UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

TRINET GROUP, INC.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

The number of shares of Registrant’s Common Stock outstanding as of JulyOctober 24, 2017 was 69,385,775.69,485,274.

Cautionary Note Regarding Forward-Looking Statements and Other Financial Information

For purposes of this report the terms “TriNet," "the Company," “we,” “us” and “our" refer to TriNet Group, Inc., and its consolidated subsidiaries. This report contains statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or otherwise contain forward-looking statements within the meaning of Section 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements.

Our Management's Discussion & Analysis of Financial Condition and Results of Operations (MD&A) includes references to our performance measures presented in accordanceconformity with U.S. Generally Accepted Accounting Principlesaccounting principles generally accepted in the United States of America (GAAP) and other non-GAAP financial measures that we use to manage our business, make planning decisions, allocate resources and as performance measures in our executive compensation plan. Refer to the Non-GAAP Financial Measures in our Key Financial and Operating Metrics section within our MD&A for definitions and reconciliations from GAAP measures.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

We are a leading provider of human resources (HR) solutions for small to midsize businesses (SMBs). Under our co-employment model, we assume certain of the responsibilities of being an employer and help our clients mitigate employer-related risks and manage many of the complex and burdensome responsibilities of being an employer, helping our clients minimize employer-related risks and manage administrative and compliance responsibilities associated with employment.

We deliver a comprehensive suite of products and services, which allow our clients and their worksite employees (WSEs) to administer and manage HR-related functions, including compensation and benefits, payroll and other transactional HR needs, employee data, and health insurance and workers' compensation programs, using our technology platform and HR expertise.

We operate in one reportable segment. Less than 1% of revenue is generated outside of the U.S.

Our technology platform provides our clients and WSEs online and mobile tools to store, view, and manage core HR information and administer a variety of HR transactions, such as payroll processing, tax administration, employee onboarding and termination, compensation reporting, expense management, and benefits enrollment and administration.

We use the collective insights and experience of our teams of HR, benefits, risk management, and compliance professionals to help clients mitigatemanage many of the administrative, regulatory, and practical risks associated with their responsibilities as employers. Our teams provide HR expertisesexpertise to assist our clients in talent management, recruiting and training, performance management,running their business by providing a variety of HR services, including employee onboarding and terminations, benefits enrollment and support, claims administration and employment practices risk management. In addition, we have the ability to provide benchmarking datamanagement and relevant HR formadministration, talent management, recruiting and document templates to our clients to help them run their business.training, and performance management. Under our vertical strategy, we tailorseek to design our product and service offerings tofor specific industries by identifying common needs and leveraging scale and shared experience to provide more efficient and relevant offerings.

We offer our WSEs access to a broad range of TriNet-sponsored benefit and insurance programs that many of our clients may be unable to obtain for their WSEs on their own and that are compliant with state, local, and federal regulations. Our benefit and insurance service offerings include plan design and administration, enrollment management, and WSE and client communications relating to our sponsored benefits and insurance programs.

We pay premiums to third-party insurance carriers for WSE insurance benefits and reimburse the insurance carriers and third-party administrators for claims payments made on our behalf within our insurance deductible layer, where applicable.

Our products and services are designed to help our clients comply with local, state, and federal employment and benefit laws. We monitor employer-related legal and regulatory developments and assist clients in complying with changing regulations and requirements at all levels, from changes in local minimum wage and family leave ordinances to sweeping reforms such as the Patient Protection and Affordable Care Act (ACA). Often these changes are staggered and require additional guidance from a variety of local, state or federal agencies, making compliance a continuous challenge. Each component of our HR solutions is designed with compliance in mind, whether it is payroll processing and tax administration, HR services focused on creating a compliant workplace, or offering ACA-compliant benefit plans.

Our consolidated results for the first sixnine months of 2017 reflect our continued progress with vertical productproducts and insurance service offerings combined with slower growth in insurance costs as a result of favorable experience in our health programs and cost management with our insurance providers.

We also experienced modest Average WSE growth as compared to the first six months of 2016 as we continued our migration from legacy platforms to our common TriNet platform. Furthermore, we moderated our new customer growth as we prepared for the launch of TriNet Main Street, our new industry vertical product.

Over the last year, we have benefited from our scale as we decreased administrative costs associated with our insurance offerings and are bringing forward this benefit to our clients. In October 2017, we launched the 2017 Fee Credit initiative designed to reward a portion of our existing clients. This incentive will be based on our full-year 2017 results and we are currently onboardingexpect our clients to receive the incentives under the program in the first quarter of 2018. The credit will be treated as a reduction of revenues.

Additionally in October 2017, we changed the contract terms with one of our health insurers. Previously we contracted with this carrier on a fully insured, guaranteed-cost basis; under this new clientsarrangement we will be responsible for this product.reimbursement of claim payments within our deductible layer.

During the secondthird quarter of 2017, we:

Our financial performance for the secondthird quarter of 2017, compared to the same period in 2016, included:

Key Financial and Operating Metrics

The following key financial and operating metrics should be read in conjunction with our condensed consolidated financial statements and related notes included in this Form 10-Q.

In addition to financial measures presented in accordance with GAAP, we monitor other non-GAAP financial measures that we use to manage our business, make planning decisions, allocate resources and as performance measures in our executive compensation plan. These key financial measures provide an additional view of our operational performance over the long termlong-term and provide useful information that we use in order to maintain and grow our business.

Reconciliation of GAAP to Non-GAAP Measures

The table below presents a reconciliation of Insurance service revenues to Net Insurance Service Revenues:

The table below presents a reconciliation of Net income to Adjusted EBITDA:

The table below presents a reconciliation of Net income to Adjusted Net Income:

Results of Operations

Q2Q3 2017 - Q2Q3 2016 Commentary

YTD 2017 - YTD 2016 Commentary

Historically, Total WSE comparisons have served as an indicator of our success in growing our business and retaining clients. Average WSE growth is another volume measure we use to monitor the performance of our business.

Average WSEs was flatdecreased 2% in the secondthird quarter of 2017 compared to the same period in 2016 and increased 2%remained flat in the first halfnine months of 2017 compared to the same period in 2016. This 2% increase was driven byThe quarter and year to date changes in Average WSEs are a result of WSE growth in our established customer base, largely offset by higher attrition, resultingincluding attrition from migrating our disciplined approach of migrating clients to a common platform. Furthermore, we moderated our new customer growth as we prepared forexpanded the launchfunctionality of our new industry vertical, TriNet Main Street.

Anticipated revenues for future periods can diverge from Total WSEs due to pricing differences across our HR solutions and services and the degree to which clients and WSEs elect to participate in our solutions. In addition to driving the growth in WSE count, we also focus on pricing strategies and product differentiation to maximize our revenue opportunities. Average monthly total revenues per WSE, as a measure to monitor the success of such pricing strategies, have increased 7%9% and 8% in the secondthird quarter and first halfnine months of 2017, respectively, compared to the same periods in 2016.

Insurance service revenues represented 86% of total revenue in the secondthird quarter and first halfnine months of 2017. Insurance service revenues increased 9%7% and 10%9% in the secondthird quarter and first halfnine months of 2017, respectively, when compared to the same periods in 2016. The growth in insurance service revenues for the secondthird quarter and first half of 2017 was equally attributable to increased participation in our health plans andcombined with an equal increase in health insurance service fees per plan participant. The growth in insurance service revenues for the first nine months of 2017 was primarily attributable to increased participation in our health plans combined with an increase in health insurance service fees per plan participant.

Insurance costs remained consistentincreased 1% and 3% for the secondthird quarter and first nine months of 2017, when compared to the same period in 2016, with flat Average WSEs and costs per Average WSE.

Other operating expenses includes cost of providing services (COPS), sales and marketing (S&M), general and administrative (G&A), and systems development and programming (SD&P) expenses.

We manage other operating expenses and allocate resources across different business functions based on percentage of Net Service Revenues. This ratio has decreased to 68%65% from 76% in the secondthird quarter of 2017 and has decreased to 70%68% from 77% in the first halfnine months of 2017, when compared to the same periods in 2016. These decreases are due to our revenues increasing faster than other operating expenses.

We had approximately 2,700 corporate employees as of JuneSeptember 30, 2017 in 4847 offices across the U.S. Our corporate employees' compensation related expenses represent a majority of our operating expenses. Compensation costs for our corporate employees include payroll, payroll taxes, stock-based compensation, bonuses, commissions and other payroll and benefits related costs. The percentage of compensation related expense to other operating expense has decreased to 66%62% from 70%65% in the secondthird quarter of 2017, and has decreased to 65%64% from 68%67% in in the first halfnine months of 2017, when compared to the same periods in 2016. These decreases are primarily due to increased non-compensation related costs associated with our vertical product development, platform integrations, and internal control remediation efforts.

We expect our operating expenses to increase in the foreseeable future due to expected growth, our continued strategy to develop new vertical products, andcontinued platform integrations, and additional costs associated with our internal control remediation efforts. We will continue to improve our systems, processes, and internal controls to gain efficiencies.controls. These expenses may fluctuate as a percentage of our total revenues from period-to-period depending on the timing of when expenses are incurred.

Q2Q3 2017 - Q2Q3 2016 Commentary

Other operating expenses increased $23.2$11.9 million or 20%10% in the secondthird quarter of 2017 compared to the same period in 2016 as part of our continued investment in supporting our infrastructure, and improving our technology platform user experience for our clients.clients, and our internal control remediation efforts. Significant drivers of our increased spending are as follows:

Other operating expenses increased $36.7$48.6 million, or 15%13%, in the first halfnine months of 2017 compared to the same period in 2016. Significant drivers of our increased spending are as follows:

Amortization of intangible assets represents costs associated with acquired companies' developed technologies, client lists, trade names and contractual agreements. Amortization expenses decreased 74%72% and 73% in the secondthird quarter and first halfnine months of 2017, respectively, compared to the same periods in 2016, as a result of the revision to the expected useful life in October 2016 of certain client lists and trademarks primarily related to our previous acquisitions.

Depreciation expense increased 42% and 49% in the secondthird quarter and first halfnine months of 2017, respectively, compared to the same periods in 2016, as a result of our additional investment in technology products and platforms and the associated depreciation of those assets.

Our effective income tax rate (ETR) was 23.5%26.3% and 38.4% for the second quarter ofthree months ended September 30, 2017 compared to an ETR of 42.9%and 2016, respectively, and 28.2% and 41.8% for the same period in 2016. The 19.4% decrease in ETR isnine months ended September 30, 2017 and 2016, respectively. These decreases are primarily due to the following:

Liquidity and Capital Resources

We manage our liquidity separately between assets and liabilities that are WSE related from our corporate assets and liabilities.

WSE related assets and liabilities primarily consist of current assets and current liabilities resulting from transactions directly or indirectly associated with WSEs, including payroll and related taxes and withholdings, our sponsored workers' compensation and health insurance programs, and other benefit programs. Our cash flows related to WSE payroll and benefits is generally matched by advance collection from our clients which is reported as payroll funds collected within WSE related assets.

We report our corporate cash and cash equivalents on the condensed consolidated balance sheets separately from WSE related assets. We rely on our corporate cash and cash equivalents and cash from operations to satisfy our operational and regulatory requirements and to fund capital expenditures. We believe that we have sufficient corporate liquidity and capital resources to satisfy future requirements and meet our obligations to clients, creditors and debt holders. We believe that our existing corporate cash and cash equivalents, working capital and cash provided by operating activities will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months.

Our liquid assets are as follows:

We manage our sponsored benefit and workers' compensation insurance obligations by maintaining funds in restricted cash, cash equivalents and investments as collateral. As of JuneSeptember 30, 2017, we had $155.3$157.0 million of restricted cash, cash equivalents and investments included in WSE related assets and $150.9$160.2 million of marketable securities designated as long-term restricted cash, cash equivalents and investments on the condensed consolidated balance sheets. These collateral amounts are generally determined at the beginning of each plan year and we may be required by our insurance carriers to adjust the balance when facts and circumstances change. We regularly review our collateral balances with our insurance carriers, and anticipate funding further collateral as needed based on program development.

We believe that we can meet our present and reasonably foreseeable operating cash needs and future commitments through existing liquid assets, continuing cash flows from operations, our borrowing capacity under our revolving credit facility and the potential issuance of debt or equity securities.

We maintain a $75.0 million revolving credit facility. The total unused portion of our revolving credit facility was $59.5 million as of JuneSeptember 30, 2017.

We generated positive cash flows from operating activities for the first halfnine months of 2017 and 2016. We also have borrowing capacity under our revolving credit facility and the potential to generate cash through the issuance of debt or equity securities, to meet short-term funding requirements. The following table presents our cash flow activities for the stated periods:

Investing Activities

Net cash used in investing activities in the first halfnine months of 2017 and 2016 primarily consisted of cash paid for capital expenditures, offset partially by proceeds from the maturity of investments.

Capital expenditures increased in the first halfnine months of 2017 compared to the same period in 2016, primarily due to the build out of our technology and client service centers. We also increased our investments in software and hardware to introduce new products, enhance existing products and platforms, as well as complete platform integrations. We expect capital investments in our software and hardware to continue in the future.

We invest cash held as collateral to satisfy our long-term obligation towards the workers' compensation liabilities in U.S. long-term treasuries and mutual funds. We review the amount of investment and the anticipated holding period regularly, in conjunction with our estimated long-term workers' compensation liabilities and anticipated claims payment trend.

Financing Activities

Net cash used in financing activities in the first halfnine months of 2017 and 2016 consisted primarily of repurchases of our common stock and repayment of debt.

The board of directors from time to time authorizes stock repurchases of our outstanding common stock primarily to offset dilution from the issuance of stock under our equity-based incentive plan and employee stock purchase plan. During the first halfnine months of 2017, we repurchased 1.11.4 million shares of common stock for $29.5$39.3 million. As of JuneSeptember 30, 2017, approximately $30.5$20.7 million remained available for repurchase. Our debt repayments were also $3.7 million lower in the first half of 2017 compared to the same periods in 2016.

Critical Accounting Policies, Estimates and Judgments

There have been no material changes to our critical accounting policies as discussed in our 2016 Form 10-K.

Recent Accounting Pronouncements

Refer to Note 1 in the condensed consolidated financial statements and related notes included in this Form 10-Q.

Quantitative and Qualitative Disclosures About Market Risk

There has been no material change in our exposure to market risks from that discussed in Item 7A of our 2016 Form 10-K.

Controls and Procedures

We have, with the participation of our Chief Executive Officer (CEO) and our Chief Financial Officer (CFO), evaluated the effectiveness of our disclosure controls and procedures as of JuneSeptember 30, 2017. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures as of JuneSeptember 30, 2017, our Chief Executive OfficerCEO and Chief Financial OfficerCFO concluded that, as of such date, our disclosure controls and procedures were not effective as a result of the material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Notwithstanding the material weaknesses in our internal control over financial reporting, we have concluded that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America. Additionally, the material weaknesses did not result in any restatements of our condensed consolidated financial statements or disclosures for any prior period.

We are taking specific steps to remediate the material weaknesses identified by management and described in greater detail in our 2016 Form 10-K. Although we intend to complete the remediation process with respect to these material weaknesses as quickly as possible, we cannot at this time estimate how long it will take, and our remediation plan may not prove to be successful.

Because the reliability of the internal control process requires repeatable execution, the successful remediation of these material weaknesses will require review and evidence of effectiveness prior to concluding that the controls are effective and there is no assurance that additional remediation steps will not be necessary. As such, as we continue to evaluate and work to improve our internal control over financial reporting, our management may decide to take additional measures to address the material weaknesses or modify the remediation steps already underway. As noted above, although we plan to complete the remediation process as quickly as possible, we cannot at this time estimate how long it will take, and our initiatives may not prove to be successful. Accordingly, until these weaknesses are remediated, we plan to perform additional analyses and other procedures to ensure that our condensed consolidated financial statements are prepared in accordance with GAAP.

Other than the remediation efforts underway, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended JuneSeptember 30, 2017, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

See accompanying notes.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSINCOME AND COMPREHENSIVE INCOME

 

NOTE 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

TriNet Group Inc. (TriNet, or the Company, we, our and us), a professional employer organization (PEO) founded in 1988, provides comprehensive human resources (HR) solutions for small to midsize businesses (SMBs) under a co-employment model. These HR solutions include bundled services, such as multi-state payroll processing and tax administration, employee benefits programs, including health insurance and retirement plans, workers' compensation insurance and claims management, employment and benefit law compliance, and other services. Through the co-employment relationship, we are the employer of record for most administrative and regulatory purposes, including:

Our clients are responsible for the day-to-day job responsibilities of the worksite employees (WSEs).

We operate in one reportable segment. All of our service revenues are generated from external clients. Less than 1% of revenue is generated outside of the U.S.

These unaudited condensed consolidated financial statements (Financial Statements) and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Rules and Regulations of the Securities and Exchange Commission (SEC). Certain information and note disclosures included in the annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The results of operations for the secondthird quarter of 2017 are not necessarily indicative of the operating results anticipated for the full year. These Financial Statements should be read in conjunction with the audited Consolidated Financial Statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2016 (2016 Form 10-K).

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect certain reported amounts and related disclosures. Significant estimates include:

These estimates are based on historical experience and on various other assumptions that we believe to be reasonable from the facts available to us. Some of the assumptions are highly uncertain at the time of estimation. To the extent actual experience differs from the assumptions used, our consolidated financial statements could be materially affected.

Recently adopted accounting guidance

Upon adoption, excess tax benefits or deficiencies from share-based award activity were reflected in the condensed consolidated statements of income as a component of the provision for income taxes, whereas they previously were recognized in equity. We also elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The adoption of ASU 2016-09 resulted in a net cumulative-effect adjustment of $0.3 million, reflected as an increase to retained earnings as of January 1, 2017, mostly related to the recognition of the previously unrecognized excess tax benefits using the modified retrospective method. The previously unrecognized excess tax effects were recorded as an increase to deferred tax assets.

Recently issued accounting pronouncements

The amendment is effective for annual reporting periods, and interim periods within those years beginning after December 15, 2018. We currently anticipate adoption of the new standard effective January 1, 2019.

We anticipate this standard will have a material impact on our condensed consolidated financial statements. While we are continuing to assess all potential impacts of the standard, we currently believe the most significant impact relates to our accounting for equipment, office and data-center operating leases.

 

Under the modified retrospective method, the new standard will be applied to all contracts initiated on or after the effective date. For contracts with remaining obligations as of the effective date, opening retained earnings will be adjusted for the cumulative effect of the change to the new standard as of the effective date.

We anticipate this standard will have a material impact on our condensed consolidated financial statements. While we are continuingdo not anticipate this standard will result in a material adjustment to assess all potential impacts of thebeginning balance retained earnings, we do anticipate this standard will have a material impact on our condensed consolidated financial statements on a prospective basis. Specifically, we currently believe the adoption will have a material impact on our accounting for sales commission expense, deferred revenue, income tax provision and deferred taxes. We anticipate that certain client acquisition costs will be deferred over the expected client tenure. We expect our professional service revenues and insurance service revenues will remain substantially unchanged. The actual revenue recognition treatment required under the standard will be dependent on contract specific terms, and may vary in some instances from recognition at the time of billing.

As of JuneSeptember 30, 2017 and December 31, 2016, we had total restricted cash, restricted cash equivalents and payroll funds collected of $741.1$748.5 million and $1.0 billion, respectively. Currently, changes in these balances are presented as operating cash activities in the condensed consolidated statements of cash flows. Under the new guidance, changes in these amounts will be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the condensed consolidated statements of cash flows.

Although there are several other new accounting pronouncements issued or proposed by the FASB, which we have adopted or will adopt, as applicable, we do not believe any of these other accounting pronouncements have had or will have a material impact on its consolidated financial position, operating results or statements of cash flows.

NOTE 2. CASH, CASH EQUIVALENTS AND INVESTMENTS

Under the terms of the agreements with certain of our workers' compensation and health benefit insurance carriers, we are required to maintain collateral in trust accounts for the benefit of specified insurance carriers and to reimburse the carriers’ claim payments within our deductible layer. We invest a portion of the collateral amounts in marketable securities. We report the current portion of these trust accounts as restricted cash and cash equivalents in WSE related assets, and the long termlong-term portion as restricted cash, cash equivalents and investments on the condensed consolidated balance sheets.

We require our clients to prefund their payroll and related taxes and other withholding liabilities before payroll is processed or due for payment. These amounts that are prefunded by clients are included in WSE related assets as payroll funds collected and are designated to pay pending payrolls and other WSE related liabilities.

Our total corporate and WSE related cash, cash equivalents and investments are summarized below:

NOTE 3. WORKSITE EMPLOYEE RELATED ASSETS AND LIABILITIES

WSE related assets and WSE related liabilities are intended to be reviewed together when considering the financial position of the Company. Our clients direct the price and service specifications for payroll and payroll taxes and as a result, we are not the primary obligor for payroll and payroll tax payments and therefore record these amounts net in our statements of income and comprehensive income. However, we record without offset, accrued wages and payroll tax liabilities for WSEs in WSE related liabilities with the related payroll funds collected and unbilled revenues in WSE related assets. We have classified these assets and liabilities and other service related amounts collectively as WSE related, to present a clearer picture of the inter-relationship of the balances and distinguish these from our other corporate assets and liabilities.

In addition to unbilled revenues, accrued wages and payroll tax liabilities, other significant balances included in the WSE related assets and liabilities include:

Included in the payroll tax liabilities and insurance premiums and other payables were amounts relating to approximately 2,700 and 2,600 corporate employees at JuneSeptember 30, 2017 and December 31, 2016, respectively.

NOTE 4. WORKERS' COMPENSATION LOSS RESERVES

The following table summarizes the workers’ compensation loss reserve activity for the three and sixnine months ended JuneSeptember 30, 2017 and 2016: