Note 2 - Restatement of Previously Issued Condensed Consolidated Financial Statements

On May 25, 2016, the Company filed its Form 10-K for 2015 which included annual financial statements for the year ended December 31, 2015. Included within the 2015 Form 10-K were the restated consolidated financial statements for the years ended December 31, 2014 and 2013 and related quarters, as well as the quarterly periods ended March 31, 2015 and June 30, 2015.

The following schedules reflect the previously reported and restated financial information as of and for the three months ended March 31, 2015.

Impact on Condensed Consolidated Balance Sheet (Unaudited) (In Thousands, Except Par Value)


	March 31, 2015
	As Previously Reported		Restatement Adjustments			As Restated
ASSETS
Current assets:
Cash and cash equivalents	$	15,205	$	0		$	15,205
Marketable securities		21,670		0			21,670
Trade accounts receivable, net		130,376		0			130,376
Income taxes receivable		13,586		545			14,131
Prepaid expenses and other		6,658		0			6,658
Restricted marketable securities and workers’ compensation deposits		12,533		0			12,533
Deferred income taxes		15,763		3,209			18,972

Total current assets		215,791		3,754			219,545

Marketable securities		6,034		0			6,034
Property, equipment and software, net		22,648		0			22,648
Restricted certificates of deposit		114,335		0			114,335
Restricted marketable securities and workers’ compensation deposits		78,516		0			78,516
Other assets		4,960		0			4,960
Goodwill		47,820		0			47,820

	$	490,104	$	3,754		$	493,858

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Line of credit	$	5,772	$	0		$	5,772
Current portion of long-term debt		25,220		0			25,220
Accounts payable		3,500		0			3,500
Accrued payroll, payroll taxes and related benefits		150,102		(103	)		149,999
Other accrued liabilities		6,190		0			6,190
Workers’ compensation claims liabilities		56,480		5,350			61,830
Safety incentives liability		15,499		0			15,499

Total current liabilities		262,763		5,247			268,010

Long-term workers’ compensation claims liabilities		165,785		4,108			169,893
Long-term debt		19,778		0			19,778
Deferred income taxes		8,159		262			8,421
Customer deposits and other long-term liabilities		1,534		0			1,534

Total liabilities		458,019		9,617			467,636


Commitments and contingencies

Stockholders’ equity:
Common stock, $.01 par value; 20,500 shares authorized, 7,141 shares issued and outstanding		71		0			71
Additional paid-in capital		5,165		0			5,165
Accumulated other comprehensive income		21		0			21
Retained earnings		26,828		(5,863	)		20,965

		32,085		(5,863	)		26,222

	$	490,104	$	3,754		$	493,858

Impact on Condensed Consolidated Statement of Operations (Unaudited) (In Thousands, Except Per Share Amounts)


	Three months ended March 31, 2015
	As Previously Reported			Restatement Adjustments			As Restated
Revenues:
Professional employer service fees	$	127,751		$	(517	)	$	127,234
Staffing services		39,166			0			39,166

Total revenues		166,917			(517	)		166,400


Cost of revenues:
Direct payroll costs		29,764			0			29,764
Payroll taxes and benefits		88,294			(217	)		88,077
Workers’ compensation		39,883			(255	)		39,628

Total cost of revenues		157,941			(472	)		157,469


Gross margin		8,976			(45	)		8,931

Selling, general and administrative expenses		16,975			(5	)		16,970
Depreciation and amortization		683			0			683

Loss from operations		(8,682	)		(40	)		(8,722	)


Other income (expense):
Investment income		89			(2	)		87
Interest expense		(520	)		0			(520	)
Other, net		(14	)		0			(14	)

Other expense, net		(445	)		(2	)		(447	)


Loss before income taxes		(9,127	)		(42	)		(9,169	)

Benefit from income taxes		(3,325	)		(16	)		(3,341	)


Net loss	$	(5,802	)	$	(26	)	$	(5,828	)


Basic loss per common share	$	(0.81	)	$	0		$	(0.82	)


Weighted average number of basic common shares outstanding		7,135			0			7,135


Diluted loss per common share	$	(0.81	)	$	0		$	(0.82	)


Weighted average number of diluted common shares outstanding		7,135			0			7,135


Cash dividends per common share	$	0.22					$	0.22

Impact on Condensed Consolidated Statement of Comprehensive Loss (Unaudited) (In Thousands)


	Three months ended March 31, 2015
	As Previously Reported			Restatement Adjustments			As Restated
Net loss	$	(5,802	)	$	(26	)	$	(5,828	)
Unrealized gains on marketable securities, net of tax of $28		44			0			44

Comprehensive loss	$	(5,758	)	$	(26	)	$	(5,784	)

Impact on Condensed Consolidated Statement of Cash Flows (Unaudited) (In Thousands)


	Three months ended March 31, 2015
	As Previously Reported			Restatement Adjustments			As Restated
Cash flows from operating activities:
Net loss	$	(5,802	)	$	(26	)	$	(5,828	)
Reconciliations of net loss to net cash provided by operating activities:
Depreciation and amortization		683			0			683
Losses recognized on marketable securities		2			0			2
Deferred income taxes		56			18			74
Share based compensation		545			0			545
Excess tax benefit from share-based compensation		(15	)		0			(15	)
Changes in certain operating assets and liabilities:
Trade accounts receivable		(27,749	)		0			(27,749	)
Income taxes receivable		(2,150	)		(34	)		(2,184	)
Prepaid expenses and other		(2,845	)		0			(2,845	)
Accounts payable		781			0			781
Accrued payroll, payroll taxes and related benefits		34,375			(213	)		34,162
Other accrued liabilities		(133	)		93			(40	)
Workers’ compensation claims liabilities		6,283			162			6,445
Safety incentives liability		1,267			0			1,267
Customer deposits, long-term liabilities and other assets, net		205			0			205

Net cash provided by operating activities		5,503			0			5,503


Cash flows from investing activities:
Purchase of property and equipment		(657	)		0			(657	)
Purchase of marketable securities		(1,454	)		0			(1,454	)
Proceeds from sales and maturities of marketable securities		24,651			0			24,651
Purchase of restricted marketable securities		(29,932	)		0			(29,932	)
Proceeds from maturities of restricted marketable securities		1,192			0			1,192

Net cash used in investing activities		(6,200	)		0			(6,200	)


Cash flows from financing activities:
Proceeds from credit-line borrowings		28,251			0			28,251
Payments on credit-line borrowings		(22,479	)		0			(22,479	)
Payments on long-term debt		(55	)		0			(55	)
Dividends paid		(1,569	)		0			(1,569	)
Proceeds from the exercise of stock options and vesting of restricted stock units		195			0			195
Excess tax benefit from share-based compensation		15			0			15

Net cash provided by financing activities		4,358			0			4,358


Net increase in cash and cash equivalents		3,661			0			3,661
Cash and cash equivalents, beginning of period		11,544			0			11,544

Cash and cash equivalents, end of period	$	15,205		$	0		$	15,205