8 unchanged sentences
Our long-term strategy is to provide the best small and medium-sized businesses in the United States with our specialized human resources service offering and to leverage our buying power and expertise to provide additional valuable services to clients.
−Removed: Our most comprehensive HR services offerings are provided through our Workforce Optimization ® and Workforce Synchronization TM solutions (together, our PEO HR Outsourcing solutions), which encompass a broad range of human resources functions, including payroll and employment administration, employee benefits, workers’ compensation, government compliance, performance management and training and development services.
+Added: Our most comprehensive HR services offerings are provided through our Workforce Optimization ® and Workforce Synchronization TM solutions (together, our “PEO HR Outsourcing solutions”), which encompass a broad range of human resources 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, our Insperity Premier TM platform.
Our overall operating results can be measured in terms of revenues, gross profit or adjusted EBITDA per WSEE per month.
We often use the average number of WSEEs paid during a period as our unit of measurement in analyzing and discussing our results of operations.
−Removed: In addition to our PEO HR Outsourcing solutions, we offer a comprehensive traditional payroll and human capital management solution, known as Workforce Acceleration TM .
−Removed: 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.
+Added: In addition to our PEO HR Outsourcing solutions, we offer a comprehensive traditional payroll and human capital management solution, known as our Workforce Acceleration TM solution.
+Added: We also offer a number of other business performance solutions, including Comprehensive Traditional Payroll and Human Capital Management, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Retirement Services, and Insurance Services, many of which are offered as a cloud-based software solution.
These other products or services are offered separately or with our other solutions.
COVID-19 Pandemic
−Removed: The effects of the COVID-19 pandemic, including actions taken by businesses and governments, have resulted in a significant reduction in U.S.
+Added: The effects of the COVID-19 pandemic, including actions taken by businesses and governments, have resulted in significant changes in U.S.
economic activity.
As the duration of the pandemic and such economic impacts remain uncertain, we have planned for a range of scenarios and have modified certain business and workforce practices.
−Removed: To conform to government restrictions and best practices, we have taken steps designed to keep our staff safe while continuing to serve clients, including implementing remote working for all non-essential employees and providing extra safety measures at corporate facilities.
−Removed: To serve our clients, we have instituted a number of service offerings and developed COVID-19 resources to assist clients with obtaining government provided tax credits, tax deferrals, loans and loan forgiveness and to provide guidance to assist clients with addressing the challenges faced by employers as a result of the pandemic.
−Removed: These service offerings and guidance to assist clients during the pandemic included additional benefits support, remote workforce transition, monitoring and educating on regulatory changes, return to the workplace and workplace safety.
−Removed: The COVID-19 pandemic did not have a significant impact to our first quarter 2020 financial results due to the increased spread of, and related government and business responses to, the COVID-19 pandemic not occurring until late in the quarter.
−Removed: However, towards the end of the first quarter, clients began layoffs and temporary leaves of absence of WSEEs, and this trend continued into the second quarter and resulted in a 1.8% decline in year-over-year average number of paid WSEEs per month in the second quarter.
−Removed: In the third quarter of 2020, the number of WSEEs returning to work as well as new hires exceeded layoffs, resulting in a 1.7% sequential increase and a 3.8% year-over-year decline in the average number of paid WSEEs per month.
−Removed: In the fourth quarter of 2020, the average number of paid WSEEs declined 1.8% year-over-year and increased 3.2% sequentially as new client sales and rehires exceeded layoffs and client attrition.
−Removed: We expect overall reduced employment levels to have a negative impact on our 2021 financial results.
−Removed: We experienced a 10.7% decrease in the year-over-year benefits costs per covered employee during the second quarter of 2020, a 1.1% increase in the year-over-year benefits costs per covered employee during the third quarter of 2020 and a
+Added: To conform to government restrictions and best practices, we have taken steps designed to keep our staff safe while continuing to serve clients, including implementing flexible remote working arrangements for our employees and providing extra safety measures at corporate facilities.
+Added: To serve our clients, we have instituted a number of service offerings and developed COVID-19 resources to assist clients with obtaining government provided tax credits, tax deferrals, PPP loans, and PPP loan forgiveness and to provide guidance to assist clients with addressing the challenges faced by employers as a result of the pandemic.
+Added: These service offerings and guidance to assist clients during the pandemic included additional benefits support, remote workforce transition, monitoring and educating on regulatory changes, including vaccine mandates, return to the workplace and workplace safety.
+Added: In 2021, the average number of WSEEs paid per month increased 7.1% year-over-year as WSEEs paid at existing clients combined with WSEEs paid from new sales exceeded 2020 levels.
+Added: We expect the average number of paid WSEEs per month to increase between 18.0% and 19.0% in the first quarter of 2022 as compared to the first quarter of 2021, which, if achieved, would equate to the average number of paid WSEEs per month growing 2.3% to 3.2% sequentially from the fourth quarter of 2021.
+Added: We experienced a 9.8% increase in the year-over-year benefits costs per covered employee during 2021 compared to 2020, which had substantially lower costs primarily due to the significant decrease in benefits utilization that we experienced during the second quarter of 2020.
+Added: During the second quarter of 2020, we experienced a 10.7% decrease in benefits costs per covered employee due primarily to lower utilization of medical services by plan participants as a result
2021 Form 10-K
1 unchanged sentence
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
−Removed: 2.4% increase in year-over-year benefits costs per covered employee during the fourth quarter of 2020.
−Removed: The fourth quarter 2020 increase in benefits costs per covered employee over the preceding third quarter of 2020 was due primarily to an increase in non-essential claims as a result of higher utilization and fewer deferrals or cancellations associated with the COVID-19 pandemic.
−Removed: For the full year 2020, we experienced a 0.5% decrease in year-over-year benefits cost per covered employee.
−Removed: We currently expect to experience higher costs related to COVID-19 and certain non-essential elective healthcare procedures during 2021 that had been deferred in response to COVID-19 governmental requirements or guidance related to shelter in place and similar orders, as well as additional costs related to COVID-19 treatment and COBRA medical claims.
−Removed: As a result, we expect that our healthcare claim costs will not be reflective of our historical quarterly claim cost trends.
−Removed: The COVID-19 pandemic has not had a material impact on our accrued workers’ compensation cost estimate;
+Added: of the COVID-19 pandemic, including in response to COVID-19 governmental requirements or guidance related to the deferral of non-essential medical procedures and shelter-in-place and similar orders.
+Added: Our healthcare claim activity in 2021 reflected a continued variability in claim incurral patterns, combined with incremental costs related to COVID-19 testing, vaccination administration, and treatment, which were driven by further COVID-19 variants.
+Added: During 2022 and possibly beyond 2022, benefits costs are expected to continue to be affected by the dynamics of the pandemic, including the impact on healthcare utilization and incremental COVID-19 testing, vaccination and treatment costs.
+Added: This may result in a higher level of healthcare claims costs than our historical claim cost trends.
+Added: While we have experienced a reduced frequency in workers’ compensation claims during the COVID-19 pandemic, the COVID-19 pandemic has not had a material impact on our workers’ compensation cost estimate;
however, the ultimate impact of COVID-19 on our workers’ compensation program remains uncertain.
−Removed: As the impact of the COVID-19 pandemic continues to emerge, such impact, if any, on our workers’ compensation program will be reflected in future reporting periods.
−Removed: In addition, during 2020, the COVID-19 pandemic has not had a material impact on our state unemployment tax costs.
−Removed: However, we anticipate state unemployment tax rates will increase during 2021 and beyond due to the impact of increased unemployment claims.
−Removed: The majority of states have not provided 2021 unemployment tax rates to employers.
−Removed: Prior to the receipt of final rate notices, we estimate our expected state unemployment tax rates in those states for which rate notices have not yet been received for purposes of budgeting and pricing.
−Removed: Some states have indicated their intention to exclude pandemic related claims from employers’ 2021 rates.
−Removed: However, the determination of which claims qualify for exclusion and the impact of such a determination on the 2021 state unemployment rates has not been clarified
−Removed: The extent to which our future results are affected by the COVID-19 pandemic will depend on various factors and consequences beyond our control, such as the scope, duration and magnitude of the pandemic, actions by businesses and governments in response to the pandemic, including programs designed to assist small and medium-sized businesses with the economic impact of the pandemic;
−Removed: and the speed and effectiveness of responses to combat the virus, including the development and availability of therapeutics and vaccines.
+Added: The extent to which our future results are affected by the COVID-19 pandemic will depend on various factors and consequences beyond our control, such as the scope, duration and magnitude of the pandemic, impacts of changes in or variants of the COVID-19 virus, actions by businesses and governments in response to the pandemic, including programs designed to assist small and medium-sized businesses with the economic impact of the pandemic;
+Added: and the speed and effectiveness of responses to combat the variants, including the development, availability, and acceptance of therapeutics and vaccines.
See Part I, Item 1A.
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2021 Highlights
−Removed: • Average number of WSEEs paid per month decreased 0.6% to 234,223, driving a 0.6% revenue decline.
−Removed: • We ended 2020 averaging 239,232 paid WSEEs in the fourth quarter of 2020, which represents a 1.8% decrease over the fourth quarter of 2019.
−Removed: We expect the average number of paid WSEEs per month to be between 232,100 and 234,400 in the first quarter 2021, which reflects the termination of a large client representing approximately 6,800 paid WSEEs.
+Added: • Average number of WSEEs paid per month increased 7.1% to 250,745, on a 16.0% revenue increase and an 8% increase in revenue per WSEE, which reflects a 5% increase in pricing and the non-recurrence of the 2020 FICA deferral credits instituted as part of the CARES Act.
+Added: • We ended 2021 averaging 268,978 paid WSEEs in the fourth quarter of 2021, which represents a 12.4% increase over the fourth quarter of 2020.
+Added: We expect the average number of paid WSEEs per month to be between 275,100 and 277,500 in the first quarter 2022.
• Approximately 23.8% and 24.4% of our average paid WSEEs were in our middle market sector for the years ended December 31, 2021 and 2020, respectively, which is generally defined as companies with 150 to 5,000 WSEEs.
−Removed: • Gross profit increased $73.9 million, primarily due to lower healthcare utilization and lower workers’ compensation costs.
−Removed: • Net income and diluted earnings per share (“Diluted EPS”) decreased 8.5% and 4.3% to $138.2 million and $3.54, respectively.
−Removed: • Adjusted EBITDA increased 15.4% to $288.6 million.
−Removed: • Adjusted net income increased 7.0% to $181.3 million.
−Removed: • Adjusted EPS increased 11.8% to $4.64.
−Removed: • Our average gross profit per WSEE per month was $287 in 2020 and $259 in 2019.
−Removed: • Operating expenses increased 12.1% in 2020 to $612.2 million, primarily due to increased non-cash stock-based compensation expense and salaries and wages partially offset by lower travel costs.
−Removed: On a per WSEE per month basis, operating expenses increased from $193 in 2019 to $218 in 2020.
−Removed: • Our adjusted EBITDA per WSEE per month increased 17.0% from $88 in 2019 to $103 in 2020.
+Added: • Gross profit increased $13.2 million, primarily due to the 7.1% growth in the average number of WSEEs paid per month driving an increase in revenue, partially offset by a 4.9% decline in gross profit per WSEE.
+Added: • Our average gross profit per WSEE per month declined from $287 in 2020 to $273 in 2021, due primarily to a 9.8% increase in benefits costs per covered employee.
+Added: • Operating expenses increased 5.7% in 2021 to $646.8 million, primarily due to increased salary and wages partially offset by lower stock-based compensation costs.
+Added: On a per WSEE per month basis, operating expenses decreased from $218 in 2020 to $215 in 2021.
+Added: • Net income and diluted earnings per share (“Diluted EPS”) both decreased 10.2% to $124.1 million and $3.18, respectively.
+Added: • Adjusted EBITDA decreased 11.7% to $254.9 million.
+Added: • Adjusted net income decreased 15.1% to $154.0 million.
+Added: • Adjusted EPS decreased 14.9% to $3.95.
+Added: • Our adjusted EBITDA per WSEE per month decreased 17.5% from $103 in 2020 to $85 in 2021.
• We ended 2021 with working capital of $116.3 million.
+Added: • During 2021, we paid $144.2 million in dividends, including our regular quarterly dividend as well as a $2.00 per share special dividend paid in December.
+Added: We also repurchased approximately 716,000 shares of our common stock at a cost of $69.7 million and paid $32.9 million in capital expenditures.
2021 Form 10-K
1 unchanged sentence
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
−Removed: • During 2020, we paid $61.9 million in dividends, repurchased 1.4 million shares of our common stock at a cost of $99.4 million, paid $98.2 million on capital expenditures, including $61.0 million for the construction of a new building, partially offset by borrowings of $100.0 million under our credit facility.
−Removed: Please read “Non-GAAP Financial Measures” for a reconciliation of adjusted EBITDA, adjusted net income, adjusted EPS and adjusted operating expenses to their most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United Stated (“GAAP”).
+Added: Please read “Non-GAAP Financial Measures” for a reconciliation of adjusted EBITDA, adjusted net income and adjusted EPS to their most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United Stated (“GAAP”).
We account for our revenues in accordance with Accounting Standards Update (“ASU”) No.
15 unchanged sentences
State unemployment tax rates are subject to claim histories and vary from state to state.
−Removed: Employee benefits costs are comprised primarily of health insurance premiums and claims costs (including dental and pharmacy costs), but also include costs of other employee benefits such as life insurance, vision care, disability insurance, education assistance, adoption assistance, a flexible spending account program and a work-life program.
+Added: Employee benefits costs are comprised primarily of health insurance premiums and claims costs (including dental and pharmacy costs), but also include costs of other employee benefits such as life insurance, vision care, disability insurance, education assistance, adoption assistance, a flexible spending account program and an employee well-being program.
Workers’ compensation costs include administrative and risk charges paid to the insurance carrier, and claims costs, which are driven primarily by the frequency and severity of claims.
3 unchanged sentences
• Salaries, wages and payroll taxes – Salaries, wages and payroll taxes (“Salaries”) are primarily a function of the number of corporate employees, their associated average pay and any additional cash incentive compensation.
+Added: Our corporate employees include client services, sales and marketing, benefits, legal, finance, information technology, administrative support personnel and those associated with our other products and services.
2021 Form 10-K
1 unchanged sentence
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
−Removed: Our corporate employees include client services, sales and marketing, benefits, legal, finance, information technology, administrative support personnel and those associated with our other products and services.
• Stock-based compensation – Our stock-based compensation relates to the recognition of non-cash compensation expense over the requisite service period of time-vested and performance-based incentive plan awards.
7 unchanged sentences
◦ employee travel and training expenses
−Removed: ◦ technology expenses
−Removed: ◦ facility repairs and maintenance costs
+Added: ◦ technology and facility costs, including repairs, maintenance and SaaS licensing costs
• Depreciation and amortization – Depreciation and amortization expense is primarily a function of our capital investments in corporate facilities, service centers, sales offices, software development and technology infrastructure.
14 unchanged sentences
Actual results may differ from these estimates.
+Added: We believe the following accounting policies are critical and/or require significant judgments and estimates used in the preparation of our Consolidated Financial Statements:
2021 Form 10-K
1 unchanged sentence
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
−Removed: We believe the following accounting policies are critical and/or require significant judgments and estimates used in the preparation of our Consolidated Financial Statements:
• Benefits costs – We provide group health insurance coverage to our WSEEs through a national network of carriers including United, UnitedHealthcare of California, Kaiser Permanente, Blue Shield of California, HMSA BlueCross BlueShield of Hawaii and Tufts, all of which provide fully insured policies or service contracts.
31 unchanged sentences
Effective for claims incurred on or after October 1, 2019, 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.
+Added: 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.
+Added: Workers’ compensation
2021 Form 10-K
1 unchanged sentence
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
−Removed: 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.
−Removed: Workers’ compensation insurance includes ongoing health care and indemnity coverage whereby claims are paid over numerous years following the date of injury.
+Added: 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.
3 unchanged sentences
Workers’ compensation cost estimates are discounted to present value at a rate based upon the U.S.
−Removed: Treasury rates that correspond with the weighted average estimated claim payout period (the average discount rate was 0.6% in 2020 and 1.9% in 2019) and are accreted over the estimated claim payment period and included as a component of direct costs in our Consolidated Statements of Operations.
+Added: Treasury rates that correspond with the weighted average estimated claim payout period (the average discount rate was 0.6% in both 2021 and 2020) and are accreted over the estimated claim payment period and included as a component of direct costs in our Consolidated Statements of Operations.
Our claim trends could be greater than or less than our prior estimates, in which case we would revise our claims estimates and record an adjustment to workers’ compensation costs in the period such determination is made.
96 unchanged sentences
new client sales, client retention and the net change in existing clients through WSEE new hires and terminations.
+Added: • During 2021, the average number of WSEEs paid from new client sales increased 8.8% from 2020.
+Added: The net gain (loss) in our client base also improved compared to 2020.
+Added: Average client retention remained flat at 82% in both 2020 and 2021.
• During 2020, the average number of WSEEs paid from new client sales decreased 1.5% from 2019.
−Removed: The net gain (loss) in our client base declined compared to 2019 as we have seen layoffs and furloughs exceeding WSEEs returning to work or otherwise hired.
−Removed: We have also seen certain clients hire significant numbers of WSEEs, while others have experienced significant layoffs.
+Added: The net gain (loss) in our client base declined compared to 2019.
Average client retention declined from 85% in 2019 to 82% in 2020.
−Removed: • During 2019, while the average number of WSEEs paid increased 12.6%, the number of WSEEs paid from new client sales decreased over 2018.
−Removed: In addition, the net change in existing clients and client retention also decreased compared to 2018.
2021 Compared to 2020
−Removed: Our revenues for 2020 were $4.3 billion, a decrease of 0.6%, primarily due to the following:
−Removed: • Average WSEEs paid decreased 0.6%.
−Removed: • Revenues per WSEE per month was essentially flat with only a decrease of 0.1%, or $2, as 3.0% higher average pricing was partially offset by $121.3 million, or $43 per WSEE per month, in FICA deferral elections by clients and credits pursuant to the CARES Act and the FFCRA.
−Removed: These deferral elections also reduced our direct costs and
+Added: Our revenues for 2021 were $5.0 billion, an increase of 16.0%, primarily due to the following:
+Added: • Average WSEEs paid increased 7.1%.
+Added: • Revenues per WSEE per month increased 8.4%, or $128, primarily due to 5.1% higher average pricing, as well as the non-recurrence of the 2020 FICA deferral credits of $121.3 million, or $43 per WSEE per month, and the 2020 comprehensive service fee credits of $11.6 million, or $4 per WSEE per month.
2021 Form 10-K
1 unchanged sentence
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
−Removed: therefore had no net effect on our gross profit.
−Removed: In addition, during the second quarter of 2020, we reduced revenue by $11.6 million for client comprehensive service fee credits applied generally on a WSEE basis across our active client base to assist clients in addressing the unprecedented economic impact of the COVID-19 pandemic.
2020 Compared to 2019
−Removed: Our revenues for 2019 were $4.3 billion, an increase of 12.7%, primarily due to the following:
−Removed: • Average WSEEs paid increased 12.6%
−Removed: • Revenues per WSEE per month increased 0.1%, or $1
−Removed: We provide our PEO HR Outsourcing solutions to small and medium-sized businesses in strategically selected markets throughout the United States.
+Added: Our revenues for 2020 were $4.3 billion, a decrease of 0.6%, primarily due to the following:
+Added: • Average WSEEs paid decreased 0.6%.
+Added: • Revenues per WSEE per month decreased 0.1%, or $2, as 3.0% higher average pricing was partially offset by $121.3 million, or $43 per WSEE per month, in FICA deferral elections by clients and credits pursuant to the CARES Act and the FFCRA.
+Added: These deferral elections also reduced our direct costs and therefore had no net effect on our gross profit.
+Added: In addition, during the second quarter of 2020, we reduced revenue by $11.6 million, or $4 per WSEE per month, for client comprehensive service fee credits applied generally on a WSEE basis across our active client base to assist clients in addressing the unprecedented economic impact of the COVID-19 pandemic in 2020.
+Added: We provide our PEO HR Outsourcing solutions to small and medium-sized businesses throughout the United States.
PEO HR Outsourcing solutions revenue distribution by region follows:
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(in thousands)
+Added: ____________________________________
+Added: Texas is included in the Southwest region.
The percentage of total PEO HR Outsourcing solutions revenues in our significant markets include the following:
Significant Markets
−Removed: In determining the pricing of the markup component of our gross billings, we take into consideration our estimates of the
2021 Form 10-K
1 unchanged sentence
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
−Removed: costs directly associated with our WSEEs, including payroll taxes, benefits and workers’ compensation costs, plus an acceptable gross profit margin.
+Added: In determining the pricing of the markup component of our gross billings, we take into consideration our estimates of the costs directly associated with our WSEEs, including payroll taxes, benefits and workers’ compensation costs, plus an acceptable gross profit margin.
As a result, our gross profit per WSEE and our operating results are significantly impacted by our ability to accurately estimate, control and manage our direct costs relative to the revenues derived from the markup component of our gross billings.
3 unchanged sentences
Our pricing objectives attempt to achieve a level of revenue per WSEE that matches or exceeds changes in primary direct costs and operating expenses.
−Removed: Our revenues per WSEE per month decreased $2 due to higher average pricing, which was offset by client FICA deferral elections and tax credits pursuant to the CARES Act and FFCRA in 2020.
−Removed: Our direct costs per WSEE per month decreased $30 due primarily to changes in our direct costs components as described below.
−Removed: The net decrease in direct costs between 2020 and 2019 attributable to changes in cost estimates for benefits and workers’ compensation totaled $12.9 million as discussed below.
+Added: Our revenues per WSEE per month increased $128 due to non-recurrence of the 2020 FICA deferral credits, comprehensive service fee credits, and higher average pricing.
+Added: Our direct costs per WSEE per month increased $142 due primarily to changes in our direct costs components as described below.
+Added: The net increase in direct costs between 2021 and 2020 attributable to changes in cost estimates for benefits and workers’ compensation totaled $5.5 million as discussed below.
The primary direct cost components changed as follows:
Benefits costs
−Removed: • The cost of group health insurance and related employee benefits increased $11 per WSEE per month, but decreased 0.5% on a per covered employee basis due primarily to a decrease in claims as a result of lower utilization and the deferral of nonessential healthcare procedures in response to COVID-19 governmental requirements or guidance.
+Added: • The cost of group health insurance and related employee benefits increased $58 per WSEE per month, or 9.8% on a per covered employee basis due primarily to an increase in claims in 2021 compared to 2020, which had lower claims as a result of lower utilization and the deferral of non-essential health care procedures, primarily in the second quarter of 2020, in connection with the COVID-19 pandemic and related government requirements or guidance.
+Added: Our healthcare claim activity in 2021 included a continued variability in claim incurral patterns, combined with incremental costs related to COVID-19 testing, vaccination administration, and treatment costs, which were driven by further COVID-19 variants.
• The percentage of WSEEs covered under our health insurance plan was 67.0% in 2021 and 67.9% in 2020.
−Removed: • Reported results include changes in estimated claims run-off related to prior periods, which was a decrease in costs of $0.2 million, but remained flat on a per WSEE per month basis, in 2020 compared to an increase in costs of $2.3 million, or $1 per WSEE per month, in 2019.
2021 Form 10-K
1 unchanged sentence
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
+Added: • Reported results include changes in estimated claims run-off related to prior periods, which was an increase in costs of $4.9 million, or $2 per WSEE per month, in 2021 compared to a decrease in costs of $0.2 million, but remained flat on a per WSEE per month basis, in 2020.
Please read “—Critical Accounting Policies and Estimates—Benefits Costs” for a discussion of our accounting for health insurance costs.
1 unchanged sentence
Our continued discipline around our client selection, safety and claims management contributed to the reduction in our cost per WSEE and, as a result, has allowed for claims within our policy periods to be closed out at amounts below our original costs estimates.
−Removed: • Workers’ compensation costs decreased 19.7%, or $6 per WSEE per month, in 2020 compared to 2019.
+Added: • Workers’ compensation costs increased 4.7%, but remained flat on a per WSEE per month basis, in 2021 compared to 2020.
• As a percentage of non-bonus payroll cost, workers’ compensation costs in 2021 were 0.29% compared to 0.32% in 2020.
• As a result of closing out claims incurred in prior periods at lower than expected costs, we recorded a reduction in workers’ compensation costs of $41.7 million, or 0.18% of non-bonus payroll costs, in 2021 compared to a reduction of $42.1 million, or 0.20% of non-bonus payroll costs, in 2020.
−Removed: The 2020 period costs include the impact of a 0.6% discount rate used to accrue workers’ compensation loss claims, compared to a 1.9% discount rate used in the 2019 period.
+Added: Both the 2021 and 2020 periods costs include the impact of a 0.6% discount rate used to accrue workers’ compensation loss claims.
Please read “—Critical Accounting Policies and Estimates—Workers’ Compensation Costs” for a discussion of our accounting for workers’ compensation costs.
Payroll tax costs
−Removed: • Payroll taxes decreased 6.9%, or $34 per WSEE per month, due primarily to $121.3 million in FICA deferral elections and tax credits by clients pursuant to the CARES Act and FFCRA.
−Removed: In addition, IRS tax reporting changes in 2020 eliminated PEO reporting of payroll taxes for self-employed owners.
−Removed: These reductions were partially offset by a 4.3% increase in payroll costs.
−Removed: • Payroll taxes as a percentage of payroll cost were 6.0% in 2020 and 6.7% in 2019.
+Added: • Payroll taxes increased 24.9% on an 18.7% increase in payroll costs, or $84 per WSEE per month, due primarily to the non-recurrence of $121.3 million in client FICA deferral elections and tax credits pursuant to the CARES Act and FFCRA in 2020, partially offset by the 2021 collection of $16.8 million in federal payroll tax refunds related to prior years.
+Added: • Payroll taxes as a percentage of payroll cost increased to 6.3% in 2021 compared to 6.0% in 2020.
2020 Compared to 2019
2 unchanged sentences
Benefits costs
−Removed: • The cost of group health insurance and related employee benefits increased $12 per WSEE per month, or 4.0%, on a per covered employee basis due primarily to an increase in the number of large individual healthcare claimants in 2019.
+Added: • The cost of group health insurance and related employee benefits increased $11 per WSEE per month, but decreased 0.5%, on a per covered employee basis due primarily to a decrease in claims as a result of lower utilization and the deferral of nonessential healthcare procedures in response to COVID-19 governmental requirements or guidance.
• The percentage of WSEEs covered under our health insurance plan was 67.9% in 2020 and 66.5% in 2019.
−Removed: • Reported results include changes in estimated claims run-off related to prior periods, which was an increase in costs of $2.3 million, or $1 per WSEE per month, in 2019 compared to a decrease in costs of $1.3 million, or $1 per WSEE per month, in 2018.
+Added: • Reported results include changes in estimated claims run-off related to prior periods, which was a decrease in costs of $0.2 million, but remained flat on a per WSEE per month basis, in 2020 compared to an increase in costs of $2.3 million, or $1 per WSEE per month, in 2019.
Please read “—Critical Accounting Policies and Estimates—Benefits Costs” for a discussion of our accounting for health insurance costs.
−Removed: Workers’ compensation costs
−Removed: Our continued discipline around our client selection, safety and claims management contributed to the reduction in our cost per WSEE and, as a result, has allowed for claims within our policy periods to be closed out at amounts below our original costs estimates.
−Removed: • Workers’ compensation costs decreased 4.7%, or $5 per WSEE per month, in 2019 compared to 2018.
2021 Form 10-K
1 unchanged sentence
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
+Added: Workers’ compensation costs
+Added: Our continued discipline around our client selection, safety and claims management contributed to the reduction in our cost per WSEE and, as a result, has allowed for claims within our policy periods to be closed out at amounts below our original costs estimates.
+Added: • Workers’ compensation costs decreased 19.7%, or $6 per WSEE per month, in 2020 compared to 2019.
• As a percentage of non-bonus payroll cost, workers’ compensation costs in 2020 were 0.32% compared to 0.41% in 2019.
3 unchanged sentences
Payroll tax costs
−Removed: • Payroll taxes increased 14.2%, or $8 per WSEE per month, due primarily to a 14.5% increase in payroll costs partially offset by lower unemployment tax rates in 2019.
−Removed: • Payroll taxes as a percentage of payroll cost were 6.7% in both 2019 and 2018.
+Added: • Payroll taxes decreased 6.9%, or $34 per WSEE per month, due primarily to $121.3 million in FICA deferral elections and tax credits by clients pursuant to the CARES Act and FFCRA.
+Added: In addition, IRS tax reporting changes in 2020 eliminated PEO reporting of payroll taxes for self-employed owners.
+Added: These reductions were partially offset by a 4.3% increase in payroll costs.
+Added: • Payroll taxes as a percentage of payroll cost were 6.0% in 2020 and 6.7% in 2019.
Operating Expenses
11 unchanged sentences
Operating expenses for 2021 increased 5.7% to $646.8 million compared to $612.2 million in 2020.
−Removed: Operating expenses per WSEE per month for 2020 increased 13.0% to $218 compared to $193 in 2019.
−Removed: • Salaries of corporate and sales staff increased 11.4% to $353.3 million, or $14 per WSEE per month, compared to 2019.
−Removed: The increase was primarily due to a 4.1% increase in headcount, including a 9.3% increase in total BPAs in 2020 and higher incentive compensation expense during 2020 related to better than expected 2020 operating results compared to lower than expected 2019 operating results.
−Removed: • Stock-based compensation increased 150.7% to $60.1 million, or $13 per WSEE per month, compared to 2019.
−Removed: The increase was primarily due to an increase in the number of stock awards anticipated to be earned related to performance-based awards granted under our short-term and long-term incentive plans based on our higher than expected operating results in 2020 compared to lower than expected operating results in 2019.
−Removed: In addition, 2020 contains the acceleration of stock-based compensation expense for employees who meet the retirement eligibility requirements for continued vesting.
+Added: Operating expenses per WSEE per month for 2021 decreased 1.4% to $215 compared to $218 in 2020.
+Added: • Salaries of corporate and sales staff increased 7.3% to $379.2 million, but remained flat on a per WSEE per month basis, compared to 2020.
+Added: The increase was primarily due to higher incentive compensation expense.
+Added: • Stock-based compensation decreased 32.5% to $40.6 million, or $7 per WSEE per month, compared to 2020.
+Added: The decrease was primarily due to the non-recurrence of stock-based compensation expense related to our 2020 short-term performance based awards.
Please read Note 1 “Accounting Policies” and Note 9 “Incentive Plans,” to the Consolidated Financial Statements for additional information.
−Removed: • Commissions expense increased 4.5% to $32.8 million, or $1 per WSEE per month, compared to 2019.
−Removed: Commissions are primarily due to commissions associated with our PEO HR Outsourcing solutions, including an increase in the amount of sales channel referral fees paid during 2020.
2021 Form 10-K
1 unchanged sentence
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
−Removed: • Advertising expense was flat compared to 2019, as a decrease in trade shows and events due to COVID-19 was partially offset by an increase in internet and radio advertising.
−Removed: • General and administrative expenses decreased 8.3% to $113.2 million, or $4 per WSEE per month, compared to 2019.
−Removed: The decrease was primarily due to reductions in travel and training costs in response to the COVID-19 pandemic, partially offset by an increase in technology licensing costs, corporate insurance and rent expense.
+Added: • Commissions expense increased 6.4% to $34.9 million, but remained flat on a per WSEE per month basis, compared to 2020.
+Added: Commissions are primarily due to commissions associated with our PEO HR Outsourcing solutions, including an increase in the amount of sales channel referral fees paid during 2021.
+Added: • Advertising expense increased 35.0% to $29.1 million, or $2 per WSEE per month, compared to 2020.
+Added: The increase was due to the resumption of the Insperity Invitational in 2021, which was canceled in 2020 due to the COVID-19 pandemic, as well as increases in television, radio and digital advertising and sponsorship costs.
+Added: • General and administrative expenses increased 9.9% to $124.4 million, but remained flat on a per WSEE per month basis, compared to 2020.
+Added: The increase was primarily due to technology SaaS licensing costs and professional services related to the implementation of a CRM solution, partially offset by decreases in travel costs.
• Depreciation and amortization expense increased 23.6% to $38.5 million, or $2 per WSEE per month, compared to 2020.
−Removed: The increase was primarily due to increased capital expenditures related to software development costs and sales office expansions.
+Added: The increase was primarily due to the completion of a new facility on our corporate campus and increased capital expenditures related to software development costs.
2020 Compared to 2019
10 unchanged sentences
Operating expenses for 2020 increased 12.1% to $612.2 million compared to $546.3 million in 2019.
−Removed: Operating expenses per WSEE per month for 2019 decreased 4.0% to $193 compared to $201 in 2018.
−Removed: • Salaries of corporate and sales staff increased 5.3% to $317.1 million, but decreased $8 on a per WSEE per month basis, compared to 2018.
−Removed: The increase was primarily due to an 11.4% increase in headcount, including a 12.8% increase in total BPAs in 2019, partially offset by the non-recurrence of a $9.3 million one-time tax reform bonus paid in the first quarter of 2018 and lower incentive compensation expense during 2019.
−Removed: • Stock-based compensation increased 17.5% to $24.0 million, but remained flat on a per WSEE per month basis, compared to 2018.
−Removed: This increase was primarily due to the acceleration of restricted stock awards and associated expense into the fourth quarter of 2017 that were originally scheduled to vest in the first quarter of 2018.
−Removed: Please read Note 1 “Accounting Policies” and Note 9 “Incentive Plans,” to the Consolidated Financial Statements for additional information.
−Removed: • Commissions expense increased 8.5% to $31.4 million, but decreased $1 on a per WSEE per month basis, compared to 2018.
−Removed: Commissions are primarily due to commissions associated with the growth in our PEO HR Outsourcing solutions, including an increase in the amount of sales channel referral fees paid in 2019.
−Removed: • Advertising expense increased 16.4% to $21.6 million, or $1 per WSEE per month, compared to 2018.
−Removed: The increase was primarily due to an increase in advertising and business promotions.
−Removed: • General and administrative expenses increased 11.1% to $123.4 million, but decreased $1 on a per WSEE per month basis, compared to 2018.
−Removed: The increase was primarily due to increased travel and training expenses associated with the increase in BPAs and technology licensing and maintenance costs.
−Removed: • Depreciation and amortization expense increased 25.7% to $28.7 million, or $1 per WSEE per month, compared to 2018.
−Removed: The increase was primarily due to increased capital expenditures related to software development costs and sales office expansions.
−Removed: Other Income (Expense)
+Added: Operating expenses per WSEE per month for 2020 increased 13.0% to $218 compared to $193 in 2019.
+Added: • Salaries of corporate and sales staff increased 11.4% to $353.3 million, or $14 per WSEE per month, compared to 2019.
+Added: The increase was primarily due to a 4.1% increase in headcount, including a 9.3% increase in total BPAs in 2020 and higher incentive compensation expense during 2020 related to better than expected 2020 operating results compared to lower than expected 2019 operating results.
+Added: • Stock-based compensation increased 150.7% to $60.1 million, or $13 per WSEE per month, compared to 2019.
+Added: The increase was primarily due to an increase in the number of stock awards anticipated to be earned related to performance-based awards granted under our short-term and long-term incentive plans based on our higher than expected operating results in 2020 compared to lower than expected operating results in 2019.
+Added: In addition, 2020 contains the acceleration of stock-based compensation expense for employees who meet the retirement eligibility requirements for continued vesting.
+Added: • Commissions expense increased 4.5% to $32.8 million, or $1 per WSEE per month, compared to 2019.
+Added: Commissions are primarily due to commissions associated with our PEO HR Outsourcing solutions, including an increase in the amount of sales channel referral fees paid during 2020.
+Added: • Advertising expense was flat compared to 2019, as a decrease in trade shows and events due to COVID-19 was partially offset by an increase in internet and radio advertising.
+Added: • General and administrative expenses decreased 8.3% to $113.2 million, or $4 per WSEE per month, compared to 2019.
+Added: The decrease was primarily due to reductions in travel and training costs in response to the COVID-19 pandemic, partially offset by an increase in technology licensing costs, corporate insurance and rent expense.
2021 Form 10-K
1 unchanged sentence
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
−Removed: Other income (expense), was expense of $5.4 million in 2020, income of $3.0 million in 2019 and income of $3.3 million in 2018.
+Added: • Depreciation and amortization expense increased 8.6% to $31.2 million, or $1 per WSEE per month, compared to 2019.
+Added: The increase was primarily due to increased capital expenditures related to software development costs and sales office expansions.
+Added: Other Income (Expense)
+Added: Other income (expense), was expense of $5.0 million in 2021, expense of $5.4 million in 2020 and income of $3.0 million in 2019.
+Added: In 2021, the decrease in interest expense was due to a decrease in the average interest rate.
In 2020, the decrease in other income was due to a decrease in interest income on our marketable securities investments and workers’ compensation deposits and a slight increase in interest expense related to the higher outstanding balance on our credit facility.
3 unchanged sentences
Our effective income tax rate was 26.3% in 2021, 27.0% in 2020 and 20.3% in 2019.
−Removed: During 2020, we incurred federal and state income tax expense of $51.0 million on pre-tax income of $189.3 million.
Our provision for income taxes differed from the U.S.
−Removed: statutory rate of 21% primarily due to state income taxes and non-deductible expenses, offset by a $2.1 million tax benefit associated with equity compensation.
−Removed: During 2019, we incurred federal and state income tax expense of $38.5 million on pre-tax income of $189.6 million.
−Removed: Our provision for income taxes differed from the U.S.
−Removed: statutory rate of 21% primarily due to state income taxes and non-deductible expenses, offset by a $14.6 million tax benefit associated with equity compensation.
−Removed: During 2018, we incurred federal and state income tax expense of $46.9 million on pre-tax income of $182.4 million.
−Removed: Our provision for income taxes differed from the U.S.
−Removed: statutory rate of 21% primarily due to state income taxes and non-deductible expenses, offset by $3.9 million of tax benefits associated with equity compensation.
+Added: statutory rate of 21% primarily due to state income taxes and non-deductible expenses, offset by excess tax benefits associated with the vesting of equity compensation of $2.6 million, $2.1 million and $14.6 million, in 2021, 2020 and 2019, respectively.
Please read Note 1 “Accounting Policies” and Note 7 “Income Taxes,” to the Consolidated Financial Statements for additional information.
19 unchanged sentences
Adjusted EBITDA is used by our lenders to assess our leverage and ability to make interest payments.
−Removed: Adjusted operating expense Represents operating expenses excluding the impact of the following:
−Removed: • costs associated with a one-time tax reform bonus paid to corporate employees.
EBITDA Represents net income computed in accordance with GAAP, plus:
4 unchanged sentences
• non-cash stock based compensation.
−Removed: • costs associated with a one-time tax reform bonus paid to corporate employees, and
−Removed: • charitable donations to Hurricane Harvey relief efforts.
Adjusted net income Represents net income computed in accordance with GAAP, excluding:
• non-cash stock based compensation.
−Removed: • costs associated with a one-time tax reform bonus paid to corporate employees, and
−Removed: • charitable donations to Hurricane Harvey relief efforts.
Adjusted EPS Represents diluted net income per share computed in accordance with GAAP, excluding:
• non-cash stock based compensation.
−Removed: • costs associated with a one-time tax reform bonus paid to corporate employees, and
−Removed: • charitable donations to Hurricane Harvey relief efforts.
2021 Form 10-K
4 unchanged sentences
(in thousands, except per WSEE per month) 2021 2020 2019
−Removed: 2020 2019 2018
−Removed: $ WSEE $ WSEE $ WSEE
+Added: Per WSEE Per WSEE Per WSEE
Payroll cost $ 28,345,623 $ 9,420 $ 23,881,607 $ 8,497 $ 22,897,206 $ 8,100
3 unchanged sentences
14.5 % 6.9 % 3.1 % 3.7 % 14.4 % 1.5 %
−Removed: Following is a reconciliation of operating expenses (GAAP) to adjusted operating expenses (non-GAAP):
−Removed: Year Ended December 31,
−Removed: (in thousands, except per WSEE per month)
−Removed: 2020 2019 2018
−Removed: $ WSEE $ WSEE $ WSEE
−Removed: Operating expenses $ 612,165 $ 218 $ 546,301 $ 193 $ 502,873 $ 201
−Removed: One-time tax reform bonus — — — — 9,306 4
−Removed: Adjusted operating expenses $ 612,165 $ 218 $ 546,301 $ 193 $ 493,567 $ 197
−Removed: % Change year over year
−Removed: 12.1 % 13.0 % 10.7 % (2.0) % 12.0 % (2.0) %
Following is a reconciliation of net income (GAAP) to EBITDA (non-GAAP) and adjusted EBITDA (non-GAAP):
2 unchanged sentences
2021 2020 2019
−Removed: $ WSEE $ WSEE $ WSEE $ WSEE $ WSEE
+Added: Per WSEE Per WSEE Per WSEE
Net income $ 124,080 $ 41 $ 138,237 $ 49 $ 151,099 $ 53
4 unchanged sentences
Stock-based compensation 40,623 14 60,145 21 23,993 8
−Removed: One-time tax reform bonus — — — — 9,306 3 — — — —
−Removed: Charitable donations to Hurricane Harvey relief efforts — — — — — — 2,000 1 — —
−Removed: Other — — — — — — (200) — — —
−Removed: Stockholder advisory expenses — — — — — — — — 323 1
Adjusted EBITDA $ 254,946 $ 85 $ 288,620 $ 103 $ 250,006 $ 88
% Change year over year (11.7) % (17.5) % 15.4 % 17.0 % 4.3 % (7.4) %
−Removed: 2020 Form 10-K
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF
−Removed: FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Following is a reconciliation of cash, cash equivalents and marketable securities (GAAP) to adjusted cash, cash equivalents and marketable securities (non-GAAP):
4 unchanged sentences
Adjusted cash, cash equivalents and marketable securities $ 162,749 $ 212,059
+Added: 2021 Form 10-K
+Added: MANAGEMENT’S DISCUSSION AND ANALYSIS OF
+Added: FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Following is a reconciliation of net income (GAAP) to adjusted net income (non-GAAP):
4 unchanged sentences
Stock-based compensation 40,623 60,145 23,993
−Removed: One-time tax reform bonus — — 9,306 — —
−Removed: Charitable donations to Hurricane Harvey relief efforts — — — 2,000 —
−Removed: Other — — — (200) —
−Removed: Stockholder advisory expenses — — — — 323
−Removed: Total non-GAAP adjustments 60,145 23,993 29,731 26,145 16,966
Tax effect of non-GAAP adjustments (10,677) (17,068) (5,643)
−Removed: Enactment of the 2017 Tax Reform Act — — — 2,481 —
−Removed: Disaster relief tax credit — — — (669) —
+Added: Total non-GAAP adjustments, net 29,946 43,077 18,350
Adjusted net income $ 154,026 $ 181,314 $ 169,449
% Change year over year (15.1) % 7.0 % 7.6 %
−Removed: 2020 Form 10-K
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF
−Removed: FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Following is a reconciliation of diluted EPS (GAAP) to adjusted EPS (non-GAAP):
4 unchanged sentences
Stock-based compensation 1.04 1.54 0.59
−Removed: One-time tax reform bonus — — 0.22 — —
−Removed: Charitable donations to Hurricane Harvey relief efforts — — — 0.05 —
−Removed: Other — — — (0.01) —
−Removed: Stockholder advisory expenses — — — — 0.01
−Removed: Total non-GAAP adjustments 1.54 0.59 0.71 0.62 0.40
Tax effect of non-GAAP adjustments (0.27) (0.44) (0.14)
−Removed: Enactment of the 2017 Tax Reform Act — — — 0.06 —
−Removed: Disaster relief tax credit — — — (0.02) —
−Removed: $ 4.64 $ 4.15 $ 3.75 $ 2.45 $ 1.79
+Added: Total non-GAAP adjustments, net 0.77 1.10 0.45
+Added: Adjusted EPS $ 3.95 $ 4.64 $ 4.15
% Change year over year
(14.9) % 11.8 % 10.7 %
−Removed: ____________________________________
−Removed: (1) Per share amounts for the years 2017 and 2016 have been adjusted to reflect the two-for-one split of our common stock effected on December 18, 2017 as a stock dividend.
Liquidity and Capital Resources
1 unchanged sentence
To meet short-term liquidity requirements, which are primarily the payment of direct costs and operating expenses, we rely primarily on cash from operations.
−Removed: Longer-term projects, large stock repurchases or significant acquisitions may be financed with debt or equity.
−Removed: We have a $500 million credit facility (“Facility”) with a syndicate of financial institutions.
+Added: Longer-term projects, large stock repurchases or significant acquisitions may be financed with public or private debt or equity.
+Added: We have a $500 million revolving credit facility (“Facility”) with a syndicate of financial institutions.
The Facility is available for working capital and general corporate purposes, including acquisitions and stock repurchases.
1 unchanged sentence
We had $607.6 million in cash, cash equivalents and marketable securities at December 31, 2021, of which approximately $424.8 million was payable in early January 2022 for withheld federal and state income taxes, employment taxes and other payroll deductions, and $20.1 million were client prepayments that were payable in January 2022.
−Removed: During 2020, we borrowed $100.0 million under the Facility, which increased working capital.
At December 31, 2021, we had working capital of $116.3 million compared to $172.3 million at December 31, 2020.
−Removed: The increase in working capital reflects, in part, cash flow from operations and borrowings under our Facility, offset by share repurchases, dividends and capital expenditures.
+Added: The reduction in working capital reflects, in part, cash flow from operations, share repurchases, dividends and capital expenditures.
We currently believe that our cash on hand, marketable securities, cash flows from operations and availability under our Facility will be adequate to meet our liquidity requirements for 2022.
−Removed: We intend to rely on these same sources, as well as public and private debt or equity financing, to meet our longer-term liquidity and capital needs, which we are monitoring in light of the significant uncertainty created by the COVID-19 pandemic.
+Added: We intend to rely on these same sources, as well as public and private debt or equity financing, to meet our longer-term liquidity and capital needs.
At December 31, 2021, we had outstanding letters of credit and borrowings totaling $370.4 million under the Facility.
Please read Note 6 to the Consolidated Financial Statements, “Long-Term Debt,” for additional information.
+Added: 2021 Form 10-K
+Added: MANAGEMENT’S DISCUSSION AND ANALYSIS OF
+Added: FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cash Flows from Operating Activities
3 unchanged sentences
These include the following:
−Removed: 2020 Form 10-K
−Removed: MANAGEMENT’S DISCUSSION AND ANALYSIS OF
−Removed: FINANCIAL CONDITION AND RESULTS OF OPERATIONS
• Timing of client payments / payroll taxes – We typically collect our comprehensive service fee, along with the client’s payroll funding, from clients no later than the same day as the payment of WSEE payrolls and associated payroll taxes.
2 unchanged sentences
therefore, operating cash flows decrease in the reporting periods that end on a Friday.
−Removed: In the year ended December 31, 2020, the last business day of the reporting period ended on a Thursday, client prepayments were $35.3 million and amounts payable for withheld federal and state income taxes, employment taxes and other payroll deductions was $342.0 million.
−Removed: In the period ended December 31, 2019, which ended on a Tuesday, client prepayments were $59.6 million and amounts payable for withheld federal and state income taxes, employment taxes and other payroll deductions was $234.6 million.
+Added: In the year ended December 31, 2021, the last business day of the reporting period ended on a Friday, client prepayments were $20.1 million and amounts payable for withheld federal and state income taxes, employment taxes and other payroll deductions was $424.8 million.
+Added: In the year ended December 31, 2020, which ended on a Thursday, client prepayments were $35.3 million and amounts payable for withheld federal and state income taxes, employment taxes and other payroll deductions was $342.0 million.
• Workers’ compensation plan funding – In 2021 and 2020, we received $35.1 million and $28.2 million, respectively, for the return of excess claim funds related to the workers’ compensation program, which resulted in an increase in working capital.
6 unchanged sentences
• Operating results – Our adjusted net income has a significant impact on our operating cash flows.
−Removed: Our adjusted net income increased 7.0% to $181.3 million in 2020 from $169.4 million in 2019.
+Added: Our adjusted net income decreased 15.1% to $154.0 million in 2021 from $181.3 million in 2020.
Please read “Results of Operations.”
Cash Flows from Investing Activities
−Removed: Our net cash flows used in investing activities were $98.6 million during 2020, primarily due to $98.2 million in property and equipment purchases, which included $61.0 million related to our corporate office expansion.
+Added: Our net cash flows used in investing activities were $31.0 million during 2021, primarily due to $32.9 million in property and equipment purchases.
Cash Flows from Financing Activities
Our net cash flows used in financing activities were $208.1 million during 2021.
−Removed: We repurchased $99.4 million in stock and paid $61.9 million in dividends, offset by borrowings of $100.0 million under our Facility.
−Removed: Please read Note 6 to the Consolidated Financial Statements, “Long-Term Debt,” for additional information.
+Added: We repurchased $69.7 million in stock and paid $144.2 million in dividends, including a special cash dividend of $76.7 million paid in the fourth quarter.
Seasonality, Inflation and Quarterly Fluctuations
2 unchanged sentences
This trend is primarily the result of many WSEEs’ medical plan deductibles being fully met by the fourth quarter, which increases our liability with respect to those claims.
−Removed: We have also experienced variability on a quarterly basis in medical claims costs based on the unpredictable nature of large claims and the COVID-19 pandemic effect on healthcare utilization patterns.
+Added: We have also experienced variability on a quarterly basis in medical claims costs based on the unpredictable nature of large claims and the COVID-19 pandemic effect on health care utilization patterns, as well as incremental costs related to COVID-19 testing, vaccination administration and treatment, which were driven by further COVID-19 variants.
Payroll taxes and associated billings are computed based on an employee’s annual taxable wage base.
The annual payroll tax wage bases are frequently met in the first two quarters of each year depending on the employee’s compensation levels.
−Removed: As a result, the gross profit contribution from payroll taxes is typically higher in the first two quarters and declines in the latter half of each year.
+Added: As a result, the gross profit contribution from payroll taxes is typically higher in the first two quarters and declines in the latter half of
+Added: 2021 Form 10-K
+Added: MANAGEMENT’S DISCUSSION AND ANALYSIS OF
+Added: FINANCIAL CONDITION AND RESULTS OF OPERATIONS
These historical trends may change and other seasonal trends may develop in the future.
For further information related to our health insurance costs, please read “—Critical Accounting Policies and Estimates—Benefits Costs.”
−Removed: We believe the effects of inflation have not had a significant impact on our results of operations or financial condition.
+Added: We believe the effects of inflation have not had a significant impact on our results of operations or financial condition, however, inflationary pressure could adversely impact our profitability in the future.
2021 Form 10-K
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.