Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 28, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 1-13998 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 76-0479645 | |
Entity Address, Address Line One | 19001 Crescent Springs Drive | |
Entity Address, City or Town | Kingwood, | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77339 | |
City Area Code | 281 | |
Local Phone Number | 358-8986 | |
Title of 12(b) Security | Common Stock, $.01 par value per share | |
Entity Trading Symbol | NSP | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 39,997,882 | |
Entity Registrant Name | INSPERITY, INC. | |
Entity Central Index Key | 0001000753 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Cash and cash equivalents | $ 243,439 | $ 326,773 |
Restricted cash | 45,251 | 42,227 |
Marketable securities | 60,880 | 60,781 |
Accounts receivable, net | 483,890 | 400,623 |
Prepaid insurance | 22,161 | 8,411 |
Other current assets | 26,438 | 27,721 |
Income taxes receivable | 11,684 | 0 |
Total current assets | 893,743 | 866,536 |
Property and equipment, net of accumulated depreciation | 134,956 | 117,213 |
Right-of-use leased assets | 58,185 | 0 |
Prepaid health insurance | 9,000 | 9,000 |
Deposits – health insurance | 6,600 | 6,200 |
Deposits – workers’ compensation | 170,032 | 166,474 |
Goodwill and other intangible assets, net | 12,717 | 12,726 |
Deferred income taxes, net | 157 | 8,816 |
Other assets | 6,732 | 4,851 |
Total assets | 1,292,122 | 1,191,816 |
Current liabilities: | ||
Accounts payable | 5,373 | 10,622 |
Payroll taxes and other payroll deductions payable | 180,617 | 261,166 |
Accrued worksite employee payroll cost | 411,457 | 329,979 |
Accrued health insurance costs | 33,239 | 35,153 |
Accrued workers’ compensation costs | 48,927 | 45,818 |
Accrued corporate payroll and commissions | 39,414 | 60,704 |
Other accrued liabilities | 42,185 | 28,890 |
Total current liabilities | 761,212 | 772,332 |
Noncurrent liabilities: | ||
Accrued workers’ compensation costs | 190,390 | 187,412 |
Long-term debt | 239,400 | 144,400 |
Operating lease liabilities, net of current | 60,132 | 0 |
Other accrued liabilities, net of current | 0 | 9,996 |
Total noncurrent liabilities | 489,922 | 341,808 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock | 555 | 555 |
Additional paid-in capital | 46,401 | 36,752 |
Treasury stock, at cost | (496,917) | (357,569) |
Retained earnings | 490,949 | 397,938 |
Total stockholders’ equity | 40,988 | 77,676 |
Total liabilities and stockholders’ equity | $ 1,292,122 | $ 1,191,816 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenues(1) | $ 1,043,388 | $ 925,126 | $ 3,239,714 | $ 2,861,793 |
Payroll taxes, benefits and workers’ compensation costs | 872,842 | 759,072 | 2,668,716 | 2,341,475 |
Gross profit | 170,546 | 166,054 | 570,998 | 520,318 |
Salaries, wages and payroll taxes | 79,264 | 70,552 | 237,340 | 226,486 |
Stock-based compensation | 6,517 | 5,769 | 20,813 | 14,656 |
Commissions | 8,034 | 6,818 | 22,727 | 19,863 |
Advertising | 4,895 | 3,846 | 17,474 | 13,996 |
General and administrative expenses | 29,773 | 25,294 | 92,801 | 82,565 |
Depreciation and amortization | 7,330 | 5,642 | 20,929 | 16,335 |
Total operating expenses | 135,813 | 117,921 | 412,084 | 373,901 |
Operating income | 34,733 | 48,133 | 158,914 | 146,417 |
Other income (expense): | ||||
Interest income | 2,574 | 2,028 | 8,621 | 5,291 |
Interest expense | (2,122) | (1,174) | (5,442) | (3,352) |
Income before income tax expense | 35,185 | 48,987 | 162,093 | 148,356 |
Income tax expense | 9,326 | 12,780 | 31,389 | 37,598 |
Net income | 25,859 | 36,207 | 130,704 | 110,758 |
Less distributed and undistributed earnings allocated to participating securities | (284) | (503) | (1,546) | (1,546) |
Net income allocated to common shares | $ 25,575 | $ 35,704 | $ 129,158 | $ 109,212 |
Basic net income per share of common stock (in dollars per share) | $ 0.64 | $ 0.86 | $ 3.19 | $ 2.64 |
Diluted net income per share of common stock (in dollars per share) | $ 0.63 | $ 0.86 | $ 3.18 | $ 2.63 |
Revenue Composition [Abstract] | ||||
Gross billings | $ 6,555,865 | $ 5,810,779 | $ 19,804,549 | $ 17,284,477 |
Worksite employee payroll cost | 5,512,477 | 4,885,653 | 16,564,835 | 14,422,684 |
Revenues(1) | $ 1,043,388 | $ 925,126 | $ 3,239,714 | $ 2,861,793 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities | ||
Net income | $ 130,704 | $ 110,758 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 20,929 | 16,335 |
Stock-based compensation | 20,813 | 14,656 |
Deferred income taxes | 8,659 | (591) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (83,267) | (66,020) |
Prepaid insurance | (13,750) | (2,973) |
Other current assets | 1,283 | 2,717 |
Other assets | (2,709) | (1,760) |
Accounts payable | (5,249) | (1,131) |
Payroll taxes and other payroll deductions payable | (80,549) | (99,161) |
Accrued worksite employee payroll expense | 81,478 | 72,713 |
Accrued health insurance costs | (1,914) | 7,383 |
Accrued workers’ compensation costs | 6,087 | 19,405 |
Accrued corporate payroll, commissions and other accrued liabilities | (22,830) | (11,887) |
Income taxes payable/receivable | (12,609) | 9,885 |
Total adjustments | (83,628) | (40,429) |
Net cash provided by operating activities | 47,076 | 70,329 |
Marketable securities: | ||
Purchases | (90,909) | (54,754) |
Proceeds from dispositions | 5,799 | 16,299 |
Proceeds from maturities | 85,480 | 2,650 |
Property and equipment: | ||
Purchases | (35,968) | (21,519) |
Net cash used in investing activities | (35,598) | (57,324) |
Cash flows from financing activities: | ||
Purchase of treasury stock | (153,668) | (16,236) |
Dividends paid | (36,777) | (25,170) |
Borrowings under revolving line of credit | 95,000 | 0 |
Other | (7,215) | (1,613) |
Net cash used in financing activities | (88,230) | (39,793) |
Net decrease in cash, cash equivalents and restricted cash | (76,752) | (26,788) |
Cash, cash equivalents and restricted cash beginning of period | 535,474 | 549,612 |
Cash, cash equivalents and restricted cash end of period | 458,722 | 522,824 |
Supplemental Cash Flow Information [Abstract] | ||
Cash and cash equivalents | 243,439 | 328,299 |
Restricted cash | 45,251 | 42,257 |
Deposits workers compensation | 170,032 | 152,268 |
ROU assets obtained in exchange for lease obligations | $ 21,980 | $ 0 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Additional Paid-In Capital [Member] | Treasury Stock [Member] | Retained Earnings [Member] |
Balance at Dec. 31, 2017 | $ 66,321 | $ 555 | $ 25,337 | $ (256,363) | $ 296,792 |
Balance (shares) at Dec. 31, 2017 | 55,489 | ||||
Purchase of treasury stock, at cost | (16,236) | $ 0 | 0 | (16,236) | 0 |
Issuance of long-term incentive awards and dividend equivalents | 0 | 0 | (5,764) | 6,619 | (855) |
Stock-based compensation expense | 14,656 | 0 | 11,293 | 3,363 | 0 |
Other | 1,611 | 0 | 1,181 | 430 | 0 |
Dividends paid | (25,170) | 0 | 0 | 0 | (25,170) |
Unrealized gain (loss) on marketable securities, net of tax | (20) | 0 | 0 | 0 | (20) |
Net income | 110,758 | 0 | 0 | 0 | 110,758 |
Balance at Sep. 30, 2018 | 151,920 | $ 555 | 32,047 | (262,187) | 381,505 |
Balance (shares) at Sep. 30, 2018 | 55,489 | ||||
Balance at Jun. 30, 2018 | 117,860 | $ 555 | 27,363 | (263,764) | 353,706 |
Balance (shares) at Jun. 30, 2018 | 55,489 | ||||
Purchase of treasury stock, at cost | (9) | $ 0 | 0 | (9) | 0 |
Stock-based compensation expense | 5,769 | 0 | 4,288 | 1,481 | 0 |
Other | 501 | 0 | 396 | 105 | 0 |
Dividends paid | (8,384) | 0 | 0 | 0 | (8,384) |
Unrealized gain (loss) on marketable securities, net of tax | (24) | 0 | 0 | 0 | (24) |
Net income | 36,207 | 0 | 0 | 0 | 36,207 |
Balance at Sep. 30, 2018 | 151,920 | $ 555 | 32,047 | (262,187) | 381,505 |
Balance (shares) at Sep. 30, 2018 | 55,489 | ||||
Balance at Dec. 31, 2018 | 77,676 | $ 555 | 36,752 | (357,569) | 397,938 |
Balance (shares) at Dec. 31, 2018 | 55,489 | ||||
Purchase of treasury stock, at cost | (153,668) | $ 0 | 0 | (153,668) | 0 |
Issuance of long-term incentive awards and dividend equivalents | 0 | 0 | (7,695) | 8,646 | (951) |
Stock-based compensation expense | 20,813 | 0 | 15,656 | 5,157 | 0 |
Other | 2,205 | 0 | 1,688 | 517 | 0 |
Dividends paid | (36,777) | 0 | 0 | 0 | (36,777) |
Unrealized gain (loss) on marketable securities, net of tax | 35 | 0 | 0 | 0 | 35 |
Net income | 130,704 | 0 | 0 | 0 | 130,704 |
Balance at Sep. 30, 2019 | 40,988 | $ 555 | 46,401 | (496,917) | 490,949 |
Balance (shares) at Sep. 30, 2019 | 55,489 | ||||
Balance at Jun. 30, 2019 | 134,889 | $ 555 | 41,009 | (383,830) | 477,155 |
Balance (shares) at Jun. 30, 2019 | 55,489 | ||||
Purchase of treasury stock, at cost | (114,872) | $ 0 | 0 | (114,872) | 0 |
Stock-based compensation expense | 6,517 | 0 | 4,880 | 1,637 | 0 |
Other | 660 | 0 | 512 | 148 | 0 |
Dividends paid | (12,037) | 0 | 0 | 0 | (12,037) |
Unrealized gain (loss) on marketable securities, net of tax | (28) | 0 | 0 | 0 | (28) |
Net income | 25,859 | 0 | 0 | 0 | 25,859 |
Balance at Sep. 30, 2019 | $ 40,988 | $ 555 | $ 46,401 | $ (496,917) | $ 490,949 |
Balance (shares) at Sep. 30, 2019 | 55,489 |
Basis of Presentation (Notes)
Basis of Presentation (Notes) | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 1. Basis of Presentation Insperity, Inc., a Delaware corporation (“Insperity,” “we,” “our,” and “us”), provides an array of human resources (“HR”) and business solutions designed to help improve business performance. Our most comprehensive HR services offerings are provided through our professional employer organization (“PEO”) services, known as Workforce Optimization ® and Workforce Synchronization TM solutions (together, our “PEO HR Outsourcing solutions”), which encompass a broad range of HR functions, including payroll and employment administration, employee benefits, workers’ compensation, government compliance, performance management, and training and development services, along with our cloud-based human capital management solution, the Insperity Premier TM platform. In addition to our PEO HR Outsourcing solutions, we also offer a comprehensive traditional payroll and human capital management solution, known as Workforce Acceleration. We also offer a number of other business performance solutions, including Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Expense Management, Retirement Services and Insurance Services, many of which are offered as a cloud-based software solution and are offered separately or with our other solutions. The Consolidated Financial Statements include the accounts of Insperity and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The accompanying Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements at and for the year ended December 31, 2018 . Our Condensed Consolidated Balance Sheet at December 31, 2018 has been derived from the audited financial statements at that date, but does not include all of the information or footnotes required by GAAP for complete financial statements. Our Condensed Consolidated Balance Sheet at September 30, 2019 and our Consolidated Statements of Operations for the three and nine month periods ended September 30, 2019 and 2018 , our Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2019 and 2018 and our Consolidated Statements of Stockholders’ Equity for the three and nine month periods ended September 30, 2019 and 2018 , have been prepared by us without audit. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary to present fairly the consolidated financial position, results of operations and cash flows, have been made. Certain prior year amounts have been reclassified to conform to the 2019 presentation. The results of operations for the interim periods are not necessarily indicative of the operating results for a full year or of future operations. |
Accounting Policies (Notes)
Accounting Policies (Notes) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Accounting Policies | 2. Accounting Policies Health Insurance Costs We provide group health insurance coverage to our WSEEs in our PEO HR Outsourcing solutions through a national network of carriers, including UnitedHealthcare (“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. The policy with United provides approximately 87% of our health insurance coverage. While the policy with United is a fully-insured plan, as a result of certain contractual terms, we have accounted for this plan since its inception using a partially self-funded insurance accounting model. Accordingly, we record the costs of the United plan, including an estimate of the incurred claims, taxes and administrative fees (collectively the “Plan Costs”) as benefits expense, which is a component of direct costs, in our Consolidated Statements of Operations. The estimated incurred claims are based upon: (1) the level of claims processed during the quarter; (2) estimated completion rates based upon recent claim development patterns under the plan; and (3) the number of participants in the plan, including both active and COBRA enrollees. Each reporting period, changes in the estimated ultimate costs resulting from claim trends, plan design and migration, participant demographics and other factors are incorporated into the benefits costs. Additionally, since the plan’s inception, under the terms of the contract, United establishes cash funding rates 90 days in advance of the beginning of a reporting quarter. If the Plan Costs for a reporting quarter are greater than the premiums paid and owed to United, a deficit in the plan would be incurred and a liability for the excess costs would be accrued in our Condensed Consolidated Balance Sheets. On the other hand, if the Plan Costs for the reporting quarter are less than the premiums paid and owed to United, a surplus in the plan would be incurred and we would record an asset for the excess premiums in our Condensed Consolidated Balance Sheets. The terms of the arrangement require us to maintain an accumulated cash surplus in the plan of $9.0 million , which is reported as long-term prepaid insurance. In addition, United requires a deposit equal to approximately one day of claims funding activity, which was $5.0 million at September 30, 2019 , and is included in deposits - health insurance as a long-term asset on our Condensed Consolidated Balance Sheets. As of September 30, 2019 , Plan Costs were less than the net premiums paid and owed to United by $17.4 million . As this amount is in excess of the agreed-upon $9.0 million surplus maintenance level, the $8.4 million difference is included in prepaid insurance, a current asset , in our Condensed Consolidated Balance Sheets. The premiums, including the additional quarterly premiums, owed to United at September 30, 2019 were $27.6 million , which is included in accrued health insurance costs, a current liability in our Condensed Consolidated Balance Sheets. Our benefits costs incurred in the first nine months of 2019 included a charge of $2.9 million for changes in estimated run-off related to prior periods. Our benefits costs incurred in the first nine months of 2018 included a reduction of $1.3 million for changes in estimated run-off related to prior periods. Workers’ Compensation Costs Our workers’ compensation coverage for our WSEEs in our PEO HR Outsourcing solutions has been provided through an arrangement with the Chubb Group of Insurance Companies or its predecessors (the “Chubb Program”) since 2007. The Chubb Program is fully insured in that Chubb has the responsibility to pay all claims incurred under the policy regardless of whether we satisfy our responsibilities. Under the Chubb Program for claims incurred on or before September 30, 2019, we have financial responsibility to Chubb for the first $1 million layer of claims per occurrence and, for claims over $1 million , up to a maximum aggregate amount of $6 million per policy year for claims that exceed $1 million . Chubb bears the financial responsibility for all claims in excess of these levels. Effective for claims incurred on or after October 1, 2019, our financial responsibility increased as we have financial responsibility to Chubb for the first $1.5 million layer of claims per occurrence and, for claims over $1.5 million , up to a maximum aggregate amount of $6 million per policy year for claims that exceed $1.5 million . Because we bear the financial responsibility for claims up to the levels noted above, such claims, which are the primary component of our workers’ compensation costs, are recorded in the period incurred. Workers’ compensation insurance includes ongoing health care and indemnity coverage whereby claims are paid over numerous years following the date of injury. Accordingly, the accrual of related incurred costs in each reporting period includes estimates, which take into account the ongoing development of claims and therefore requires a significant level of judgment. We utilize a third-party actuary to estimate our loss development rate, which is primarily based upon the nature of WSEEs job responsibilities, the location of WSEEs, the historical frequency and severity of workers’ compensation claims, and an estimate of future cost trends. Each reporting period, changes in the actuarial assumptions resulting from changes in actual claims experience and other trends are incorporated into our workers’ compensation claims cost estimates. During the nine months ended September 30, 2019 and 2018 , we reduced accrued workers’ compensation costs by $26.0 million and $13.4 million , respectively, for changes in estimated losses related to prior reporting periods. Workers’ compensation cost estimates are discounted to present value at a rate based upon the U.S. Treasury rates that correspond with the weighted average estimated claim payout period (the average discount rate utilized in the 2019 period was 2.0% and in the 2018 period was 2.5% ) and are accreted over the estimated claim payment period and included as a component of direct costs in our Consolidated Statements of Operations. The following table provides the activity and balances related to incurred but not paid workers’ compensation claims: Nine Months Ended September 30, (in thousands) 2019 2018 Beginning balance, January 1, $ 229,639 $ 207,630 Accrued claims 44,334 54,744 Present value discount (3,664 ) (5,372 ) Paid claims (34,669 ) (31,645 ) Ending balance $ 235,640 $ 225,357 Current portion of accrued claims $ 45,250 $ 42,258 Long-term portion of accrued claims 190,390 183,099 Total accrued claims $ 235,640 $ 225,357 The current portion of accrued workers’ compensation costs on our Condensed Consolidated Balance Sheets at September 30, 2019 includes $3.7 million of workers’ compensation administrative fees. As of September 30, 2019 and 2018 , the undiscounted accrued workers’ compensation costs were $255.3 million and $241.3 million , respectively. At the beginning of each policy period, the workers’ compensation insurance carrier establishes monthly funding requirements comprised of premium costs and funds to be set aside for payment of future claims (“claim funds”). The level of claim funds is primarily based upon anticipated WSEE payroll levels and expected workers’ compensation loss rates, as determined by the insurance carrier. Monies funded into the program for incurred claims expected to be paid within one year are recorded as restricted cash, a short-term asset, while the remainder of claim funds are included in deposits – workers’ compensation, a long-term asset in our Condensed Consolidated Balance Sheets. During the first nine months of 2019 and 2018 , we received $16.7 million and $19.4 million , respectively, for the return of excess claim funds related to the workers’ compensation program, which resulted in a net decrease to deposits - workers’ compensation. At September 30, 2019 , we had restricted cash of $45.3 million and deposits – workers’ compensation of $170.0 million . Our estimate of incurred claim costs expected to be paid within one year is included in short-term liabilities, while our estimate of incurred claim costs expected to be paid beyond one year is included in long-term liabilities on our Condensed Consolidated Balance Sheets. Revenue and Direct Cost Recognition We enter into contracts with our customers for human resources services based on a stated rate and price in the contract. Our contracts generally have a term of 12 months, but are cancellable at any time by either party with 30-days’ notice. Our performance obligations are satisfied as services are rendered each month. The term between invoicing and when our performance obligations are satisfied is not significant. Payment terms are typically due concurrently with the invoicing of our PEO services. We do not have significant financing components or significant payment terms. Our revenue is generally recognized ratably over the payroll period as WSEEs perform their service at the client worksite. Customers are invoiced concurrently with each periodic payroll of its WSEEs. Revenues that have been recognized but unbilled of $474.2 million and $385.6 million at September 30, 2019 and December 31, 2018 , respectively, are included in accounts receivable, net on our Condensed Consolidated Balance Sheets. Pursuant to the “practical expedients” provided under Accounting Standards Update (“ASU”) No 2014-09, we expense sales commissions when incurred because the terms of our contracts generally are cancellable by either party with a 30-day notice. These costs are recorded in commissions in our Consolidated Statements of Operations. Our revenue for our PEO HR Outsourcing solutions by geographic region and for our other products and services offerings are as follows: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2019 2018 % Change 2019 2018 % Change Northeast $ 271,839 $ 237,076 14.7 % $ 853,263 $ 748,717 14.0 % Southeast 122,992 109,552 12.3 % 373,044 333,004 12.0 % Central 180,602 155,184 16.4 % 555,797 476,277 16.7 % Southwest 242,200 217,946 11.1 % 756,495 664,731 13.8 % West 212,618 192,011 10.7 % 661,460 599,617 10.3 % 1,030,251 911,769 13.0 % 3,200,059 2,822,346 13.4 % Other revenue 13,137 13,357 (1.6 )% 39,655 39,447 0.5 % Total revenue $ 1,043,388 $ 925,126 12.8 % $ 3,239,714 $ 2,861,793 13.2 % |
Cash, Cash Equivalents and Mark
Cash, Cash Equivalents and Marketable Securities (Notes) | 9 Months Ended |
Sep. 30, 2019 | |
Cash, Cash Equivalents and Marketable Securities [Abstract] | |
Cash, Cash Equivalents and Marketable Securities | 3. Cash, Cash Equivalents and Marketable Securities The following table summarizes our cash and investments in cash equivalents and marketable securities held by investment managers and overnight investments: September 30, 2019 December 31, 2018 (in thousands) Cash & Cash Equivalents Marketable Securities Total Cash & Cash Equivalents Marketable Securities Total Overnight holdings $ 217,270 $ — $ 217,270 $ 311,158 $ — $ 311,158 Investment holdings 16,156 60,880 77,036 16,711 60,781 77,492 Cash in demand accounts 24,465 — 24,465 33,207 — 33,207 Outstanding checks (14,452 ) — (14,452 ) (34,303 ) — (34,303 ) Total $ 243,439 $ 60,880 $ 304,319 $ 326,773 $ 60,781 $ 387,554 Our cash and overnight holdings fluctuate based on the timing of clients’ payroll processing cycles. Our cash, cash equivalents and marketable securities at September 30, 2019 and December 31, 2018 included $153.8 million and $224.5 million , respectively, of funds associated with federal and state income tax withholdings, employment taxes and other payroll deductions, as well as $19.7 million and $34.2 million , respectively, in client prepayments. |
Fair Value Measurements Fair Va
Fair Value Measurements Fair Value Measurements (Notes) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures [Text Block] | 4. Fair Value Measurements We account for our financial assets in accordance with Accounting Standard Codification 820, Fair Value Measurement . This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The fair value measurement disclosures are grouped into three levels based on valuation factors: • 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 of Instruments Measured and Recognized at Fair Value The following table summarizes the levels of fair value measurements of our financial assets: September 30, 2019 December 31, 2018 (in thousands) Total Level 1 Level 2 Total Level 1 Level 2 Money market funds $ 232,777 $ 232,777 $ — $ 325,819 $ 325,819 $ — U.S. Treasury bills 61,529 61,529 — 52,197 52,197 — Municipal bonds — — — 10,634 — 10,634 Total $ 294,306 $ 294,306 $ — $ 388,650 $ 378,016 $ 10,634 The municipal bond securities valued as Level 2 are primarily pre-refunded municipal bonds that are secured by escrow funds containing U.S. government securities. Our valuation techniques used to measure fair value for these securities during the period consisted primarily of third-party pricing services that utilized actual market data such as trades of comparable bond issues, broker/dealer quotations for the same or similar investments in active markets and other observable inputs. The following is a summary of our available-for-sale marketable securities: (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value September 30, 2019 U.S. Treasury bills $ 60,854 $ 27 $ (1 ) $ 60,880 Municipal bonds — — — — Total $ 60,854 $ 27 $ (1 ) $ 60,880 December 31, 2018 U.S. Treasury bills $ 50,150 $ — $ (3 ) $ 50,147 Municipal bonds 10,640 1 (7 ) 10,634 Total $ 60,790 $ 1 $ (10 ) $ 60,781 As of September 30, 2019 , the contractual maturities of our marketable securities were as follows: (in thousands) Amortized Cost Estimated Fair Value Less than one year $ 60,854 $ 60,880 One to five years — — Total $ 60,854 $ 60,880 Fair Value of Other Financial Instruments The carrying amounts of cash, cash equivalents, restricted cash, accounts receivable, deposits and accounts payable approximate their fair values due to the short-term maturities of these instruments. As of September 30, 2019 , the carrying value of borrowings under our revolving credit facility approximates fair value and was classified as Level 2 in the fair value hierarchy. Please read Note 5 , “ Long-Term Debt ,” for additional information. |
Long-term Debt (Notes)
Long-term Debt (Notes) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Revolving Credit Facility | 5. Long-Term Debt We have a revolving credit facility (the “Facility”), which was increased from $350 million to $500 million of borrowing capacity in the third quarter of 2019. The Facility may be further increased to $550 million based on the terms and subject to the conditions set forth in the agreement relating to the Facility (the “Credit Agreement”). The Facility is available for working capital and general corporate purposes, including acquisitions, stock repurchases and issuances of letters of credit. Our obligations under the Facility are secured by 65% of the stock of our captive insurance subsidiary and are guaranteed by all of our domestic subsidiaries. At September 30, 2019 , our outstanding balance on the Facility was $239.4 million , and we had an outstanding $1.0 million letter of credit issued under the Facility, resulting in an available borrowing capacity of $259.6 million . The Facility matures on September 13, 2024 . Borrowings under the Facility bear interest at an alternate base rate or LIBOR , at our option, plus an applicable margin. Depending on our leverage ratio, the applicable margin varies (1) in the case of LIBOR loans, from 1.50% to 2.25% and (2) in the case of alternate base rate loans, from 0.00% to 0.50% . The alternate base rate is the highest of (1) the prime rate most recently published in The Wall Street Journal, (2) the federal funds rate plus 0.50% and (3) the 30-day LIBOR rate plus 2.00% . We also pay an unused commitment fee on the average daily unused portion of the Facility at a rate of 0.25% . The average interest rate for the period ended September 30, 2019 was 3.90% . Interest expense and unused commitment fees are recorded in other income (expense). The Facility contains both affirmative and negative covenants that we believe are customary for arrangements of this nature. Covenants include, but are not limited to, limitations on our ability to incur additional indebtedness, sell material assets, retire, redeem or otherwise reacquire our capital stock, acquire the capital stock or assets of another business, make investments and pay dividends. In addition, the Credit Agreement requires us to comply with financial covenants limiting our total funded debt, minimum interest coverage ratio and maximum leverage ratio. We were in compliance with all financial covenants under the Credit Agreement at September 30, 2019 . |
Leases Leases (Notes)
Leases Leases (Notes) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Lessee, Operating Leases [Text Block] | 6. Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognize a right-of-use (“ROU”) asset and a lease liability for all leases with terms greater than 12 months and also requires disclosures by lessees and lessors about the amount, timing and uncertainty of cash flows arising from leases. Subsequent to the issuance of Topic 842, the FASB clarified the guidance through several ASUs; hereinafter, the collection of lease guidance is referred to as “ASC 842”. On January 1, 2019 we adopted ASC 842 using the modified retrospective transition method. Results for the reporting period beginning January 1, 2019 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with our historical accounting under ASC 840, Leases. Upon adoption of ASC 842, we increased our total assets and liabilities due to the recording of operating lease ROU assets and operating lease liabilities of approximately $50.8 million and $63.7 million , respectively, as of January 1, 2019. These increases did not have a material impact on our results of operations or cash flows. For all leases that commenced before the effective date of ASC 842, we elected to apply the permitted practical expedients to not reassess the following: (1) whether any expired or existing contracts contain leases; (2) the lease classification for any expired or existing leases; and (3) initial direct costs for any existing leases. We determine if an arrangement is a lease at inception of a contract. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The lease terms used to calculate the ROU asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense. We have lease agreements which require payments for lease and non-lease components and have elected to account for these as a single lease component related to our other operating facilities. We have operating leases for office space, other operating facilities, vehicles and office equipment. Our fixed operating lease costs for the three and nine months ended September 30, 2019 were $4.1 million and $11.7 million , respectively, and are included in general and administrative expenses on our Consolidated Statements of Operations. During the nine months ended September 30, 2019 , cash paid for amounts included in the measurement of operating lease liabilities was $12.5 million . The following table presents the lease balances within our Condensed Consolidated Balance Sheets, weighted average lease term and weighted average discount rates related to our operating leases: (dollars in thousands) Classification in Condensed Consolidated Balance Sheets September 30, 2019 Operating lease ROU assets Right-of-use leased assets $ 58,185 Lease liabilities: Current operating lease liabilities Other accrued liabilities $ 15,195 Long-term operating lease liabilities Operating lease liabilities, net of current 60,132 Total operating lease liabilities $ 75,327 Less: Landlord funded tenant improvements $ 12,711 Deferred rent 4,431 Operating lease ROU assets $ 58,185 Weighted average remaining lease term (years) 6 Weighted average discount rate 4.6 % The following presents the maturity of our operating leases liabilities as of September 30, 2019 : (in thousands) Operating Leases Remainder of 2019 $ 4,564 2020 17,656 2021 15,049 2022 13,637 2023 11,134 Thereafter 24,174 Total remaining obligation 86,214 Less imputed interest 10,887 Present value of lease liabilities $ 75,327 As of September 30, 2019 , we have additional operating leases that have not yet commenced of $8.2 million with lease terms ranging from 4 years to 8 years. |
Stockholders' Equity (Notes)
Stockholders' Equity (Notes) | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders' Equity Note [Abstract] | |
Stockholders Equity | 7. Stockholders' Equity During the first nine months of 2019 , we repurchased or withheld an aggregate of 1,481,369 shares of our common stock, as described below. Repurchase Program Our Board of Directors (the “Board”) has authorized a program to repurchase shares of our outstanding common stock (“Repurchase Program”). The purchases are to be made from time to time in the open market or directly from stockholders at prevailing market prices based on market conditions and other factors. In 2019, the Board authorized an increase of 700,000 shares that may be repurchased under the Repurchase Program. During the nine months ended September 30, 2019 , 1,254,210 shares were repurchased under the Repurchase Program. As of September 30, 2019 , we were authorized to repurchase an additional 1,056,945 shares under the Repurchase Program. Withheld Shares During the nine months ended September 30, 2019 , we withheld 227,159 shares to satisfy tax withholding obligations for the vesting of long-term incentive and restricted stock awards. Dividends The Board declared quarterly dividends as follows: (amounts per share) 2019 2018 First quarter $ 0.30 $ 0.20 Second quarter 0.30 0.20 Third quarter 0.30 0.20 During the nine months ended September 30, 2019 and 2018 , we paid dividends totaling $36.8 million and $25.2 million , respectively. |
Net Income Per Share (Notes)
Net Income Per Share (Notes) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Net Income per Share | 8. Net Income Per Share We utilize the two-class method to compute net income per share. The two-class method allocates a portion of net income to participating securities, which includes unvested awards of share-based payments with non-forfeitable rights to receive dividends. Net income allocated to unvested share-based payments is excluded from net income allocated to common shares. Any undistributed losses resulting from dividends exceeding net income are not allocated to participating securities. Basic net income per share is computed by dividing net income allocated to common shares by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income allocated to common shares by the weighted average number of common shares outstanding during the period, plus the dilutive effect of outstanding stock options. The following table summarizes the net income allocated to common shares and the basic and diluted shares used in the net income per share computations: Three Months Ended September 30, Nine Months Ended (in thousands) 2019 2018 2019 2018 Net income $ 25,859 $ 36,207 $ 130,704 $ 110,758 Less distributed and undistributed earnings allocated to participating securities (284 ) (503 ) (1,546 ) (1,546 ) Net income allocated to common shares $ 25,575 $ 35,704 $ 129,158 $ 109,212 Weighted average common shares outstanding 40,168 41,330 40,481 41,311 Incremental shares from assumed LTIP awards and conversions of common stock options 149 218 143 283 Adjusted weighted average common shares outstanding 40,317 41,548 40,624 41,594 |
Commitments and Contingencies (
Commitments and Contingencies (Notes) | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. Commitments and Contingencies Worksite Employee 401(k) Retirement Plan Class Action Litigation In December 2015, a class action lawsuit was filed against us and a third-party who served as the discretionary trustee of the Insperity 401(k) retirement plan that is available to eligible worksite employees (the “Plan”) in the United States District Court for the Northern District of Georgia, Atlanta Division, on behalf of Plan participants. The suit generally alleges the third-party discretionary trustee of the Plan and Insperity breached their fiduciary duties to plan participants by selecting an Insperity subsidiary to serve as the recordkeeper for the Plan, by causing participants in the Plan to pay excessive recordkeeping fees to the Insperity subsidiary, by failing to monitor other fiduciaries, and by making imprudent investment choices. The court certified a class defined as “all participants and beneficiaries of the Insperity 401(k) Plan from December 22, 2009 through September 30, 2017.” The court dismissed the breach of fiduciary duty claims relating to the selection of an Insperity subsidiary to serve as the recordkeeper of the Plan. On March 28, 2019, the court partially granted Insperity’s motion for summary judgment, resulting in the dismissal of the claims concerning allegations of excessive recordkeeping fees. The court has denied plaintiffs’ request for a jury trial and has set a bench trial for March 2, 2020. With respect to plaintiffs’ remaining claims, plaintiffs allege damages up to $128 million against all defendants. We believe we have meritorious defenses, and we intend to vigorously defend this litigation. As a result of uncertainty regarding the outcome of this matter, no provision has been made in the accompanying Consolidated Financial Statements. Other Litigation We are a defendant in various other lawsuits and claims arising in the normal course of business. Management believes it has valid defenses in these cases and is defending them vigorously. While the results of litigation cannot be predicted with certainty, management believes the final outcome of such litigation will not have a material adverse effect on our financial position or results of operations. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Health Insurance Costs | Health Insurance Costs We provide group health insurance coverage to our WSEEs in our PEO HR Outsourcing solutions through a national network of carriers, including UnitedHealthcare (“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. The policy with United provides approximately 87% of our health insurance coverage. While the policy with United is a fully-insured plan, as a result of certain contractual terms, we have accounted for this plan since its inception using a partially self-funded insurance accounting model. Accordingly, we record the costs of the United plan, including an estimate of the incurred claims, taxes and administrative fees (collectively the “Plan Costs”) as benefits expense, which is a component of direct costs, in our Consolidated Statements of Operations. The estimated incurred claims are based upon: (1) the level of claims processed during the quarter; (2) estimated completion rates based upon recent claim development patterns under the plan; and (3) the number of participants in the plan, including both active and COBRA enrollees. Each reporting period, changes in the estimated ultimate costs resulting from claim trends, plan design and migration, participant demographics and other factors are incorporated into the benefits costs. Additionally, since the plan’s inception, under the terms of the contract, United establishes cash funding rates 90 days in advance of the beginning of a reporting quarter. If the Plan Costs for a reporting quarter are greater than the premiums paid and owed to United, a deficit in the plan would be incurred and a liability for the excess costs would be accrued in our Condensed Consolidated Balance Sheets. On the other hand, if the Plan Costs for the reporting quarter are less than the premiums paid and owed to United, a surplus in the plan would be incurred and we would record an asset for the excess premiums in our Condensed Consolidated Balance Sheets. The terms of the arrangement require us to maintain an accumulated cash surplus in the plan of $9.0 million , which is reported as long-term prepaid insurance. In addition, United requires a deposit equal to approximately one day of claims funding activity, which was $5.0 million at September 30, 2019 , and is included in deposits - health insurance as a long-term asset on our Condensed Consolidated Balance Sheets. As of September 30, 2019 , Plan Costs were less than the net premiums paid and owed to United by $17.4 million . As this amount is in excess of the agreed-upon $9.0 million surplus maintenance level, the $8.4 million difference is included in prepaid insurance, a current asset , in our Condensed Consolidated Balance Sheets. The premiums, including the additional quarterly premiums, owed to United at September 30, 2019 were $27.6 million , which is included in accrued health insurance costs, a current liability in our Condensed Consolidated Balance Sheets. Our benefits costs incurred in the first nine months of 2019 included a charge of $2.9 million for changes in estimated run-off related to prior periods. Our benefits costs incurred in the first nine months of 2018 included a reduction of $1.3 million for changes in estimated run-off related to prior periods. |
Workers' Compensation Costs | Workers’ Compensation Costs Our workers’ compensation coverage for our WSEEs in our PEO HR Outsourcing solutions has been provided through an arrangement with the Chubb Group of Insurance Companies or its predecessors (the “Chubb Program”) since 2007. The Chubb Program is fully insured in that Chubb has the responsibility to pay all claims incurred under the policy regardless of whether we satisfy our responsibilities. Under the Chubb Program for claims incurred on or before September 30, 2019, we have financial responsibility to Chubb for the first $1 million layer of claims per occurrence and, for claims over $1 million , up to a maximum aggregate amount of $6 million per policy year for claims that exceed $1 million . Chubb bears the financial responsibility for all claims in excess of these levels. Effective for claims incurred on or after October 1, 2019, our financial responsibility increased as we have financial responsibility to Chubb for the first $1.5 million layer of claims per occurrence and, for claims over $1.5 million , up to a maximum aggregate amount of $6 million per policy year for claims that exceed $1.5 million . Because we bear the financial responsibility for claims up to the levels noted above, such claims, which are the primary component of our workers’ compensation costs, are recorded in the period incurred. Workers’ compensation insurance includes ongoing health care and indemnity coverage whereby claims are paid over numerous years following the date of injury. Accordingly, the accrual of related incurred costs in each reporting period includes estimates, which take into account the ongoing development of claims and therefore requires a significant level of judgment. We utilize a third-party actuary to estimate our loss development rate, which is primarily based upon the nature of WSEEs job responsibilities, the location of WSEEs, the historical frequency and severity of workers’ compensation claims, and an estimate of future cost trends. Each reporting period, changes in the actuarial assumptions resulting from changes in actual claims experience and other trends are incorporated into our workers’ compensation claims cost estimates. During the nine months ended September 30, 2019 and 2018 , we reduced accrued workers’ compensation costs by $26.0 million and $13.4 million , respectively, for changes in estimated losses related to prior reporting periods. Workers’ compensation cost estimates are discounted to present value at a rate based upon the U.S. Treasury rates that correspond with the weighted average estimated claim payout period (the average discount rate utilized in the 2019 period was 2.0% and in the 2018 period was 2.5% ) and are accreted over the estimated claim payment period and included as a component of direct costs in our Consolidated Statements of Operations. The following table provides the activity and balances related to incurred but not paid workers’ compensation claims: Nine Months Ended September 30, (in thousands) 2019 2018 Beginning balance, January 1, $ 229,639 $ 207,630 Accrued claims 44,334 54,744 Present value discount (3,664 ) (5,372 ) Paid claims (34,669 ) (31,645 ) Ending balance $ 235,640 $ 225,357 Current portion of accrued claims $ 45,250 $ 42,258 Long-term portion of accrued claims 190,390 183,099 Total accrued claims $ 235,640 $ 225,357 The current portion of accrued workers’ compensation costs on our Condensed Consolidated Balance Sheets at September 30, 2019 includes $3.7 million of workers’ compensation administrative fees. As of September 30, 2019 and 2018 , the undiscounted accrued workers’ compensation costs were $255.3 million and $241.3 million , respectively. At the beginning of each policy period, the workers’ compensation insurance carrier establishes monthly funding requirements comprised of premium costs and funds to be set aside for payment of future claims (“claim funds”). The level of claim funds is primarily based upon anticipated WSEE payroll levels and expected workers’ compensation loss rates, as determined by the insurance carrier. Monies funded into the program for incurred claims expected to be paid within one year are recorded as restricted cash, a short-term asset, while the remainder of claim funds are included in deposits – workers’ compensation, a long-term asset in our Condensed Consolidated Balance Sheets. During the first nine months of 2019 and 2018 , we received $16.7 million and $19.4 million , respectively, for the return of excess claim funds related to the workers’ compensation program, which resulted in a net decrease to deposits - workers’ compensation. At September 30, 2019 , we had restricted cash of $45.3 million and deposits – workers’ compensation of $170.0 million . Our estimate of incurred claim costs expected to be paid within one year is included in short-term liabilities, while our estimate of incurred claim costs expected to be paid beyond one year is included in long-term liabilities on our Condensed Consolidated Balance Sheets. |
Revenue Recognition | Revenue and Direct Cost Recognition We enter into contracts with our customers for human resources services based on a stated rate and price in the contract. Our contracts generally have a term of 12 months, but are cancellable at any time by either party with 30-days’ notice. Our performance obligations are satisfied as services are rendered each month. The term between invoicing and when our performance obligations are satisfied is not significant. Payment terms are typically due concurrently with the invoicing of our PEO services. We do not have significant financing components or significant payment terms. Our revenue is generally recognized ratably over the payroll period as WSEEs perform their service at the client worksite. Customers are invoiced concurrently with each periodic payroll of its WSEEs. Revenues that have been recognized but unbilled of $474.2 million and $385.6 million at September 30, 2019 and December 31, 2018 , respectively, are included in accounts receivable, net on our Condensed Consolidated Balance Sheets. Pursuant to the “practical expedients” provided under Accounting Standards Update (“ASU”) No 2014-09, we expense sales commissions when incurred because the terms of our contracts generally are cancellable by either party with a 30-day notice. These costs are recorded in commissions in our Consolidated Statements of Operations. Our revenue for our PEO HR Outsourcing solutions by geographic region and for our other products and services offerings are as follows: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2019 2018 % Change 2019 2018 % Change Northeast $ 271,839 $ 237,076 14.7 % $ 853,263 $ 748,717 14.0 % Southeast 122,992 109,552 12.3 % 373,044 333,004 12.0 % Central 180,602 155,184 16.4 % 555,797 476,277 16.7 % Southwest 242,200 217,946 11.1 % 756,495 664,731 13.8 % West 212,618 192,011 10.7 % 661,460 599,617 10.3 % 1,030,251 911,769 13.0 % 3,200,059 2,822,346 13.4 % Other revenue 13,137 13,357 (1.6 )% 39,655 39,447 0.5 % Total revenue $ 1,043,388 $ 925,126 12.8 % $ 3,239,714 $ 2,861,793 13.2 % |
Fair Value Measurements Fair Vl
Fair Value Measurements Fair Vlue Measurements (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments, Policy [Policy Text Block] | We account for our financial assets in accordance with Accounting Standard Codification 820, Fair Value Measurement . This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The fair value measurement disclosures are grouped into three levels based on valuation factors: • 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 |
Leases Leases (Policies)
Leases Leases (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases of Lessee Disclosure [Text Block] | In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognize a right-of-use (“ROU”) asset and a lease liability for all leases with terms greater than 12 months and also requires disclosures by lessees and lessors about the amount, timing and uncertainty of cash flows arising from leases. Subsequent to the issuance of Topic 842, the FASB clarified the guidance through several ASUs; hereinafter, the collection of lease guidance is referred to as “ASC 842”. On January 1, 2019 we adopted ASC 842 using the modified retrospective transition method. Results for the reporting period beginning January 1, 2019 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with our historical accounting under ASC 840, Leases. Upon adoption of ASC 842, we increased our total assets and liabilities due to the recording of operating lease ROU assets and operating lease liabilities of approximately $50.8 million and $63.7 million , respectively, as of January 1, 2019. These increases did not have a material impact on our results of operations or cash flows. For all leases that commenced before the effective date of ASC 842, we elected to apply the permitted practical expedients to not reassess the following: (1) whether any expired or existing contracts contain leases; (2) the lease classification for any expired or existing leases; and (3) initial direct costs for any existing leases. We determine if an arrangement is a lease at inception of a contract. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The lease terms used to calculate the ROU asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense. We have lease agreements which require payments for lease and non-lease components and have elected to account for these as a single lease component related to our other operating facilities. |
Accounting Policies (Tables)
Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Activity and balances related to incurred but not paid workers' compensation claims | The following table provides the activity and balances related to incurred but not paid workers’ compensation claims: Nine Months Ended September 30, (in thousands) 2019 2018 Beginning balance, January 1, $ 229,639 $ 207,630 Accrued claims 44,334 54,744 Present value discount (3,664 ) (5,372 ) Paid claims (34,669 ) (31,645 ) Ending balance $ 235,640 $ 225,357 Current portion of accrued claims $ 45,250 $ 42,258 Long-term portion of accrued claims 190,390 183,099 Total accrued claims $ 235,640 $ 225,357 |
Disaggregation of Revenue [Table Text Block] | Our revenue for our PEO HR Outsourcing solutions by geographic region and for our other products and services offerings are as follows: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2019 2018 % Change 2019 2018 % Change Northeast $ 271,839 $ 237,076 14.7 % $ 853,263 $ 748,717 14.0 % Southeast 122,992 109,552 12.3 % 373,044 333,004 12.0 % Central 180,602 155,184 16.4 % 555,797 476,277 16.7 % Southwest 242,200 217,946 11.1 % 756,495 664,731 13.8 % West 212,618 192,011 10.7 % 661,460 599,617 10.3 % 1,030,251 911,769 13.0 % 3,200,059 2,822,346 13.4 % Other revenue 13,137 13,357 (1.6 )% 39,655 39,447 0.5 % Total revenue $ 1,043,388 $ 925,126 12.8 % $ 3,239,714 $ 2,861,793 13.2 % |
Cash, Cash Equivalents and Ma_2
Cash, Cash Equivalents and Marketable Securities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Cash, Cash Equivalents and Marketable Securities [Abstract] | |
Summary of investments in cash, cash equivalents and marketable securities | The following table summarizes our cash and investments in cash equivalents and marketable securities held by investment managers and overnight investments: September 30, 2019 December 31, 2018 (in thousands) Cash & Cash Equivalents Marketable Securities Total Cash & Cash Equivalents Marketable Securities Total Overnight holdings $ 217,270 $ — $ 217,270 $ 311,158 $ — $ 311,158 Investment holdings 16,156 60,880 77,036 16,711 60,781 77,492 Cash in demand accounts 24,465 — 24,465 33,207 — 33,207 Outstanding checks (14,452 ) — (14,452 ) (34,303 ) — (34,303 ) Total $ 243,439 $ 60,880 $ 304,319 $ 326,773 $ 60,781 $ 387,554 |
Fair Value Measurements Fair _2
Fair Value Measurements Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Table Text Block] | The following table summarizes the levels of fair value measurements of our financial assets: September 30, 2019 December 31, 2018 (in thousands) Total Level 1 Level 2 Total Level 1 Level 2 Money market funds $ 232,777 $ 232,777 $ — $ 325,819 $ 325,819 $ — U.S. Treasury bills 61,529 61,529 — 52,197 52,197 — Municipal bonds — — — 10,634 — 10,634 Total $ 294,306 $ 294,306 $ — $ 388,650 $ 378,016 $ 10,634 |
Available-for-sale Securities [Table Text Block] | The following is a summary of our available-for-sale marketable securities: (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value September 30, 2019 U.S. Treasury bills $ 60,854 $ 27 $ (1 ) $ 60,880 Municipal bonds — — — — Total $ 60,854 $ 27 $ (1 ) $ 60,880 December 31, 2018 U.S. Treasury bills $ 50,150 $ — $ (3 ) $ 50,147 Municipal bonds 10,640 1 (7 ) 10,634 Total $ 60,790 $ 1 $ (10 ) $ 60,781 |
Investments Classified by Contractual Maturity Date [Table Text Block] | As of September 30, 2019 , the contractual maturities of our marketable securities were as follows: (in thousands) Amortized Cost Estimated Fair Value Less than one year $ 60,854 $ 60,880 One to five years — — Total $ 60,854 $ 60,880 |
Leases Leases (Tables)
Leases Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Schedule of lease in balance sheet [Table Text Block] | The following table presents the lease balances within our Condensed Consolidated Balance Sheets, weighted average lease term and weighted average discount rates related to our operating leases: (dollars in thousands) Classification in Condensed Consolidated Balance Sheets September 30, 2019 Operating lease ROU assets Right-of-use leased assets $ 58,185 Lease liabilities: Current operating lease liabilities Other accrued liabilities $ 15,195 Long-term operating lease liabilities Operating lease liabilities, net of current 60,132 Total operating lease liabilities $ 75,327 Less: Landlord funded tenant improvements $ 12,711 Deferred rent 4,431 Operating lease ROU assets $ 58,185 Weighted average remaining lease term (years) 6 Weighted average discount rate 4.6 % |
Lessee, Operating Lease, Liability, Maturity [Table Text Block] | The following presents the maturity of our operating leases liabilities as of September 30, 2019 : (in thousands) Operating Leases Remainder of 2019 $ 4,564 2020 17,656 2021 15,049 2022 13,637 2023 11,134 Thereafter 24,174 Total remaining obligation 86,214 Less imputed interest 10,887 Present value of lease liabilities $ 75,327 |
Stockholders' Equity Stockholde
Stockholders' Equity Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Quarterly dividends declared [Table Text Block] | The Board declared quarterly dividends as follows: (amounts per share) 2019 2018 First quarter $ 0.30 $ 0.20 Second quarter 0.30 0.20 Third quarter 0.30 0.20 |
Net Income per Share (Tables)
Net Income per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Summary of the net income allocated to common shares and the basic and diluted shares used in the net income per share computations | The following table summarizes the net income allocated to common shares and the basic and diluted shares used in the net income per share computations: Three Months Ended September 30, Nine Months Ended (in thousands) 2019 2018 2019 2018 Net income $ 25,859 $ 36,207 $ 130,704 $ 110,758 Less distributed and undistributed earnings allocated to participating securities (284 ) (503 ) (1,546 ) (1,546 ) Net income allocated to common shares $ 25,575 $ 35,704 $ 129,158 $ 109,212 Weighted average common shares outstanding 40,168 41,330 40,481 41,311 Incremental shares from assumed LTIP awards and conversions of common stock options 149 218 143 283 Adjusted weighted average common shares outstanding 40,317 41,548 40,624 41,594 |
Accounting Policies (Details)
Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Oct. 01, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Health Insurance Costs [Abstract] | |||||||
Percentage of our health insurance coverage provided by United | 87.00% | 87.00% | |||||
Number of days in advance of the beginning of a reporting quarter United establishes cash funding rates | 90 days | ||||||
Required accumulated cash surplus | $ 9,000 | $ 9,000 | $ 9,000 | ||||
Required deposit equal to approximately one day of claims funding activity | 5,000 | 5,000 | |||||
Amount which plan costs were less than the net premiums paid and owed | 17,400 | 17,400 | |||||
Prepaid health insurance, current | 8,400 | 8,400 | |||||
Premiums owed to United | 27,600 | 27,600 | |||||
Benefits costs incurred (reduced) related to run-off | (2,900) | $ 1,300 | (2,900) | $ 1,300 | |||
Workers' Compensation Costs [Abstract] | |||||||
Company's maximum economic burden for the first layer of claims per occurrence | 1,000 | 1,000 | $ 1,500 | ||||
Company's maximum aggregate economic burden for claims in excess of 1 million per policy year | 6,000 | 6,000 | $ 6,000 | ||||
Decrease Increase in accrued workers' compensation costs for changes in estimated losses | $ (26,000) | $ (13,400) | |||||
U.S. Treasury rates that correspond with the weighted average estimated claim payout period (in hundredths) | 2.00% | 2.50% | |||||
Incurred but not paid workers compensation liabilities [Abstract] | |||||||
Liability for Unpaid Claims and Claims Adjustment Expense, Adjustments | 229,639 | $ 207,630 | |||||
Workers' Compensation Expense | $ 44,334 | $ 54,744 | |||||
Present value discount | (3,664) | (5,372) | |||||
Paid claims | (34,669) | (31,645) | |||||
WorkersCompensationLiabilityNetOfAdminFeesCurrent | 45,250 | 42,258 | 45,250 | 42,258 | |||
Long-term portion of accrued claims | 190,390 | 183,099 | 190,390 | 183,099 | 187,412 | ||
Ending balance | 235,640 | 225,357 | 235,640 | 225,357 | |||
Workers compensation administrative fees accrued | 3,700 | 3,700 | |||||
Undiscounted accrued workers' compensation costs | $ 255,300 | 241,300 | |||||
Time period incurred claims expected to be paid recorded as restricted cash | 1 year | ||||||
Return Of Excess Claim Funds | $ 16,700 | 19,400 | |||||
Time period incurred claims expected to be paid, included in deposits, a long-term asset | Greater than 1 year | ||||||
Restricted cash | 45,251 | 42,257 | $ 45,251 | 42,257 | 42,227 | 41,137 | |
Deposits workers compensation | 170,032 | 152,268 | $ 170,032 | 152,268 | 166,474 | $ 154,215 | |
Time period estimate of incurred claim costs to be paid included in short-term liabilities | 1 year | ||||||
Time period incurred claims expected to be paid, included in long-term liabilities | Greater than 1 year | ||||||
Revenue from Contract with Customer [Abstract] | |||||||
Unbilled | 474,200 | $ 474,200 | $ 385,600 | ||||
Disaggregation of Revenue [Line Items] | |||||||
Revenue from Contract with Customer, Excluding Assessed Tax | 1,043,388 | 925,126 | 3,239,714 | 2,861,793 | |||
Northeast [Member] | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Revenue from Contract with Customer, Excluding Assessed Tax | 271,839 | 237,076 | 853,263 | 748,717 | |||
Southeast [Member] | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Revenue from Contract with Customer, Excluding Assessed Tax | 122,992 | 109,552 | 373,044 | 333,004 | |||
Central [Member] | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Revenue from Contract with Customer, Excluding Assessed Tax | 180,602 | 155,184 | 555,797 | 476,277 | |||
Southwest [Member] | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Revenue from Contract with Customer, Excluding Assessed Tax | 242,200 | 217,946 | 756,495 | 664,731 | |||
West [Member] | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Revenue from Contract with Customer, Excluding Assessed Tax | 212,618 | 192,011 | 661,460 | 599,617 | |||
Other Revenues [Member] | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 13,137 | $ 13,357 | $ 39,655 | $ 39,447 |
Cash, Cash Equivalents and Ma_3
Cash, Cash Equivalents and Marketable Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Cash and Cash Equivalents [Line Items] | ||
Overnight Holdings | $ 217,270 | $ 311,158 |
Short-term Investments | 77,036 | 77,492 |
Cash | 24,465 | 33,207 |
Drafts Payable | (14,452) | (34,303) |
Cash, Cash Equivalents, and Short-term Investments | 304,319 | 387,554 |
Payroll Withholdings Included in Cash Balance | 153,800 | 224,500 |
Client Prepayments Included in Cash Balance | 19,700 | 34,200 |
Money Market Funds [Member] | ||
Cash and Cash Equivalents [Line Items] | ||
Overnight Holdings | 0 | 0 |
Short-term Investments | 60,880 | 60,781 |
Cash | 0 | 0 |
Drafts Payable | 0 | 0 |
Cash, Cash Equivalents, and Short-term Investments | 60,880 | 60,781 |
Cash and Cash Equivalents [Member] | ||
Cash and Cash Equivalents [Line Items] | ||
Overnight Holdings | 217,270 | 311,158 |
Short-term Investments | 16,156 | 16,711 |
Cash | 24,465 | 33,207 |
Drafts Payable | (14,452) | (34,303) |
Cash, Cash Equivalents, and Short-term Investments | $ 243,439 | $ 326,773 |
Fair Value Measurements Fair _3
Fair Value Measurements Fair Value Measurements (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | $ 232,777 | $ 325,819 |
US Government Securities, at Carrying Value | 61,529 | 52,197 |
Municipal bonds | 0 | 10,634 |
Total | 294,306 | 388,650 |
Available-for-sale Securities, Amortized Cost Basis | 60,854 | 60,790 |
Available-for-sale Securities, Gross Unrealized Gain | 27 | 1 |
Available-for-sale Securities, Gross Unrealized Loss | (1) | (10) |
Available-for-sale Securities | 60,880 | 60,781 |
Debt Securities, Available-for-sale, Amortized Cost, Fiscal Year Maturity [Abstract] | ||
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, within One Year, Amortized Cost | 60,854 | |
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, after One Through Five Years, Amortized Cost | 0 | |
Debt Securities, Available-for-sale, Fair Value, Fiscal Year Maturity [Abstract] | ||
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, within One Year, Fair Value | 60,880 | |
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, after One Through Five Years, Fair Value | 0 | |
US Treasury Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities, Amortized Cost Basis | 60,854 | 50,150 |
Available-for-sale Securities, Gross Unrealized Gain | 27 | 0 |
Available-for-sale Securities, Gross Unrealized Loss | (1) | (3) |
Available-for-sale Securities | 60,880 | 50,147 |
Municipal Bond [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale Securities, Amortized Cost Basis | 0 | 10,640 |
Available-for-sale Securities, Gross Unrealized Gain | 0 | 1 |
Available-for-sale Securities, Gross Unrealized Loss | 0 | (7) |
Available-for-sale Securities | 0 | 10,634 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 232,777 | 325,819 |
US Government Securities, at Carrying Value | 61,529 | 52,197 |
Municipal bonds | 0 | 0 |
Total | 294,306 | 378,016 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 0 | 0 |
US Government Securities, at Carrying Value | 0 | 0 |
Municipal bonds | 0 | 10,634 |
Total | $ 0 | $ 10,634 |
Long-term Debt (Details)
Long-term Debt (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) | |
Line of Credit Facility [Line Items] | ||
Current borrowing capacity | $ 500,000 | |
Maximum borrowing capacity | $ 550,000 | |
Percentage Of Subsidiary Stock Securing Debt | 0.65 | |
Long-term debt | $ 239,400 | $ 144,400 |
Letters of Credit Outstanding, Amount | 1,000 | |
Line of Credit Facility, Remaining Borrowing Capacity | $ 259,600 | |
Applicable Margin Federal Funds Rate | 0.50% | |
Applicable Margin 30 Day Libor | 2.00% | |
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.25% | |
Line of Credit Facility, Interest Rate During Period | 3.90% | |
London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | ||
Line of Credit Facility [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 1.50% | |
London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | ||
Line of Credit Facility [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 2.25% | |
Base Rate [Member] | Minimum [Member] | ||
Line of Credit Facility [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 0.00% | |
Base Rate [Member] | Maximum [Member] | ||
Line of Credit Facility [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 0.50% |
Leases Leases (Details)
Leases Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | |
Operating Lease, Cost | $ 4,100 | $ 11,700 | ||
Operating Lease, Payments | 12,500 | |||
Lessee Operating Lease Leases Not Yet Commenced Amount | 8,200 | 8,200 | ||
Right-of-use leased assets | $ 58,185 | $ 58,185 | $ 50,800 | $ 0 |
Operating Lease, Weighted Average Remaining Lease Term | 6 years | 6 years | ||
Operating Lease, Liability, Current | $ 15,195 | $ 15,195 | ||
Operating lease liabilities, net of current | 60,132 | 60,132 | $ 0 | |
Landlord funded tenant improvements | 12,711 | 12,711 | ||
Deferred Rent Credit, Noncurrent | $ 4,431 | $ 4,431 | ||
Operating Lease, Weighted Average Discount Rate, Percent | 4.60% | 4.60% | ||
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year | $ 4,564 | $ 4,564 | ||
Lessee, Operating Lease, Liability, Payments, Due Year Two | 17,656 | 17,656 | ||
Lessee, Operating Lease, Liability, Payments, Due Year Three | 15,049 | 15,049 | ||
Lessee, Operating Lease, Liability, Payments, Due Year Four | 13,637 | 13,637 | ||
Lessee, Operating Lease, Liability, Payments, Due Year Five | 11,134 | 11,134 | ||
Lessee, Operating Lease, Liability, Payments, Due after Year Five | 24,174 | 24,174 | ||
Lessee, Operating Lease, Liability, Payments, Due | 86,214 | 86,214 | ||
Lessee, Operating Lease, Liability, Undiscounted Excess Amount | 10,887 | 10,887 | ||
Operating Lease, Liability | $ 75,327 | $ 75,327 | $ 63,700 | |
Minimum [Member] | ||||
Lessee, Operating Lease, Lease Not yet Commenced, Term of Contract | 4 years | 4 years | ||
Maximum [Member] | ||||
Lessee, Operating Lease, Lease Not yet Commenced, Term of Contract | 8 years | 8 years |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | ||||||||
Dividends | $ 36.8 | $ 25.2 | ||||||
Aggregate number of shares repurchased during the period (in shares) | 1,481,369 | |||||||
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | 700,000 | 700,000 | ||||||
Shares repurchased under the program (in shares) | 1,254,210 | |||||||
Authorized to repurchased additional shares under repurchase program (in shares) | 1,056,945 | 1,056,945 | ||||||
Shares withheld for tax withholding obligations for the vesting of restricted stock awards (in shares) | 227,159 | |||||||
Dividends declared per share of common stock (in dollars per share) | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.20 | $ 0.20 | $ 0.20 |
Net Income per Share (Details)
Net Income per Share (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share [Abstract] | ||||
Net income | $ 25,859 | $ 36,207 | $ 130,704 | $ 110,758 |
Less distributed and undistributed earnings allocated to participating securities | 284 | 503 | 1,546 | 1,546 |
Net Income (Loss) Available to Common Stockholders, Basic | $ 25,575 | $ 35,704 | $ 129,158 | $ 109,212 |
Weighted average common shares outstanding basic (in shares) | 40,168 | 41,330 | 40,481 | 41,311 |
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements | 149 | 218 | 143 | 283 |
Weighted Average Number of Shares Outstanding, Diluted | 40,317 | 41,548 | 40,624 | 41,594 |
Commitments and Contingencies C
Commitments and Contingencies Commitments and Contingencies (Details) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Commitments and Contingencies Disclosure (Details) [Abstract] | |
Loss Contingency, Damages Sought | $ 128,000,000 |
Loss Contingency Accrual, Provision | $ 0 |