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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 | |
---|---|---|---|---|---|---|---|---|
0.25 | 0.29% | 85.25 | 85.3918 | 84.446 | 84.5134 | 136,224 | 01:00:00 |
ý
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For the quarterly period ended September 30, 2013.
|
o
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For the transition period from _______________ to _______________
|
Delaware
|
|
76-0479645
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
19001 Crescent Springs Drive
|
|
|
Kingwood, Texas
|
|
77339
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
x
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
|
TABLE OF CONTENTS
|
|
|
|
|
|
Part I
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Part II
|
||
|
|
|
Item 1.
|
||
|
|
|
Item 1a.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 6.
|
|
|
September 30,
2013 |
|
December 31, 2012
|
||||
|
|
(Unaudited)
|
|
|
||||
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
161,842
|
|
|
$
|
264,544
|
|
Restricted cash
|
|
50,317
|
|
|
47,149
|
|
||
Marketable securities
|
|
47,400
|
|
|
16,904
|
|
||
Accounts receivable, net:
|
|
|
|
|
|
|
||
Trade
|
|
2,062
|
|
|
6,931
|
|
||
Unbilled
|
|
214,210
|
|
|
181,040
|
|
||
Other
|
|
2,690
|
|
|
2,415
|
|
||
Prepaid insurance
|
|
17,349
|
|
|
15,620
|
|
||
Other current assets
|
|
10,097
|
|
|
9,651
|
|
||
Deferred income taxes
|
|
3,451
|
|
|
7,211
|
|
||
Total current assets
|
|
509,418
|
|
|
551,465
|
|
||
|
|
|
|
|
||||
Property and equipment:
|
|
|
|
|
|
|
||
Land
|
|
4,115
|
|
|
4,115
|
|
||
Buildings and improvements
|
|
68,363
|
|
|
68,583
|
|
||
Computer hardware and software
|
|
84,684
|
|
|
81,140
|
|
||
Software development costs
|
|
38,137
|
|
|
35,866
|
|
||
Furniture and fixtures
|
|
37,118
|
|
|
36,717
|
|
||
Aircraft
|
|
35,879
|
|
|
35,879
|
|
||
|
|
268,296
|
|
|
262,300
|
|
||
Accumulated depreciation and amortization
|
|
(179,252
|
)
|
|
(168,358
|
)
|
||
Total property and equipment, net
|
|
89,044
|
|
|
93,942
|
|
||
|
|
|
|
|
||||
Other assets:
|
|
|
|
|
|
|
||
Prepaid health insurance
|
|
9,000
|
|
|
9,000
|
|
||
Deposits – health insurance
|
|
3,700
|
|
|
3,000
|
|
||
Deposits – workers’ compensation
|
|
75,112
|
|
|
64,201
|
|
||
Goodwill and other intangible assets, net
|
|
22,275
|
|
|
23,775
|
|
||
Other assets
|
|
1,920
|
|
|
4,817
|
|
||
Total other assets
|
|
112,007
|
|
|
104,793
|
|
||
Total assets
|
|
$
|
710,469
|
|
|
$
|
750,200
|
|
|
|
September 30,
2013 |
|
December 31,
2012 |
||||
|
|
(Unaudited)
|
|
|
||||
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
3,311
|
|
|
$
|
3,660
|
|
Payroll taxes and other payroll deductions payable
|
|
102,288
|
|
|
178,534
|
|
||
Accrued worksite employee payroll cost
|
|
184,142
|
|
|
150,070
|
|
||
Accrued health insurance costs
|
|
6,824
|
|
|
13,942
|
|
||
Accrued workers’ compensation costs
|
|
52,312
|
|
|
49,484
|
|
||
Accrued corporate payroll and commissions
|
|
22,186
|
|
|
23,537
|
|
||
Other accrued liabilities
|
|
15,561
|
|
|
12,478
|
|
||
Income taxes payable
|
|
57
|
|
|
4,054
|
|
||
Total current liabilities
|
|
386,681
|
|
|
435,759
|
|
||
|
|
|
|
|
||||
Noncurrent liabilities:
|
|
|
|
|
|
|||
Accrued workers’ compensation costs
|
|
66,654
|
|
|
64,536
|
|
||
Deferred income taxes
|
|
8,395
|
|
|
9,000
|
|
||
Total noncurrent liabilities
|
|
75,049
|
|
|
73,536
|
|
||
|
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
|
|
||
Common stock
|
|
308
|
|
|
308
|
|
||
Additional paid-in capital
|
|
134,781
|
|
|
133,207
|
|
||
Treasury stock, at cost
|
|
(141,401
|
)
|
|
(133,950
|
)
|
||
Accumulated other comprehensive income, net of tax
|
|
23
|
|
|
16
|
|
||
Retained earnings
|
|
255,028
|
|
|
241,324
|
|
||
Total stockholders’ equity
|
|
248,739
|
|
|
240,905
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
710,469
|
|
|
$
|
750,200
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenues (gross billings of $3.236 billion, $3.068 billion, $9.736 billion and $9.339 billion, less worksite employee payroll cost of $2.696 billion, $2.556 billion, $8.037 billion and $7.712 billion, respectively)
|
|
$
|
539,869
|
|
|
$
|
511,953
|
|
|
$
|
1,698,979
|
|
|
$
|
1,626,386
|
|
|
|
|
|
|
|
|
|
|
||||||||
Direct costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Payroll taxes, benefits and workers’ compensation costs
|
|
442,460
|
|
|
413,533
|
|
|
1,395,706
|
|
|
1,337,668
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Gross profit
|
|
97,409
|
|
|
98,420
|
|
|
303,273
|
|
|
288,718
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries, wages and payroll taxes
|
|
43,797
|
|
|
44,032
|
|
|
137,697
|
|
|
127,402
|
|
||||
Stock-based compensation
|
|
2,749
|
|
|
2,429
|
|
|
8,351
|
|
|
7,385
|
|
||||
Commissions
|
|
3,609
|
|
|
3,358
|
|
|
10,349
|
|
|
10,299
|
|
||||
Advertising
|
|
4,273
|
|
|
3,680
|
|
|
19,243
|
|
|
17,001
|
|
||||
General and administrative expenses
|
|
20,567
|
|
|
21,122
|
|
|
62,592
|
|
|
61,694
|
|
||||
Depreciation and amortization
|
|
5,302
|
|
|
4,659
|
|
|
15,692
|
|
|
13,336
|
|
||||
|
|
80,297
|
|
|
79,280
|
|
|
253,924
|
|
|
237,117
|
|
||||
Operating income
|
|
17,112
|
|
|
19,140
|
|
|
49,349
|
|
|
51,601
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest, net
|
|
26
|
|
|
142
|
|
|
155
|
|
|
462
|
|
||||
Other, net
|
|
(1
|
)
|
|
(3
|
)
|
|
(2,668
|
)
|
|
141
|
|
||||
Income before income tax expense
|
|
17,137
|
|
|
19,279
|
|
|
46,836
|
|
|
52,204
|
|
||||
Income tax expense
|
|
7,055
|
|
|
7,827
|
|
|
20,093
|
|
|
21,247
|
|
||||
Net income
|
|
$
|
10,082
|
|
|
$
|
11,452
|
|
|
$
|
26,743
|
|
|
$
|
30,957
|
|
|
|
|
|
|
|
|
|
|
||||||||
Less distributed and undistributed earnings allocated to participating securities
|
|
(289
|
)
|
|
(334
|
)
|
|
(769
|
)
|
|
(898
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income allocated to common shares
|
|
$
|
9,793
|
|
|
$
|
11,118
|
|
|
$
|
25,974
|
|
|
$
|
30,059
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net income per share of common stock
|
|
$
|
0.39
|
|
|
$
|
0.45
|
|
|
$
|
1.05
|
|
|
$
|
1.20
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted net income per share of common stock
|
|
$
|
0.39
|
|
|
$
|
0.45
|
|
|
$
|
1.04
|
|
|
$
|
1.20
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
10,082
|
|
|
$
|
11,452
|
|
|
$
|
26,743
|
|
|
$
|
30,957
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
||||||||
Unrealized gain on available-for-sale securities, net of tax
|
|
26
|
|
|
12
|
|
|
7
|
|
|
46
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
|
$
|
10,108
|
|
|
$
|
11,464
|
|
|
$
|
26,750
|
|
|
$
|
31,003
|
|
|
|
Common Stock Issued
|
|
Additional Paid-In Capital
|
|
Treasury Stock
|
|
Accumulated Other Comprehensive Income
|
|
Retained Earnings
|
|
Total
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2012
|
|
30,758
|
|
|
$
|
308
|
|
|
$
|
133,207
|
|
|
$
|
(133,950
|
)
|
|
$
|
16
|
|
|
$
|
241,324
|
|
|
$
|
240,905
|
|
Purchase of treasury stock, at cost
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,130
|
)
|
|
—
|
|
|
—
|
|
|
(17,130
|
)
|
||||||
Exercise of stock options
|
|
—
|
|
|
—
|
|
|
(740
|
)
|
|
1,903
|
|
|
—
|
|
|
—
|
|
|
1,163
|
|
||||||
Income tax benefit from stock-based compensation, net
|
|
—
|
|
|
—
|
|
|
877
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
877
|
|
||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
1,341
|
|
|
7,010
|
|
|
—
|
|
|
—
|
|
|
8,351
|
|
||||||
Other
|
|
—
|
|
|
—
|
|
|
96
|
|
|
766
|
|
|
—
|
|
|
—
|
|
|
862
|
|
||||||
Dividends paid
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,039
|
)
|
|
(13,039
|
)
|
||||||
Unrealized gain on marketable securities, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,743
|
|
|
26,743
|
|
||||||
Balance at September 30, 2013
|
|
30,758
|
|
|
$
|
308
|
|
|
$
|
134,781
|
|
|
$
|
(141,401
|
)
|
|
$
|
23
|
|
|
$
|
255,028
|
|
|
$
|
248,739
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2013
|
|
2012
|
||||
|
|
|
|
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
26,743
|
|
|
$
|
30,957
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
||
Depreciation and amortization
|
|
15,692
|
|
|
13,315
|
|
||
Impairment charge
|
|
2,679
|
|
|
—
|
|
||
Amortization of marketable securities
|
|
1,597
|
|
|
1,827
|
|
||
Stock-based compensation
|
|
8,351
|
|
|
7,385
|
|
||
Deferred income taxes
|
|
3,150
|
|
|
2,259
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||
Restricted cash
|
|
(3,168
|
)
|
|
(1,332
|
)
|
||
Accounts receivable
|
|
(28,576
|
)
|
|
(32,175
|
)
|
||
Prepaid insurance
|
|
(1,729
|
)
|
|
(2,439
|
)
|
||
Other current assets
|
|
(446
|
)
|
|
3,355
|
|
||
Other assets
|
|
(11,406
|
)
|
|
(6,373
|
)
|
||
Accounts payable
|
|
(349
|
)
|
|
(1,997
|
)
|
||
Payroll taxes and other payroll deductions payable
|
|
(76,246
|
)
|
|
(60,704
|
)
|
||
Accrued worksite employee payroll expense
|
|
34,072
|
|
|
43,947
|
|
||
Accrued health insurance costs
|
|
(7,118
|
)
|
|
13,095
|
|
||
Accrued workers’ compensation costs
|
|
2,828
|
|
|
5,231
|
|
||
Accrued corporate payroll, commissions and other accrued liabilities
|
|
3,850
|
|
|
2,155
|
|
||
Income taxes payable/receivable
|
|
(4,301
|
)
|
|
6,529
|
|
||
Total adjustments
|
|
(61,120
|
)
|
|
(5,922
|
)
|
||
Net cash provided by (used in) operating activities
|
|
(34,377
|
)
|
|
25,035
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
|
||
Marketable securities:
|
|
|
|
|
|
|
||
Purchases
|
|
(49,580
|
)
|
|
(23,585
|
)
|
||
Proceeds from dispositions
|
|
8,025
|
|
|
—
|
|
||
Proceeds from maturities
|
|
9,474
|
|
|
27,119
|
|
||
Cash exchanged for acquisitions
|
|
—
|
|
|
(1,200
|
)
|
||
Property and equipment
|
|
(9,281
|
)
|
|
(11,996
|
)
|
||
Net cash used in investing activities
|
|
(41,362
|
)
|
|
(9,662
|
)
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2013
|
|
2012
|
||||
|
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
||||
Purchase of treasury stock
|
|
$
|
(17,130
|
)
|
|
$
|
(13,770
|
)
|
Dividends paid
|
|
(13,039
|
)
|
|
(12,643
|
)
|
||
Proceeds from the exercise of stock options
|
|
1,163
|
|
|
1,062
|
|
||
Income tax benefit from stock-based compensation
|
|
1,181
|
|
|
1,457
|
|
||
Other
|
|
862
|
|
|
(469
|
)
|
||
Net cash used in financing activities
|
|
(26,963
|
)
|
|
(24,363
|
)
|
||
|
|
|
|
|
||||
Net decrease in cash and cash equivalents
|
|
(102,702
|
)
|
|
(8,990
|
)
|
||
Cash and cash equivalents at beginning of period
|
|
264,544
|
|
|
211,208
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
161,842
|
|
|
$
|
202,218
|
|
1.
|
Basis of Presentation
|
2.
|
Accounting Policies
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2013
|
|
2012
|
||||
|
|
(in thousands)
|
||||||
|
|
|
|
|
||||
Beginning balance, January 1,
|
|
$
|
111,685
|
|
|
$
|
104,791
|
|
Accrued claims
|
|
30,496
|
|
|
28,586
|
|
||
Present value discount
|
|
(748
|
)
|
|
(712
|
)
|
||
Paid claims
|
|
(24,462
|
)
|
|
(23,133
|
)
|
||
Ending balance
|
|
$
|
116,971
|
|
|
$
|
109,532
|
|
|
|
|
|
|
||||
Current portion of accrued claims
|
|
$
|
50,317
|
|
|
$
|
46,069
|
|
Long-term portion of accrued claims
|
|
66,654
|
|
|
63,463
|
|
||
|
|
$
|
116,971
|
|
|
$
|
109,532
|
|
3.
|
Cash, Cash Equivalents and Marketable Securities
|
|
|
September 30,
2013 |
|
December 31,
2012 |
||||
|
|
(in thousands)
|
||||||
Overnight Holdings
|
|
|
|
|
||||
Money market funds (cash equivalents)
|
|
$
|
116,580
|
|
|
$
|
255,000
|
|
Investment Holdings
|
|
|
|
|
|
|
||
Money market funds (cash equivalents)
|
|
37,877
|
|
|
26,087
|
|
||
Marketable securities
|
|
47,400
|
|
|
16,904
|
|
||
|
|
201,857
|
|
|
297,991
|
|
||
Cash held in demand accounts
|
|
18,717
|
|
|
21,732
|
|
||
Outstanding checks
|
|
(11,332
|
)
|
|
(38,275
|
)
|
||
Total cash, cash equivalents and marketable securities
|
|
$
|
209,242
|
|
|
$
|
281,448
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
161,842
|
|
|
$
|
264,544
|
|
Marketable securities
|
|
47,400
|
|
|
16,904
|
|
||
|
|
$
|
209,242
|
|
|
$
|
281,448
|
|
•
|
Level 1 - quoted prices in active markets using identical assets
|
•
|
Level 2 - significant other observable inputs, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other observable inputs
|
•
|
Level 3 - significant unobservable inputs
|
|
|
Fair Value Measurements
|
||||||||||||||
|
|
(in thousands)
|
||||||||||||||
|
|
September 30,
2013 |
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
154,457
|
|
|
$
|
154,457
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Municipal bonds
|
|
47,400
|
|
|
—
|
|
|
47,400
|
|
|
—
|
|
||||
Total
|
|
$
|
201,857
|
|
|
$
|
154,457
|
|
|
$
|
47,400
|
|
|
$
|
—
|
|
|
|
Fair Value Measurements
|
||||||||||||||
|
|
(in thousands)
|
||||||||||||||
|
|
December 31,
2012 |
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
281,087
|
|
|
$
|
281,087
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Municipal bonds
|
|
16,904
|
|
|
—
|
|
|
16,904
|
|
|
—
|
|
||||
Total
|
|
$
|
297,991
|
|
|
$
|
281,087
|
|
|
$
|
16,904
|
|
|
$
|
—
|
|
|
|
Amortized
Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Estimated
Fair Value |
||||||||
|
|
|
|
(in thousands)
|
|
|
||||||||||
September 30, 2013
|
|
|
|
|
|
|
|
|
||||||||
Municipal bonds
|
|
$
|
47,361
|
|
|
$
|
41
|
|
|
$
|
(2
|
)
|
|
$
|
47,400
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Municipal bonds
|
|
$
|
16,878
|
|
|
$
|
29
|
|
|
$
|
(3
|
)
|
|
$
|
16,904
|
|
|
|
Amortized
Cost |
|
Estimated
Fair Value |
||||
|
|
(in thousands)
|
||||||
|
|
|
|
|
||||
Less than one year
|
|
$
|
30,885
|
|
|
$
|
30,905
|
|
One to five years
|
|
16,476
|
|
|
16,495
|
|
||
Total
|
|
$
|
47,361
|
|
|
$
|
47,400
|
|
4.
|
Other Assets
|
5.
|
Revolving Credit Facility
|
6.
|
Stockholders' Equity
|
|
|
2013
|
|
2012
|
||||
|
|
(amounts per share)
|
||||||
First quarter
|
|
$
|
0.17
|
|
|
$
|
0.15
|
|
Second quarter
|
|
0.17
|
|
|
0.17
|
|
||
Third quarter
|
|
0.17
|
|
|
0.17
|
|
7.
|
Net Income per Share
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
|
(in thousands)
|
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
10,082
|
|
|
$
|
11,452
|
|
|
$
|
26,743
|
|
|
$
|
30,957
|
|
Less distributed and undistributed earnings allocated to participating securities
|
|
(289
|
)
|
|
(334
|
)
|
|
(769
|
)
|
|
(898
|
)
|
||||
Net income allocated to common shares
|
|
$
|
9,793
|
|
|
$
|
11,118
|
|
|
$
|
25,974
|
|
|
$
|
30,059
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
|
24,849
|
|
|
24,923
|
|
|
24,855
|
|
|
25,034
|
|
||||
Incremental shares from assumed conversions of common stock options
|
|
18
|
|
|
57
|
|
|
24
|
|
|
63
|
|
||||
Adjusted weighted average common shares outstanding
|
|
24,867
|
|
|
24,980
|
|
|
24,879
|
|
|
25,097
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Potentially dilutive securities not included in weighted average share calculation due to anti-dilutive effect
|
|
—
|
|
|
41
|
|
|
10
|
|
|
33
|
|
8.
|
Commitments and Contingencies
|
|
|
Three Months Ended
September 30, |
|||||||||
|
|
2013
|
|
2012
|
|
% Change
|
|||||
|
|
(in thousands, except per share and statistical data)
|
|||||||||
Revenues (gross billings of $3.236 billion and $3.068 billion, less worksite employee payroll cost of $2.696 billion and $2.556 billion, respectively)
|
|
$
|
539,869
|
|
|
$
|
511,953
|
|
|
5.5
|
%
|
Gross profit
|
|
97,409
|
|
|
98,420
|
|
|
(1.0
|
)%
|
||
Operating expenses
|
|
80,297
|
|
|
79,280
|
|
|
1.3
|
%
|
||
Operating income
|
|
17,112
|
|
|
19,140
|
|
|
(10.6
|
)%
|
||
Other income
|
|
25
|
|
|
139
|
|
|
(82.0
|
)%
|
||
Net income
|
|
10,082
|
|
|
11,452
|
|
|
(12.0
|
)%
|
||
Diluted net income per share of common stock
|
|
0.39
|
|
|
0.45
|
|
|
(13.3
|
)%
|
||
|
|
|
|
|
|
|
|||||
Statistical Data:
|
|
|
|
|
|
|
|
|
|
||
Average number of worksite employees paid per month
|
|
129,248
|
|
|
127,096
|
|
|
1.7
|
%
|
||
Revenues per worksite employee per month
(1)
|
|
$
|
1,392
|
|
|
$
|
1,343
|
|
|
3.6
|
%
|
Gross profit per worksite employee per month
|
|
251
|
|
|
258
|
|
|
(2.7
|
)%
|
||
Operating expenses per worksite employee per month
|
|
207
|
|
|
208
|
|
|
(0.5
|
)%
|
||
Operating income per worksite employee per month
|
|
44
|
|
|
50
|
|
|
(12.0
|
)%
|
||
Net income per worksite employee per month
|
|
26
|
|
|
30
|
|
|
(13.3
|
)%
|
(1)
|
Gross billings of
$8,346
and
$8,047
per worksite employee per month, less payroll cost of
$6,954
and
$6,704
per worksite employee per month, respectively.
|
|
|
Three Months Ended
September 30, |
|
Three Months Ended
September 30, |
|||||||||||||
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|||||||
|
|
(in thousands)
|
|
(% of total revenue)
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
Northeast
|
|
$
|
136,334
|
|
|
$
|
131,759
|
|
|
3.5
|
%
|
|
25.7
|
%
|
|
26.1
|
%
|
Southeast
|
|
51,813
|
|
|
47,670
|
|
|
8.7
|
%
|
|
9.8
|
%
|
|
9.5
|
%
|
||
Central
|
|
78,322
|
|
|
73,875
|
|
|
6.0
|
%
|
|
14.8
|
%
|
|
14.7
|
%
|
||
Southwest
|
|
147,518
|
|
|
140,843
|
|
|
4.7
|
%
|
|
27.8
|
%
|
|
27.9
|
%
|
||
West
|
|
116,959
|
|
|
110,110
|
|
|
6.2
|
%
|
|
21.9
|
%
|
|
21.8
|
%
|
||
|
|
530,946
|
|
|
504,257
|
|
|
5.3
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
||
Other revenue
(1)
|
|
8,923
|
|
|
7,696
|
|
|
15.9
|
%
|
|
|
|
|
||||
Total revenue
|
|
$
|
539,869
|
|
|
$
|
511,953
|
|
|
5.5
|
%
|
|
|
|
|
•
|
Benefits costs
– The cost of group health insurance and related employee benefits
increased
$45
per worksite employee per month, or
7.5%
on a cost per covered employee basis compared to the
third
quarter of
2012
. Our benefits costs incurred in the third quarter of 2012 reflected lower claims activity than historical trends, which impacted the year-over-year comparison. The percentage of worksite employees covered under our health insurance plans was
71.8%
in the
2013
period compared to
71.9%
in the
2012
period. Please read
Note 2
to the Consolidated Financial Statements, “
Accounting Policies
– Health Insurance Costs,” for a discussion of our accounting for health insurance costs.
|
•
|
Workers’ compensation costs
– Workers’ compensation costs were flat in the
third
quarter of
2013
, but
decreased
$1
per worksite employee per month compared to the
third
quarter of
2012
. As a percentage of non-bonus payroll cost, workers’ compensation costs were
0.55%
in the
2013
period compared to
0.57%
in the
2012
period. During the
2013
period, we recorded reductions in workers’ compensation costs of
$1.9 million
, or
0.08%
of non-bonus payroll costs, for changes in estimated losses related to prior reporting periods, compared to
$3.9 million
, or
0.16%
of non-bonus payroll costs in the
2012
period. Please read
Note 2
to the Consolidated Financial Statements, “
Accounting Policies
– Workers’ Compensation Costs,” for a discussion of our accounting for workers’ compensation costs.
|
•
|
Payroll tax costs
– Payroll taxes increased
4.7%
, or
$13
per worksite employee per month compared to the
third
quarter of
2012
primarily due to the
5.5%
increase
in payroll costs. Payroll taxes as a percentage of payroll cost were
6.3%
in the
2013
period compared to
6.4%
in the
2012
period.
|
|
|
Three Months Ended
September 30, |
|
Three Months Ended
September 30, |
||||||||||||||||||
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
||||||||||
|
|
(in thousands)
|
|
(per worksite employee per month)
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Salaries, wages and payroll taxes
|
|
$
|
43,797
|
|
|
$
|
44,032
|
|
|
(0.5
|
)%
|
|
$
|
113
|
|
|
$
|
115
|
|
|
(1.7
|
)%
|
Stock-based compensation
|
|
2,749
|
|
|
2,429
|
|
|
13.2
|
%
|
|
7
|
|
|
6
|
|
|
16.7
|
%
|
||||
Commissions
|
|
3,609
|
|
|
3,358
|
|
|
7.5
|
%
|
|
9
|
|
|
9
|
|
|
—
|
|
||||
Advertising
|
|
4,273
|
|
|
3,680
|
|
|
16.1
|
%
|
|
11
|
|
|
10
|
|
|
10.0
|
%
|
||||
General and administrative expenses
|
|
20,567
|
|
|
21,122
|
|
|
(2.6
|
)%
|
|
53
|
|
|
56
|
|
|
(5.4
|
)%
|
||||
Depreciation and amortization
|
|
5,302
|
|
|
4,659
|
|
|
13.8
|
%
|
|
14
|
|
|
12
|
|
|
16.7
|
%
|
||||
Total operating expenses
|
|
$
|
80,297
|
|
|
$
|
79,280
|
|
|
1.3
|
%
|
|
$
|
207
|
|
|
$
|
208
|
|
|
(0.5
|
)%
|
•
|
Salaries, wages and payroll taxes of corporate and sales staff
decreased
0.5%
or
$2
per worksite employee per month compared to the
2012
period. This decrease was primarily due to lower incentive compensation accruals offset by a
7.8%
rise in headcount, which includes the recent increase in Business Performance Advisors.
|
•
|
Stock-based compensation
increased
13.2%
, or
$1
per worksite employee per month compared to the
2012
period, primarily due to an increase in the weighted average market value on the date of grant associated with restricted stock awards. Stock-based compensation expense represents amortization of restricted stock awards granted to employees.
|
•
|
Commissions expense
increased
7.5%
, but remained flat on a per worksite employee per month basis compared to the
2012
period. This increase was primarily due to commissions paid to our Adjacent Businesses.
|
•
|
Advertising costs
increased
16.1%
, or
$1
per worksite employee per month compared to the
2012
period, primarily due to increased spending on health care reform related advertising and business promotions.
|
•
|
General and administrative expenses
decreased
2.6%
, or
$3
per worksite employee per month compared to the
2012
period, primarily due to reductions in bad debts and professional services, partially offset by increases in travel, training and repairs and maintenance.
|
•
|
Depreciation and amortization expense
increased
13.8%
, or
$2
per worksite employee per month compared to the
2012
period, primarily due to investments in our technology infrastructure and amortization associated with our Adjacent Business investments.
|
(1)
|
Gross billings of
$8,555
and
$8,340
per worksite employee per month, less payroll cost of
$7,062
and
$6,888
per worksite employee per month, respectively.
|
|
|
Nine Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|||||||||||||
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|||||||
|
|
(in thousands)
|
|
(% of total revenue)
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
Northeast
|
|
$
|
439,351
|
|
|
$
|
425,295
|
|
|
3.3
|
%
|
|
26.3
|
%
|
|
26.5
|
%
|
Southeast
|
|
158,976
|
|
|
148,552
|
|
|
7.0
|
%
|
|
9.5
|
%
|
|
9.3
|
%
|
||
Central
|
|
247,078
|
|
|
235,464
|
|
|
4.9
|
%
|
|
14.8
|
%
|
|
14.7
|
%
|
||
Southwest
|
|
459,740
|
|
|
447,617
|
|
|
2.7
|
%
|
|
27.5
|
%
|
|
27.9
|
%
|
||
West
|
|
367,829
|
|
|
346,387
|
|
|
6.2
|
%
|
|
21.9
|
%
|
|
21.6
|
%
|
||
|
|
1,672,974
|
|
|
1,603,315
|
|
|
4.3
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
||
Other revenue
(1)
|
|
26,005
|
|
|
23,071
|
|
|
12.7
|
%
|
|
|
|
|
||||
Total revenue
|
|
$
|
1,698,979
|
|
|
$
|
1,626,386
|
|
|
4.5
|
%
|
|
|
|
|
•
|
Benefits costs
– The cost of group health insurance and related employee benefits
increased
$23
per worksite employee per month, or
4.0%
on a cost per covered employee basis compared to the first
nine
months of
2012
. Included in 2013 benefits costs is a reduction of $3.4 million, or $3 per worksite employee per month, for lower than expected claim costs and premium taxes related to prior periods. The 2012 benefits costs included $2.4 million, or $2 per worksite employee per month in claim costs for higher than expected run-off of claims incurred in prior periods. The percentage of worksite employees covered under our health insurance plans was
72.1%
in the
2013
period compared to
72.3%
in the
2012
period. Please read
Note 2
to the Consolidated Financial Statements, “
Accounting Policies
– Health Insurance Costs,” for a discussion of our accounting for health insurance costs.
|
•
|
Workers’ compensation costs
– Workers’ compensation costs
increased
2.6%
, but remained flat on a per worksite employee per month basis compared to the first
nine
months of
2012
. As a percentage of non-bonus payroll cost, workers’ compensation costs were
0.54%
in the
2013
period compared to
0.56%
in the
2012
period. During the
2013
period, we recorded reductions in workers’ compensation costs of
$8.3 million
, or
0.11%
of non-bonus payroll costs, for changes in estimated losses related to prior reporting periods, compared to
$10.4 million
, or
0.15%
of non-bonus payroll costs in the
2012
period. Please read
Note 2
to the Consolidated Financial Statements, “
Accounting Policies
– Workers’ Compensation Costs,” for a discussion of our accounting for workers’ compensation costs.
|
•
|
Payroll tax costs
– Payroll taxes
increased
3.3%
, or
$8
per worksite employee per month compared to the first
nine
months of
2012
, primarily due to the
4.2%
increase
in payroll costs and a $2.9 million, or $3 per worksite employee per
|
|
|
Nine Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
||||||||||
|
|
(in thousands)
|
|
(per worksite employee per month)
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Salaries, wages and payroll taxes
|
|
$
|
137,697
|
|
|
$
|
127,402
|
|
|
8.1
|
%
|
|
$
|
121
|
|
|
$
|
114
|
|
|
6.1
|
%
|
Stock-based compensation
|
|
8,351
|
|
|
7,385
|
|
|
13.1
|
%
|
|
7
|
|
|
7
|
|
|
—
|
|
||||
Commissions
|
|
10,349
|
|
|
10,299
|
|
|
0.5
|
%
|
|
9
|
|
|
9
|
|
|
—
|
|
||||
Advertising
|
|
19,243
|
|
|
17,001
|
|
|
13.2
|
%
|
|
17
|
|
|
15
|
|
|
13.3
|
%
|
||||
General and administrative expenses
|
|
62,592
|
|
|
61,694
|
|
|
1.5
|
%
|
|
55
|
|
|
55
|
|
|
—
|
|
||||
Depreciation and amortization
|
|
15,692
|
|
|
13,336
|
|
|
17.7
|
%
|
|
14
|
|
|
12
|
|
|
16.7
|
%
|
||||
Total operating expenses
|
|
$
|
253,924
|
|
|
$
|
237,117
|
|
|
7.1
|
%
|
|
$
|
223
|
|
|
$
|
212
|
|
|
5.2
|
%
|
•
|
Salaries, wages and payroll taxes of corporate and sales staff
increased
8.1%
, or
$7
per worksite employee per month compared to the
2012
period. This increase was primarily due to a
6.2%
rise in headcount.
|
•
|
Stock-based compensation
increased
13.1%
, but remained flat on a per worksite employee per month basis compared to the
2012
period, primarily due to an increase in the weighted average market value on the date of grant associated with restricted stock awards. Stock-based compensation expense represents amortization of restricted stock awards granted to employees.
|
•
|
Commissions expense
increased
0.5%
and remained flat on a per worksite employee per month basis compared to the
2012
period.
|
•
|
Advertising costs
increased
13.2%
, or
$2
per worksite employee per month compared to the
2012
period, primarily due to increased spending on health care reform related advertising and business promotions.
|
•
|
General and administrative expenses
increased
1.5%
, but remained flat on a per worksite employee per month basis compared to the
2012
period, primarily due to increased travel, training and repairs and maintenance, partially offset by reductions in professional services and bad debts.
|
•
|
Depreciation and amortization expense
increased
17.7%
, or
$2
per worksite employee per month compared to the
2012
period, primarily due to investments in our technology infrastructure and amortization associated with our Adjacent Business investments.
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
||||||||||
|
|
(in thousands, except per worksite employee per month data)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP to non-GAAP reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Payroll cost (GAAP)
|
|
$
|
2,696,330
|
|
|
$
|
2,556,114
|
|
|
5.5
|
%
|
|
$
|
8,036,532
|
|
|
$
|
7,712,302
|
|
|
4.2
|
%
|
Less: Bonus payroll cost
|
|
192,868
|
|
|
156,723
|
|
|
23.1
|
%
|
|
706,795
|
|
|
728,589
|
|
|
(3.0
|
)%
|
||||
Non-bonus payroll cost
|
|
$
|
2,503,462
|
|
|
$
|
2,399,391
|
|
|
4.3
|
%
|
|
$
|
7,329,737
|
|
|
$
|
6,983,713
|
|
|
5.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Payroll cost per worksite employee per month (GAAP)
|
|
$
|
6,954
|
|
|
$
|
6,704
|
|
|
3.7
|
%
|
|
$
|
7,062
|
|
|
$
|
6,888
|
|
|
2.5
|
%
|
Less: Bonus payroll cost per worksite employee per month
|
|
498
|
|
|
411
|
|
|
21.2
|
%
|
|
621
|
|
|
651
|
|
|
(4.6
|
)%
|
||||
Non-bonus payroll cost per worksite employee per month
|
|
$
|
6,456
|
|
|
$
|
6,293
|
|
|
2.6
|
%
|
|
$
|
6,441
|
|
|
$
|
6,237
|
|
|
3.3
|
%
|
•
|
Timing of client payments / payroll levels –
We typically collect our comprehensive service fee, along with the client’s payroll funding, from clients at least one day prior to the payment of worksite employee payrolls and associated payroll taxes. Therefore, the last business day of a reporting period has a substantial impact on our reporting of operating cash flows. For example, many worksite employees are paid on Fridays; therefore, operating cash flows decrease in the reporting periods that end on a Friday or a Monday. In the period ended
September 30, 2013
, the last business day of the reporting period was a
Monday
, client prepayments were
$9.0 million
and accrued worksite employee payroll was
$184.1 million
. In the period ended
September 30, 2012
, the last business day of the reporting period was a
Friday
, client prepayments were
$12.4 million
and accrued worksite employee payroll was
$174.3 million
.
|
•
|
Workers’ compensation plan funding –
Under our workers’ compensation insurance arrangements, we make monthly payments to the carriers comprised of premium costs and funds to be set aside for payment of future claims (“claim funds”). These pre-determined amounts are stipulated in our agreements with the carriers, and are based primarily on anticipated worksite employee payroll levels and workers’ compensation loss rates during the policy year. Changes in payroll levels from those that were anticipated in the arrangements can result in changes in the amount of cash payments, which will impact our reporting of operating cash flows. Our claim funds paid, based upon anticipated worksite employee payroll levels and workers’ compensation loss rates, were
$33.5 million
in the first
nine
months of
2013
and
$32.1 million
in the first
nine
months of
2012
. However, our estimate of workers’ compensation loss costs was
$29.7 million
in the
2013
period and
$27.9 million
in the
2012
period, respectively. During the first
nine
months of 2013, we paid the insurance carrier an additional
$5.0 million
in claim funds for policy years prior to
2013
. During the first
nine
months of 2012, we received
$2.5 million
for the return of excess claim funds related to the workers' compensation program, which resulted in an increase to 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 solely determined by United based primarily upon recent claim history and anticipated cost trends, also have a significant impact on our operating cash flows. At
September 30, 2013
, premiums owed and cash funded to United have exceeded Plan Costs, resulting in a
$16.4 million
surplus,
$7.4 million
of which is reflected as a current asset, and
$9.0 million
of which is reflected as a long-term asset on our Consolidated Balance Sheets. The premiums owed to United at
September 30, 2013
, were
$3.5 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
decreased
13.6%
to
$26.7 million
in the
nine months ended September 30, 2013
, compared to
$31.0 million
in the
nine months ended September 30, 2012
, due to higher operating expenses and a
$2.7 million
non-cash impairment charge on a minority investment. Please read “Results of Operations
–
Nine Months Ended September 30, 2013
Compared to
Nine Months Ended September 30, 2012
.”
|
Period |
Total Number of Shares Purchased
(1)(2)
|
Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Program
(1)
|
Maximum Number of Shares that may yet be Purchased under the Program
(1)
|
|||||
07/01/2013 – 07/31/2013
|
184
|
|
$
|
33.07
|
|
—
|
|
1,413,845
|
|
08/01/2013 – 08/31/2013
|
29,496
|
|
33.02
|
|
29,496
|
|
1,384,349
|
|
|
09/01/2013 – 09/30/2013
|
31,780
|
|
32.35
|
|
31,780
|
|
1,352,569
|
|
|
Total
|
61,460
|
|
$
|
32.67
|
|
61,276
|
|
1,352,569
|
|
(1)
|
Our Board has approved a program to repurchase up to
15.5
million shares of our outstanding common stock. During the three months ended
September 30, 2013
,
61,276
shares were repurchased under the program and
184
shares were withheld to satisfy tax withholding obligations for the vesting of restricted stock awards. As of
September 30, 2013
, we were authorized to repurchase an additional
1,352,569
shares under the program. Unless terminated earlier by resolution of the Board, the repurchase program will expire when we have repurchased all shares authorized for repurchase under the repurchase program.
|
(2)
|
These shares include shares of restricted stock that were withheld to satisfy tax-withholding obligations arising in conjunction with the vesting of restricted stock. The required withholding is calculated using the closing sales price reported by the New York Stock Exchange on the date prior to the applicable vesting date. These shares are not subject to the repurchase program described above.
|
|
(a)
|
List of Exhibits
|
|
31.1
|
*
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
*
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
**
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
**
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
*
|
XBRL Instance Document.
(1)
|
101.SCH
|
*
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
*
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
*
|
XBRL Extension Definition Linkbase Document.
|
101.LAB
|
*
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
*
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
____________________________________
|
|
|
|
|
|
|
|
*
|
Filed with this report.
|
|
|
|
|
|
|
**
|
Furnished with this report
|
(1)
|
Attached as exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Operations for the
three and nine
month periods ended
September 30, 2013
and
2012
; (ii) the Consolidated Statements of Comprehensive Income for the
three and nine
month periods ended
September 30, 2013
and
2012
; (iii) the Consolidated Balance Sheets at
September 30, 2013
and
December 31, 2012
; (iv) the Consolidated Statement of Stockholders’ Equity for the
nine
month period ended
September 30, 2013
; (v) the Consolidated Statements of Cash Flows for the
nine
month periods ended
September 30, 2013
and
2012
; and (vi) Notes to the Consolidated Financial Statements.
|
|
Insperity, Inc.
|
|
|
|
|
Date: November 1, 2013
|
By:
|
/s/ Douglas S. Sharp
|
|
|
Douglas S. Sharp
|
|
|
Senior Vice President of Finance,
|
|
|
Chief Financial Officer and Treasurer
|
|
|
(Principal Financial and Duly Authorized Officer)
|
1 Year Insperity Chart |
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