What changed in this filing

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Item 1. Financial Statements

2024-10-31 compared with 2024-08-06 · 62 added, 61 removed, 344 unchanged (26% of the section changed)

2 unchanged sentences

(in millions)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Cash and cash equivalents $ 470 $ 693

36 unchanged sentences

See accompanying notes.

Insperity | 2024 Second Quarter Form 10-Q

Insperity | 2024 Third Quarter Form 10-Q

FINANCIAL STATEMENTS

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions, except per share amounts)

22 unchanged sentences

See accompanying notes.

Insperity | 2024 Second Quarter Form 10-Q

Insperity | 2024 Third Quarter Form 10-Q

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions)

36 unchanged sentences

ROU assets obtained in exchange for lease obligations $ 24 $ 12

Excise tax liability accrued for common stock repurchases — 1

See accompanying notes.

Insperity | 2024 Second Quarter Form 10-Q

Insperity | 2024 Third Quarter Form 10-Q

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Six Months Ended June 30, 2024 and 2023

For the Nine Months Ended September 30, 2024 and 2023

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

7 unchanged sentences

Net income — — — — 100 100

Balance at June 30, 2024 55 $ 1 $ 191 $ ( 838 ) $ 788 $ 142

Balance at September 30, 2024 55 $ 1 $ 208 $ ( 853 ) $ 769 $ 125

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

5 unchanged sentences

Net income — — — — 152 152

Balance at June 30, 2023 55 $ 1 $ 158 $ ( 745 ) $ 717 $ 131

Insperity | 2024 Second Quarter Form 10-Q

Balance at September 30, 2023 55 $ 1 $ 173 $ ( 831 ) $ 740 $ 83

Insperity | 2024 Third Quarter Form 10-Q

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Continued)

For the Three Months Ended June 30, 2024 and 2023

For the Three Months Ended September 30, 2024 and 2023

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

1 unchanged sentence

Shares Amount

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

Balance at June 30, 2024 55 $ 1 $ 191 $ ( 838 ) $ 788 $ 142

Purchase of treasury stock, at cost — — — ( 15 ) — ( 15 )

4 unchanged sentences

Net income — — — — 3 3

Balance at September 30, 2024 55 $ 1 $ 208 $ ( 853 ) $ 769 $ 125

Balance at June 30, 2023 55 $ 1 $ 158 $ ( 745 ) $ 717 $ 131

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

Purchase of treasury stock, at cost — — — ( 87 ) — ( 87 )

4 unchanged sentences

Net income — — — — 45 45

Balance at June 30, 2023 55 $ 1 $ 158 $ ( 745 ) $ 717 $ 131

Balance at September 30, 2023 55 $ 1 $ 173 $ ( 831 ) $ 740 $ 83

See accompanying notes.

Insperity | 2024 Second Quarter Form 10-Q

Insperity | 2024 Third 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 June 30, 2024 and our Consolidated Statements of Income for the three and six month periods ended June 30, 2024 and 2023, our Consolidated Statements of Cash Flows for the six month periods ended June 30, 2024 and 2023 and our Consolidated Statements of Stockholders' Equity for the three and six month periods ended June 30, 2024 and 2023, have been prepared by us without audit.

Our Condensed Consolidated Balance Sheet at September 30, 2024 and our Consolidated Statements of Income for the three and nine month periods ended September 30, 2024 and 2023, our Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2024 and 2023 and our Consolidated Statements of Stockholders' Equity for the three and nine month periods ended September 30, 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.

10 unchanged sentences

(2) estimated completion rates based upon recent claim development

Insperity | 2024 Second Quarter Form 10-Q

Insperity | 2024 Third Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6 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 $ 7 million at June 30, 2024, and is included in deposits - health insurance as a long-term asset on our Condensed Consolidated Balance Sheets.

As of June 30, 2024, Plan Costs were less than the net premiums paid and owed to United by $ 27 million.

In addition, United requires a deposit equal to approximately one day of claims funding activity, which was $ 7 million at September 30, 2024, and is included in deposits - health insurance as a long-term asset on our Condensed Consolidated Balance Sheets.

As of September 30, 2024, Plan Costs were less than the net premiums paid and owed to United by $ 28 million.

As this amount is in excess of the agreed-upon $ 9 million surplus maintenance level, the $ 19 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 June 30, 2024 were $ 35 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 2024 included a decrease of $ 26 million for changes in estimated run-off related to prior periods, net of Individual Claims Limit.

Our benefits costs incurred in the first six months of 2023 included a decrease of $ 10 million for changes in estimated run-off related to prior periods, net of Individual Claims Limit.

The premiums, including the additional quarterly premiums, owed to United at September 30, 2024 were $ 39 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 2024 included a decrease of $ 32 million for changes in estimated run-off related to prior periods, net of Individual Claims Limit.

Our benefits costs incurred in the first nine months of 2023 included a decrease of $ 14 million for changes in estimated run-off related to prior periods, net of Individual Claims Limit.

Workers’ Compensation Costs

Our workers’ compensation coverage for our WSEEs in our PEO HR Outsourcing Solutions has been provided through an arrangement with the Chubb Group of Insurance Companies or its predecessors (the “Chubb Program”) since 2007.

Our workers’ compensation coverage for our WSEEs in our PEO HR Outsourcing Solutions has been provided through arrangements with the Chubb Group of Insurance Companies or its predecessors (the “Chubb Program”) since 2007.

The Chubb Program is fully insured in that Chubb has the responsibility to pay all claims incurred under the policy regardless of whether we satisfy our responsibilities.

7 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 six months ended June 30, 2024 and 2023, we reduced accrued workers’ compensation costs by $ 17 million and $ 15 million, respectively, for changes in estimated losses related to prior periods.

During the nine months ended September 30, 2024 and 2023, we reduced accrued workers’ compensation costs by $ 25 million and $ 26 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 2024 period was 4.3 % and in the 2023 period was 4.2 %) 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 Second Quarter Form 10-Q

Insperity | 2024 Third 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:

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions)

7 unchanged sentences

Total accrued claims $ 207 $ 222

The current portion of accrued workers’ compensation costs on our Condensed Consolidated Balance Sheets at June 30, 2024 and 2023 includes $ 2 million and $ 3 million, respectively, of workers’ compensation administrative fees.

The undiscounted accrued workers’ compensation costs were $ 244 million as of June 30, 2024 and $ 253 million as of June 30, 2023.

The current portion of accrued workers’ compensation costs on our Condensed Consolidated Balance Sheets at September 30, 2024 and 2023 includes $ 3 million and $ 4 million, respectively, of workers’ compensation administrative fees.

The undiscounted accrued workers’ compensation costs were $ 242 million as of September 30, 2024 and $ 250 million as of September 30, 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”).

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 June 30, 2024, we had restricted cash of $ 64 million and deposits – workers’ compensation of $ 170 million.

At September 30, 2024, we had restricted cash of $ 67 million and deposits – workers’ compensation of $ 175 million, of which $ 233 million was held in a trust account.

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.

7 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 $ 727 million and $ 669 million at June 30, 2024 and December 31, 2023, respectively, 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 $ 754 million and $ 669 million at September 30, 2024 and December 31, 2023, respectively, 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 Income.

Insperity | 2024 Second Quarter Form 10-Q

Insperity | 2024 Third 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 June 30, Six Months Ended June 30,

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

(in millions) 2024 2023 % Change 2024 2023 % Change

14 unchanged sentences

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

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

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

(in millions) 2024 2023 2024 2023

5 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(in millions)

6 unchanged sentences

Total $ 470 $ 16 $ 486 $ 693 $ 16 $ 709

Insperity | 2024 Second Quarter Form 10-Q

Insperity | 2024 Third 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 June 30, 2024 and December 31, 2023 included $ 459 million and $ 510 million, respectively, of funds associated with federal and state income tax withholdings, employment taxes, and other payroll deductions, as well as $ 22 million and $ 28 million, respectively, in client prepayments.

At June 30, 2024, our cash, cash equivalents and marketable securities included $ 97 million of funds we received in late June 2024 from the Internal Revenue Service related to employee retention tax credits claimed by our PEO clients under the COVID relief programs, that were distributed to clients in early July 2024.

Our cash, cash equivalents and marketable securities at September 30, 2024 and December 31, 2023 included $ 255 million and $ 510 million, respectively, of funds associated with federal and state income tax withholdings, employment taxes, and other payroll deductions, as well as $ 19 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, funds held for clients, and deposits - workers’ compensation as reported in our Consolidated Statements of Cash Flows:

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions)

14 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 June 30, 2024 and December 31, 2023, payroll taxes and other payroll deductions payable were $ 504 million and $ 566 million, respectively.

The balance at June 30, 2024 includes $ 97 million of funds we received in late June 2024 from the Internal Revenue Service related to employee retention tax credits claimed by our PEO clients under the COVID relief programs, that were distributed to clients in early July 2024.

Fair Value Measurements

3 unchanged sentences

• Level 1 - quoted prices in active markets using identical assets

Insperity | 2024 Second Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Level 2 - significant other observable inputs, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other observable inputs

• Level 3 - significant unobservable inputs

Insperity | 2024 Third Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value of Instruments Measured and Recognized at Fair Value

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(in millions)

8 unchanged sentences

“ Other Balance Sheet Information ,” for additional information.

During Q3 2024, we transferred $ 158 million of claim funds previously held with Chubb to a trust account and those funds were subsequently invested in money market funds.

Both before and after the transfer, these funds were included in restricted cash and deposits - workers’ compensation on our Condensed Consolidated Balance Sheet.

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.

2 unchanged sentences

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

June 30, 2024

September 30, 2024

Treasury bills $ 16 $ — $ — $ 16

1 unchanged sentence

Treasury bills $ 16 $ — $ — $ 16

As of June 30, 2024, the contractual maturities of all marketable securities in our portfolio were less than one year.

As of September 30, 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 June 30, 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.

As of September 30, 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 June 30, 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.

Insperity | 2024 Second Quarter Form 10-Q

At September 30, 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.

Insperity | 2024 Third Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6 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 six month period ended June 30, 2024 was 7.2 %.

The average interest rate for the nine month period ended September 30, 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 June 30, 2024.

We were in compliance with all financial covenants under the Credit Agreement at September 30, 2024.

Stockholders' Equity

During the six months ended June 30, 2024, we repurchased or withheld an aggregate of 383,790 shares of our common stock, as described below.

During the nine months ended September 30, 2024, we repurchased or withheld an aggregate of 551,264 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 six months ended June 30, 2024, 203,744 shares were repurchased under the Repurchase Program.

As of June 30, 2024, we were authorized to repurchase an additional 1,765,818 shares under the Repurchase Program.

During the nine months ended September 30, 2024, 371,003 shares were repurchased under the Repurchase Program.

As of September 30, 2024, we were authorized to repurchase an additional 1,598,559 shares under the Repurchase Program.

Withheld Shares

During the six months ended June 30, 2024, we withheld 180,046 shares to satisfy tax withholding obligations for the vesting of long-term incentive and restricted stock unit awards.

During the nine months ended September 30, 2024, we withheld 180,261 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:

2 unchanged sentences

Second quarter 0.60 0.57

During the six months ended June 30, 2024 and 2023, we declared and paid dividends totaling $ 44 million and $ 42 million, respectively.

Third quarter 0.60 0.57

During the nine months ended September 30, 2024 and 2023, we declared and paid dividends totaling $ 67 million and $ 63 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 Second Quarter Form 10-Q

Insperity | 2024 Third Quarter Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2024 2023 2024 2023

3 unchanged sentences

Adjusted weighted average common shares outstanding 38 38 38 38

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 each of the three and six month periods ended June 30, 2024 and 2023, respectively.

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 each of the three and nine month periods ended September 30, 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 | 2024 Second Quarter Form 10-Q

Insperity | 2024 Third 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