What changed in this filing

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Item 1. Financial Statements

2021-08-03 compared with 2021-05-04 · 92 added, 84 removed, 322 unchanged (35% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands) March 31, 2021 December 31, 2020

(in thousands) June 30, 2021 December 31, 2020

Cash and cash equivalents $ 455,387 $ 554,846

27 unchanged sentences

Operating lease liabilities, net of current 69,736 64,289

Deferred income taxes, net 13,343 —

Other accrued liabilities, net of current 6,294 6,292

8 unchanged sentences

See accompanying notes.

Insperity | 2021 First Quarter Form 10-Q

Insperity | 2021 Second Quarter Form 10-Q

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands, except per share amounts) 2021 2020 2021 2020

24 unchanged sentences

____________________________________

(1) Revenues are comprised of gross billings less worksite employee (“WSEE”) payroll costs as follows:

Three Months Ended March 31,

(1) Revenues are comprised of gross billings less WSEE payroll costs as follows:

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2021 2020 2021 2020

3 unchanged sentences

See accompanying notes.

Insperity | 2021 First Quarter Form 10-Q

Insperity | 2021 Second Quarter Form 10-Q

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2021 2020

22 unchanged sentences

Purchases ( 30,862 ) ( 25,438 )

Proceeds from dispositions — 484

Proceeds from maturities 30,340 27,625

11 unchanged sentences

Cash, cash equivalents and restricted cash end of period $ 705,127 $ 682,559

Insperity | 2021 First Quarter Form 10-Q

Insperity | 2021 Second Quarter Form 10-Q

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2021 2020

11 unchanged sentences

See accompanying notes.

Insperity | 2021 First Quarter Form 10-Q

Insperity | 2021 Second Quarter Form 10-Q

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended March 31, 2021 and 2020

For the Six Months Ended June 30, 2021 and 2020

Common Stock Issued Additional Paid-In Capital Treasury Stock Retained Earnings and AOCI Total

9 unchanged sentences

Net income — — — — 87,076 87,076

Balance at March 31, 2021 55,489 $ 555 $ 81,329 $ ( 628,391 ) $ 620,151 $ 73,644

Balance at June 30, 2021 55,489 $ 555 $ 94,396 $ ( 635,627 ) $ 627,938 $ 87,262

Balance at December 31, 2019 55,489 $ 555 $ 48,141 $ ( 544,102 ) $ 499,485 $ 4,079

7 unchanged sentences

Net income — — — — 113,943 113,943

Balance at June 30, 2020 55,489 $ 555 $ 54,783 $ ( 592,313 ) $ 581,613 $ 44,638

Insperity | 2021 Second Quarter Form 10-Q

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

For the Three Months Ended June 30, 2021 and 2020

Common Stock Issued Additional Paid-In Capital Treasury Stock Retained Earnings and AOCI Total

(in thousands) Shares Amount

Balance at March 31, 2021 55,489 $ 555 $ 81,329 $ ( 628,391 ) $ 620,151 $ 73,644

Insperity | 2021 First Quarter Form 10-Q

Purchase of treasury stock, at cost — — — ( 8,850 ) — ( 8,850 )

Stock-based compensation expense — — 12,588 1,193 — 13,781

Other — — 479 421 — 900

Dividends paid — — — — ( 17,367 ) ( 17,367 )

Net income — — — — 25,154 25,154

Balance at June 30, 2021 55,489 $ 555 $ 94,396 $ ( 635,627 ) $ 627,938 $ 87,262

Balance at March 31, 2020 55,489 $ 555 $ 46,327 $ ( 595,487 ) $ 545,295 $ ( 3,310 )

Purchase of treasury stock, at cost — — — ( 27 ) — ( 27 )

Stock-based compensation expense — — 8,448 2,246 — 10,694

Other — — 8 955 — 963

Dividends paid — — — — ( 15,517 ) ( 15,517 )

Unrealized loss on marketable securities, net of tax — — — — ( 16 ) ( 16 )

Net income — — — — 51,851 51,851

Balance at June 30, 2020 55,489 $ 555 $ 54,783 $ ( 592,313 ) $ 581,613 $ 44,638

See accompanying notes.

Insperity | 2021 Second Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

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 offer a comprehensive traditional payroll and human capital management solution, known as Workforce Acceleration.

Our PEO HR Outsourcing solutions 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 offer a comprehensive traditional payroll and human capital management solution, known as Workforce Acceleration TM .

We also offer a number of other business performance solutions, including Comprehensive Traditional Payroll and Human Capital Management, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Retirement Services and Insurance Services, many of which are offered as a cloud-based software solution.

7 unchanged sentences

Our Condensed Consolidated Balance Sheet at December 31, 2020 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 March 31, 2021 and our Consolidated Statements of Operations for the three month periods ended March 31, 2021 and 2020, our Consolidated Statements of Cash Flows for the three month periods ended March 31, 2021 and 2020 and our Consolidated Statements of Stockholders’ Equity for the three month periods ended March 31, 2021 and 2020, 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.

Our Condensed Consolidated Balance Sheet at June 30, 2021 and our Consolidated Statements of Operations for the three and six month periods ended June 30, 2021 and 2020, our Consolidated Statements of Cash Flows for the six month periods ended June 30, 2021 and 2020 and our Consolidated Statements of Stockholders’ Equity for the three and six month periods ended June 30, 2021 and 2020, have been prepared by us without audit.

In the opinion of management, all adjustments necessary to present fairly the consolidated financial position, results of operations and cash flows have been made, and all such adjustments are of a normal recurring nature.

The results of operations for the interim periods are not necessarily indicative of the operating results for a full year or of future operations.

2 unchanged sentences

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.

The policy with United provides approximately 87 % of our participants’ 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.

3 unchanged sentences

(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

Insperity | 2021 First Quarter Form 10-Q

(2) estimated completion rates based upon recent claim development patterns under

Insperity | 2021 Second Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

demographics and other factors are incorporated into the benefits costs, which requires a significant level of judgment.

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, which requires a significant level of judgment.

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.

2 unchanged sentences

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 $ 6.5 million at March 31, 2021, and is included in deposits - health insurance as a long-term asset on our Condensed Consolidated Balance Sheets.

As of March 31, 2021, Plan Costs were less than the net premiums paid and owed to United by $ 51.4 million.

As this amount is in excess of the agreed-upon $ 9.0 million surplus maintenance level, the $ 42.4 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 March 31, 2021 were $ 66.0 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 three months of 2021 included an increase of $ 5.5 million for changes in estimated run-off related to prior periods.

Our benefits costs incurred in the first three months of 2020 included a reduction of $ 1.5 million for changes in estimated run-off related to prior periods.

In addition, United requires a deposit equal to approximately one day of claims funding activity, which was $ 6.5 million at June 30, 2021, and is included in deposits - health insurance as a long-term asset on our Condensed Consolidated Balance Sheets.

As of June 30, 2021, Plan Costs were less than the net premiums paid and owed to United by $ 0.6 million.

As this amount is less than the agreed-upon $ 9.0 million surplus maintenance level, the $ 8.4 million difference is included in accrued health insurance costs, a current liability, in our Condensed Consolidated Balance Sheets.

The premiums, including the additional quarterly premiums, owed to United at June 30, 2021 were $ 14.5 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 six months of 2021 included an increase of $ 5.7 million for changes in estimated run-off related to prior periods.

Our benefits costs incurred in the first six months of 2020 included a reduction of $ 3.0 million for changes in estimated run-off related to prior periods.

Workers’ Compensation Costs

9 unchanged sentences

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 three months ended March 31, 2021 and 2020, we reduced accrued workers’ compensation costs by $ 13.2 million and $ 10.1 million, respectively, for changes in estimated losses related to prior reporting periods.

During the six months ended June 30, 2021 and 2020, we reduced accrued workers’ compensation costs by $ 23.0 million and $ 22.2 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 2021 period was 0.5 % and in the 2020 period was 0.8 %) and are accreted over the estimated claim payment period and included as a component of direct costs in our Consolidated Statements of Operations.

Insperity | 2021 First Quarter Form 10-Q

Insperity | 2021 Second Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides the activity and balances related to incurred but not paid workers’ compensation claims:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2021 2020

7 unchanged sentences

Total accrued claims $ 238,823 $ 242,717

The current portion of accrued workers’ compensation costs on our Condensed Consolidated Balance Sheets at March 31, 2021 includes $ 3.3 million of workers’ compensation administrative fees.

As of March 31, 2021 and 2020, the undiscounted accrued workers’ compensation costs were $ 253.2 million and $ 265.6 million, respectively.

The current portion of accrued workers’ compensation costs on our Condensed Consolidated Balance Sheets at June 30, 2021 includes $ 3.7 million of workers’ compensation administrative fees.

As of June 30, 2021 and 2020, the undiscounted accrued workers’ compensation costs were $ 254.8 million and $ 261.4 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”).

1 unchanged sentence

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.

At March 31, 2021, we had restricted cash of $ 46.4 million and deposits – workers’ compensation of $ 193.1 million.

At June 30, 2021, we had restricted cash of $ 46.1 million and deposits – workers’ compensation of $ 203.6 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.

1 unchanged sentence

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 contracts generally establish pricing for a period of 12 months, and are generally cancellable at any time by either party with 30-days’ notice.

Our performance obligations are satisfied as services are rendered each month.

4 unchanged sentences

Customers are invoiced concurrently with each periodic payroll of its WSEEs.

Revenues that have been recognized but unbilled of $ 549.0 million and $ 380.8 million at March 31, 2021 and December 31, 2020, 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.

Revenues that have been recognized but unbilled of $ 585.4 million and $ 380.8 million at June 30, 2021 and December 31, 2020, respectively, are included in accounts receivable, net on our Condensed Consolidated Balance Sheets.

Pursuant to the “practical expedients” provided under Accounting Standards Update 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.

Insperity | 2021 First Quarter Form 10-Q

Insperity | 2021 Second Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 March 31,

(in thousands) 2021 2020 % Change

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2021 2020 % Change 2021 2020 % Change

Northeast $ 329,016 $ 273,543 20.3 % $ 702,645 $ 617,401 13.8 %

8 unchanged sentences

The following table summarizes our cash and investments in cash equivalents and marketable securities held by investment managers and overnight investments:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

(in thousands) Cash & Cash Equivalents Marketable Securities Total Cash & Cash Equivalents Marketable Securities Total

5 unchanged sentences

Our cash and overnight holdings fluctuate based on the timing of clients’ payroll processing cycles.

Our cash, cash equivalents and marketable securities at March 31, 2021 and December 31, 2020 included $ 273.5 million and $ 342.0 million, respectively, of funds associated with federal and state income tax withholdings, employment taxes and other payroll deductions, as well as $ 58.9 million and $ 35.3 million, respectively, in client prepayments.

Our cash, cash equivalents and marketable securities at June 30, 2021 and December 31, 2020 included $ 226.7 million and $ 342.0 million, respectively, of funds associated with federal and state income tax withholdings, employment taxes and other payroll deductions, as well as $ 50.4 million and $ 35.3 million, respectively, in client prepayments.

Fair Value Measurements

5 unchanged sentences

• Level 3 - significant unobservable inputs

Insperity | 2021 First Quarter Form 10-Q

Insperity | 2021 Second Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

The following table summarizes the levels of fair value measurements of our financial assets:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

(in thousands) Total Level 1 Level 2 Total Level 1 Level 2

8 unchanged sentences

(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

March 31, 2021

June 30, 2021

Treasury bills $ 12,318 $ — $ — $ 12,318

5 unchanged sentences

Total $ 34,524 $ 9 $ ( 4 ) $ 34,529

As of March 31, 2021, the contractual maturities of our marketable securities were as follows:

As of June 30, 2021, the contractual maturities of our marketable securities were as follows:

(in thousands) Amortized Cost Estimated Fair Value

4 unchanged sentences

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 March 31, 2021, the carrying value of borrowings under our revolving credit facility approximates fair value and was classified as Level 2 in the fair value hierarchy.

As of June 30, 2021, 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.

Insperity | 2021 First Quarter Form 10-Q

Insperity | 2021 Second Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

We have a revolving credit facility (the “Facility”) with borrowing capacity of up to $ 500 million.

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 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 (as amended, 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 March 31, 2021, our outstanding balance on the Facility was $ 369.4 million, and we had an outstanding $ 1.0 million letter of credit issued under the Facility, resulting in an available borrowing capacity of $ 129.6 million.

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 other than certain excluded subsidiaries.

At June 30, 2021, our outstanding balance on the Facility was $ 369.4 million, and we had an outstanding $ 1.0 million letter of credit issued under the Facility, resulting in an available borrowing capacity of $ 129.6 million.

The Facility matures on September 13, 2024.

3 unchanged sentences

We also pay an unused commitment fee on the average daily unused portion of the Facility at a rate of 0.25 % per year.

The average interest rate for the three month period ended March 31, 2021 was 1.88 %.

The average interest rate for the six month period ended June 30, 2021 was 1.9 %.

Interest expense and unused commitment fees are recorded in other income (expense).

Upon the discontinuation of LIBOR, the Facility provides that we and the agent will negotiate in good faith to amend the agreement to address such discontinuation and to place the parties in substantially the same economic position.

Following early opt-in by us or our lenders or such other time as LIBOR rates have permanently or indefinitely ceased to be published by the regulatory supervisory authority of LIBOR, then LIBOR will be replaced by a rate per annum equal to the secured overnight financing rate published by the Federal Reserve Bank of New York or such other benchmark as determined in accordance with the Credit Agreement.

The Facility contains both affirmative and negative covenants that we believe are customary for arrangements of this nature.

1 unchanged sentence

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 March 31, 2021.

We were in compliance with all financial covenants under the Credit Agreement at June 30, 2021.

Stockholders' Equity

During the first three months of 2021, we repurchased or withheld an aggregate of 340,317 shares of our common stock, as described below.

During the first six months of 2021, we repurchased or withheld an aggregate of 437,903 shares of our common stock, as described below.

Repurchase Program

1 unchanged sentence

The purchases may 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.

During the three months ended March 31, 2021, 49,904 shares were repurchased under the Repurchase Program.

As of March 31, 2021, we were authorized to repurchase an additional 1,078,233 shares under the Repurchase Program.

During the six months ended June 30, 2021, 147,281 shares were repurchased under the Repurchase Program.

As of June 30, 2021, we were authorized to repurchase an additional 980,856 shares under the Repurchase Program.

Withheld Shares

During the three months ended March 31, 2021, we withheld 290,413 shares to satisfy tax withholding obligations for the vesting of long-term incentive and restricted stock awards.

During the six months ended June 30, 2021, we withheld 290,622 shares to satisfy tax withholding obligations for the vesting of long-term incentive and restricted stock awards.

The Board declared quarterly dividends as follows:

1 unchanged sentence

First quarter $ 0.40 $ 0.40

During the three months ended March 31, 2021 and 2020, we paid dividends totaling $ 15.5 million and $ 15.6 million, respectively.

Insperity | 2021 First Quarter Form 10-Q

Second quarter 0.45 0.40

Insperity | 2021 Second Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On May 21, 2020, the Board declared a dividend of one right (“Right”) for each outstanding share of common stock to common stockholders of record at the close of business on June 1, 2020 (the “Rights Plan”).

Each Right, if and when it becomes exercisable, entitles the registered holder to purchase from us one unit consisting of one one-hundredth of a share of Series A Junior Participating Preferred Stock, par value $0.01 per share.

Initially, the Rights are attached to all outstanding shares of our common stock.

The Rights are not currently exercisable and the Rights Plan will expire at the close of business on May 20, 2021 , unless the Rights are earlier redeemed or exchanged by us.

During the six months ended June 30, 2021 and 2020, we paid dividends totaling $ 32.8 million and $ 31.1 million, respectively.

Net Income Per Share

4 unchanged sentences

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 March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2021 2020 2021 2020

6 unchanged sentences

Incremental shares from assumed time-vested and performance-based RSU awards and conversions of common stock options

232 79 427 173

Adjusted weighted average common shares outstanding 38,823 38,646 38,837 38,857

Insperity | 2021 First Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 (the “Co-Defendant”) 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 alleged 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 denied plaintiffs’ request for a jury trial and set a bench trial, which was held from March 2, 2020 to March 13, 2020.

At trial, plaintiffs alleged damages up to approximately $ 146 million against all defendants.

All parties filed proposed findings of fact and conclusions of law on June 15, 2020.

On September 18, 2020, the plaintiffs and Co-Defendant informed the court that they reached an agreement in principle to settle the entire case, including a full and final release of all claims against Insperity.

Insperity did not participate in the settlement discussions and will make no financial contribution to the settlement.

In connection with the settlement, the Plaintiffs and Co-Defendant filed a motion to extend the class period to March 31, 2019, which the court granted.

The court granted final approval of the settlement on March 9, 2021.

Securities Class Action Lawsuit

6 unchanged sentences

On April 26, 2021, the defendants moved to dismiss the consolidated complaint with prejudice.

Plaintiff’s opposition is due June 10, 2021.

The Lead Plaintiff filed its opposition to the motion to dismiss on June 10, 2021, and the defendants filed their reply in support of the motion to dismiss on July 12, 2021.

We believe the allegations in the action are without merit, 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.

Insperity | 2021 Second Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Litigation

2 unchanged sentences

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.

Insperity | 2021 First Quarter Form 10-Q

Insperity | 2021 Second Quarter Form 10-Q

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements