What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-01 compared with 2023-04-26 · 87 added, 55 removed, 317 unchanged (31% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands) March 31, 2023 December 31, 2022

(in thousands) June 30, 2023 December 31, 2022

Cash and cash equivalents $ 580,093 $ 732,828

2 unchanged sentences

Accounts receivable, net 605,065 622,764

Prepaid insurance 50,665 11,706

Prepaid insurance and related assets 22,747 11,706

Income taxes receivable 11,588 —

Other current assets 60,144 61,728

22 unchanged sentences

Operating lease liabilities, net of current 50,087 55,587

Deferred income taxes, net 1,196 —

Total noncurrent liabilities 599,064 604,616

7 unchanged sentences

See accompanying notes.

Insperity | 2023 First Quarter Form 10-Q

Insperity | 2023 Second Quarter Form 10-Q

FINANCIAL STATEMENTS

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share amounts) 2023 2022 2023 2022

23 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands) 2023 2022 2023 2022

3 unchanged sentences

See accompanying notes.

Insperity | 2023 First Quarter Form 10-Q

Insperity | 2023 Second Quarter Form 10-Q

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2023 2022

7 unchanged sentences

Accounts receivable 17,699 ( 172,551 )

Prepaid insurance ( 38,959 ) ( 11,431 )

Prepaid insurance and related assets ( 11,041 ) ( 41,654 )

Other current assets 566 ( 17,874 )

8 unchanged sentences

Total adjustments ( 177,126 ) ( 80,698 )

Net cash provided by operating activities 39,352 58,847

Net cash provided by (used in) operating activities ( 69,637 ) 22,785

Cash flows from investing activities

2 unchanged sentences

Proceeds from maturities 21,560 17,665

Property and equipment:

Purchases ( 6,849 ) ( 4,686 )

Proceeds from dispositions 8,491 —

Property and equipment purchases ( 14,017 ) ( 9,043 )

Net cash used in investing activities ( 16,291 ) ( 8,646 )

4 unchanged sentences

Net cash used in financing activities ( 84,990 ) ( 91,632 )

Net increase (decrease) in cash, cash equivalents, restricted cash and funds held for clients ( 16,440 ) 9,071

Net decrease in cash, cash equivalents, restricted cash and funds held for clients ( 170,918 ) ( 77,493 )

Cash, cash equivalents, restricted cash and funds held for clients beginning of period 1,013,919 807,768

3 unchanged sentences

See accompanying notes.

Insperity | 2023 First Quarter Form 10-Q

Insperity | 2023 Second Quarter Form 10-Q

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

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

8 unchanged sentences

Net income — — — — 107,489 107,489

Balance at March 31, 2023 55,489 $ 555 $ 142,002 $ ( 735,219 ) $ 726,094 $ 133,432

Balance at June 30, 2023 55,489 $ 555 $ 157,526 $ ( 744,788 ) $ 717,226 $ 130,519

Balance at December 31, 2021 55,489 $ 555 $ 109,179 $ ( 665,089 ) $ 553,581 $ ( 1,774 )

6 unchanged sentences

Net income — — — — 103,483 103,483

Balance at June 30, 2022 55,489 $ 555 $ 125,622 $ ( 709,810 ) $ 618,765 $ 35,132

Insperity | 2023 Second Quarter Form 10-Q

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

For the Three Months Ended June 30, 2023 and 2022

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

(in thousands) Shares Amount

Balance at March 31, 2023 55,489 $ 555 $ 142,002 $ ( 735,219 ) $ 726,094 $ 133,432

Insperity | 2023 First Quarter Form 10-Q

Purchase of treasury stock, at cost — — — ( 10,751 ) — ( 10,751 )

Issuance of equity-based incentive awards and dividend equivalents — — ( 74 ) 87 ( 13 ) —

Stock-based compensation expense — — 14,753 603 — 15,356

Other — — 845 492 — 1,337

Dividends paid — — — — ( 21,735 ) ( 21,735 )

Unrealized loss on marketable securities, net of tax — — — — ( 14 ) ( 14 )

Net income — — — — 12,894 12,894

Balance at June 30, 2023 55,489 $ 555 $ 157,526 $ ( 744,788 ) $ 717,226 $ 130,519

Balance at March 31, 2022 55,489 $ 555 $ 110,053 $ ( 681,625 ) $ 604,978 $ 33,961

Purchase of treasury stock, at cost — — — ( 29,364 ) — ( 29,364 )

Issuance of equity-based incentive awards and dividend equivalents — — ( 34 ) 34 — —

Stock-based compensation expense — — 14,952 679 — 15,631

Other — — 651 466 — 1,117

Dividends paid — — — — ( 19,853 ) ( 19,853 )

Unrealized gain on marketable securities, net of tax — — — — 41 41

Net income — — — — 33,599 33,599

Balance at June 30, 2022 55,489 $ 555 $ 125,622 $ ( 709,810 ) $ 618,765 $ 35,132

See accompanying notes.

Insperity | 2023 Second Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13 unchanged sentences

Our Condensed Consolidated Balance Sheet at December 31, 2022 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, 2023 and our Consolidated Statements of Operations for the three month periods ended March 31, 2023 and 2022, our Consolidated Statements of Cash Flows for the three month periods ended March 31, 2023 and 2022 and our Consolidated Statements of Stockholders’ Equity for the three month periods ended March 31, 2023 and 2022, have been prepared by us without audit.

Our Condensed Consolidated Balance Sheet at June 30, 2023 and our Consolidated Statements of Operations for the three and six month periods ended June 30, 2023 and 2022, our Consolidated Statements of Cash Flows for the six month periods ended June 30, 2023 and 2022 and our Consolidated Statements of Stockholders’ Equity for the three and six month periods ended June 30, 2023 and 2022, 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.

5 unchanged sentences

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.

Effective January 1, 2020, under the amended agreement with United, we no longer have financial responsibilities for a participant’s annual claim costs that exceed $1 million.

Effective January 1, 2020, under the amended agreement with United, we no longer have financial responsibilities for a participant’s annual claim costs that exceed $1 million (“Pooling Limit”).

Accordingly, we record the cost 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.

2 unchanged sentences

(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

Insperity | 2023 First Quarter Form 10-Q

and (3) the number of participants in the plan, including both

Insperity | 2023 Second Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

3 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 health insurance.

In addition, United requires a deposit equal to approximately one day of claims funding activity, which was $ 6.5 million at March 31, 2023 , and is included in deposits - health insurance as a long-term asset on our Condensed Consolidated Balance Sheets.

As of March 31, 2023 , Plan Costs were less than the net premiums paid and owed to United by $ 41.5 million.

As this amount is in excess of the agreed-upon $ 9.0 million surplus maintenance level, the $ 32.5 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, 2023 were $ 71.1 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 2023 included a decrease of $ 9.0 million for changes in estimated run-off related to prior periods.

Our benefits costs incurred in the first three months of 2022 included an increase of $ 0.8 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, 2023, and is included in deposits - health insurance as a long-term asset on our Condensed Consolidated Balance Sheets.

As of June 30, 2023, Plan Costs were more than the net premiums paid and owed to United by $ 6.5 million.

As this amount is less than the agreed-upon $ 9.0 million surplus maintenance level, the $ 15.5 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, 2023 were $ 10.8 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 2023 included a decrease of $ 9.8 million for changes in estimated run-off related to prior periods, net of Pooling Limit.

Our benefits costs incurred in the first six months of 2022 included an increase of $ 10.2 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, 2023 and 2022, we reduced accrued workers’ compensation costs by $ 7.6 million and $ 14.9 million, respectively, for changes in estimated losses related to prior periods.

During the six months ended June 30, 2023 and 2022, we reduced accrued workers’ compensation costs by $ 15.0 million and $ 26.8 million, respectively, for changes in estimated losses related to prior 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 2023 period was 4.0 % and in the 2022 period was 2.0 %) and are accreted over the estimated claim payment period and included as a component of direct costs in our Consolidated Statements of Operations.

Insperity | 2023 First Quarter Form 10-Q

Insperity | 2023 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) 2023 2022

7 unchanged sentences

Total accrued claims $ 227,579 $ 227,003

The current portion of accrued workers’ compensation costs on our Condensed Consolidated Balance Sheets at March 31, 2023 includes $ 3.8 million of workers’ compensation administrative fees.

The undiscounted accrued workers’ compensation costs were $ 252.6 million as of March 31, 2023 and $ 248.0 million as of March 31, 2022.

The current portion of accrued workers’ compensation costs on our Condensed Consolidated Balance Sheets at June 30, 2023 includes $ 3.4 million of workers’ compensation administrative fees.

The undiscounted accrued workers’ compensation costs were $ 252.6 million as of June 30, 2023 and $ 243.9 million as of June 30, 2022.

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, 2023 , we had restricted cash of $ 48.1 million and deposits – workers’ compensation of $ 211.2 million.

During the first six months of 2023 , we received $ 43.4 million for the return of excess claim funds related to the workers’ compensation program, which resulted in a decrease to deposits - workers’ compensation.

At June 30, 2023, we had restricted cash of $ 48.0 million and deposits – workers’ compensation of $ 181.0 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.

8 unchanged sentences

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

Revenues that have been recognized but not invoiced represent unbilled accounts receivable of $ 582.8 million and $ 600.4 million at March 31, 2023 and December 31, 2022, and are included in accounts receivable, net on our Condensed Consolidated Balance Sheets.

Revenues that have been recognized but not invoiced represent unbilled accounts receivable of $ 590.6 million and $ 600.4 million at June 30, 2023 and December 31, 2022, and are included in accounts receivable, net on our Condensed Consolidated Balance Sheets.

Pursuant to the “practical expedients” provided under ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers , we expense sales commissions when incurred because the terms of our contracts are cancellable by either party with a 30-day notice.

These costs are recorded in commissions in our Consolidated Statements of Operations.

Insperity | 2023 First Quarter Form 10-Q

Insperity | 2023 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) 2023 2022 % Change

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

(in thousands) 2023 2022 % Change 2023 2022 % Change

Northeast $ 425,848 $ 388,680 9.6 % $ 918,138 $ 838,602 9.5 %

9 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, 2023 December 31, 2022

June 30, 2023 December 31, 2022

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

6 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, 2023 and December 31, 2022 included $ 457.8 million and $ 504.8 million, respectively, of funds associated with federal and state income tax withholdings, employment taxes, and other payroll deductions, as well as $ 42.9 million and $ 36.8 million, respectively, in client prepayments.

Insperity | 2023 First Quarter Form 10-Q

Our cash, cash equivalents and marketable securities at June 30, 2023 and December 31, 2022 included $ 365.9 million and $ 504.8 million, respectively, of funds associated with federal and state income tax withholdings, employment taxes, and other payroll deductions, as well as $ 31.3 million and $ 36.8 million, respectively, in client prepayments.

Insperity | 2023 Second Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

The following table summarizes our cash, cash equivalents, restricted cash and funds held for clients as reported in our Consolidated Statements of Cash Flows:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2023 2022

25 unchanged sentences

• Level 3 - significant unobservable inputs

Insperity | 2023 First Quarter Form 10-Q

Insperity | 2023 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, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(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, 2023

June 30, 2023

Treasury bills $ 36,036 $ 2 $ ( 40 ) $ 35,998

2 unchanged sentences

Municipal bonds 3,369 — ( 4 ) 3,365

As of March 31, 2023 , the contractual maturities of the marketable securities in our portfolio were less than one year.

As of June 30, 2023, the contractual maturities of the marketable securities in our portfolio were less than one year.

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 March 31, 2023 , 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, 2023, 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.

4 unchanged sentences

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 March 31, 2023 , 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 $ 279.6 million.

At June 30, 2023, 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 $ 279.6 million.

The Facility matures on June 30, 2027 .

Borrowings under the Facility bear interest at an annual rate equal to an alternate base rate or Adjusted Term SOFR for term SOFR loans, in either case plus an applicable margin.

Insperity | 2023 First Quarter Form 10-Q

Insperity | 2023 Second Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4 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, 2023 was 6.35 %.

The average interest rate for the six month period ended June 30, 2023 was 6.57 %.

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

2 unchanged sentences

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, 2023 .

We were in compliance with all financial covenants under the Credit Agreement at June 30, 2023.

Stockholders' Equity

During the first three months of 2023 , we repurchased or withheld an aggregate of 288,502 shares of our common stock, as described below.

During the first six months of 2023 , we repurchased or withheld an aggregate of 386,090 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, 2023 , 93,387 shares were repurchased under the Repurchase Program.

As of March 31, 2023 , we were authorized to repurchase an additional 938,773 shares under the Repurchase Program.

During the six months ended June 30, 2023, 190,338 shares were repurchased under the Repurchase Program.

As of June 30, 2023, we were authorized to repurchase an additional 841,822 shares under the Repurchase Program.

Withheld Shares

During the three months ended March 31, 2023 , we withheld 195,115 shares to satisfy tax withholding obligations for the vesting of long-term incentive and restricted stock awards.

During the six months ended June 30, 2023, we withheld 195,752 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 $ 0.52 $ 0.45

During the three months ended March 31, 2023 and 2022, we paid dividends totaling $ 19.9 million and $ 17.2 million, respectively.

Second quarter 0.57 0.52

During the six months ended June 30, 2023 and 2022, we paid dividends totaling $ 41.6 million and $ 37.1 million, respectively.

Earnings Per Share

1 unchanged sentence

Diluted EPS is computed by dividing net income by the weighted average number of common shares outstanding during the period, plus the dilutive effect of time-vested and performance-based restricted stock units (“RSUs”).

Insperity | 2023 First Quarter Form 10-Q

Insperity | 2023 Second Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

(in thousands) 2023 2022 2023 2022

1 unchanged sentence

Less distributed and undistributed earnings allocated to participating securities

— ( 1 ) — ( 31 )

Net income allocated to common shares

8 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 | 2023 First Quarter Form 10-Q

Insperity | 2023 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