53
|
|
62
|
|
|||
|
|
|
|
|
|
||||||||
Operating Metrics:
|
|
|
|
|
|
||||||||
Total WSEs payroll and payroll taxes processed (in millions)
|
$
|
37,666
|
|
$
|
37,115
|
|
$
|
34,281
|
|
1
|
%
|
8
|
%
|
Average WSEs
|
317,104
|
|
324,679
|
|
326,850
|
|
(2
|
)
|
(1
|
)
|
|||
Total WSEs
|
325,616
|
|
325,370
|
|
337,885
|
|
—
|
|
(4
|
)
|
(1)
|
Refer to Non-GAAP measures definitions and reconciliations from GAAP measures in Part II, Item 6. Selected Financial Data.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
Volume - the percentage change in period over period Average WSEs,
|
•
|
Mix - the change in composition of Average WSEs within our verticals combined with the composition of our enrolled WSEs within our insurance offerings, and
|
•
|
Rate - the combined percentage changes in service fees for each vertical product and changes in service fees associated with each insurance service offering.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
(in millions)
|
|
|
$124
|
2016 Operating Income
|
|
|
+$215
|
Higher total revenues primarily as a result of an increase in ISR related to health plan participation combined with an increase in fees per service offering.
|
|
-$52
|
Higher insurance costs primarily as a result of an increase in health plan participation.
|
|
-$70
|
Higher OE primarily as a result of an increase in our corporate employees and an increase in the costs associated with internal control remediation.
|
$217
|
2017 Operating Income
|
|
|
+$228
|
Higher total revenues primarily as a result of a change in the PSR mix of our vertical products, an increase in participation in our insurance services and an increase in fees per service offering.
|
|
-$144
|
Higher insurance costs primarily as a result of an increase in health plan participation.
|
|
-$50
|
Higher OE primarily as a result of an increase in our corporate employees, an increase in costs associated with a marketing campaign and an increase in our investment in operational and process improvements.
|
$251
|
2018 Operating Income
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
Volume - the percentage change in period over period Average WSEs,
|
•
|
Mix - the change in composition of Average WSEs within our verticals, and
|
•
|
Rate - the percentage changes in fees for each vertical.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
Volume - the percentage change in period over period Average WSEs,
|
•
|
Mix - all other changes including the composition of our enrolled WSEs within our insurance service offerings, and
|
•
|
Rate - the percentage changes in fees associated with each of our insurance service offerings.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
Volume - the percentage change in period over period Average WSEs,
|
•
|
Rate - the percentage changes in cost trend associated with each of our insurance service offerings, and
|
•
|
Mix - all other changes including the composition of our enrolled WSEs within our insurance offerings.
|
•
|
higher per enrollee medical costs (medical cost trend) of 7.0% - 8.0% in 2018 and 3.2% in 2017, as a result of higher medical utilization and prescription drug price increases,
|
•
|
administrative cost reductions from insurance carriers, and
|
•
|
favorable prior year development on our accrued workers' compensation costs of $28 million in 2018 and $6 million in 2017, primarily as a result of lower than expected severity development.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
(1)
|
Change in NISR during 2017 comprised of an increase in ISR of $204, partially offset by an increase in insurance costs of $52.
|
(2)
|
Change in NISR during 2018 comprised of an increase in ISR of $199, partially offset by an increase in insurance costs of $144.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
7% net increase due to current year impact and prior year non-recurring discrete tax benefits resulting from federal legislative changes,
|
•
|
4%
increase from a decrease in excess tax benefits and disqualifying dispositions from SBC,
|
•
|
2% increase resulting from the repeal of Section 199 benefits and other non-deductible expenses,
|
•
|
2%
decrease in uncertain tax positions (UTP) recorded compared to prior year, and
|
•
|
2% decrease in other as a result of 3% decrease due to changes related to ongoing litigation, partially offset by a 1% increase due to apportionment changes in higher tax jurisdictions.
|
•
|
20%
decrease attributable to revaluation of deferred taxes resulting from federal legislative changes pursuant to the TCJA passed in December 2017,
|
•
|
8%
decrease due to a discrete tax benefit from recognizing excess tax benefits from SBC,
|
•
|
4% decrease resulting from the recognition of Section 199 benefits and decreased non-deductible expenses, and
|
•
|
3% decrease related to tax credits and excludable income for state tax purposes.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
December 31,
|
|||||||||||||||||
|
2018
|
2017
|
||||||||||||||||
(in millions)
|
Corporate
|
WSE
|
Total
|
Corporate
|
WSE
|
Total
|
||||||||||||
Current assets:
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
228
|
|
$
|
—
|
|
$
|
228
|
|
$
|
336
|
|
$
|
—
|
|
$
|
336
|
|
Investments
|
54
|
|
—
|
|
54
|
|
—
|
|
—
|
|
—
|
|
||||||
Restricted cash, cash equivalents and investments
|
15
|
|
927
|
|
942
|
|
15
|
|
1,265
|
|
1,280
|
|
||||||
Other current assets
|
36
|
|
386
|
|
422
|
|
15
|
|
360
|
|
375
|
|
||||||
Total current assets
|
$
|
333
|
|
$
|
1,313
|
|
$
|
1,646
|
|
$
|
366
|
|
$
|
1,625
|
|
$
|
1,991
|
|
Total current liabilities
|
$
|
112
|
|
$
|
1,313
|
|
$
|
1,425
|
|
$
|
139
|
|
$
|
1,618
|
|
$
|
1,757
|
|
Working capital
|
$
|
221
|
|
$
|
—
|
|
$
|
221
|
|
$
|
227
|
|
$
|
7
|
|
$
|
234
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||
(in millions)
|
2018
|
2017
|
2016
|
||||||||||||||||||||||||
|
Corporate
|
WSE
|
Total
|
Corporate
|
WSE
|
Total
|
Corporate
|
WSE
|
Total
|
||||||||||||||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Operating activities
(1)
|
$
|
234
|
|
$
|
(338
|
)
|
$
|
(104
|
)
|
$
|
299
|
|
$
|
307
|
|
$
|
606
|
|
$
|
189
|
|
$
|
3
|
|
$
|
192
|
|
Investing activities
|
(200
|
)
|
—
|
|
(200
|
)
|
(24
|
)
|
—
|
|
(24
|
)
|
(27
|
)
|
—
|
|
(27
|
)
|
|||||||||
Financing activities
|
(85
|
)
|
—
|
|
(85
|
)
|
(77
|
)
|
—
|
|
(77
|
)
|
(104
|
)
|
—
|
|
(104
|
)
|
|||||||||
Net increase (decrease) in cash and cash equivalents, unrestricted and restricted
|
$
|
(51
|
)
|
$
|
(338
|
)
|
$
|
(389
|
)
|
$
|
198
|
|
$
|
307
|
|
$
|
505
|
|
$
|
58
|
|
$
|
3
|
|
$
|
61
|
|
Cash and cash equivalents, unrestricted and restricted:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Beginning of period
|
$
|
476
|
|
$
|
1,262
|
|
$
|
1,738
|
|
$
|
278
|
|
$
|
955
|
|
$
|
1,233
|
|
$
|
220
|
|
$
|
952
|
|
$
|
1,172
|
|
End of period
|
$
|
425
|
|
$
|
924
|
|
$
|
1,349
|
|
$
|
476
|
|
$
|
1,262
|
|
$
|
1,738
|
|
$
|
278
|
|
$
|
955
|
|
$
|
1,233
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net increase (decrease) in cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Unrestricted
|
$
|
(108
|
)
|
$
|
—
|
|
$
|
(108
|
)
|
$
|
152
|
|
$
|
—
|
|
$
|
152
|
|
$
|
18
|
|
$
|
—
|
|
$
|
18
|
|
Restricted
|
57
|
|
(338
|
)
|
(281
|
)
|
46
|
|
307
|
|
353
|
|
40
|
|
3
|
|
43
|
|
(1)
|
Prior year balances were retrospectively adjusted for ASU 2016-18.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||
(in millions)
|
2018
|
2017
|
2016
|
||||||||||||||||||||||||
|
Corporate
|
WSE
|
Total
|
Corporate
|
WSE
|
Total
|
Corporate
|
WSE
|
Total
|
||||||||||||||||||
Net income
|
$
|
192
|
|
$
|
—
|
|
$
|
192
|
|
$
|
178
|
|
$
|
—
|
|
$
|
178
|
|
$
|
61
|
|
$
|
—
|
|
$
|
61
|
|
Depreciation and amortization
|
46
|
|
—
|
|
46
|
|
35
|
|
—
|
|
35
|
|
39
|
|
—
|
|
39
|
|
|||||||||
Stock-based compensation expense
|
44
|
|
—
|
|
44
|
|
32
|
|
—
|
|
32
|
|
26
|
|
—
|
|
26
|
|
|||||||||
Payment of interest
|
(17
|
)
|
—
|
|
(17
|
)
|
(16
|
)
|
—
|
|
(16
|
)
|
(15
|
)
|
—
|
|
(15
|
)
|
|||||||||
Income tax payments, net
|
(49
|
)
|
—
|
|
(49
|
)
|
(2
|
)
|
—
|
|
(2
|
)
|
(39
|
)
|
—
|
|
(39
|
)
|
|||||||||
Collateral (paid to) refunded from insurance carriers, net
|
—
|
|
26
|
|
26
|
|
—
|
|
(3
|
)
|
(3
|
)
|
—
|
|
(25
|
)
|
(25
|
)
|
|||||||||
Changes in deferred taxes
|
1
|
|
—
|
|
1
|
|
(25
|
)
|
—
|
|
(25
|
)
|
42
|
|
—
|
|
42
|
|
|||||||||
Changes in other operating assets
|
(44
|
)
|
(27
|
)
|
(71
|
)
|
36
|
|
(36
|
)
|
—
|
|
(38
|
)
|
92
|
|
54
|
|
|||||||||
Changes in other operating liabilities
|
61
|
|
(337
|
)
|
(276
|
)
|
61
|
|
346
|
|
407
|
|
113
|
|
(64
|
)
|
49
|
|
|||||||||
Net cash provided by (used in) operating activities
(1)
|
$
|
234
|
|
$
|
(338
|
)
|
$
|
(104
|
)
|
$
|
299
|
|
$
|
307
|
|
$
|
606
|
|
$
|
189
|
|
$
|
3
|
|
$
|
192
|
|
(1)
|
Prior year balances were retrospectively adjusted for ASU 2016-18, where applicable.
|
|
Year Ended December 31,
|
||||||||
(in millions)
|
2018
|
2017
|
2016
|
||||||
Investments:
|
|
|
|
||||||
Purchases of marketable securities
|
$
|
(258
|
)
|
$
|
—
|
|
$
|
(15
|
)
|
Proceeds from sale and maturity of marketable securities
|
101
|
|
14
|
|
28
|
|
|||
Cash (used in) provided by investments
|
$
|
(157
|
)
|
$
|
14
|
|
$
|
13
|
|
|
|
|
|
||||||
Capital expenditures:
|
|
|
|
||||||
Software and hardware
|
$
|
30
|
|
$
|
28
|
|
$
|
31
|
|
Office furniture, equipment and leasehold improvements
|
13
|
|
10
|
|
9
|
|
|||
Cash used in capital expenditures
|
$
|
43
|
|
$
|
38
|
|
$
|
40
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
Year Ended December 31,
|
||||||||
(in millions)
|
2018
|
2017
|
2016
|
||||||
Financing activities
|
|
|
|
||||||
Repurchase of common stock, net of issuance
|
$
|
69
|
|
$
|
39
|
|
$
|
67
|
|
Repayment of borrowings
|
22
|
|
38
|
|
37
|
|
|||
Net proceeds from issuance of debt
|
(6
|
)
|
—
|
|
—
|
|
|||
Cash used in financing activities
|
$
|
85
|
|
$
|
77
|
|
$
|
104
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
Payments Due by Period
|
||||||||||||||
(in millions)
|
Total
|
Less than 1 year
|
1-3 years
|
3-5 years
|
More than 5 years
|
||||||||||
Debt obligations
(1)
|
$
|
483
|
|
$
|
39
|
|
$
|
75
|
|
$
|
369
|
|
$
|
—
|
|
Workers' compensation obligations
(2)
|
241
|
|
73
|
|
57
|
|
37
|
|
74
|
|
|||||
Operating lease obligations
(3)
|
88
|
|
18
|
|
28
|
|
17
|
|
25
|
|
|||||
Purchase obligations
(4)
|
42
|
|
31
|
|
11
|
|
—
|
|
—
|
|
|||||
Uncertain tax positions
(5)
|
6
|
|
1
|
|
5
|
|
—
|
|
—
|
|
|||||
Total
|
$
|
860
|
|
$
|
162
|
|
$
|
176
|
|
$
|
423
|
|
$
|
99
|
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
the selection of method used and the relative weights given to selecting the method used for each policy year,
|
•
|
the underlying assumptions of LDF used in these models,
|
•
|
the effect of any changes to claims handling and payment processes,
|
•
|
evaluation of loss (medical and indemnity) cost trends, costs from changes in the risk exposure being evaluated and any applicable changes in legal, regulatory or judicial environment.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
•
|
TriNet's historical frequency and severity of workers' compensation claims experience, exposure data and industry loss experience,
|
•
|
inputs of WSEs’ job responsibilities and location,
|
•
|
estimates of future cost trends to establish expected loss ratios for subsequent accident years,
|
•
|
expected loss ratios for the latest accident year or prior accident years, adjusted for the loss trend, the effect of rate changes and other quantifiable factors, and
|
•
|
LDFs to project the reported losses for each accident year to an ultimate basis.
|
•
|
TriNet historical loss claims payment patterns and medical cost trend rates,
|
•
|
current period claims costs and claims reporting patterns (completion factors), and
|
•
|
plan enrollment.
|
|
|
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
|
|
|
|
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
|
December 31,
|
|
December 31,
|
||||
(in millions, except share and per share data)
|
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
228
|
|
|
$
|
336
|
|
Investments
|
|
54
|
|
|
—
|
|
||
Restricted cash, cash equivalents and investments
|
|
942
|
|
|
1,280
|
|
||
Accounts receivable, net
|
|
11
|
|
|
21
|
|
||
Unbilled revenue, net
|
|
304
|
|
|
297
|
|
||
Prepaid expenses
|
|
48
|
|
|
38
|
|
||
Other current assets
|
|
59
|
|
|
19
|
|
||
Total current assets
|
|
1,646
|
|
|
1,991
|
|
||
Restricted cash, cash equivalents and investments, noncurrent
|
|
187
|
|
|
162
|
|
||
Investments, noncurrent
|
|
135
|
|
|
—
|
|
||
Property & equipment, net
|
|
79
|
|
|
70
|
|
||
Goodwill
|
|
289
|
|
|
289
|
|
||
Other intangible assets, net
|
|
21
|
|
|
26
|
|
||
Other assets
|
|
78
|
|
|
55
|
|
||
Total assets
|
|
$
|
2,435
|
|
|
$
|
2,593
|
|
Liabilities and stockholders' equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable and other current liabilities
|
|
$
|
45
|
|
|
$
|
59
|
|
Long-term debt, current portion
|
|
22
|
|
|
40
|
|
||
Client deposits
|
|
56
|
|
|
52
|
|
||
Accrued wages
|
|
352
|
|
|
329
|
|
||
Accrued health insurance costs, net
|
|
135
|
|
|
151
|
|
||
Accrued workers' compensation costs, net
|
|
67
|
|
|
67
|
|
||
Payroll tax liabilities and other payroll withholdings
|
|
729
|
|
|
1,034
|
|
||
Insurance premiums and other payables
|
|
19
|
|
|
25
|
|
||
Total current liabilities
|
|
1,425
|
|
|
1,757
|
|
||
Long-term debt, less current portion
|
|
391
|
|
|
383
|
|
||
Accrued workers' compensation costs, less current portion, net
|
|
158
|
|
|
165
|
|
||
Deferred taxes
|
|
68
|
|
|
68
|
|
||
Other non-current liabilities
|
|
18
|
|
|
14
|
|
||
Total liabilities
|
|
2,060
|
|
|
2,387
|
|
||
Commitments and contingencies (see Note 8)
|
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
|
||||
Preferred stock
|
|
—
|
|
|
—
|
|
||
($0.000025 par value per share; 20,000,000 shares authorized; no shares issued or outstanding at December 31, 2018 and 2017)
|
|
|
|
|
||||
Common stock and additional paid-in capital
|
|
641
|
|
|
583
|
|
||
($0.000025 par value per share; 750,000,000 shares authorized; 70,596,559 and 69,818,392 shares issued and outstanding at December 31, 2018 and 2017, respectively)
|
|
|
|
|
||||
Accumulated deficit
|
|
(266
|
)
|
|
(377
|
)
|
||
Total stockholders' equity
|
|
375
|
|
|
206
|
|
||
Total liabilities & stockholders' equity
|
|
$
|
2,435
|
|
|
$
|
2,593
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Year Ended December 31
|
||||||||
(in millions, except share and per share data)
|
2018
|
2017
|
2016
|
||||||
Professional service revenues
|
$
|
487
|
|
$
|
458
|
|
$
|
447
|
|
Insurance service revenues
|
3,016
|
|
2,817
|
|
2,613
|
|
|||
Total revenues
|
3,503
|
|
3,275
|
|
3,060
|
|
|||
Insurance costs
|
2,610
|
|
2,466
|
|
2,414
|
|
|||
Cost of providing services (exclusive of depreciation and amortization of intangible assets)
|
229
|
|
213
|
|
190
|
|
|||
Sales and marketing
|
182
|
|
187
|
|
174
|
|
|||
General and administrative
|
142
|
|
114
|
|
92
|
|
|||
Systems development and programming
|
49
|
|
45
|
|
31
|
|
|||
Depreciation and amortization of intangible assets
|
40
|
|
33
|
|
35
|
|
|||
Total costs and operating expenses
|
3,252
|
|
3,058
|
|
2,936
|
|
|||
Operating income
|
251
|
|
217
|
|
124
|
|
|||
Other income (expense):
|
|
|
|
||||||
Interest expense, bank fees and other
|
(22
|
)
|
(20
|
)
|
(20
|
)
|
|||
Interest income
|
12
|
|
3
|
|
—
|
|
|||
Income before provision for income taxes
|
241
|
|
200
|
|
104
|
|
|||
Income tax expense
|
49
|
|
22
|
|
43
|
|
|||
Net income
|
$
|
192
|
|
$
|
178
|
|
$
|
61
|
|
Other comprehensive income, net of tax
|
—
|
|
—
|
|
1
|
|
|||
Comprehensive income
|
$
|
192
|
|
$
|
178
|
|
$
|
62
|
|
|
|
|
|
||||||
Net income per share:
|
|
|
|
||||||
Basic
|
$
|
2.72
|
|
$
|
2.57
|
|
$
|
0.88
|
|
Diluted
|
$
|
2.65
|
|
$
|
2.49
|
|
$
|
0.85
|
|
Weighted average shares:
|
|
|
|
||||||
Basic
|
70,385,639
|
|
69,175,377
|
|
70,159,696
|
|
|||
Diluted
|
72,300,663
|
|
71,385,280
|
|
71,972,486
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Common Stock and Additional Paid-In Capital
|
Accumulated Deficit
|
Accumulated Other Comprehensive Loss
|
Total Stockholders’ Equity (Deficit)
|
||||||||||
(in millions, except share data)
|
Shares
|
Amount
|
||||||||||||
Balance at December 31, 2015
|
70,371,425
|
|
$
|
494
|
|
$
|
(485
|
)
|
$
|
(1
|
)
|
$
|
8
|
|
Net income
|
—
|
|
—
|
|
61
|
|
—
|
|
61
|
|
||||
Other comprehensive income
|
—
|
|
—
|
|
—
|
|
1
|
|
1
|
|
||||
Issuance of common stock for vested restricted stock units
|
695,253
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Issuance of common stock under employee stock purchase plan
|
283,644
|
|
4
|
|
—
|
|
—
|
|
4
|
|
||||
Issuance of common stock from exercise of stock options
|
1,297,812
|
|
5
|
|
—
|
|
—
|
|
5
|
|
||||
Stock-based compensation expense
|
—
|
|
26
|
|
—
|
|
—
|
|
26
|
|
||||
Repurchase of common stock
|
(3,414,675
|
)
|
—
|
|
(72
|
)
|
—
|
|
(72
|
)
|
||||
Awards effectively repurchased for required employee withholding taxes
|
(217,769
|
)
|
—
|
|
(4
|
)
|
—
|
|
(4
|
)
|
||||
Excess tax benefit from equity incentive plan activity
|
—
|
|
6
|
|
—
|
|
—
|
|
6
|
|
||||
Balance at December 31, 2016
|
69,015,690
|
|
535
|
|
(500
|
)
|
—
|
|
35
|
|
||||
Net income
|
—
|
|
—
|
|
178
|
|
—
|
|
178
|
|
||||
Issuance of common stock from vested restricted stock units
|
1,020,352
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Issuance of common stock for employee stock purchase plan
|
224,928
|
|
5
|
|
—
|
|
—
|
|
5
|
|
||||
Issuance of common stock from exercise of stock options
|
1,441,957
|
|
11
|
|
—
|
|
—
|
|
11
|
|
||||
Stock-based compensation expense
|
—
|
|
32
|
|
—
|
|
—
|
|
32
|
|
||||
Repurchase of common stock
|
(1,549,434
|
)
|
—
|
|
(44
|
)
|
—
|
|
(44
|
)
|
||||
Awards effectively repurchased for required employee withholding taxes
|
(335,101
|
)
|
—
|
|
(11
|
)
|
—
|
|
(11
|
)
|
||||
Balance at December 31, 2017
|
69,818,392
|
|
583
|
|
(377
|
)
|
—
|
|
206
|
|
||||
Net income
|
—
|
|
—
|
|
192
|
|
—
|
|
192
|
|
||||
Cumulative effect of accounting change
|
—
|
|
—
|
|
2
|
|
—
|
|
2
|
|
||||
Issuance of common stock from restricted stock units and restricted stock awards
|
1,634,271
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Issuance of common stock for employee stock purchase plan
|
175,966
|
|
7
|
|
—
|
|
—
|
|
7
|
|
||||
Issuance of common stock from exercise of stock options
|
617,157
|
|
7
|
|
—
|
|
—
|
|
7
|
|
||||
Stock-based compensation expense
|
—
|
|
44
|
|
—
|
|
—
|
|
44
|
|
||||
Repurchase of common stock
|
(1,190,995
|
)
|
—
|
|
(61
|
)
|
—
|
|
(61
|
)
|
||||
Awards effectively repurchased for required employee withholding taxes
|
(458,232
|
)
|
—
|
|
(22
|
)
|
—
|
|
(22
|
)
|
||||
Balance at December 31, 2018
|
70,596,559
|
|
641
|
|
(266
|
)
|
—
|
|
375
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Year Ended December 31,
|
||||||||
(in millions)
|
2018
|
2017
|
2016
|
||||||
Operating activities
|
|
|
|
||||||
Net income
|
$
|
192
|
|
$
|
178
|
|
61
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||||
Depreciation and amortization
|
46
|
|
35
|
|
39
|
|
|||
Stock-based compensation
|
44
|
|
32
|
|
26
|
|
|||
Deferred income taxes
|
1
|
|
(25
|
)
|
42
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
||||||
Accounts receivable
|
10
|
|
(14
|
)
|
—
|
|
|||
Unbilled revenue
|
(14
|
)
|
(4
|
)
|
(79
|
)
|
|||
Prepaid expenses
|
(9
|
)
|
28
|
|
(45
|
)
|
|||
Accounts payable and other current liabilities
|
(8
|
)
|
23
|
|
11
|
|
|||
Client deposits
|
4
|
|
(4
|
)
|
(2
|
)
|
|||
Accrued wages
|
23
|
|
26
|
|
73
|
|
|||
Accrued health insurance costs
|
(16
|
)
|
22
|
|
16
|
|
|||
Accrued workers' compensation costs
|
(7
|
)
|
9
|
|
60
|
|
|||
Payroll taxes payable and other payroll withholdings
|
(305
|
)
|
294
|
|
(175
|
)
|
|||
Other assets
|
(64
|
)
|
(11
|
)
|
174
|
|
|||
Other liabilities
|
(1
|
)
|
17
|
|
(9
|
)
|
|||
Net cash (used in) provided by operating activities
|
(104
|
)
|
606
|
|
192
|
|
|||
Investing activities
|
|
|
|
||||||
Purchases of marketable securities
|
(258
|
)
|
—
|
|
(15
|
)
|
|||
Proceeds from sale and maturity of marketable securities
|
101
|
|
14
|
|
28
|
|
|||
Acquisitions of property and equipment
|
(43
|
)
|
(38
|
)
|
(40
|
)
|
|||
Net cash used in investing activities
|
(200
|
)
|
(24
|
)
|
(27
|
)
|
|||
Financing activities
|
|
|
|
||||||
Repurchase of common stock
|
(61
|
)
|
(44
|
)
|
(72
|
)
|
|||
Proceeds from issuance of common stock
|
14
|
|
16
|
|
9
|
|
|||
Awards effectively repurchased for required employee withholding taxes
|
(22
|
)
|
(11
|
)
|
(4
|
)
|
|||
Proceeds from issuance of debt, net
|
210
|
|
—
|
|
58
|
|
|||
Payments for extinguishment of debt
|
(204
|
)
|
—
|
|
(58
|
)
|
|||
Repayment of debt
|
(22
|
)
|
(38
|
)
|
(37
|
)
|
|||
Net cash used in financing activities
|
(85
|
)
|
(77
|
)
|
(104
|
)
|
|||
Net (decrease) increase in unrestricted and restricted cash and cash equivalents
|
(389
|
)
|
505
|
|
61
|
|
|||
Cash and cash equivalents, unrestricted and restricted:
|
|
|
|
||||||
Beginning of period
|
1,738
|
|
1,233
|
|
1,172
|
|
|||
End of period
|
$
|
1,349
|
|
$
|
1,738
|
|
$
|
1,233
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information
|
|
|
|
||||||
Interest paid
|
$
|
17
|
|
$
|
16
|
|
15
|
|
|
Income taxes paid, net
|
49
|
|
2
|
|
39
|
|
|||
Supplemental schedule of noncash investing and financing activities
|
|
|
|
||||||
Payable for purchase of property and equipment
|
$
|
3
|
|
$
|
2
|
|
1
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
•
|
compensation through wages and salaries,
|
•
|
employer payroll-related tax payments,
|
•
|
employee payroll-related tax withholdings and payments,
|
•
|
employee benefit programs including health and life insurance, and others, and
|
•
|
workers' compensation coverage.
|
|
|
December 31, 2017
|
||||||||||
|
|
As previously
|
|
Reclassification
|
|
As
|
||||||
(in millions)
|
|
Reported
|
|
Amounts
|
|
Revised
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Restricted cash, cash equivalents, and investments
|
|
$
|
15
|
|
|
$
|
1,265
|
|
|
$
|
1,280
|
|
Accounts receivable, net
|
|
—
|
|
|
21
|
|
|
21
|
|
|||
Unbilled revenue, net
|
|
—
|
|
|
297
|
|
|
297
|
|
|||
Prepaid income taxes
|
|
5
|
|
|
(5
|
)
|
|
—
|
|
|||
Prepaid expenses
|
|
8
|
|
|
30
|
|
|
38
|
|
|||
Other current assets
|
|
2
|
|
|
17
|
|
|
19
|
|
|||
Worksite employee related assets
|
|
1,625
|
|
|
(1,625
|
)
|
|
—
|
|
|||
Workers' compensation collateral receivable
|
|
39
|
|
|
(39
|
)
|
|
—
|
|
|||
Deferred and other long term income taxes
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|||
Other assets
|
|
14
|
|
|
41
|
|
|
55
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
|
December 31, 2017
|
||||||||||
|
|
As previously
|
|
Reclassification
|
|
As
|
||||||
(in millions)
|
|
Reported
|
|
Amounts
|
|
Revised
|
||||||
Liabilities and stockholders' equity
|
|
|
|
|
|
|
||||||
Accounts payable & other current liabilities
|
|
$
|
45
|
|
|
$
|
14
|
|
|
$
|
59
|
|
Accrued wages
|
|
40
|
|
|
289
|
|
|
329
|
|
|||
Client deposits
|
|
—
|
|
|
52
|
|
|
52
|
|
|||
Accrued health insurance costs, net
|
|
—
|
|
|
151
|
|
|
151
|
|
|||
Accrued workers' compensation costs, net
|
|
—
|
|
|
67
|
|
|
67
|
|
|||
Payroll tax liabilities and other payroll withholdings
|
|
—
|
|
|
1,034
|
|
|
1,034
|
|
|||
Insurance premiums and other payables
|
|
—
|
|
|
25
|
|
|
25
|
|
|||
Other current liabilities
|
|
14
|
|
|
(14
|
)
|
|
—
|
|
|||
Worksite employee related liabilities
|
|
1,618
|
|
|
(1,618
|
)
|
|
—
|
|
|
Year ended December 31,
|
|||||||||||||||||||||||
|
2017
|
2016
|
||||||||||||||||||||||
(in millions)
|
As previously reported
|
Effect of ASU adoption
|
Reclassified amounts
|
As revised
|
As previously reported
|
Effect of ASU adoption
|
Reclassified amounts
|
As revised
|
||||||||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
||||||||||||||||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Accounts receivable
|
$
|
—
|
|
$
|
—
|
|
$
|
(14
|
)
|
$
|
(14
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Restricted cash, cash equivalents, and investments
|
(46
|
)
|
46
|
|
—
|
|
—
|
|
(42
|
)
|
42
|
|
—
|
|
—
|
|
||||||||
Unbilled revenue
|
—
|
|
—
|
|
(4
|
)
|
(4
|
)
|
—
|
|
—
|
|
(79
|
)
|
(79
|
)
|
||||||||
Prepaid income taxes
|
37
|
|
—
|
|
(37
|
)
|
—
|
|
(38
|
)
|
—
|
|
38
|
|
—
|
|
||||||||
Prepaid expenses
|
1
|
|
—
|
|
27
|
|
28
|
|
(2
|
)
|
—
|
|
(43
|
)
|
(45
|
)
|
||||||||
Workers' compensation collateral receivable
|
(7
|
)
|
—
|
|
7
|
|
—
|
|
(3
|
)
|
—
|
|
3
|
|
—
|
|
||||||||
Accounts payable
|
22
|
|
—
|
|
1
|
|
23
|
|
9
|
|
—
|
|
2
|
|
11
|
|
||||||||
Client deposits
|
—
|
|
—
|
|
(4
|
)
|
(4
|
)
|
—
|
|
—
|
|
(2
|
)
|
(2
|
)
|
||||||||
Accrued wages
|
11
|
|
—
|
|
15
|
|
26
|
|
4
|
|
—
|
|
69
|
|
73
|
|
||||||||
Accrued health insurance costs
|
—
|
|
—
|
|
22
|
|
22
|
|
—
|
|
—
|
|
16
|
|
16
|
|
||||||||
Accrued workers' compensation costs
|
12
|
|
—
|
|
(3
|
)
|
9
|
|
55
|
|
—
|
|
5
|
|
60
|
|
||||||||
Payroll taxes payable and other payroll withholdings
|
—
|
|
—
|
|
294
|
|
294
|
|
—
|
|
—
|
|
(175
|
)
|
(175
|
)
|
||||||||
Worksite employee related assets
|
(343
|
)
|
307
|
|
36
|
|
—
|
|
92
|
|
1
|
|
(93
|
)
|
—
|
|
||||||||
Worksite employee related liabilities
|
342
|
|
—
|
|
(342
|
)
|
—
|
|
(94
|
)
|
—
|
|
94
|
|
—
|
|
||||||||
Other assets
|
4
|
|
—
|
|
(15
|
)
|
(11
|
)
|
—
|
|
—
|
|
174
|
|
174
|
|
||||||||
Other liabilities
|
—
|
|
—
|
|
17
|
|
17
|
|
—
|
|
—
|
|
(9
|
)
|
(9
|
)
|
||||||||
Net cash provided by operating activities
|
253
|
|
353
|
|
—
|
|
606
|
|
149
|
|
43
|
|
—
|
|
192
|
|
||||||||
Financing activities
|
|
|
|
|
|
|
|
|
||||||||||||||||
Proceeds from issuance of common stock on exercised options
|
11
|
|
—
|
|
(11
|
)
|
—
|
|
5
|
|
—
|
|
(5
|
)
|
—
|
|
||||||||
Proceeds from issuance of common stock on employee stock purchase plan
|
5
|
|
—
|
|
(5
|
)
|
—
|
|
4
|
|
—
|
|
(4
|
)
|
—
|
|
||||||||
Proceeds from issuance of common stock
|
—
|
|
—
|
|
16
|
|
16
|
|
—
|
|
—
|
|
9
|
|
9
|
|
||||||||
Net increase in cash and cash equivalents
|
$
|
152
|
|
$
|
353
|
|
$
|
—
|
|
$
|
505
|
|
$
|
18
|
|
$
|
43
|
|
$
|
—
|
|
$
|
61
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
•
|
liability for unpaid losses and loss adjustment expenses (accrued workers' compensation costs) related to workers' compensation and workers' compensation collateral receivable,
|
•
|
accrued health insurance costs,
|
•
|
liability for insurance premiums payable,
|
•
|
impairments of goodwill and other intangible assets,
|
•
|
income tax assets and liabilities, and
|
•
|
liability for legal contingencies.
|
•
|
Our annual service contracts with our clients that are cancellable with 30 days' notice are initially considered 30-day contracts under the new standard;
|
•
|
Professional service revenues are recognized on an output basis which results in recognition at the time payroll is processed;
|
•
|
Our non-refundable set up fees are no longer deferred but accounted for as part of our transaction price and are allocated among professional service revenues and insurance services revenues; and
|
•
|
The majority of sales commissions related to onboarding new clients that were previously expensed are capitalized as contract assets and amortized over the estimated client life.
|
•
|
Payroll and payroll tax processing,
|
•
|
Health benefits services, and
|
•
|
Workers’ compensation services.
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Year Ended December 31, 2018
|
|||||
(in millions)
|
Capitalized
|
Amortized
|
||||
Deferred commission costs
|
$
|
33
|
|
$
|
2
|
|
•
|
TriNet's historical loss experience, exposure data, and industry loss experience,
|
•
|
inputs including WSE job responsibilities and location,
|
•
|
historical frequency and severity of workers' compensation claims,
|
|
|
|
FINANCIAL STATEMENTS
|
|
•
|
an estimate of future cost trends to establish expected loss ratios for subsequent accident years,
|
•
|
expected loss ratios for the latest accident year or prior accident years, adjusted for the loss trend, the effect of rate changes and other quantifiable factors, and
|
•
|
loss development factors to project the reported losses for each accident year to an ultimate basis.
|
|
|
|
FINANCIAL STATEMENTS
|
|
•
|
cash and cash equivalents in trust accounts functioning as security deposits for our insurance carriers,
|
•
|
payroll funds collected representing cash collected in advance from clients which we designate as restricted for the purpose of funding WSE payroll and payroll taxes and other payroll related liabilities, and
|
•
|
amounts held in trust for current and future premium and claim obligations with our insurance carriers, which amounts are held in trust according to the terms of the relevant insurance policies and by the local insurance regulations of the jurisdictions in which the policies are in force.
|
•
|
Level 1—observable inputs for identical assets or liabilities, such as quoted prices in active markets,
|
•
|
Level 2—inputs other than the quoted prices in active markets that are observable either directly or indirectly,
|
•
|
Level 3—unobservable inputs in which there is little or no market data, which requires that we develop our own assumptions.
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
December 31, 2018
|
||||||||
(in millions)
|
As reported
|
Balance Using Previous Standard
|
Increase (Decrease)
|
||||||
Balance sheet
|
|
|
|
||||||
Assets
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
228
|
|
$
|
235
|
|
$
|
(7
|
)
|
Restricted cash, cash equivalents and investments, current
|
942
|
|
935
|
|
7
|
|
|||
Unbilled revenue, net
|
304
|
|
311
|
|
(7
|
)
|
|||
Prepaid expenses
|
48
|
|
44
|
|
4
|
|
|||
Other current assets
|
59
|
|
49
|
|
10
|
|
|||
Other assets
|
78
|
|
67
|
|
11
|
|
|||
Liabilities
|
|
|
|
||||||
Accounts payable and other current liabilities
|
$
|
45
|
|
$
|
48
|
|
$
|
3
|
|
Deferred taxes
|
68
|
|
67
|
|
$
|
(1
|
)
|
||
Other non-current liabilities
|
18
|
|
22
|
|
$
|
4
|
|
||
Equity
|
|
|
|
||||||
Accumulated deficit
|
$
|
(266
|
)
|
$
|
(290
|
)
|
$
|
(24
|
)
|
|
Year Ended December 31, 2018
|
||||||||
(in millions, except per share data)
|
As Reported
|
Balance Using Previous Standard
|
Increase (Decrease)
|
||||||
Income statement
|
|
|
|
||||||
Revenue
|
|
|
|
||||||
Professional service revenues
|
$
|
487
|
|
$
|
485
|
|
$
|
2
|
|
Total revenues
|
3,503
|
|
3,501
|
|
2
|
|
|||
Expense
|
|
|
|
||||||
Sales and marketing expense
|
|
|
|
||||||
Commissions expense
|
22
|
|
53
|
|
(31
|
)
|
|||
Total expense
|
3,252
|
|
3,283
|
|
(31
|
)
|
|||
Income before provision for income taxes
|
241
|
|
208
|
|
33
|
|
|||
Income tax expense
|
49
|
|
40
|
|
9
|
|
|||
Net income
|
$
|
192
|
|
$
|
168
|
|
$
|
24
|
|
Basic earnings per share
|
$
|
2.72
|
|
$
|
2.40
|
|
$
|
0.32
|
|
Diluted earnings per share
|
$
|
2.65
|
|
$
|
2.34
|
|
$
|
0.31
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
(in millions)
|
Increase Under New Guidance
|
||
Recognizing right-of-use asset
|
|
||
Long-term right-of-use assets
|
$
|
53
|
|
Recognizing lease liability and derecognizing deferred rent
|
|
||
Accounts payable and other current liabilities
|
$
|
16
|
|
Other non-current liabilities
|
37
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
December 31, 2018
|
December 31, 2017
|
||||||||||||||||||||||
(in millions)
|
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
|
$
|
228
|
|
$
|
—
|
|
$
|
—
|
|
$
|
228
|
|
$
|
336
|
|
$
|
—
|
|
$
|
—
|
|
$
|
336
|
|
Investments
|
—
|
|
54
|
|
—
|
|
54
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Restricted cash, cash equivalents and investments
|
|
|
|
|
|
|
|
|
||||||||||||||||
Insurance carriers security deposits
|
15
|
|
—
|
|
—
|
|
15
|
|
15
|
|
—
|
|
—
|
|
15
|
|
||||||||
Payroll funds collected
|
783
|
|
—
|
|
—
|
|
783
|
|
1,095
|
|
—
|
|
—
|
|
1,095
|
|
||||||||
Collateral for health benefits claims
|
75
|
|
—
|
|
—
|
|
75
|
|
69
|
|
—
|
|
—
|
|
69
|
|
||||||||
Collateral for workers' compensation claims
|
66
|
|
1
|
|
—
|
|
67
|
|
98
|
|
1
|
|
—
|
|
99
|
|
||||||||
Collateral to secure standby letter of credit
|
—
|
|
—
|
|
2
|
|
2
|
|
—
|
|
—
|
|
2
|
|
2
|
|
||||||||
Total restricted cash, cash equivalents and investments, current
|
939
|
|
1
|
|
2
|
|
942
|
|
1,277
|
|
1
|
|
2
|
|
1,280
|
|
||||||||
Investments, noncurrent
|
—
|
|
135
|
|
—
|
|
135
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Restricted cash, cash equivalents and investments, noncurrent
|
|
|
|
|
|
|
|
|
||||||||||||||||
Collateral for workers' compensation claims
|
182
|
|
5
|
|
—
|
|
187
|
|
125
|
|
37
|
|
—
|
|
162
|
|
||||||||
Total
|
$
|
1,349
|
|
$
|
195
|
|
$
|
2
|
|
$
|
1,546
|
|
$
|
1,738
|
|
$
|
38
|
|
$
|
2
|
|
$
|
1,778
|
|
|
December 31, 2018
|
|||||||||||
(in millions)
|
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Fair Value
|
||||||||
Asset-backed securities
|
$
|
33
|
|
$
|
—
|
|
$
|
—
|
|
$
|
33
|
|
Corporate bonds
|
99
|
|
—
|
|
—
|
|
99
|
|
||||
U.S. government agencies and government-sponsored agencies
|
7
|
|
—
|
|
—
|
|
7
|
|
||||
U.S. treasuries
|
46
|
|
—
|
|
—
|
|
46
|
|
||||
Exchange traded fund
|
1
|
|
—
|
|
—
|
|
1
|
|
||||
Other debt securities
|
9
|
|
—
|
|
—
|
|
9
|
|
||||
Total
|
$
|
195
|
|
$
|
—
|
|
$
|
—
|
|
$
|
195
|
|
|
December 31, 2017
|
|||||||||||
(in millions)
|
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Fair Value
|
||||||||
U.S. treasuries
|
$
|
37
|
|
$
|
—
|
|
$
|
—
|
|
$
|
37
|
|
Exchange traded fund
|
1
|
|
—
|
|
—
|
|
1
|
|
||||
Total
|
$
|
38
|
|
$
|
—
|
|
$
|
—
|
|
$
|
38
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
December 31, 2018
|
|||||||||||||||||
|
Less than 12 months
|
12 months or more
|
Total
|
|||||||||||||||
(in millions)
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
||||||||||||
Asset-backed securities
|
$
|
25
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
25
|
|
$
|
—
|
|
Corporate bonds
|
84
|
|
—
|
|
—
|
|
—
|
|
84
|
|
—
|
|
||||||
U.S. government agencies and government-sponsored agencies
|
4
|
|
—
|
|
—
|
|
—
|
|
4
|
|
—
|
|
||||||
U.S. treasuries
|
21
|
|
—
|
|
—
|
|
—
|
|
21
|
|
—
|
|
||||||
Other debt securities
|
7
|
|
—
|
|
—
|
|
—
|
|
7
|
|
—
|
|
||||||
Total
|
$
|
141
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
141
|
|
$
|
—
|
|
|
December 31, 2017
|
|||||||||||||||||
|
Less than 12 months
|
12 months or more
|
Total
|
|||||||||||||||
(in millions)
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
||||||||||||
U.S. treasuries
|
$
|
5
|
|
$
|
—
|
|
$
|
24
|
|
$
|
—
|
|
$
|
29
|
|
$
|
—
|
|
Total
|
$
|
5
|
|
$
|
—
|
|
$
|
24
|
|
$
|
—
|
|
$
|
29
|
|
$
|
—
|
|
|
December 31, 2018
|
||||||||||||||
(in millions)
|
One year or less
|
Over One Year Through Five Years
|
Over Five Years Through Ten Years
|
Over Ten Years
|
Fair Value
|
||||||||||
Asset-backed securities
|
$
|
4
|
|
$
|
26
|
|
$
|
3
|
|
$
|
—
|
|
$
|
33
|
|
Corporate bonds
|
42
|
|
57
|
|
—
|
|
—
|
|
99
|
|
|||||
U.S. government agencies and government-sponsored agencies
|
1
|
|
2
|
|
—
|
|
4
|
|
7
|
|
|||||
U.S. treasuries
|
12
|
|
34
|
|
—
|
|
—
|
|
46
|
|
|||||
Other debt securities
|
—
|
|
1
|
|
—
|
|
8
|
|
9
|
|
|||||
Total
|
$
|
59
|
|
$
|
120
|
|
$
|
3
|
|
$
|
12
|
|
$
|
194
|
|
|
December 31, 2017
|
||||||||||||||
(in millions)
|
One year or less
|
Over One Year Through Five Years
|
Over Five Years Through Ten Years
|
Over Ten Years
|
Fair Value
|
||||||||||
U.S. treasuries
|
$
|
—
|
|
$
|
37
|
|
$
|
—
|
|
$
|
—
|
|
$
|
37
|
|
Total
|
$
|
—
|
|
$
|
37
|
|
$
|
—
|
|
$
|
—
|
|
$
|
37
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Year Ended December 31,
|
||||||||
(in millions)
|
2018
|
2017
|
2016
|
||||||
Gross proceeds from sales
|
$
|
54
|
|
$
|
—
|
|
$
|
—
|
|
Gross proceeds from maturities
|
47
|
|
14
|
|
28
|
|
|||
Total
|
$
|
101
|
|
$
|
14
|
|
$
|
28
|
|
(in millions)
|
December 31, 2018
|
December 31, 2017
|
||||
Software
|
$
|
144
|
|
$
|
114
|
|
Office equipment, including data processing equipment
|
27
|
|
23
|
|
||
Leasehold improvements
|
21
|
|
15
|
|
||
Furniture, fixtures, and equipment
|
15
|
|
15
|
|
||
Projects in progress
|
2
|
|
7
|
|
||
Total
|
209
|
|
174
|
|
||
Less: Accumulated depreciation
|
(130
|
)
|
(104
|
)
|
||
Property and equipment, net
|
$
|
79
|
|
$
|
70
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
|
December 31, 2018
|
December 31, 2017
|
||||||||||||||||
(in millions)
|
Weighted Average Amortization Period
|
Gross Carrying Amount
|
Accumulated Amortization
|
Net
Carrying Amount
|
Gross Carrying Amount
|
Accumulated Amortization
|
Net Carrying Amount
|
||||||||||||
Goodwill
|
|
$
|
289
|
|
$
|
—
|
|
$
|
289
|
|
$
|
289
|
|
$
|
—
|
|
$
|
289
|
|
Amortizable intangibles:
|
|
|
|
|
|
|
|
||||||||||||
Customer contracts
|
10 years
|
90
|
|
(71
|
)
|
19
|
|
210
|
|
(187
|
)
|
23
|
|
||||||
Developed technology
|
5 years
|
5
|
|
(3
|
)
|
2
|
|
6
|
|
(3
|
)
|
3
|
|
||||||
Total
|
|
$
|
95
|
|
$
|
(74
|
)
|
$
|
21
|
|
$
|
216
|
|
$
|
(190
|
)
|
$
|
26
|
|
|
Year Ended December 31,
|
||||||||
(in millions)
|
2018
|
2017
|
2016
|
||||||
Total accrued costs, beginning of year
|
$
|
255
|
|
$
|
255
|
|
$
|
190
|
|
Incurred
|
|
|
|
||||||
Current year
|
80
|
|
98
|
|
113
|
|
|||
Prior years
|
(28
|
)
|
(6
|
)
|
28
|
|
|||
Total incurred
|
52
|
|
92
|
|
141
|
|
|||
Paid
|
|
|
|
||||||
Current year
|
(12
|
)
|
(14
|
)
|
(14
|
)
|
|||
Prior years
|
(57
|
)
|
(78
|
)
|
(62
|
)
|
|||
Total paid
|
(69
|
)
|
(92
|
)
|
(76
|
)
|
|||
Total accrued costs, end of year
|
$
|
238
|
|
$
|
255
|
|
$
|
255
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
(in millions)
|
|
December 31, 2018
|
December 31, 2017
|
||||
Total accrued costs, end of year
|
|
$
|
238
|
|
$
|
255
|
|
Collateral paid to carriers and offset against accrued costs
|
|
(13
|
)
|
(23
|
)
|
||
Total accrued costs, net of carrier collateral offset
|
|
$
|
225
|
|
$
|
232
|
|
|
|
|
|
||||
Payable in less than 1 year
(net of collateral paid to carriers of $3 and $6 as of December 31, 2018 and 2017, respectively)
|
|
67
|
|
67
|
|
||
Payable in more than 1 year
(net of collateral paid to carriers of $10 and $17 as of December 31, 2018 and 2017, respectively)
|
|
158
|
|
165
|
|
||
Total accrued costs, net of carrier collateral offset
|
|
$
|
225
|
|
$
|
232
|
|
(in millions)
|
December 31,
2018 |
December 31,
2017 |
Annual
Contractual Interest Rate |
Effective Interest Rate
|
Maturity
Date |
|||||||
Term Loan A
|
$
|
—
|
|
$
|
303
|
|
3.95
|
%
|
(1)
|
4.07
|
%
|
July 2019
|
Term Loan A-2
|
—
|
|
122
|
|
3.83
|
%
|
(2)
|
3.90
|
%
|
July 2019
|
||
2018 Term Loan A
|
414
|
|
—
|
|
4.15
|
%
|
(3)
|
4.25
|
%
|
June 2023
|
||
Total term loans
|
414
|
|
425
|
|
|
|
|
|
||||
Deferred loan costs
|
(1
|
)
|
(2
|
)
|
|
|
|
|
||||
Less: current portion
|
(22
|
)
|
(40
|
)
|
|
|
|
|
||||
Long-term debt, noncurrent
|
$
|
391
|
|
$
|
383
|
|
|
|
|
|
(1)
|
Bears interest at LIBOR plus
2.25%
or the prime rate plus
1.25%
at our option, subject to certain rate adjustments based upon our total leverage ratio.
|
(2)
|
Bears interest at LIBOR plus
2.125%
or the prime rate plus
1.125%
at our option, subject to certain rate adjustments based upon our total leverage ratio.
|
(3)
|
Bears interest at LIBOR plus
1.625%
or the prime rate plus
0.625%
at our option in the first full fiscal quarter of the term loan, thereafter subject to certain rate adjustments based on our total leverage ratio. As of December 31, 2018, the interest rate was based on LIBOR plus
1.625%
.
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Year ending December 31,
|
|
||||||||||||||||
(in millions)
|
2019
|
2020
|
2021
|
2022
|
2023
|
Thereafter
|
||||||||||||
Term loan repayments
|
$
|
22
|
|
$
|
22
|
|
$
|
22
|
|
$
|
22
|
|
$
|
326
|
|
$
|
—
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
(in millions)
|
Operating Leases
|
||
Year ending December 31:
|
|
||
2019
|
$
|
18
|
|
2020
|
17
|
|
|
2021
|
11
|
|
|
2022
|
9
|
|
|
2023
|
8
|
|
|
Thereafter
|
25
|
|
|
Minimum lease payments
|
$
|
88
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Number
of Shares |
Weighted
Average Exercise Price |
Weighted
Average Remaining Contractual Term
(in years)
|
Aggregate
Intrinsic Value (in millions) |
|||||
Balance at December 31, 2017
|
1,296,863
|
|
$
|
12.27
|
|
5.87
|
$
|
41
|
|
Exercised
|
(617,157
|
)
|
11.00
|
|
|
|
|||
Forfeited
|
(15,694
|
)
|
32.81
|
|
|
|
|||
Canceled
|
(8,497
|
)
|
32.02
|
|
|
|
|||
Balance at December 31, 2018
|
655,515
|
|
$
|
12.90
|
|
4.91
|
$
|
19
|
|
Exercisable at December 31, 2018
|
642,631
|
|
$
|
12.65
|
|
4.94
|
$
|
19
|
|
Vested and expected to vest at December 31, 2018
|
655,515
|
|
$
|
12.90
|
|
4.91
|
$
|
19
|
|
|
Year Ended December 31,
|
||||||||
Additional Disclosures for Stock Options (in millions)
|
2018
|
2017
|
2016
|
||||||
Total fair value of options vested
|
$
|
4
|
|
$
|
7
|
|
$
|
7
|
|
Total intrinsic value of options exercised
|
24
|
|
36
|
|
21
|
|
|||
Cash received from options exercised
|
7
|
|
11
|
|
5
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
RSUs
|
RSAs
|
||||||||
|
Number of Units
|
Weighted-Average
Grant Date
Fair Value
|
Number of Shares
|
Weighted-Average
Grant Date
Fair Value
|
||||||
Nonvested at December 31, 2017
|
2,703,335
|
|
$
|
25.82
|
|
—
|
|
$
|
—
|
|
Granted
|
714,358
|
|
47.07
|
|
372,783
|
|
49.02
|
|
||
Vested
|
(1,273,796
|
)
|
27.26
|
|
(13,683
|
)
|
47.61
|
|
||
Forfeited
|
(406,343
|
)
|
28.68
|
|
(12,308
|
)
|
47.61
|
|
||
Nonvested at December 31, 2018
|
1,737,554
|
|
$
|
32.83
|
|
346,792
|
|
$
|
49.13
|
|
|
RSUs
|
|
RSAs
|
||||||||||||||||
|
Year Ended December 31,
|
|
Year Ended December 31,
|
||||||||||||||||
Additional Disclosures for equity-based plans
|
2018
|
2017
|
2016
|
|
2018
|
2017
|
2016
|
||||||||||||
Total grant date fair value of shares granted (in millions)
|
$
|
34
|
|
$
|
46
|
|
$
|
42
|
|
|
$
|
18
|
|
$
|
—
|
|
$
|
—
|
|
Total grant date fair value of shares vested (in millions)
|
$
|
35
|
|
$
|
21
|
|
$
|
16
|
|
|
$
|
1
|
|
$
|
—
|
|
$
|
—
|
|
Shares withheld to settle payroll tax liabilities related to vesting of shares held by employees
|
451,875
|
|
335,101
|
|
217,769
|
|
|
6,357
|
|
—
|
|
—
|
|
|
ESPP Assumptions
|
||||
Year Ended December 31,
|
Expected Term (in Years)
|
Expected Volatility
|
Risk-Free Interest Rate
|
Expected Dividend Yield
|
|
2018
|
0.50
|
27-37%
|
1.42-2.5%
|
0
|
%
|
2017
|
0.50
|
28-37%
|
0.62-1.42%
|
0
|
%
|
2016
|
0.50
|
32-76%
|
0.33-0.62%
|
0
|
%
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Year Ended December 31,
|
||||||||
(in millions)
|
2018
|
2017
|
2016
|
||||||
Cost of providing services
|
$
|
10
|
|
$
|
8
|
|
$
|
7
|
|
Sales and marketing
|
8
|
|
6
|
|
6
|
|
|||
General and administrative
|
22
|
|
14
|
|
11
|
|
|||
Systems development and programming costs
|
4
|
|
4
|
|
2
|
|
|||
Total stock-based compensation expense
|
$
|
44
|
|
$
|
32
|
|
$
|
26
|
|
Income tax benefit related to stock-based compensation expense
|
$
|
11
|
|
$
|
7
|
|
$
|
9
|
|
Tax benefit realized from stock options exercised and similar awards
|
$
|
23
|
|
$
|
28
|
|
$
|
7
|
|
|
Amount
(in millions) |
Weighted-Average Period (in Years)
|
||
Nonvested stock options
|
$
|
—
|
|
0.11
|
Nonvested RSUs
|
49
|
|
2.07
|
|
Nonvested RSAs
|
12
|
|
2.44
|
|
Year Ended December 31,
|
||||||||
(in millions)
|
2018
|
2017
|
2016
|
||||||
Current:
|
|
|
|
||||||
Federal
|
$
|
41
|
|
$
|
46
|
|
$
|
1
|
|
State
|
7
|
|
1
|
|
—
|
|
|||
Total Current
|
48
|
|
47
|
|
1
|
|
|||
Deferred:
|
|
|
|
||||||
Federal
|
(3
|
)
|
12
|
|
38
|
|
|||
State
|
4
|
|
3
|
|
5
|
|
|||
Revaluation due to legislative changes
|
—
|
|
(40
|
)
|
(1
|
)
|
|||
Total Deferred
|
1
|
|
(25
|
)
|
42
|
|
|||
Total
|
$
|
49
|
|
$
|
22
|
|
$
|
43
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Year Ended December 31,
|
|||||||||||||||||||||||
|
2018
|
2017
|
2016
|
|||||||||||||||||||||
(in millions, except percent)
|
Pre-Tax Income
|
Tax Expense/(Benefit)
|
Percent of Pre-Tax Income (Loss)
|
Pre-Tax Income
|
Tax Expense/(Benefit)
|
Percent of Pre-Tax Income (Loss)
|
Pre-Tax Income
|
Tax Expense/(Benefit)
|
Percent of Pre-Tax Income (Loss)
|
|||||||||||||||
|
$
|
241
|
|
|
|
$
|
200
|
|
|
|
$
|
104
|
|
|
|
|||||||||
U.S. federal statutory tax rate
|
|
$
|
51
|
|
21
|
%
|
|
$
|
70
|
|
35
|
%
|
|
$
|
37
|
|
35
|
%
|
||||||
State income taxes, net of federal benefit
|
|
18
|
|
8
|
|
|
10
|
|
5
|
|
|
4
|
|
4
|
|
|||||||||
Tax rate change
|
|
—
|
|
—
|
|
|
(40
|
)
|
(20
|
)
|
|
(1
|
)
|
(1
|
)
|
|||||||||
Nondeductible meals, entertainment and penalties
|
|
1
|
|
1
|
|
|
1
|
|
—
|
|
|
4
|
|
4
|
|
|||||||||
Stock-based compensation
|
|
(9
|
)
|
(4
|
)
|
|
(15
|
)
|
(7
|
)
|
|
1
|
|
1
|
|
|||||||||
Uncertain tax positions
|
|
1
|
|
—
|
|
|
4
|
|
2
|
|
|
—
|
|
—
|
|
|||||||||
Tax credits
|
|
(4
|
)
|
(2
|
)
|
|
(3
|
)
|
(1
|
)
|
|
(1
|
)
|
(1
|
)
|
|||||||||
State and tax return to provision adjustment
|
|
(7
|
)
|
(3
|
)
|
|
(5
|
)
|
(3
|
)
|
|
(1
|
)
|
(1
|
)
|
|||||||||
Sec 199 benefits
|
|
—
|
|
—
|
|
|
(3
|
)
|
(1
|
)
|
|
—
|
|
—
|
|
|||||||||
Other
|
|
(2
|
)
|
(1
|
)
|
|
3
|
|
1
|
|
|
—
|
|
—
|
|
|||||||||
Total
|
|
$
|
49
|
|
20
|
%
|
|
$
|
22
|
|
11
|
%
|
|
$
|
43
|
|
41
|
%
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Year Ended December 31,
|
|||||
(in millions)
|
2018
|
2017
|
||||
Deferred tax assets:
|
|
|
||||
Net operating losses (federal and state)
|
$
|
3
|
|
$
|
4
|
|
Accrued expenses
|
8
|
|
6
|
|
||
Accrued workers' compensation costs
|
9
|
|
8
|
|
||
Stock-based compensation
|
8
|
|
8
|
|
||
Tax benefits relating to uncertain positions
|
—
|
|
1
|
|
||
Tax credits (federal and state)
|
7
|
|
9
|
|
||
Total
|
35
|
|
36
|
|
||
Valuation allowance
|
(7
|
)
|
(7
|
)
|
||
Total deferred tax assets
|
28
|
|
29
|
|
||
Deferred tax liabilities:
|
|
|
||||
Depreciation and amortization
|
(24
|
)
|
(13
|
)
|
||
Deferred service revenues
|
(62
|
)
|
(79
|
)
|
||
Prepaid health plan expenses
|
—
|
|
(3
|
)
|
||
Prepaid commission expenses
|
(9
|
)
|
—
|
|
||
Total deferred tax liabilities
|
(95
|
)
|
(95
|
)
|
||
Net deferred tax liabilities
|
$
|
(67
|
)
|
$
|
(66
|
)
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Year Ended December 31,
|
||||||||
(in millions)
|
2018
|
2017
|
2016
|
||||||
Unrecognized tax benefits at January 1
|
$
|
6
|
|
$
|
1
|
|
$
|
3
|
|
Additions for tax positions of prior periods
|
1
|
|
4
|
|
—
|
|
|||
Additions for tax positions of current period
|
—
|
|
1
|
|
—
|
|
|||
Reductions for tax positions of prior period:
|
|
|
|
||||||
Settlements with taxing authorities
|
—
|
|
—
|
|
(2
|
)
|
|||
Lapse of applicable statute of limitations
|
(1
|
)
|
—
|
|
—
|
|
|||
Unrecognized tax benefits at December 31
|
$
|
6
|
|
$
|
6
|
|
$
|
1
|
|
|
Year Ended December 31,
|
||||||||
(in millions, except per share data)
|
2018
|
2017
|
2016
|
||||||
Net income
|
$
|
192
|
|
$
|
178
|
|
$
|
61
|
|
Weighted average shares of common stock outstanding
|
70
|
|
69
|
|
70
|
|
|||
Basic EPS
|
$
|
2.72
|
|
$
|
2.57
|
|
$
|
0.88
|
|
|
|
|
|
||||||
Net income
|
$
|
192
|
|
$
|
178
|
|
$
|
61
|
|
Weighted average shares of common stock outstanding
|
70
|
|
69
|
|
70
|
|
|||
Dilutive effect of stock options and restricted stock units
|
2
|
|
2
|
|
2
|
|
|||
Weighted average shares of common stock outstanding
|
72
|
|
71
|
|
72
|
|
|||
Diluted EPS
|
$
|
2.65
|
|
$
|
2.49
|
|
$
|
0.85
|
|
|
|
|
|
||||||
Common stock equivalents excluded from income per
diluted share because of their anti-dilutive effect
|
1
|
|
2
|
|
1
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
•
|
Money market mutual funds are valued on a spread or discount rate basis,
|
•
|
Asset-backed securities are valued using historical and projected prepayments speed and loss scenarios and spreads obtained from the new issue market, dealer quotes and trade prices,
|
•
|
U.S. treasuries, corporate bonds, and other debt securities are priced based on dealer quotes from multiple sources, and
|
•
|
US government agencies and government sponsored agencies are priced using LIBOR/swap curves, credit spreads and interest rate volatilities.
|
(in millions)
|
Level 1
|
Level 2
|
Total
|
||||||
December 31, 2018
|
|
|
|
||||||
Cash equivalents:
|
|
|
|
||||||
Money market mutual funds
|
$
|
4
|
|
$
|
—
|
|
$
|
4
|
|
U.S. treasuries
|
—
|
|
1
|
|
1
|
|
|||
Total cash equivalents
|
4
|
|
1
|
|
5
|
|
|||
Investments:
|
|
|
|
||||||
Asset-backed securities
|
—
|
|
33
|
|
33
|
|
|||
Corporate bonds
|
—
|
|
99
|
|
99
|
|
|||
U.S. government agencies and government-sponsored agencies
|
—
|
|
7
|
|
7
|
|
|||
U.S. treasuries
|
—
|
|
41
|
|
41
|
|
|||
Other debt securities
|
—
|
|
9
|
|
9
|
|
|||
Total investments
|
—
|
|
189
|
|
189
|
|
|||
Restricted cash equivalents:
|
|
|
|
||||||
Money market mutual funds
|
48
|
|
—
|
|
48
|
|
|||
Commercial paper
|
20
|
|
—
|
|
20
|
|
|||
Total restricted cash equivalents
|
68
|
|
—
|
|
68
|
|
|||
Restricted investments:
|
|
|
|
||||||
U.S. treasuries
|
—
|
|
5
|
|
5
|
|
|||
Exchange traded fund
|
1
|
|
—
|
|
1
|
|
|||
Certificate of deposit
|
—
|
|
2
|
|
2
|
|
|||
Total restricted investments
|
1
|
|
7
|
|
8
|
|
|||
Total investments and restricted cash equivalents and investments
|
$
|
73
|
|
$
|
197
|
|
$
|
270
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
(in millions)
|
Level 1
|
Level 2
|
Total
|
||||||
December 31, 2017
|
|
|
|
||||||
Restricted cash equivalents:
|
|
|
|
||||||
Money market mutual funds
|
$
|
199
|
|
$
|
—
|
|
$
|
199
|
|
Commercial paper
|
21
|
|
—
|
|
21
|
|
|||
Total restricted cash equivalents
|
220
|
|
—
|
|
220
|
|
|||
Restricted investments:
|
|
|
|
||||||
U.S. treasuries
|
37
|
|
—
|
|
37
|
|
|||
Exchange traded fund
|
1
|
|
—
|
|
1
|
|
|||
Certificate of deposit
|
—
|
|
2
|
|
2
|
|
|||
Total restricted investments
|
38
|
|
2
|
|
40
|
|
|||
Total restricted cash equivalents and investments
|
$
|
258
|
|
$
|
2
|
|
$
|
260
|
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
Quarter ended
|
|||||||||||
(in millions, except per share data)
|
March 31
|
June 30
|
September 30
|
December 31
|
||||||||
2018
|
|
|
|
|
||||||||
Total revenues
|
$
|
861
|
|
$
|
850
|
|
$
|
875
|
|
$
|
917
|
|
Insurance costs
|
641
|
|
630
|
|
647
|
|
692
|
|
||||
Operating income
|
71
|
|
76
|
|
62
|
|
42
|
|
||||
Net income
|
54
|
|
58
|
|
51
|
|
29
|
|
||||
Basic net income per share
|
$
|
0.77
|
|
$
|
0.82
|
|
$
|
0.73
|
|
$
|
0.41
|
|
Diluted net income per share
|
$
|
0.75
|
|
$
|
0.80
|
|
$
|
0.71
|
|
$
|
0.40
|
|
2017
|
|
|
|
|
||||||||
Total revenues
|
$
|
808
|
|
$
|
801
|
|
$
|
818
|
|
$
|
848
|
|
Insurance costs
|
609
|
|
600
|
|
613
|
|
644
|
|
||||
Operating income
|
49
|
|
57
|
|
63
|
|
48
|
|
||||
Net income
(1)
|
29
|
|
40
|
|
43
|
|
66
|
|
||||
Basic net income per share
(1)
|
$
|
0.42
|
|
$
|
0.58
|
|
$
|
0.62
|
|
$
|
0.95
|
|
Diluted net income per share
(1)
|
$
|
0.41
|
|
$
|
0.56
|
|
$
|
0.60
|
|
$
|
0.92
|
|
|
|
|
DISCLOSURE CONTROLS AND PROCEDURES
|
|
|
|
|
MANAGEMENT AND CERTAIN SECURITY HOLDERS
|
|
|
|
|
FINANCIAL STATEMENT SCHEDULES
|
|
|
Balance at
|
Credited/
|
Charges
|
Balance at
|
||||||
|
Beginning of
|
Charged to
|
Utilized/
|
End of
|
||||||
(in millions)
|
Period
|
Net Income
|
Write-Offs
|
Period
|
||||||
Allowances for Doubtful Accounts and Authorized Credits
|
|
|
|
|
||||||
Year ended December 31, 2018
|
$
|
—
|
|
2
|
|
(1
|
)
|
$
|
1
|
|
Year ended December 31, 2017
|
$
|
—
|
|
1
|
|
(1
|
)
|
$
|
—
|
|
Year ended December 31, 2016
|
$
|
1
|
|
1
|
|
(2
|
)
|
$
|
—
|
|
Tax Valuation Allowance
|
|
|
|
|
||||||
Year ended December 31, 2018
|
$
|
7
|
|
—
|
|
—
|
|
$
|
7
|
|
Year ended December 31, 2017
|
$
|
6
|
|
1
|
|
—
|
|
$
|
7
|
|
Year ended December 31, 2016
|
$
|
5
|
|
1
|
|
—
|
|
$
|
6
|
|
|
|
|
EXHIBITS
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit
No.
|
|
Description of Exhibit
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|||||||
3.1
|
|
|
8-K
|
|
001-36373
|
|
3.1
|
|
|
4/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
10-Q
|
|
001-36373
|
|
3.1
|
|
|
11/2/2017
|
|
|
|
|
|
|
|
|
|
|
|||||||
3.3
|
|
|
S-1/A
|
|
333-192465
|
|
3.4
|
|
|
3/4/2014
|
|
|
|
|
|
|
|
|
|
|
|||||||
4.1
|
|
|
8-K
|
|
001-36373
|
|
4.1
|
|
|
2/2/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1*
|
|
|
S-1/A
|
|
333-192465
|
|
10.3
|
|
|
3/14/2014
|
|
|
|
|
|
|
|
|
|
|
|||||||
10.2*
|
|
|
10-Q
|
|
001-36373
|
|
10.1
|
|
|
5/8/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.3*
|
|
|
S-1/A
|
|
333-192465
|
|
10.4
|
|
|
3/4/2014
|
|
|
|
|
|
|
|
|
|
|
|||||||
10.4*
|
|
|
S-1/A
|
|
333-192465
|
|
10.6
|
|
|
3/4/2014
|
|
|
|
|
|
|
|
|
|
|
|||||||
10.5*
|
|
|
10-Q
|
|
001-36373
|
|
10.1
|
|
|
4/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.6*
|
|
|
10-Q
|
|
001-36373
|
|
10.2
|
|
|
4/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7*
|
|
|
10-Q
|
|
001-36373
|
|
10.3
|
|
|
4/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8*
|
|
|
10-Q
|
|
001-36373
|
|
10.4
|
|
|
4/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9*
|
|
|
S-1/A
|
|
333-192465
|
|
10.7
|
|
|
3/14/2014
|
|
|
|
|
|
|
|
|
|
|
|||||||
10.10*
|
|
|
8-K
|
|
001-36373
|
|
N/A
|
|
|
3/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.11*
|
|
|
10-K
|
|
001-36373
|
|
10.7
|
|
|
2/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12*
|
|
|
10-K
|
|
001-36373
|
|
10.10
|
|
|
4/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXHIBITS
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit
No.
|
|
Description of Exhibit
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
|
|
Filed
Herewith
|
|
10.13*
|
|
|
8-K
|
|
001-36373
|
|
10.1
|
|
|
5/23/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14*
|
|
|
10-Q
|
|
001-36373
|
|
10.5
|
|
|
4/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.15
|
|
|
S-1/A
|
|
333-192465
|
|
10.8
|
|
|
3/4/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.16*
|
|
|
S-1/A
|
|
333-192465
|
|
10.9
|
|
|
2/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17*
|
|
|
10-Q
|
|
001-36373
|
|
10.1
|
|
|
8/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.18*
|
|
|
10-Q
|
|
001-36373
|
|
10.2
|
|
|
8/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.19*
|
|
|
10-Q
|
|
001-36373
|
|
10.2
|
|
|
8/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.20*
|
|
|
10-K
|
|
001-36373
|
|
10.15
|
|
|
2/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.21*
|
|
|
S-1/A
|
|
333-192465
|
|
10.11
|
|
|
2/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.22*
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.23*
|
|
|
8-K
|
|
001-36373
|
|
10.1
|
|
|
10/3/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.24*
|
|
|
10-K
|
|
001-36373
|
|
10.19
|
|
|
2/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.25*
|
|
|
10-Q
|
|
001-36373
|
|
10.1
|
|
|
10/29/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26*
|
|
|
8-K
|
|
001-36373
|
|
10.1
|
|
|
12/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27*
|
|
|
8-K
|
|
001-36373
|
|
10.1
|
|
|
6/22/2018
|
|
|
|
|
|
EXHIBITS
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit
No.
|
|
Description of Exhibit
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.1
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.1
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Constitutes a management contract or compensatory plan or arrangement.
|
||||||||||||
**
|
Document has been furnished, is deemed not filed and is not to be incorporated by reference into any of the Company’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: February 14, 2019
|
|
By:
|
/s/ Burton M. Goldfield
|
|
|
|
Burton M. Goldfield
|
|
|
|
Chief Executive Officer
|
|
|
|
|
Date: February 14, 2019
|
|
By:
|
/s/ Richard Beckert
|
|
|
|
Richard Beckert
|
|
|
|
Chief Financial Officer
|
|
|
|
SIGNATURES
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Burton M. Goldfield
|
|
Chief Executive Officer (
principal executive officer
)
|
|
February 14, 2019
|
Burton M. Goldfield
|
|
|
||
|
|
|
|
|
/s/ Richard Beckert
|
|
Chief Financial Officer (
principal financial officer
)
|
|
February 14, 2019
|
Richard Beckert
|
|
|
||
|
|
|
|
|
/s/ Michael P. Murphy
|
|
Chief Accounting Officer (
principal accounting officer
)
|
|
February 14, 2019
|
Michael P. Murphy
|
|
|
||
|
|
|
|
|
/s/ Michael J. Angelakis
|
|
Director
|
|
February 14, 2019
|
Michael J. Angelakis
|
|
|
||
|
|
|
|
|
/s/ Katherine August-deWilde
|
|
Director
|
|
February 14, 2019
|
Katherine August-deWilde
|
|
|
||
|
|
|
|
|
/s/ Martin Babinec
|
|
Director
|
|
February 14, 2019
|
Martin Babinec
|
|
|
||
|
|
|
|
|
/s/ H. Raymond Bingham
|
|
Director
|
|
February 14, 2019
|
H. Raymond Bingham
|
|
|
||
|
|
|
|
|
/s/ Paul Chamberlain
|
|
Director
|
|
February 14, 2019
|
Paul Chamberlain
|
|
|
||
|
|
|
|
|
/s/ Kenneth Goldman
|
|
Director
|
|
February 14, 2019
|
Kenneth Goldman
|
|
|
||
|
|
|
|
|
/s/ David C. Hodgson
|
|
Director
|
|
February 14, 2019
|
David C. Hodgson
|
|
|
||
|
|
|
|
|
/s/ Wayne B. Lowell
|
|
Director
|
|
February 14, 2019
|
Wayne B. Lowell
|
|
|
|
|
|
1.
|
EMPLOYMENT BY THE COMPANY
|
2.
|
COMPENSATION.
|
(a)
|
Standard Company Benefits.
You will be eligible to participate in the Company's standard employee benefits plans that are available to employees generally, as in effect from time to time, subject to the terms and conditions of such plans.
|
(b)
|
Severance Benefits.
The Chief Executive Officer will recommend to the Committee that you be designated as a Participant in the TriNet Group, Inc. Amended and Restated Executive Severance Benefit Plan (the “Severance Plan”), a copy of which is attached hereto as Annex A, which shall be the only severance benefits from the Company to which you shall be entitled. Once you are designated as a Participant, in order to receive any severance benefits under the Severance Plan, you are required to return a signed copy of the Participation Notice, which is attached as Exhibit A to the Severance Plan, to the Senior Vice President, Human Resources.
|
SAMANTHA WELLINGTON
|
|
DATE
|
Company Name
|
|
DBA/AKA
|
|
Incorporation
Jurisdiction
|
210 Park Avenue Holding, Inc.
|
|
|
|
Oklahoma
|
Accord Human Resources 12, Inc.
|
|
|
|
Florida
|
Accord Technology, LLC
|
|
|
|
Oklahoma
|
Affiliated Risk Management, Inc.
|
|
|
|
North Carolina
|
ALSUB-36, Inc.
|
|
|
|
Alabama
|
Ambrose Advisory Services, LLC
|
|
|
|
New York
|
Amlease Corporation
|
|
TriNet
|
|
Delaware
|
Amlease of PA, Inc.
|
|
|
|
Pennsylvania
|
App7, Inc.
|
|
ExpenseCloud
|
|
Delaware
|
Archimedes Risk Solutions, Ltd.
|
|
|
|
Bermuda
|
ASOI, Inc.
|
|
|
|
Delaware
|
AZSUB-51, Inc.
|
|
|
|
Arizona
|
Gevity Insurance Agency, Inc.
|
|
|
|
Delaware
|
HR Complete, Inc.
|
|
|
|
Delaware
|
Mayberry HR Outsourcing, Inc.
|
|
|
|
North Carolina
|
Mosaic By Accord, LLC
|
|
|
|
Oklahoma
|
NYSUB-54, Inc.
|
|
|
|
New York
|
NYSUB-55, Inc.
|
|
|
|
New York
|
Real Solutions, Inc.
|
|
|
|
Arizona
|
Rocky Top HR Outsourcing, Inc.
|
|
|
|
Tennessee
|
Route 66 HR Outsourcing, Inc.
|
|
|
|
California
|
SOI Employee Benefit Trust
|
|
|
|
North Carolina
|
SOI Holdings, Inc.
|
|
|
|
Delaware
|
SOI, Inc.
|
|
|
|
Delaware
|
SOI-17 of TN, Inc.
|
|
|
|
Tennessee
|
SOI-23 of FL, Inc.
|
|
TriNet
|
|
Florida
|
SOI-27 of CA, Inc.
|
|
|
|
California
|
SOI-28 of TX, Inc.
|
|
|
|
Texas
|
SOI-29 of AR, Inc.
|
|
|
|
Arkansas
|
SOI-31 of AR, Inc.
|
|
|
|
Arkansas
|
SOI-59 of TX, Inc.
|
|
|
|
Texas
|
Star Outsourcing, Inc.
|
|
|
|
Arizona
|
Strategic Outsourced HR, Inc.
|
|
|
|
Indiana
|
Company Name
|
|
DBA/AKA
|
|
Incorporation
Jurisdiction
|
Strategic Outsourcing, Inc.
|
|
SOI
|
|
Delaware
|
Summit Services of Georgia, Inc.
|
|
|
|
Georgia
|
Summit Services, Inc.
|
|
|
|
New Jersey
|
TriNet Employee Benefit Insurance Trust
|
|
|
|
California
|
TriNet Employer Group Canada, Inc.
|
|
TriNet
|
|
Ontario
|
TriNet Holdings A, Inc.
|
|
|
|
Delaware
|
TriNet Holdings B, Inc.
|
|
|
|
Delaware
|
TriNet HR I, Inc.
|
|
Accord
|
|
Oklahoma
|
TriNet HR III, Inc.
|
|
TriNet
|
|
California
|
TriNet HR III-A, Inc.
|
|
TriNet
|
|
Delaware
|
TriNet HR III-B, Inc.
|
|
TriNet
|
|
Delaware
|
TriNet HR IV, LLC
|
|
Ambrose
|
|
New York
|
TriNet HR XI, Inc.
|
|
TriNet
|
|
Delaware
|
TriNet Insurance Brokerage, Inc.
|
|
|
|
Delaware
|
TriNet Insurance Services, Inc.
|
|
|
|
California
|
TriNet Professional Employer Services, Inc.
|
|
|
|
Delaware
|
TriNet USA, Inc.
|
|
|
|
Delaware
|
TXSUB-64, Inc.
|
|
|
|
Texas
|
(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
|
(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.
|
/s/ Burton M. Goldfield
|
|
|
Burton M. Goldfield
|
|
|
President and Chief Executive Officer
|
|
|
(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
|
(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.
|
/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:
|
|
February 14, 2019
|
|
/s/ Burton M. Goldfield
|
|
|
|
|
Burton M. Goldfield
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
/s/ Richard Beckert
|
Date:
|
|
February 14, 2019
|
|
Richard Beckert
|
|
|
|
|
Chief Financial Officer
|