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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Insperity Inc | NYSE:NSP | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
3.97 | 4.13% | 100.05 | 100.345 | 96.10 | 96.92 | 262,740 | 01:00:00 |
ý
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Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the fiscal year ended December 31, 2016.
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o
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the transition period from _____________________to _____________________
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Delaware
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76-0479645
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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19001 Crescent Springs Drive
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Kingwood, Texas
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77339
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(Address of principal executive offices)
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(Zip Code)
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Common Stock, par value $0.01 per share
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New York Stock Exchange
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Rights to Purchase Series A Junior Participating Preferred Stock
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New York Stock Exchange
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(Title of class)
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(Name of Exchange on Which Registered)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Part I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item S-K 401(b).
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Part II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Part III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Part IV
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Item 15.
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•
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the focus on growth and productivity of the small and medium-sized business community in the United States, utilizing outsourcing to concentrate on core competencies
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•
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the need to provide competitive health care and related benefits to attract and retain employees
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•
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the increasing costs associated with health and workers’ compensation insurance coverage, workplace safety programs, employee-related complaints and litigation
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•
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complex regulation of employment issues and the related costs of compliance, including the allocation of time and effort to such functions by owners and key executives
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•
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benefits and payroll administration
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•
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health and workers’ compensation insurance programs
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•
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personnel records management
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•
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employer liability management
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•
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assistance with government compliance
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•
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general HR advice
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•
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access to the ESC for employees, managers and client owners
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•
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401(k) retirement plan sponsored by us
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•
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employee recruiting and support
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•
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employee performance management
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•
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training and development services
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•
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payroll processing
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•
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payroll tax deposits
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•
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quarterly payroll tax reporting
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•
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employee file maintenance
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•
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unemployment claims processing
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•
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workers’ compensation claims reporting and monitoring
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•
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a group health plan
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•
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a health savings account program
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•
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a health care flexible spending account plan
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•
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an educational assistance program
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•
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an adoption assistance program
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•
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group term life insurance
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•
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group universal life insurance
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•
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accidental death and dismemberment insurance
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•
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short-term and long-term disability insurance
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•
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a 401(k) retirement plan
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•
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cafeteria plans for group health and health savings account contributions
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•
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WebPayroll for the submission, approval and reporting of payroll data
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•
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tools to manage the onboarding of new employees
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•
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employee administration functions such as viewing or changing information about employees
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•
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access to client-specific compliance-related information relevant to many HR areas, including the Affordable Care Act
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•
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a reporting and analytics tool to create, view, save and export reports and data about employees
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•
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ability to manage employee time and attendance information, absences and paid time off
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•
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access to Talent Management tools in the areas of Recruiting, Performance Management and Learning Management
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•
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access to a library of online human resources forms
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•
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access to a wide range of best-practices human resources management content
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•
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through Insperity Mobile, access to review and approve payroll transactions and employee time entry from most mobile devices
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•
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access to view, edit and change a range of employee profile information
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•
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online check stubs, pay history reports and W-2s
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•
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employee-specific benefits content, including summary plan descriptions and enrollment status
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•
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access to 401(k) retirement plan information through the Retirement Service Center powered by Insperity
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•
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e-Learning web-based training
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•
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links to benefits providers and other key vendors
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•
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performance management tools including self-reviews and review history
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•
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ability to submit time and attendance information, absences and paid time off requests
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•
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access to view a wide range of employee-specific information such as pay stub, insurance coverage and ID card, 401(k) balances and other commonly accessed data through Insperity Mobile
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•
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drafting and reviewing personnel policies and employee handbooks
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•
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designing job descriptions
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•
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performing prospective employee screening and background investigations
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•
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designing performance appraisal processes and forms
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•
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professional development and issues-oriented training
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•
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employee counseling
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•
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substance abuse awareness training
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•
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outplacement services
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•
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compensation guidance
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•
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Payment of wages and salaries as reported by the client and related tax reporting and remittance (local, state and federal withholding, FICA, FUTA, state unemployment)
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•
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Workers’ compensation compliance, procurement, management and reporting
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•
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Compliance with the Code, COBRA, HIPAA and ERISA (for each employee benefit plan sponsored by Insperity), as well as monitoring changes in other governmental laws and regulations governing the employer/employee relationship and updating the client when necessary
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•
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Offering benefits under Insperity-sponsored employee benefit plans that comply with PPACA requirements
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•
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Employee benefits administration of plans sponsored solely by Insperity
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Payment, through Insperity, of commissions, bonuses, vacations, paid time off, sick pay, paid leaves of absence and severance payments
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Payment and related tax reporting and remittance of non-qualified deferred compensation and equity-based compensation
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•
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Ownership and protection of all client intellectual property rights
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•
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Compliance with OSHA regulations, EPA regulations, FLSA, FMLA, WARN, USERRA and state and local equivalents and compliance with government contracting provisions
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•
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Compliance with federal, state and local pay or play health care mandates and all such other similar federal, state and local legislation
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•
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Compliance with the National Labor Relations Act (“NLRA”), including all organizing efforts and expenses related to a collective bargaining agreement and related benefits
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•
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Professional licensing requirements, fidelity bonding and professional liability insurance
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•
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Products produced and/or services provided
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COBRA, HIPAA, PPACA, the Code and ERISA compliance for client-sponsored benefit plans
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•
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Implementation of policies and practices relating to the employee/employer relationship
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•
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Compliance with all federal, state and local employment laws, including, but not limited to Title VII of the Civil Rights Act of 1964, ADEA, Title I of ADA, the Consumer Credit Protection Act and immigration laws and regulations
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Revenue Change
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% of Total Revenues
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Northeast
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13.4
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%
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26.0
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%
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Southeast
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21.4
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%
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11.0
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%
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Central
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18.4
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%
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16.2
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%
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Southwest
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6.0
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%
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23.9
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%
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West
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13.3
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%
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22.9
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%
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Industry
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% of Client Base
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Computer and information services
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18
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%
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Management, administration and consulting services
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15
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%
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Finance, insurance and real estate
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14
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%
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Manufacturing
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10
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%
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Wholesale trade
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8
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%
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Engineering, accounting and legal services
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8
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%
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Medical services
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7
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%
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Retail trade
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4
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%
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Not-for-profit and similar organizations
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5
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%
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Construction
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4
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%
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Other
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7
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%
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Initial
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Market
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Sales Offices
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Entry Date
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Houston
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5
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1986
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San Antonio
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1
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1989
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Austin
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1
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1989
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Orlando
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1
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1989
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Dallas/Fort Worth
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5
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1993
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Atlanta
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3
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1994
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Phoenix
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1
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1995
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Chicago
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3
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1995
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Washington D.C.
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2
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1995
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Denver
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2
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1996
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Los Angeles
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5
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1997
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Charlotte
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1
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1997
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St. Louis
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1
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1998
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San Francisco
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3
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1998
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New York
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4
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1999
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Maryland
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2
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2000
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New Jersey
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2
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2000
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San Diego
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1
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2001
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Boston
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2
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2001
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Minneapolis
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2
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2002
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Raleigh
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1
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2006
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Kansas City
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1
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2007
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Columbus
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1
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2010
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Nashville
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1
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2011
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Philadelphia
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1
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2012
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Seattle
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1
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2015
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Indianapolis
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1
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2016
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•
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market size, in terms of small and medium-sized businesses engaged in selected industries that meet our risk profile
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•
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market receptivity to PEO services, including the regulatory environment and relevant history with other PEO providers
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•
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existing relationships within a given market, such as vendor or client relationships
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•
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expansion cost issues, such as advertising and overhead costs
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•
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direct cost issues that bear on our effectiveness in controlling and managing the cost of our services, such as workers’ compensation and health insurance costs, unemployment risks and various legal and other factors
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•
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a comparison of the services we offer to alternatives available to small and medium-sized businesses in the relevant market, such as the cost to the target clients of procuring services directly or through other PEOs
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•
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long-term strategy issues, such as the general perception of markets and our estimate of the long-term revenue growth potential of the market
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•
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worksite employee enrollment
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•
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human resources management
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•
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benefits and defined contribution plan administration
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•
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payroll processing
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•
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client invoicing and collection
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•
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management information and reporting
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•
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sales bid calculations
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•
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a 401(k) retirement plan
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•
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cafeteria plans under Code Section 125
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•
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a group health plan, which includes medical, dental, vision and prescription drug coverage, as well as a work-life program
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•
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a health savings account program
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•
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a welfare benefits plan, which includes life, disability and accidental death and dismemberment coverage
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•
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a health care flexible spending account plan
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•
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an educational assistance program
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•
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an adoption assistance program
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•
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a commuter benefits program
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•
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the employer’s degree of behavioral control (the extent of instructions, training and the nature of the work)
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•
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the financial control or the economic aspects of the relationship
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•
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the intended relationship of the parties (whether employee benefits are provided, whether any contracts exist, whether services are ongoing or for a project, whether there are any penalties for discharge/termination, and the frequency of the business activity)
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•
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withholding of income tax requirements governed by Code Section 3401, et seq.
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•
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obligations under FICA, governed by Code Section 3101, et seq.
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•
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obligations under FUTA, governed by Code Section 3301, et seq.
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•
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payment of the salaries and wages for work performed by worksite employees, regardless of whether the client timely pays us the associated service fee
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•
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withholding and payment of federal and state payroll taxes with respect to wages and salaries reported by Insperity
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•
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providing benefits to worksite employees even if our costs to provide such benefits exceed the fees the client pays us
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•
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income tax withholding requirements
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•
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FICA
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•
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FUTA
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Name
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Age
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Position
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Paul J. Sarvadi
|
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60
|
|
Chairman of the Board and Chief Executive Officer
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Richard G. Rawson
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68
|
|
President
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A. Steve Arizpe
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59
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|
Executive Vice President of Client Services and Chief Operating Officer
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Jay E. Mincks
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63
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|
Executive Vice President of Sales and Marketing
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Douglas S. Sharp
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55
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|
Senior Vice President of Finance, Chief Financial Officer and Treasurer
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Daniel D. Herink
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50
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|
Senior Vice President of Legal, General Counsel and Secretary
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2016
|
|
High
|
|
Low
|
|
Dividends
per Share |
|
||||||
First Quarter
|
|
$
|
52.32
|
|
|
$
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41.83
|
|
|
$
|
0.22
|
|
|
Second Quarter
|
|
77.24
|
|
|
50.61
|
|
|
0.25
|
|
|
|||
Third Quarter
|
|
82.18
|
|
|
64.70
|
|
|
0.25
|
|
|
|||
Fourth Quarter
|
|
76.70
|
|
|
64.55
|
|
|
0.25
|
|
|
|||
|
|
|
|
|
|
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|
||||||
2015
|
|
|
|
|
|
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|
||||||
First Quarter
|
|
$
|
55.42
|
|
|
$
|
32.43
|
|
|
$
|
0.19
|
|
|
Second Quarter
|
|
55.11
|
|
|
47.83
|
|
|
0.22
|
|
|
|||
Third Quarter
|
|
52.95
|
|
|
41.77
|
|
|
0.22
|
|
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|||
Fourth Quarter
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|
49.00
|
|
|
41.88
|
|
|
0.22
|
|
|
Period
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|
Total Number of Shares Purchased
(1)(2)
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|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
(1)
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|
Maximum Number of Shares that may yet be Purchased under the Program
(1)
|
|||||
10/01/2016 – 10/31/2016
|
|
604
|
|
|
$
|
73.10
|
|
|
—
|
|
|
1,388,811
|
|
11/01/2016 – 11/30/2016
|
|
168,960
|
|
|
69.74
|
|
|
168,960
|
|
|
1,219,851
|
|
|
12/01/2016 – 12/31/2016
|
|
83,582
|
|
|
70.94
|
|
|
83,582
|
|
|
1,136,269
|
|
|
Total
|
|
253,146
|
|
|
$
|
70.14
|
|
|
252,542
|
|
|
1,136,269
|
|
(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 2016. During the three months ended
December 31, 2016
,
252,542
shares were repurchased under the program. As of
December 31, 2016
, we were authorized to repurchase an additional
1,136,269
shares under the program. Unless terminated earlier by resolution of the Board, the repurchase program will expire when we have repurchased all the shares authorized for repurchase under the repurchase program.
|
(2)
|
During the three months ended
December 31, 2016
,
604
shares of restricted stock were withheld to satisfy tax-withholding
|
|
|
12/11
|
|
|
12/12
|
|
|
12/13
|
|
|
12/14
|
|
|
12/15
|
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|
12/16
|
|
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|
|
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|
||||||
Insperity, Inc.
|
|
100.00
|
|
|
135.97
|
|
|
154.17
|
|
|
157.39
|
|
|
227.62
|
|
|
340.41
|
|
S&P Smallcap 600
|
|
100.00
|
|
|
116.33
|
|
|
164.38
|
|
|
173.84
|
|
|
170.41
|
|
|
215.67
|
|
S&P 1500 Composite Human Resources and Employment Services
|
|
100.00
|
|
|
117.53
|
|
|
195.39
|
|
|
204.13
|
|
|
209.03
|
|
|
231.76
|
|
|
|
Year ended December 31,
|
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
||||||||||
|
|
(in thousands, except per share and statistical data)
|
|
||||||||||||||||||
Income Statement Data:
|
|
|
|
||||||||||||||||||
Revenues
(1)
|
|
$
|
2,941,347
|
|
|
$
|
2,603,614
|
|
|
$
|
2,357,788
|
|
|
$
|
2,256,112
|
|
|
$
|
2,158,824
|
|
|
Gross profit
|
|
491,610
|
|
|
437,867
|
|
|
403,805
|
|
|
393,251
|
|
|
382,221
|
|
|
|||||
Operating income
|
|
106,306
|
|
|
65,699
|
|
(2)
|
47,474
|
|
(3)
|
56,223
|
|
(4)
|
67,494
|
|
(4)
|
|||||
Net income
|
|
65,991
|
|
|
39,390
|
|
|
28,004
|
|
|
32,032
|
|
(5)
|
40,402
|
|
|
|||||
Diluted net income per share of common stock
|
|
3.09
|
|
|
1.58
|
|
|
1.05
|
|
(6)
|
1.25
|
|
|
1.56
|
|
(6)
|
|||||
Adjusted net income
(7)
|
|
76,718
|
|
|
54,519
|
|
|
36,734
|
|
|
42,289
|
|
|
48,668
|
|
|
|||||
Adjusted diluted net income per share of common stock
(7)
|
|
3.59
|
|
|
2.19
|
|
|
1.43
|
|
|
1.65
|
|
|
1.89
|
|
|
|||||
Adjusted EBITDA
(7)
|
|
141,183
|
|
|
110,014
|
|
|
84,124
|
|
|
92,303
|
|
|
100,899
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital
|
|
$
|
39,364
|
|
|
$
|
54,337
|
|
|
$
|
66,742
|
|
|
$
|
120,445
|
|
|
$
|
108,495
|
|
|
Total assets
|
|
907,174
|
|
|
784,912
|
|
|
792,595
|
|
|
758,864
|
|
|
742,989
|
|
|
|||||
Total debt
|
|
104,400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
Total stockholders’ equity
|
|
60,525
|
|
|
172,455
|
|
|
204,096
|
|
|
253,272
|
|
|
240,905
|
|
|
|||||
Cash dividends per share
|
|
0.97
|
|
|
0.85
|
|
|
2.74
|
|
(8)
|
0.68
|
|
|
1.66
|
|
(8)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Statistical Data:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average number of worksite employees paid per month during period
|
|
165,850
|
|
|
145,830
|
|
|
130,718
|
|
|
127,517
|
|
|
125,650
|
|
|
|||||
Revenues per worksite employee per month
(9)
|
|
$
|
1,478
|
|
|
$
|
1,488
|
|
|
$
|
1,503
|
|
|
$
|
1,474
|
|
|
$
|
1,432
|
|
|
Gross profit per worksite employee per month
|
|
$
|
247
|
|
|
$
|
250
|
|
|
$
|
257
|
|
|
$
|
257
|
|
|
$
|
253
|
|
|
Operating income per worksite employee per month
|
|
$
|
53
|
|
|
$
|
38
|
|
|
$
|
30
|
|
|
$
|
37
|
|
|
$
|
45
|
|
|
Adjusted EBITDA per worksite employee per month
(7)
|
|
$
|
71
|
|
|
$
|
63
|
|
|
$
|
54
|
|
|
$
|
60
|
|
|
$
|
67
|
|
|
(1)
|
Gross billings of
$17.933 billion
,
$15.806 billion
,
$14.187 billion
,
$13.462 billion
and
$12.992 billion
, less worksite employee payroll cost of
$14.992 billion
,
$13.202 billion
,
$11.829 billion
,
$11.206 billion
and
$10.833 billion
, respectively.
|
(2)
|
Includes non-cash impairment and other charges in the first and second quarters of 2015 of
$9.8 million
and
$1.3 million
, respectively, partially offset by a reduction of
$0.6 million
in the fourth quarter of 2015. Please read
Note 7
to the Consolidated Financial Statements, “
Impairment Charges and Other
,” for additional information.
|
(3)
|
Includes a non-cash impairment charge in the second quarter of 2014 of
$2.5 million
. Please read
Note 6
to the Consolidated Financial Statements, “
Goodwill and Other Intangible Assets
,” for additional information. Also includes a non-cash charge in the fourth quarter of 2014 of
$1.2 million
. Please read
Note 1
to the Consolidated Financial Statements, “
Accounting Policies
,” for additional information.
|
(4)
|
Includes non-cash impairment charges of
$3.3 million
and
$4.2 million
in the fourth quarters of 2013 and 2012, respectively. Please read
Note 6
to the Consolidated Financial Statements, “
Goodwill and Other Intangible Assets
,” for additional information.
|
(5)
|
Includes a non-cash impairment charge in the second quarter of 2013 of
$2.7 million
, please read
Note 7
to the Consolidated Financial Statements, “
Impairment Charges and Other
,” for additional information. Also includes a $2.0 million tax benefit in the fourth quarter of 2013 related to tax years 2009 through 2012, please read
Note 9
to the Consolidated Financial Statements, “
Income Taxes
,” for additional information.
|
(6)
|
Includes the impact of dividends exceeding earnings under the two-class method, resulting in a $0.05 and $0.01 earnings per share decrease in 2014 and 2012, respectively. Please read
Note 12
to the Consolidated Financial Statements, “
Net Income Per Share
,” for additional information.
|
(7)
|
These are non-GAAP measures used by management to analyze Insperity’s performance. Please read Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures” for a reconciliation of the non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.
|
(8)
|
Includes a $2.00 and $1.00 per share special dividend paid in the fourth quarters of 2014 and 2012, respectively.
|
(9)
|
Gross billings of
$9,011
,
$9,032
,
$9,044
,
$8,797
and
$8,617
per worksite employee per month, less payroll cost of
$7,533
,
$7,544
,
$7,541
,
$7,323
and
$7,185
per worksite employee per month, respectively.
|
•
|
employment-related taxes (“payroll taxes”)
|
•
|
costs of employee benefit plans
|
•
|
workers’ compensation costs
|
•
|
Salaries, wages and payroll taxes
– Salaries, wages and payroll taxes are primarily a function of the number of corporate employees, their associated average pay and any additional incentive compensation. Our corporate employees include client services, sales and marketing, benefits, legal, finance, information technology, administrative support personnel and those associated with our other products and services.
|
•
|
Stock-based compensation
– Our stock-based compensation relates to the recognition of non-cash compensation expense over the vesting period of restricted stock and long-term incentive plan awards.
|
•
|
Commissions –
Commissions expense consists primarily of amounts paid to sales managers and BPAs. 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, including the Insperity Invitational
™
presented by UnitedHealthcare
®
sponsorship.
|
•
|
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
|
•
|
Depreciation and amortization –
Depreciation and amortization expense is primarily a function of our capital investments in corporate facilities, service centers, sales offices, technology infrastructure and that associated with our acquisitions.
|
•
|
Impairment charges and other –
Impairment charges and other consist of non-cash expense associated with the decline in fair value of long-lived and intangible assets, including goodwill. Please read
Note 1
“
Accounting Policies
,”
Note 6
“
Goodwill and Other Intangible Assets
” and
Note 7
“
Impairment Charges and Other
,” to the Consolidated Financial Statements for additional information.
|
•
|
Benefits costs
– We provide group health insurance coverage to our worksite employees through a national network of carriers including United, UnitedHealthcare of California, Kaiser Permanente, Blue Shield of California, HMSA BlueCross BlueShield of Hawaii and Tufts, all of which provide fully insured policies or service contracts.
|
Change in
Completion Rate and Annual Trend
|
|
Change in
Benefits Costs
(in thousands) |
|
Change in
Net Income
(in thousands) |
||||
(2.5)%
|
|
$
|
(16,236
|
)
|
|
$
|
10,187
|
|
(1.0)%
|
|
(6,494
|
)
|
|
4,075
|
|
||
1.0%
|
|
6,494
|
|
|
(4,075
|
)
|
||
2.5%
|
|
16,236
|
|
|
(10,187
|
)
|
•
|
Workers’ compensation costs
– Since October 1, 2007, our workers’ compensation coverage has been provided through our arrangement with Chubb. Under the Chubb Program, we bear the economic burden for the first $1 million layer of claims per occurrence, and effective October 1, 2010, we also bear the economic burden for a maximum aggregate amount of $5 million per policy year for claim amounts that exceed the first $1 million. Chubb bears the economic burden for all claims in excess of these levels. The Chubb Program is a fully insured policy whereby Chubb has the responsibility to pay all claims incurred under the policy regardless of whether we satisfy our responsibilities. Our coverage from September 1, 2003 through September 30, 2007 was provided through selected member insurance companies of American International Group, Inc.
|
Change in Loss Development Rate
|
|
Change in Workers’ Compensation Costs
(in thousands) |
|
Change in
Net Income
(in thousands) |
||||
(5.0)%
|
|
$
|
(3,565
|
)
|
|
$
|
2,236
|
|
(2.5)%
|
|
(1,783
|
)
|
|
1,118
|
|
||
2.5%
|
|
1,783
|
|
|
(1,118
|
)
|
||
5.0%
|
|
3,565
|
|
|
(2,236
|
)
|
•
|
Contingent liabilities
– We accrue and disclose contingent liabilities in our Consolidated Financial Statements in accordance with ASC 450-10,
Contingencies
. GAAP requires accrual of contingent liabilities that are considered probable to occur and that can be reasonably estimated. For contingent liabilities that are considered reasonably possible to occur, financial statement disclosure is required, including the range of possible loss if it can be reasonably determined. From time to time we disclose in our financial statements issues that we believe are reasonably possible to occur, although we cannot determine the range of possible loss in all cases. As issues develop, we evaluate the probability of future loss and the potential range of such losses. If such evaluation were to determine that a loss was probable and the loss could be reasonably estimated, we would be required to accrue our estimated loss, which would reduce net income in the period that such determination was made.
|
•
|
Deferred taxes
– We have recorded a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. While we have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, our ability to realize our deferred tax assets could change from our current estimates. If we determine that we would be able to realize our deferred tax assets in the future in excess of the net recorded amount, an adjustment to reduce the valuation allowance would increase net income in the period that such determination is made. Likewise, should we determine that we will not be able to realize all or part of our net deferred tax assets in the future, an adjustment to increase the valuation allowance would reduce net income in the period such determination is made.
|
•
|
Allowance for doubtful accounts
– We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our clients to pay their comprehensive service fees. We believe that the success of our business is heavily dependent on our ability to collect these comprehensive service fees for several reasons, including:
|
•
|
the fact that we are at risk for the payment of our direct costs and worksite employee payroll costs regardless of whether our clients pay their comprehensive service fees
|
•
|
the large volume and dollar amount of transactions we process
|
•
|
the periodic and recurring nature of payroll, upon which the comprehensive service fees are based
|
•
|
Property and equipment
– Our property and equipment relate primarily to our facilities and related improvements, furniture and fixtures, computer hardware and software and capitalized software development costs. These costs are depreciated or amortized over the estimated useful lives of the assets. If we determine that the useful lives of these assets will be shorter than we currently estimate, our depreciation and amortization expense could be accelerated, which would decrease net income in the periods of such a determination. In addition, we periodically evaluate these costs for impairment. If events or circumstances were to indicate that any of our long-lived assets might be impaired, we would assess recoverability based on the estimated undiscounted future cash flows to be generated from the applicable asset. In addition, we may record an impairment loss, which would reduce net income, to the extent that the carrying value of the asset exceeded the fair value of the asset. Fair value is generally determined using an estimate of discounted future net cash flows from operating activities or upon disposal of the asset. Please read
Note 1
to the Consolidated Financial Statements, “
Accounting Policies
,” for additional information.
|
•
|
Goodwill and other intangibles –
Goodwill is tested for impairment on an annual basis and between annual tests in certain circumstances, and is written down when impaired. Purchased intangible assets other than goodwill are amortized over their useful lives unless these lives are determined to be indefinite. Our purchased intangible assets are carried at cost less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets, which ranges from
three
to
10 years
. Please read
Note 6
to the Consolidated Financial Statements, “
Goodwill and Other Intangible Assets
,” for additional information.
|
|
|
Year ended December 31,
|
|||||||||
|
|
2016
|
|
2015
|
|
% Change
|
|||||
|
|
(in thousands, except per share and statistical data)
|
|||||||||
Revenues (gross billings of $17.933 billion and $15.806 billion, less worksite employee payroll cost of $14.992 billion and $13.202 billion, respectively)
|
|
$
|
2,941,347
|
|
|
$
|
2,603,614
|
|
|
13.0
|
%
|
Gross profit
|
|
491,610
|
|
|
437,867
|
|
|
12.3
|
%
|
||
Operating expenses
|
|
385,304
|
|
|
372,168
|
|
(1)
|
3.5
|
%
|
||
Operating income
|
|
106,306
|
|
|
65,699
|
|
|
61.8
|
%
|
||
Other expense
|
|
(1,129
|
)
|
|
(80
|
)
|
|
—
|
|
||
Net income
|
|
65,991
|
|
|
39,390
|
|
|
67.5
|
%
|
||
Diluted net income per share of common stock
|
|
3.09
|
|
|
1.58
|
|
|
95.6
|
%
|
||
Adjusted net income
(2)
|
|
76,718
|
|
|
54,519
|
|
|
40.7
|
%
|
||
Adjusted diluted net income per share of common stock
(2)
|
|
3.59
|
|
|
2.19
|
|
|
63.9
|
%
|
||
Adjusted EBITDA
(2)
|
|
141,183
|
|
|
110,014
|
|
|
28.3
|
%
|
||
|
|
|
|
|
|
|
|||||
Statistical Data:
|
|
|
|
|
|
|
|||||
Average number of worksite employees paid per month
|
|
165,850
|
|
|
145,830
|
|
|
13.7
|
%
|
||
Revenues per worksite employee per month
(3)
|
|
$
|
1,478
|
|
|
$
|
1,488
|
|
|
(0.7
|
)%
|
Gross profit per worksite employee per month
|
|
247
|
|
|
250
|
|
|
(1.2
|
)%
|
||
Operating expenses per worksite employee per month
|
|
194
|
|
|
212
|
|
|
(8.5
|
)%
|
||
Operating income per worksite employee per month
|
|
53
|
|
|
38
|
|
|
39.5
|
%
|
||
Net income per worksite employee per month
|
|
33
|
|
|
23
|
|
|
43.5
|
%
|
||
Adjusted EBITDA per worksite employee per month
(2)
|
|
71
|
|
|
63
|
|
|
12.7
|
%
|
(1)
|
Includes non-cash impairment and other charges in the first and second quarters of 2015 of
$9.8 million
and
$1.3 million
, respectively, offset by a reduction of
$0.6 million
in the fourth quarter of 2015. Please read
Note 7
to the Consolidated Financial Statements, “
Impairment Charges and Other
,” for additional information.
|
(2)
|
Please read Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – 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
$9,011
and
$9,032
per worksite employee per month, less payroll cost of
$7,533
and
$7,544
per worksite employee per month, respectively.
|
|
|
Year ended December 31,
|
|
Year ended December 31,
|
|||||||||||||
|
|
2016
|
|
2015
|
|
% Change
|
|
2016
|
|
2015
|
|||||||
|
|
(in thousands)
|
|
(% of total revenue)
|
|||||||||||||
Northeast
|
|
$
|
750,748
|
|
|
$
|
661,891
|
|
|
13.4
|
%
|
|
26.0
|
%
|
|
25.9
|
%
|
Southeast
|
|
318,185
|
|
|
262,128
|
|
|
21.4
|
%
|
|
11.0
|
%
|
|
10.3
|
%
|
||
Central
|
|
467,297
|
|
|
394,649
|
|
|
18.4
|
%
|
|
16.2
|
%
|
|
15.4
|
%
|
||
Southwest
|
|
689,334
|
|
|
650,350
|
|
|
6.0
|
%
|
|
23.9
|
%
|
|
25.5
|
%
|
||
West
|
|
664,308
|
|
|
586,252
|
|
|
13.3
|
%
|
|
22.9
|
%
|
|
22.9
|
%
|
||
|
|
2,889,872
|
|
|
2,555,270
|
|
|
13.1
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
||
Other revenue
(1)
|
|
51,475
|
|
|
48,344
|
|
|
6.5
|
%
|
|
|
|
|
|
|
||
Total revenue
|
|
$
|
2,941,347
|
|
|
$
|
2,603,614
|
|
|
13.0
|
%
|
|
|
|
|
|
|
•
|
Benefits costs –
The cost of group health insurance and related employee benefits
increased
$2
per worksite employee per month, or
2.0%
, on a per covered employee basis compared to
2015
. Included in 2016 benefits costs is a charge of
$5.1 million
, or
$3
per worksite employee per month, for changes in estimated claims run-off related to prior periods. The percentage of worksite employees covered under our health insurance plan was
69.2%
in
2016
and
70.4%
in
2015
. Please read “—Critical Accounting Policies and Estimates – Benefits Costs” for a discussion of our accounting for health insurance costs.
|
•
|
Workers’ compensation costs –
Workers’ compensation costs
increased
0.6%
, but decreased
$5
on a per worksite employee per month basis, compared to
2015
. As a percentage of non-bonus payroll cost, workers’ compensation costs
decreased
to
0.59%
in
2016
from
0.68%
in
2015
. During
2016
, as a result of closing out claims at lower than expected costs, we recorded reductions in workers’ compensation costs of
$10.9 million
, or
0.08%
of non-bonus payroll costs, for changes in estimated losses related to prior reporting periods, compared to
$1.3 million
, or
0.01%
of non-bonus payroll costs, in
2015
. The
2016
period costs include the impact of a
1.1%
discount rate used to accrue workers’ compensation loss claims, compared to a
1.0%
discount rate used in the
2015
period. Please read “—Critical Accounting Policies and Estimates – Workers’ Compensation Costs” for a discussion of our accounting for workers’ compensation costs.
|
•
|
Payroll tax costs
– Payroll taxes
increased
13.4%
, but decreased
$2
on a per worksite employee per month basis, compared to
2015
, due primarily to a
13.5%
increase
in total payroll cost in
2016
. Payroll taxes as a percentage of payroll cost
decreased
to
6.84%
in
2016
compared to
6.85%
in
2015
.
|
|
|
Year ended December 31
,
|
|
Year ended December 31
,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
% Change
|
|
2016
|
|
2015
|
|
% Change
|
||||||||||
|
|
(in thousands)
|
|
(per worksite employee per month)
|
||||||||||||||||||
Salaries, wages and payroll taxes
|
|
$
|
229,589
|
|
|
$
|
211,060
|
|
|
8.8
|
%
|
|
$
|
115
|
|
|
$
|
120
|
|
|
(4.2
|
)%
|
Stock-based compensation
|
|
16,643
|
|
|
13,345
|
|
|
24.7
|
%
|
|
8
|
|
|
8
|
|
|
—
|
|
||||
Commissions
|
|
19,288
|
|
|
18,479
|
|
|
4.4
|
%
|
|
10
|
|
|
11
|
|
|
(9.1
|
)%
|
||||
Advertising
|
|
16,447
|
|
|
15,980
|
|
|
2.9
|
%
|
|
8
|
|
|
9
|
|
|
(11.1
|
)%
|
||||
General and administrative expenses
|
|
86,693
|
|
|
84,259
|
|
|
2.9
|
%
|
|
44
|
|
|
47
|
|
|
(6.4
|
)%
|
||||
Impairment charges and other
|
|
—
|
|
|
10,480
|
|
|
(100.0
|
)%
|
|
—
|
|
|
6
|
|
|
(100.0
|
)%
|
||||
Depreciation and amortization
|
|
16,644
|
|
|
18,565
|
|
|
(10.3
|
)%
|
|
9
|
|
|
11
|
|
|
(18.2
|
)%
|
||||
Total operating expenses
|
|
$
|
385,304
|
|
|
$
|
372,168
|
|
|
3.5
|
%
|
|
$
|
194
|
|
|
$
|
212
|
|
|
(8.5
|
)%
|
•
|
Salaries, wages and payroll taxes of corporate and sales staff
increased
8.8%
, but decreased
$5
on a per worksite employee per month basis, compared to
2015
. The increase was primarily due to a
5.8%
rise in headcount, including a 9.9% increase in BPAs in
2016
.
|
•
|
Stock-based compensation
increased
24.7%
, but remained flat on a per worksite employee per month basis, compared to
2015
. This increase was primarily due to awards issued under our Long-Term Incentive Program established in 2015. Stock-based compensation expense represents amortization of restricted stock and long-term incentive awards granted to employees and the annual stock grant made to non-employee directors. Please read
Note 1
“
Accounting Policies
” and
Note 11
“
Incentive Plans
,” to the Consolidated Financial Statements for additional information.
|
•
|
Commissions expense
increased
4.4%
, but decreased
$1
on a per worksite employee per month basis, compared to
2015
, primarily due to commissions associated with our PEO HR Outsourcing solutions.
|
•
|
Advertising costs
increased
2.9%
, but decreased
$1
on a per worksite employee per month basis, compared to
2015
, primarily due to increased spending on Internet advertising.
|
•
|
General and administrative expenses, which includes
$0.3 million
and
$1.5 million
in stockholder advisory expenses in
2016
and
2015
, respectively,
increased
2.9%
, but
decreased
$3
on a per worksite employee per month basis, compared to
2015
.
|
•
|
Depreciation and amortization expense
decreased
10.3%
, or
$2
per worksite employee per month, compared to
2015
, primarily due to certain acquired assets becoming fully depreciated in 2015 and the sale of our two aircraft in 2015, which eliminated the depreciation on those assets. Please reach
Note 7
to the Consolidated Financial Statements, “
Impairment Charges and Other
,” for additional information.
|
|
|
Year ended December 31,
|
|||||||||
|
|
2015
|
|
2014
|
|
% Change
|
|||||
|
|
(in thousands, except per share and statistical data)
|
|||||||||
Revenues (gross billings of $15.806 billion and $14.187 billion, less worksite employee payroll cost of $13.202 billion and $11.829 billion, respectively)
|
|
$
|
2,603,614
|
|
|
$
|
2,357,788
|
|
|
10.4
|
%
|
Gross profit
|
|
437,867
|
|
|
403,805
|
|
|
8.4
|
%
|
||
Operating expenses
|
|
372,168
|
|
(1)
|
356,331
|
|
(2)
|
4.4
|
%
|
||
Operating income
|
|
65,699
|
|
|
47,474
|
|
|
38.4
|
%
|
||
Other income (expense)
|
|
(80
|
)
|
|
153
|
|
|
(152.3
|
)%
|
||
Net income
|
|
39,390
|
|
|
28,004
|
|
|
40.7
|
%
|
||
Diluted net income per share of common stock
|
|
1.58
|
|
|
1.05
|
|
(3)
|
50.5
|
%
|
||
Adjusted net income
(4)
|
|
54,519
|
|
|
36,734
|
|
|
48.4
|
%
|
||
Adjusted diluted net income per share of common stock
(4)
|
|
2.19
|
|
|
1.43
|
|
|
53.1
|
%
|
||
Adjusted EBITDA
(4)
|
|
110,014
|
|
|
84,124
|
|
|
30.8
|
%
|
||
|
|
|
|
|
|
|
|||||
Statistical Data:
|
|
|
|
|
|
|
|
||||
Average number of worksite employees paid per month
|
|
145,830
|
|
|
130,718
|
|
|
11.6
|
%
|
||
Revenues per worksite employee per month
(5)
|
|
$
|
1,488
|
|
|
$
|
1,503
|
|
|
(1.0
|
)%
|
Gross profit per worksite employee per month
|
|
250
|
|
|
257
|
|
|
(2.7
|
)%
|
||
Operating expenses per worksite employee per month
|
|
212
|
|
|
227
|
|
|
(6.6
|
)%
|
||
Operating income per worksite employee per month
|
|
38
|
|
|
30
|
|
|
26.7
|
%
|
||
Net income per worksite employee per month
|
|
23
|
|
|
18
|
|
|
27.8
|
%
|
||
Adjusted EBITDA per worksite employee per month
(4)
|
|
63
|
|
|
54
|
|
|
16.7
|
%
|
(1)
|
Includes non-cash impairment and other charges in the first and second quarters of 2015 of
$9.8 million
and
$1.3 million
, respectively, offset by a reduction of
$0.6 million
in the fourth quarter of 2015. Please read
Note 7
to the Consolidated Financial Statements, “
Impairment Charges and Other
,” for additional information.
|
(2)
|
Includes a non-cash impairment charge in the second quarter of 2014 of
$2.5 million
. Please read
Note 6
to the Consolidated Financial Statements, “
Goodwill and Other Intangible Assets
,” for additional information. Also includes a non-cash charge in the fourth quarter of 2014 of
$1.2 million
. Please read
Note 1
to the Consolidated Financial Statements, “
Accounting Policies
,” for additional information.
|
(3)
|
Includes the impact of dividends exceeding earnings under the two-class method, resulting in a $0.05 earnings per share decrease in 2014. Please read
Note 12
to the Consolidated Financial Statements, “
Net Income Per Share
,” for additional information.
|
(4)
|
Please read Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – 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.
|
(5)
|
Gross billings of
$9,032
and
$9,044
per worksite employee per month, less payroll cost of
$7,544
and
$7,541
per worksite employee per month, respectively.
|
|
|
Year ended December 31,
|
|
Year ended December 31,
|
|||||||||||||
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|||||||
|
|
(in thousands)
|
|
(% of total revenue)
|
|||||||||||||
Northeast
|
|
$
|
661,891
|
|
|
$
|
601,526
|
|
|
10.0
|
%
|
|
25.9
|
%
|
|
26.0
|
%
|
Southeast
|
|
262,128
|
|
|
225,709
|
|
|
16.1
|
%
|
|
10.3
|
%
|
|
9.7
|
%
|
||
Central
|
|
394,649
|
|
|
334,669
|
|
|
17.9
|
%
|
|
15.4
|
%
|
|
14.5
|
%
|
||
Southwest
|
|
650,350
|
|
|
632,356
|
|
|
2.8
|
%
|
|
25.5
|
%
|
|
27.3
|
%
|
||
West
|
|
586,252
|
|
|
521,139
|
|
|
12.5
|
%
|
|
22.9
|
%
|
|
22.5
|
%
|
||
|
|
2,555,270
|
|
|
2,315,399
|
|
|
10.4
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
||
Other revenue
(1)
|
|
48,344
|
|
|
42,389
|
|
|
14.0
|
%
|
|
|
|
|
|
|
||
Total revenue
|
|
$
|
2,603,614
|
|
|
$
|
2,357,788
|
|
|
10.4
|
%
|
|
|
|
|
|
|
•
|
Benefits costs –
The cost of group health insurance and related employee benefits
decreased
$3
per worksite employee per month, but increased
1.4%
, on a per covered employee basis compared to
2014
. The percentage of worksite employees covered under our health insurance plan was
70.4%
in
2015
and
71.7%
in
2014
. Please read “—Critical Accounting Policies and Estimates – Benefits Costs” for a discussion of our accounting for health insurance costs.
|
•
|
Workers’ compensation costs –
Workers’ compensation costs increased
14.7%
, or
$1
per worksite employee per month, compared to
2014
, due primarily to an
11.6%
increase
in the average number of worksite employees paid per month. As a
|
•
|
Payroll tax costs
– Payroll taxes increased
10.3%
, but
decreased
$6
on a per worksite employee per month basis, compared to
2014
, due primarily to an
11.6%
increase in total payroll cost in
2015
, offset in part by lower state unemployment tax rates. Payroll taxes as a percentage of payroll cost decreased to
6.85%
in
2015
compared to
6.93%
in
2014
.
|
|
|
Year ended December 31
,
|
|
Year ended December 31,
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|
% Change
|
||||||||||
|
|
(in thousands)
|
|
(per worksite employee per month)
|
||||||||||||||||||
Salaries, wages and payroll taxes
|
|
$
|
211,060
|
|
|
$
|
200,118
|
|
|
5.5
|
%
|
|
$
|
120
|
|
|
$
|
127
|
|
|
(5.5
|
)%
|
Stock-based compensation
|
|
13,345
|
|
|
11,053
|
|
|
20.7
|
%
|
|
8
|
|
|
7
|
|
|
14.3
|
%
|
||||
Commissions
|
|
18,479
|
|
|
15,285
|
|
|
20.9
|
%
|
|
11
|
|
|
10
|
|
|
10.0
|
%
|
||||
Advertising
|
|
15,980
|
|
|
20,084
|
|
|
(20.4
|
)%
|
|
9
|
|
|
13
|
|
|
(30.8
|
)%
|
||||
General and administrative expenses
|
|
84,259
|
|
|
84,717
|
|
|
(0.5
|
)%
|
|
47
|
|
|
54
|
|
|
(13.0
|
)%
|
||||
Impairment charges and other
|
|
10,480
|
|
|
3,687
|
|
|
184.2
|
%
|
|
6
|
|
|
2
|
|
|
200.0
|
%
|
||||
Depreciation and amortization
|
|
18,565
|
|
|
21,387
|
|
|
(13.2
|
)%
|
|
11
|
|
|
14
|
|
|
(21.4
|
)%
|
||||
Total operating expenses
|
|
$
|
372,168
|
|
|
$
|
356,331
|
|
|
4.4
|
%
|
|
$
|
212
|
|
|
$
|
227
|
|
|
(6.6
|
)%
|
•
|
Salaries, wages and payroll taxes of corporate and sales staff
increased
5.5%
, but decreased
$7
on a per worksite employee per month basis, compared to
2014
. The increase was primarily due to a 2.7% rise in headcount, including an 11.8% increase in BPAs, and increased incentive compensation, primarily attributable to a higher level of achievement on our 2015 annual incentive goals as compared to 2014.
|
•
|
Stock-based compensation
increased
20.7%
, or
$1
per worksite employee per month, compared to
2014
. This increase was primarily due to awards issued under our Long-Term Incentive Program established in 2015. Stock-based compensation expense represents amortization of restricted stock and long-term incentive awards granted to employees and the annual stock grant made to non-employee directors. Please read
Note 1
“
Accounting Policies
” and
Note 11
“
Incentive Plans
,” to the Consolidated Financial Statements for additional information.
|
•
|
Commissions expense
increased
20.9%
, or
$1
per worksite employee per month, compared to
2014
, primarily due to commissions associated with our PEO HR Outsourcing solutions.
|
•
|
Advertising costs
decreased
20.4%
, or
$4
per worksite employee per month, compared to
2014
, primarily due to decreased spending on radio and television advertising and sponsorships.
|
•
|
General and administrative expenses were flat, but
decreased
$7
per worksite employee per month, compared to
2014
.
|
•
|
Depreciation and amortization expense
decreased
13.2%
, or
$3
per worksite employee per month, compared to
2014
, primarily due to the July 2015 sale of our aircraft, which eliminated the depreciation on those assets. Please read
Note 7
to the Consolidated Financial Statements, “
Impairment Charges and Other
,” for additional information.
|
|
|
Year ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(in thousands, except per
worksite employee per month data)
|
||||||||||
Payroll cost (GAAP)
|
|
$
|
14,991,510
|
|
|
$
|
13,202,564
|
|
|
$
|
11,829,133
|
|
Less: bonus payroll cost
|
|
1,648,936
|
|
|
1,611,857
|
|
|
1,509,010
|
|
|||
Non-bonus payroll cost
|
|
$
|
13,342,574
|
|
|
$
|
11,590,707
|
|
|
$
|
10,320,123
|
|
|
|
|
|
|
|
|
||||||
Payroll cost per worksite employee (GAAP)
|
|
$
|
7,533
|
|
|
$
|
7,544
|
|
|
$
|
7,541
|
|
Less: Bonus payroll cost per worksite employee
|
|
829
|
|
|
921
|
|
|
962
|
|
|||
Non-bonus payroll cost per worksite employee
|
|
$
|
6,704
|
|
|
$
|
6,623
|
|
|
$
|
6,579
|
|
|
|
Year-ended December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
|
(in thousands, except worksite employee per month data)
|
||||||||||||||||||
Net income (GAAP)
|
|
$
|
65,991
|
|
|
$
|
39,390
|
|
|
$
|
28,004
|
|
|
$
|
32,032
|
|
|
$
|
40,402
|
|
Income tax expense
|
|
39,186
|
|
|
26,229
|
|
|
19,623
|
|
|
21,700
|
|
|
27,888
|
|
|||||
Interest expense
|
|
2,396
|
|
|
459
|
|
|
370
|
|
|
383
|
|
|
354
|
|
|||||
Depreciation and amortization
|
|
16,644
|
|
|
18,565
|
|
|
21,387
|
|
|
21,064
|
|
|
18,250
|
|
|||||
EBITDA
|
|
124,217
|
|
|
84,643
|
|
|
69,384
|
|
|
75,179
|
|
|
86,894
|
|
|||||
Impairment charges and other
|
|
—
|
|
|
10,480
|
|
|
3,687
|
|
|
6,021
|
|
|
4,191
|
|
|||||
Stock-based compensation
|
|
16,643
|
|
|
13,345
|
|
|
11,053
|
|
|
11,103
|
|
|
9,814
|
|
|||||
Stockholder advisory expenses
|
|
323
|
|
|
1,546
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Adjusted EBITDA (non-GAAP)
|
|
$
|
141,183
|
|
|
$
|
110,014
|
|
|
$
|
84,124
|
|
|
$
|
92,303
|
|
|
$
|
100,899
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per worksite employee per month (GAAP)
|
|
$
|
33
|
|
|
$
|
23
|
|
|
$
|
18
|
|
|
$
|
21
|
|
|
$
|
27
|
|
Income tax expense per worksite employee per month
|
|
20
|
|
|
15
|
|
|
13
|
|
|
14
|
|
|
18
|
|
|||||
Interest expense per worksite employee per month
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Depreciation and amortization per worksite employee per month
|
|
9
|
|
|
11
|
|
|
14
|
|
|
14
|
|
|
12
|
|
|||||
EBITDA per worksite employee per month
|
|
62
|
|
|
48
|
|
|
45
|
|
|
49
|
|
|
57
|
|
|||||
Impairment charges and other per worksite employee per month
|
|
—
|
|
|
6
|
|
|
2
|
|
|
4
|
|
|
3
|
|
|||||
Stock-based compensation per worksite employee per month
|
|
8
|
|
|
8
|
|
|
7
|
|
|
7
|
|
|
7
|
|
|||||
Stockholder advisory expenses per worksite employee per month
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Adjusted EBITDA per worksite employee per month (non-GAAP)
|
|
$
|
71
|
|
|
$
|
63
|
|
|
$
|
54
|
|
|
$
|
60
|
|
|
$
|
67
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
(in thousands)
|
||||||
Cash, cash equivalents and marketable securities (GAAP)
|
|
$
|
287,885
|
|
|
$
|
279,413
|
|
Less: Amounts payable for withheld federal and state income taxes, employment taxes and other payroll deductions
|
|
221,710
|
|
|
185,719
|
|
||
Client prepayments
|
|
21,256
|
|
|
17,037
|
|
||
Adjusted cash, cash equivalents and marketable securities (non-GAAP)
|
|
$
|
44,919
|
|
|
$
|
76,657
|
|
|
|
Year-ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(in thousands, except worksite employee per month data)
|
||||||||||
Operating expenses (GAAP)
|
|
$
|
385,304
|
|
|
$
|
372,168
|
|
|
$
|
356,331
|
|
Less: Impairment charges and other
|
|
—
|
|
|
10,480
|
|
|
3,687
|
|
|||
Stockholder advisory expenses
|
|
323
|
|
|
1,546
|
|
|
—
|
|
|||
Adjusted operating expenses (non-GAAP)
|
|
$
|
384,981
|
|
|
$
|
360,142
|
|
|
$
|
352,644
|
|
|
|
|
|
|
|
|
||||||
Operating expenses per worksite employee per month (GAAP)
|
|
$
|
194
|
|
|
$
|
212
|
|
|
$
|
227
|
|
Less: Impairment charges and other per worksite employee per month
|
|
—
|
|
|
5
|
|
|
2
|
|
|||
Stockholder advisory expenses per worksite employee per month
|
|
1
|
|
|
1
|
|
|
—
|
|
|||
Adjusted operating expenses per worksite employee per month (non-GAAP)
|
|
$
|
193
|
|
|
$
|
206
|
|
|
$
|
225
|
|
|
|
Year-ended December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Net income (GAAP)
|
|
$
|
65,991
|
|
|
$
|
39,390
|
|
|
$
|
28,004
|
|
|
$
|
32,032
|
|
|
$
|
40,402
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Impairment charges and other
|
|
—
|
|
|
10,480
|
|
|
3,687
|
|
|
6,021
|
|
|
4,191
|
|
|||||
Stock-based compensation
|
|
16,643
|
|
|
13,345
|
|
|
11,053
|
|
|
11,103
|
|
|
9,814
|
|
|||||
Stockholder advisory expenses
|
|
323
|
|
|
1,546
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Tax credit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,982
|
)
|
|
—
|
|
|||||
Total non-GAAP adjustment
|
|
16,966
|
|
|
25,371
|
|
|
14,740
|
|
|
15,142
|
|
|
14,005
|
|
|||||
Tax effect on non-GAAP adjustments
|
|
(6,239
|
)
|
|
(10,242
|
)
|
|
(6,010
|
)
|
|
(4,885
|
)
|
|
(5,739
|
)
|
|||||
Adjusted net income (non-GAAP)
|
|
$
|
76,718
|
|
|
$
|
54,519
|
|
|
$
|
36,734
|
|
|
$
|
42,289
|
|
|
$
|
48,668
|
|
|
|
Year-ended December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
|
(amounts per share)
|
||||||||||||||||||
Diluted net income per share of common stock (GAAP)
|
|
$
|
3.09
|
|
|
$
|
1.58
|
|
|
$
|
1.05
|
|
|
$
|
1.25
|
|
|
$
|
1.56
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Impairment charges and other
|
|
—
|
|
|
0.42
|
|
|
0.14
|
|
|
0.24
|
|
|
0.16
|
|
|||||
Stock-based compensation
|
|
0.78
|
|
|
0.54
|
|
|
0.42
|
|
|
0.43
|
|
|
0.38
|
|
|||||
Stockholder advisory expenses
|
|
0.02
|
|
|
0.06
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Impact of dividends exceeding earnings
|
|
—
|
|
|
—
|
|
|
0.05
|
|
|
—
|
|
|
0.01
|
|
|||||
Tax credit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.08
|
)
|
|
—
|
|
|||||
Total non-GAAP adjustments
|
|
0.80
|
|
|
1.02
|
|
|
0.61
|
|
|
0.59
|
|
|
0.55
|
|
|||||
Tax effect on non-GAAP adjustments
|
|
(0.30
|
)
|
|
(0.41
|
)
|
|
(0.23
|
)
|
|
(0.19
|
)
|
|
(0.22
|
)
|
|||||
Adjusted diluted net income per share of common stock (non-GAAP)
|
|
$
|
3.59
|
|
|
$
|
2.19
|
|
|
$
|
1.43
|
|
|
$
|
1.65
|
|
|
$
|
1.89
|
|
•
|
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 and at month-end; therefore, operating cash flows decrease in the reporting periods that end on a Friday. In the year ended
December 31, 2016
, the last business day of the reporting period ended on a
Friday
, client prepayments were
$21.3 million
and amounts payable for withheld federal and state income taxes, employment taxes and other payroll deductions was
$221.7 million
. In the period ended December 31, 2015, which ended on a
Thursday
, client prepayments were
$17.0 million
and amounts payable for withheld federal and state income taxes, employment taxes and other payroll deductions was
$185.7 million
.
|
•
|
Workers’ compensation plan funding
– Under our workers’ compensation insurance arrangements, we make monthly payments to the carriers comprised of premium costs and funds to be set aside for payment of future claims (“claim funds”). These pre-determined amounts are stipulated in our agreements with the carriers and are based primarily on anticipated worksite employee payroll levels and workers’ compensation loss rates during the policy year. Changes in payroll levels from those that were anticipated in the arrangements can result in changes in the amount of the cash payments, which will impact our reporting of operating cash flows. Our claim funds paid, based upon anticipated worksite employee payroll levels and workers’ compensation loss rates, were
$52.7 million
in
2016
and
$54.2 million
in
2015
. However, our estimates of workers’ compensation loss costs were
$62.4 million
and
$64.5 million
in
2016
and
2015
, respectively. In
2016
and
2015
, we received
$12.8 million
and
$5.3 million
, respectively, for the return of excess claim funds related to the workers’ compensation program, which increased working capital.
|
•
|
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 determined solely by United based primarily upon recent claim history and anticipated cost trends, also have a significant impact on our operating cash flows. Since inception of the United plan, premiums paid and owed to United have exceeded Plan Costs, resulting in a
$15.0 million
surplus, which is
$6.0 million
in excess of our agreed-upon
$9.0 million
surplus maintenance level. The
$6.0 million
difference is therefore reflected as a current asset and
$9.0 million
is reflected as a long-term asset on our Consolidated Balance Sheets at
December 31, 2016
. In addition, the premiums owed to United at
December 31, 2016
, were
$22.6 million
, which is included in accrued health insurance costs, a current liability, on our Consolidated Balance Sheets.
|
•
|
Operating results
– Our net income has a significant impact on our operating cash flows. Our net income
increased
67.5%
to
$66.0 million
in
2016
from
$39.4 million
in
2015
. Please read “Results of Operations
– Year Ended
December 31, 2016
Compared to Year Ended
December 31, 2015
.
”
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Contractual obligations
|
|
Total
|
|
2017
|
|
2018-2019
|
|
2020-2021
|
|
Thereafter
|
||||||||||
Non-cancelable operating leases
|
|
$
|
54,250
|
|
|
$
|
14,888
|
|
|
$
|
22,693
|
|
|
$
|
11,514
|
|
|
$
|
5,155
|
|
Purchase obligations
(1)
|
|
29,054
|
|
|
12,630
|
|
(2)
|
12,675
|
|
|
3,349
|
|
|
400
|
|
|||||
Long-term debt
|
|
104,400
|
|
|
—
|
|
|
—
|
|
|
104,400
|
|
|
—
|
|
|||||
Other long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued workers’ compensation claim costs
(3)
|
|
183,928
|
|
|
42,637
|
|
|
46,414
|
|
|
31,045
|
|
|
63,832
|
|
|||||
Total contractual cash obligations
|
|
$
|
371,632
|
|
|
$
|
70,155
|
|
|
$
|
81,782
|
|
|
$
|
150,308
|
|
|
$
|
69,387
|
|
(1)
|
The table includes purchase obligations associated with non-cancelable contracts individually greater than $100,000 and one year.
|
(2)
|
Includes $4.9 million related to the construction of a new facility on our corporate campus. For more information, please read Item 2. “Properties.”
|
(3)
|
Accrued workers’ compensation claim costs include the short and long-term amounts. For more information, please read, “– Critical Accounting Policies and Estimates – Workers’ Compensation Costs.”
|
|
3.1
|
Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1 (No. 33-96952)).
|
|
3.2
|
Certificate of Ownership and Merger dated March 3, 2011 (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 10-Q for the quarter ended March 31, 2011).
|
|
3.3
|
Amended and Restated Bylaws of Insperity, Inc. dated February 17, 2014 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on February 18, 2014).
|
|
3.4
|
Certificate of Designation of Series A Junior Participating Preferred Stock setting forth the terms of the Preferred Stock (included as Exhibit A to the Rights Agreement).
|
|
4.1
|
Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1 (No. 33-96952)).
|
|
4.2
|
Rights Agreement dated as of November 13, 2007 between Insperity, Inc. and Mellon Investor Services, LLC, as Rights Agent (the “Rights Agreement”) (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on November 16, 2007).
|
|
4.3
|
Form of Rights Certificate (included as Exhibit B to the Rights Agreement).
|
|
10.1†
|
Insperity, Inc. 2001 Incentive Plan, as amended and restated (incorporated by reference to Appendix A to the Registrant’s definitive proxy statement on Schedule 14A filed on March 18, 2009 (No. 1-13998)).
|
|
10.2†
|
Form of Director Stock Option Agreement (Annual Grant) (incorporated by reference to Exhibit 10.11 to the Registrant’s Form 10-K for the year ended December 31, 2004).
|
|
10.3†
|
Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.12 to the Registrant’s Form 10-K for the year ended December 31, 2004).
|
|
10.4†
|
Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q for the quarter ended September 30, 2012).
|
|
10.5†
|
Form of Director Stock Option Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 10-Q for the quarter ended September 30, 2012).
|
|
10.6†
|
Form of Director Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.3 to the Registrant’s Form 10-Q for the quarter ended September 30, 2012).
|
|
10.7†
|
Form of Employee Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on February 22, 2013).
|
|
10.8†
|
Form of New Hire Employee Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on February 22, 2013).
|
|
10.9†
|
Form of Named Executive Officer Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on February 22, 2013).
|
|
10.10†
|
Form of Director Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed on February 22, 2013).
|
|
10.11†
|
Form of Employee Award Notice and Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on April 2, 2015).
|
|
10.12†
|
Form of Executive Officer Restricted Stock Award Agreement for awards granted on or after March 29, 2016 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on April 1, 2016).
|
(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 years ended
December 31, 2016
,
2015
and
2014
; (ii) the Consolidated Balance Sheets at
December 31, 2016
and
2015
; (iii) the Consolidated Statements of Comprehensive Income for the years ended
December 31, 2016
,
2015
and
2014
; (iv) the Consolidated
|
†
|
Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.
|
(+)
|
Confidential treatment has been requested for this exhibit and confidential portions have been filed with the Securities and Exchange Commission.
|
|
INSPERITY, INC.
|
|
|
|
|
|
By
:
|
/s/ Douglas S. Sharp
|
|
|
Douglas S. Sharp
|
|
|
Senior
Vice President of Finance
|
|
|
Chief Financial Officer and Treasurer
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
|
Management’s Report on Internal Control
|
F-3
|
|
|
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
|
F-4
|
|
|
Consolidated Balance Sheets as of December 31, 2016 and 2015
|
F-5
|
|
|
Consolidated Statements of Operations for the years ended December 31, 2016, 2015 and 2014
|
F-7
|
|
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2016, 2015 and 2014
|
F-8
|
|
|
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2016, 2015 and 2014
|
F-9
|
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014
|
F-10
|
|
|
Notes to Consolidated Financial Statements
|
F-12
|
|
/s/ Ernst & Young LLP
|
/s/ Paul J. Sarvadi
|
|
/s/ Douglas S. Sharp
|
Paul J. Sarvadi
|
|
Douglas S. Sharp
|
Chairman of the Board and
|
|
Senior Vice President of Finance
|
Chief Executive Officer
|
|
Chief Financial Officer and Treasurer
|
|
/s/ Ernst & Young LLP
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
286,034
|
|
|
$
|
269,538
|
|
Restricted cash
|
|
42,637
|
|
|
37,418
|
|
||
Marketable securities
|
|
1,851
|
|
|
9,875
|
|
||
Accounts receivable, net:
|
|
|
|
|
|
|
||
Trade
|
|
13,107
|
|
|
7,691
|
|
||
Unbilled
|
|
254,999
|
|
|
190,715
|
|
||
Other
|
|
2,178
|
|
|
2,259
|
|
||
Prepaid insurance
|
|
15,041
|
|
|
7,417
|
|
||
Other current assets
|
|
19,526
|
|
|
17,135
|
|
||
Income taxes receivable
|
|
4,949
|
|
|
—
|
|
||
Total current assets
|
|
640,322
|
|
|
542,048
|
|
||
|
|
|
|
|
||||
Property and equipment:
|
|
|
|
|
|
|
||
Land
|
|
5,214
|
|
|
5,214
|
|
||
Buildings and improvements
|
|
90,151
|
|
|
70,273
|
|
||
Computer hardware and software
|
|
97,311
|
|
|
90,654
|
|
||
Software development costs
|
|
51,956
|
|
|
45,762
|
|
||
Furniture, fixtures and other
|
|
38,483
|
|
|
39,919
|
|
||
|
|
283,115
|
|
|
251,822
|
|
||
Accumulated depreciation and amortization
|
|
(202,854
|
)
|
|
(190,063
|
)
|
||
Total property and equipment, net
|
|
80,261
|
|
|
61,759
|
|
||
|
|
|
|
|
||||
Other assets:
|
|
|
|
|
|
|
||
Prepaid health insurance
|
|
9,000
|
|
|
9,000
|
|
||
Deposits – health insurance
|
|
4,700
|
|
|
3,700
|
|
||
Deposits – workers’ compensation
|
|
143,938
|
|
|
136,462
|
|
||
Goodwill and other intangible assets, net
|
|
13,088
|
|
|
13,588
|
|
||
Deferred income taxes, net
|
|
14,025
|
|
|
16,976
|
|
||
Other assets
|
|
1,840
|
|
|
1,379
|
|
||
Total other assets
|
|
186,591
|
|
|
181,105
|
|
||
Total assets
|
|
$
|
907,174
|
|
|
$
|
784,912
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
4,189
|
|
|
$
|
5,381
|
|
Payroll taxes and other payroll deductions payable
|
|
247,766
|
|
|
205,393
|
|
||
Accrued worksite employee payroll cost
|
|
215,214
|
|
|
161,917
|
|
||
Accrued health insurance costs
|
|
26,360
|
|
|
13,643
|
|
||
Accrued workers’ compensation costs
|
|
44,231
|
|
|
39,053
|
|
||
Accrued corporate payroll and commissions
|
|
40,761
|
|
|
39,103
|
|
||
Other accrued liabilities
|
|
22,437
|
|
|
20,250
|
|
||
Income tax payable
|
|
—
|
|
|
2,971
|
|
||
Total current liabilities
|
|
600,958
|
|
|
487,711
|
|
||
|
|
|
|
|
||||
Noncurrent liabilities:
|
|
|
|
|
|
|
||
Accrued workers’ compensation costs
|
|
141,291
|
|
|
124,746
|
|
||
Long-term debt
|
|
104,400
|
|
|
—
|
|
||
Total noncurrent liabilities
|
|
245,691
|
|
|
124,746
|
|
||
|
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
|
|
||
Preferred stock, par value $0.01 per share:
|
|
|
|
|
|
|
||
Shares authorized – 20,000
|
|
|
|
|
|
|
||
Shares issued and outstanding – none
|
|
—
|
|
|
—
|
|
||
Common stock, par value $0.01 per share:
|
|
|
|
|
|
|
||
Shares authorized – 60,000
|
|
|
|
|
|
|
||
Shares issued – 27,744 and 30,758 at December 31, 2016 and 2015, respectively
|
|
277
|
|
|
308
|
|
||
Additional paid-in capital
|
|
9,240
|
|
|
144,701
|
|
||
Treasury stock, at cost – 6,719 and 6,493 at December 31, 2016 and 2015, respectively
|
|
(227,152
|
)
|
|
(205,325
|
)
|
||
Accumulated other comprehensive income, net of tax
|
|
(3
|
)
|
|
—
|
|
||
Retained earnings
|
|
278,163
|
|
|
232,771
|
|
||
Total stockholders’ equity
|
|
60,525
|
|
|
172,455
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
907,174
|
|
|
$
|
784,912
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues (gross billings of $17.933 billion, $15.806 billion and $14.187 billion, less worksite employee payroll cost of $14.992 billion, $13.202 billion and $11.829 billion, respectively)
|
|
$
|
2,941,347
|
|
|
$
|
2,603,614
|
|
|
$
|
2,357,788
|
|
Direct costs:
|
|
|
|
|
|
|
|
|
|
|||
Payroll taxes, benefits and workers’ compensation costs
|
|
2,449,737
|
|
|
2,165,747
|
|
|
1,953,983
|
|
|||
Gross profit
|
|
491,610
|
|
|
437,867
|
|
|
403,805
|
|
|||
|
|
|
|
|
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|||
Salaries, wages and payroll taxes
|
|
229,589
|
|
|
211,060
|
|
|
200,118
|
|
|||
Stock-based compensation
|
|
16,643
|
|
|
13,345
|
|
|
11,053
|
|
|||
Commissions
|
|
19,288
|
|
|
18,479
|
|
|
15,285
|
|
|||
Advertising
|
|
16,447
|
|
|
15,980
|
|
|
20,084
|
|
|||
General and administrative expenses
|
|
86,693
|
|
|
84,259
|
|
|
84,717
|
|
|||
Impairment charges and other
|
|
—
|
|
|
10,480
|
|
|
3,687
|
|
|||
Depreciation and amortization
|
|
16,644
|
|
|
18,565
|
|
|
21,387
|
|
|||
|
|
385,304
|
|
|
372,168
|
|
|
356,331
|
|
|||
Operating income
|
|
106,306
|
|
|
65,699
|
|
|
47,474
|
|
|||
|
|
|
|
|
|
|
||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|||
Interest income
|
|
1,267
|
|
|
379
|
|
|
523
|
|
|||
Interest expense
|
|
(2,396
|
)
|
|
(459
|
)
|
|
(370
|
)
|
|||
|
|
|
|
|
|
|
||||||
Income before income tax expense
|
|
105,177
|
|
|
65,619
|
|
|
47,627
|
|
|||
|
|
|
|
|
|
|
||||||
Income tax expense
|
|
39,186
|
|
|
26,229
|
|
|
19,623
|
|
|||
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
65,991
|
|
|
$
|
39,390
|
|
|
$
|
28,004
|
|
|
|
|
|
|
|
|
||||||
Less distributed and undistributed earnings allocated to participating securities
|
|
(1,496
|
)
|
|
(981
|
)
|
|
(2,002
|
)
|
|||
|
|
|
|
|
|
|
||||||
Net income allocated to common shares
|
|
$
|
64,495
|
|
|
$
|
38,409
|
|
|
$
|
26,002
|
|
|
|
|
|
|
|
|
||||||
Basic net income per share of common stock
|
|
$
|
3.10
|
|
|
$
|
1.58
|
|
|
$
|
1.05
|
|
|
|
|
|
|
|
|
||||||
Diluted net income per share of common stock
|
|
$
|
3.09
|
|
|
$
|
1.58
|
|
|
$
|
1.05
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
65,991
|
|
|
$
|
39,390
|
|
|
$
|
28,004
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
||||||
Unrealized loss on available-for-sale securities, net of tax
|
|
(3
|
)
|
|
(3
|
)
|
|
(26
|
)
|
|||
|
|
|
|
|
|
|
||||||
Comprehensive income
|
|
$
|
65,988
|
|
|
$
|
39,387
|
|
|
$
|
27,978
|
|
|
|
Common Stock
Issued
|
|
Additional Paid-In Capital
|
|
Treasury Stock
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Retained Earnings
|
|
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
Total
|
|||||||||||||||||
Balance at December 31, 2013
|
|
30,758
|
|
|
$
|
308
|
|
|
$
|
135,653
|
|
|
$
|
(138,688
|
)
|
|
$
|
29
|
|
|
$
|
255,970
|
|
|
$
|
253,272
|
|
Purchase of treasury stock, at cost
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,769
|
)
|
|
—
|
|
|
—
|
|
|
(20,769
|
)
|
||||||
Exercise of stock options
|
|
—
|
|
|
—
|
|
|
(180
|
)
|
|
459
|
|
|
—
|
|
|
—
|
|
|
279
|
|
||||||
Income tax benefit from stock-based compensation, net
|
|
—
|
|
|
—
|
|
|
488
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
488
|
|
||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
1,592
|
|
|
9,461
|
|
|
—
|
|
|
—
|
|
|
11,053
|
|
||||||
Other
|
|
—
|
|
|
—
|
|
|
216
|
|
|
1,072
|
|
|
—
|
|
|
—
|
|
|
1,288
|
|
||||||
Dividends paid
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(69,493
|
)
|
|
(69,493
|
)
|
||||||
Unrealized loss on marketable securities, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
(26
|
)
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,004
|
|
|
28,004
|
|
||||||
Balance at December 31, 2014
|
|
30,758
|
|
|
$
|
308
|
|
|
$
|
137,769
|
|
|
$
|
(148,465
|
)
|
|
$
|
3
|
|
|
$
|
214,481
|
|
|
$
|
204,096
|
|
Purchase of treasury stock, at cost
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(67,113
|
)
|
|
—
|
|
|
—
|
|
|
(67,113
|
)
|
||||||
Exercise of stock options
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
377
|
|
|
—
|
|
|
—
|
|
|
374
|
|
||||||
Income tax benefit from stock-based compensation, net
|
|
—
|
|
|
—
|
|
|
2,216
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,216
|
|
||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
4,239
|
|
|
9,053
|
|
|
—
|
|
|
53
|
|
|
13,345
|
|
||||||
Other
|
|
—
|
|
|
—
|
|
|
480
|
|
|
823
|
|
|
—
|
|
|
—
|
|
|
1,303
|
|
||||||
Dividends paid
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,153
|
)
|
|
(21,153
|
)
|
||||||
Unrealized loss on marketable securities, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39,390
|
|
|
39,390
|
|
||||||
Balance at December 31, 2015
|
|
30,758
|
|
|
$
|
308
|
|
|
$
|
144,701
|
|
|
$
|
(205,325
|
)
|
|
$
|
—
|
|
|
$
|
232,771
|
|
|
$
|
172,455
|
|
Purchase of treasury stock, at cost
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31,669
|
)
|
|
—
|
|
|
—
|
|
|
(31,669
|
)
|
||||||
Repurchase of common stock
|
|
(3,014
|
)
|
|
(31
|
)
|
|
(144,232
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(144,263
|
)
|
||||||
Exercise of stock options
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
625
|
|
|
—
|
|
|
—
|
|
|
598
|
|
||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
8,156
|
|
|
8,487
|
|
|
—
|
|
|
—
|
|
|
16,643
|
|
||||||
Other
|
|
—
|
|
|
—
|
|
|
642
|
|
|
730
|
|
|
—
|
|
|
—
|
|
|
1,372
|
|
||||||
Dividends paid
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,599
|
)
|
|
(20,599
|
)
|
||||||
Unrealized loss on marketable securities, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65,991
|
|
|
65,991
|
|
||||||
Balance at December 31, 2016
|
|
27,744
|
|
|
$
|
277
|
|
|
$
|
9,240
|
|
|
$
|
(227,152
|
)
|
|
$
|
(3
|
)
|
|
$
|
278,163
|
|
|
$
|
60,525
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
65,991
|
|
|
$
|
39,390
|
|
|
$
|
28,004
|
|
Adjustments to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
|
|
16,644
|
|
|
18,565
|
|
|
21,387
|
|
|||
Impairment charges and other
|
|
—
|
|
|
10,480
|
|
|
3,687
|
|
|||
Amortization of marketable securities
|
|
90
|
|
|
836
|
|
|
1,891
|
|
|||
Stock-based compensation
|
|
16,643
|
|
|
13,345
|
|
|
11,053
|
|
|||
Deferred income taxes
|
|
2,951
|
|
|
(14,733
|
)
|
|
(1,733
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|||
Restricted cash
|
|
(5,219
|
)
|
|
6,622
|
|
|
7,888
|
|
|||
Accounts receivable
|
|
(69,619
|
)
|
|
(25,549
|
)
|
|
34,893
|
|
|||
Prepaid insurance
|
|
(7,624
|
)
|
|
13,884
|
|
|
(10,663
|
)
|
|||
Other current assets
|
|
(2,391
|
)
|
|
514
|
|
|
(5,596
|
)
|
|||
Other assets
|
|
(8,941
|
)
|
|
(22,069
|
)
|
|
(32,013
|
)
|
|||
Accounts payable
|
|
(1,192
|
)
|
|
707
|
|
|
1,996
|
|
|||
Payroll taxes and other payroll deductions payable
|
|
42,373
|
|
|
29,052
|
|
|
10,737
|
|
|||
Accrued worksite employee payroll expense
|
|
53,297
|
|
|
(30,479
|
)
|
|
18,595
|
|
|||
Accrued health insurance costs
|
|
12,717
|
|
|
(4,686
|
)
|
|
13,226
|
|
|||
Accrued workers’ compensation costs
|
|
21,723
|
|
|
26,159
|
|
|
15,805
|
|
|||
Accrued corporate payroll, commissions and other accrued liabilities
|
|
3,150
|
|
|
4,105
|
|
|
18,517
|
|
|||
Income taxes payable/receivable
|
|
(7,920
|
)
|
|
(1,060
|
)
|
|
4,039
|
|
|||
Total adjustments
|
|
66,682
|
|
|
25,693
|
|
|
113,709
|
|
|||
Net cash provided by operating activities
|
|
132,673
|
|
|
65,083
|
|
|
141,713
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|||
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|||
Purchases
|
|
(1,049
|
)
|
|
(10,558
|
)
|
|
(69,578
|
)
|
|||
Proceeds from maturities
|
|
1,715
|
|
|
10,593
|
|
|
28,494
|
|
|||
Proceeds from dispositions
|
|
7,268
|
|
|
17,869
|
|
|
56,880
|
|
|||
Property and equipment:
|
|
|
|
|
|
|
|
|
|
|||
Purchases
|
|
(33,994
|
)
|
|
(17,844
|
)
|
|
(19,124
|
)
|
|||
Proceeds from sale of aircraft
|
|
—
|
|
|
12,159
|
|
|
—
|
|
|||
Proceeds from dispositions
|
|
43
|
|
|
153
|
|
|
122
|
|
|||
Net cash provided by (used in) investing activities
|
|
(26,017
|
)
|
|
12,372
|
|
|
(3,206
|
)
|
|
|
Year ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Purchase of treasury stock
|
|
$
|
(31,669
|
)
|
|
$
|
(67,113
|
)
|
|
$
|
(20,769
|
)
|
Repurchase of common stock
|
|
(144,263
|
)
|
|
—
|
|
|
—
|
|
|||
Dividends paid
|
|
(20,599
|
)
|
|
(21,153
|
)
|
|
(69,493
|
)
|
|||
Borrowings under long-term debt agreement
|
|
124,400
|
|
|
—
|
|
|
—
|
|
|||
Principal repayments
|
|
(20,000
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from the exercise of stock options
|
|
598
|
|
|
374
|
|
|
279
|
|
|||
Income tax benefit from stock-based compensation
|
|
—
|
|
|
2,216
|
|
|
889
|
|
|||
Other
|
|
1,373
|
|
|
1,303
|
|
|
1,288
|
|
|||
Net cash used in financing activities
|
|
(90,160
|
)
|
|
(84,373
|
)
|
|
(87,806
|
)
|
|||
|
|
|
|
|
|
|
||||||
Net increase (decrease) in cash and cash equivalents
|
|
16,496
|
|
|
(6,918
|
)
|
|
50,701
|
|
|||
Cash and cash equivalents at beginning of year
|
|
269,538
|
|
|
276,456
|
|
|
225,755
|
|
|||
Cash and cash equivalents at end of year
|
|
$
|
286,034
|
|
|
$
|
269,538
|
|
|
$
|
276,456
|
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|||
Income taxes, net
|
|
$
|
44,148
|
|
|
$
|
39,806
|
|
|
$
|
16,429
|
|
Interest expense
|
|
$
|
2,396
|
|
|
$
|
459
|
|
|
$
|
370
|
|
1.
|
Accounting Policies
|
Buildings and improvements
|
|
5-30 years
|
Computer hardware and software
|
|
2-5 years
|
Software development costs
|
|
3-5 years
|
Furniture, fixtures and other
|
|
5-7 years
|
|
|
Year ended December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
(in thousands)
|
||||||
Beginning balance
|
|
$
|
162,184
|
|
|
$
|
136,088
|
|
Accrued claims
|
|
65,069
|
|
|
67,559
|
|
||
Present value discount
|
|
(2,628
|
)
|
|
(3,095
|
)
|
||
Paid claims
|
|
(40,697
|
)
|
|
(38,368
|
)
|
||
Ending balance
|
|
$
|
183,928
|
|
|
$
|
162,184
|
|
|
|
|
|
|
||||
Current portion of accrued claims
|
|
$
|
42,637
|
|
|
$
|
37,438
|
|
Long-term portion of accrued claims
|
|
141,291
|
|
|
124,746
|
|
||
|
|
$
|
183,928
|
|
|
$
|
162,184
|
|
2.
|
Cash, Cash Equivalents and Marketable Securities
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
(in thousands)
|
||||||
Overnight holdings:
|
|
|
|
|
||||
Money market funds (cash equivalents)
|
|
$
|
255,091
|
|
|
$
|
247,720
|
|
Investment holdings:
|
|
|
|
|
||||
Money market funds (cash equivalents)
|
|
28,231
|
|
|
26,048
|
|
||
Marketable securities
|
|
1,851
|
|
|
9,875
|
|
||
|
|
285,173
|
|
|
283,643
|
|
||
Cash held in demand accounts
|
|
25,758
|
|
|
19,377
|
|
||
Outstanding checks
|
|
(23,046
|
)
|
|
(23,607
|
)
|
||
Total cash, cash equivalents and marketable securities
|
|
$
|
287,885
|
|
|
$
|
279,413
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
286,034
|
|
|
$
|
269,538
|
|
Marketable securities
|
|
1,851
|
|
|
9,875
|
|
||
|
|
$
|
287,885
|
|
|
$
|
279,413
|
|
3.
|
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, quoted prices in markets that are not active, or other observable inputs
|
•
|
Level 3 - significant unobservable inputs
|
|
|
Fair Value Measurements
|
||||||||||||||
|
|
|
|
(in thousands)
|
|
|
||||||||||
|
|
December 31,
2016 |
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Money market funds
|
|
$
|
283,322
|
|
|
$
|
283,322
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Municipal bonds
|
|
1,851
|
|
|
—
|
|
|
1,851
|
|
|
—
|
|
||||
Total
|
|
$
|
285,173
|
|
|
$
|
283,322
|
|
|
$
|
1,851
|
|
|
$
|
—
|
|
|
|
Fair Value Measurements
|
||||||||||||||
|
|
|
|
(in thousands)
|
|
|
||||||||||
|
|
December 31,
2015 |
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Money market funds
|
|
$
|
273,768
|
|
|
$
|
273,768
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Municipal bonds
|
|
9,875
|
|
|
—
|
|
|
9,875
|
|
|
—
|
|
||||
Total
|
|
$
|
283,643
|
|
|
$
|
273,768
|
|
|
$
|
9,875
|
|
|
$
|
—
|
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
|
|
|
|
(in thousands)
|
|
|
||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
Municipal bonds
|
|
$
|
1,854
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
1,851
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Municipal bonds
|
|
$
|
9,875
|
|
|
$
|
3
|
|
|
$
|
(3
|
)
|
|
$
|
9,875
|
|
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
|
|
(in thousands)
|
||||||
Less than one year
|
|
$
|
1,299
|
|
|
$
|
1,299
|
|
One to five years
|
|
555
|
|
|
552
|
|
||
Total
|
|
$
|
1,854
|
|
|
$
|
1,851
|
|
4.
|
Accounts Receivable
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
(in thousands)
|
||||||
Accrued worksite employee payroll cost
|
|
$
|
215,214
|
|
|
$
|
161,917
|
|
Unbilled revenues
|
|
61,041
|
|
|
45,835
|
|
||
Customer prepayments
|
|
(21,256
|
)
|
|
(17,037
|
)
|
||
Unbilled accounts receivable
|
|
$
|
254,999
|
|
|
$
|
190,715
|
|
5.
|
Deposits
|
6.
|
Goodwill and Other Intangible Assets
|
|
|
December 31, 2015
|
|
Twelve Months Ended
December 31, 2016 |
|
December 31, 2016
|
||||||||||
|
|
Balance
|
|
Impairment
|
|
Amortization Expense
|
|
Balance
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Gross carrying amount:
|
|
|
|
|
|
|
|
|
||||||||
Trademarks
|
|
$
|
220
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
220
|
|
Customer relationships
|
|
6,392
|
|
|
—
|
|
|
—
|
|
|
6,392
|
|
||||
Aggregate goodwill acquired:
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
21,156
|
|
|
—
|
|
|
—
|
|
|
21,156
|
|
||||
Total
|
|
$
|
27,768
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27,768
|
|
|
|
|
|
|
|
|
|
|
||||||||
Accumulated amortization:
|
|
|
|
|
|
|
|
|
||||||||
Trademarks
|
|
$
|
(101
|
)
|
|
$
|
—
|
|
|
$
|
(39
|
)
|
|
$
|
(140
|
)
|
Customer relationships
|
|
(5,609
|
)
|
|
—
|
|
|
(461
|
)
|
|
(6,070
|
)
|
||||
Accumulated impairment:
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
(8,470
|
)
|
|
—
|
|
|
—
|
|
|
(8,470
|
)
|
||||
Total
|
|
$
|
(14,180
|
)
|
|
$
|
—
|
|
|
$
|
(500
|
)
|
|
$
|
(14,680
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Net carrying amount:
|
|
|
|
|
|
|
|
|
||||||||
Trademarks
|
|
$
|
119
|
|
|
$
|
—
|
|
|
$
|
(39
|
)
|
|
$
|
80
|
|
Customer relationships
|
|
783
|
|
|
—
|
|
|
(461
|
)
|
|
322
|
|
||||
Goodwill
|
|
12,686
|
|
|
—
|
|
|
—
|
|
|
12,686
|
|
||||
Total goodwill and other intangible assets
|
|
$
|
13,588
|
|
|
$
|
—
|
|
|
$
|
(500
|
)
|
|
$
|
13,088
|
|
7.
|
Impairment Charges and Other
|
8.
|
Long-Term Debt
|
9.
|
Income Taxes
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
|
|
(in thousands)
|
||||||
Deferred tax liabilities:
|
|
|
|
|
||||
Prepaid assets
|
|
$
|
(7,133
|
)
|
|
$
|
(3,952
|
)
|
Depreciation
|
|
(936
|
)
|
|
(1,741
|
)
|
||
Software development costs
|
|
(3,960
|
)
|
|
(2,699
|
)
|
||
Total deferred tax liabilities
|
|
(12,029
|
)
|
|
(8,392
|
)
|
||
|
|
|
|
|
||||
Deferred tax assets:
|
|
|
|
|
|
|
||
Accrued incentive compensation
|
|
8,590
|
|
|
8,818
|
|
||
Net operating loss carryforward
|
|
1,300
|
|
|
1,463
|
|
||
Workers’ compensation accruals
|
|
7,891
|
|
|
7,586
|
|
||
Accrued rent
|
|
1,092
|
|
|
1,229
|
|
||
Stock-based compensation
|
|
6,217
|
|
|
4,553
|
|
||
Intangibles
|
|
618
|
|
|
1,159
|
|
||
Minority investment impairment
|
|
1,021
|
|
|
1,016
|
|
||
Other
|
|
349
|
|
|
564
|
|
||
Total deferred tax assets
|
|
27,078
|
|
|
26,388
|
|
||
Valuation allowance
|
|
(1,024
|
)
|
|
(1,020
|
)
|
||
Total net deferred tax assets
|
|
26,054
|
|
|
25,368
|
|
||
|
|
|
|
|
||||
Net deferred tax assets
|
|
$
|
14,025
|
|
|
$
|
16,976
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(in thousands)
|
||||||||||
Current income tax expense:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
31,045
|
|
|
$
|
35,221
|
|
|
$
|
18,034
|
|
State
|
|
5,190
|
|
|
5,741
|
|
|
3,322
|
|
|||
Total current income tax expense
|
|
36,235
|
|
|
40,962
|
|
|
21,356
|
|
|||
Deferred income tax (benefit) expense:
|
|
|
|
|
|
|
|
|
|
|||
Federal
|
|
2,641
|
|
|
(13,632
|
)
|
|
(1,764
|
)
|
|||
State
|
|
310
|
|
|
(1,101
|
)
|
|
31
|
|
|||
Total deferred income tax (benefit) expense
|
|
2,951
|
|
|
(14,733
|
)
|
|
(1,733
|
)
|
|||
Total income tax expense
|
|
$
|
39,186
|
|
|
$
|
26,229
|
|
|
$
|
19,623
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(in thousands)
|
||||||||||
Expected income tax expense at 35%
|
|
$
|
36,812
|
|
|
$
|
22,967
|
|
|
$
|
16,670
|
|
State income taxes, net of federal benefit
|
|
3,684
|
|
|
2,696
|
|
|
2,204
|
|
|||
Nondeductible expenses
|
|
1,669
|
|
|
1,669
|
|
|
1,939
|
|
|||
Section 199 benefits
|
|
(686
|
)
|
|
(627
|
)
|
|
(592
|
)
|
|||
Equity compensation
|
|
(1,338
|
)
|
|
—
|
|
|
—
|
|
|||
Research and development credit
|
|
(751
|
)
|
|
(530
|
)
|
|
(455
|
)
|
|||
Other, net
|
|
(204
|
)
|
|
54
|
|
|
(143
|
)
|
|||
Reported total income tax expense
|
|
$
|
39,186
|
|
|
$
|
26,229
|
|
|
$
|
19,623
|
|
10.
|
Stockholders’ Equity
|
|
|
2016
|
|
2015
|
|
||||
|
|
(amounts per share)
|
|
||||||
First quarter
|
|
$
|
0.22
|
|
|
$
|
0.19
|
|
|
Second quarter
|
|
0.25
|
|
|
0.22
|
|
|
||
Third quarter
|
|
0.25
|
|
|
0.22
|
|
|
||
Fourth quarter
|
|
0.25
|
|
|
0.22
|
|
|
11.
|
Incentive Plans
|
|
|
Shares
|
|
Weighted Average Exercise Price Per Share
|
|
Weighted Average Remaining Contractual Life
|
|
Aggregate Intrinsic Value
|
|||||
|
|
(in thousands)
|
|
|
|
(in years)
|
|
(in thousands)
|
|||||
Outstanding - December 31, 2015
|
|
28
|
|
|
$
|
29.56
|
|
|
|
|
|
||
Granted
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
|
(20
|
)
|
|
29.17
|
|
|
|
|
|
|||
Canceled
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Outstanding - December 31, 2016
|
|
8
|
|
|
$
|
30.59
|
|
|
4.5
|
|
$
|
315
|
|
Exercisable - December 31, 2016
|
|
8
|
|
|
$
|
30.59
|
|
|
4.5
|
|
$
|
315
|
|
|
|
Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
|
|
(in thousands)
|
|
|
|||
Non-vested - December 31, 2015
|
|
618
|
|
|
$
|
37.98
|
|
Granted
|
|
236
|
|
|
52.66
|
|
|
Vested
|
|
(333
|
)
|
|
35.66
|
|
|
Canceled/Forfeited
|
|
(18
|
)
|
|
44.66
|
|
|
Non-vested - December 31, 2016
|
|
503
|
|
|
$
|
46.17
|
|
|
|
Number of Performance Units at Target
|
|
Weighted Average Grant Date Fair Value
|
|
Maximum Shares Eligible to Receive
|
||||
|
|
|
|
|
|
|
||||
Unvested at December 31, 2015
|
|
100,900
|
|
|
$
|
52.80
|
|
|
201,800
|
|
Granted
|
|
133,380
|
|
|
58.42
|
|
|
224,861
|
|
|
Vested
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Canceled
|
|
(2,550
|
)
|
|
52.80
|
|
|
(4,636
|
)
|
|
Unvested at December 31, 2016
|
|
231,730
|
|
|
$
|
56.04
|
|
|
422,025
|
|
|
|
|
|
|
|
|
||||
Expected to vest
|
|
302,059
|
|
|
|
|
|
12.
|
Net Income Per Share
|
|
|
Year ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(in thousands)
|
||||||||||
Net income
|
|
$
|
65,991
|
|
|
$
|
39,390
|
|
|
$
|
28,004
|
|
Less distributed and undistributed earnings allocated to participating securities
|
|
(1,496
|
)
|
|
(981
|
)
|
|
(2,002
|
)
|
|||
Net income allocated to common shares
|
|
$
|
64,495
|
|
|
$
|
38,409
|
|
|
$
|
26,002
|
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding
|
|
20,834
|
|
|
24,308
|
|
|
24,708
|
|
|||
Incremental shares from assumed conversions of common stock options and LTIP awards
|
|
47
|
|
|
7
|
|
|
4
|
|
|||
Adjusted weighted average common shares outstanding
|
|
20,881
|
|
|
24,315
|
|
|
24,712
|
|
|||
|
|
|
|
|
|
|
||||||
Potentially dilutive securities not included in weighted average share
calculation due to anti-dilutive effect |
|
—
|
|
|
—
|
|
|
4
|
|
13.
|
Leases
|
|
|
Operating
Leases
|
||
|
|
(in thousands)
|
||
2017
|
|
$
|
14,888
|
|
2018
|
|
13,132
|
|
|
2019
|
|
9,561
|
|
|
2020
|
|
7,008
|
|
|
2021
|
|
4,506
|
|
|
Thereafter
|
|
5,155
|
|
|
Total minimum lease payments
|
|
$
|
54,250
|
|
14.
|
Commitments and Contingencies
|
2017
|
|
$
|
12,630
|
|
(1)
|
2018
|
|
8,799
|
|
|
|
2019
|
|
3,876
|
|
|
|
2020
|
|
2,549
|
|
|
|
2021
|
|
800
|
|
|
|
Thereafter
|
|
400
|
|
|
|
Total obligations
|
|
$
|
29,054
|
|
|
(1)
|
Includes $4.9 million related to the construction of a new facility on our corporate campus.
|
15.
|
Quarterly Financial Data (Unaudited)
|
|
|
Quarter ended
|
|
||||||||||||||||||
|
|
March 31
|
|
June 30
|
|
|
|
Sept. 30
|
|
|
|
Dec. 31
|
|
||||||||
|
|
(in thousands, except per share amounts)
|
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
802,408
|
|
|
$
|
707,332
|
|
|
|
|
$
|
702,538
|
|
|
|
|
$
|
729,069
|
|
|
Gross profit
|
|
150,016
|
|
|
113,259
|
|
|
|
|
117,796
|
|
|
|
|
110,539
|
|
|
||||
Operating income
|
|
53,043
|
|
|
16,023
|
|
|
|
22,773
|
|
|
|
|
14,467
|
|
|
|||||
Net income
|
|
32,693
|
|
|
9,713
|
|
|
|
|
14,065
|
|
|
|
|
9,520
|
|
|
||||
Basic net income per share
|
|
1.53
|
|
|
0.45
|
|
|
|
|
0.66
|
|
|
|
|
0.45
|
|
|
||||
Diluted net income per share
|
|
1.53
|
|
|
0.45
|
|
|
|
|
0.66
|
|
|
|
|
0.45
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
699,479
|
|
|
$
|
627,838
|
|
|
|
|
$
|
626,286
|
|
|
|
|
$
|
650,011
|
|
|
Gross profit
|
|
129,860
|
|
|
104,219
|
|
|
|
|
106,743
|
|
|
|
|
97,045
|
|
|
||||
Operating income
|
|
23,520
|
|
(1)
|
12,217
|
|
(2)
|
|
19,936
|
|
|
|
|
10,026
|
|
(3)
|
|||||
Net income
|
|
13,787
|
|
|
7,314
|
|
|
|
11,950
|
|
|
|
|
6,339
|
|
|
|||||
Basic net income per share
|
|
0.54
|
|
|
0.29
|
|
|
|
|
0.48
|
|
|
|
|
0.26
|
|
|
||||
Diluted net income per share
|
|
0.54
|
|
|
0.29
|
|
|
|
|
0.48
|
|
|
|
|
0.26
|
|
|
(1)
|
Includes non-cash impairment and other charges in the first quarter of 2015 of
$9.8 million
. Please read
Note 7
, “
Impairment Charges and Other
,” for additional information.
|
(2)
|
Includes non-cash impairment and other charges in the second quarter of 2015 of
$1.3 million
. Please read
Note 7
, “
Impairment Charges and Other
,” for additional information.
|
(3)
|
Includes a reduction to non-cash impairment and other charges in the fourth quarter of 2015 of
$0.6 million
. Please read
Note 7
, “
Impairment Charges and Other
,” for additional information.
|
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