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Item 1. Financial Statements

2024-05-01 compared with 2023-10-31 · 122 added, 161 removed, 252 unchanged (53% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(in millions)

March 31, 2024 December 31, 2023

Cash and cash equivalents $ 667 $ 693

3 unchanged sentences

Prepaid insurance and related assets 37 7

Other current assets 56,037 61,728

Funds held for clients and other current assets

Total current assets 1,619 1,595

16 unchanged sentences

Income taxes payable 15 3

Other accrued liabilities 64,883 73,173

Client funds liability and other accrued liabilities

Total current liabilities 1,406 1,436

11 unchanged sentences

See accompanying notes.

Insperity | 2023 Third Quarter Form 10-Q

Insperity | 2024 First Quarter Form 10-Q

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended

September 30, Nine Months Ended

September 30,

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

(in millions, except per share amounts)

$ 1,802 $ 1,770

Payroll taxes, benefits and workers’ compensation costs

1,292,956 1,194,607 4,090,952 3,678,909

Gross profit 345 332

16 unchanged sentences

Diluted $ 2.08 $ 2.45

____________________________________

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022 2023 2022

Gross billings $ 10,067,191 $ 9,528,695 $ 31,762,946 $ 29,111,243

WSEE payroll cost 8,516,304 8,089,535 26,857,278 24,662,139

Revenues $ 1,550,887 $ 1,439,160 $ 4,905,668 $ 4,449,104

See accompanying notes.

Insperity | 2023 Third Quarter Form 10-Q

Insperity | 2024 First Quarter Form 10-Q

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

(in thousands) 2023 2022

Three Months Ended March 31,

(in millions)

Cash flows from operating activities

22 unchanged sentences

Proceeds from maturities 6 12

Proceeds from dispositions 27,735 —

Property and equipment purchases ( 5 ) ( 7 )

3 unchanged sentences

Dividends paid ( 21 ) ( 20 )

Other ( 314 ) ( 3,130 )

Client funds liability and other

Net cash used in financing activities ( 83 ) ( 47 )

4 unchanged sentences

ROU assets obtained in exchange for lease obligations $ 4 $ 1

Excise tax liability accrued for common stock repurchases 545 —

See accompanying notes.

Insperity | 2023 Third Quarter Form 10-Q

Insperity | 2024 First Quarter Form 10-Q

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Nine Months Ended September 30, 2023 and 2022

For the Three Months Ended March 31, 2024 and 2023

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

(in thousands) Shares Amount

(in millions)

Shares Amount

Balance at December 31, 2023 55 $ 1 $ 185 $ ( 831 ) $ 739 $ 94

4 unchanged sentences

Dividends paid — — — — ( 21 ) ( 21 )

Unrealized gain on marketable securities, net of tax — — — — 78 78

Net income — — — — 79 79

Balance at September 30, 2023 55,489 $ 555 $ 173,307 $ ( 830,988 ) $ 740,245 $ 83,119

Balance at March 31, 2024 55 $ 1 $ 172 $ ( 826 ) $ 793 $ 140

Balance at December 31, 2022 55 $ 1 $ 151 $ ( 726 ) $ 655 $ 81

4 unchanged sentences

Dividends paid — — — — ( 20 ) ( 20 )

Unrealized loss on marketable securities, net of tax — — — — ( 85 ) ( 85 )

Net income — — — — 95 95

Balance at September 30, 2022 55,489 $ 555 $ 139,370 $ ( 716,046 ) $ 636,624 $ 60,503

Insperity | 2023 Third Quarter Form 10-Q

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

For the Three Months Ended September 30, 2023 and 2022

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

(in thousands) Shares Amount

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

Purchase of treasury stock, at cost — — — ( 86,645 ) — ( 86,645 )

Issuance of equity-based incentive awards and dividend equivalents — — ( 54 ) 62 ( 8 ) —

Stock-based compensation expense — — 15,209 1 — 15,210

Other — — 626 382 — 1,008

Dividends paid — — — — ( 21,338 ) ( 21,338 )

Unrealized gain on marketable securities, net of tax — — — — 33 33

Net income — — — — 44,332 44,332

Balance at September 30, 2023 55,489 $ 555 $ 173,307 $ ( 830,988 ) $ 740,245 $ 83,119

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

Purchase of treasury stock, at cost — — — ( 6,615 ) — ( 6,615 )

Issuance of equity-based incentive awards and dividend equivalents — — ( 37 ) 44 ( 7 ) —

Stock-based compensation expense — — 13,339 2 — 13,341

Other — — 446 333 — 779

Dividends paid — — — — ( 19,769 ) ( 19,769 )

Unrealized loss on marketable securities, net of tax — — — — ( 34 ) ( 34 )

Net income — — — — 37,669 37,669

Balance at September 30, 2022 55,489 $ 555 $ 139,370 $ ( 716,046 ) $ 636,624 $ 60,503

Balance at March 31, 2023 55 $ 1 $ 142 $ ( 735 ) $ 725 $ 133

See accompanying notes.

Insperity | 2023 Third Quarter Form 10-Q

Insperity | 2024 First Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13 unchanged sentences

Our Condensed Consolidated Balance Sheet at December 31, 2023 has been derived from the audited financial statements at that date, but does not include all of the information or footnotes required by GAAP for complete financial statements.

Our Condensed Consolidated Balance Sheet at September 30, 2023 and our Consolidated Statements of Operations for the three and nine month periods ended September 30, 2023 and 2022, our Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2023 and 2022 and our Consolidated Statements of Stockholders’ Equity for the three and nine month periods ended September 30, 2023 and 2022, have been prepared by us without audit.

Our Condensed Consolidated Balance Sheet at March 31, 2024 and our Consolidated Statements of Income for the three month periods ended March 31, 2024 and 2023, our Consolidated Statements of Cash Flows for the three month periods ended March 31, 2024 and 2023 and our Consolidated Statements of Stockholders' Equity for the three month periods ended March 31, 2024 and 2023, 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.

1 unchanged sentence

Accounting Policies

Revenue and Direct Cost Recognition

We enter into contracts with our customers for human resources services based on a stated rate and price in the contract.

Our contracts generally 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.

The term between invoicing and when our performance obligations are satisfied is not significant.

Our payment terms typically require payment concurrently with the invoicing of our PEO services.

We do not have significant financing components or significant payment terms.

Our revenue is generally recognized ratably over the payroll period as WSEEs perform their service at the client worksite in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers .

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

Revenues that have been recognized but not invoiced represent unbilled accounts receivable of $ 644.4 million and $ 600.4 million at September 30, 2023 and December 31, 2022, and are included in accounts receivable, net on our Condensed Consolidated Balance Sheets.

Insperity | 2023 Third Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

Our revenue for our PEO HR Outsourcing Solutions by geographic region and for our other products and services offerings are as follows:

Three Months Ended September 30, Nine Months Ended September 30,

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

Northeast $ 415,318 $ 385,541 7.7 % $ 1,333,456 $ 1,224,142 8.9 %

Southeast 221,930 197,131 12.6 % 681,866 592,116 15.2 %

Central 282,248 256,150 10.2 % 885,960 779,500 13.7 %

Southwest 295,142 280,299 5.3 % 942,929 869,073 8.5 %

West 320,567 305,465 4.9 % 1,013,669 940,617 7.8 %

1,535,205 1,424,586 7.8 % 4,857,880 4,405,448 10.3 %

Other revenue 15,682 14,574 7.6 % 47,788 43,656 9.5 %

Total revenue $ 1,550,887 $ 1,439,160 7.8 % $ 4,905,668 $ 4,449,104 10.3 %

Health Insurance Costs

We provide group health insurance coverage under a single-employer plan that covers both our WSEEs in our PEO HR Outsourcing Solutions and our corporate employees and utilizes 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.

We provide group health insurance coverage under a single-employer plan that covers both our WSEEs in our PEO HR Outsourcing Solutions and our corporate employees and utilizes a national network of carriers, including UnitedHealthcare (“United”), UnitedHealthcare of California, Kaiser Permanente, Blue Shield of California, HMSA BlueCross BlueShield of Hawaii, and Harvard Pilgrim Health Care, formerly known as Tufts, all of which provide fully insured policies or service contracts.

Approximately 87 % of our costs related to health insurance coverage are provided under our policy with United.

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 (“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.

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 (“Individual Claims Limit”).

The estimated incurred but not reported claims are based upon:

(1) the level of claims processed during the quarter;

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

(1) the level of claims processed during each quarter;

(2) estimated completion rates based upon recent claim development

Insperity | 2024 First Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

patterns under the plan;

and (3) the number of participants in the plan, including both active and COBRA enrollees.

4 unchanged sentences

The terms of the arrangement require us to maintain an accumulated cash surplus in the plan of $ 9 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 September 30, 2023, and is included in deposits - health insurance as a long-term asset on our Condensed Consolidated Balance Sheets.

As of September 30, 2023, Plan Costs were less than the net premiums paid and owed to United by $ 18.8 million.

In addition, United requires a deposit equal to approximately one day of claims funding activity, which was $ 7 million at March 31, 2024, and is included in deposits - health insurance as a long-term asset on our Condensed Consolidated Balance Sheets.

As of March 31, 2024, Plan Costs were less than the net premiums paid and owed to United by $ 33 million.

As this amount is in excess of the agreed-upon $ 9 million surplus maintenance level, the $ 24 million difference is included in prepaid insurance, a current asset, in our Condensed Consolidated Balance Sheets.

The premiums, including the additional quarterly premiums, owed to United at September 30, 2023 were $ 42.9 million, which is included in accrued health insurance costs, a current liability in our Condensed Consolidated Balance Sheets.

Our benefits costs incurred in the first nine months of 2023 included a decrease of $ 13.9 million for changes in estimated run-off related to prior periods, net of Pooling Limit.

Insperity | 2023 Third Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

benefits costs incurred in the first nine months of 2022 included an increase of $ 12.8 million for changes in estimated run-off related to prior periods.

The premiums, including the additional quarterly premiums, owed to United at March 31, 2024 were $ 63 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 2024 included a decrease of $ 18 million for changes in estimated run-off related to prior periods, net of Individual Claims Limit.

Our benefits costs incurred in the first three months of 2023 included a decrease of $ 9 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 nine months ended September 30, 2023 and 2022, we reduced accrued workers’ compensation costs by $ 26.2 million and $ 35.3 million, respectively, for changes in estimated losses related to prior periods.

During the three months ended March 31, 2024 and 2023, we reduced accrued workers’ compensation costs by $ 9 million and $ 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 4.2 % and in the 2022 period was 2.5 %) and are accreted over the estimated claim payment period and included as a component of direct costs in our Consolidated Statements of Operations.

Treasury rates that correspond with the weighted average estimated claim payout period (the average discount rate utilized in the 2024 period was 4.5 % and in the 2023 period was 4.0 %) and are accreted over the estimated claim payment period and included as a component of direct costs in our Consolidated Statements of Income.

Insperity | 2024 First 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:

Nine Months Ended September 30,

(in thousands) 2023 2022

Three Months Ended March 31,

(in millions)

Beginning balance, January 1, $ 220 $ 229

6 unchanged sentences

Total accrued claims $ 215 $ 229

The current portion of accrued workers’ compensation costs on our Condensed Consolidated Balance Sheets at September 30, 2023 includes $ 3.7 million of workers’ compensation administrative fees.

The undiscounted accrued workers’ compensation costs were $ 249.5 million as of September 30, 2023 and $ 245.5 million as of September 30, 2022.

The current portion of accrued workers’ compensation costs on our Condensed Consolidated Balance Sheets at March 31, 2024 and 2023 includes $ 4 million in both periods of workers’ compensation administrative fees.

The undiscounted accrued workers’ compensation costs were $ 247 million as of March 31, 2024 and $ 253 million as of March 31, 2023.

At the beginning of each policy period, the workers’ compensation insurance carrier establishes monthly funding requirements comprised of premium costs and funds to be set aside for payment of future claims (“claim funds”).

The level of claim funds is primarily based upon anticipated WSEE payroll levels and expected workers’ compensation

Insperity | 2023 Third Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

loss rates, as determined by the insurance carrier.

The level of claim funds is primarily based upon anticipated WSEE payroll levels and expected workers’ compensation loss rates, as determined by the insurance carrier.

Monies funded into the program for incurred claims expected to be paid within one year are recorded as restricted cash, a short-term asset, while the remainder of claim funds are included in deposits – workers’ compensation, a long-term asset in our Condensed Consolidated Balance Sheets.

During the first nine months of 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 September 30, 2023, we had restricted cash of $ 51.3 million and deposits – workers’ compensation of $ 197.5 million.

At March 31, 2024, we had restricted cash of $ 61 million and deposits – workers’ compensation of $ 204 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.

We enter into contracts with our customers for human resources services based on a stated rate and price in the contract.

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.

The term between invoicing and when our performance obligations are satisfied is not significant.

Our payment terms typically require payment concurrently with the invoicing of our PEO services.

We do not have significant financing components or significant payment terms.

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

Revenues that have been recognized but not invoiced represent unbilled accounts receivable of $ 712 million and $ 669 million at March 31, 2024 and December 31, 2023, respectively, and are included in accounts receivable, net on our Condensed Consolidated Balance Sheets.

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

Insperity | 2024 First 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 millions)

2024 2023 % Change

Northeast $ 509 $ 492 3 %

Southeast 246 239 3 %

Central 324 319 2 %

Southwest 340 340 — %

West 366 363 1 %

1,785 1,753 2 %

Other revenue 17 17 — %

Total revenue $ 1,802 $ 1,770 2 %

Our PEO HR Outsourcing Solutions revenues are primarily derived from our gross billings, which are based on (1) the payroll cost of our WSEEs;

and (2) a markup computed as a percentage of the payroll cost.

The gross billings are invoiced concurrently with each periodic payroll of our WSEEs.

Revenues, which exclude the payroll cost component of gross billings and therefore consist solely of the markup, are recognized ratably over the payroll period as WSEEs perform their service at the client worksite.

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 operating results are significantly impacted by our ability to accurately estimate our direct costs relative to the revenues derived from the markup component of our gross billings.

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

Three Months Ended March 31,

(in millions) 2024 2023

Gross billings $ 11,483 $ 11,451

WSEE payroll cost 9,681 9,681

Revenues $ 1,802 $ 1,770

Other Balance Sheet Information

1 unchanged sentence

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

September 30, 2023 December 31, 2022

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

March 31, 2024 December 31, 2023

(in millions)

Cash & Cash Equivalents Marketable Securities Total Cash & Cash Equivalents Marketable Securities Total

Overnight holdings $ 356 $ — $ 356 $ 611 $ — $ 611

Investment holdings 118 16 134 119 16 135

Total financial assets 679,903 13,837 693,740 735,475 33,068 768,543

474 16 490 730 16 746

Cash in demand accounts 212 — 212 27 — 27

1 unchanged sentence

Total $ 667 $ 16 $ 683 $ 693 $ 16 $ 709

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

Our cash, cash equivalents and marketable securities at September 30, 2023 and December 31, 2022 included $ 482.7 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 $ 20.2 million and $ 36.8 million, respectively, in client prepayments.

At September 30, 2023, our cash, cash equivalents and marketable securities included $ 149.3 million of funds we received in late September 2023 from the Internal Revenue Service for employee retention tax credits claimed by our PEO clients under the COVID relief programs, that were distributed to clients in early October 2023.

Insperity | 2023 Third Quarter Form 10-Q

Insperity | 2024 First Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2024 and December 31, 2023 included $ 443 million and $ 510 million, respectively, of funds associated with federal and state income tax withholdings, employment taxes, and other payroll deductions, as well as $ 34 million and $ 28 million, respectively, in client prepayments.

Cash, Cash Equivalents, Restricted Cash and Funds Held for Clients

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

Nine Months Ended September 30,

(in thousands) 2023 2022

Three Months Ended March 31,

(in millions)

Supplemental schedule of cash and cash equivalents, restricted cash and funds held for clients

2 unchanged sentences

Other current assets – funds held for clients (1)

34,942 31,732

Deposits – workers’ compensation 198 196

3 unchanged sentences

Other current assets – funds held for clients (1)

29,835 25,277

Deposits – workers’ compensation 204 211

4 unchanged sentences

“ Accounting Policies ,” for a discussion of our accounting policies for deposits – workers’ compensation and restricted cash.

Payroll Taxes and Other Payroll Deductions Payable

As a co-employer, we generally assume responsibility for the withholding and remittance of federal and state payroll taxes and other payroll deductions with respect to wages and salaries paid to our WSEEs.

As of September 30, 2023 and December 31, 2022, payroll taxes and other payroll deductions payable were $ 518.1 million and $ 556.1 million, respectively.

The balance at September 30, 2023 includes $ 149.3 million of funds we received in late September 2023 from the Internal Revenue Service for employee retention tax credits claimed by our PEO clients under the COVID relief programs, that were distributed to clients in early October 2023.

Fair Value Measurements

We account for our financial assets in accordance with Accounting Standard Codification 820, Fair Value Measurement .

We account for our financial assets in accordance with ASC 820, Fair Value Measurement .

This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.

3 unchanged sentences

• Level 3 - significant unobservable inputs

Insperity | 2023 Third Quarter Form 10-Q

Insperity | 2024 First 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:

September 30, 2023 December 31, 2022

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

March 31, 2024 December 31, 2023

(in millions)

Total Level 1 Level 2 Total Level 1 Level 2

Money market funds $ 474 $ 474 $ — $ 730 $ 730 $ —

Treasury bills 16 16 — 16 16 —

Municipal bonds — — — 3,365 — 3,365

Total financial assets $ 693,740 $ 693,740 $ — $ 768,543 $ 765,178 $ 3,365

The municipal bond securities valued as Level 2 are primarily pre-refunded municipal bonds that are secured by escrow funds containing U.S.

government securities.

490 490 — 746 746 —

Deposits - money market funds

42 42 — 22 22 —

$ 532 $ 532 $ — $ 768 $ 768 $ —

Please read Note 3.

“ Other Balance Sheet Information ,” for additional information.

Our valuation techniques used to measure fair value for these securities during the period consisted primarily of third-party pricing services that utilized actual market data such as trades of comparable bond issues, broker/dealer quotations for the same or similar investments in active markets and other observable inputs.

The following is a summary of our available-for-sale marketable securities:

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

September 30, 2023

(in millions)

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

March 31, 2024

Treasury bills $ 16 $ — $ — $ 16

1 unchanged sentence

Treasury bills $ 16 $ — $ — $ 16

Municipal bonds 3,369 — ( 4 ) 3,365

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

As of March 31, 2024, the contractual maturities of all 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 September 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.

As of March 31, 2024, 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 100 % of the stock of our captive insurance subsidiary and are guaranteed by all of our subsidiaries other than our captive insurance subsidiary and certain other excluded subsidiaries.

At September 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.

At March 31, 2024, our outstanding balance on the Facility was $ 369 million, and we had an outstanding $ 1 million letter of credit issued under the Facility, resulting in an available borrowing capacity of $ 280 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 Third Quarter Form 10-Q

Adjusted Term SOFR is a forward-looking term rate based on the secured overnight financing rate plus a spread adjustment, which ranges from 0.10 % to 0.25 % depending on the interest period and type of loan.

Depending on our leverage ratio, the applicable margin

Insperity | 2024 First Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Term SOFR is a forward-looking term rate based on the secured overnight financing rate plus a spread adjustment, which ranges from 0.10 % to 0.25 % depending on the interest period and type of loan.

Depending on our leverage ratio, the applicable margin varies (1) in the case of SOFR loans, from 1.50 % to 2.25 % and (2) in the case of alternate base rate loans, from 0.00 % to 0.50 %.

varies (1) in the case of SOFR loans, from 1.50 % to 2.25 % and (2) in the case of alternate base rate loans, from 0.00 % to 0.50 %.

The alternate base rate is the highest of (1) the prime rate most recently published in The Wall Street Journal, (2) the federal funds rate plus 0.50 %;

1 unchanged sentence

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 nine month period ended September 30, 2023 was 6.75 %.

The average interest rate for the three month period ended March 31, 2024 was 7.2 %.

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 September 30, 2023.

We were in compliance with all financial covenants under the Credit Agreement at March 31, 2024.

Stockholders' Equity

During the first nine months of 2023 , we repurchased or withheld an aggregate of 1,258,702 shares of our common stock, as described below.

During the three months ended March 31, 2024, we repurchased or withheld an aggregate of 232,891 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 nine months ended September 30, 2023, 1,062,598 shares were repurchased under the Repurchase Program.

On August 1, 2023, we announced that our Board authorized an increase of 2,000,000 shares that may be repurchased under the Repurchase Program.

As of September 30, 2023, we were authorized to repurchase an additional 1,969,562 shares under the Repurchase Program.

The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposes a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022.

During the nine months ended September 30, 2023, we recorded the applicable excise tax in treasury stock as part of the cost basis of stock repurchased and recorded a corresponding liability for the excise tax payable in other accrued liabilities in our Condensed Consolidated Balance Sheet.

During the three months ended March 31, 2024, 53,744 shares were repurchased under the Repurchase Program.

As of March 31, 2024, we were authorized to repurchase an additional 1,915,818 shares under the Repurchase Program.

Withheld Shares

During the nine months ended September 30, 2023, we withheld 196,104 shares to satisfy tax withholding obligations for the vesting of long-term incentive and restricted stock awards.

The Board declared quarterly dividends as follows:

During the three months ended March 31, 2024, we withheld 179,147 shares to satisfy tax withholding obligations for the vesting of long-term incentive and restricted stock unit awards.

The Board declared and paid quarterly dividends as follows:

(amounts per share) 2024 2023

First quarter $ 0.57 $ 0.52

Second quarter 0.57 0.52

Third quarter 0.57 0.52

During the nine months ended September 30, 2023 and 2022, we paid dividends totaling $ 63.0 million and $ 56.9 million, respectively.

Insperity | 2023 Third Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the three months ended March 31, 2024 and 2023, we declared and paid dividends totaling $ 21 million and $ 20 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 | 2024 First Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the net income and the basic and diluted shares used in the earnings per share computations:

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022 2023 2022

(in millions)

Net income $ 79 $ 95

Less distributed and undistributed earnings allocated to participating securities

Net income allocated to common shares

$ 44,332 $ 37,669 $ 151,821 $ 141,125

Weighted average common shares outstanding 37 38

1 unchanged sentence

Adjusted weighted average common shares outstanding 38 39

Potentially dilutive securities not included in weighted average share calculation due to anti-dilutive effect 14 15 6 13

An insignificant number of shares of time-vested and performance-based RSU awards were excluded from the calculation of diluted earnings per share due to anti-dilution during the three months ended March 31, 2024 and 2023, respectively.

Commitments and Contingencies

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 | 2023 Third Quarter Form 10-Q

Insperity | 2024 First 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