ý
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For the quarterly period ended September 30, 2015.
|
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
ý
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
|
TABLE OF CONTENTS
|
|
|
|
|
|
Part I
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
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Item 4.
|
||
|
|
|
Part II
|
||
|
|
|
Item 1.
|
||
|
|
|
Item 1a.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 6.
|
|
|
September 30,
2015 |
|
December 31, 2014
|
||||
|
|
(Unaudited)
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
201,085
|
|
|
$
|
276,456
|
|
Restricted cash
|
|
43,056
|
|
|
44,040
|
|
||
Marketable securities
|
|
9,754
|
|
|
28,631
|
|
||
Accounts receivable, net:
|
|
|
|
|
|
|
||
Trade
|
|
3,450
|
|
|
12,010
|
|
||
Unbilled
|
|
265,197
|
|
|
160,154
|
|
||
Other
|
|
4,774
|
|
|
2,952
|
|
||
Prepaid insurance
|
|
20,177
|
|
|
21,301
|
|
||
Other current assets
|
|
15,279
|
|
|
17,649
|
|
||
Deferred income taxes
|
|
5,692
|
|
|
6,316
|
|
||
Total current assets
|
|
568,464
|
|
|
569,509
|
|
||
|
|
|
|
|
||||
Property and equipment:
|
|
|
|
|
|
|
||
Land
|
|
5,214
|
|
|
5,214
|
|
||
Buildings and improvements
|
|
73,931
|
|
|
70,471
|
|
||
Computer hardware and software
|
|
88,325
|
|
|
89,204
|
|
||
Software development costs
|
|
44,525
|
|
|
41,314
|
|
||
Furniture, fixtures and other
|
|
38,800
|
|
|
38,617
|
|
||
Aircraft
|
|
—
|
|
|
35,866
|
|
||
|
|
250,795
|
|
|
280,686
|
|
||
Accumulated depreciation and amortization
|
|
(192,772
|
)
|
|
(196,341
|
)
|
||
Total property and equipment, net
|
|
58,023
|
|
|
84,345
|
|
||
|
|
|
|
|
||||
Other assets:
|
|
|
|
|
|
|
||
Prepaid health insurance
|
|
9,000
|
|
|
9,000
|
|
||
Deposits – health insurance
|
|
3,700
|
|
|
3,700
|
|
||
Deposits – workers’ compensation
|
|
121,172
|
|
|
113,934
|
|
||
Goodwill and other intangible assets, net
|
|
13,780
|
|
|
14,457
|
|
||
Deferred income taxes
|
|
4,466
|
|
|
—
|
|
||
Other assets
|
|
1,488
|
|
|
1,725
|
|
||
Total other assets
|
|
153,606
|
|
|
142,816
|
|
||
Total assets
|
|
$
|
780,093
|
|
|
$
|
796,670
|
|
|
|
September 30,
2015 |
|
December 31,
2014 |
||||
|
|
(Unaudited)
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
2,613
|
|
|
$
|
4,674
|
|
Payroll taxes and other payroll deductions payable
|
|
116,257
|
|
|
176,341
|
|
||
Accrued worksite employee payroll cost
|
|
251,966
|
|
|
192,396
|
|
||
Accrued health insurance costs
|
|
12,661
|
|
|
18,329
|
|
||
Accrued workers’ compensation costs
|
|
45,798
|
|
|
45,592
|
|
||
Accrued corporate payroll and commissions
|
|
34,654
|
|
|
32,644
|
|
||
Other accrued liabilities
|
|
23,139
|
|
|
22,444
|
|
||
Income taxes payable
|
|
4,976
|
|
|
4,031
|
|
||
Total current liabilities
|
|
492,064
|
|
|
496,451
|
|
||
|
|
|
|
|
||||
Noncurrent liabilities:
|
|
|
|
|
|
|||
Accrued workers’ compensation costs
|
|
112,088
|
|
|
92,048
|
|
||
Deferred income taxes
|
|
—
|
|
|
4,075
|
|
||
Total noncurrent liabilities
|
|
112,088
|
|
|
96,123
|
|
||
|
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
|
|
||
Common stock
|
|
308
|
|
|
308
|
|
||
Additional paid-in capital
|
|
143,951
|
|
|
137,769
|
|
||
Treasury stock, at cost
|
|
(200,043
|
)
|
|
(148,465
|
)
|
||
Accumulated other comprehensive income, net of tax
|
|
5
|
|
|
3
|
|
||
Retained earnings
|
|
231,720
|
|
|
214,481
|
|
||
Total stockholders’ equity
|
|
175,941
|
|
|
204,096
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
780,093
|
|
|
$
|
796,670
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenues (gross billings of $3.826 billion, $3.362 billion, $11.469 billion and $10.231 billion less worksite employee payroll cost of $3.200 billion, $2.802 billion, $9.515 billion and $8.469 billion, respectively)
|
|
$
|
626,286
|
|
|
$
|
560,303
|
|
|
$
|
1,953,603
|
|
|
$
|
1,761,923
|
|
|
|
|
|
|
|
|
|
|
||||||||
Direct costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Payroll taxes, benefits and workers’ compensation costs
|
|
519,543
|
|
|
459,486
|
|
|
1,612,781
|
|
|
1,459,477
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Gross profit
|
|
106,743
|
|
|
100,817
|
|
|
340,822
|
|
|
302,446
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries, wages and payroll taxes
|
|
51,329
|
|
|
49,384
|
|
|
158,311
|
|
|
148,245
|
|
||||
Stock-based compensation
|
|
3,710
|
|
|
2,701
|
|
|
10,174
|
|
|
8,346
|
|
||||
Commissions
|
|
4,516
|
|
|
3,790
|
|
|
12,923
|
|
|
10,753
|
|
||||
Advertising
|
|
3,574
|
|
|
4,885
|
|
|
14,681
|
|
|
18,182
|
|
||||
General and administrative expenses
|
|
19,191
|
|
|
20,295
|
|
|
63,578
|
|
|
64,143
|
|
||||
Impairment charges and other
|
|
—
|
|
|
—
|
|
|
11,120
|
|
|
2,485
|
|
||||
Depreciation and amortization
|
|
4,487
|
|
|
5,302
|
|
|
14,362
|
|
|
15,827
|
|
||||
|
|
86,807
|
|
|
86,357
|
|
|
285,149
|
|
|
267,981
|
|
||||
Operating income
|
|
19,936
|
|
|
14,460
|
|
|
55,673
|
|
|
34,465
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest, net
|
|
3
|
|
|
9
|
|
|
2
|
|
|
80
|
|
||||
Other, net
|
|
16
|
|
|
34
|
|
|
(16
|
)
|
|
20
|
|
||||
Income before income tax expense
|
|
19,955
|
|
|
14,503
|
|
|
55,659
|
|
|
34,565
|
|
||||
Income tax expense
|
|
8,005
|
|
|
6,118
|
|
|
22,608
|
|
|
14,725
|
|
||||
Net income
|
|
$
|
11,950
|
|
|
$
|
8,385
|
|
|
$
|
33,051
|
|
|
$
|
19,840
|
|
|
|
|
|
|
|
|
|
|
||||||||
Less distributed and undistributed earnings allocated to participating securities
|
|
(303
|
)
|
|
(243
|
)
|
|
(822
|
)
|
|
(576
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income allocated to common shares
|
|
$
|
11,647
|
|
|
$
|
8,142
|
|
|
$
|
32,229
|
|
|
$
|
19,264
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net income per share of common stock
|
|
$
|
0.48
|
|
|
$
|
0.33
|
|
|
$
|
1.32
|
|
|
$
|
0.78
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted net income per share of common stock
|
|
$
|
0.48
|
|
|
$
|
0.33
|
|
|
$
|
1.32
|
|
|
$
|
0.78
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
11,950
|
|
|
$
|
8,385
|
|
|
$
|
33,051
|
|
|
$
|
19,840
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Unrealized gain (loss) on available-for-sale securities, net of tax
|
|
5
|
|
|
(17
|
)
|
|
2
|
|
|
(5
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
|
$
|
11,955
|
|
|
$
|
8,368
|
|
|
$
|
33,053
|
|
|
$
|
19,835
|
|
|
|
Common Stock Issued
|
|
Additional Paid-In Capital
|
|
Treasury Stock
|
|
Accumulated Other Comprehensive Income
|
|
Retained Earnings
|
|
Total
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2014
|
|
30,758
|
|
|
$
|
308
|
|
|
$
|
137,769
|
|
|
$
|
(148,465
|
)
|
|
$
|
3
|
|
|
$
|
214,481
|
|
|
$
|
204,096
|
|
Purchase of treasury stock, at cost
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(59,293
|
)
|
|
—
|
|
|
—
|
|
|
(59,293
|
)
|
||||||
Exercise of stock options
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
377
|
|
|
—
|
|
|
—
|
|
|
374
|
|
||||||
Income tax benefit from stock-based compensation, net
|
|
—
|
|
|
—
|
|
|
2,338
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,338
|
|
||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
3,456
|
|
|
6,718
|
|
|
—
|
|
|
—
|
|
|
10,174
|
|
||||||
Other
|
|
—
|
|
|
—
|
|
|
391
|
|
|
620
|
|
|
—
|
|
|
—
|
|
|
1,011
|
|
||||||
Dividends paid
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,812
|
)
|
|
(15,812
|
)
|
||||||
Unrealized gain on marketable securities, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,051
|
|
|
33,051
|
|
||||||
Balance at September 30, 2015
|
|
30,758
|
|
|
$
|
308
|
|
|
$
|
143,951
|
|
|
$
|
(200,043
|
)
|
|
$
|
5
|
|
|
$
|
231,720
|
|
|
$
|
175,941
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2015
|
|
2014
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
33,051
|
|
|
$
|
19,840
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
|
|
||
Depreciation and amortization
|
|
14,362
|
|
|
15,827
|
|
||
Impairment charges and other
|
|
11,120
|
|
|
2,485
|
|
||
Amortization of marketable securities
|
|
733
|
|
|
1,474
|
|
||
Stock-based compensation
|
|
10,174
|
|
|
8,346
|
|
||
Deferred income taxes
|
|
(7,904
|
)
|
|
4,299
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||
Restricted cash
|
|
984
|
|
|
(5,294
|
)
|
||
Accounts receivable
|
|
(98,305
|
)
|
|
(34,805
|
)
|
||
Prepaid insurance
|
|
1,124
|
|
|
(19,975
|
)
|
||
Other current assets
|
|
2,393
|
|
|
(798
|
)
|
||
Other assets
|
|
(6,827
|
)
|
|
(11,761
|
)
|
||
Accounts payable
|
|
(2,061
|
)
|
|
577
|
|
||
Payroll taxes and other payroll deductions payable
|
|
(60,084
|
)
|
|
(60,578
|
)
|
||
Accrued worksite employee payroll expense
|
|
59,570
|
|
|
37,227
|
|
||
Accrued health insurance costs
|
|
(5,668
|
)
|
|
21,248
|
|
||
Accrued workers’ compensation costs
|
|
20,246
|
|
|
10,567
|
|
||
Accrued corporate payroll, commissions and other accrued liabilities
|
|
1,169
|
|
|
12,911
|
|
||
Income taxes payable/receivable
|
|
247
|
|
|
(2,572
|
)
|
||
Total adjustments
|
|
(58,727
|
)
|
|
(20,822
|
)
|
||
Net cash used in operating activities
|
|
(25,676
|
)
|
|
(982
|
)
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
|
||
Marketable securities:
|
|
|
|
|
|
|
||
Purchases
|
|
(9,219
|
)
|
|
(36,468
|
)
|
||
Proceeds from dispositions
|
|
9,483
|
|
|
10,630
|
|
||
Proceeds from maturities
|
|
17,869
|
|
|
24,759
|
|
||
Property and equipment:
|
|
|
|
|
||||
Purchases
|
|
(10,039
|
)
|
|
(11,032
|
)
|
||
Proceeds from sale of aircraft
|
|
12,159
|
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
|
20,253
|
|
|
(12,111
|
)
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2015
|
|
2014
|
||||
Cash flows from financing activities:
|
|
|
|
|
||||
Purchase of treasury stock
|
|
$
|
(58,557
|
)
|
|
$
|
(20,769
|
)
|
Dividends paid
|
|
(15,812
|
)
|
|
(14,015
|
)
|
||
Proceeds from the exercise of stock options
|
|
374
|
|
|
277
|
|
||
Income tax benefit from stock-based compensation
|
|
3,036
|
|
|
307
|
|
||
Other
|
|
1,011
|
|
|
996
|
|
||
Net cash used in financing activities
|
|
(69,948
|
)
|
|
(33,204
|
)
|
||
|
|
|
|
|
||||
Net decrease in cash and cash equivalents
|
|
(75,371
|
)
|
|
(46,297
|
)
|
||
Cash and cash equivalents at beginning of period
|
|
276,456
|
|
|
225,755
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
201,085
|
|
|
$
|
179,458
|
|
1.
|
Basis of Presentation
|
2.
|
Accounting Policies
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2015
|
|
2014
|
||||
|
|
(in thousands)
|
||||||
|
|
|
|
|
||||
Beginning balance, January 1,
|
|
$
|
136,088
|
|
|
$
|
120,833
|
|
Accrued claims
|
|
49,607
|
|
|
39,130
|
|
||
Present value discount
|
|
(1,816
|
)
|
|
(1,418
|
)
|
||
Paid claims
|
|
(28,735
|
)
|
|
(28,314
|
)
|
||
Ending balance
|
|
$
|
155,144
|
|
|
$
|
130,231
|
|
|
|
|
|
|
||||
Current portion of accrued claims
|
|
$
|
43,056
|
|
|
$
|
57,222
|
|
Long-term portion of accrued claims
|
|
112,088
|
|
|
73,009
|
|
||
|
|
$
|
155,144
|
|
|
$
|
130,231
|
|
3.
|
Cash, Cash Equivalents and Marketable Securities
|
|
|
September 30,
2015 |
|
December 31,
2014 |
||||
|
|
(in thousands)
|
||||||
Overnight Holdings
|
|
|
|
|
||||
Money market funds (cash equivalents)
|
|
$
|
173,586
|
|
|
$
|
271,840
|
|
Investment Holdings
|
|
|
|
|
|
|
||
Money market funds (cash equivalents)
|
|
21,301
|
|
|
14,125
|
|
||
Marketable securities
|
|
9,754
|
|
|
28,631
|
|
||
|
|
204,641
|
|
|
314,596
|
|
||
Cash held in demand accounts
|
|
17,748
|
|
|
20,369
|
|
||
Outstanding checks
|
|
(11,550
|
)
|
|
(29,878
|
)
|
||
Total cash, cash equivalents and marketable securities
|
|
$
|
210,839
|
|
|
$
|
305,087
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
201,085
|
|
|
$
|
276,456
|
|
Marketable securities
|
|
9,754
|
|
|
28,631
|
|
||
Total cash, cash equivalents and marketable securities
|
|
$
|
210,839
|
|
|
$
|
305,087
|
|
•
|
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,
2015 |
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
194,887
|
|
|
$
|
194,887
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Municipal bonds
|
|
9,754
|
|
|
—
|
|
|
9,754
|
|
|
—
|
|
||||
Total
|
|
$
|
204,641
|
|
|
$
|
194,887
|
|
|
$
|
9,754
|
|
|
$
|
—
|
|
|
|
Fair Value Measurements
|
||||||||||||||
|
|
(in thousands)
|
||||||||||||||
|
|
December 31,
2014 |
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
285,965
|
|
|
$
|
285,965
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Municipal bonds
|
|
28,631
|
|
|
—
|
|
|
28,631
|
|
|
—
|
|
||||
Total
|
|
$
|
314,596
|
|
|
$
|
285,965
|
|
|
$
|
28,631
|
|
|
$
|
—
|
|
|
|
Amortized
Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Estimated
Fair Value |
||||||||
|
|
|
|
(in thousands)
|
|
|
||||||||||
September 30, 2015
|
|
|
|
|
|
|
|
|
||||||||
Municipal bonds
|
|
$
|
9,746
|
|
|
$
|
10
|
|
|
$
|
(2
|
)
|
|
$
|
9,754
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Municipal bonds
|
|
$
|
28,626
|
|
|
$
|
16
|
|
|
$
|
(11
|
)
|
|
$
|
28,631
|
|
|
|
Amortized
Cost |
|
Estimated
Fair Value |
||||
|
|
(in thousands)
|
||||||
|
|
|
|
|
||||
Less than one year
|
|
$
|
6,294
|
|
|
$
|
6,297
|
|
One to five years
|
|
3,452
|
|
|
3,457
|
|
||
Total
|
|
$
|
9,746
|
|
|
$
|
9,754
|
|
4.
|
Impairment Charges and Other
|
5.
|
Revolving Credit Facility
|
6.
|
Stockholders' Equity
|
|
|
2015
|
|
2014
|
||||
|
|
(amounts per share)
|
||||||
|
|
|
|
|
||||
First quarter
|
|
$
|
0.19
|
|
|
$
|
0.17
|
|
Second quarter
|
|
0.22
|
|
|
0.19
|
|
||
Third quarter
|
|
0.22
|
|
|
0.19
|
|
7.
|
Long-Term Incentive Plan
|
8.
|
Net Income per Share
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
|
(in thousands)
|
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
11,950
|
|
|
$
|
8,385
|
|
|
$
|
33,051
|
|
|
$
|
19,840
|
|
Less distributed and undistributed earnings allocated to participating securities
|
|
(303
|
)
|
|
(243
|
)
|
|
(822
|
)
|
|
(576
|
)
|
||||
Net income allocated to common shares
|
|
$
|
11,647
|
|
|
$
|
8,142
|
|
|
$
|
32,229
|
|
|
$
|
19,264
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
|
24,030
|
|
|
24,650
|
|
|
24,502
|
|
|
24,747
|
|
||||
Incremental shares from assumed conversions of common stock options
|
|
6
|
|
|
2
|
|
|
7
|
|
|
5
|
|
||||
Adjusted weighted average common shares outstanding
|
|
24,036
|
|
|
24,652
|
|
|
24,509
|
|
|
24,752
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Potentially dilutive securities not included in weighted average share calculation due to anti-dilutive effect
|
|
—
|
|
|
16
|
|
|
—
|
|
|
5
|
|
9.
|
Commitments and Contingencies
|
|
|
Three Months Ended
September 30, |
|||||||||
|
|
2015
|
|
2014
|
|
% Change
|
|||||
|
|
(in thousands, except per share and statistical data)
|
|||||||||
|
|
|
|
|
|
|
|||||
Revenues (gross billings of $3.826 billion and $3.362 billion, less worksite employee payroll cost of $3.200 billion and $2.802 billion, respectively)
|
|
$
|
626,286
|
|
|
$
|
560,303
|
|
|
11.8
|
%
|
Gross profit
|
|
106,743
|
|
|
100,817
|
|
|
5.9
|
%
|
||
Operating expenses
|
|
86,807
|
|
|
86,357
|
|
|
0.5
|
%
|
||
Operating income
|
|
19,936
|
|
|
14,460
|
|
|
37.9
|
%
|
||
Other income
|
|
19
|
|
|
43
|
|
|
(55.8
|
)%
|
||
Net income
|
|
11,950
|
|
|
8,385
|
|
|
42.5
|
%
|
||
Diluted net income per share of common stock
|
|
0.48
|
|
|
0.33
|
|
|
45.5
|
%
|
||
Adjusted net income
(1)
|
|
14,171
|
|
|
9,946
|
|
|
42.5
|
%
|
||
Adjusted diluted net income per share of common stock
(1)
|
|
0.57
|
|
|
0.39
|
|
|
46.2
|
%
|
||
Adjusted EBITDA
(1)
|
|
28,278
|
|
|
22,610
|
|
|
25.1
|
%
|
||
|
|
|
|
|
|
|
|||||
Statistical Data:
|
|
|
|
|
|
|
|
|
|
||
Average number of worksite employees paid per month
|
|
149,086
|
|
|
131,545
|
|
|
13.3
|
%
|
||
Revenues per worksite employee per month
(2)
|
|
$
|
1,400
|
|
|
$
|
1,420
|
|
|
(1.4
|
)%
|
Gross profit per worksite employee per month
|
|
239
|
|
|
255
|
|
|
(6.3
|
)%
|
||
Operating expenses per worksite employee per month
|
|
194
|
|
|
218
|
|
|
(11.0
|
)%
|
||
Operating income per worksite employee per month
|
|
45
|
|
|
37
|
|
|
21.6
|
%
|
||
Net income per worksite employee per month
|
|
27
|
|
|
21
|
|
|
28.6
|
%
|
(1)
|
Please read “Non-GAAP Financial Measures” for a reconciliation of the non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with GAAP.
|
(2)
|
Gross billings of
$8,555
and
$8,519
per worksite employee per month, less payroll cost of
$7,155
and
$7,099
per worksite employee per month, respectively.
|
|
|
Three Months Ended
September 30, |
|
Three Months Ended
September 30, |
|||||||||||||
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|||||||
|
|
(in thousands)
|
|
(% of total revenue)
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
Northeast
|
|
$
|
156,700
|
|
|
$
|
142,376
|
|
|
10.1
|
%
|
|
25.5
|
%
|
|
25.9
|
%
|
Southeast
|
|
64,420
|
|
|
53,615
|
|
|
20.2
|
%
|
|
10.5
|
%
|
|
9.8
|
%
|
||
Central
|
|
95,628
|
|
|
79,448
|
|
|
20.4
|
%
|
|
15.6
|
%
|
|
14.5
|
%
|
||
Southwest
|
|
155,581
|
|
|
150,404
|
|
|
3.4
|
%
|
|
25.4
|
%
|
|
27.4
|
%
|
||
West
|
|
141,353
|
|
|
123,531
|
|
|
14.4
|
%
|
|
23.0
|
%
|
|
22.4
|
%
|
||
|
|
613,682
|
|
|
549,374
|
|
|
11.7
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
||
Other revenue
(1)
|
|
12,604
|
|
|
10,929
|
|
|
15.3
|
%
|
|
|
|
|
||||
Total revenue
|
|
$
|
626,286
|
|
|
$
|
560,303
|
|
|
11.8
|
%
|
|
|
|
|
•
|
Benefits costs
– The cost of group health insurance and related employee benefits
decreased
$1
per worksite employee per month, but increased
1.9%
on a cost per covered employee basis, compared to the
third
quarter of
2014
. Our benefits costs incurred in the
third
quarter of
2015
reflect favorable claim trends due to reductions in COBRA participation levels. Included in 2014 benefits costs is a reduction of $6.4 million, or $16 per worksite employee per
|
•
|
Workers’ compensation costs
– Workers’ compensation costs
increased
15.5%
, or
$1
per worksite employee per month, compared to the
third
quarter of
2014
, primarily due to a
13.3%
increase
in the average number of worksite employees paid per month. As a percentage of non-bonus payroll cost, workers’ compensation costs were
0.70%
in the
2015
period compared to
0.68%
in the
2014
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
12.8%
, but decreased
$2
on a per worksite employee per month basis, compared to the
third
quarter of
2014
, primarily due to a
14.2%
increase
in payroll costs, partially offset by lower unemployment tax rates. Payroll taxes as a percentage of payroll cost were
6.3%
in both the
2015
and the
2014
periods.
|
|
|
Three Months Ended
September 30, |
|
Three Months Ended
September 30, |
||||||||||||||||||
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|
% Change
|
||||||||||
|
|
(in thousands)
|
|
(per worksite employee per month)
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Salaries, wages and payroll taxes
|
|
$
|
51,329
|
|
|
$
|
49,384
|
|
|
3.9
|
%
|
|
$
|
115
|
|
|
$
|
125
|
|
|
(8.0
|
)%
|
Stock-based compensation
|
|
3,710
|
|
|
2,701
|
|
|
37.4
|
%
|
|
8
|
|
|
7
|
|
|
14.3
|
%
|
||||
Commissions
|
|
4,516
|
|
|
3,790
|
|
|
19.2
|
%
|
|
10
|
|
|
10
|
|
|
—
|
|
||||
Advertising
|
|
3,574
|
|
|
4,885
|
|
|
(26.8
|
)%
|
|
8
|
|
|
12
|
|
|
(33.3
|
)%
|
||||
General and administrative expenses
|
|
19,191
|
|
|
20,295
|
|
|
(5.4
|
)%
|
|
43
|
|
|
51
|
|
|
(15.7
|
)%
|
||||
Depreciation and amortization
|
|
4,487
|
|
|
5,302
|
|
|
(15.4
|
)%
|
|
10
|
|
|
13
|
|
|
(23.1
|
)%
|
||||
Total operating expenses
|
|
$
|
86,807
|
|
|
$
|
86,357
|
|
|
0.5
|
%
|
|
$
|
194
|
|
|
$
|
218
|
|
|
(11.0
|
)%
|
•
|
Salaries, wages and payroll taxes of corporate and sales staff
increased
3.9%
, but decreased
$10
on a per worksite employee per month basis, compared to the
2014
period. This increase was primarily due to a
4.1%
increase in corporate headcount, primarily due to a 16.5% increase in the number of Business Performance Advisors.
|
•
|
Stock-based compensation
increased
37.4%
, or
$1
per worksite employee per month, compared to the
2014
period. This increase was primarily due to awards issued under the new Insperity, Inc. Long-Term Incentive Program (the “LTIP”). Please read
Note 7
to the Consolidated Financial Statements, “
Long-Term Incentive Plan
,” for additional information.
|
•
|
Commissions expense
increased
19.2%
, but remained flat on a per worksite employee per month basis, compared to the
2014
period, primarily due to commissions associated with our PEO HR Outsourcing solutions.
|
•
|
Advertising costs
decreased
26.8%
, or
$4
per worksite employee per month, compared to the
2014
period, primarily due to reduced spending on radio and television advertising.
|
•
|
General and administrative expenses
decreased
5.4%
, or
$8
per worksite employee per month, compared to the
2014
period, due in part to lower spending on professional fees and on repair and maintenance costs associated with the two aircraft sold in July 2015. Please read
Note 4
to the Consolidated Financial Statements, “
Impairment Charges and Other
,” for additional information
|
•
|
Depreciation and amortization expense
decreased
15.4%
, or
$3
per worksite employee per month compared to the
2014
period, primarily due to the July 2015 sale of our two aircraft, which eliminated the depreciation on those assets. Please read
Note 4
to the Consolidated Financial Statements, “
Impairment Charges and Other
,” for additional information.
|
|
|
Nine Months Ended
September 30, |
|||||||||
|
|
2015
|
|
2014
|
|
% Change
|
|||||
|
|
(in thousands, except per share and statistical data)
|
|||||||||
|
|
|
|
|
|
|
|||||
Revenues (gross billings of $11.469 billion and $10.231 billion, less worksite employee payroll cost of $9.515 billion and $8.469 billion, respectively)
|
|
$
|
1,953,603
|
|
|
$
|
1,761,923
|
|
|
10.9
|
%
|
Gross profit
|
|
340,822
|
|
|
302,446
|
|
|
12.7
|
%
|
||
Operating expenses
(1)
|
|
285,149
|
|
|
267,981
|
|
|
6.4
|
%
|
||
Operating income
|
|
55,673
|
|
|
34,465
|
|
|
61.5
|
%
|
||
Other income (expense)
|
|
(14
|
)
|
|
100
|
|
|
(114.0
|
)%
|
||
Net income
|
|
33,051
|
|
|
19,840
|
|
|
66.6
|
%
|
||
Diluted net income per share of common stock
|
|
1.32
|
|
|
0.78
|
|
|
69.2
|
%
|
||
Adjusted net income
(2)
|
|
46,578
|
|
|
26,197
|
|
|
77.8
|
%
|
||
Adjusted diluted net income per share of common stock
(2)
|
|
1.86
|
|
|
1.03
|
|
|
80.6
|
%
|
||
Adjusted EBITDA
(2)
|
|
93,211
|
|
|
61,504
|
|
|
51.6
|
%
|
||
|
|
|
|
|
|
|
|||||
Statistical Data:
|
|
|
|
|
|
|
|
|
|
||
Average number of worksite employees paid per month
|
|
143,392
|
|
|
128,703
|
|
|
11.4
|
%
|
||
Revenues per worksite employee per month
(3)
|
|
$
|
1,514
|
|
|
$
|
1,521
|
|
|
(0.5
|
)%
|
Gross profit per worksite employee per month
|
|
264
|
|
|
261
|
|
|
1.1
|
%
|
||
Operating expenses per worksite employee per month
|
|
221
|
|
|
231
|
|
|
(4.3
|
)%
|
||
Operating income per worksite employee per month
|
|
43
|
|
|
30
|
|
|
43.3
|
%
|
||
Net income per worksite employee per month
|
|
26
|
|
|
17
|
|
|
52.9
|
%
|
(1)
|
Includes non-cash impairment and other charges of
$11.1 million
, or
$0.26
per share in the
2015
period and $2.5 million, or $0.06 per share in the
2014
period. Please read
Note 4
to the Consolidated Financial Statements, “
Impairment Charges and Other
,” for additional information.
|
(2)
|
Please read “Non-GAAP Financial Measures” for a reconciliation of the non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with GAAP.
|
(3)
|
Gross billings of
$8,887
and
$8,832
per worksite employee per month, less payroll cost of
$7,373
and
$7,311
per worksite employee per month, respectively.
|
|
|
Nine Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|||||||||||||
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|||||||
|
|
(in thousands)
|
|
(% of total revenue)
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
Northeast
|
|
$
|
500,899
|
|
|
$
|
451,505
|
|
|
10.9
|
%
|
|
26.1
|
%
|
|
26.1
|
%
|
Southeast
|
|
193,970
|
|
|
169,472
|
|
|
14.5
|
%
|
|
10.1
|
%
|
|
9.8
|
%
|
||
Central
|
|
294,464
|
|
|
249,497
|
|
|
18.0
|
%
|
|
15.4
|
%
|
|
14.4
|
%
|
||
Southwest
|
|
489,790
|
|
|
471,218
|
|
|
3.9
|
%
|
|
25.5
|
%
|
|
27.2
|
%
|
||
West
|
|
438,758
|
|
|
389,642
|
|
|
12.6
|
%
|
|
22.9
|
%
|
|
22.5
|
%
|
||
|
|
1,917,881
|
|
|
1,731,334
|
|
|
10.8
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
||
Other revenue
(1)
|
|
35,722
|
|
|
30,589
|
|
|
16.8
|
%
|
|
|
|
|
||||
Total revenue
|
|
$
|
1,953,603
|
|
|
$
|
1,761,923
|
|
|
10.9
|
%
|
|
|
|
|
•
|
Benefits costs
– The cost of group health insurance and related employee benefits
decreased
$12
per worksite employee per month, or
0.2%
on a cost per covered employee basis, compared to the first
nine
months of
2014
. Our benefits costs incurred in the first
nine
months of
2015
reflect reductions in COBRA participation levels and includes a reduction in estimated claims run-off related to prior periods of
$0.8 million
, or $1 per worksite employee per month. Benefits costs incurred in the first nine months of
2014
included an increase in estimated claims run-off related to prior periods of
$2.4 million
, or $2 per worksite employee per month. The percentage of worksite employees covered under our health insurance plans was
70.5%
in the
2015
period compared to
71.7%
in the
2014
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
20.9%
, or
$4
per worksite employee per month, compared to the first
nine
months of
2014
, primarily due to higher incurred claim levels and an
11.4%
increase
in the average number of worksite employees paid per month. As a percentage of non-bonus payroll cost, workers’ compensation costs were
0.70%
in the
2015
period compared to
0.65%
in the
2014
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
11.1%
, but
decreased
$1
per worksite employee per month, compared to the first
nine
months of
2014
, primarily due to a
12.4%
increase
in payroll costs, partially offset by lower unemployment tax rates. Payroll taxes as a percentage of payroll cost were
7.3%
in the
2015
period and
7.4%
in the
2014
period.
|
|
|
Nine Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|
% Change
|
||||||||||
|
|
(in thousands)
|
|
(per worksite employee per month)
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Salaries, wages and payroll taxes
|
|
$
|
158,311
|
|
|
$
|
148,245
|
|
|
6.8
|
%
|
|
$
|
123
|
|
|
$
|
128
|
|
|
(3.9
|
)%
|
Stock-based compensation
|
|
10,174
|
|
|
8,346
|
|
|
21.9
|
%
|
|
8
|
|
|
7
|
|
|
14.3
|
%
|
||||
Commissions
|
|
12,923
|
|
|
10,753
|
|
|
20.2
|
%
|
|
10
|
|
|
9
|
|
|
11.1
|
%
|
||||
Advertising
|
|
14,681
|
|
|
18,182
|
|
|
(19.3
|
)%
|
|
11
|
|
|
16
|
|
|
(31.3
|
)%
|
||||
General and administrative expenses
|
|
63,578
|
|
|
64,143
|
|
|
(0.9
|
)%
|
|
49
|
|
|
55
|
|
|
(10.9
|
)%
|
||||
Impairment charges and other
|
|
11,120
|
|
|
2,485
|
|
|
347.5
|
%
|
|
9
|
|
|
2
|
|
|
350.0
|
%
|
||||
Depreciation and amortization
|
|
14,362
|
|
|
15,827
|
|
|
(9.3
|
)%
|
|
11
|
|
|
14
|
|
|
(21.4
|
)%
|
||||
Total operating expenses
|
|
$
|
285,149
|
|
|
$
|
267,981
|
|
|
6.4
|
%
|
|
$
|
221
|
|
|
$
|
231
|
|
|
(4.3
|
)%
|
•
|
Salaries, wages and payroll taxes of corporate and sales staff
increased
6.8%
, but
decreased
$5
on a per worksite employee per month basis, compared to the
2014
period. This increase was primarily due to higher incentive
|
•
|
Stock-based compensation
increased
21.9%
, or
$1
per worksite employee per month, compared to the
2014
period. This increase was primarily due to awards issued under the new LTIP. Please read
Note 7
to the Consolidated Financial Statements, “
Long-Term Incentive Plan
,” for additional information.
|
•
|
Commissions expense
increased
20.2%
, or
$1
per worksite employee per month, compared to the
2014
period, primarily due to commissions associated with our PEO HR Outsourcing solutions.
|
•
|
Advertising costs
decreased
19.3%
, or
$5
per worksite employee per month, compared to the
2014
period, primarily due to reduced spending on radio and television advertising and sponsorships.
|
•
|
General and administrative expenses, which includes
$1.5 million
in stockholder advisory expenses in the
2015
period,
decreased
0.9%
, or
$6
per worksite employee per month compared to the
2014
period. This decrease was due in part to lower consulting and professional fees.
|
•
|
Depreciation and amortization expense
decreased
9.3%
, or
$3
per worksite employee per month compared to the
2014
period, primarily due to the July 2015 sale of our two aircraft, which eliminated the depreciation on those assets. Please read
Note 4
to the Consolidated Financial Statements, “
Impairment Charges and Other
,” for additional information.
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|
% Change
|
||||||||||
|
|
(in thousands, except per worksite employee per month data)
|
||||||||||||||||||||
GAAP to non-GAAP reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Payroll cost (GAAP)
|
|
$
|
3,199,788
|
|
|
$
|
2,801,722
|
|
|
14.2
|
%
|
|
$
|
9,515,662
|
|
|
$
|
8,468,804
|
|
|
12.4
|
%
|
Less: Bonus payroll cost
|
|
262,445
|
|
|
204,405
|
|
|
28.4
|
%
|
|
1,038,315
|
|
|
947,751
|
|
|
9.6
|
%
|
||||
Non-bonus payroll cost
|
|
$
|
2,937,343
|
|
|
$
|
2,597,317
|
|
|
13.1
|
%
|
|
$
|
8,477,347
|
|
|
$
|
7,521,053
|
|
|
12.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Payroll cost per worksite employee per month (GAAP)
|
|
$
|
7,155
|
|
|
$
|
7,099
|
|
|
0.8
|
%
|
|
$
|
7,373
|
|
|
$
|
7,311
|
|
|
0.8
|
%
|
Less: Bonus payroll cost per worksite employee per month
|
|
588
|
|
|
518
|
|
|
13.5
|
%
|
|
805
|
|
|
818
|
|
|
(1.6
|
)%
|
||||
Non-bonus payroll cost per worksite employee per month
|
|
$
|
6,567
|
|
|
$
|
6,581
|
|
|
(0.2
|
)%
|
|
$
|
6,568
|
|
|
$
|
6,493
|
|
|
1.2
|
%
|
|
|
September 30,
2015 |
|
December 31,
2014 |
||||
|
|
(in thousands)
|
||||||
|
|
|
|
|
||||
Cash, cash equivalents and marketable securities (GAAP)
|
|
$
|
210,839
|
|
|
$
|
305,087
|
|
Less: Amounts payable for withheld federal and state income taxes, employment taxes and other payroll deductions
|
|
99,382
|
|
|
152,132
|
|
||
Customer prepayments
|
|
40,533
|
|
|
87,887
|
|
||
Adjusted cash, cash equivalents and marketable securities
|
|
$
|
70,924
|
|
|
$
|
65,068
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|
% Change
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating expenses (GAAP)
|
|
$
|
86,807
|
|
|
$
|
86,357
|
|
|
0.5
|
%
|
|
$
|
285,149
|
|
|
$
|
267,981
|
|
|
6.4
|
%
|
Less: Impairment charges and other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,120
|
|
|
2,485
|
|
|
347.5
|
%
|
||||
Stockholder advisory expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,546
|
|
|
—
|
|
|
—
|
|
||||
Adjusted operating expenses
|
|
$
|
86,807
|
|
|
$
|
86,357
|
|
|
0.5
|
%
|
|
$
|
272,483
|
|
|
$
|
265,496
|
|
|
2.6
|
%
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|
% Change
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (GAAP)
|
|
$
|
11,950
|
|
|
$
|
8,385
|
|
|
42.5
|
%
|
|
$
|
33,051
|
|
|
$
|
19,840
|
|
|
66.6
|
%
|
Income tax expense
|
|
8,005
|
|
|
6,118
|
|
|
30.8
|
%
|
|
22,608
|
|
|
14,725
|
|
|
53.5
|
%
|
||||
Interest expense
|
|
126
|
|
|
104
|
|
|
21.2
|
%
|
|
350
|
|
|
281
|
|
|
24.6
|
%
|
||||
Depreciation and amortization
|
|
4,487
|
|
|
5,302
|
|
|
(15.4
|
)%
|
|
14,362
|
|
|
15,827
|
|
|
(9.3
|
)%
|
||||
EBITDA
|
|
24,568
|
|
|
19,909
|
|
|
23.4
|
%
|
|
70,371
|
|
|
50,673
|
|
|
38.9
|
%
|
||||
Impairment charges and other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,120
|
|
|
2,485
|
|
|
347.5
|
%
|
||||
Stock-based compensation
|
|
3,710
|
|
|
2,701
|
|
|
37.4
|
%
|
|
10,174
|
|
|
8,346
|
|
|
21.9
|
%
|
||||
Stockholder advisory expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,546
|
|
|
—
|
|
|
—
|
|
||||
Adjusted EBITDA
|
|
$
|
28,278
|
|
|
$
|
22,610
|
|
|
25.1
|
%
|
|
$
|
93,211
|
|
|
$
|
61,504
|
|
|
51.6
|
%
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|
% Change
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (GAAP)
|
|
$
|
11,950
|
|
|
$
|
8,385
|
|
|
42.5
|
%
|
|
$
|
33,051
|
|
|
$
|
19,840
|
|
|
66.6
|
%
|
Impairment charges and other, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,572
|
|
|
1,566
|
|
|
319.7
|
%
|
||||
Stock-based compensation, net of tax
|
|
2,221
|
|
|
1,561
|
|
|
42.3
|
%
|
|
6,041
|
|
|
4,791
|
|
|
26.1
|
%
|
||||
Stockholder advisory expenses, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
914
|
|
|
—
|
|
|
—
|
|
||||
Adjusted net income
|
|
$
|
14,171
|
|
|
$
|
9,946
|
|
|
42.5
|
%
|
|
$
|
46,578
|
|
|
$
|
26,197
|
|
|
77.8
|
%
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|
% Change
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted net income per share of common stock (GAAP)
|
|
$
|
0.48
|
|
|
$
|
0.33
|
|
|
45.5
|
%
|
|
$
|
1.32
|
|
|
$
|
0.78
|
|
|
69.2
|
%
|
Impairment charges and other, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.26
|
|
|
0.06
|
|
|
333.3
|
%
|
||||
Stock-based compensation, net of tax
|
|
0.09
|
|
|
0.06
|
|
|
50.0
|
%
|
|
0.24
|
|
|
0.19
|
|
|
26.3
|
%
|
||||
Stockholder advisory expenses, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.04
|
|
|
—
|
|
|
—
|
|
||||
Adjusted diluted net income per share of common stock
|
|
$
|
0.57
|
|
|
$
|
0.39
|
|
|
46.2
|
%
|
|
$
|
1.86
|
|
|
$
|
1.03
|
|
|
80.6
|
%
|
•
|
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, 2015
, the last business day of the reporting period was a
Wednesday
, client prepayments were
$40.5 million
and accrued worksite employee payroll was
$252.0 million
. 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
.
|
•
|
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
|
•
|
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, 2015
, premiums owed and cash funded to United have exceeded Plan Costs, resulting in a
$17.8 million
surplus,
$8.8 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, 2015
, were
$8.9 million
, which is included in accrued health insurance costs, a current liability, on our Consolidated Balance Sheets. Funding rates, as determined by United, resulted in an additional quarterly premium of
$6.2 million
at
September 30, 2015
as compared to
$20.1 million
in additional quarterly premium at
September 30, 2014
.
|
•
|
Operating results
– Our net income has a significant impact on our operating cash flows. Our net income
increased
66.6%
to
$33.1 million
in the
nine months ended September 30, 2015
, compared to
$19.8 million
in the
nine months ended September 30, 2014
, due to higher gross profit. Please read “Results of Operations
–
Nine Months Ended September 30, 2015
Compared to
Nine Months Ended September 30, 2014
.”
|
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)
|
|||||
|
|
|
|
|
|
|
|
|
|||||
07/01/2015 – 07/31/2015
|
|
257,769
|
|
|
$
|
50.99
|
|
|
257,605
|
|
|
980,227
|
|
08/01/2015 – 08/31/2015
|
|
157,069
|
|
|
47.40
|
|
|
157,069
|
|
|
823,158
|
|
|
09/01/2015 – 09/30/2015
|
|
120,085
|
|
|
43.61
|
|
|
120,085
|
|
|
703,073
|
|
|
Total
|
|
534,923
|
|
|
$
|
48.28
|
|
|
534,759
|
|
|
|
(1)
|
Our Board has approved a program to repurchase shares of our outstanding common stock, including an additional one million shares authorized for repurchase in May 2015. During the three months ended
September 30, 2015
,
534,759
shares were repurchased under the program and
164
shares were withheld to satisfy tax withholding obligations for the vesting of restricted stock awards. As of
September 30, 2015
, we were authorized to repurchase an additional
703,073
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 August 28, 2015, by and between Insperity Holdings, Inc. and United HealthCare Insurance Company.
|
10.2(+)
|
*
|
Amendment to the Minimum Premium Financial Agreement, as amended effective January 1, 2013, by and between Insperity Holdings, Inc. and United HealthCare Insurance Company, effective as of January 1, 2015.
|
10.3(+)
|
*
|
Amendment to the Minimum Premium Administrative Services Agreement, as amended effective January 1, 2013, by and between Insperity Holdings, Inc. and United HealthCare Insurance Company, effective as of January 1, 2015.
|
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, 2015
and
2014
; (ii) the Consolidated Statements of Comprehensive Income for the
three and nine
month periods ended
September 30, 2015
and
2014
; (iii) the Consolidated Balance Sheets at
September 30, 2015
and
December 31, 2014
; (iv) the Consolidated Statement of Stockholders’ Equity for the
nine
month period ended
September 30, 2015
; (v) the Consolidated Statements of Cash Flows for the
nine
month periods ended
September 30, 2015
and
2014
; and (vi) Notes to the Consolidated Financial Statements.
|
|
Insperity, Inc.
|
|
|
|
|
Date: November 2, 2015
|
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, 2019. 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 can 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)
|
Renew UHC Dental coverage with
***
renewal in 2016,
***
renewal in 2017 and
***
renewal
***
in 2018. 2019 Dental renewal will be calculated via normal experience rating and mutually agreed on by UHC and Insperity.
|
3)
|
Renew OptumHealth (OH) Care24 w/ Worklife Solutions at
***
through 2019.
|
4)
|
***
, 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
***
– the
***
portion of the
***
will be
***
by
***
and the
***
and
***
portion of the
***
will be
***
by
***
.
|
b.
|
2017 CY
***
– based on
***
increased by
***
if
***
exceeds
***
, increased by
***
if
***
is less than
***
.
|
c.
|
2018 CY
***
– based on 2017 PEPM increased by
***
if
***
exceeds
***
, increased by
***
if
***
is less than
***
.
|
d.
|
2019 CY
***
– based on
***
increased by
***
if
***
exceeds
***
, increased by
***
if
***
is less than
***
.
|
5)
|
***
and
***
will continue to be a pass through of actual expenses.
|
6)
|
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.
|
The definition of “Policy” for purposes of Section 1(s) of the Agreement shall be as follows:
|
II.
|
The “Maximum Monthly Employer Benefit Obligation"' (the “MMEBO”) shall be the following:
|
o
|
The Quoted Premium effective January 1, 2013 for each Policy minus the *** effective January 1, 2013
|
o
|
The Quoted Premium effective January 1, 2014 for each Policy minus the *** effective January 1,
2014
|
o
|
The Quoted Premium effective January 1, 2015 for each Policy minus the *** effective January 1,
2015
|
o
|
The Quoted Premium effective January 1, 2016 for each Policy minus the *** effective January l, 2016
|
o
|
The Quoted Premium effective January 1, 2017 for each Policy minus the *** effective January l, 2017
|
|
2
|
|
o
|
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 “***")
|
o
|
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 ***")
|
o
|
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 2015 *** and *** (the ''2015 ***'')
|
o
|
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 2016 *** and *** (the ''2016 ***'')
|
o
|
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 2017 *** (the ''2017 ***'')
|
o
|
Calculated based on calendar year 2012 ***, paid through February 28, 2013, increased by *** for each Policy (the '"2013 ***").
|
|
3
|
|
o
|
The 2013 *** increased by *** for each Policy (the "2014 ***").
|
o
|
The 2014 *** increased by *** for each Policy (the “2015 ***”).
|
*** in the *** below
|
***
|
***
|
***
|
***
|
***Increase
|
***
|
***
|
***
|
***
|
***Increase
|
|
***
|
***
|
***
|
•
|
*** is defined to include *** for coverage in the Policy and *** for coverage under *** (f/k/a ***) ***, effective January 1, 2015, ***, 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 *** 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 1st. For example, to determine the ***, *** and *** for the quarter beginning January 1, 2015 and ending March 31, 2015, the *** as of December 15, 2014 shall be used.
|
|
4
|
|
•
|
***, as measured on February 15 each contract year, will set the level of the combined *** for the current year. *** includes *** for *** in *** or *** as per the current agreement.
|
o
|
Calculation of the "***" is defined in Section VI of this Exhibit D.
|
a.
|
2016 CY
***: The 2016 CY *** will be based on the 2015 *** by:
|
•
|
*** and *** will continue to be a pass through of actual expenses.
|
|
5
|
|
|
6
|
|
|
7
|
|
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
|
a.
|
The health insurance or similar products of a Competing Vendor may not be offered to Existing Company membership until after December 31, 2017, 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 *** unilaterally to the Competing Vendor; and
|
(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.
|
Only *** Competing Vendor will be introduced into a limited number of Markets, not to exceed *** Markets, through December 31, 2017. 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 *** and *** markets. These markets will remain exclusive markets to the Company. If agreed to by both parties, the exclusivity requirement will be modified if changes are mandated by Federal or State law (to the extent not previously addressed in subparagraph (a) to this Section 1).
|
|
2
|
|
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.
|
|
3
|
|
(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 ***.
|
D.
|
Alternate Vendors
|
a.
|
Cooperate in good faith to ease the exclusivity provisions of the Agreement to accommodate a *** offering competitive with the marketplace, however, such easing shall be to the extent minimally necessary to achieve a competitive offering;
|
b.
|
Restrict any *** offering to *** at the ***;
|
|
4
|
|
c.
|
Maintain the existing Agreement for the remainder of the term of the Agreement.
|
I.
|
***
|
||
II.
|
***
|
||
III.
|
***
|
||
IV.
|
***
|
||
V.
|
***
(this includes membership in
***
and
***
metros)
|
||
VI.
|
***
(
***
includes
***
)
|
||
VII.
|
***
|
||
VIII.
|
***
|
||
IX.
|
***
|
||
X.
|
***
|
||
XL
|
***
|
|
5
|
|
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.
|
***
|
|
6
|
|
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
|
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 addition of a new vendor *** the Employer's *** in adding new clients in the market All fees and expenses of any such consultant shall be paid by the Employer.
|
|
7
|
|
|
8
|
|
|
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.
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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 2, 2015
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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.
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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 2, 2015
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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.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/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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November 2, 2015
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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.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/
Douglas S. Sharp
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Douglas S. Sharp
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Senior Vice President of Finance,
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Chief Financial Officer and Treasurer
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November 2, 2015
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