☒
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the quarterly period ended
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March 31, 2020
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or
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☐
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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|
|
|
|
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For the transition period from _______________ to _______________
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Delaware
|
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76-0479645
|
(State or other jurisdiction of incorporation or organization)
|
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(I.R.S. Employer Identification No.)
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19001 Crescent Springs Drive
|
||
Kingwood,
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Texas
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77339
|
(Address of principal executive offices)
|
Securities registered pursuant to Section 12(b) of the Act:
|
||
Title of each class
|
Ticker symbol(s)
|
Name of each exchange on which registered
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Common Stock, $.01 par value per share
|
NSP
|
New York Stock Exchange
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Large accelerated filer
|
☒
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Accelerated filer
|
☐
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Non-accelerated filer
|
☐
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Emerging growth company
|
☐
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Smaller reporting company
|
☐
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TABLE OF CONTENTS
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Page
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Part I, Item 1.
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||
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Part I, Item 2.
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Part I, Item 3.
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Part I, Item 4.
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Part II, Item 1.
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Part II, Item 1A.
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Part II, Item 2.
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Part II, Item 6.
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FINANCIAL STATEMENTS
(Unaudited)
|
(in thousands)
|
March 31, 2020
|
|
|
December 31, 2019
|
|
||
|
|
|
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
404,728
|
|
|
$
|
367,342
|
|
Restricted cash
|
48,349
|
|
|
49,295
|
|
||
Marketable securities
|
19,508
|
|
|
34,728
|
|
||
Accounts receivable, net
|
520,745
|
|
|
465,779
|
|
||
Prepaid insurance
|
45,525
|
|
|
10,418
|
|
||
Other current assets
|
40,425
|
|
|
43,493
|
|
||
Income taxes receivable
|
—
|
|
|
3,691
|
|
||
Total current assets
|
1,079,280
|
|
|
974,746
|
|
||
Property and equipment, net of accumulated depreciation
|
160,297
|
|
|
147,706
|
|
||
Right-of-use leased assets
|
58,461
|
|
|
56,886
|
|
||
Prepaid health insurance
|
9,000
|
|
|
9,000
|
|
||
Deposits – health insurance
|
8,100
|
|
|
8,100
|
|
||
Deposits – workers’ compensation
|
188,549
|
|
|
175,913
|
|
||
Goodwill and other intangible assets, net
|
12,711
|
|
|
12,714
|
|
||
Deferred income taxes, net
|
—
|
|
|
3,956
|
|
||
Other assets
|
6,010
|
|
|
5,975
|
|
||
Total assets
|
$
|
1,522,408
|
|
|
$
|
1,394,996
|
|
|
|
|
|
||||
Liabilities and stockholders’ equity (deficit)
|
|
|
|
||||
Accounts payable
|
$
|
6,240
|
|
|
$
|
4,565
|
|
Payroll taxes and other payroll deductions payable
|
268,245
|
|
|
277,248
|
|
||
Accrued worksite employee payroll cost
|
436,764
|
|
|
401,859
|
|
||
Accrued health insurance costs
|
46,841
|
|
|
21,180
|
|
||
Accrued workers’ compensation costs
|
52,311
|
|
|
52,868
|
|
||
Accrued corporate payroll and commissions
|
21,610
|
|
|
52,612
|
|
||
Other accrued liabilities
|
51,729
|
|
|
58,713
|
|
||
Income taxes payable
|
4,718
|
|
|
—
|
|
||
Total current liabilities
|
888,458
|
|
|
869,045
|
|
||
Accrued workers’ compensation cost, net of current
|
197,633
|
|
|
193,609
|
|
||
Long-term debt
|
369,400
|
|
|
269,400
|
|
||
Operating lease liabilities, net of current
|
61,623
|
|
|
58,863
|
|
||
Deferred income taxes, net
|
8,604
|
|
|
—
|
|
||
Total noncurrent liabilities
|
637,260
|
|
|
521,872
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Common stock
|
555
|
|
|
555
|
|
||
Additional paid-in capital
|
46,327
|
|
|
48,141
|
|
||
Treasury stock, at cost
|
(595,487
|
)
|
|
(544,102
|
)
|
||
Retained earnings
|
545,295
|
|
|
499,485
|
|
||
Total stockholders’ equity (deficit)
|
(3,310
|
)
|
|
4,079
|
|
||
Total liabilities and stockholders’ equity (deficit)
|
$
|
1,522,408
|
|
|
$
|
1,394,996
|
|
Insperity | 2020 First Quarter Form 10-Q
|
4
|
FINANCIAL STATEMENTS
(Unaudited)
|
|
Three Months Ended
March 31, |
|||||
(in thousands, except per share amounts)
|
2020
|
2019
|
||||
|
|
|
||||
Revenues(1)
|
$
|
1,229,483
|
|
$
|
1,153,010
|
|
Payroll taxes, benefits and workers’ compensation costs
|
995,461
|
|
926,293
|
|
||
Gross profit
|
234,022
|
|
226,717
|
|
||
Salaries, wages and payroll taxes
|
86,501
|
|
83,380
|
|
||
Stock-based compensation
|
6,552
|
|
6,040
|
|
||
Commissions
|
8,460
|
|
6,952
|
|
||
Advertising
|
4,833
|
|
5,031
|
|
||
General and administrative expenses
|
34,853
|
|
33,162
|
|
||
Depreciation and amortization
|
7,602
|
|
6,691
|
|
||
Total operating expenses
|
148,801
|
|
141,256
|
|
||
Operating income
|
85,221
|
|
85,461
|
|
||
Other income (expense):
|
|
|
|
|
||
Interest income
|
1,879
|
|
3,245
|
|
||
Interest expense
|
(2,362
|
)
|
(1,681
|
)
|
||
Income before income tax expense
|
84,738
|
|
87,025
|
|
||
Income tax expense
|
22,646
|
|
10,736
|
|
||
Net income
|
$
|
62,092
|
|
$
|
76,289
|
|
Less distributed and undistributed earnings allocated to participating securities
|
(462
|
)
|
(1,031
|
)
|
||
Net income allocated to common shares
|
$
|
61,630
|
|
$
|
75,258
|
|
|
|
|
||||
Net income per share of common stock
|
|
|
||||
Basic
|
$
|
1.59
|
|
$
|
1.86
|
|
Diluted
|
$
|
1.58
|
|
$
|
1.85
|
|
(1)
|
Revenues are comprised of gross billings less worksite employee (“WSEE”) payroll costs as follows:
|
|
Three Months Ended
March 31, |
|||||
(in thousands)
|
2020
|
2019
|
||||
|
|
|
||||
Gross billings
|
$
|
7,436,754
|
|
$
|
6,871,670
|
|
Less: WSEE payroll cost
|
6,207,271
|
|
5,718,660
|
|
||
Revenues
|
$
|
1,229,483
|
|
$
|
1,153,010
|
|
Insperity | 2020 First Quarter Form 10-Q
|
5
|
FINANCIAL STATEMENTS
(Unaudited)
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
2020
|
|
2019
|
||||
|
|
|
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
62,092
|
|
|
$
|
76,289
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
7,602
|
|
|
6,691
|
|
||
Stock-based compensation
|
6,552
|
|
|
6,040
|
|
||
Deferred income taxes
|
12,560
|
|
|
8,671
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(54,966
|
)
|
|
(20,674
|
)
|
||
Prepaid insurance
|
(35,107
|
)
|
|
(16,517
|
)
|
||
Other current assets
|
3,068
|
|
|
(8,893
|
)
|
||
Other assets and ROU assets
|
3,403
|
|
|
(809
|
)
|
||
Accounts payable
|
1,675
|
|
|
(2,768
|
)
|
||
Payroll taxes and other payroll deductions payable
|
(9,003
|
)
|
|
46,896
|
|
||
Accrued worksite employee payroll expense
|
34,905
|
|
|
33,883
|
|
||
Accrued health insurance costs
|
25,661
|
|
|
10,679
|
|
||
Accrued workers’ compensation costs
|
3,467
|
|
|
1,367
|
|
||
Accrued corporate payroll, commissions and other accrued liabilities
|
(46,531
|
)
|
|
(23,656
|
)
|
||
Income taxes payable/receivable
|
8,409
|
|
|
498
|
|
||
Total adjustments
|
(38,305
|
)
|
|
41,408
|
|
||
Net cash provided by operating activities
|
23,787
|
|
|
117,697
|
|
||
|
|
|
|
||||
Cash flows from investing activities
|
|
|
|
|
|
||
Marketable securities:
|
|
|
|
|
|
||
Purchases
|
(8,689
|
)
|
|
(35,538
|
)
|
||
Proceeds from dispositions
|
—
|
|
|
5,499
|
|
||
Proceeds from maturities
|
24,000
|
|
|
37,360
|
|
||
Property and equipment:
|
|
|
|
||||
Purchases
|
(15,625
|
)
|
|
(5,608
|
)
|
||
Net cash provided by (used in) investing activities
|
(314
|
)
|
|
1,713
|
|
||
|
|
|
|
||||
Cash flows from financing activities
|
|
|
|
||||
Purchase of treasury stock
|
(61,203
|
)
|
|
(29,037
|
)
|
||
Dividends paid
|
(15,557
|
)
|
|
(12,386
|
)
|
||
Borrowings under revolving line of credit
|
100,000
|
|
|
—
|
|
||
Other
|
2,363
|
|
|
1,085
|
|
||
Net cash provided by (used in) financing activities
|
25,603
|
|
|
(40,338
|
)
|
||
Net increase in cash, cash equivalents and restricted cash
|
49,076
|
|
|
79,072
|
|
||
Cash, cash equivalents and restricted cash beginning of period
|
592,550
|
|
|
535,474
|
|
||
Cash, cash equivalents and restricted cash end of period
|
$
|
641,626
|
|
|
$
|
614,546
|
|
Insperity | 2020 First Quarter Form 10-Q
|
6
|
FINANCIAL STATEMENTS
(Unaudited)
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
2020
|
|
2019
|
||||
|
|
|
|
||||
Supplemental schedule of cash and cash equivalents and restricted cash
|
|
|
|
||||
Cash and cash equivalents
|
$
|
367,342
|
|
|
$
|
326,773
|
|
Restricted cash
|
49,295
|
|
|
42,227
|
|
||
Deposits – workers’ compensation
|
175,913
|
|
|
166,474
|
|
||
Cash, cash equivalents and restricted cash beginning of period
|
$
|
592,550
|
|
|
$
|
535,474
|
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
404,728
|
|
|
$
|
398,936
|
|
Restricted cash
|
48,349
|
|
|
44,705
|
|
||
Deposits – workers’ compensation
|
188,549
|
|
|
170,905
|
|
||
Cash, cash equivalents and restricted cash end of period
|
$
|
641,626
|
|
|
$
|
614,546
|
|
|
|
|
|
||||
Supplemental operating lease cash flow information:
|
|
|
|
||||
ROU assets obtained in exchange for lease obligations
|
$
|
6,787
|
|
|
$
|
3,140
|
|
Insperity | 2020 First Quarter Form 10-Q
|
7
|
FINANCIAL STATEMENTS
(Unaudited)
|
|
Common Stock Issued
|
Additional Paid-In Capital
|
Treasury Stock
|
Retained Earnings and AOCI
|
Total
|
||||||||||||
(in thousands)
|
Shares
|
Amount
|
|||||||||||||||
|
|
|
|
|
|
|
|||||||||||
Balance at December 31, 2019
|
55,489
|
|
$
|
555
|
|
$
|
48,141
|
|
$
|
(544,102
|
)
|
$
|
499,485
|
|
$
|
4,079
|
|
Purchase of treasury stock, at cost
|
—
|
|
—
|
|
—
|
|
(61,203
|
)
|
—
|
|
(61,203
|
)
|
|||||
Issuance of long-term incentive awards and dividend equivalents
|
—
|
|
—
|
|
(7,088
|
)
|
7,898
|
|
(810
|
)
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
—
|
|
4,893
|
|
1,659
|
|
—
|
|
6,552
|
|
|||||
Other
|
—
|
|
—
|
|
381
|
|
261
|
|
—
|
|
642
|
|
|||||
Dividends paid
|
—
|
|
—
|
|
—
|
|
—
|
|
(15,557
|
)
|
(15,557
|
)
|
|||||
Unrealized gain on marketable securities, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
85
|
|
85
|
|
|||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
62,092
|
|
62,092
|
|
|||||
Balance at March 31, 2020
|
55,489
|
|
$
|
555
|
|
$
|
46,327
|
|
$
|
(595,487
|
)
|
$
|
545,295
|
|
$
|
(3,310
|
)
|
|
|
|
|
|
|
|
|||||||||||
Balance at December 31, 2018
|
55,489
|
|
$
|
555
|
|
$
|
36,752
|
|
$
|
(357,569
|
)
|
$
|
397,938
|
|
$
|
77,676
|
|
Purchase of treasury stock, at cost
|
—
|
|
—
|
|
—
|
|
(29,037
|
)
|
—
|
|
(29,037
|
)
|
|||||
Issuance of long-term incentive awards and dividend equivalents
|
—
|
|
—
|
|
(7,695
|
)
|
8,646
|
|
(951
|
)
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
—
|
|
4,340
|
|
1,700
|
|
—
|
|
6,040
|
|
|||||
Other
|
—
|
|
—
|
|
436
|
|
163
|
|
—
|
|
599
|
|
|||||
Dividends paid
|
—
|
|
—
|
|
—
|
|
—
|
|
(12,386
|
)
|
(12,386
|
)
|
|||||
Unrealized gain on marketable securities, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
13
|
|
13
|
|
|||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
76,289
|
|
76,289
|
|
|||||
Balance at March 31, 2019
|
55,489
|
|
$
|
555
|
|
$
|
33,833
|
|
$
|
(376,097
|
)
|
$
|
460,903
|
|
$
|
119,194
|
|
Insperity | 2020 First Quarter Form 10-Q
|
8
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
1.
|
Basis of Presentation
|
2.
|
Accounting Policies
|
Insperity | 2020 First Quarter Form 10-Q
|
9
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
Insperity | 2020 First Quarter Form 10-Q
|
10
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
2020
|
|
2019
|
||||
|
|
|
|
||||
Beginning balance, January 1,
|
$
|
242,904
|
|
|
$
|
229,639
|
|
Accrued claims
|
14,339
|
|
|
15,787
|
|
||
Present value discount
|
(200
|
)
|
|
(1,689
|
)
|
||
Paid claims
|
(11,121
|
)
|
|
(12,409
|
)
|
||
Ending balance
|
$
|
245,922
|
|
|
$
|
231,328
|
|
|
|
|
|
||||
Current portion of accrued claims
|
$
|
48,289
|
|
|
$
|
44,704
|
|
Long-term portion of accrued claims
|
197,633
|
|
|
186,624
|
|
||
Total accrued claims
|
$
|
245,922
|
|
|
$
|
231,328
|
|
Insperity | 2020 First Quarter Form 10-Q
|
11
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
|
Three Months Ended March 31,
|
|||||||
(in thousands)
|
2020
|
2019
|
% Change
|
|||||
|
|
|
|
|||||
Northeast
|
$
|
344,086
|
|
$
|
310,945
|
|
10.7
|
%
|
Southeast
|
140,678
|
|
129,906
|
|
8.3
|
%
|
||
Central
|
211,302
|
|
195,753
|
|
7.9
|
%
|
||
Southwest
|
272,130
|
|
269,832
|
|
0.9
|
%
|
||
West
|
246,853
|
|
233,204
|
|
5.9
|
%
|
||
|
1,215,049
|
|
1,139,640
|
|
6.6
|
%
|
||
Other revenue
|
14,434
|
|
13,370
|
|
8.0
|
%
|
||
Total revenue
|
$
|
1,229,483
|
|
$
|
1,153,010
|
|
6.6
|
%
|
3.
|
Cash, Cash Equivalents and Marketable Securities
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||
(in thousands)
|
Cash & Cash Equivalents
|
Marketable Securities
|
Total
|
|
Cash & Cash Equivalents
|
Marketable Securities
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
Overnight holdings
|
$
|
372,469
|
|
$
|
—
|
|
$
|
372,469
|
|
|
$
|
349,857
|
|
$
|
—
|
|
$
|
349,857
|
|
Investment holdings
|
19,494
|
|
19,508
|
|
39,002
|
|
|
13,218
|
|
34,728
|
|
47,946
|
|
||||||
Cash in demand accounts
|
26,266
|
|
—
|
|
26,266
|
|
|
36,521
|
|
—
|
|
36,521
|
|
||||||
Outstanding checks
|
(13,501
|
)
|
—
|
|
(13,501
|
)
|
|
(32,254
|
)
|
—
|
|
(32,254
|
)
|
||||||
Total
|
$
|
404,728
|
|
$
|
19,508
|
|
$
|
424,236
|
|
|
$
|
367,342
|
|
$
|
34,728
|
|
$
|
402,070
|
|
4.
|
Fair Value Measurements
|
•
|
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,
|
Insperity | 2020 First Quarter Form 10-Q
|
12
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
•
|
Level 3 - significant unobservable inputs
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||
(in thousands)
|
Total
|
Level 1
|
Level 2
|
|
Total
|
Level 1
|
Level 2
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
$
|
387,263
|
|
$
|
387,263
|
|
$
|
—
|
|
|
$
|
363,075
|
|
$
|
363,075
|
|
$
|
—
|
|
U.S. Treasury bills
|
18,060
|
|
18,060
|
|
—
|
|
|
34,728
|
|
34,728
|
|
—
|
|
||||||
Municipal bonds
|
6,148
|
|
—
|
|
6,148
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Total
|
$
|
411,471
|
|
$
|
405,323
|
|
$
|
6,148
|
|
|
$
|
397,803
|
|
$
|
397,803
|
|
$
|
—
|
|
(in thousands)
|
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Estimated Fair Value
|
||||||||
|
|
|
|
|
||||||||
March 31, 2020
|
|
|
|
|
||||||||
U.S. Treasury bills
|
$
|
13,290
|
|
$
|
70
|
|
$
|
—
|
|
$
|
13,360
|
|
Municipal bonds
|
6,122
|
|
26
|
|
—
|
|
6,148
|
|
||||
Total
|
$
|
19,412
|
|
$
|
96
|
|
$
|
—
|
|
$
|
19,508
|
|
|
|
|
|
|
||||||||
December 31, 2019
|
|
|
|
|
||||||||
U.S. Treasury bills
|
$
|
34,716
|
|
$
|
13
|
|
$
|
(1
|
)
|
$
|
34,728
|
|
Total
|
$
|
34,716
|
|
$
|
13
|
|
$
|
(1
|
)
|
$
|
34,728
|
|
(in thousands)
|
Amortized Cost
|
Estimated Fair Value
|
||||
|
|
|
||||
Less than one year
|
$
|
19,412
|
|
$
|
19,508
|
|
One to five years
|
—
|
|
—
|
|
||
Total
|
$
|
19,412
|
|
$
|
19,508
|
|
Insperity | 2020 First Quarter Form 10-Q
|
13
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
5.
|
Long-Term Debt
|
6.
|
Stockholders' Equity (Deficit)
|
(amounts per share)
|
2020
|
|
|
2019
|
|
||
|
|
|
|
||||
First quarter
|
$
|
0.40
|
|
|
$
|
0.30
|
|
Insperity | 2020 First Quarter Form 10-Q
|
14
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
7.
|
Incentive Plans
|
8.
|
Net Income Per Share
|
|
Three Months Ended
March 31, |
|||||
(in thousands)
|
2020
|
2019
|
||||
|
|
|
||||
Net income
|
$
|
62,092
|
|
$
|
76,289
|
|
Less distributed and undistributed earnings allocated to participating securities
|
(462
|
)
|
(1,031
|
)
|
||
Net income allocated to common shares
|
$
|
61,630
|
|
$
|
75,258
|
|
|
|
|
||||
Weighted average common shares outstanding
|
38,802
|
|
40,508
|
|
||
Incremental shares from assumed time-vested and performance-based RSU awards and conversions of common stock options
|
266
|
|
142
|
|
||
Adjusted weighted average common shares outstanding
|
39,068
|
|
40,650
|
|
Insperity | 2020 First Quarter Form 10-Q
|
15
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
9.
|
Commitments and Contingencies
|
Insperity | 2020 First Quarter Form 10-Q
|
16
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Average number of WSEEs paid per month increased 5.5%
|
•
|
Net income and diluted earnings per share (“diluted EPS”) decreased 18.6% and 14.6%, to $62.1 million and $1.58, respectively
|
Insperity | 2020 First Quarter Form 10-Q
|
17
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Adjusted EPS decreased 14.1% to $1.70
|
•
|
Adjusted EBITDA decreased 0.2% to $101.3 million
|
(in thousands, except per share, WSEE and statistical data)
|
Three Months Ended
March 31, |
|||||||
2020
|
2019
|
% Change
|
||||||
|
|
|
|
|||||
Financial data:
|
|
|
|
|||||
Revenues
|
$
|
1,229,483
|
|
$
|
1,153,010
|
|
6.6
|
%
|
Gross profit
|
234,022
|
|
226,717
|
|
3.2
|
%
|
||
Operating expenses
|
148,801
|
|
141,256
|
|
5.3
|
%
|
||
Operating income
|
85,221
|
|
85,461
|
|
(0.3
|
)%
|
||
Other income (expense)
|
(483
|
)
|
1,564
|
|
(130.9
|
)%
|
||
Net income
|
62,092
|
|
76,289
|
|
(18.6
|
)%
|
||
Diluted EPS
|
1.58
|
|
1.85
|
|
(14.6
|
)%
|
||
|
|
|
|
|||||
Non-GAAP financial measures(1):
|
|
|
|
|||||
Adjusted net income
|
$
|
66,893
|
|
$
|
81,584
|
|
(18.0
|
)%
|
Adjusted EBITDA
|
101,254
|
|
101,437
|
|
(0.2
|
)%
|
||
Adjusted EPS
|
1.70
|
|
1.98
|
|
(14.1
|
)%
|
||
|
|
|
|
|||||
Average WSEEs paid
|
238,014
|
|
225,525
|
|
5.5
|
%
|
||
Statistical data (per WSEE per month):
|
|
|
|
|||||
Revenues(2)
|
$
|
1,722
|
|
$
|
1,704
|
|
1.1
|
%
|
Gross profit
|
328
|
|
335
|
|
(2.1
|
)%
|
||
Operating expenses
|
208
|
|
209
|
|
(0.5
|
)%
|
||
Operating income
|
119
|
|
126
|
|
(5.6
|
)%
|
||
Net income
|
87
|
|
113
|
|
(23.0
|
)%
|
(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)
|
Revenues per WSEE per month are comprised of gross billings per WSEE per month less WSEE payroll costs per WSEE per month as follows:
|
|
Three Months Ended
March 31, |
|||||
(per WSEE per month)
|
2020
|
2019
|
||||
Gross billings
|
$
|
10,415
|
|
$
|
10,157
|
|
Less: WSEE payroll cost
|
8,693
|
|
8,453
|
|
||
Revenues
|
$
|
1,722
|
|
$
|
1,704
|
|
Insperity | 2020 First Quarter Form 10-Q
|
18
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
WSEE
|
•
|
Adjusted EBITDA
|
•
|
Adjusted EPS
|
•
|
During the first quarter of 2020 (“Q1 2020”), the number of WSEEs paid from new client sales increased over the first quarter of 2019 (“Q1 2019”). However, net gains in our client base and client retention declined during Q1 2020 compared to Q1 2019.
|
Insperity | 2020 First Quarter Form 10-Q
|
19
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Adjusted EBITDA and
Year-over-Year Growth Percentage
(in thousands)
|
Adjusted EPS and
Year-over-Year Growth Percentage
(amounts per share)
|
Insperity | 2020 First Quarter Form 10-Q
|
20
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Average WSEEs paid increased 5.5%.
|
•
|
Revenues per WSEE per month increased 1.1%, or $18.
|
Insperity | 2020 First Quarter Form 10-Q
|
21
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Insperity | 2020 First Quarter Form 10-Q
|
22
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Gross Profit and
Year-over-Year Growth Percentage (in thousands) |
Gross Profit per WSEE per Month and
Year-over-Year Growth Percentage |
•
|
The cost of group health insurance and related employee benefits increased $32 per WSEE per month and increased 5.8% on a cost per covered employee basis due primarily to an increase in the number of large individual healthcare claimants in Q1 2020 over the low level in Q1 2019, in addition to our historical healthcare trends.
|
•
|
The percentage of WSEEs covered under our health insurance plans was 66.9% in Q1 2020 compared to 67.4% in Q1 2019.
|
Insperity | 2020 First Quarter Form 10-Q
|
23
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Reported results include changes in estimated claims run-off related to prior periods which was a decrease in costs of $1.5 million, or $2 per WSEE per month, in Q1 2020 compared to a decrease in costs of $0.3 million, or flat on per WSEE per month basis, in Q1 2019.
|
•
|
Workers’ compensation costs increased 2.1%, but decreased $1 on a per WSEE per month basis, in Q1 2020 compared to Q1 2019.
|
•
|
As a percentage of non-bonus payroll cost, workers’ compensation costs in Q1 2020 were 0.39% compared to 0.42% in Q1 2019.
|
•
|
As a result of closing out claims at lower than expected costs, we recorded a reduction in workers’ compensation costs of $10.1 million, or 0.20% of non-bonus payroll costs, in Q1 2020 compared to a reduction of $7.8 million, or 0.17% of non-bonus payroll costs, in Q1 2019.
|
•
|
Payroll taxes increased 4.5% on an 8.5% increase in payroll costs, but decreased $7 on a per WSEE per month basis primarily due to lower FICA as a result of Internal Revenue Service self-employed owner tax reporting changes for PEOs and lower unemployment tax rates in 2020.
|
•
|
Payroll taxes as a percentage of payroll costs were 7.8% in Q1 2020 and 8.1% in Q1 2019.
|
•
|
Salaries, wages and payroll taxes — Salaries, wages and payroll taxes (“Salaries”) are primarily a function of the number of corporate employees, their associated average pay and any additional incentive compensation.
|
•
|
Stock-based compensation — Our stock-based compensation relates to the recognition of non-cash compensation expense over the requisite service period of time-vested and performance-based awards.
|
•
|
Commissions — Commissions expense consists primarily of amounts paid to sales managers and business performance advisors (“BPAs”) as well as channel referral fees. Commissions are based on new accounts sold and a percentage of revenue generated by such personnel.
|
•
|
Advertising — Advertising expense primarily consists of media advertising and other business promotions in our current and anticipated sales markets.
|
•
|
General and administrative expenses — Our general and administrative expenses primarily include:
|
•
|
rent expenses related to our service centers and sales offices
|
•
|
outside professional service fees related to legal, consulting and accounting services
|
•
|
administrative costs, such as postage, printing and supplies
|
•
|
employee travel and training expenses
|
•
|
technology and facility repairs and maintenance costs
|
Insperity | 2020 First Quarter Form 10-Q
|
24
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Depreciation and amortization — Depreciation and amortization expense is primarily a function of our capital investments in corporate facilities, service centers, sales offices and technology infrastructure.
|
•
|
Salaries of corporate and sales staff for Q1 2020 increased 3.7% to $86.5 million, but decreased $2 on a per WSEE per month basis, compared to Q1 2019. This increase was primarily due to a 6.7% increase in corporate headcount, including an 11.2% increase in total BPAs in Q1 2020 compared to Q1 2019, partially offset by lower incentive compensation expense in Q1 2020.
|
•
|
Stock based compensation expense for Q1 2020 increased 8.5% to $6.6 million, but remained flat on a per WSEE per month basis, compared to Q1 2019. The increase was primarily due to awards issued under our incentive plan and the acceleration of expense for employees who meet the requirements for continued vesting. Please read Note 7 to the Consolidated Financial Statements, “Incentive Plans,” for additional information.
|
•
|
Commissions expense for Q1 2020 increased 21.7% to $8.5 million, or $2 per WSEE per month, compared to Q1 2019. The increase was primarily due to commissions associated with growth in our PEO HR Outsourcing solutions, including an increase in the amount of sales channel referral fees paid during Q1 2020. Additionally, as a result of the extension of our fall campaign into Q1 2020, the bonuses paid to sales managers increased in Q1 2020 compared to Q1 2019.
|
•
|
Advertising expense for Q1 2020 decreased 3.9% to $4.8 million, but remained flat on a per WSEE per month basis, compared to Q1 2019. The decrease was primarily due to decreases in sponsorships and television advertising, which was partially offset by an increase in internet advertising.
|
•
|
General and administrative expenses for Q1 2020 increased 5.1% to $34.9 million, but decreased $2 on a per WSEE per month basis, compared to Q1 2019. The increase was primarily due to increased rent, technology licensing costs, printing and professional services. Travel and training costs were essentially flat compared to prior year due to our decision to restrict travel across the organization in the second half of March in response to the COVID-19 pandemic. We expect a reduction in travel and training costs for the remainder of 2020.
|
•
|
Depreciation and amortization expense for Q1 2020 increased 13.6% to $7.6 million, or $1 per WSEE per month, compared to Q1 2019. The increase was primarily due to increased capital expenditures related to software development costs and sales office expansions.
|
Insperity | 2020 First Quarter Form 10-Q
|
25
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended
March 31, |
|
|
2020
|
2019
|
|
|
|
Effective income tax rate
|
26.7%
|
12.3%
|
Insperity | 2020 First Quarter Form 10-Q
|
26
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended March 31,
|
||||||||||||
(in thousands, except per WSEE per month)
|
2020
|
|
2019
|
||||||||||
$
|
WSEE
|
|
$
|
WSEE
|
|||||||||
|
|
|
|
|
|
||||||||
Payroll cost
|
$
|
6,207,271
|
|
$
|
8,693
|
|
|
$
|
5,718,660
|
|
$
|
8,453
|
|
Less: Bonus payroll cost
|
1,050,968
|
|
1,472
|
|
|
990,578
|
|
1,465
|
|
||||
Non-bonus payroll cost
|
$
|
5,156,303
|
|
$
|
7,221
|
|
|
$
|
4,728,082
|
|
$
|
6,988
|
|
% Change period over period
|
9.1
|
%
|
3.3
|
%
|
|
15.9
|
%
|
0.6
|
%
|
(in thousands)
|
March 31, 2020
|
|
|
December 31, 2019
|
|
||
|
|
|
|
||||
Cash, cash equivalents and marketable securities
|
$
|
424,236
|
|
|
$
|
402,070
|
|
Less:
|
|
|
|
||||
Amounts payable for withheld federal and state income taxes, employment taxes and other payroll deductions
|
235,203
|
|
|
234,553
|
|
||
Client prepayments
|
22,143
|
|
|
59,612
|
|
||
Adjusted cash, cash equivalents and marketable securities
|
$
|
166,890
|
|
|
$
|
107,905
|
|
|
Three Months Ended March 31,
|
||||||||||||
(in thousands, except per WSEE per month)
|
2020
|
|
2019
|
||||||||||
$
|
WSEE
|
|
$
|
WSEE
|
|||||||||
|
|
|
|
|
|
||||||||
Net income
|
$
|
62,092
|
|
$
|
87
|
|
|
$
|
76,289
|
|
$
|
113
|
|
Income tax expense
|
22,646
|
|
32
|
|
|
10,736
|
|
16
|
|
||||
Interest expense
|
2,362
|
|
3
|
|
|
1,681
|
|
2
|
|
||||
Depreciation and amortization
|
7,602
|
|
11
|
|
|
6,691
|
|
10
|
|
||||
EBITDA
|
94,702
|
|
133
|
|
|
95,397
|
|
141
|
|
||||
Stock-based compensation
|
6,552
|
|
9
|
|
|
6,040
|
|
9
|
|
||||
Adjusted EBITDA
|
$
|
101,254
|
|
$
|
142
|
|
|
$
|
101,437
|
|
$
|
150
|
|
% Change period over period
|
(0.2
|
)%
|
(5.3
|
)%
|
|
21.0
|
%
|
4.9
|
%
|
|
Three Months Ended March 31,
|
|||||
(in thousands)
|
2020
|
2019
|
||||
|
|
|
||||
Net income
|
$
|
62,092
|
|
$
|
76,289
|
|
Non-GAAP adjustments:
|
|
|
||||
Stock-based compensation
|
6,552
|
|
6,040
|
|
||
Total non-GAAP adjustments
|
6,552
|
|
6,040
|
|
||
Tax effect
|
(1,751
|
)
|
(745
|
)
|
||
Adjusted net income
|
$
|
66,893
|
|
$
|
81,584
|
|
% Change period over period
|
(18.0
|
)%
|
37.0
|
%
|
Insperity | 2020 First Quarter Form 10-Q
|
27
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended March 31,
|
|||||
(amounts per share)
|
2020
|
2019
|
||||
|
|
|
||||
Diluted EPS
|
$
|
1.58
|
|
$
|
1.85
|
|
Non-GAAP adjustments:
|
|
|
||||
Stock-based compensation
|
0.17
|
|
0.15
|
|
||
Total non-GAAP adjustments
|
0.17
|
|
0.15
|
|
||
Tax effect
|
(0.05
|
)
|
(0.02
|
)
|
||
Adjusted EPS
|
$
|
1.70
|
|
$
|
1.98
|
|
% Change period over period
|
(14.1
|
)%
|
40.4
|
%
|
•
|
Timing of client payments / payroll taxes – 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 WSEE 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 WSEEs 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 March 31, 2020, the last business day of the reporting period was a Tuesday, client prepayments were $22.1 million and employment taxes and other deductions were $235.2 million. In the period ended March 31, 2019, the last business day of the reporting period was a Friday, client prepayments were $32.4 million and employment taxes and other deductions were $279.6 million.
|
Insperity | 2020 First Quarter Form 10-Q
|
28
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
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. As of March 31, 2020, premiums owed and cash funded to United have exceeded the costs of the United plan, resulting in a $36.8 million surplus, $27.8 million of which is reflected as a current asset, and $9.0 million of which is reflected as a long-term asset on our Condensed Consolidated Balance Sheets. The premiums, including an additional quarterly premium, owed to United at March 31, 2020, were $40.7 million, which is included in accrued health insurance costs, a current liability, on our Condensed Consolidated Balance Sheets.
|
•
|
Operating results – Our net income has a significant impact on our operating cash flows. Our adjusted net income decreased 18.0% to $66.9 million in the first three months ended March 31, 2020, compared to $81.6 million in the first three months ended March 31, 2019. Please read “Results of Operations – First Quarter 2020 Compared to First Quarter 2019.”
|
Insperity | 2020 First Quarter Form 10-Q
|
29
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK AND CONTROLS AND PROCEDURES
|
Insperity | 2020 First Quarter Form 10-Q
|
30
|
OTHER INFORMATION
|
•
|
adverse economic conditions;
|
•
|
impact of the COVID-19 pandemic, or other future pandemics, including the scope, severity and duration of the pandemic; government responses; regulatory developments; and the related disruptions and economic impact to our business and the small and medium-sized businesses that we serve;
|
•
|
regulatory and tax developments and possible adverse application of various federal, state and local regulations;
|
•
|
the ability to secure competitive replacement contracts for health insurance and workers’ compensation insurance at expiration of current contracts;
|
•
|
cancellation of client contracts on short notice, or the inability to renew client contracts or attract new clients;
|
•
|
vulnerability to regional economic factors because of our geographic market concentration;
|
•
|
increases in health insurance costs and workers’ compensation rates and underlying claims trends, health care reform, financial solvency of workers’ compensation carriers, other insurers or financial institutions, state unemployment tax rates, liabilities for employee and client actions or payroll-related claims;
|
•
|
failure to manage growth of our operations and the effectiveness of our sales and marketing efforts;
|
•
|
the impact of the competitive environment and other developments in the human resources services industry, including the PEO industry, on our growth and/or profitability;
|
•
|
our liability for worksite employee payroll, payroll taxes and benefits costs;
|
•
|
our liability for disclosure of sensitive or private information;
|
•
|
our ability to integrate or realize expected returns on our acquisitions;
|
•
|
failure of our information technology systems;
|
Insperity | 2020 First Quarter Form 10-Q
|
31
|
OTHER INFORMATION
|
•
|
an adverse final judgment or settlement of claims against Insperity; and
|
•
|
disruptions to our business resulting from the actions of certain stockholders.
|
•
|
scope, severity and duration of the pandemic;
|
•
|
varying impact that the pandemic has within each locality;
|
•
|
actions taken by government authorities to contain the outbreak or address its impact;
|
•
|
development of safe and effective treatments or vaccines for COVID-19;
|
•
|
direct and indirect economic effects of the pandemic and containment measures;
|
•
|
scope, significant and duration of business disruptions on small and medium-sized businesses, including any reduction in employment levels, compensation levels and employee benefit levels;
|
•
|
magnitude and extent of business failures among the small and medium-sized businesses that we serve;
|
•
|
ability of our clients to pay for the outsourced HR services and solutions we provide; and
|
•
|
any resulting impact on the demand for our outsourced HR services and solutions.
|
Insperity | 2020 First Quarter Form 10-Q
|
32
|
OTHER INFORMATION
|
Insperity | 2020 First Quarter Form 10-Q
|
33
|
OTHER INFORMATION
|
Period |
Total Number of Shares Purchased(1)(2)
|
Average Price Paid per Share
|
Total Number of Shares Purchased Under Announced Program(2)
|
Maximum Number of Shares Available for Purchase under Announced Program(2)
|
|||||
01/01/2020 – 01/31/2020
|
30
|
|
$
|
92.70
|
|
—
|
|
413,833
|
|
02/01/2020 – 02/29/2020
|
709,675
|
|
70.93
|
|
559,400
|
|
854,433
|
|
|
03/01/2020 – 03/31/2020
|
168,600
|
|
64.44
|
|
168,600
|
|
685,833
|
|
|
Total
|
878,305
|
|
$
|
69.68
|
|
728,000
|
|
|
(1)
|
During the three months ended March 31, 2020, 150,305 shares of stock were withheld to satisfy tax-withholding obligations arising in conjunction with the vesting of restricted stock and long term incentive compensation awards. 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.
|
(2)
|
Our Board of Directors (the “Board”) has approved a program to repurchase shares of our outstanding common stock, including an additional 1,000,000 shares authorized for repurchase in February 2020. As of March 31, 2020, we were authorized to repurchase an additional 685,833 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.
|
Insperity | 2020 First Quarter Form 10-Q
|
34
|
OTHER INFORMATION
|
Exhibit No
|
|
Exhibit
|
10.1
|
*(+)
|
|
10.2
|
†
|
|
10.3
|
†
|
|
31.1
|
*
|
|
31.2
|
*
|
|
32.1
|
**
|
|
32.2
|
**
|
|
101.INS
|
*
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
101.SCH
|
*
|
Inline XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
*
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
*
|
Inline XBRL Extension Definition Linkbase Document.
|
101.LAB
|
*
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
*
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
104
|
|
Cover Page Interactive Data File (embedded with the Inline XBRL document)
|
|
____________________________________
|
|
|
|
†
|
Management contract or compensatory plan or arrangement
|
|
|
|
|
|
|
(+)
|
Certain portions of the exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information is (i) not material and (ii) would likely cause competitive hard to the Company if publicly disclosed.
|
|
|
|
|
|
|
*
|
Filed with this report.
|
|
|
|
|
|
|
**
|
Furnished with this report.
|
Insperity | 2020 First Quarter Form 10-Q
|
35
|
|
INSPERITY, INC.
|
|
|
|
|
Date: May 4, 2020
|
By:
|
/s/ Douglas S. Sharp
|
|
|
Douglas S. Sharp
|
|
|
Senior Vice President of Finance,
|
|
|
Chief Financial Officer and Treasurer
|
|
|
(Principal Financial Officer)
|
Insperity | 2020 First Quarter Form 10-Q
|
36
|
Best Regards,
|
|
AGREED TO AND ACCEPTED BY:
|
|
|
|
/s/ Anthony R. Carr
|
|
/s/ James Allison
|
|
|
Insperity Holdings, Inc.
|
|
|
|
Anthony R. Carr
|
|
James Allison
|
National Vice President,
|
|
Sr. Vice President, Gross Profit Operations
|
UnitedHealthcare
|
|
Insperity Holdings, Inc.
|
|
|
Date: 2/10/2020
|
1)
|
The "[ ]" shall consist of an [ ] portion, the [ ], and a [ ] portion, where [ ]shall be measured each December 15th and June 15th and shall be the [ ] that is used to determine the [ ] and [ ] for the following six (6) months of the MP Financial Agreement period.
|
2)
|
The Pooling Charge shall be a [ ] for the calendar year beginning January 1, 2020. The Pooling Charge shall be updated annually for each calendar year, subject to the terms below. For subsequent calendar years, UnitedHealthcare will notify Insperity of the Pooling Charge [ ], and Insperity will elect or decline the pooling option [ ] of the applicable calendar year. The Pooling Charge quoted includes all applicable premium taxes.
|
i.
|
The Pooling Charge pertains to the pooling mechanism as described in the contract for combined medical and pharmacy claims paid in excess of $1,000,000 per individual claimant during each calendar year.
|
ii.
|
The Pooling Charge may be adjusted at [ ] due to the following circumstances:
|
a.
|
Increase greater than [ ] or [ ]
|
b.
|
[ ] enrollment exceeds 10% of total membership
|
c.
|
Change to federal, state legislation or regulation, involving taxes/assessments
|
d.
|
Material change to plan design required by regulatory authority or elected by Insperity
|
iii.
|
The Pooling Charge for subsequent years [ ] the following:
|
a.
|
Calendar Year 2021: [ ]
|
b.
|
Calendar Year 2022: [ ]
|
|
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
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer(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.
|
Date: May 4, 2020
|
|
|
|
|
/s/ Paul J. Sarvadi
|
|
Paul J. Sarvadi
|
|
Chairman of the Board and Chief Executive Officer
|
|
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
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer(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.
|
Date: May 4, 2020
|
|
|
|
|
/s/ Douglas S. Sharp
|
|
Douglas S. Sharp
|
|
Senior Vice President of Finance, Chief Financial Officer and Treasurer
|
|
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.
|
/s/ Paul J. Sarvadi
|
|
Paul J. Sarvadi
|
|
Chairman of the Board and Chief Executive Officer
|
|
May 4, 2020
|
|
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.
|
/s/ Douglas S. Sharp
|
|
Douglas S. Sharp
|
|
Senior Vice President of Finance,
|
|
Chief Financial Officer and Treasurer
|
|
May 4, 2020
|