ý
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For the quarterly period ended September 30, 2014.
|
o
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For the transition period from _______________ to _______________
|
Delaware
|
|
76-0479645
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
19001 Crescent Springs Drive
|
|
|
Kingwood, Texas
|
|
77339
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
x
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
|
TABLE OF CONTENTS
|
|
|
|
|
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Part I
|
|
|
|
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Item 1.
|
||
|
|
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Item 2.
|
||
|
|
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Item 3.
|
||
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|
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Item 4.
|
||
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Part II
|
||
|
|
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Item 1.
|
||
|
|
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Item 1a.
|
||
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Item 2.
|
||
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|
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Item 6.
|
|
|
September 30,
2014 |
|
December 31, 2013
|
||||
|
|
(Unaudited)
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
179,458
|
|
|
$
|
225,755
|
|
Restricted cash
|
|
57,222
|
|
|
51,928
|
|
||
Marketable securities
|
|
45,953
|
|
|
46,340
|
|
||
Accounts receivable, net:
|
|
|
|
|
|
|
||
Trade
|
|
3,730
|
|
|
7,453
|
|
||
Unbilled
|
|
237,748
|
|
|
199,628
|
|
||
Other
|
|
3,336
|
|
|
2,928
|
|
||
Prepaid insurance
|
|
30,613
|
|
|
10,638
|
|
||
Other current assets
|
|
12,851
|
|
|
12,053
|
|
||
Income taxes receivable
|
|
2,740
|
|
|
409
|
|
||
Deferred income taxes
|
|
—
|
|
|
8,185
|
|
||
Total current assets
|
|
573,651
|
|
|
565,317
|
|
||
|
|
|
|
|
||||
Property and equipment:
|
|
|
|
|
|
|
||
Land
|
|
5,214
|
|
|
4,115
|
|
||
Buildings and improvements
|
|
68,471
|
|
|
67,939
|
|
||
Computer hardware and software
|
|
87,631
|
|
|
85,241
|
|
||
Software development costs
|
|
40,628
|
|
|
38,522
|
|
||
Furniture and fixtures
|
|
36,855
|
|
|
36,479
|
|
||
Aircraft
|
|
35,879
|
|
|
35,879
|
|
||
|
|
274,678
|
|
|
268,175
|
|
||
Accumulated depreciation and amortization
|
|
(191,913
|
)
|
|
(181,760
|
)
|
||
Total property and equipment, net
|
|
82,765
|
|
|
86,415
|
|
||
|
|
|
|
|
||||
Other assets:
|
|
|
|
|
|
|
||
Prepaid health insurance
|
|
9,000
|
|
|
9,000
|
|
||
Deposits – health insurance
|
|
3,700
|
|
|
3,700
|
|
||
Deposits – workers’ compensation
|
|
93,686
|
|
|
81,878
|
|
||
Goodwill and other intangible assets, net
|
|
14,808
|
|
|
18,434
|
|
||
Other assets
|
|
1,748
|
|
|
1,816
|
|
||
Total other assets
|
|
122,942
|
|
|
114,828
|
|
||
Total assets
|
|
$
|
779,358
|
|
|
$
|
766,560
|
|
|
|
September 30,
2014 |
|
December 31,
2013 |
||||
|
|
(Unaudited)
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
3,255
|
|
|
$
|
2,678
|
|
Payroll taxes and other payroll deductions payable
|
|
105,026
|
|
|
165,604
|
|
||
Accrued worksite employee payroll cost
|
|
211,028
|
|
|
173,801
|
|
||
Accrued health insurance costs
|
|
26,351
|
|
|
5,103
|
|
||
Accrued workers’ compensation costs
|
|
59,393
|
|
|
52,930
|
|
||
Accrued corporate payroll and commissions
|
|
26,474
|
|
|
21,611
|
|
||
Other accrued liabilities
|
|
23,008
|
|
|
14,960
|
|
||
Total current liabilities
|
|
454,535
|
|
|
436,687
|
|
||
|
|
|
|
|
||||
Noncurrent liabilities:
|
|
|
|
|
|
|||
Accrued workers’ compensation costs
|
|
73,009
|
|
|
68,905
|
|
||
Deferred income taxes
|
|
3,806
|
|
|
7,696
|
|
||
Total noncurrent liabilities
|
|
76,815
|
|
|
76,601
|
|
||
|
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
|
|
||
Common stock
|
|
308
|
|
|
308
|
|
||
Additional paid-in capital
|
|
136,972
|
|
|
135,653
|
|
||
Treasury stock, at cost
|
|
(151,091
|
)
|
|
(138,688
|
)
|
||
Accumulated other comprehensive income, net of tax
|
|
24
|
|
|
29
|
|
||
Retained earnings
|
|
261,795
|
|
|
255,970
|
|
||
Total stockholders’ equity
|
|
248,008
|
|
|
253,272
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
779,358
|
|
|
$
|
766,560
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenues (gross billings of $3.362 billion, $3.236 billion, $10.231 billion and $9.736 billion, less worksite employee payroll cost of $2.802 billion, $2.696 billion, $8.469 billion and $8.037 billion, respectively)
|
|
$
|
560,303
|
|
|
$
|
539,869
|
|
|
$
|
1,761,923
|
|
|
$
|
1,698,979
|
|
|
|
|
|
|
|
|
|
|
||||||||
Direct costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Payroll taxes, benefits and workers’ compensation costs
|
|
459,486
|
|
|
442,460
|
|
|
1,459,477
|
|
|
1,395,706
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Gross profit
|
|
100,817
|
|
|
97,409
|
|
|
302,446
|
|
|
303,273
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries, wages and payroll taxes
|
|
49,384
|
|
|
43,797
|
|
|
148,245
|
|
|
137,697
|
|
||||
Stock-based compensation
|
|
2,701
|
|
|
2,749
|
|
|
8,346
|
|
|
8,351
|
|
||||
Commissions
|
|
3,790
|
|
|
3,609
|
|
|
10,753
|
|
|
10,349
|
|
||||
Advertising
|
|
4,885
|
|
|
4,273
|
|
|
18,182
|
|
|
19,243
|
|
||||
General and administrative expenses
|
|
20,295
|
|
|
20,567
|
|
|
64,143
|
|
|
62,592
|
|
||||
Impairment charge
|
|
—
|
|
|
—
|
|
|
2,485
|
|
|
—
|
|
||||
Depreciation and amortization
|
|
5,302
|
|
|
5,302
|
|
|
15,827
|
|
|
15,692
|
|
||||
|
|
86,357
|
|
|
80,297
|
|
|
267,981
|
|
|
253,924
|
|
||||
Operating income
|
|
14,460
|
|
|
17,112
|
|
|
34,465
|
|
|
49,349
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest, net
|
|
9
|
|
|
26
|
|
|
80
|
|
|
155
|
|
||||
Other, net
|
|
34
|
|
|
(1
|
)
|
|
20
|
|
|
(2,668
|
)
|
||||
Income before income tax expense
|
|
14,503
|
|
|
17,137
|
|
|
34,565
|
|
|
46,836
|
|
||||
Income tax expense
|
|
6,118
|
|
|
7,055
|
|
|
14,725
|
|
|
20,093
|
|
||||
Net income
|
|
$
|
8,385
|
|
|
$
|
10,082
|
|
|
$
|
19,840
|
|
|
$
|
26,743
|
|
|
|
|
|
|
|
|
|
|
||||||||
Less distributed and undistributed earnings allocated to participating securities
|
|
(243
|
)
|
|
(289
|
)
|
|
(576
|
)
|
|
(769
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income allocated to common shares
|
|
$
|
8,142
|
|
|
$
|
9,793
|
|
|
$
|
19,264
|
|
|
$
|
25,974
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net income per share of common stock
|
|
$
|
0.33
|
|
|
$
|
0.39
|
|
|
$
|
0.78
|
|
|
$
|
1.05
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted net income per share of common stock
|
|
$
|
0.33
|
|
|
$
|
0.39
|
|
|
$
|
0.78
|
|
|
$
|
1.04
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
8,385
|
|
|
$
|
10,082
|
|
|
$
|
19,840
|
|
|
$
|
26,743
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Unrealized gain (loss) on available-for-sale securities, net of tax
|
|
(17
|
)
|
|
26
|
|
|
(5
|
)
|
|
7
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
|
$
|
8,368
|
|
|
$
|
10,108
|
|
|
$
|
19,835
|
|
|
$
|
26,750
|
|
|
|
Common Stock Issued
|
|
Additional Paid-In Capital
|
|
Treasury Stock
|
|
Accumulated Other Comprehensive Income
|
|
Retained Earnings
|
|
Total
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2013
|
|
30,758
|
|
|
$
|
308
|
|
|
$
|
135,653
|
|
|
$
|
(138,688
|
)
|
|
$
|
29
|
|
|
$
|
255,970
|
|
|
$
|
253,272
|
|
Purchase of treasury stock, at cost
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,769
|
)
|
|
—
|
|
|
—
|
|
|
(20,769
|
)
|
||||||
Exercise of stock options
|
|
—
|
|
|
—
|
|
|
(177
|
)
|
|
454
|
|
|
—
|
|
|
—
|
|
|
277
|
|
||||||
Income tax benefit from stock-based compensation, net
|
|
—
|
|
|
—
|
|
|
66
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
66
|
|
||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
1,233
|
|
|
7,113
|
|
|
—
|
|
|
—
|
|
|
8,346
|
|
||||||
Other
|
|
—
|
|
|
—
|
|
|
197
|
|
|
799
|
|
|
—
|
|
|
—
|
|
|
996
|
|
||||||
Dividends paid
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,015
|
)
|
|
(14,015
|
)
|
||||||
Unrealized loss on marketable securities, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,840
|
|
|
19,840
|
|
||||||
Balance at September 30, 2014
|
|
30,758
|
|
|
$
|
308
|
|
|
$
|
136,972
|
|
|
$
|
(151,091
|
)
|
|
$
|
24
|
|
|
$
|
261,795
|
|
|
$
|
248,008
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2014
|
|
2013
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
19,840
|
|
|
$
|
26,743
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
|
|
||
Depreciation and amortization
|
|
15,827
|
|
|
15,692
|
|
||
Impairment charge
|
|
2,485
|
|
|
2,679
|
|
||
Amortization of marketable securities
|
|
1,474
|
|
|
1,597
|
|
||
Stock-based compensation
|
|
8,346
|
|
|
8,351
|
|
||
Deferred income taxes
|
|
4,299
|
|
|
3,150
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||
Restricted cash
|
|
(5,294
|
)
|
|
(3,168
|
)
|
||
Accounts receivable
|
|
(34,805
|
)
|
|
(28,576
|
)
|
||
Prepaid insurance
|
|
(19,975
|
)
|
|
(1,729
|
)
|
||
Other current assets
|
|
(798
|
)
|
|
(446
|
)
|
||
Other assets
|
|
(11,761
|
)
|
|
(11,406
|
)
|
||
Accounts payable
|
|
577
|
|
|
(349
|
)
|
||
Payroll taxes and other payroll deductions payable
|
|
(60,578
|
)
|
|
(76,246
|
)
|
||
Accrued worksite employee payroll expense
|
|
37,227
|
|
|
34,072
|
|
||
Accrued health insurance costs
|
|
21,248
|
|
|
(7,118
|
)
|
||
Accrued workers’ compensation costs
|
|
10,567
|
|
|
2,828
|
|
||
Accrued corporate payroll, commissions and other accrued liabilities
|
|
12,911
|
|
|
3,850
|
|
||
Income taxes payable/receivable
|
|
(2,572
|
)
|
|
(4,301
|
)
|
||
Total adjustments
|
|
(20,822
|
)
|
|
(61,120
|
)
|
||
Net cash used in operating activities
|
|
(982
|
)
|
|
(34,377
|
)
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
|
||
Marketable securities:
|
|
|
|
|
|
|
||
Purchases
|
|
(36,468
|
)
|
|
(49,580
|
)
|
||
Proceeds from dispositions
|
|
10,630
|
|
|
8,025
|
|
||
Proceeds from maturities
|
|
24,759
|
|
|
9,474
|
|
||
Property and equipment
|
|
(11,032
|
)
|
|
(9,281
|
)
|
||
Net cash used in investing activities
|
|
(12,111
|
)
|
|
(41,362
|
)
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2014
|
|
2013
|
||||
Cash flows from financing activities:
|
|
|
|
|
||||
Purchase of treasury stock
|
|
$
|
(20,769
|
)
|
|
$
|
(17,130
|
)
|
Dividends paid
|
|
(14,015
|
)
|
|
(13,039
|
)
|
||
Proceeds from the exercise of stock options
|
|
277
|
|
|
1,163
|
|
||
Income tax benefit from stock-based compensation
|
|
307
|
|
|
1,181
|
|
||
Other
|
|
996
|
|
|
862
|
|
||
Net cash used in financing activities
|
|
(33,204
|
)
|
|
(26,963
|
)
|
||
|
|
|
|
|
||||
Net decrease in cash and cash equivalents
|
|
(46,297
|
)
|
|
(102,702
|
)
|
||
Cash and cash equivalents at beginning of period
|
|
225,755
|
|
|
264,544
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
179,458
|
|
|
$
|
161,842
|
|
1.
|
Basis of Presentation
|
2.
|
Accounting Policies
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2014
|
|
2013
|
||||
|
|
(in thousands)
|
||||||
|
|
|
|
|
||||
Beginning balance, January 1,
|
|
$
|
120,833
|
|
|
$
|
111,685
|
|
Accrued claims
|
|
39,130
|
|
|
30,496
|
|
||
Present value discount
|
|
(1,418
|
)
|
|
(748
|
)
|
||
Paid claims
|
|
(28,314
|
)
|
|
(24,462
|
)
|
||
Ending balance
|
|
$
|
130,231
|
|
|
$
|
116,971
|
|
|
|
|
|
|
||||
Current portion of accrued claims
|
|
$
|
57,222
|
|
|
$
|
50,317
|
|
Long-term portion of accrued claims
|
|
73,009
|
|
|
66,654
|
|
||
|
|
$
|
130,231
|
|
|
$
|
116,971
|
|
3.
|
Cash, Cash Equivalents and Marketable Securities
|
|
|
September 30,
2014 |
|
December 31,
2013 |
||||
|
|
(in thousands)
|
||||||
Overnight Holdings
|
|
|
|
|
||||
Money market funds (cash equivalents)
|
|
$
|
123,800
|
|
|
$
|
192,040
|
|
Investment Holdings
|
|
|
|
|
|
|
||
Money market funds (cash equivalents)
|
|
43,427
|
|
|
42,913
|
|
||
Marketable securities
|
|
45,953
|
|
|
46,340
|
|
||
|
|
213,180
|
|
|
281,293
|
|
||
Cash held in demand accounts
|
|
20,778
|
|
|
23,054
|
|
||
Outstanding checks
|
|
(8,547
|
)
|
|
(32,252
|
)
|
||
Total cash, cash equivalents and marketable securities
|
|
$
|
225,411
|
|
|
$
|
272,095
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
179,458
|
|
|
$
|
225,755
|
|
Marketable securities
|
|
45,953
|
|
|
46,340
|
|
||
Total cash, cash equivalents and marketable securities
|
|
$
|
225,411
|
|
|
$
|
272,095
|
|
•
|
Level 1 - quoted prices in active markets using identical assets
|
•
|
Level 2 - significant other observable inputs, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other observable inputs
|
•
|
Level 3 - significant unobservable inputs
|
|
|
Fair Value Measurements
|
||||||||||||||
|
|
(in thousands)
|
||||||||||||||
|
|
September 30,
2014 |
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
167,227
|
|
|
$
|
167,227
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Municipal bonds
|
|
45,953
|
|
|
—
|
|
|
45,953
|
|
|
—
|
|
||||
Total
|
|
$
|
213,180
|
|
|
$
|
167,227
|
|
|
$
|
45,953
|
|
|
$
|
—
|
|
|
|
Fair Value Measurements
|
||||||||||||||
|
|
(in thousands)
|
||||||||||||||
|
|
December 31,
2013 |
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
234,953
|
|
|
$
|
234,953
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Municipal bonds
|
|
46,340
|
|
|
—
|
|
|
46,340
|
|
|
—
|
|
||||
Total
|
|
$
|
281,293
|
|
|
$
|
234,953
|
|
|
$
|
46,340
|
|
|
$
|
—
|
|
|
|
Amortized
Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Estimated
Fair Value |
||||||||
|
|
|
|
(in thousands)
|
|
|
||||||||||
September 30, 2014
|
|
|
|
|
|
|
|
|
||||||||
Municipal bonds
|
|
$
|
45,912
|
|
|
$
|
45
|
|
|
$
|
(4
|
)
|
|
$
|
45,953
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Municipal bonds
|
|
$
|
46,290
|
|
|
$
|
51
|
|
|
$
|
(1
|
)
|
|
$
|
46,340
|
|
|
|
Amortized
Cost |
|
Estimated
Fair Value |
||||
|
|
(in thousands)
|
||||||
|
|
|
|
|
||||
Less than one year
|
|
$
|
14,503
|
|
|
$
|
14,519
|
|
One to five years
|
|
31,409
|
|
|
31,434
|
|
||
Total
|
|
$
|
45,912
|
|
|
$
|
45,953
|
|
4.
|
Goodwill and Other Intangible Assets
|
|
|
December 31, 2013
|
|
Nine Months Ended
September 30, 2014 |
|
September 30, 2014
|
||||||||||
|
|
Balance
|
|
Impairment
|
|
Amortization Expense
|
|
Balance
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Gross carrying amount:
|
|
|
|
|
|
|
|
|
||||||||
Trademarks
|
|
$
|
1,230
|
|
|
$
|
(1,010
|
)
|
|
$
|
—
|
|
|
$
|
220
|
|
Customer relationships
|
|
7,784
|
|
|
(1,392
|
)
|
|
—
|
|
|
6,392
|
|
||||
Aggregate goodwill acquired:
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
21,156
|
|
|
—
|
|
|
—
|
|
|
21,156
|
|
||||
Total
|
|
$
|
30,170
|
|
|
$
|
(2,402
|
)
|
|
$
|
—
|
|
|
$
|
27,768
|
|
|
|
|
|
|
|
|
|
|
||||||||
Accumulated amortization:
|
|
|
|
|
|
|
|
|
||||||||
Trademarks
|
|
$
|
(680
|
)
|
|
$
|
695
|
|
|
$
|
(67
|
)
|
|
$
|
(52
|
)
|
Customer relationships
|
|
(4,340
|
)
|
|
976
|
|
|
(1,074
|
)
|
|
(4,438
|
)
|
||||
Accumulated impairment:
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
(6,716
|
)
|
|
(1,754
|
)
|
|
—
|
|
|
(8,470
|
)
|
||||
Total
|
|
$
|
(11,736
|
)
|
|
$
|
(83
|
)
|
|
$
|
(1,141
|
)
|
|
$
|
(12,960
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Net carrying amount:
|
|
|
|
|
|
|
|
|
||||||||
Trademarks
|
|
$
|
550
|
|
|
$
|
(315
|
)
|
|
$
|
(67
|
)
|
|
$
|
168
|
|
Customer relationships
|
|
3,444
|
|
|
(416
|
)
|
|
(1,074
|
)
|
|
1,954
|
|
||||
Goodwill
|
|
14,440
|
|
|
(1,754
|
)
|
|
—
|
|
|
12,686
|
|
||||
Total goodwill and other intangible assets
|
|
$
|
18,434
|
|
|
$
|
(2,485
|
)
|
|
$
|
(1,141
|
)
|
|
$
|
14,808
|
|
5.
|
Other Assets
|
6.
|
Revolving Credit Facility
|
7.
|
Stockholders' Equity
|
|
|
2014
|
|
2013
|
||||
|
|
(amounts per share)
|
||||||
|
|
|
|
|
||||
First quarter
|
|
$
|
0.17
|
|
|
$
|
0.17
|
|
Second quarter
|
|
0.19
|
|
|
0.17
|
|
||
Third quarter
|
|
0.19
|
|
|
0.17
|
|
8.
|
Net Income per Share
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
|
(in thousands)
|
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
8,385
|
|
|
$
|
10,082
|
|
|
$
|
19,840
|
|
|
$
|
26,743
|
|
Less distributed and undistributed earnings allocated to participating securities
|
|
(243
|
)
|
|
(289
|
)
|
|
(576
|
)
|
|
(769
|
)
|
||||
Net income allocated to common shares
|
|
$
|
8,142
|
|
|
$
|
9,793
|
|
|
$
|
19,264
|
|
|
$
|
25,974
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
|
24,650
|
|
|
24,849
|
|
|
24,747
|
|
|
24,855
|
|
||||
Incremental shares from assumed conversions of common stock options
|
|
2
|
|
|
18
|
|
|
5
|
|
|
24
|
|
||||
Adjusted weighted average common shares outstanding
|
|
24,652
|
|
|
24,867
|
|
|
24,752
|
|
|
24,879
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Potentially dilutive securities not included in weighted average share calculation due to anti-dilutive effect
|
|
16
|
|
|
—
|
|
|
5
|
|
|
10
|
|
9.
|
Commitments and Contingencies
|
|
|
Three Months Ended
September 30, |
|||||||||
|
|
2014
|
|
2013
|
|
% Change
|
|||||
|
|
(in thousands, except per share and statistical data)
|
|||||||||
|
|
|
|
|
|
|
|||||
Revenues (gross billings of $3.362 billion and $3.236 billion, less worksite employee payroll cost of $2.802 billion and $2.696 billion, respectively)
|
|
$
|
560,303
|
|
|
$
|
539,869
|
|
|
3.8
|
%
|
Gross profit
|
|
100,817
|
|
|
97,409
|
|
|
3.5
|
%
|
||
Operating expenses
|
|
86,357
|
|
|
80,297
|
|
|
7.5
|
%
|
||
Operating income
|
|
14,460
|
|
|
17,112
|
|
|
(15.5
|
)%
|
||
Other income
|
|
43
|
|
|
25
|
|
|
72.0
|
%
|
||
Net income
|
|
8,385
|
|
|
10,082
|
|
|
(16.8
|
)%
|
||
Diluted net income per share of common stock
|
|
0.33
|
|
|
0.39
|
|
|
(15.4
|
)%
|
||
|
|
|
|
|
|
|
|||||
Statistical Data:
|
|
|
|
|
|
|
|
|
|
||
Average number of worksite employees paid per month
|
|
131,545
|
|
|
129,248
|
|
|
1.8
|
%
|
||
Revenues per worksite employee per month
(1)
|
|
$
|
1,420
|
|
|
$
|
1,392
|
|
|
2.0
|
%
|
Gross profit per worksite employee per month
|
|
255
|
|
|
251
|
|
|
1.6
|
%
|
||
Operating expenses per worksite employee per month
|
|
218
|
|
|
207
|
|
|
5.3
|
%
|
||
Operating income per worksite employee per month
|
|
37
|
|
|
44
|
|
|
(15.9
|
)%
|
||
Net income per worksite employee per month
|
|
21
|
|
|
26
|
|
|
(19.2
|
)%
|
(1)
|
Gross billings of
$8,519
and
$8,346
per worksite employee per month, less payroll cost of
$7,099
and
$6,954
per worksite employee per month, respectively.
|
|
|
Three Months Ended
September 30, |
|
Three Months Ended
September 30, |
|||||||||||||
|
|
2014
|
|
2013
|
|
% Change
|
|
2014
|
|
2013
|
|||||||
|
|
(in thousands)
|
|
(% of total revenue)
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
Northeast
|
|
$
|
142,376
|
|
|
$
|
136,334
|
|
|
4.4
|
%
|
|
25.9
|
%
|
|
25.7
|
%
|
Southeast
|
|
53,615
|
|
|
51,813
|
|
|
3.5
|
%
|
|
9.8
|
%
|
|
9.8
|
%
|
||
Central
|
|
79,448
|
|
|
78,322
|
|
|
1.4
|
%
|
|
14.5
|
%
|
|
14.8
|
%
|
||
Southwest
|
|
150,404
|
|
|
147,518
|
|
|
2.0
|
%
|
|
27.4
|
%
|
|
27.8
|
%
|
||
West
|
|
123,531
|
|
|
116,959
|
|
|
5.6
|
%
|
|
22.4
|
%
|
|
21.9
|
%
|
||
|
|
549,374
|
|
|
530,946
|
|
|
3.5
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
||
Other revenue
(1)
|
|
10,929
|
|
|
8,923
|
|
|
22.5
|
%
|
|
|
|
|
||||
Total revenue
|
|
$
|
560,303
|
|
|
$
|
539,869
|
|
|
3.8
|
%
|
|
|
|
|
•
|
Benefits costs
– The cost of group health insurance and related employee benefits
increased
$3
per worksite employee per month, or
1.3%
on a cost per covered employee basis, compared to the
third
quarter of
2013
. Our benefits costs incurred in the
third
quarter of
2014
reflect favorable claim trends due to a reduction in both large claims and COBRA participation levels, partially offset by $3.1 million, or $8 per worksite employee per month, of additional taxes primarily due to new health care reform requirements. Our estimate of incurred but not paid claims increased during the
third
quarter of
2014
. Partially offsetting this increase were benefit cost reductions for changes in estimated claim run-off related to prior periods of $6.4 million, or $16 per worksite employee per month, in the third quarter of 2014. The percentage of worksite employees covered under our health insurance plans was
71.2%
in the
2014
period compared to
71.8%
in the
2013
period. Please read
Note 2
to the Consolidated Financial Statements, “
Accounting Policies
– Health Insurance Costs,” for a discussion of our accounting for health insurance costs.
|
•
|
Workers’ compensation costs
– Workers’ compensation costs
increased
$10
per worksite employee per month, or
29.4%
compared to the
third
quarter of
2013
, primarily due to higher incurred claim levels. As a percentage of non-bonus payroll cost, workers’ compensation costs were
0.68%
in the
2014
period compared to
0.55%
in the
2013
period. During the
2014
period, we recorded reductions in workers’ compensation costs of
$0.4 million
, or
0.02%
of non-bonus payroll costs, for changes in estimated losses related to prior reporting periods, compared to
$1.9 million
, or
0.08%
of non-bonus payroll costs in the
2013
period. Please read
Note 2
to the Consolidated Financial Statements, “
Accounting Policies
– Workers’ Compensation Costs,” for a discussion of our accounting for workers’ compensation costs.
|
•
|
Payroll tax costs
– Payroll taxes increased
4.0%
, or
$10
per worksite employee per month, compared to the
third
quarter of
2013
, primarily due to the
3.9%
increase
in payroll costs. Payroll taxes as a percentage of payroll cost were
6.3%
in both the
2014
and the
2013
periods.
|
|
|
Three Months Ended
September 30, |
|
Three Months Ended
September 30, |
||||||||||||||||||
|
|
2014
|
|
2013
|
|
% Change
|
|
2014
|
|
2013
|
|
% Change
|
||||||||||
|
|
(in thousands)
|
|
(per worksite employee per month)
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Salaries, wages and payroll taxes
|
|
$
|
49,384
|
|
|
$
|
43,797
|
|
|
12.8
|
%
|
|
$
|
125
|
|
|
$
|
113
|
|
|
10.6
|
%
|
Stock-based compensation
|
|
2,701
|
|
|
2,749
|
|
|
(1.7
|
)%
|
|
7
|
|
|
7
|
|
|
—
|
|
||||
Commissions
|
|
3,790
|
|
|
3,609
|
|
|
5.0
|
%
|
|
10
|
|
|
9
|
|
|
11.1
|
%
|
||||
Advertising
|
|
4,885
|
|
|
4,273
|
|
|
14.3
|
%
|
|
12
|
|
|
11
|
|
|
9.1
|
%
|
||||
General and administrative expenses
|
|
20,295
|
|
|
20,567
|
|
|
(1.3
|
)%
|
|
51
|
|
|
53
|
|
|
(3.8
|
)%
|
||||
Depreciation and amortization
|
|
5,302
|
|
|
5,302
|
|
|
—
|
|
|
13
|
|
|
14
|
|
|
(7.1
|
)%
|
||||
Total operating expenses
|
|
$
|
86,357
|
|
|
$
|
80,297
|
|
|
7.5
|
%
|
|
$
|
218
|
|
|
$
|
207
|
|
|
5.3
|
%
|
•
|
Salaries, wages and payroll taxes of corporate and sales staff
increased
12.8%
, or
$12
per worksite employee per month, compared to the
2013
period. This increase was primarily due to higher incentive compensation accruals and a
1.3%
rise in headcount.
|
•
|
Stock-based compensation
decreased
1.7%
, but remained flat on a per worksite employee per month basis compared to the
2013
period. Stock-based compensation expense represents amortization of restricted stock awards granted to employees.
|
•
|
Commissions expense
increased
5.0%
, or
$1
per worksite employee per month, compared to the
2013
period, primarily due to commissions associated with our Strategic Businesses.
|
•
|
Advertising costs
increased
14.3%
, or
$1
per worksite employee per month, compared to the
2013
period, primarily due to changes in the timing of television advertising spend.
|
•
|
General and administrative expenses
decreased
1.3%
, or
$2
per worksite employee per month, compared to the
2013
period.
|
|
|
Nine Months Ended
September 30, |
|||||||||
|
|
2014
|
|
2013
|
|
% Change
|
|||||
|
|
(in thousands, except per share and statistical data)
|
|||||||||
|
|
|
|
|
|
|
|||||
Revenues (gross billings of $10.231 billion and $9.736 billion, less worksite employee payroll cost of $8.469 billion and $8.037 billion, respectively)
|
|
$
|
1,761,923
|
|
|
$
|
1,698,979
|
|
|
3.7
|
%
|
Gross profit
|
|
302,446
|
|
|
303,273
|
|
|
(0.3
|
)%
|
||
Operating expenses
|
|
267,981
|
|
(1)
|
253,924
|
|
|
5.5
|
%
|
||
Operating income
|
|
34,465
|
|
|
49,349
|
|
|
(30.2
|
)%
|
||
Other income (expense)
|
|
100
|
|
|
(2,513
|
)
|
(2)
|
(104.0
|
)%
|
||
Net income
|
|
19,840
|
|
|
26,743
|
|
|
(25.8
|
)%
|
||
Diluted net income per share of common stock
|
|
0.78
|
|
|
1.04
|
|
|
(25.0
|
)%
|
||
|
|
|
|
|
|
|
|||||
Statistical Data:
|
|
|
|
|
|
|
|
|
|
||
Average number of worksite employees paid per month
|
|
128,703
|
|
|
126,445
|
|
|
1.8
|
%
|
||
Revenues per worksite employee per month
(3)
|
|
$
|
1,521
|
|
|
$
|
1,493
|
|
|
1.9
|
%
|
Gross profit per worksite employee per month
|
|
261
|
|
|
266
|
|
|
(1.9
|
)%
|
||
Operating expenses per worksite employee per month
|
|
231
|
|
|
223
|
|
|
3.6
|
%
|
||
Operating income per worksite employee per month
|
|
30
|
|
|
43
|
|
|
(30.2
|
)%
|
||
Net income per worksite employee per month
|
|
17
|
|
|
23
|
|
|
(26.1
|
)%
|
(1)
|
Includes a non-cash impairment charge of $2.5 million, or $0.06 per share in the second quarter of 2014. Please read
Note 4
to the Consolidated Financial Statements, “
Goodwill and Other Intangible Assets
,” for additional information.
|
(2)
|
Includes the impact of a $2.7 million, or $0.10 per share, non-cash impairment charge in the second quarter of 2013. Please read
Note 5
to the Consolidated Financial Statements, “
Other Assets
,” for additional information.
|
(3)
|
Gross billings of
$8,832
and
$8,555
per worksite employee per month, less payroll cost of
$7,311
and
$7,062
per worksite employee per month, respectively.
|
|
|
Nine Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|||||||||||||
|
|
2014
|
|
2013
|
|
% Change
|
|
2014
|
|
2013
|
|||||||
|
|
(in thousands)
|
|
(% of total revenue)
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
Northeast
|
|
$
|
451,505
|
|
|
$
|
439,351
|
|
|
2.8
|
%
|
|
26.1
|
%
|
|
26.3
|
%
|
Southeast
|
|
169,472
|
|
|
158,976
|
|
|
6.6
|
%
|
|
9.8
|
%
|
|
9.5
|
%
|
||
Central
|
|
249,497
|
|
|
247,078
|
|
|
1.0
|
%
|
|
14.4
|
%
|
|
14.8
|
%
|
||
Southwest
|
|
471,218
|
|
|
459,740
|
|
|
2.5
|
%
|
|
27.2
|
%
|
|
27.5
|
%
|
||
West
|
|
389,642
|
|
|
367,829
|
|
|
5.9
|
%
|
|
22.5
|
%
|
|
21.9
|
%
|
||
|
|
1,731,334
|
|
|
1,672,974
|
|
|
3.5
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
||
Other revenue
(1)
|
|
30,589
|
|
|
26,005
|
|
|
17.6
|
%
|
|
|
|
|
||||
Total revenue
|
|
$
|
1,761,923
|
|
|
$
|
1,698,979
|
|
|
3.7
|
%
|
|
|
|
|
•
|
Benefits costs
– The cost of group health insurance and related employee benefits
increased
$21
per worksite employee per month, or
3.8%
on a cost per covered employee basis, compared to the first
nine
months of
2013
. Our benefits costs incurred in the first
nine
months of
2014
included costs of
$2.4 million
, or
$2
per worksite employee per month, for changes in estimated run-off related to 2013. Included in 2013 benefits costs is a reduction of $3.4 million, or $3 per
|
•
|
Workers’ compensation costs
– Workers’ compensation costs
increased
$7
per worksite employee per month, or
22.6%
, compared to the first
nine
months of
2013
. As a percentage of non-bonus payroll cost, workers’ compensation costs were
0.65%
in the
2014
period compared to
0.54%
in the
2013
period. During the
2014
period, we recorded reductions in workers’ compensation costs of
$3.0 million
, or
0.04%
of non-bonus payroll costs, for changes in estimated losses related to prior reporting periods, compared to
$8.3 million
, or
0.11%
of non-bonus payroll costs, in the
2013
period. Please read
Note 2
to the Consolidated Financial Statements, “
Accounting Policies
– Workers’ Compensation Costs,” for a discussion of our accounting for workers’ compensation costs.
|
•
|
Payroll tax costs
– Payroll taxes
increased
2.7%
, or
$5
per worksite employee per month, compared to the first
nine
months of
2013
, primarily due to the
5.4%
increase
in payroll costs offset by lower state unemployment tax rates. Payroll taxes as a percentage of payroll cost were
7.4%
in the
2014
period and
7.6%
in the
2013
period.
|
|
|
Nine Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
% Change
|
|
2014
|
|
2013
|
|
% Change
|
||||||||||
|
|
(in thousands)
|
|
(per worksite employee per month)
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Salaries, wages and payroll taxes
|
|
$
|
148,245
|
|
|
$
|
137,697
|
|
|
7.7
|
%
|
|
$
|
128
|
|
|
$
|
121
|
|
|
5.8
|
%
|
Stock-based compensation
|
|
8,346
|
|
|
8,351
|
|
|
(0.1
|
)%
|
|
7
|
|
|
7
|
|
|
—
|
|
||||
Commissions
|
|
10,753
|
|
|
10,349
|
|
|
3.9
|
%
|
|
9
|
|
|
9
|
|
|
—
|
|
||||
Advertising
|
|
18,182
|
|
|
19,243
|
|
|
(5.5
|
)%
|
|
16
|
|
|
17
|
|
|
(5.9
|
)%
|
||||
General and administrative expenses
|
|
64,143
|
|
|
62,592
|
|
|
2.5
|
%
|
|
55
|
|
|
55
|
|
|
—
|
|
||||
Impairment charge
|
|
2,485
|
|
|
—
|
|
|
100.0
|
%
|
|
2
|
|
|
—
|
|
|
100.0
|
%
|
||||
Depreciation and amortization
|
|
15,827
|
|
|
15,692
|
|
|
0.9
|
%
|
|
14
|
|
|
14
|
|
|
—
|
|
||||
Total operating expenses
|
|
$
|
267,981
|
|
|
$
|
253,924
|
|
|
5.5
|
%
|
|
$
|
231
|
|
|
$
|
223
|
|
|
3.6
|
%
|
•
|
Salaries, wages and payroll taxes of corporate and sales staff
increased
7.7%
, or
$7
per worksite employee per month, compared to the
2013
period. This increase was primarily due to higher incentive compensation accruals and a
3.1%
rise in headcount.
|
•
|
Stock-based compensation
decreased
0.1%
, but remained flat on a per worksite employee per month basis compared to the
2013
period. Stock-based compensation expense represents amortization of restricted stock awards granted to employees.
|
•
|
Commissions expense
increased
3.9%
, but remained flat on a per worksite employee per month basis compared to the
2013
period, primarily due to commissions associated with our Strategic Businesses.
|
•
|
Advertising costs
decreased
5.5%
, or
$1
per worksite employee per month compared to the
2013
period, primarily due to reduced spending on radio and television advertising.
|
•
|
General and administrative expenses
increased
2.5%
, but remained
flat
on a per worksite employee per month basis compared to the
2013
period.
|
•
|
Depreciation and amortization expense
increased
0.9%
, but remained flat on a per worksite employee per month basis compared to the
2013
period.
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||
|
|
2014
|
|
2013
|
|
% Change
|
|
2014
|
|
2013
|
|
% Change
|
||||||||||
|
|
(in thousands, except per worksite employee per month data)
|
||||||||||||||||||||
GAAP to non-GAAP reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Payroll cost (GAAP)
|
|
$
|
2,801,722
|
|
|
$
|
2,696,330
|
|
|
3.9
|
%
|
|
$
|
8,468,804
|
|
|
$
|
8,036,532
|
|
|
5.4
|
%
|
Less: Bonus payroll cost
|
|
204,405
|
|
|
192,868
|
|
|
6.0
|
%
|
|
947,751
|
|
|
706,795
|
|
|
34.1
|
%
|
||||
Non-bonus payroll cost
|
|
$
|
2,597,317
|
|
|
$
|
2,503,462
|
|
|
3.7
|
%
|
|
$
|
7,521,053
|
|
|
$
|
7,329,737
|
|
|
2.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Payroll cost per worksite employee per month (GAAP)
|
|
$
|
7,099
|
|
|
$
|
6,954
|
|
|
2.1
|
%
|
|
$
|
7,311
|
|
|
$
|
7,062
|
|
|
3.5
|
%
|
Less: Bonus payroll cost per worksite employee per month
|
|
518
|
|
|
498
|
|
|
4.0
|
%
|
|
818
|
|
|
621
|
|
|
31.7
|
%
|
||||
Non-bonus payroll cost per worksite employee per month
|
|
$
|
6,581
|
|
|
$
|
6,456
|
|
|
1.9
|
%
|
|
$
|
6,493
|
|
|
$
|
6,441
|
|
|
0.8
|
%
|
•
|
Timing of client payments / payroll levels –
We typically collect our comprehensive service fee, along with the client’s payroll funding, from clients at least one day prior to the payment of worksite employee payrolls and associated payroll taxes. Therefore, the last business day of a reporting period has a substantial impact on our reporting of operating cash flows. For example, many worksite employees are paid on Fridays; therefore, operating cash flows decrease in the reporting periods that end on a Friday or a Monday. In the period ended
September 30, 2014
, the last business day of the reporting period was a
Tuesday
, client prepayments were
$18.3 million
and accrued worksite employee payroll was
$211.0 million
. In the period ended
September 30, 2013
, the last business day of the reporting period was a
Monday
, client prepayments were
$9.0 million
and accrued worksite employee payroll was
$184.1 million
.
|
•
|
Workers’ compensation plan funding –
Under our workers’ compensation insurance arrangements, we make monthly payments to the carriers comprised of premium costs and funds to be set aside for payment of future claims (“claim funds”). These pre-determined amounts are stipulated in our agreements with the carriers, and are based primarily on anticipated worksite employee payroll levels and workers’ compensation loss rates during the policy year. Changes in payroll levels from those that were anticipated in the arrangements can result in changes in the amount of cash payments, which will impact our reporting of operating cash flows. Our claim funds paid, based upon anticipated worksite employee payroll levels and workers’ compensation loss rates, were
$40.9 million
in the first
nine
months of
2014
and
$33.5 million
in the first
nine
months of
2013
. However, our estimate of workers’ compensation loss costs was
$37.7 million
in the
2014
period and
$29.7 million
in the
2013
period, respectively. During the first
nine
months of
2014
and
2013
, we paid the insurance carrier an additional
$7.2 million
and
$5.0 million
, respectively, in claim funds for prior policy years.
|
•
|
Medical plan funding –
Our health care contract with United establishes participant cash funding rates
90
days in advance of the beginning of a reporting quarter. Therefore, changes in the participation level of the United plan have a direct impact on our operating cash flows. In addition, changes to the funding rates, which are solely determined by United based primarily upon recent claim history and anticipated cost trends, also have a significant impact on our operating cash flows. At
September 30, 2014
, premiums owed and cash funded to United have exceeded Plan Costs, resulting in a
$31.8 million
surplus,
$22.8 million
of which is reflected as a current asset, and
$9.0 million
of which is reflected as a long-term asset on our Consolidated Balance Sheets. The premiums owed to United at
September 30, 2014
, were
$22.7 million
, which is included in accrued health insurance costs, a current liability, on our Consolidated Balance Sheets. Higher funding rates, as determined by United, resulted in a higher additional quarterly premium of
$20.1 million
at
September 30, 2014
as compared to no additional quarterly premium at
September 30, 2013
.
|
•
|
Operating results
– Our net income has a significant impact on our operating cash flows. Our net income
decreased
25.8%
to
$19.8 million
in the
nine months ended September 30, 2014
, compared to
$26.7 million
in the
nine months ended September 30, 2013
, due to higher operating expenses. Please read “Results of Operations
–
Nine Months Ended September 30, 2014
Compared to
Nine Months Ended September 30, 2013
.”
|
Period |
|
Total Number of Shares Purchased
(1)(2)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Announced Program
(1)
|
|
Maximum Number of Shares Available for Purchase under Announced Program
(1)
|
|||||
|
|
|
|
|
|
|
|
|
|||||
07/01/2014 – 07/31/2014
|
|
36,916
|
|
|
$
|
31.98
|
|
|
36,786
|
|
|
928,885
|
|
08/01/2014 – 08/31/2014
|
|
160,120
|
|
|
30.28
|
|
|
160,120
|
|
|
768,765
|
|
|
09/01/2014 – 09/30/2014
|
|
—
|
|
|
—
|
|
|
—
|
|
|
768,765
|
|
|
Total
|
|
197,036
|
|
|
$
|
30.60
|
|
|
196,906
|
|
|
768,765
|
|
(1)
|
Our Board has approved a program to repurchase shares of our outstanding common stock. During the three months ended
September 30, 2014
,
196,906
shares were repurchased under the program and
130
shares were withheld to satisfy tax withholding obligations for the vesting of restricted stock awards. As of
September 30, 2014
, we were authorized to repurchase an additional
768,765
shares under the program. Unless terminated earlier by resolution of the Board, the repurchase program will expire when we have repurchased all shares authorized for repurchase under the repurchase program.
|
(2)
|
These shares include shares of restricted stock that were withheld to satisfy tax-withholding obligations arising in conjunction with the vesting of restricted stock. The required withholding is calculated using the closing sales price reported by the New York Stock Exchange on the date prior to the applicable vesting date. These shares are not subject to the repurchase program described above.
|
|
(a)
|
List of Exhibits
|
|
10.1(+)
|
*
|
Letter Agreement, dated September 2, 2014, by and between Insperity Holdings, Inc. and UnitedHealthcare Insurance Company.
|
10.2(+)
|
*
|
Amendment to Minimum Premium Financial Agreement, as amended effective January 1, 2011, by and between Insperity Holdings, Inc. (fka Administaff of Texas, Inc.) and UnitedHealthcare Insurance Company, effective as of January 1, 2013.
|
10.3(+)
|
*
|
Amendment to Minimum Premium Administrative Services Agreement, as amended effective January 1, 2011, by and between Insperity Holdings, Inc. (fka Administaff of Texas, Inc.) and UnitedHealthcare Insurance Company, effective as of January 1, 2013.
|
31.1
|
*
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
*
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
**
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
**
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
*
|
XBRL Instance Document.
(1)
|
101.SCH
|
*
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
*
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
*
|
XBRL Extension Definition Linkbase Document.
|
101.LAB
|
*
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
*
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
____________________________________
|
|
|
|
|
|
|
|
(+)
|
Confidential treatment has been requested for this exhibit and confidential portions have been filed with the Securities and Exchange Commission.
|
|
|
|
|
|
|
*
|
Filed with this report.
|
|
|
|
|
|
|
**
|
Furnished with this report.
|
(1)
|
Attached as exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Operations for the
three and nine
month periods ended
September 30, 2014
and
2013
; (ii) the Consolidated Statements of Comprehensive Income for the
three and nine
month periods ended
September 30, 2014
and
2013
; (iii) the Consolidated Balance Sheets at
September 30, 2014
and
December 31, 2013
; (iv) the Consolidated Statement of Stockholders’ Equity for the
nine
month period ended
September 30, 2014
; (v) the Consolidated Statements of Cash Flows for the
nine
month periods ended
September 30, 2014
and
2013
; and (vi) Notes to the Consolidated Financial Statements.
|
|
Insperity, Inc.
|
|
|
|
|
Date: November 3, 2014
|
By:
|
/s/ Douglas S. Sharp
|
|
|
Douglas S. Sharp
|
|
|
Senior Vice President of Finance,
|
|
|
Chief Financial Officer and Treasurer
|
|
|
(Principal Financial Officer)
|
1)
|
In keeping with previous agreements, UHC’s suggested language is as follows: "Competitive" means that either (i) the Company and the Employer agree or (ii) an independent consultant chosen by mutual agreement of the parties has determined, that such product ranks either
***
or
***
as compared to competing products of other vendors in the designated market. In making any determination of the rank of a product in a market, such consultant shall apply such criteria relating to
***
,
***
and
***
as it shall determine appropriate. All fees and expenses of any such consultant shall be paid by the Employer.
|
a.
|
The exclusivity provisions shall not apply to any Client of Insperity where a state or municipality requires issuance of small business policies directly to Clients and/or Employees, nor shall it apply to Clients and/or Employees who elect coverage under a federal, state or private exchange. Insperity and UnitedHealthcare will work together to find mutually agreeable parameters for any Insperity
***
.
|
b.
|
Barring
***
or
***
, existing UHC membership is grandfathered for the remainder of the contractual period from the time a competing carrier is introduced into a market.
|
c.
|
When a new carrier is added to a UHC market, the
***
is made at the
***
and not the
***
.
|
d.
|
If there is a
***
to the Company
***
network in a Market, if no group health insurance or similar product is offered by the Company in the Market, or if no group health insurance or similar product offered by the Company is Competitive in that Market, the Employer may offer, subject to the existing terms of our agreement, the health insurance or similar products of a Competing Vendor in such market. Only
***
will be introduced into a limited number of Markets, not to exceed
***
Markets, through December 31, 2017. The
***
market cap does not apply if changes are
***
by
***
or
***
.
|
e.
|
***
and
***
will remain exclusive markets. If agreed to by both parties, the exclusivity requirement will be modified if changes are
***
by
***
or
***
(to the extent not previously addressed in subparagraph a to this section 1).
|
f.
|
UnitedHealthcare will be the exclusive Vendor for
***
coverage offered in the
***
markets. If agreed to by both parties, the exclusivity requirement will be modified if changes are mandated by
***
or
***
(to the extent not previously addressed in subparagraph a to this section 1).
|
g.
|
UHC will be notified at least 90 days prior to the introduction of a competing carrier into a market.
|
2)
|
In the event that either party reasonably believes that any state or other jurisdiction may impose a
***
on it for proceeding with its performance under the Agreement, or that a state or jurisdiction will enforce a regulation, statute or exchange provision that will result in either a material reduction in Insperity's ability to market its full suite of services to its existing and potential clients or UnitedHealthcare's ability to market its insurance products in the state or jurisdiction, such party will promptly advise the other party of such belief and the basis therefore. In such event, the parties agree to cooperate in good faith to resolve such matter to the satisfaction of both parties. After a good faith effort by the parties to eliminate the risk of
***
or the material reduction of Insperity's ability to market its full suite of services to its existing and potential clients or UnitedHealthcare's ability to market its insurance products in the state or jurisdiction, if the matter is not resolved to the satisfaction of both parties, (a) the party upon which such
***
may be imposed may immediately discontinue the Agreement's application in such state or jurisdiction by providing notice to that effect to the other party, except that the effective date of the termination may be extended to the latest date the Agreement can remain in effect before triggering the
***
, or later if adequate indemnification is provided by the other party, or, (b) in the case of a material reduction of Insperity's ability to market its full suite of services to its existing and potential clients, or UnitedHealthcare's ability to market its insurance products in the state or jurisdiction, the Agreement's application in such state or jurisdiction will be effective
***
following notice to the other party. In the event of termination, the Agreement will continue to apply in all other states or jurisdictions, except that if it is a Federal law at issue the Agreement will discontinue in its entirety. Furthermore, in the event of termination of this Agreement, Insperity agrees that it will deliver written notice to UnitedHealthcare of termination of the Policy issued to Insperity as of the effective date of the termination of this Agreement.
|
3)
|
In the event of
***
in the use of
***
by businesses within Insperity’s target customer base, which threatens Insperity’s ability to
***
or
***
, the parties agree to:
|
a.
|
Cooperate in good faith to ease the exclusivity provisions of the Agreement to accommodate a
***
competitive with the
***
, however, such easing shall be to the extent
***
to achieve a competitive offering;
|
b.
|
Restrict any
***
to presentation at the
***
;
|
c.
|
Maintain the existing Agreement for the remainder of the term of the Agreement;
|
4)
|
Renew UHC Dental coverage with
***
renewal
***
in 2016 and
***
in 2017.
|
5)
|
Renew OptumHealth (OH) Care24 w/ Worklife Solutions at
***
through 2017.
|
6)
|
If
***
exceeds
***
on
***
,
***
previously agreed to will be
***
and
***
will apply to 2015.
|
7)
|
***
, as measured on
***
each contract year, will set the level of combined
***
and the
***
for the current year.
***
includes all
***
for coverage in
***
or
***
as per current agreement.
|
a.
|
2016 CY
***
– based on
***
by
***
if
***
exceeds
***
,
***
by
***
if
***
exceeds
***
or
***
by
***
if
***
is less than
***
.
|
b.
|
2017 CY
***
– based on
***
by
***
if
***
exceeds
***
,
***
by
***
if
***
exceeds
***
or
***
by
***
if
***
is less than
***
.
|
8)
|
***
and
***
will continue to be a pass through of actual expenses.
|
9)
|
If
***
below the following thresholds, the
***
by the percentage in the table.
***
includes
***
for
***
in
***
or
***
as per current agreement. The total
***
measurements process remains the same as current agreement.
|
i.
|
*** below *** *** *** ***
|
g.
|
“Deficit” means, with respect to an Arrangement Period, the excess of (i) *** for the Arrangement Period *** (I) the *** the Arrangement Period ***, *** (II) the *** over (ii) the *** for the Arrangement Period. The “Arrangement Period ***” is defined to be the sum of the *** number of Employees covered under the MP Policy in each *** within the Arrangement Period.
If the Arrangement Period includes more than one ***, and if the *** is different for one or more of the *** included in the calculation, then the calculation of the Deficit shall be done for each *** or *** included in the Arrangement Period (each the “***”), and then the *** shall be summed to calculate the Deficit.
|
h.
|
"***” means the amount for the Policies set forth in Exhibit D to the Agreement, and is the total of the *** and the ***. The Company shall adjust the *** for any *** for which the *** used to calculate the MP Premium has been changed pursuant to section V and VI of Exhibit D. The Company shall notify the Employer of an adjustment to the *** at the same time that it provides the notice required under section 5 of the Agreement.
|
n.
|
“Surplus” means, with respect to an Arrangement Period, the excess of (i) *** for the Arrangement Period *** the *** of the (ii) *** for the Arrangement Period *** (I) the *** the Arrangement Period ***, *** (II) *** with respect to the Policies for the Arrangement Period.
If the Arrangement Period includes more than one ***, and if the *** is different for one or more of the *** included in the calculation, then the calculation of the Surplus shall be done for each *** or *** included in the Arrangement Period (each the “***”), and then the *** shall be summed to calculate the Surplus.
|
|
2
|
|
p.
|
“***” means the amount separately identified and provided by Company to Employer in the normal course for an Arrangement Period, which collectively with the *** equals the ***.
|
q.
|
“***” means the amount separately identified and provided by Company to Employer in the normal course for an Arrangement Period, which collectively with the *** equals the ***.
|
r.
|
“***” means the actual incurred *** and *** plus the sum of the applicable year’s *** and ***.
|
I.
|
The definition of “Policy” for purposes of Section 1(s) of the Agreement shall be as follows:
|
•
|
Effective January 1, 2013: No. *** (Medical ***) (“Policy”)
|
II.
|
The “Maximum Monthly Employer Benefit Obligation” (the “MMEBO”) shall be the following:
|
•
|
Effective January 1, 2013:
|
◦
|
The Quoted Premium effective January 1, 2013 for each Policy minus the *** effective January 1, 2013
|
•
|
Effective January 1, 2014:
|
◦
|
The Quoted Premium effective January 1, 2014 for each Policy minus the *** effective January 1, 2014
|
|
3
|
|
•
|
Effective January 1, 2015:
|
◦
|
The Quoted Premium effective January 1, 2015 for each Policy minus the *** effective January 1, 2015
|
III.
|
The “MP Premium” shall be the following:
|
•
|
Effective January 1, 2013:
|
◦
|
The total of the estimated *** and ***, calculated as a fixed dollar amount during the Arrangement Period and trued up in normal course, for each Policy plus the 2013 *** (the “2013 ***”)
|
•
|
Effective January 1, 2014:
|
◦
|
The total of the estimated *** and *** and ***, calculated as a fixed dollar amount during the Arrangement Period and trued up in normal course, for each Policy plus the sum of the 2014 *** and *** (the “2014 ***”)
|
•
|
Effective January 1, 2015:
|
◦
|
The total of the *** and *** and ***, calculated as a fixed dollar amount during the Arrangement Period and trued up in normal course, for each Policy plus the sum of the 2015 *** and *** (the “2015 ***”)
|
IV.
|
The “***” shall be the following:
|
•
|
Effective January 1, 2013:
|
◦
|
Calculated based on calendar year 2012 ***, paid through February 28, 2013, increased by *** for each Policy (the “2013 ***”).
|
•
|
Effective January 1, 2014:
|
◦
|
The 2013 *** increased by *** for each Policy (the “2014 ***”).
|
•
|
Effective January 1, 2015:
|
◦
|
The 2014 *** increased by *** for each Policy (the “2015 ***”).
|
|
4
|
|
V.
|
If *** below the thresholds set forth below, the *** increases by the percentage in the table. Calculation of the “***” is defined in Section (VII) of this Exhibit D.
|
*** in the *** below
|
***
|
***
|
***
|
***
|
*** Increase
|
***
|
***
|
***
|
***
|
*** Increase
|
|
***
|
***
|
***
|
VI.
|
If *** above the thresholds set forth below, the *** decreases by the percentage in the table. Calculation of the “***” is defined in Section (VII) of this Exhibit D.
|
*** in the *** above
|
***
|
***
|
***
|
***
|
*** Decrease
|
***
|
***
|
***
|
***
|
*** Decrease
|
|
***
|
***
|
***
|
VII.
|
For purposes of the aforementioned tables in (V) and (VI) of this Exhibit D, *** shall be determined each *** based upon the following parameters:
|
•
|
*** is defined to include *** for coverage in the Policy and *** for coverage under *** (f/k/a ***) ***, effective January 1, 2011, ***, which *** are amended from time to time in the normal course of business, including all ***, *** and/or *** in COBRA or state continuation coverage.
|
•
|
*** shall be measured each January 1st, April 1st, July 1st and October 1st, based upon the *** in effect on the 15th day of the preceding month. The Membership as of the 15th of the month preceding each of January 1st, April 1st, July 1st and October 1st, shall be the *** that is used to determine the ***, *** and *** for the quarter beginning that immediately following January 1st, April 1st, July 1st, and October 1
st
. For example, to determine the *** and *** for the quarter beginning January 1, 2013 and ending March 31, 2013, the *** as of December 15, 2012 shall be used.
|
VIII.
|
The applicable year’s *** Fee shall be billed separately to Employer.
|
|
5
|
|
h.
|
In the event that either party reasonably believes that any State or other jurisdiction may impose a *** on it for proceeding with its performance under the Agreement, or that a State or jurisdiction will enforce a regulation or statute that will result in either a material reduction in Employer’s ability to market its full suite of services to its existing and potential clients or Company’s ability to market its insurance products in the State or jurisdiction, such party will promptly advise the other party of such belief and the basis therefore. In such event, the parties agree to cooperate in good faith to resolve such matter to the satisfaction of both parties. After a good faith effort by the parties to eliminate the risk of *** or the material reduction of Employer’s ability to market its full suite of services to its existing and potential clients or Company’s ability to market its insurance products in the State or jurisdiction, if the matter is not resolved to the satisfaction of both parties, (a) the party upon which such *** may be imposed may immediately discontinue the Agreement's application in such State or jurisdiction by providing notice to that effect to the other party, except that the effective date of the termination may be extended to the latest date the Agreement can remain in effect before triggering the ***, or later if adequate indemnification is provided by the other party, or, (b) in the case of a material reduction of Employer’s ability to market its full suite of services to its existing and potential clients, or Company’s ability to market its insurance products in the State or jurisdiction, the Agreement's application in such State or jurisdiction will be effective *** following notice to the other party. In the event of termination, the Agreement will continue to apply in all other States or jurisdictions, except that if it is a Federal law at issue the Agreement will discontinue in its entirety. Furthermore, in the event of termination of this Agreement, Employer agrees that it will deliver written notice to Company of termination of the Policy issued to Employer as of the effective date of the termination of this Agreement.
|
|
6
|
|
|
7
|
|
|
8
|
|
A.
|
Except as otherwise set forth in this
Exhibit F
, the Company shall have the right to be the exclusive provider of medical and dental coverage for Employees; provided, however, that execution of an agreement between the Company and the Employer with respect to the Company’s right to be the exclusive provider of dental coverage for Employees with respect to certain geographical coverage areas (“Dental Agreement”) shall cause this Agreement and the MP Financial Agreement (including any exhibits or appendices to either) to be modified effective as of the effective date of the Dental Agreement to delete any effect on or reference to dental benefits, coverage, policies, or exclusivity rights as to the provision of dental coverage to employees of the Employer, and shall be interpreted in a manner consistent therewith.
|
B.
|
Exceptions to the Company's Right to be Exclusive Provider
|
1.
|
If there is a *** to the Company *** network in a Market, or if no group health insurance or similar product offered by the Company is Competitive in that Market, the Employer may offer, subject to this section B of this
Exhibit F
, the health insurance or similar products of a Competing Vendor in such market.
|
a.
|
Th
e
health insurance or similar products of a Competing Vendor may not be offered to Existing Company membership until after December 31, 2015, unless there is *** or required by Federal or State law.
|
b.
|
If
Employer introduces a Competing Vendor, the following provisions shall apply as long as the Company continues to write new group policies in that market:
|
(i.)
|
Employer agrees to *** to the Competing Vendor;
|
(ii.)
|
Existing Clients will be offered a choice at the time of the Client’s contract renewal between the Company and Competing Vendor coverage options; and
|
(iii.)
|
The choice between the Company and the Competing Vendor’s coverage options shall only be *** at the *** and in no event *** to the ***.
|
c.
|
Onl
y
*** Competing Vendor will be introduced into a limited number of Markets, not to exceed *** Markets, through December 31, 2015. This Market limitation may be increased if both parties determine that Federal or State law requires more Competing Vendors to be offered in a Market;
|
d.
|
Company will be notified at least 90 days prior to the introduction of a Competing Vendor into a Market;
|
e.
|
In no event will a Competing Vendor be introduced in the ***, which market includes *** and *** markets. These markets will remain exclusive markets to
|
f.
|
Notwithstanding any provision of Exhibit F to the contrary, the exclusivity
provisions shall not apply to *** due to the absence of a ***, or any other county where *** following a *** where there is no ***.
|
g.
|
Notwithstanding any provision of Exhibit F to the contrary, the exclusivity provisions shall not apply to any *** business policies (*** business policies are those issued to *** with *** eligible employees).
|
h.
|
Notwithstanding any provision of Exhibit F to the contrary, the exclusivity provisions shall not apply to prevent Employer from offering *** or another Competing Vendor in ***.
|
i.
|
Notwithstanding any provision of Exhibit F to the contrary, the exclusivity provisions shall not apply to prevent Employer from offering *** or another Competing Vendor in ***.
|
j.
|
Notwithstanding any provision of Exhibit F to the contrary, the exclusivity provisions shall not apply to prevent Employer from offering alternative *** coverage (but not *** coverage) through *** or *** in ***.
|
k.
|
Company will be the exclusive Vendor for *** coverage offered in the *** markets. If agreed to by both parties, the exclusivity requirement will be modified if changes are mandated by Federal or State law.
|
l.
|
Where a State or municipality requires issuance of small business policies directly to Clients and/or Employees, Employer will not be subject to this exclusivity provision for those Clients and/or Employees. This section does not prohibit a Client or Employee from selecting coverage in a Federal, State or private exchange, provided that *** the Client or Employee from selecting coverage in an exchange.
|
m.
|
Employer and Company will work together to find mutually agreeable parameters for any *** (“***”) *** by Employer.
|
2.
|
Removal or Addition of the Company’s HMOs and Other Products
|
a.
|
If at any time the HMO Substitute offered by the Employer through the Company ceases to be Competitive, the Employer may in its sole discretion cease offering such product. In any such case, the Employer shall notify the Company of its opinion concerning the Competitive status of such product at least *** before it
|
(i.)
|
Employer agrees to *** to the Competing Vendor;
|
(ii.)
|
Existing Clients will be offered a choice at the time of the Client’s contract renewal between the Company and Competing Vendor coverage options; and
|
(iii.)
|
The choice between the Company and the Competing Vendor’s coverage options shall only be *** at the *** and in no event *** to the ***.
|
b.
|
If, at the time the Company begins to offer an HMO Substitute which is Competitive in a certain market, the Employer is offering an HMO through a Competing Vendor consistent with the provisions of this Exhibit F in that market, the Employer shall offer each Client in such market coverage options for Employees in such market not later than the renewal date of such Client’s service agreement consisting of either (i) subject to Section C of this Exhibit F, the *** and *** options or (ii) such Competing Vendor’s *** and, at the Competing Vendor’s ***, its ***.
|
3.
|
Acquisition by Employer of another Professional Employer Organization
|
C.
|
Continuation of Company HMO in
***
|
D.
|
Definitions
|
a.
|
"Competing Vendor" means a vendor of medical coverage products in a particular geographic market other than the Company.
|
b.
|
"Competitive" means that either (i) the Company and the Employer agree or (ii) an independent consultant chosen by mutual agreement of the parties has determined, that such product ranks either *** as compared to competing products of other vendors in the designated market. In making any determination of the rank of a product in a market, such consultant shall apply such criteria relating to *** and *** as it shall determine appropriate. All fees and expenses of any such consultant shall be paid by the Employer.
|
c.
|
“Existing Client” means a Client which is covered under a Company *** or *** as of the date such determination is made under Section B of this Exhibit F.
|
d.
|
"HMO" means a product issued by a licensed "health maintenance organization" and offered as a network only or lock in product. Any references in this
Exhibit F
to the Company's "HMOs" shall include any HMO issued by the Company (or another member of the Company’s controlled group).
|
e.
|
Each of the following geographic areas are defined as a “Market” under this Agreement:
|
I.
|
***
|
II.
|
***
|
III.
|
***
|
IV.
|
***
|
V.
|
*** (this includes membership in *** and *** metros)
|
VI.
|
*** (*** includes ***)
|
VII.
|
***
|
VIII.
|
***
|
IX.
|
***
|
X.
|
***
|
XI.
|
***
|
XII.
|
***
|
XIII.
|
***
|
XIV.
|
***
|
XV.
|
***
|
XVI.
|
***
|
XVII.
|
***
|
XVIII.
|
***
|
XIX.
|
***
|
XX.
|
***
|
XXI.
|
***
|
XXII.
|
***
|
XXIII.
|
***
|
XXIV.
|
***
|
XXV.
|
***
|
XXVI.
|
***
|
XXVII.
|
***
|
XXVIII.
|
***
|
XXIX.
|
***
|
XXX.
|
***
|
XXXI.
|
***
|
XXXII.
|
***
|
XXXIII.
|
***
|
XXXIV.
|
***
|
XXXV.
|
***
|
XXXVI.
|
***
|
XXXVII.
|
***
|
XXXVIII.
|
***
|
XXXIX.
|
***
|
XL.
|
***
|
XLI.
|
***
|
XLII.
|
***
|
XLIII.
|
***
|
XLIV.
|
***
|
XLV.
|
***
|
XLVI.
|
***
|
XLVII.
|
***
|
XLVIII.
|
***
|
XLIX.
|
***
|
L.
|
***
|
LI.
|
***
|
LII.
|
***
|
f.
|
"PPO" means any product for network coverage that is not an HMO, the HMO Substitute or an EPO.
|
g.
|
"EPO" means a product issued by a licensed "insurance company" and offered as a network only or lock in product.
|
h.
|
"HMO Substitute" means the *** benefit plan (which includes both in-network and out-of- network benefits) developed and offered to the Employer by the Company as a substitute for Company's HMO products in connection with Section B of this Exhibit F.
|
i.
|
“***” means that either (i) the Company and the Employer agree or (ii) an independent consultant chosen by mutual agreement of the parties has determined, that Company’s network in a Market has been ***. In order to determine if there is a ***, the consultant shall apply reasonable criteria to determine that both (a) the *** imposes a *** to the Employer's ability to add new clients in the market; and (b) the
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Insperity, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: November 3, 2014
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/s/ Paul J. Sarvadi
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Paul J. Sarvadi
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Chairman of the Board and Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of Insperity, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: November 3, 2014
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/s/
Douglas S. Sharp
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Douglas S. Sharp
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|
Senior Vice President of Finance, Chief Financial Officer and Treasurer
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1.
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/
Paul J. Sarvadi
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|
Paul J. Sarvadi
|
|
Chairman of the Board and Chief Executive Officer
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|
November 3, 2014
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|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/
Douglas S. Sharp
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Douglas S. Sharp
|
|
Senior Vice President of Finance,
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Chief Financial Officer and Treasurer
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November 3, 2014
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