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 consolidated 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 and six months ended June 30, 2015.

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


	June 30, 2015
	As Previously Reported		Restatement Adjustments			As Restated
ASSETS
Current assets:
Cash and cash equivalents	$	4,439	$	0		$	4,439
Trade accounts receivable, net		137,862		0			137,862
Income taxes receivable		8,737		457			9,194
Prepaid expenses and other		5,689		0			5,689
Restricted certificates of deposit		26,015		0			26,015
Restricted marketable securities and workers’ compensation deposits		21,343		0			21,343
Deferred income taxes		15,774		3,209			18,983

Total current assets		219,859		3,666			223,525

Marketable securities		6,048		0			6,048
Property, equipment and software, net		22,648		0			22,648
Restricted certificates of deposit		88,320		0			88,320
Restricted marketable securities and workers’ compensation deposits		101,828		0			101,828
Other assets		4,840		0			4,840
Goodwill		47,820		0			47,820

	$	491,363	$	3,666		$	495,029

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Line of credit	$	3,223	$	0		$	3,223
Current portion of long-term debt		27,220		0			27,220
Accounts payable		2,419		0			2,419
Accrued payroll, payroll taxes and related benefits		141,278		(522	)		140,756
Other accrued liabilities		4,845		0			4,845
Workers’ compensation claims liabilities		60,457		4,931			65,388
Safety incentives liability		18,147		0			18,147

Total current liabilities		257,589		4,409			261,998

Long-term workers’ compensation claims liabilities		169,154		4,702			173,856
Long-term debt		14,723		0			14,723
Deferred income taxes		8,159		262			8,421
Customer deposits and other long-term liabilities		1,487		0			1,487

Total liabilities		451,112		9,373			460,485


Commitments and contingencies

Stockholders’ equity:
Common stock, $.01 par value; 20,500 shares authorized, 7,141 shares issued and outstanding		72		0			72
Additional paid-in capital		6,173		0			6,173
Accumulated other comprehensive income		4		0			4
Retained earnings		34,002		(5,707	)		28,295

		40,251		(5,707	)		34,544

	$	491,363	$	3,666		$	495,029

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


	Three months ended June 30, 2015
	As Previously Reported			Restatement Adjustments			As Restated
Revenues:
Professional employer service fees	$	140,048		$	(436	)	$	139,612
Staffing services		42,347			0			42,347

Total revenues		182,395			(436	)		181,959


Cost of revenues:
Direct payroll costs		32,188			0			32,188
Payroll taxes and benefits		72,146			(338	)		71,808
Workers’ compensation		41,897			(412	)		41,485

Total cost of revenues		146,231			(750	)		145,481


Gross margin		36,164			314			36,478

Selling, general and administrative expenses		21,278			151			21,429
Depreciation and amortization		709			0			709

Income from operations		14,177			163			14,340


Other income (expense):
Investment income		148			81			229
Interest expense		(562	)		0			(562	)
Other, net		(65	)		0			(65	)

Other expense, net		(479	)		81			(398	)


Income before income taxes		13,698			244			13,942

Provision for income taxes		4,952			88			5,040


Net income	$	8,746		$	156		$	8,902


Basic earnings per common share	$	1.22		$	0.02		$	1.24


Weighted average number of basic common shares outstanding		7,151			0			7,151


Diluted earnings per common share	$	1.19		$	0.02		$	1.21


Weighted average number of diluted common shares outstanding		7,327			0			7,327


Cash dividends per common share	$	0.22					$	0.22


	Six months ended June 30, 2015
	As Previously Reported			Restatement Adjustments			As Restated
Revenues:
Professional employer service fees	$	267,799		$	(953	)	$	266,846
Staffing services		81,513			0			81,513

Total revenues		349,312			(953	)		348,359


Cost of revenues:
Direct payroll costs		61,952			0			61,952
Payroll taxes and benefits		160,440			(555	)		159,885
Workers’ compensation		81,780			(667	)		81,113

Total cost of revenues		304,172			(1,222	)		302,950


Gross margin		45,140			269			45,409

Selling, general and administrative expenses		38,253			146			38,399
Depreciation and amortization		1,392			0			1,392

Income from operations		5,495			123			5,618


Other income (expense):
Investment income		236			80			316
Interest expense		(1,082	)		0			(1,082	)
Other, net		(78	)		(1	)		(79	)

Other expense, net		(924	)		79			(845	)


Income before income taxes		4,571			202			4,773

Provision for income taxes		1,627			72			1,699


Net income	$	2,944		$	130		$	3,074


Basic earnings per common share	$	0.41		$	0.02		$	0.43


Weighted average number of basic common shares outstanding		7,143			0			7,143


Diluted earnings per common share	$	0.40		$	0.02		$	0.42


Weighted average number of diluted common shares outstanding		7,328			0			7,328


Cash dividends per common share	$	0.44					$	0.44

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


	Three months ended June 30, 2015
	As Previously Reported			Restatement Adjustments		As Restated
Net income	$	8,746		$	156	$	8,902
Unrealized losses on marketable securities, net of tax of $11		(17	)		0		(17	)

Comprehensive income	$	8,729		$	156	$	8,885


	Six months ended June 30, 2015
	As Previously Reported			Restatement Adjustments		As Restated
Net income	$	2,944		$	130	$	3,074
Unrealized gains on marketable securities, net of tax of $17		27			0		27

Comprehensive income	$	2,971		$	130	$	3,101

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


	Six months ended June 30, 2015
	As Previously Reported			Restatement Adjustments			As Restated
Cash flows from operating activities:
Net income	$	2,944		$	130		$	3,074
Reconciliations of net income to net cash provided by operating activities:
Depreciation and amortization		1,392			0			1,392
Losses recognized on marketable securities		1			0			1
Deferred income taxes		0			72			72
Share based compensation		1,069			0			1,069
Excess tax benefit from share-based compensation		(70	)		0			(70	)
Changes in certain operating assets and liabilities:
Trade accounts receivable		(35,235	)		0			(35,235	)
Income taxes receivable		2,754			(1	)		2,753
Prepaid expenses and other		(1,876	)		0			(1,876	)
Accounts payable		(300	)		0			(300	)
Accrued payroll, payroll taxes and related benefits		24,094			825			24,919
Other accrued liabilities		(21	)		(1,364	)		(1,385	)
Workers’ compensation claims liabilities		13,629			337			13,966
Safety incentives liability		3,915			0			3,915
Customer deposits, long-term liabilities and other assets, net		278			0			278

Net cash provided by operating activities		12,574			(1	)		12,573


Cash flows from investing activities:
Purchase of property and equipment		(1,365	)		0			(1,365	)
Purchase of marketable securities		(2,315	)		0			(2,315	)
Proceeds from sales and maturities of marketable securities		47,197			0			47,197
Purchase of restricted marketable securities		(64,483	)		0			(64,483	)
Proceeds from maturities of restricted marketable securities		3,621			0			3,621

Net cash used in investing activities		(17,345	)		0			(17,345	)


Cash flows from financing activities:
Proceeds from credit-line borrowings		44,934			0			44,934
Payments on credit-line borrowings		(41,711	)		0			(41,711	)
Payments on long-term debt		(3,110	)		0			(3,110	)
Common stock repurchased on vesting of restricted stock units		(65	)		0			(65	)
Dividends paid		(3,142	)		1			(3,141	)
Proceeds from the exercise of stock options and vesting of restricted stock units		690			0			690
Excess tax benefit from share-based compensation		70			0			70
Net cash used in financing activities		(2,334	)		1			(2,333	)

Net decrease in cash and cash equivalents		(7,105	)		0			(7,105	)
Cash and cash equivalents, beginning of period		11,544			0			11,544
Cash and cash equivalents, end of period	$	4,439		$	0		$	4,439