10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-36373

TriNet Group, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	95-3359658
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1100 San Leandro Blvd., Suite 400

San Leandro, CA 94577

(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code: (510) 352-5000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x (do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of October 31, 2014, the registrant had 69,596,136 shares of common stock outstanding.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Unaudited Consolidated Financial Statements	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income (Loss)	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	50
Signatures		51
Exhibit Index		52

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

TriNet Group, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	September 30,			December 31,
	2014			2013
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	97,952		$	94,356
Restricted cash		14,538			15,267
Prepaid income taxes		32,973			3,331
Deferred income taxes		68			68
Prepaid expenses		9,636			7,849
Deferred loan costs and other current assets		5,273			5,238
Worksite employee related assets		697,047			772,437
Total current assets		857,487			898,546
Workers compensation receivable		38,142			25,381
Restricted cash and investments		62,454			36,968
Property and equipment, net		32,353			25,690
Goodwill		288,857			288,857
Other intangible assets, net		94,461			134,020
Deferred income taxes		7,621			1,000
Deferred loan costs and other assets		11,930			24,276
Total assets	$	1,393,305		$	1,434,738
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable	$	11,422		$	7,315
Accrued corporate wages		31,538			26,264
Deferred income taxes		73,121			16,535
Current portion of notes payable and borrowings under capital leases		20,694			6,669
Other current liabilities		12,736			9,078
Worksite employee related liabilities		690,703			767,624
Total current liabilities		840,214			833,485
Notes payable and borrowings under capital leases, less current portion		529,542			812,208
Workers compensation liabilities		67,273			45,309
Deferred income taxes		—			8,888
Other liabilities		5,189			5,210
Total liabilities		1,442,218			1,705,100
Commitments and contingencies (Note 11)
Series G convertible preferred stock, $.0001 per share stated value    (aggregate liquidation preference of $59,306); no shares authorized, issued and outstanding    at September 30, 2014; 5,391,441 shares authorized, issued and outstanding at December 31, 2013		—			59,059
Series H convertible preferred stock, $.0001 per share stated value    (aggregate liquidation preference of $60,000); no shares authorized, issued and outstanding    at September 30, 2014; 4,124,986 shares authorized, issued and outstanding at December 31, 2013		—			63,819
Stockholders’ deficit:
Preferred stock, $.000025 per share stated value; 20,000,000 shares authorized;    no shares issued and outstanding at September 30, 2014 and December 31, 2013		—			—
Common stock, $.000025 per share stated value; 750,000,000 shares authorized;    69,383,359 and 15,259,540 shares issued and outstanding at September 30, 2014    and December 31, 2013		411,449			74,160
Accumulated deficit		(460,120	)		(467,209	)
Accumulated other comprehensive loss		(242	)		(191	)
Total stockholders’ deficit		(48,913	)		(393,240	)
Total liabilities and stockholders’ deficit	$	1,393,305		$	1,434,738

See accompanying notes.

3

TriNet Group, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2014			2013			2014			2013
Professional service revenues	$	86,864		$	75,641		$	251,999		$	195,952
Insurance service revenues		469,087			372,476			1,337,870			966,667
Total revenues		555,951			448,117			1,589,869			1,162,619
Costs and operating expenses:
Insurance costs		428,184			343,464			1,209,536			866,593
Cost of providing services (exclusive of depreciation and    amortization of intangible assets)		32,575			27,556			100,252			74,042
Sales and marketing		37,396			31,367			104,225			79,387
General and administrative		13,766			14,593			40,785			39,821
Systems development and programming costs		6,776			5,052			19,235			15,140
Amortization of intangible assets		12,743			15,442			39,559			35,926
Depreciation		3,265			3,356			9,725			8,908
Total costs and operating expenses		534,705			440,830			1,523,317			1,119,817
Operating income		21,246			7,287			66,552			42,802
Other income (expense):
Interest expense and bank fees		(18,462	)		(19,902	)		(49,174	)		(32,091	)
Other, net		179			75			257			309
Income (loss) before provision for (benefit from) income taxes		2,963			(12,540	)		17,635			11,020
Provision for (benefit from) income taxes		2,238			(4,800	)		9,149			3,880
Net income (loss)	$	725		$	(7,740	)	$	8,486		$	7,140
Net income (loss) per share:
Basic	$	0.01		$	(0.60	)	$	0.13		$	0.14
Diluted	$	0.01		$	(0.60	)	$	0.13		$	0.13
Weighted average shares:
Basic		69,134,908			12,835,295			51,654,608			11,501,581
Diluted		72,954,352			12,835,295			55,003,651			15,196,398

See accompanying notes.

4

TriNet Group, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2014			2013			2014			2013
Net income (loss)	$	725		$	(7,740	)	$	8,486		$	7,140
Other comprehensive income (loss), net of tax
Unrealized gains (losses) on investments		(10	)		45			10			(9	)
Unrealized gains on interest rate cap		–			45			–			66
Foreign currency translation adjustments		(63	)		19			(62	)		(20	)
Total other comprehensive income (loss), net of tax		(73	)		109			(52	)		37
Comprehensive income (loss)	$	652		$	(7,631	)	$	8,434		$	7,177

See accompanying notes.

5

TriNet Group, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
		2014			2013
Operating activities
Net income	$	8,486		$	7,140
Adjustments to reconcile net income to net cash provided by  operating activities:
Depreciation and amortization		67,754			56,313
Deferred income taxes		27,180			(9,534	)
Stock-based compensation		8,251			4,360
Excess tax benefit from equity incentive plan activity		–			(14,281	)
Accretion of workers compensation and leases fair value adjustment		(969	)		(1,244	)
Changes in operating assets and liabilities:
Restricted cash		(7,968	)		(6,522	)
Prepaid expenses and other current assets		(7,899	)		(8,049	)
Workers compensation receivables		(11,775	)		3,624
Other assets		8,166			3,995
Accounts payable		4,826			1,598
Income tax payable/receivable		(29,057	)		12,314
Other current liabilities		11,321			7,447
Other liabilities		22,196			1,968
Worksite employee related assets		75,390			(41,062	)
Worksite employee related liabilities		(76,921	)		44,013
Net cash provided by operating activities		98,981			62,080
Investing activities
Acquisition of businesses		–			(193,727	)
Proceeds from sale and maturity of debt securities		–			500
Purchase of debt securities		(16,789	)		(7,253	)
Purchase of property and equipment		(17,082	)		(6,314	)
Net cash used in investing activities		(33,871	)		(206,794	)
Financing activities
Proceeds from issuance of common stock, net of issuance costs		218,572			–
Proceeds from issuance of common stock on exercised options		1,146			6,889
Excess tax benefit from equity incentive plan activity		–			14,281
Borrowings under notes payable		–			970,000
Repayment of notes payable		(268,425	)		(450,104	)
Payment of debt issuance costs		(11,060	)		(24,611	)
Payments of special dividend		–			(310,922	)
Repayments under capital leases		(263	)		(620	)
Repurchase of common stock		(1,422	)		(11,767	)
Net cash provided by (used in) financing activities		(61,452	)		193,146
Effect of exchange rate changes on cash and cash equivalents		(62	)		(20	)
Net increase in cash and cash equivalents		3,596			48,412
Cash and cash equivalents at beginning of period		94,356			63,749
Cash and cash equivalents at end of period	$	97,952		$	112,161
Supplemental disclosures of cash flow information
Cash paid for interest	$	25,662		$	18,557
Cash paid for income taxes, net of refunds		10,969			719
Supplemental schedule of noncash investing and financing activities
Payable for purchase of property and equipment		826			378

See accompanying notes.

6

TriNet Group, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

TriNet Group, Inc. (the Company or TriNet), a Delaware corporation incorporated in January 2000, provides a comprehensive human resources solution for small to medium-sized businesses. The Company’s solution includes payroll processing, human capital consulting, employment law compliance and employee benefits, including health insurance, retirement plans and workers compensation insurance.

The Company provides its services through co-employment relationships with its customers, under which the Company and its customers each take responsibility for certain portions of the employer-employee relationship for worksite employees (WSEs). The Company is the employer of record for most administrative and regulatory purposes, including the following: (i) compensation through wages and salaries; (ii) employer payroll-related taxes payment; (iii) employee payroll-related taxes withholding and payment; (iv) employee benefit programs including health and life insurance, and others; and (v) workers compensation coverage.

Initial Public Offering

In March 2014, the Company completed its initial public offering (IPO) in which the Company issued and sold 15,000,000 shares of common stock at a public offering price of $16.00 per share. In addition, another 2,250,000 shares were sold by certain selling stockholders pursuant to the underwriters’ option to purchase additional shares.  The Company received net proceeds of approximately $217.6 million, after deducting underwriting discounts and commissions of $16.8 million and offering expenses of $5.6 million. The Company did not receive any proceeds from the sale by the selling stockholders.  Upon the closing of the IPO, all shares of the Company’s then-outstanding preferred stock were converted into an aggregate of 38,065,708 shares of common stock.

Segment Information

The Company operates in one reportable segment in accordance with ASC 280. All of the Company’s service revenues are generated from external customers. Less than 1% of revenues are generated outside of the United States of America (U.S.). Substantially all of the Company’s long-lived assets are located in the U.S.

Basis of Presentation

The accompanying unaudited consolidated financial statements and footnotes thereto of the Company and its wholly owned subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933 on March 27, 2014, and the Company’s prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933 on September 12, 2014. There have been no changes to the Company’s significant accounting policies described in the prospectuses that have had a material impact on our consolidated financial statements and related notes. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated balance sheets present the current assets and current liabilities directly related to the processing of human resources transactions as WSE-related assets and WSE-related liabilities, respectively. WSE-related assets are comprised of cash and investments restricted for current workers compensation claim payments, payroll funds collected, accounts receivable, unbilled service revenues, and refundable or prepaid amounts related to the Company-sponsored workers compensation and health plan programs. WSE-related liabilities are comprised of customer prepayments, wages and payroll taxes accrued and payable, and liabilities related to the Company-sponsored workers compensation and health plan programs resulting from workers compensation case reserves, premium amounts due to providers for enrolled employees, and workers compensation and health reserves that are expected to be disbursed within the next 12 months.

The unaudited interim financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for fair presentation. The results of the nine months ended September 30, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014.

7

Seasonality

Historically, the Company has experienced its highest monthly addition of WSEs, as well as its highest monthly levels of client attrition, in the month of January, primarily because clients that change their payroll service providers tend to do so at the beginning of a calendar year. In addition, the Company experiences higher levels of client attrition in connection with renewals of the health insurance it provides for its WSEs, in the event that such renewals result in increased premiums that it passes on to its clients. The Company has also historically experienced higher insurance claim volumes in the second and third quarters of a fiscal year than in the first and fourth quarters of a fiscal year, as WSEs typically access their health care providers more often in the second and third quarters of a fiscal year, which has negatively impacted the Company’s insurance costs in these quarters. These historical trends may change, and other seasonal trends may develop that make it more difficult for the Company to manage its business.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. These estimates include, but are not limited to, allowances for accounts receivable, workers compensation related assets and liabilities, health plan assets and liabilities, recoverability of goodwill and other intangible assets, income taxes, stock-based compensation and other contingent liabilities. Such estimates are based on historical experience and on various other assumptions that Company management believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-15—Presentation of Financial Statements — Going Concern (Subtopic 205-40), which addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect to early adopt this guidance and does not believe that the adoption of this guidance will have a material impact on its consolidated financial statements.

In June 2014, the FASB issued ASU 2014-12—Compensation-Stock Compensation, which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. The amendments may be applied prospectively to all awards granted or modified after the effective date or retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented. The Company does not expect this guidance to have a material effect on its consolidated financial statements. The Company expects to adopt this guidance in 2016.

In May 2014, the FASB issued ASU 2014-09—Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance under GAAP. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard provides a five-step analysis of transactions to determine when and how revenue is recognized. ASU 2014-09 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. The amendments may be applied retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company expects to adopt this guidance in 2017. The Company has not yet selected a method of adoption and is currently evaluating the effect that the amendments will have on the consolidated financial statements.

In July 2013, the FASB issued ASU 2013-11—Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which requires that an unrecognized tax benefit, or portion of an unrecognized tax benefit, be presented as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. If an applicable deferred tax asset is not available or a company does not expect to use the applicable deferred tax asset, the unrecognized tax benefit should be presented as a liability in the financial statements and should not be combined with an unrelated deferred tax asset. ASU 2013-11 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2013. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date, however retrospective application is permitted. The Company adopted this guidance in 2014. The adoption of ASU 2013-11 did not have a material impact on the Company’s consolidated financial statements.

8

NOTE 2. WORKSITE EMPLOYEE-RELATED ASSETS AND LIABILITIES

The following schedule presents the components of the Company’s WSE-related assets and WSE-related liabilities (in thousands):

	September 30,		December 31,
	2014		2013
Worksite employee-related assets:
Restricted cash	$	39,857	$	19,154
Restricted investment		25,146		2,317
Payroll funds collected		323,923		490,058
Unbilled revenue, net of advance collection of $52,144 and $54,159 at     September 30, 2014 and December 31, 2013, respectively		278,393		200,641
Accounts receivable, net of allowance for doubtful accounts of $229 and $865 at     September 30, 2014 and December 31, 2013, respectively		6,450		10,450
Prepaid health plan expenses		3,438		7,584
Refundable health plan premiums		2,739		17,601
Refundable workers compensation premiums		10,814		20,834
Prepaid workers compensation expenses		2,543		1,414
Other payroll assets		3,744		2,384
Total worksite employee-related assets	$	697,047	$	772,437
Worksite employee-related liabilities:
Unbilled wages accrual	$	310,075	$	243,640
Payroll taxes payable		191,165		358,285
Health benefits payable		96,031		67,132
Customer prepayments		37,323		51,902
Workers compensation payable		34,055		23,453
Other payroll deductions		22,054		23,212
Total worksite employee-related liabilities	$	690,703	$	767,624

NOTE 3. WORKERS COMPENSATION

The Company has agreements with various insurance carriers to provide workers compensation insurance coverage for worksite employees. Insurance carriers are responsible for administrating and paying claims. The Company is responsible for reimbursing each carrier up to a deductible limit per occurrence.

The following summarizes the activities in liability for unpaid claims and claims adjustment expenses (in thousands):

	For the nine months ended September 30,			For the year ended December 31,
	2014			2013
Liability for unpaid claims and claims adjustment at beginning of period	$	58,610		$	53,900
Plans acquired through business combinations		–			481
Incurred related to:
Current year		44,567			26,401
Prior years		(4,450	)		(3,319	)
Total incurred		40,117			23,082
Paid related to:
Current year		(8,483	)		(8,055	)
Prior years		(7,364	)		(10,798	)
Total paid		(15,847	)		(18,853	)
Liability for unpaid claims and claims adjustment at end of period		82,880			58,610
Other premiums and collateral liabilities		18,448			10,152
Total workers compensation liabilities at end of period	$	101,328		$	68,762
Current portion included in worksite employee-related liability		34,055			23,453
Long term portion	$	67,273		$	45,309

9

Under the terms of its agreements with its workers compensation insurance carriers, the Company collects and holds premiums in restricted accounts pending claims payments by the claims administrator. As of September 30, 2014 and December 31, 2013, such restricted amounts of $34.5 million and $21.5 million, respectively, are presented as restricted cash and restricted investment within WSE-related assets in the accompanying consolidated balance sheets. In addition, the Company invests premium collateral in excess of short term claim obligations in certain longer term securities. While it is the intention of the Company to reinvest maturing securities, periodically certain securities will be classified as short term to the extent the Company does not intend to reinvest the proceeds upon maturity.  At September 30, 2014 and December 31, 2013, $62.5 million and $37.0 million, respectively, are presented as restricted long-term investments.

NOTE 4. PROPERTY AND EQUIPMENT, NET

Property and equipment, net, consist of the following (in thousands):

	September 30,			December 31,
	2014			2013
Software	$	48,813		$	43,513
Office equipment, including data processing equipment		17,833			14,667
Leasehold improvements		7,030			6,836
Furniture, fixtures, and equipment		5,758			3,998
Projects in progress		9,942			5,106
		89,376			74,120
Accumulated depreciation		(57,023	)		(48,430	)
Property and equipment, net	$	32,353		$	25,690

Software and furniture, fixtures, and equipment include amounts for assets under capital leases of $1.5 million and $1.4 million at September 30, 2014 and December 31, 2013, respectively. Accumulated depreciation of these assets was $0.8 million and $0.5 million at September 30, 2014 and December 31, 2013, respectively. Amortization of assets held under capital leases is included with depreciation expense in the accompanying consolidated statements of operations.

Projects in progress consist primarily of software development costs. The Company capitalizes software development costs intended for internal use. The Company recognized depreciation expense for capitalized internally developed software of $4.0 million and $3.8 million for the nine months ended September 30, 2014 and 2013, respectively. Accumulated depreciation for these assets was $28.5 million and $25.3 million at September 30, 2014 and December 31, 2013, respectively. The Company periodically assesses the likelihood of unsuccessful completion of projects in progress, as well as monitoring events or changes in circumstances, which might suggest that impairment has occurred and recoverability should be evaluated. An impairment loss is recognized if the carrying amount of the asset is not recoverable and exceeds the future net cash flows expected to be generated by the asset. There was $0.1 million and $0.4 million losses recognized on internally developed software for the nine months ended September 30, 2014 and 2013, respectively.

NOTE 5. MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS

The Company’s noncurrent restricted cash and investments include $30.2 million of available-for-sale marketable securities and $32.2 million of cash collateral at September 30, 2014. The Company’s restricted investments within WSE-related assets include $22.8 million of available-for-sale marketable securities and $2.3 million of certificates of deposit as of September 30, 2014. The available-for-sale marketable securities as of September 30, 2014 and December 31, 2013 consist of the following (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2014
U.S. treasuries	$	52,500	$	49	$	(13	)	$	52,536
Mutual funds		500		7		–			507
Total investments	$	53,000	$	56	$	(13	)	$	53,043
December 31, 2013:
U.S. treasuries	$	35,900	$	38	$	(20	)	$	35,918
Mutual funds		500		8	–				508
Total investments	$	36,400	$	46	$	(20	)	$	36,426

10

There were no realized gains or losses for the three and nine months ended September 30, 2014 and 2013. As of September 30, 2014 and December 31, 2013, the contractual maturities of the U.S. treasuries were two to three years.

As of September 30, 2014, certain of the Company’s U.S. treasuries were in unrealized loss position principally due to changes in interest rates and credit spreads. No U.S. treasuries were in an unrealized loss position for more than 12 months as of either September 30, 2014 or December 31, 2013. In analyzing an issuer’s financial condition, the Company considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analysts’ reports. The fair value of these securities in an unrealized loss position represented 39% of the total fair value of all securities available for sale and their unrealized loss was $0.01 million as of September 30, 2014. As the Company has the ability to hold debt securities until maturity, or for the foreseeable future as classified as available for sale, no decline was deemed to be other-than-temporary.

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

As a basis for considering such assumptions, the Company uses a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

· Level I—observable inputs such as quoted prices in active markets

· Level II—inputs other than the quoted prices in active markets that are observable either directly or indirectly

· Level III—unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions

This hierarchy requires the Company to use observable market data when available and to minimize the use of unobservable inputs when determining fair value. On a recurring basis, the Company measures its financial assets at fair value.

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis (in thousands):

	Total Fair Value		Level I		Level II		Level III
September 30, 2014
Certificate of deposit	$	2,317	$	2,317	$	–	$	–
U.S. treasuries		52,536		52,536	–		–
Mutual funds		507		507	–		–
Interest rate cap		4	–			4	–
Total	$	55,364	$	55,360	$	4	$	–
December 31, 2013:
Certificates of deposit	$	2,858	$	2,858	$	–	$	–
U.S. treasuries		35,918		35,918	–		–
Mutual funds	508		508		–		–
Interest rate cap	47		–		47		–
Total	$	39,331	$	39,284	$	47	$	–

There were no transfers between Level I and Level II assets for the three months ended September 30, 2014 or the year ended December 31, 2013.

As of September 30, 2014 and December 31, 2013, certificate of deposit consisted of certificates of deposit held by domestic financial institutions, which are presented as restricted investments within WSE-related assets in the accompanying consolidated balance sheets.

The book value of the Company’s financial instruments not measured at fair value, including cash, restricted cash, WSE-related assets and liabilities, line of credit and accrued corporate wages, approximates fair value due to the relatively short maturity, cash repayments or market interest rates of such instruments. The fair value of such financial instruments, other than cash and restricted cash, is determined using the income approach based on the present value of estimated future cash flows. The fair value of all of these instruments would be categorized as Level II of the fair value hierarchy, with the exception of cash and cash equivalents, which would be categorized as Level I.

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At September 30, 2014 and December 31, 2013, the carrying value of our notes payable of $550.0 million and $818.4 million, respectively, approximated fair value. The estimate fair values of our notes payable are considered a Level II valuation in the hierarchy for fair value measurement and are based on a cash flow model discounted at market interest rates that considers the underlying risks of unsecured debt.

NOTE 6. NOTES PAYABLE AND BORROWINGS UNDER CAPITAL LEASES

The following schedule summarizes the components of the Company’s notes payable and borrowings under capital leases balances (in thousands):

	September 30,			December 31,
	2014			2013
Notes payable under credit facility	$	550,000		$	818,425
Capital leases		236			452
Less current portion		(20,694	)		(6,669	)
	$	529,542		$	812,208

In August 2013, the Company, as guarantor, its subsidiary TriNet HR Corporation, as borrower, and certain of its other subsidiaries as subsidiary guarantors entered into two senior secured credit facilities:

· a $705.0 million first lien credit facility with JPMorgan Chase Bank, N.A., as administrative agent which provided a $75.0 million revolving credit facility, a $175.0 million tranche B-1 term loan and a $455.0 million tranche B-2 term loan; and

· a $190.0 million second lien credit facility with Wilmington Trust, National Association, as administrative agent.

In March 2014, the proceeds from the IPO were used to fully repay the $190.0 million second lien credit facility, which resulted in a prepayment premium of $3.8 million, and to repay $25.0 million of the first lien tranche B-1 term loan. Additionally, the remaining balance of the loan fees associated with the second lien credit facility and a portion of the loan fees associated with the first lien credit facility were fully amortized in March 2014 for a charge of $5.0 million. In May 2014, the Company repaid $25.0 million of the first lien tranche B-1 term loan. As a result, a portion of the loan fees associated with the first lien credit facility was fully amortized in May 2014 for a charge of $0.5 million.

On July 9, 2014, the Company amended and restated its first lien credit facility pursuant to an amended and restated first lien credit agreement (“the Amended and Restated Credit Agreement”). The Amended and Restated Credit Agreement provides for: (i) $375 million principal amount of “tranche A term loans,” (ii) $200 million principal amount of “tranche B term loans,” and (iii) a revolving credit facility of $75 million. The proceeds of the tranche A term loans were used to refinance in part the tranche B-2 term loans outstanding under the original first lien credit facility. The proceeds of the tranche B term loans were used to (i) refinance the remaining tranche B-2 term loans outstanding under the original first lien credit facility, (ii) refinance other amounts outstanding under the original first lien credit facility and (iii) pay fees and expenses related thereto. The revolving credit facility replaced the revolving credit facility under the original first lien credit facility.

The tranche A term loans and the revolving credit facility will mature on July 9, 2019. The tranche B term loans will mature on July 9, 2017. Loans under the revolving credit facility are expected to be used for working capital and other general corporate purposes.

The $75.0 million revolving credit facility includes capacity for a $30.0 million letter of credit facility and a $10.0 million swingline facility. The total unused portion of the revolving credit facility was $59.5 million as of September 30, 2014. In connection with the Amended and Restated Credit Agreement, the Company incurred $11.1 million of debt issuance costs. The Company deferred $8.0 million of the costs, which are being amortized over the term of the credit facility.  The remaining $3.1 million of costs were recorded to interest expense and bank fees.  Additionally, the Company recorded a $9.0 million loss on extinguishment of debt to write-off deferred issuance costs associated with the original first lien credit facility, which was also recorded to interest expense and bank fees.  The remaining $6.1 million of loan fees associated with the previous facility that was deemed to be modified continues to be amortized over the revised remaining term of the Amended and Restated Credit Agreement.

In August 2014, the Company repaid $25.0 million of the first lien tranche B-1 term loan. As a result, a portion of the loan fees associated with the first lien credit facility was fully amortized in August 2014 for a charge of $0.6 million.

The Amended and Restated Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Company and its subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness, and dividends and other distributions. The Amended and Restated Credit Agreement also contains financial covenants that require the Company to maintain a minimum consolidated interest

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coverage ratio of at least 3.50 to 1.00, beginning with the fiscal quarter ending September 30, 2014, and a maximum total leverage ratio, currently at 5.00 to 1.00. The Company was in compliance with the restrictive covenants under the credit facilities at September 30, 2014. The credit facility is secured by substantially all of the Company’s assets and the assets of the borrower and of the subsidiary guarantors, other than specifically excluded assets.

NOTE 7. CONVERTIBLE PREFERRED STOCK

On June 7, 2005, the Company issued 5,391,441 shares of Series G convertible preferred stock (Series G) at $11.00 per share for an aggregate cash purchase price of $59.3 million. The Company recorded the issuance of Series G at $59.1 million, net of issuance costs of $0.2 million. On June 1, 2009, the Company issued 4,124,986 shares of Series H convertible preferred stock (Series H) at $16.69 per share for an aggregate cash purchase price of $68.8 million. The Company recorded the issuance of Series H at $63.8 million, net of issuance costs of $5.0 million. Upon the issuance of Series H, certain terms related to Series G were amended. In March 2014, upon completion of the Company’s IPO, all of the outstanding shares of Series H and Series G were converted into 38,065,708 shares of common stock.

NOTE 8: STOCKHOLDERS’ EQUITY

Equity-Based Incentive Plans

In 2000, the Company established the 2000 Equity Incentive Plan (the 2000 Plan), which provided for granting incentive stock options, nonstatutory stock options, bonus awards and restricted stock awards to eligible employees, directors, and consultants of the Company. In December 2009, the Board of Directors approved the 2009 Equity Incentive Plan (the 2009 Plan) as the successor to and continuation of the 2000 Plan. As of the 2009 Plan effective date, remaining shares available for issuance under the 2000 Plan were cancelled and became available for issuance under the 2009 Plan. No additional stock awards will be granted under the 2000 Plan. The 2009 Plan provides for the grant of the following awards to eligible employees, directors, and consultants: incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards, and other stock awards. Incentive stock options may only be granted to employees. Nonemployee directors are eligible to receive nonstatutory stock options automatically at designated intervals over their period of continuous service on the Board. In February 2014, the Board approved an amendment to the 2009 Plan authorizing an additional 3,000,000 shares available for grant. The amended 2009 Plan also provides that the number of shares reserved for issuance under the 2009 Plan will increase on January 1 of each year for a period of up to five years by 4.5% of the total number of shares of capital stock outstanding on December 31 of the preceding calendar year, which will begin on January 1, 2015 and continue through January 1, 2019.

The exercise price per share of all incentive stock options granted under the 2000 Plan and the 2009 Plan must be at least equal to the fair market value of the shares at the date of grant as determined by the Board of Directors. Options issued to recipients other than nonemployee directors generally vest over four years with a one year cliff and monthly thereafter, and have a maximum contractual term of 10 years. Options issued to members of the Board of Directors are issued with varying vesting schedules. Incentive stock options granted at 110% of the fair market value to stockholders who have greater than 10% ownership have a maximum term of five years.

The Company also has granted restricted stock units to members of the Board of Directors and certain executives. These restricted stock units represent rights to receive shares of the Company’s common stock on satisfaction of applicable vesting conditions. The fair value of restricted stock units is equal to the fair value of the Company’s common stock on the date of grant. The restricted stock units vest at a rate of 25% at the end of the first year and then pro rata monthly thereafter over the remaining vesting term of three or two years, as applicable.

Activity under the 2000 Plan and the 2009 Plan for the nine months ended September 30, 2014 is summarized as follows:

	Shares Available for Grant
Balance at December 31, 2013		2,004,464
Authorized		3,000,000
Granted		(2,721,000	)
Forfeited		400,644
Expired		6,580
Balance at September 30, 2014		2,690,688

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The following table summarizes stock option activity under the Company’s equity-based plans for the nine months ended September 30, 2014:

	Number of Shares			Weighted Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)
Balance at December 31, 2013		6,281,148		$	1.74	8.55		$	53,373
Granted		2,696,000			12.67
Exercised		(1,043,854	)		1.10
Forfeited		(372,644	)		5.02
Expired		(6,580	)		0.50
Balance at September 30, 2014		7,554,070		$	5.57		8.40	$	152,467
Exercisable at September 30, 2014		1,981,686		$	1.04	7.32		$	48,960
Vested and expected to vest at September 30, 2014		7,197,880		$	5.43	8.37		$	146,231

The weighted-average grant date fair value of stock options granted in each of the three months ended September 30, 2014 and September 30, 2013 was $15.83 and $5.97 per share, respectively. The weighted-average grant date fair value of stock options granted in each of the nine months ended September 30, 2014 and September 30, 2013 was $6.99 and $3.89 per share, respectively. The total fair value of options vested for the three months ended September 30, 2014 and September 30, 2013 was $1.7 million and $0.7 million, respectively. The total fair value of options vested for the nine months ended September 30, 2014 and September 30, 2013 was $6.2 million and $3.1 million, respectively.

The total intrinsic value of options exercised for the three months ended September 30, 2014 and September 30, 2013 was $6.8 million and $41.1 million, respectively. The total intrinsic value of options exercised for the nine months ended September 30, 2014 and September 30, 2013 was $16.8 million and $48.3 million, respectively. Cash received from options exercised during the three months ended September 30, 2014 and September 30, 2013 was $0.5 million and $5.6 million, respectively. Cash received from options exercised during the nine months ended September 30, 2014 and September 30, 2013 was $1.1 million and $6.9 million, respectively. The exercise price of all options granted was equal to the fair value of the common stock on the date of grant.

As of September 30, 2014, unrecognized compensation expense, net of forfeitures, associated with nonvested options outstanding was $22.9 million and is expected to be recognized over a weighted-average period of 2.98 years.

The following table summarizes restricted stock unit activity under the Company’s equity-based plans for the nine months ended September 30, 2014:

	Number of Units			Weighted-Average Grant Date Fair Value
Nonvested at December 31, 2013		40,000		$	13.21
Granted		25,000		$	28.59
Vested		(3,500	)	$	13.21
Forfeited		(28,000	)	$	13.21
Nonvested at September 30, 2014		33,500		$	13.21

The total grant date fair value of restricted stock units granted in the nine months ended September 30, 2014 was $0.7 million. No restricted stock units were granted in the nine months ended September 30, 2013. The total grant date fair value of restricted stock units vested in the nine months ended September 30, 2014 and 2013 was de minimis and $0.1 million, respectively. As of September 30, 2014, unrecognized compensation expense, net of forfeitures, associated with the nonvested restricted stock units outstanding was $0.8 million, and is expected to be recognized over a weighted-average period of 3.74 years.

Stock Split

On March 7, 2014, the Company’s board of directors and stockholders approved and effected an amendment to the amended and restated certificate of incorporation providing for a 2-for-1 stock split of the outstanding common stock. All of the share numbers, share prices, and exercise prices have been adjusted within these financial statements, on a retroactive basis, to reflect this 2-for-1stock split.

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Employee Stock Purchase Plan

The Company adopted the 2014 Employee Stock Purchase Plan (ESPP) in February 2014, which became effective on March 26, 2014. The ESPP was approved with a reserve of 1.1 million shares of common stock for future issuance under various terms provided for in the ESPP, which will automatically increase on January 1 of each year from 2015 through 2024 by the lesser of 1% of the total number of shares outstanding on December 31 of the preceding calendar year or 1,800,000 shares. We commenced our first purchase period under the ESPP on March 26, 2014 with the purchase price at the lesser of 85% of the fair market value of the common stock on the offering date and 85% of the fair market value of the common stock on the applicable purchase date.  Offering periods will be six months in duration and will end on or about May 15 and November 15 of each year, with the exception of the initial offering period which commenced on March 26, 2014 and that ends on November 14, 2014. Employees may contribute a minimum of 1% and a maximum of 15% of their earnings.

NOTE 9: EARNINGS PER SHARE

Basic net income per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period and participating convertible preferred stock that were outstanding prior to the IPO. Diluted net income per share is computed by giving effect to all potential shares of common stock, including shares issuable upon the conversion of our convertible preferred stock that were outstanding prior to the IPO, shares issuable upon the exercise of outstanding stock options, and stock related to unvested restricted stock unit awards to the extent dilutive.

The following table sets forth the computation of the Company’s basic and diluted net income per share attributable to common stock (in thousands, except per share data):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014		2013			2014			2013
Numerator (basic)
Net income	$	725	$	(7,740	)	$	8,486		$	7,140
Less net income allocated to participating securities		–		–			(1,658	)		(5,484	)
Net income attributable to common stock	$	725	$	(7,740	)	$	6,828		$	1,656
Denominator (basic)
Weighted average shares of common stock outstanding		69,135		12,835			51,655			11,502
Basic EPS	$	0.01	$	(0.60	)	$	0.13		$	0.14
Numerator (diluted)
Net income	$	725	$	(7,740	)	$	8,486		$	7,140
Less net income allocated to participating securities		–		–			(1,576	)		(5,103	)
Net income attributable to common stock	$	725	$	(7,740	)	$	6,910		$	2,037
Denominator (diluted)
Weighted average shares of common stock		69,135		12,835			51,655			11,502
Dilutive effect of stock options and restricted stock units		3,819		–			3,349			3,695
Weighted average shares of common stock outstanding		72,954		12,835			55,004			15,197
Diluted EPS	$	0.01	$	(0.60	)	$	0.13		$	0.13
Common stock equivalents excluded from income per diluted share    because of their anti-dilutive effect		129		1,609			595			1,639

NOTE 10. INCOME TAXES

The Company is subject to taxation in the United States and Canada. However, business is conducted primarily in the United States. The effective tax rate differs from the statutory rate primarily due to state taxes, non-deductible stock-based compensation, tax credits and changes in uncertain tax positions. The Company makes estimates and judgments about its future taxable income that are based on assumptions that are consistent with the Company’s plans and estimates. Should the actual amounts differ from these estimates, the amount of the valuation allowance could be materially affected.

Income taxes are computed using the asset and liability method, under which deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Changes in valuation allowances are reflected as a component of provision for income taxes.

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The Company’s effective tax rate (ETR) was 75.5% and 38.3% for the three months ended September 30, 2014 and 2013, respectively. The Company’s ETR was 51.9% and 35.2% for the nine months ended September 30, 2014 and 2013, respectively. The increase is primarily due to non-deductible stock-based compensation, a discrete tax charge for the revaluation of deferred taxes, based on a regulatory state tax change and an income tax accounting method change, and non-deductible transaction costs related to our secondary offering. The remainder of the increase is primarily due to the expiration of the federal research and development tax credit in 2014, as well as a release of uncertain tax positions recognized for the three months ended March 31, 2013     

The amount of refundable income taxes increased by $29.6 million primarily due to refund claims filed by the Company in the amount of $18.8 million, $10.2 million and $2.2 million for the tax years ended December 31, 2013, 2012 and 2011, respectively, resulting from an income tax accounting method change approved by the Internal Revenue Service (IRS) in the third quarter of 2014.

  The Company has approximately $36.2 million of net operating losses related to excess tax deductions that were not recorded to deferred tax assets.  When such net operating losses are utilized to reduce the income tax payable, the Company would expect to credit equity.  For purposes of determining when the net operating losses are utilized, the Company has elected to follow the tax law ordering method.

The Company has not been subject to U.S. federal, state and local income tax examinations by tax authorities in material jurisdictions for tax years beginning prior to January 1, 2010.  However, there are outstanding Notices of Proposed Assessment disallowing employment tax credits totaling $10.5 million in connection with the IRS examination of Gevity HR, Inc. and Subsidiaries, which was acquired by TriNet on June 1, 2009.  While Appeals has denied the credits, and the Company plans to exhaust all administrative efforts to resolve this issue, it is likely that the matter will ultimately be resolved through litigation. With regard to these employment tax credits, the Company believes it is more likely than not that the Company will prevail.  Therefore, no reserve has been recognized related to this matter.     

NOTE 11. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases office facilities, including its headquarters and other facilities, and equipment under non-cancelable operating leases. The Company also leases certain software and furniture, fixtures, and equipment under capital leases. The lease agreements generally provide for rental payments on a graduated basis and for options to renew, which could increase future minimum lease payments if exercised. The Company recognizes rent expense on a straight-line basis over the lease period and accrues for rent expense incurred but not paid. Rent expense for the three months ended September 30, 2014 and 2013 was $3.1 million and $2.7 million, respectively. Rent expense for the nine months ended September 30, 2014 and 2013 2013 was $8.7 million and $7.2 million, respectively.

Operating Covenants

To meet various states’ licensing requirements and maintain accreditation by Employer Services Assurance Corporation, the Company is subject to various minimum working capital and net worth requirements. As of September 30, 2014, the Company believes it has fully complied in all material respects with all applicable state regulations regarding minimum net worth, working capital and all other financial and legal requirements. Further, the Company has maintained positive working capital throughout the period covered by the financial statements.

Contingencies

The Company may from time to time become involved in various litigation matters arising in the ordinary course of business, including suits by its clients. The unfavorable resolution of any such matter could have a material effect on the Company’s consolidated financial position and results of operations.

Due to the nature of the Company’s relationship with its WSEs, the Company could be subject to liability for federal and state law violations even if the Company does not participate in such violations. While the Company’s agreements with its clients contain indemnification provisions related to the conduct of its clients, the Company historically has not encountered situations requiring enforcement of these indemnification provisions.

The Company has been named as a defendant in various class action lawsuits arising from the nature of the Company’s relationship with its WSEs. At this stage of the lawsuits, management believes an unfavorable outcome to the Company is not probable. There are significant uncertainties involved in any class action litigation. Management is unable to estimate a possible loss or range of loss for these class action lawsuits.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You shouldread thefollowingdiscussionof our financialconditionand resultsof operationsin conjunction with our consolidatedfinancialstatementsand therelatednotesincludedelsewherein thisQuarterly Report on Form 10-Q and our Prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended, with the Securities and Exchange Commission on September 12, 2014.

Special Note Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. These statements are not guarantees of future performance, but are based on management’s expectations as of the date of this report and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included under Part II, Item 1A below. All information provided in this report is as of the date of this report and the company undertakes no duty to update this information except as required by law.

Overview

TriNetisaleadingproviderofacomprehensivehumanresourcessolutionforsmalltomedium-sized businesses,orSMBs.WeenhancebusinessproductivitybyenablingourclientstooutsourcetheirHRfunctionto onestrategicpartnerandallowingthemtofocusonoperatingandgrowingtheircorebusinesses.OurHRsolution includesservicessuchaspayrollprocessing,humancapitalconsulting,employmentlawcomplianceandemployee benefits,includinghealthinsurance,retirementplansandworkerscompensationinsurance.Ourservicesare deliveredbyourexpertteamofHRprofessionalsandenabledbyourproprietary,cloud-basedtechnologyplatform, whichallowsourclientsandtheiremployeestoefficientlyconducttheirHRtransactionsanytimeandanywhere. Webelievewearealeaderintheindustryduetooursize,ourpresenceintheUnitedStatesandCanadaandthe numberofclientsandemployeesthatweserve.

Weutilizeaco-employmentmodelpursuanttowhichbothweandourclientsbecomeemployersofour clients’employees,whichwerefertoasworksiteemployees,orWSEs.Thismodelaffordsusacloseand embeddedrelationshipwithourclientsandtheiremployees.Undertheco-employmentmodel,employment-relatedliabilitiesarecontractuallyallocatedbetweenusandourclients.Weassumeresponsibilityfor,andmanagetherisks associatedwith,eachclients’employeepayrollobligations,includingtheliabilityforpaymentofsalariesandwages toeachclientemployee,thepaymentofpayrolltaxesand,attheclient’soption,responsibilityforprovidinggroup health,welfare,workerscompensationandretirementbenefitstosuchindividuals.Unlikeapayrollserviceprovider,weissueeachWSEapayrollcheckdrawnonourbankaccountsandcontractwithinsurancecarriersto providehealthandworkerscompensationinsurancetoWSEsunderTriNet’sname.

We servethousandsof clientsin specificindustryverticalmarkets,includingtechnology,lifesciences, propertymanagement,professionalservices,bankingand financialservices,retail,manufacturingand hospitality services,as wellas non-profitentities.As of September 30, 2014, we servedover10,000 clientsin all 50 states,the Districtof Columbiaand Canada and co-employedapproximately273,000 WSEs.

Our total revenues consist of professional service revenues and insurance service revenues. For the three and nine months ended September 30, 2014 and 2013, 16% and 17% of our total revenues, respectively, consisted of professional service revenues, and 84% and 83% of our totalrevenues,respectively,consistedof insuranceservicerevenues.We earnprofessionalservice revenuesby processingHRtransactions,such as payrolland employmenttaxwithholding,and providinglabor and benefitlaw complianceservices,on behalfof our clients.We earninsuranceservicerevenuesby providing risk-based,third-partyplansto our clients,primarilyemployeehealthbenefitplansand workerscompensation insurance.

For professionalservicerevenues,we recognizeas revenuesthefeeswe earnforprocessingHR transactions,which feesdo not includethepayrollthatispaidto us by theclientand paidout to WSEs or remittedas taxes.We recognizeas insuranceservicerevenuesallinsurance-relatedbillingsand administrative feescollectedfromclientsand withheldfromWSEs forrisk-basedinsuranceplansprovidedthroughthird-party insurancecarriers,primarilyemployeehealthinsuranceand workerscompensationinsurance.We in turnpay premiumsto third-partyinsurancecarriersfortheseinsurancebenefits,as wellas reimbursethemforclaim paymentswithinour insurancedeductiblelayer.These premiumsand reimbursementsareclassifiedas insurance costson our statementsof operations.To augmentour financialinformationpreparedin accordancewith U.S. generallyacceptedaccountingprinciples,or GAAP,we use internallya non-GAAPfinancialmeasure,Net InsuranceServiceRevenues, which consistsof insuranceservicerevenueslessinsurancecosts.We alsouse a measureof totalnon-GAAPrevenue,or Net ServiceRevenues, which isthesumof

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professionalservicerevenues and Net InsuranceServiceRevenues. For the three months ended September 30, 2014 and 2013, 68% and 72% of our Net ServiceRevenues, respectively,consistedof professionalservicerevenuesand 32% and 28% of our Net ServiceRevenues, respectively,consistedof Net InsuranceServiceRevenues. For the nine months ended September 30, 2014 and 2013, 66% of our Net Service Revenues consisted of professional service revenues and 34% of our Net Service Revenues consisted of Net Insurance Service Revenues.

We sellour servicesprimarilythroughour directsalesforce,which consistsof salesrepresentativeswho focuson servingclientsin specificindustryverticalmarkets.For the three months ended September 30, 2014 and 2013, our salesand marketing expenseswere $37.4 millionand $31.4 million,respectively,or 7% and 7% of our total revenuesand 29% and 30% of our Net ServiceRevenues, respectively. For the nine months ended September 30, 2014 and 2013, our sales and marketing expenseswere $104.2 million and $79.4 million, respectively, or 7% and 7% of our total revenues and 27% and 27% of our Net Service Revenues, respectively.

We have madesignificantinvestmentsin our proprietary,cloud-basedtechnologyplatform,including implementingclientinformationand managementsoftwareto provideour clientswith enhancedfeaturesand functionalitywith which to conducttheirHRtransactions,managetheiremployeesand analyzeemployee benefitsdata.For the three months ended September 30, 2014 and 2013, our systemsdevelopmentand programmingcostswere $6.8 millionand $5.1 million, respectively,or 1% and 1% of our totalrevenuesand 5% and 5% of our Net Service Revenues, respectively. For the nine months ended September 30, 2014 and 2013, our systemsdevelopmentand programmingcostswere $19.2 million and $15.1 million, respectively, or 1% and 1% of our total revenues and 5% and 5% of our Net Service Revenues, respectively.

Strategic Acquisitions

We operate in a highly fragmented industry and have completed numerous strategic acquisitions over the course of the past decade. We intend to continue to pursue strategic acquisitions that will enable us to add new clients and employees to our existing business and offer our clients and their employees more comprehensive and attractive services. Our operations could be adversely impacted if our strategic acquisitions are not integrated effectively. Because many of the companies we have acquired to date were focused on specific industries, our acquisitions have allowed us to expand our vertical service offerings into areas such as financial services, property management and food services, hospitality and manufacturing in which we did not previously have a significant presence. In addition, we have acquired sales representatives with experience in these vertical markets. Our acquisitions have provided us with additional clients and WSEs to allow us to continue to leverage our operations over a larger client base. These acquisitions have resulted in increased revenues and costs, as described below in our results of operations. We expect to continue to pursue strategic acquisitions.

KeyOperatingMetrics

We regularlyreviewcertainkey operatingmetricsto evaluategrowth trends,measureour performanceand makestrategicdecisions.Our key operatingmetrics as of and for the three and nine month periods ended September 30, 2014 and 2013 were as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Net Insurance Service Revenues (in thousands)	$	40,903	$	29,012	$	128,334	$	100,074
Net Service Revenues (in thousands)	$	127,767	$	104,653	$	380,333	$	296,026
Total WSEs		272,846		218,577
Total Sales Representatives		391		301

TotalWSEs

We defineTotalWSEs attheend of a givenfiscalperiodas thetotalnumberof WSEs paidin thelast calendarmonthof thefiscalperiod.We believethatcomparingour TotalWSEs attheend of a fiscalperiodto thatof priorperiodsisan indicatorof our successin growing our business,both organicallyand throughthe integrationof acquiredbusinesses,and retainingclients,and thatour TotalWSEs paidin thelastcalendarmonth of thefiscalperiodisa leadingindicatorof our anticipatedrevenuesforfuturefiscalperiods.

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TotalSalesRepresentatives

Our directsalesforceconsistsof salesrepresentativeswho focuson servingclientsin specificindustry verticalmarkets.We defineTotalSalesRepresentativesattheend of a givenfiscalperiodas thetotalnumberof our directsalesforceemployeesatthatdate.We believethatcomparingour TotalSalesRepresentativesatthe end of a fiscalperiodto our TotalSalesRepresentativesattheend of a priorfiscalperiodisan indicatorof our successin growing our business,and thatour TotalSalesRepresentativesattheend of recentfiscalperiodsisa key indicatorof our abilityto increaseour revenuesin thefollowingfiscalperiods.

Net Insurance ServiceRevenues and Net ServiceRevenues

WedefineNetInsuranceServiceRevenuesasinsuranceservicerevenueslessinsurancecosts.WedefineNet ServiceRevenuesasthesumofprofessionalservicerevenuesandNetInsuranceServiceRevenues.Ourtotal revenuesonaGAAPbasisrepresentthetotalamountinvoicedbyustoourclients,netofdirectpass-throughcosts suchaspayrollandpayrolltaxpayments,fortheservicesweprovidetoourclients.Ourinsurancecostsincludethe premiumswepaytoinsurancecarriersforthehealthandworkerscompensationinsurancecoverageprovidedtoour clientsandWSEsandthereimbursementswepaytotheinsurancecarriersforclaimpaymentswithinourinsurance deductiblelayer.Weactprincipallyastheserviceprovidertoaddvalueintheexecutionandprocurementofthese servicestoourclients.NetInsuranceServiceRevenuesistheprimaryindicatorofourabilitytosource,addvalue andofferbenefitservicestoWSEsthroughthird-partyinsurancecarriers,andisconsideredbymanagementtobea keyperformancemeasure.WebelievethatNetServiceRevenuesisalsoakeyperformancemeasureasitprovidesa usefulmeasureoftotalrevenuesforthetwomaincomponentsofourrevenuescalculatedonaconsistentbasis.In addition,managementbelievesmeasuringoperatingcostsasafunctionofNetServiceRevenuesprovidesauseful metric,aswebelieveitenablesbetterevaluationoftheperformanceofourbusiness.

Non-GAAPFinancialResults

We use Net InsuranceServiceRevenues, Net ServiceRevenues, AdjustedEBITDAand AdjustedNet Incometo providean additionalview of our operationalperformance.Net InsuranceServiceRevenues, Net ServiceRevenues, AdjustedEBITDA and AdjustedNet Incomearefinancialmeasuresthatarenot preparedin accordancewith GAAP.We defineNet InsuranceServiceRevenues as insuranceservicerevenueslessinsurance costs,which includethepremiumswe pay to insurancecarriersforthehealthand workerscompensation insurancecoverageprovidedto our clientsand WSEs and thereimbursementswe pay to theinsurancecarriers forclaimpaymentswithinour insurancedeductiblelayer.We defineNet ServiceRevenues as thesumof professionalservicerevenuesand Net InsuranceServiceRevenues. We defineAdjustedEBITDAas netincome,excludingtheeffectsof our incometaxprovision,interestexpense,depreciation,amortizationof intangibleassetsand stock-basedcompensationexpense and, in 2014, the expenses of the registered secondary offering of our common stock that was completed in September 2014.We defineAdjustedNet Incomeas netincome, excludingtheeffectsof stock-basedcompensation,amortizationof intangibleassets, non-cashinterestexpense and, in 2014, the expenses of the registered secondary offering of our common stock that was completed in September 2014, as well as the income tax effect of these pre-tax adjustments at our effective tax rate. For the nine months ended September 30, 2014, the effective tax rate is adjusted to 39.5% to exclude income tax on non-deductible stock-based compensation and discrete items including the cumulative effect of state law changes. Non-cash interestexpense representsamortization and write-off of our debtissuancecosts and, for the nine months ended September 30, 2014, a debt prepayment premium.

We believethattheuse of Net InsuranceServiceRevenues providesusefulinformationas itpresentsa measureof revenuesfromour provisionof insuranceservicesto our clientsthateliminatesthecostof insurance. We believethatNet ServiceRevenues providesa usefulmeasureof totalrevenuesforthetwo maincomponents of our revenuescalculatedon a consistentbasis.We believethattheuse of AdjustedEBITDA and AdjustedNet Incomeprovidesadditionalperiod-to-periodcomparisonsand analysisof trendsin our business,as theyexclude certainone-timeand non-cashexpenses.We believethatNet InsuranceServiceRevenues, Net ServiceRevenues, AdjustedEBITDA and AdjustedNet Incomeareusefulforour stockholdersand boardof directorsby helping themto identifytrendsin our businessand understandhow our managementevaluatesour business.We use Net InsuranceServiceRevenues, Net ServiceRevenues and AdjustedEBITDA to monitorand evaluateour operatingresultsand trendson an ongoing basisand internallyforoperating,budgetingandfinancialplanningpurposes,in additionto allocatingour resourcesto enhancethefinancialperformanceof our businessand evaluatingtheeffectivenessof our businessstrategies.We alsouse Net ServiceRevenues and AdjustedEBITDAin determiningtheincentivecompensationformanagement.

Net InsuranceServiceRevenues, Net ServiceRevenues, AdjustedEBITDA and AdjustedNet Incomeare not preparedin accordancewith, and shouldnot be consideredin isolationof, or as an alternativeto, measurementsrequiredby GAAP.In addition,thesenon-GAAPmeasuresarenot basedon any comprehensive setof accountingrulesor principles.As non-GAAPmeasures,Net InsuranceServiceRevenues, Net Service Revenues, AdjustedEBITDA and AdjustedNet Incomehave limitationsin thattheydo not reflectallof the amountsassociatedwith our resultsof operationsas determinedin accordancewith GAAP.In particular:

· Net Insurance Service Revenues and Net Service Revenues are reduced by the insurance costs that we pay to the insurance carriers;

· Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

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· Adjusted EBITDA does not reflect the amounts we paid in taxes or other components of our tax provision;

· Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

· Adjusted EBITDA and Adjusted Net Income do not reflect changes in, or cash requirements for, our working capital needs;

· AdjustedEBITDAand AdjustedNet Income do not reflect the expenses we incurred in connection with the registered offering of our common stock during the third quarter of 2014;

· Adjusted EBITDA and Adjusted Net Income do not reflect the non-cash component of employee compensation;

· Although depreciation and amortization of intangible assets are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and

· Other companies in our industry may calculate –these measures or similar measures differently than we do, limiting their usefulness as a comparative measure.

Becauseof theselimitations,you shouldconsiderNet InsuranceServiceRevenues, Net ServiceRevenues, AdjustedEBITDA and AdjustedNet Incomealongsideotherfinancialperformancemeasures,includingtotal revenues,netincomeand our financialresultspresentedin accordancewith GAAP.

The tablebelow setsfortha reconciliationof GAAPinsuranceservicerevenuesto Net InsuranceServiceRevenues:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
	(in thousands)
Insurance service revenues	$	469,087	$	372,476	$	1,337,870	$	966,667
Less:  Insurance costs		428,184		343,464		1,209,536		866,593
Net Insurance Service Revenues	$	40,903	$	29,012	$	128,334	$	100,074

The tablebelow setsfortha reconciliationof GAAPtotalrevenuesto Net ServiceRevenues:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
	(in thousands)
Total revenues	$	555,951	$	448,117	$	1,589,869	$	1,162,619
Less:  Insurance costs		428,184		343,464		1,209,536		866,593
Net Service Revenues	$	127,767	$	104,653	$	380,333	$	296,026

The tablebelow setsfortha reconciliationof GAAPnetincometo AdjustedEBITDA:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2014		2013			2014		2013
	(in thousands)
Net income (loss)	$	725	$	(7,740	)	$	8,486	$	7,140
Provision for (benefit from) income taxes		2,238		(4,800	)		9,149		3,880
Stock-based compensation		3,181		1,495			8,251		4,360
Interest expense and bank fees		18,462		19,902			49,174		32,091
Depreciation		3,265		3,356			9,725		8,908
Amortization of intangible assets		12,743		15,442			39,559		35,926
Secondary offering costs		858		-			858		-
Adjusted EBITDA	$	41,472	$	27,655		$	125,202	$	92,305

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The tablebelow setsfortha reconciliationof GAAPnetincometo AdjustedNet Income:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
	(in thousands)
Net income (loss)	$	725		$	(7,740	)	$	8,486		$	7,140
Effective income tax rate adjustment		1,068			-			2,183			-
Stock-based compensation		3,181			1,495			8,251			4,360
Amortization of intangible assets		12,743			15,442			39,559			35,926
Non-cash interest expense		13,602			11,145			21,088			12,442
Debt prepayment premium		-			-			3,800			-
Secondary offering costs		858			-			858			-
Income tax impact of pre-tax adjustments at 39.5%		(12,002	)		(11,092	)		(29,055	)		(20,828	)
Adjusted Net Income	$	20,175		$	9,250		$	55,170		$	39,040

Impactof HealthCare Reform

The PatientProtectionand AffordableCare Act and theHeath Care and EducationReconciliationAct of2010, which we referto collectivelyas theAct, entailsweepinghealthcarereformswith staggeredeffective datesthrough2018, and manyprovisionsof theAct requiretheissuanceof additionalguidancefrom theU.S.Departmentsof Labor and Healthand Human Services,theIRS and U.S.states.Beginningin 2014, a numberof key provisionsof theAct takeeffect,includingtheestablishmentof state and federally run insuranceexchanges, insurancemarketreforms,“pay or play”penaltieson applicable largeemployersand theimposition and assessment of excisetaxeson the healthinsuranceindustryand reinsurancetaxeson insurersand third-partyadministrators.Collectively,these itemshave thepotentialto significantlychangetheinsurancemarketplaceforemployersand how employers offer or provideinsuranceto employees.

We arenot yetableto determinetheimpactsto our business,and to our clients,resultingfromtheAct. In futureperiods,theAct mayresultin increasedcoststo us and our clientsand couldaffectour abilityto attract and retainclients.Additionally,we maybe limitedor delayedin our abilityto increaseservicefeesto offsetany associatedpotentialincreasedcostsresultingfromcompliancewith theAct. Furthermore,theuncertainty surroundingthetermsand applicationof theAct maydelayor inhibitthedecisionsof potentialclientsto outsourcetheirHRneeds.As a result, these changescouldhave a negativeimpacton our operatingresults.

Seasonality

Historically,wehaveexperiencedourhighestmonthlyadditionofWSEs,aswellasourhighestmonthlylevels ofclientattrition,inthemonthofJanuary,primarilybecauseclientsthatchangetheirpayrollserviceproviderstend todosoatthebeginningofacalendaryear.Inaddition,weexperiencehigherlevelsofclientattritioninconnection withrenewalsofthehealthinsuranceweprovideforourWSEs,intheeventthatsuchrenewalsresultinincreased premiumsthatwepassontoourclients.Wehavealsohistoricallyexperiencedhigherinsuranceclaimvolumesin thesecondandthirdquartersofafiscalyearthaninthefirstandfourthquartersofafiscalyear,asWSEstypically accesstheirhealthcareprovidersmoreofteninthesecondandthirdquartersofafiscalyear,whichhasnegatively impactedourinsurancecostsinthesequarters.Thesehistoricaltrendsmaychange,andotherseasonaltrendsmay developthatmakeitmoredifficultforustomanageourbusiness.

Basis of Presentationand KeyComponents of Our Resultsof Operations

TotalRevenues

Our totalrevenuesconsistof professionalservicerevenuesand insuranceservicerevenues.

We earnprofessionalservicerevenuesby processingHRtransactions,such as payrolland employmenttax withholding,paymentto WSEs, and laborand benefitlaw compliance,on behalfof our clients.Our clientspay us thesefeesbasedon eithera fixedfeeperWSE permonthor pertransaction,or a percentageof theWSE’s payrollcost,pursuantto writtenprofessionalservicesagreementsthataregenerallycancelableby us or our clientsupon 30 days’priorwrittennotice.We alsoearnprofessionalservicerevenuesby providingstrategicHR servicesto our clients,such as talentacquisition,performancemanagementand timeand expensereporting services.Our clientspay us professionalservicefeesfortheseservicesbasedon separatewrittenagreements.

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We earninsuranceservicerevenuesby providingrisk-based,third-partyplansto our clients,primarily employeehealthbenefitplansand workerscompensationinsurance.Insuranceservicerevenuesconsistof insurance-relatedbillingsand administrativefees.We recognizeas insuranceservicerevenuesinsurance-related billingsand administrativefeescollectedfromclientsand withheldfromWSEs forrisk-basedinsuranceplans providedthroughthird-partyinsurancecarriers,primarilyemployeehealthinsuranceand workerscompensation insurance.We in turnpay premiumsto third-partyinsurancecarriersfortheseinsurancebenefits,as wellas reimbursethemforclaimpaymentswithinour insurancedeductiblelayer.These premiumsand reimbursements areclassifiedas insurancecostson our statementsof operations.

Ourclientspayusadministrativefees,typicallybasedonapercentageofinsurance-relatedamounts,collected fromclientsandwithheldfromWSEs,primarilyinexchangeforouradministrationofemployeehealthbenefitplans.

Insurance Costs

Insurancecostsincludethepremiumswe pay to theinsurancecarriersforthehealthand workers compensationinsurancecoverageprovidedto theclientsand WSEs and thereimbursementswe pay to the insurancecarriersforclaimpaymentsmadeto theWSEs withintheinsurancedeductiblelayer.

Our insurancecostsare,in part,a functionof thetypeand termsof agreementsthatwe enterintowith the insurancecarriersthatprovidefully-insuredcoverageforour WSEs. Our futurepremiumsunderthese,or ensuing,policieswillbe influencedby theWSE claimsactivityin priorperiods.The remainderof thehealthinsurancepoliciesand allof theworkers compensationinsurancepoliciesthatwe provideto our clientsarepolicieswith respectto which we agreeto reimburseour carriersforany claimsthattheypay withinour deductiblelayer.Under thesepolicies,WSEs file claimswith thecarriers,which areresponsibleforpayingtheclaimsup to themaximumcoverageunderthe policies.The carriersthenseekreimbursementfromus up to our deductibleperincidentforworkers compensationclaims,or up to a cap forhealthinsuranceclaimsin accordancewith thetermsof theunderlying healthinsurancepolicies.In no eventarewe liableto pay theclaimsdirectlyto WSEs. As we evaluatetheclaims experienceforeachfiscalperiod,we adjust,as we deemnecessary,our workerscompensationand health benefitsreserves,and thisin turnhas a correspondingimpacton our insurancecosts.As a result,our insurance costsfluctuatefromperiodto perioddependingon thenumberand severityof theclaimsincurredby our WSEs. We expectour insurance coststo continueto increase in absolutedollars on an annual basisfortheforeseeablefuturedue to expected growth in WSEs.

Cost of ProvidingServices

Cost of providingservicesconsistsprimarilyof costsincurredby us associatedwith directcustomer support,such as payrolland benefitsprocessing,professionalHRconsultants,employeeliabilityinsuranceand costsassociatedwith defendingclientsin employment-relatedlegalclaims,benefitsand riskmanagement, postageand shippingexpensesand consultingexpenses. We expectour cost of providing servicesto continueto increase in absolutedollars on an annual basisfortheforeseeablefuturedue to expected growth in WSEs, partially offset by improved efficiencies,althoughtheseexpensesmayfluctuateas a percentageof our totalrevenuesfromperiodto period dependingon thetimingof thoseexpenses.

Salesand MarketingExpenses

Salesand marketingexpensesconsistprimarilyof salaries,commissionsand relatedvariablecompensation expenses,commissionpaymentsto partnersand thecostof marketingprograms.Marketingprogramsconsistof advertising,leadgeneration,marketingevents,corporatecommunications,brandbuildingand productmarketing activities,as wellas variousincentivizedpartnershipand referralprograms.We expectour salesand marketing expensesto continueto increase,both in absolutedollarsand as a percentageof our totalrevenueson an annual basis,fortheforeseeablefutureas we expand our salesforceand our othersalesand marketingeffortsto build our brand,althoughtheseexpensesmayfluctuateas a percentageof our totalrevenuesfromperiodto period dependingon thetimingof thoseexpenses.

General and AdministrativeExpenses

Generalandadministrativeexpensesconsistprimarilyofcompensation-relatedexpenses,legalandother professionalservicesfeesandothergeneralcorporateexpenses.Weexpectourgeneralandadministrativeexpenses tocontinuetoincreaseinabsolutedollarsfortheforeseeablefutureduetoincreasesinourlegalandfinancial compliancecostsinconnectionwithbeinga newly publiccompany,althoughtheseexpensesmayfluctuateasa percentageofourtotalrevenuesfromperiodtoperioddependingonthetimingofthoseexpenses.

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SystemsDevelopmentand ProgrammingCosts

Systemsdevelopmentand programmingcostsconsistprimarilyof compensation-relatedexpensesforour employeesand contractorsdedicatedto systemsdevelopmentand programming,as wellas feesthatwe pay to third-partyconsultingfirms.We expectour systemsdevelopmentand programmingcoststo continueto increase modestlyin absolutedollarsfortheforeseeablefutureas we continueto investin and improveour technology platform.However, overtime,we expectour systemsdevelopmentand programmingcoststo remainrelatively consistentas a percentageof our totalrevenueson an annualbasis,althoughthesecostsmayfluctuateas a percentageof our totalrevenuesfromperiodto perioddependingon when we incurthosecosts.

Amortizationof IntangibleAssets

Amortizationof intangibleassetsrepresentscostsassociatedwith an acquiredcompany’sdeveloped technologies,clientlists,tradenamesand contractualagreements.We amortizetheseintangiblesovertheir respectiveestimatedusefullivesusingeitherthestraight-linemethodor theacceleratedmethod.

Depreciation

Depreciationconsistsprimarilyofamortizationofthecostofsoftwareandfurniture,fixturesandequipment.

Other Income(Expense)

Otherincome(expense)consistsprimarilyof interestexpenseunderour creditfacilityand capitalleases, debt issuance cost amortization, and a prepayment premium.

ProvisionforIncomeTaxes

We aresubjectto taxationin theUnitedStatesand Canada. We conductour businessprimarilyin theUnited States,and allof our clientsareU.S.employers.However, we provideservicesto certainclients withemployeesin Canada. The percentageof our totalrevenuesattributableto WSEs in Canada was lessthan 1% in 2013 and for the three and nine months ended September 30, 2014. Our effectivetaxratediffersfromthestatutoryrateprimarilydue to state taxes,taxcredits, non-deductible chargesand changesin uncertaintaxpositions.We makeestimatesand judgmentsaboutour future taxableincomebasedon assumptionsthatareconsistentwith our plansand estimates.Should theactualamounts differfromour estimates,theamountof our valuationallowancecouldbe materiallyaffected.

Income taxes are computed using the asset and liability method, under which deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Changes in valuation allowances are reflected as a component of provision for income taxes.

CriticalAccounting Policies,Estimatesand Judgments

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. These estimates include, but are not limited to, allowances for accounts receivable, workers compensation related assets and liabilities, health plan assets and liabilities, recoverability of goodwill and other intangible assets, income taxes, stock-based compensation and other contingent liabilities. Such estimates are based on historical experience and on various other assumptions that Company management believes to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

This Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933 on September 12, 2014. There have been no material changes to our critical accounting policies described in the prospectus for the year ended December 31, 2013.  

Recent Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-15—Presentation of Financial Statements — Going Concern (Subtopic 205-40), which addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted. We do not expect to early adopt this guidance and do not believe that the adoption of this guidance will have a material impact on our consolidated financial statements.

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In June 2014, the FASB issued ASU 2014-12—Compensation-Stock Compensation, which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. The amendments may be applied prospectively to all awards granted or modified after the effective date or retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented. We do not expect this guidance to have a material effect on our consolidated financial statements. We expect to adopt this guidance in 2016.

In May 2014, the FASB issued ASU 2014-09—Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance under GAAP. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard provides a five-step analysis of transactions to determine when and how revenue is recognized. ASU 2014-09 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. The amendments may be applied retrospectively or as a cumulative-effect adjustment as of the date of adoption. We expect to adopt this guidance in 2017. We have not yet selected a method of adoption and are currently evaluating the effect that the amendments will have on our consolidated financial statements.

In July 2013, the FASB issued ASU 2013-11—Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which requires that an unrecognized tax benefit, or portion of an unrecognized tax benefit, be presented as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. If an applicable deferred tax asset is not available or a company does not expect to use the applicable deferred tax asset, the unrecognized tax benefit should be presented as a liability in the financial statements and should not be combined with an unrelated deferred tax asset. ASU 2013-11 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2013. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date, however retrospective application is permitted. We adopted this guidance in 2014. The adoption of ASU 2013-11 did not have a material impact on our consolidated financial statements.

Resultsof Operations

The followingtablessetforthour resultsof operationsfortheperiodspresentedand as a percentageof our totalrevenuesand Net ServiceRevenues forthoseperiods.Period-to-periodcomparisonsof our financialresults arenot necessarilyindicativeof financialresultsto be achievedin futureperiods.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Consolidated Statement of Operations:	(in thousands)
Professional service revenues	$	86,864		$	75,641		$	251,999		$	195,952
Insurance service revenues		469,087			372,476			1,337,870			966,667
Total revenues		555,951			448,117			1,589,869			1,162,619
Costs and operating expenses:
Insurance costs		428,184			343,464			1,209,536			866,593
Cost of providing services (exclusive of depreciation and      amortization of intangible assets) (1)		32,575			27,556			100,252			74,042
Sales and marketing (1)		37,396			31,367			104,225			79,387
General and administrative (1)		13,766			14,593			40,785			39,821
Systems development and programming costs (1)		6,776			5,052			19,235			15,140
Amortization of intangible assets		12,743			15,442			39,559			35,926
Depreciation		3,265			3,356			9,725			8,908
Total costs and operating expenses		534,705			440,830			1,523,317			1,119,817
Operating income		21,246			7,287			66,552			42,802
Other income (expense):
Interest expense and bank fees		(18,462	)		(19,902	)		(49,174	)		(32,091	)
Other, net		179			75			257			309
Income (loss) before provision for (benefit from) income taxes		2,963			(12,540	)		17,635			11,020
Provision for (benefit from) income taxes		2,238			(4,800	)		9,149			3,880
Net income (loss)	$	725		$	(7,740	)	$	8,486		$	7,140

__________________________________________

(1) Includes stock-based compensation expense as follows:

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	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
	(in thousands)
Cost of providing services (exclusive of depreciation and    amortization of intangible assets)	$	843	$	254	$	2,098	$	770
Sales and marketing		771		250		2,062		882
General and administrative		1,280		851		3,333		2,371
Systems development and programming costs		287		140		758		337
Total stock-based compensation expense	$	3,181	$	1,495	$	8,251	$	4,360

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Percentage of total revenues:
Professional service revenues		16	%		17	%		16	%		17	%
Insurance service revenues		84	%		83	%		84	%		83	%
Total revenues		100	%		100	%		100	%		100	%
Costs and operating expenses:
Insurance costs		77	%		77	%		76	%		75	%
Cost of providing services (exclusive of depreciation    and amortization of intangible assets)		6	%		6	%		6	%		6	%
Sales and marketing		7	%		7	%		7	%		7	%
General and administrative		2	%		3	%		3	%		3	%
Systems development and programming costs		1	%		1	%		1	%		1	%
Amortization of intangible assets		2	%		3	%		2	%		3	%
Depreciation		1	%		1	%		1	%		1	%
Total costs and operating expenses		96	%		98	%		96	%		96	%
Operating income		4	%		2	%		4	%		4	%
Other income (expense):
Interest expense and bank fees		(3	%)		(4	%)		(3	%)		(3	%)
Other, net		0	%		0	%		0	%		0	%
Income (loss) before provision for (benefit from) income taxes		1	%		(3	%)		1	%		1	%
Provision for (benefit from) income taxes		0	%		(1	%)		1	%		0	%
Net income (loss)		0	%		(2	%)		1	%		1	%

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Percentage of Net Service Revenues:
Professional service revenues		68	%		72	%		66	%		66	%
Net Insurance Service Revenues		32	%		28	%		34	%		34	%
Net Service Revenues		100	%		100	%		100	%		100	%
Other operating expenses:
Cost of providing services (exclusive of depreciation and
amortization of intangible assets)		25	%		26	%		26	%		25	%
Sales and marketing		29	%		30	%		27	%		27	%
General and administrative		11	%		14	%		11	%		13	%
Systems development and programming costs		5	%		5	%		5	%		5	%
Amortization of intangible assets		10	%		15	%		10	%		12	%
Depreciation		3	%		3	%		3	%		3	%
Total other operating expenses		83	%		93	%		83	%		86	%
Operating income		17	%		7	%		17	%		14	%
Other income (expense):
Interest expense and bank fees		(14	%)		(19	%)		(13	%)		(11	%)
Other, net		0	%		0	%		0	%		0	%
Income (loss) before provision for (benefit from) income taxes		2	%		(12	%)		5	%		4	%
Provision for (benefit from) income taxes		2	%		(5	%)		2	%		1	%
Net income (loss)		1	%		(7	%)		2	%		2	%

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Three and Nine Months Ended September 30, 2014 and 2013

TotalRevenues

	Three months ended				Change				Nine months ended				Change
	September 30,				2014 vs. 2013				September 30,				2014 vs. 2013
	2014		2013		$		%		2014		2013		$		%
	(in thousands, except percentages)
Professional service revenues	$	86,864	$	75,641	$	11,223		15%	$	251,999	$	195,952	$	56,047		29%
Insurance service revenues		469,087		372,476		96,611		26%		1,337,870		966,667		371,203		38%
Total revenues	$	555,951	$	448,117	$	107,834		24%	$	1,589,869	$	1,162,619	$	427,250		37%
Key operating metrics:
Total WSEs		272,846		218,577		54,269		25%
Total Sales Representatives		391		301		90		30%

Totalrevenuesincreasedby$107.8million,or24%, and $427.3 million,or 37%,for the three and nine months ended September 30, 2014, respectively, comparedto the same period of the prior year.  Professional service revenues and insurance service revenues represented 16% and 84%, respectively, of total revenues for the three and nine months ended September 30, 2014, compared to 17% and 83%, respectively, of total revenues in the same period of the prior year.  The increase in total revenues was attributable to the significant growth of our Total WSEs and revenues from our acquisition of Ambrose Employer Group, LLC, or Ambrose, in the third quarter of 2013, as further described below.

Professionalservicerevenues for the three months ended September 30, 2014increasedby$11.2million,or15%,comparedtothe same period of the prior year.The increase was mainly attributable to our increaseinTotal WSEs. Partially offsetting the increase was a $5.0 million refund related to prior year payroll taxes received in the three months ended September 30, 2013.Professionalservicerevenues for the nine months ended September 30, 2014increasedby $56.0 million,or 29%,comparedtothe same period of the prior year.The increase was mainly attributable to our increaseinTotal WSEsand our acquisition of Ambrose in third quarter of 2013, which contributed $15.4 million of professional service revenues during the first half of 2014.  In addition, we received a $2.3 million refund related to prior year payroll taxes in the nine months ended September 30, 2014 compared to a $5.0 million refund received in the nine months ended September 30, 2013.

Insuranceservicerevenuesincreasedby $96.6 million,or 26%, and by $371.2 million, or 38%, forthe three and nine months ended September 30, 2014, respectively,comparedto the same period of the prior year.  The increase was primarilydue to our increasein TotalWSEs.Additionally, our acquisitionof Ambrose contributed $130.4 million of insurance service revenues during the first half of 2014.

TotalWSEs atSeptember 30, 2014 increasedby54,269, or 25%, comparedto TotalWSEs at September 30, 2013, which was primarily driven by a net increase in total clients. Our TotalSalesRepresentativesincreasedfrom 301 atSeptember 30, 2013 to 391 atSeptember 30, 2014, primarily due to our efforts to grow our sales force.

Insurance Costs

	Three months ended				Change				Nine months ended				Change
	September 30,				2014 vs. 2013				September 30,				2014 vs. 2013
	2014		2013		$		%		2014		2013		$		%
	(in thousands, except percentages)
Insurance costs	$	428,184	$	343,464	$	84,720		25%	$	1,209,536	$	866,593	$	342,943		40%

Insurance costs increased $84.7 million, or 25%, for the three months ended September 30, 2014 compared to the same period of the prior year. The increase resulted from an increase in Total WSEs.  

Insurance costs increased $342.9 million, or 40%, for the nine months ended September 30, 2014 compared to the same period of the prior year, $118.6 million of which is due to our acquisition of Ambrose. The remaining increase resulted from an increase in Total WSEs other than those acquired from Ambrose and a 2% increase in average insurance costs per WSE other than those acquired from Ambrose.

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Net Insurance ServiceRevenues and Net ServiceRevenues

	Three months ended				Change				Nine months ended				Change
	September 30,				2014 vs. 2013				September 30,				2014 vs. 2013
	2014		2013		$		%		2014		2013		$		%
	(in thousands, except percentages)
Insurance service revenues	$	469,087	$	372,476	$	96,611		26%	$	1,337,870	$	966,667	$	371,203		38%
Less:  Insurance costs		428,184		343,464		84,720		25%		1,209,536		866,593		342,943		40%
Net Insurance Service Revenues	$	40,903	$	29,012	$	11,891		41%	$	128,334	$	100,074	$	28,260		28%

	Three months ended				Change				Nine months ended				Change
	September 30,				2014 vs. 2013				September 30,				2014 vs. 2013
	2014		2013		$		%		2014		2013		$		%
	(in thousands, except percentages)
Total revenues	$	555,951	$	448,117	$	107,834		24%	$	1,589,869	$	1,162,619	$	427,250		37%
Less:  Insurance costs		428,184		343,464		84,720		25%		1,209,536		866,593		342,943		40%
Net Service Revenues	$	127,767	$	104,653	$	23,114		22%	$	380,333	$	296,026	$	84,307		28%

For thereasonssetforthabove with respect to the increases in our insurance service revenues and total revenues, our Net InsuranceServiceRevenues increasedby $11.9 million,or 41%, and by $28.3 million, or 28%, forthe three and nine months ended September 30, 2014, respectively, as comparedto the same period of the prior year. Similarly, our Net ServiceRevenues increasedby $23.1 million,or 22%, and by $84.3 million, or 28%, forthe three and nine months ended September 30, 2014, respectively, as comparedto the same period of the prior year.

Other OperatingExpenses

	Three months ended				Change					Nine months ended				Change
	September 30,				2014 vs. 2013					September 30,				2014 vs. 2013
	2014		2013		$			%		2014		2013		$		%
	(in thousands, except percentages)
Cost of providing services	$	32,575	$	27,556	$	5,019			18%	$	100,252	$	74,042	$	26,210		35%
Sales and marketing		37,396		31,367		6,029			19%		104,225		79,387		24,838		31%
General and administrative		13,766		14,593		(827	)		(6%)		40,785		39,821		964		2%
System development and programming costs		6,776		5,052		1,724			34%		19,235		15,140		4,095		27%
Amortization of intangible assets		12,743		15,442		(2,699	)		(17%)		39,559		35,926		3,633		10%
Depreciation		3,265		3,356		(91	)		(3%)		9,725		8,908		817		9%
Total operating expenses	$	106,521	$	97,366	$	9,155			9%	$	313,781	$	253,224	$	60,557		24%

Cost of ProvidingServices

	Three months ended				Change					Nine months ended				Change
	September 30,				2014 vs. 2013					September 30,				2014 vs. 2013
	2014		2013		$			%		2014		2013		$		%
	(in thousands, except percentages)
Compensation-related costs	$	23,818	$	19,904	$	3,914			20%	$	72,837	$	52,777	$	20,060		38%
Facilities		1,816		1,327		489			37%		5,197		3,711		1,486		40%
Information technology and communication		2,146		2,250		(104	)		(5%)		6,663		5,809		854		15%
Other expenses		4,795		4,075		720			18%		15,555		11,745		3,810		32%
Total cost of providing services	$	32,575	$	27,556	$	5,019			18%	$	100,252	$	74,042	$	26,210		35%

Cost of providing services for the three months ended September 30, 2014 increased by $5.0 million, or 18%, compared to the same period of the prior year. Compensation-related costs increased by $3.9 million due to increased headcount as well as a $0.6 million increase in stock-based compensation.  Cost of providing services remained unchanged at 6% of total revenues in the three months ended September 30, 2014 compared to the same period of the prior year.  Cost of providing services decreased to 25% of Net Service Revenues in the three months ended September 30, 2014 from 26% of Net Service Revenues in the same period of the prior year as a result of increased revenues.

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Cost of providing services for the nine months ended September 30, 2014 increased by $26.2 million, or 35%, compared to the same period of the prior year, due in part to our acquisition of Ambrose, which accounted for $4.9 million of the increase. Compensation-related costs increased by $20.1 million due to increased headcount, including $4.0 million from our acquisition of Ambrose. The remainder of the increase was due to an increase in WSEs other than those that we acquired from Ambrose, as well as a $1.3 million increase in stock-based compensation. Facilities-related costs increased by $1.5 million due to the growth of our business.  Cost of providing services remained at 6% of total revenues for the nine months ended September 30, 2014 compared to the same period of the prior year. Cost of providing services has increased to 26% of Net Service Revenues in the nine months ended September 30, 2014, from 25% of Net Service Revenues in the same period of the prior year.  The increase was due to costs associated with the integration of our recently acquired subsidiaries.

Salesand Marketing

	Three months ended				Change					Nine months ended				Change
	September 30,				2014 vs. 2013					September 30,				2014 vs. 2013
	2014		2013		$			%		2014		2013		$		%
	(in thousands, except percentages)
Compensation-related costs	$	24,667	$	19,352	$	5,315			27%	$	72,387	$	52,506	$	19,881		38%
Marketing and advertising		5,109		4,288		821			19%		13,690		11,414		2,276		20%
Facilities		1,037		825		212			26%		2,750		2,494		256		10%
Other expenses		6,583		6,902		(319	)		(5%)		15,398		12,973		2,425		19%
Total sales and marketing	$	37,396	$	31,367	$	6,029			19%	$	104,225	$	79,387	$	24,838		31%

Sales and marketing expenses for the three months ended September 30, 2014 increased by $6.0 million, or 19%, compared to the same period of the prior year. Of this increase, $5.3 million was due to compensation-related costs from our growth in direct sales channels, primarily the addition of new sales representatives, as well as a $0.5 million increase in stock-based compensation. Marketing and advertising expenses increased $0.8 million, or 19%, primarily as a result of our effort to focus on market verticals and penetration.  Sales and marketing expenses as a percentage of total revenues remained unchanged at 7% in each of the three months ended September 30, 2014 and 2013.  As a percentage of Net Service Revenues, sales and marketing expenses decreased to 29% in the three months ended September 30, 2014, from 30% in the same period of the prior year as a result of increased revenues.

Sales and marketing expenses for the nine months ended September 30, 2014 increased by $24.8 million, or 31%, compared to the same period of the prior year. Of this increase, $19.9 million was due to compensation-related costs, including $3.0 million from our acquisition of Ambrose and $16.9 million from our growth in direct sales channels, primarily the addition of new sales representatives, as well as a $1.2 million increase in stock based compensation. Marketing and advertising expenses increased $2.3 million, or 20%, primarily due to our acquisition of Ambrose.  Other expenses increased $2.4 million, or 19%, primarily due to increased sales travel, meeting and conference activities, as well as other expenses associated with recruiting efforts and information technology.  Sales and marketing expenses as a percentage of total revenues remained unchanged at 7% in each of the nine months ended September 30, 2014 and 2013.  As a percentage of Net Service Revenues, sales and marketing expenses remained unchanged at 27% in each of the nine months ended September 30, 2014 and 2013.

Generaland Administrative

	Three months ended				Change					Nine months ended				Change
	September 30,				2014 vs. 2013					September 30,				2014 vs. 2013
	2014		2013		$			%		2014		2013		$			%
	(in thousands, except percentages)
Compensation-related costs	$	7,910	$	8,463	$	(553	)		(7%)	$	24,617	$	24,566	$	51			0%
Legal and professional fees		2,131		2,065		66			3%		5,197		5,655		(458	)		(8%)
Other expenses		3,725		4,065		(340	)		(8%)		10,971		9,600		1,371			14%
Total general and administrative	$	13,766	$	14,593	$	(827	)		(6%)	$	40,785	$	39,821	$	964			2%

General and administrative expenses for the three months ended September 30, 2014 decreased by $0.8 million, or 6%, compared to the same period of the prior year.  Compensation-related costs decreased $0.5 million compared to the same period of the prior year.  General and administrative expenses decreased to 2% of total revenues, or 11% of Net Service Revenues, in the three months ended September 30, 2014, from 3% of total revenues, or 14% of Net Service Revenues, in the same period of the prior year as a result of efficiencies realized subsequent to our acquisitions.

28

General and administrative expenses for the nine months ended September 30, 2014 increased by $1.0 million, or 2%, compared to the same period of the prior year, primarily due to costs associated with the integration of our recently acquired subsidiaries.  General and administrative expenses remained unchanged at 3% of total revenues and decreased to 11% of Net Service Revenues in the nine months ended September 30, 2014, compared to 3% of total revenues and 13% of Net Service Revenues, in the same period of the prior year, as a result of an increase in revenues as well as efficiencies realized subsequent to our acquisitions.

SystemsDevelopmentand Programming

	Three months ended				Change				Nine months ended				Change
	September 30,				2014 vs. 2013				September 30,				2014 vs. 2013
	2014		2013		$		%		2014		2013		$			%
	(in thousands, except percentages)
Compensation-related costs	$	5,346	$	3,694	$	1,652		45%	$	15,656	$	11,246	$	4,410			39%
Other expenses		1,430		1,358		72		5%		3,579		3,894		(315	)		(8%)
Total systems development and programming costs	$	6,776	$	5,052	$	1,724		34%	$	19,235	$	15,140	$	4,095			27%

Our systemsdevelopmentand programmingcostsforthe three months ended September 30, 2014 increasedby $1.7 million,or 34%, comparedto the same period of the prior year. Theincreasewas due to an increase in compensation-related costs resulting from the increase in headcount to supportand enhance our technology product delivery. Despite these increases, systems development and programming costs remained unchanged at 1% of total revenues, or 5% of Net Service Revenues, in the three months ended September 30, 2014.

Our systemsdevelopmentand programmingcostsforthe nine months ended September 30, 2014 increasedby $4.1 million,or 27%, comparedto the same period of the prior year. Of thisincrease,$0.5 millionwas attributableto increasedheadcountfromour acquisitionof Ambrose.The remainingincreasewas due to a $3.9 millionincreasein compensation-relatedcostsresulting fromtheincreasein headcount,otherthanthosewe acquiredfromAmbrose,to supportand enhance our technology product delivery. Systems development and programming costs remained unchanged at 1% of total revenues, or 5% of Net Service Revenues, in the nine months ended September 30, 2014.

Amortizationof IntangibleAssetsand Depreciation

	Three months ended				Change					Nine months ended				Change
	September 30,				2014 vs. 2013					September 30,				2014 vs. 2013
	2014		2013		$			%		2014		2013		$		%
	(in thousands, except percentages)
Amortization of intangible assets	$	12,743	$	15,442	$	(2,699	)		(17%)	$	39,559	$	35,926	$	3,633		10%
Depreciation	$	3,265	$	3,356	$	(91	)		(3%)	$	9,725	$	8,908	$	817		9%

Our amortizationof intangibleassetsdecreasedby $2.7 million,or 17%, forthe three months ended September 30, 2014 as a result of the expiration of useful lives of certain customer lists and non-compete agreements related to our previous acquisitions. Our amortizationof intangibleassets increased by $3.6 million, or 10%, forthe nine months ended September 30, 2014 primarilyattributableto our acquisitionof Ambrose.Depreciationexpenseincreasedby $0.8 million, or 9%, forthe nine months ended September 30, 2014, comparedto the same period of the prior year, primarilyattributableto depreciationfromour acquisition of Ambrose.

Other Income(Expense)

	Three months ended						Change				Nine months ended						Change
	September 30,						2014 vs. 2013				September 30,						2014 vs. 2013
	2014			2013			$		%		2014			2013			$			%
	(in thousands, except percentages)
Interest expense and bank fees	$	(18,462	)	$	(19,902	)	$	1,440		(7%)	$	(49,174	)	$	(32,091	)	$	(17,083	)		53%

29

Otherincome(expense)was primarilytheresultof interestexpenseunderour creditfacilities.In October 2012, we amendedand restatedour secured credit facility to providefortotalborrowingsof $350.0 million,which was amendedagainin April2013 to providefortotal borrowingsof $500.0 million.In August 2013, we enteredintotwo new seniorsecuredcreditfacilitiesfortotal borrowingsof $820.0 millionto pay offour previouscreditfacilitiesand pay a specialdividend. In March 2014, the Company repaid $216.6 million of these facilities from its IPO proceeds, which led to lower interest expense in the three months ended September 30, 2014 as a result of the lower debt level compared to the same period of the prior year.  Interestexpenseincreasedin the nine months ended September 30, 2014 due to a $5.0 million charge related to the acceleration of loan fee amortization due to our refinancing activities, a $3.8 million prepayment premium related to our partial repayment of the credit facilities during the period, and an increase in interest expense resulting from the higher debt level.

Provisionfor (Benefit from) IncomeTaxes

	Three months ended						Change				Nine months ended						Change
	September 30,						2014 vs. 2013				September 30,						2014 vs. 2013
	2014			2013			$		%		2014			2013			$		%
	(in thousands, except percentages)
Provision for (benefit from) income taxes	$	2,238		$	(4,800	)	$	7,038		(147%)	$	9,149		$	3,880		$	5,269		136%
Effective tax rates		75.5	%		38.3	%						51.9	%		35.2	%

Our provision for income taxes for the three months ended September 30, 2014 increased by $7.0 million compared to the same period of the prior year, primarily due to the increase in our pre-tax income. Our effective tax rate (ETR) increased from 38.3% for the three months ended September 30, 2013 to 75.5% for the three months ended September 30, 2014, primarily due to non-deductible stock-based compensation, a discrete charge for the revaluation of deferred taxes based on an income tax accounting method change, and non-deductible transaction costs related to our secondary offering.  The remainder of the increase is primarily due to the expiration of the federal research and development tax credit in 2014.

Our provision for income taxes for the nine months ended September 30, 2014 increased by $5.3 million compared to the same period of the prior year, primarily due to an increase in our pre-tax income. Our effective tax rate increased from 35.2% for the nine months ended September 30, 2013 to 51.9% for the nine months ended September 30, 2014, primarily due to non-deductible stock-based compensation, a discrete tax charge of $1.3 million, for the revaluation of deferred taxes, based on a regulatory state tax change and an income tax accounting method change, and non-deductible transaction costs related to our secondary offering.  The remainder of the increase is primarily due to the expiration of the federal research and development tax credit in 2014, as well as a release of uncertain tax positions recognized for the three months ended March 31, 2013.

Liquidityand CapitalResources

Our principalsourceof liquidityforoperationsisderivedfromcashprovidedby operatingactivities.Werelyon cashprovidedby operatingactivitiesto meetour short-termliquidityrequirements,which primarilyrelate to thepaymentof corporatepayrolland otheroperatingcosts,and capitalexpenditures.Our creditfacilitieshave been used to fund acquisitionsand dividends,and we have not reliedon thesefacilitiesto provideliquidityforour operations.Our cashflow relatedto WSE payrolland benefitsisgenerallymatchedby advancecollection fromour clients.To minimizethecreditriskassociatedwith remittingthepayrolland associatedtaxesandbenefitscosts,we requireclientsto prefundthepayrolland relatedpayrolltaxesand benefitscosts.To theextent thisdoes not occur,our resultsof operationsand cashflow maybe negativelyimpacted.

WSE-relatedliabilitiescanfluctuatesignificantlyduetovariousfactors,includingthedayoftheweekon whichaclientpayrollperiodends,theexistenceofholidaysatorimmediatelyfollowingaclientpayrollperiod-end andvariousfederalandstatecompliancecalendars.Wereporttheadvancecollectionfromourclientsaspayroll fundscollectedwithinWSE-relatedassetsonourbalancesheet.Ourcashandcashequivalentsreportedonour balancesheetrepresentourcorporatecashavailabletomeetcorporateliquidityrequirements,capitalspendingand expansionplans,potentialacquisitions,debtservicerequirementsandothercorporateoperatingcashneeds.

30

Cash Flows

We generatedpositivecashflowsfromoperatingactivitiesduringthe nine months ended September 30, 2014 and 2013. We also have theabilityto generatecashthroughour financingarrangementsunderour creditfacilityto meetshort-term fundingrequirementsrelatedto WSE-relatedobligations.The followingtableshows our cashflowsfrom operatingactivities,investingactivitiesand financingactivitiesforthestatedperiods:

	Nine Months Ended September 30,
	2014			2013
	(in thousands)
Net cash provided by (used in):
Operating activities	$	98,981		$	62,080
Investing activities		(33,871	)		(206,794	)
Financing activities		(61,452	)		193,146
Effect of exchange rates on cash and cash equivalents		(62	)		(20	)
Net increase in cash and cash equivalents	$	3,596		$	48,412

Cash Flows from OperatingActivities

Netcashprovidedbyoperatingactivitieswas$99.0millionand$62.1millionforthenine months endedSeptember 30,2014and2013,respectively.Historically,cashprovidedbyoperatingactivitieshasbeen affectedbyournetincome,adjustedfornon-cashexpenseitems(suchasdepreciation,amortizationofintangible assets,deferredincometaxes, and expenseassociatedwithstock-basedcompensation)andchangesinworkingcapital accounts.ThefluctuationinourworkingcapitalaccountswasprimarilydrivenbyWSE-relatedassetsand liabilities.

Cash Flows from InvestingActivities

Net cash used in investing activities was $33.9 million for the nine months ended September 30, 2014, as compared to $206.8 million in the same period of the prior year, mainly due to our acquisition of Ambrose for $193.7 million in the third quarter of 2013. In the nine months ended September 30, 2014, we invested $16.8 million in debt securities compared to $7.3 million for the same period of 2013 to maximize return on workers compensation premium collateral. Investments to purchase property and equipment were $17.1 million for the nine months ended September 30, 2014 compared to $6.3 million for the same period of 2013 reflecting an increased investment in technology to enhance our product offerings.

Cash Flows from FinancingActivities

Net cashused in financingactivitieswas $61.5 millionfor the nine months ended September 30, 2014, comparedto $193.1 million provided by financing activitiesin the same period of the prior year. Net cashused in financingactivitiesduring the nine months ended September 30, 2014 was attributableto $268.4 million in loan repayments, offset by $219.7 million of net proceeds received from the issuance of common stock in our IPO and exercise of stock options. Net cashprovided by financingactivitiesduring the nine months ended September 30, 2013 was attributableto the borrowing of $970.0 million under our credit facility in connection with our acquisition of Ambrose, partially offset by $450.1 million in loan repayments, $310.9 million in special dividends, $24.6 million in debt issuance costs and $11.8 millionin commonstockrepurchases.

2014 Credit Facility

In August 2013, we, as guarantor, our subsidiary TriNet HR Corporation, as borrower, and certain of our other subsidiaries as subsidiary guarantors entered into two senior secured credit facilities: (i) a $705.0 million first lien credit facility with JPMorgan Chase Bank, N.A., as administrative agent, and (ii) a $190.0 million second lien credit facility with Wilmington Trust, National Association, as administrative agent. Proceeds from our IPO were used to fully repay the $190.0 million second lien credit facility, which resulted in a prepayment premium of $3.8 million, and to repay $25.0 million of the first lien credit tranche B-1 term loan. Additionally, the remaining balance of the loan fees associated with the second lien credit facility and a portion of the loan fees associated with the first lien credit facility were fully amortized in March 2014 for a charge of $5.0 million. On July 9, 2014, we amended and restated our first lien credit facility pursuant to an amended and restated first lien credit agreement, or the Amended and Restated Credit Agreement.

31

The Amended and Restated Credit Agreement provides for: (i) $375 million principal amount of “tranche A term loans,” (ii) $200 million principal amount of “tranche B term loans,” and (iii) a revolving credit facility of $75 million, which we refer to as the revolving credit facility. The proceeds of the tranche A term loans were used to refinance in part the tranche B-2 term loans outstanding under the original first lien credit facility. The proceeds of the tranche B term loans were used to (i) refinance the remaining tranche B-2 term loans outstanding under the original first lien credit facility, (ii) refinance other amounts outstanding under the original first lien credit facility and (iii) pay fees and expenses related thereto. The revolving credit facility replaced the revolving credit facility under the original first lien credit facility.

In connection with the Amended and Restated Credit Agreement, we incurred $11.1 million of debt issuance costs. We deferred $8.0 million of the costs, which are being amortized over the term of the credit facility.  The remaining $3.1 million of costs were recorded to interest expense and bank fees.  Additionally, we recorded a $9.0 million loss on extinguishment of debt to write-off deferred issuance costs associated with the original first lien credit facility, which was also recorded to interest expense and bank fees.  The remaining $6.1 million of loan fees associated with the previous facility were deemed to be modified and continue to be amortized over the revised remaining term of the Amended and Restated Credit Agreement.

The tranche A term loans and the revolving credit facility will mature on July 9, 2019. The tranche B term loans will mature on July 9, 2017. Loans under the revolving credit facility are expected to be used for working capital and other general corporate purposes.

The tranche A term loans and loans under the revolving credit facility bear interest, at our option, at a rate equal to either the LIBOR rate, plus an applicable margin equal to 2.75% per annum, or the prime lending rate, plus an applicable margin equal to 1.75% per annum. The applicable margins for the tranche A term loans and loans under the revolving credit facility are subject to reduction by 0.25% or 0.50%, or increase by 0.25% based upon our total leverage ratio. The tranche B term loans bear interest, at our option, at a rate equal to either the LIBOR rate, plus an applicable margin equal to 2.75% per annum or the prime lending rate, plus an applicable margin equal to 1.75% per annum. We are required to pay a commitment fee of 0.50%, subject to decrease to 0.375% based on our total leverage ratio, on the daily unused amount of the commitments under the revolving credit facility, as well as fronting fees and other customary fees for letters of credit issued under the revolving credit facility.

We are permitted to make voluntary prepayments at any time without payment of a premium, except that a 1% premium would apply to a repricing of the tranche B term loans effected on or prior to the six-month anniversary of the effective date for the amendment and restatement of our credit facility. We are required to make mandatory prepayments of term loans (without payment of a premium) with (i) net cash proceeds from issuances of debt (other than certain permitted debt), (ii) net cash proceeds from certain non-ordinary course asset sales and casualty and condemnation proceeds (subject to reinvestment rights and other exceptions), and (iii) beginning with the fiscal year ending December 31, 2015, 50% of our excess cash flow (subject to decrease to (x) 25% if our total leverage ratio as of the last day of such fiscal year is less than 3.75 to 1.0 and equal to or greater than 3.00 to 1.0, and (y) 0% if our total leverage ratio as of the last day of such fiscal year is less than 3.00 to 1.0), provided that we may defer prepayments based on excess cash flow to the extent such payments would result our GAAP working capital being less than $10 million (after giving effect to such prepayments).

The tranche A term loans will be paid in equal quarterly installments in an aggregate annual amount equal to: (i) beginning on December 31, 2014 to December 31, 2016, 5% of the original principal amount thereof, (ii) beginning on December 31, 2016 to December 31, 2018, 7.5% of the original principal amount thereof, and (iii) beginning on December 31, 2018 to June 30, 2019, 10% of the original principal amount thereof with any remaining balance payable on the final maturity date of the tranche A term loans. The tranche B term loans will be paid in equal quarterly installments in an aggregate annual amount equal to 1% of the original principal amount thereof, with any remaining balance payable on the final maturity date of the tranche B term loans.

Our credit facility contains customary representations and warranties and customary affirmative and negative covenants applicable to us and our subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness, and dividends and other distributions. Our credit facility also contains financial covenants that require us to maintain a minimum consolidated interest coverage ratio and a maximum total leverage ratio.

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ContractualObligationsand Commitments

ThefollowingtablesummarizesourcontractualobligationsandcommercialcommitmentsasofSeptember 30,2014,andtheeffecttheyareexpectedtohaveonourliquidityandcapitalresources(inthousands):

	Payments Due by Period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-term debt obligations	$	550,000	$	9,813	$	45,687	$	232,000	$	262,500
Interest on debt obligations		90,413		7,087		41,443		37,550		4,333
Workers compensation liabilities		120,629		20,726		38,449		18,727		42,727
Capital lease obligations		252		114		118		20		-
Operating lease obligations		24,634		2,786		13,950		4,676		3,222
Purchase obligations		14,183		387		13,796		-		-
Uncertain tax positions		3,061		2,565		496		-		-
Total	$	803,172	$	43,478	$	153,939	$	292,973	$	312,782

Long-term debt obligations and interest on debt obligations reflect the terms of the amended and restated credit agreement discussed above. The projected interest payments incorporate the forward LIBOR curve as of September 30, 2014.

Workerscompensationliabilitiesrepresentedin thetableabove areconsideredcontractualobligations becausetheyrepresenttheestimatedcostsof reimbursingthecarriersforpayingclaimswithinthedeductible layerin accordancewith workerscompensationinsurancepolicies.Workerscompensationliabilitiesinclude estimatesforreportedclaims,plusestimatesforclaimsincurredbut not reported,and estimatesof certain expensesassociatedwith processingand settlingtheclaims.These estimatesaresubjectto significantuncertainty.The actualamountto be paidisnot finallydetermineduntilwe reacha settlementwith theinsurance carrier.Finalclaimsettlementsmayvarysignificantlyfromthepresentestimates,particularlybecausemany claimswillnot be settleduntilwellintothefuture.In estimatingthetimingof futurepaymentsby year,we have assumedthatour historicalpaymentpatternswillcontinue.However, theactualtimingof futurepaymentscould varymateriallyfromtheseestimatesdue to, amongotherthings,changesin claimreportingand paymentpatterns and largeunanticipatedsettlements.

Our purchaseobligationsrepresentedin thetableabove primarilyconsistof obligationsforrenewal premiumson workerscompensationpolicies,softwarelicensesand maintenance,salesand marketingeventsand professionaland consultingfees.These areassociatedwith agreementsthatwe believeareenforceableand legallybindingand thatspecifyallsignificantterms,includingfixedor minimumservicesto be used, fixed,minimumor variablepriceprovisions,and theapproximatetimingof thetransaction.Obligationsundercontracts thatwe can cancelwithouta significantpenaltyarenot includedin thetableabove. The table includes purchase obligations individually greater than $100,000 and with a remaining term in excess of one year.

To supportour growth and expansion,we mayleaseadditionalofficespace.Many of our operatinglease agreementsprovideus with theoptionto renew. Our futureoperatingleaseobligationswould changeifwe exercisedtheseoptionsand ifwe enteredintoadditionaloperatingleaseagreementsas we expand our operations.

In thenormalcourseof business,we makerepresentationsand warrantiesthatguaranteetheperformanceof servicesunderservicearrangementswith clients.Historically,therehas been no materiallossesrelatedto such guarantees.In addition,in connectionwith our initialpublicoffering,we have enteredintoindemnification agreementswith our officersand directors,which requireus to defendand, ifnecessary,indemnifythese individualsforcertainpendingor futurelegalclaimsas theyrelateto theirservicesprovidedto us. Such indemnificationobligationsarenot includedin thetableabove.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to certain market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities as follows.

We had cash and cash equivalents, restricted cash, restricted investments, payroll funds collected, and interest bearing receivable in connection with workers compensation premiums totaling $602.0 million at September 30, 2014. Included in this amount were $55.4 million in time deposits and U.S. Treasuries. Such interest-earning instruments carry a degree of interest rate risk. To date, fluctuations in interest income have not been significant. Fluctuations in the value of our investment securities caused by a change in interest rates (gains or losses on the carrying value) are recorded in other comprehensive income, and are realized only if we sell the underlying securities.  Our investments are made for capital preservation purposes. An immediate increase or decrease in the interest rates in effect at either December 31, 2013 or September 30, 2014 of 100-basis points would not result in a material market value reduction or increase at such date.

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The cash and cash equivalents, restricted cash, payroll funds collected and workers compensation receivable are held for working capital purposes.  Our cash equivalents, payroll funds collected, workers compensation receivable and our investments are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectation due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. However, because we classify our debt securities as “available for sale,” no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are determined to be other-than-temporary. Our fixed-income portfolio is subject to interest rate risk.

We also had total outstanding indebtedness of $550.0 million as of September 30, 2014, of which $20.5 million is due within 12 months. Amounts outstanding under our credit facility carry variable interest rates of LIBOR + 2.75% over the term of the facility.  As a result of our credit facility, we are exposed to changes in interest rates. With an increase in interest rates in effect at September 30, 2014 of 100 basis points, our interest expense for 2014 through 2019 would be $111.0 million. On the other hand, with a decrease in interest rates in effect at September 30, 2014 of 100 basis points, our interest expense for 2014 through 2019 would be $69.8 million.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2014. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures as of September 30, 2014, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Remediation Efforts on Previously Identified Material Weakness

In preparing and reviewing our consolidated financial statements as of and for the nine months ended September 30, 2013, and in connection with our restatement of previously issued consolidated financial statements for the years ended December 31, 2010 and 2011, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. The material weakness identified related to our incorrectly recording a deferred tax asset in connection with our accounting for our acquisition of Ambrose that should have been reported as goodwill as of September 30, 2013, and to incorrectly recording a true-up to the income tax provision in 2011 related to the allocation of stock compensation between qualified and nonqualified stock options that should have been identified and recorded in 2010. As a result, there were adjustments required in connection with closing our books and records and preparing our consolidated financial statements for the nine months ended September 30, 2013 and a restatement was required for our consolidated financial statements for the years ended December 31, 2010 and 2011.

In response to this material weakness, we have hired a Director of Income Tax Accounting, who reports directly to our Chief Accounting Officer. We will continue to engage external technical advisers to assist us with the evaluation of complex tax issues and improve our process, procedures and documentation standards relating to preparation of income tax provision calculations.  We will continue to assess and develop our tax professionals to provide appropriate technical and accounting expertise commensurate with our needs to properly consider and apply GAAP for income taxes.

Neither we nor our independent registered public accounting firm has performed an evaluation of our internal control over financial reporting during any period in accordance with the provisions of the Sarbanes-Oxley Act. In light of the material weakness that was identified as a result of the limited procedures performed, we believe that it is possible that, had we and our independent registered public accounting firm performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act, additional material weaknesses or significant control deficiencies may have been identified.

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As we continue to evaluate and test improvements to our internal control over financial reporting, we may determine to take additional measures to address control deficiencies or decide to modify certain of the remediation measures described above. We expect that the material weakness will be remediated in 2014, although there can be no assurances that our efforts will be effective. Our Chief Executive Officer and Chief Financial Officer considered this material weakness in evaluating our disclosure controls and procedures as of September 30, 2014, and determined that the material weakness did not impact our disclosure controls and procedures for the period ended September 30, 2014.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended September 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As described above, we are implementing changes to our disclosure controls and procedures and internal control over financial reporting to remediate the material weakness identified above.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We mayfromtimeto timebecomeinvolvedin variouslitigation matters arisingin theordinarycourseof business,includingsuitsby our clients.The unfavorableresolutionof any such mattercouldhave a material effecton ourconsolidatedfinancialpositionand resultsof operations.

Due to thenatureof ourrelationshipwith ourWSEs, we couldbe subjectto liability forfederaland statelaw violationseven ifwe do not participatein such violations.Whileour agreementswith our clientscontainindemnificationprovisionsrelatedto theconductof our clients,we historicallyhave not encounteredsituationsrequiringenforcementof theseindemnificationprovisions.

We have been named as a defendant in various class action lawsuits arising from the nature of our relationship with our WSEs. Management is currently unable to estimate a possible loss or range of loss for these class action lawsuits. However, at this stage of the lawsuits, management currently believes that none of the pending legal proceedings or claims is reasonably likely to have a material adverse effect on our financial position, results of operations or cash flows. Nevertheless, regardless of the outcome, litigation can have an adverse impact on us because of defense costs, diversion of management resources and other factors. In addition, if one or more of these legal matters were resolved against the Company in a way contrary to management’s expectations, our consolidated financial statements could be materially adversely affected.

Item 1A. Risk Factors

RISK FACTORS

Investinginourcommonstockinvolvesahighdegreeofrisk.Youshouldcarefullyconsiderthefollowingrisks andalloftheotherinformationcontainedinthisreport,includingourconsolidatedfinancialstatementsand relatednotes.Ifanyofthefollowingrisksmaterialize,ourbusiness,financial conditionandresultsofoperationscouldbemateriallyandadverselyaffected.Inthatcase,thetradingpriceofour commonstockcoulddecline,andyoumaylosesomeorallofyourinvestment.

Risks Relatedto Our Business and Industry

Our successdepends on growth in marketacceptanceof the human resourcesoutsourcingand related serviceswe provide.

Our successdependson thewillingnessof SMBs to outsourcetheirHRfunctionto a third-partyservice provider.We estimatethatfewerthan5% of U.S.employeesof businesseswith fewerthan500 employeesare partof a co-employmentarrangement,in which allor someportionof theemployer’sHRfunctionwas outsourcedto a singlethird-partyprovidersuch as TriNet.We believethatour growth opportunityisprimarilya functionof our abilityto penetratetheSMB market.Many companieshave investedsubstantialpersonnel,infrastructureand financialresourcesin theirown internalHRorganizationsand thereforemaybe reluctantto switchto our solution.Companiesmaynot engageus forotherreasons,includinga desireto maintaincontroloverallaspects of theirHRactivities,a beliefthattheymanagetheirHRactivitiesmoreeffectivelyusingtheirinternal administrativeorganizations,perceptionsabouttheexpensesassociatedwith our services,perceptionsabout whetherour servicescomplywith laws and regulationsapplicableto themor theirbusinesses,or other considerationsthatmaynot alwaysbe evident.Additionalconcernsor considerationsmayalsoemergein the future.We mustaddressour potentialclients’concernsand explainthebenefitsof our approachin orderto convincethemto changetheway thattheymanagetheirHRactivities,particularlyin partsof theUnitedStates where our companyand solutionarelesswell-known.Ifwe arenot successfulin addressingpotentialclients’ concernsand convincingcompaniesthatour solutioncan fulfilltheirHRneeds,thenthemarketforour solution maynot developas we anticipateand our businessmaynot grow.

Ifwe are unable to rapidlygrow our salesforce,we willnot be ableto grow our businessat the ratethat we anticipate,which could harm our business,resultsof operationsand financialcondition.

In orderto raiseawarenessof thebenefitsof our servicesand identifyand acquirenew clients,we must rapidlygrow our directsalesforce,which consistsof regionalsalesrepresentativeswho focuson servingclients in specificindustryverticalmarkets.Competitionforskilledsalespersonnelisintense,and we cannotassureyou thatwe willbe successfulin attracting,trainingand retainingqualifiedsalespersonnel,or thatour newly hired salespersonnelwillfunctioneffectively,eitherindividuallyor as a group. In addition,our newly hiredsales personnelaretypicallynot productiveforup to a yearfollowingtheirhiring.This resultsin increasednear-term coststo us relativeto thesalescontributionsof thesenewly hiredsalespersonnel.Ifwe areunableto rapidly grow and effectivelytrainour salesforce,our revenueslikelywillnot increaseattheratethatwe anticipate, which couldharmour business,resultsof operationsand financialcondition.

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We are subjectto clientattrition.

We regularlyexperiencesignificantclientattritiondue to a varietyof factors,includingincreasesin administrativefeesand insurancecosts,disruptioncausedby thetransitionof WSEs we have gainedthrough acquisitionto our technologyplatform,clientbusinessfailure,competitionand clientsdeterminingto bringHR administrationin-house.Our standardclientserviceagreementcan be cancelledby us or by theclientwithout penaltywith 30 days’priorwrittennotice.Clientswho intendto ceasedoing businesswith us oftenelectto do so effectiveas of thebeginningof a calendaryear.As a result,in thefirstquarterof eachyearwe experienceour largestconcentrationof clientattrition.In addition,we experiencehigherlevelsof clientattritionin connectionwith renewalsof thehealthinsurancewe provideforWSEs in theeventthatsuch renewalsresultin increased premiumsthatwe passon to our clients.Ifwe were to experienceclientattritionin excessof our projected annualattritionrateof approximately20% of our installedWSE base,as we did in 2010 and 2011, itcouldharm our business,resultsof operationsand financialcondition.

Our acquisitionstrategycreatesrisksforour business.

We have completednumerousacquisitionsof otherbusinesses,and we expectthatwe willcontinueto grow throughacquisitionsof otherbusinesses,assetsor technologies.We mayfailto identifyattractiveacquisition candidatesor we maybe unableto reachacceptabletermsforfutureacquisitions.Ifwe areunableto complete acquisitionsin thefuture,our abilityto grow our businesswillbe impaired.

We maypay foracquisitionsby issuingadditionalsharesof our commonstock,which would diluteour stockholders,or by issuingdebt,which couldincludetermsthatrestrictour abilityto operateour businessor pursueotheropportunitiesand subjectus to meaningfuldebtserviceobligations.We mayalsouse significant amountsof cashto completeacquisitions.To theextentthatwe completeacquisitionsin thefuture,we likelywill incurfuturedepreciationand amortizationexpensesassociatedwith theacquiredassets.We mayalsorecord significantamountsof intangibleassets,includinggoodwill,which couldbecomeimpairedin thefuture. Acquisitionsinvolvenumerousotherrisks,including:

· difficultiesintegratingtheoperations,technologies,servicesand personnelof theacquiredcompanies, includingthemigrationof WSEs froman acquiredcompany’stechnologyplatformto ours;

· challengesmaintainingour internalstandards,controls,proceduresand policies;

· diversionof management’sattentionfromotherbusinessconcerns;

· over-valuationby us of acquiredcompanies;

· litigationresultingfromactivitiesof theacquiredcompany,includingclaimsfromterminatedemployees, customers,formerstockholdersand otherthirdparties;

· insufficientrevenuesto offsetincreasedexpensesassociatedwith theacquisitionsand unanticipated liabilitiesof theacquiredcompanies;

· insufficientindemnificationor securityfromthesellingpartiesforlegalliabilitiesthatwe mayassumein connectionwith our acquisitions;

· enteringmarketsin which we have no priorexperienceand maynot succeed;

· risksassociatedwith foreignacquisitions,such as communicationand integrationproblemsresulting fromgeographicdispersionand languageand culturaldifferences,compliancewith foreignlaws and regulationsand generaleconomicor politicalconditionsin othercountriesor regions;

· potentiallossof key employeesof theacquiredcompanies;and

· impairmentof relationshipswith clientsand employeesof theacquiredcompaniesor our clientsand employeesas a resultof theintegrationof acquiredoperationsand new managementpersonnel.

Ifwe failto integratenewly acquiredbusinesseseffectively,we mightnot achievethegrowth, service enhancementor operationalefficiencyobjectivesof theacquisitions,and our business,resultsof operationsand financialconditioncouldbe harmed.

Unexpectedchanges in workers compensationand healthinsuranceclaimsby worksiteemployeescould harm our business.

Our insurancecostsareimpactedsignificantlyby our WSEs’ healthand workerscompensationinsurance claimsexperience.We establishreservesto providefortheestimatedcostsof reimbursingour workerscompensationand healthinsurancecarriersforpayingclaimswithinthedeductiblelayerin accordancewith their insurancepolicies.Estimatingthesereservesinvolvesour considerationof a numberof factorsand requires significantjudgment.Ifthereisan unexpectedincreasein theseverityor frequencyof claims,such as due to our WSEs generatingadditionalclaimsactivity,or ifwe subsequentlyreceiveupdatedinformationindicating insuranceclaimswere higherthanpreviouslyestimatedand reported,our insurancecostscouldbe higherin that periodor subsequent

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periodsas we adjustour reservesaccordingly.In addition,we maybe unableto increaseour pricingto offsetincreasesin insurancecostson a timelybasis.A numberof factorsaffectclaimactivitylevels, such as changesin generaleconomicconditions,proposedand enactedregulatorychangesand diseaseoutbreaks.

Our quarterlyresultsof operationsmayfluctuateas a resultof numerous factors,many of which are outsideof our control.

Our quarterlyresultsof operationsarelikelyto fluctuate,and our resultsin somequartersmaybe below the expectationsof researchanalystsand our investors,which couldcausethepriceof our commonstockto decline. Some of our significantexpenses,such as insurancecostsforour WSEs, rentexpenseand debtexpense,may requiresignificantleadtimeto reduce.Ifwe do not achieveour expectedrevenuestargets,we maybe unableto adjustour costsquicklyenough to offsetany revenuesshortfall,which couldharmour resultsof operations. Some of theimportantfactorsthatmaycauseour revenues,resultsof operationsand cashflowsto fluctuatefrom quarterto quarterinclude:

· thenumberof our new clientsinitiatingserviceand thenumberof WSEs employedby eachnew client;

· our lossof existingclients;

· reductionin thenumberof WSEs atexistingclients;

· thenumberand severityof healthand workerscompensationinsuranceclaimsby WSEs and thetimingof claimsinformationprovidedby our insurancecarriers;

· thetimingof clientpaymentsand paymentdefaultsby clients;

· theamountand timingof our operatingexpensesand capitalexpenditures;

· costsassociatedwith our acquisitionsof companies,assetsand technologies;

· payments or drawdowns on our credit facility, or any amendments to our obligations under our credit facility;

· expenseswe incurforgeographicand serviceexpansion;

· our regulatorycompliancecosts;

· changesto our creditratingsby ratingagencies;

· changesin our effectivetaxrate;

· extraordinaryexpensessuch as litigationor otherdispute-relatedsettlementpayments;and

· theimpactof new accountingpronouncements.

Many of theabove factorsarediscussedin moredetailelsewherein this“Risk Factors”sectionand in the section of this report titled“Management’sDiscussionand Analysisof FinancialConditionand Resultsof Operations”. Many of thesefactorsareoutsideour control,and thevariabilityand unpredictabilityof thesefactors couldcauseus to failto meetour expectationsforrevenuesor resultsof operationsfora givenperiod.In addition,theoccurrenceof one or moreof thesefactorsmightcauseour resultsof operationsto varywidely, which couldleadto negativeimpactson our margins,short-termliquidityor abilityto retainor attractkey personnel,and couldcauseotherunanticipatedissues.Accordingly,we believethatquarter-to-quarter comparisonsof our revenues,resultsof operationsand cashflowsmaynot be meaningfuland shouldnot be reliedupon as an indicationof our futureperformance.

Our businessissubjectto numerous stateand federallaws, and uncertaintyas to the applicationof these laws, or adverseapplicationsof theselaws, as wellas changes in applicablelaws, could adverselyaffectour business.

Ouroperationsaregovernedbynumerousfederal,stateandlocallawsrelatingtolabor,tax,benefits,insurance andemploymentmatters.Weareaprofessionalemployerorganization,andbyenteringintoaco-employment relationshipwithWSEs,weassumecertainobligations,responsibilitiesandpotentiallegalrisksofanemployer undertheselaws.However,manyoftheselaws(suchastheEmployeeRetirementIncomeSecurityAct,orERISA, andfederalandstateemploymenttaxlaws)donotspecificallyaddresstheobligationsandresponsibilitiesofa providerofoutsourcedHRinaco-employmentrelationship,andthedefinitionofemployerundertheselawsisnot uniform.Inaddition,manystateshavenotaddressedtheco-employmentrelationshipforpurposesofcompliancewith applicablestatelawsgoverningtherelationshipbetweenemployersandemployeesandstateinsurancelaws.Thereisevengreateruncertaintyonthefederallevel,suchastheapplicationofimmigrationreformtoaco-employment relationship,andtaxcreditsforsmallbusinessesthatutilizeaco-employmentrelationship.

We arenot ableto predictwhetherbroaderfederalor stateregulationgoverningtheco-employment relationshipwillbe implemented,or ifitis,how itwillaffectus. Any adverseapplicationor interpretation(in courts,agenciesor otherwise)of new or existingfederalor statelaws to theco-employmentrelationshipwith our WSEs and clientscouldharmour business.Iffederal,stateor localjurisdictionswere to changetheirregulatory frameworkrelatedto outsourcedHR,or introducenew laws governingour

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industrythatwere materiallydifferent fromexistinglaws, thosechangescouldreduceor eliminatetheneed forsomeof our services,or couldrequire thatwe makesignificantchangesin our methodsof doing business,which couldincreaseour costof doing business.Changes in regulationscouldalsoaffecttheextentand typeof benefitsemployerscan or mustprovide employees,theamountand typeof taxesemployersand employeesarerequiredto pay or thetimewithinwhich employersmustremittaxesto theapplicableauthority.These changescouldsubstantiallydecreaseour revenues and substantiallyincreaseour costof doing business.Ifwe failto educateand assistour clientsregardingnew or revisedlegislationthatimpactsthem,our reputationcouldbe harmed.

Although somestatesdo not explicitlyregulateprofessionalemployerorganizations,42 stateshave passed laws thathave licensing,certificationor registrationrequirementsapplicableto professionalemployer organizationsor recognizetheprofessionalemployerorganizationmodel,and otherstatesmayimplementsuch requirementsin thefuture.Laws regulatingprofessionalemployerorganizationsvaryfromstateto state,but generallyprovideforoversightof thefiscalresponsibilityof professionalemployerorganizations,and in some casescodifyand clarifytheco-employmentrelationshipforprocessingunemploymentclaims,workers compensationand otherpurposesunderstatelaw. We maybe requiredto spend significanttimeand resourcesto satisfylicensingrequirementsor otherapplicableregulationsin somestates,and we maynot be ableto satisfy theserequirementsor regulationsin allstates,which couldprohibitus fromdoing businessin such states.In addition,we cannotassureyou thatwe willbe ableto renew our licensesin allstates.

Ifwe are not recognizedas an employerof worksiteemployeesunder federaland stateregulations,we and our clientscould be adverselyimpacted.

In orderforWSEs to receivethefullbenefitof our benefitsofferings,itisimportantthatwe actand qualify as an employerof theWSEs undertheInternalRevenue Code of 1986, or theCode, and ERISA.In addition,our statusas an employerisimportantforpurposesof ERISApreemptionof statelaws. The definitionof employer undervariouslaws isnot uniform,and underboth theCode and ERISAthetermisdefinedin partby complex multi-factortestsundercommonlaw. We believethatwe qualifyas an employerof our WSEs in theUnited Statesunderboth theCode and ERISA,and we implementprocessesto protectand preservethisstatus. However, theU.S.Departmentof Labor has issuedguidancethatcertainentitiesin theHRoutsourcingindustry do not qualifyas commonlaw employersof WSEs forERISApurposes.Ifwe were found not to be an employer undertheCode, our WSEs maynot receivethefavorabletaxtreatmentforany plansintendedto qualifyunder Section401 of theCode, includingour 401(k)plansand cafeteriaplans,which couldhave a materialadverse effecton our business.Ifwe were found not to be an employerforERISApurposes,our planswould not comply with ERISA,and finesand penaltiescouldbe imposed.In addition,ifwe were found not to be an employerforERISApurposes,we and our planswould not enjoythefullpreemptionof statelaws providedby ERISAand couldbe subjectto varyingstatelaws and regulations,includinglaws governingmultipleemployerwelfare arrangements,or MEWAs, as wellas to claimsbasedupon statelaws.

We and our clientscould be adverselyimpactedby healthcarereform.

The PatientProtectionand AffordableCare Act and theHeath Care and EducationReconciliationAct of 2010, which we referto collectivelyas theAct, entailsweepinghealthcarereformswith staggeredeffective datesthrough2018, and manyprovisionsof theAct requiretheissuanceof additionalguidancefrom theU.S.Departmentsof Labor and Healthand Human Services,theInternalRevenue Service,or IRS, and U.S. states.Beginningin 2014, a numberof key provisionsof theAct takeeffect,includingtheestablishmentof state and federally run insuranceexchanges,insurancemarketreforms,“pay or play”penaltieson applicable largeemployersand theimposition and assessment of excisetaxeson thehealthinsuranceindustryand reinsurancetaxeson insurersand third-partyadministrators. Collectively,theseitemshave thepotentialto significantlychangetheinsurancemarketplaceforemployersand how employers offer orprovideinsuranceto employees.

As a co-employerof our clients’WSEs, we assumeor sharemanyof theemployer-relatedresponsibilities and legalrisksand assistour clientsin complyingwith manyemployment-relatedgovernmentalregulations. Generally,theAct and subsequentlyissuedguidanceby theIRS and theU.S.Departmentof Healthand Human Serviceshave not addressed,or in someinstancesareunclear,as to theirapplicationin theco-employment relationship.For example,theAct providesfora smallbusinesstaxcreditforeligiblecompaniesofferinghealth carecoverageto employees.We believethatthesetaxcreditsareavailableto our clientsthatmeetthe qualificationrequirements;however, theAct and subsequentlyissuedIRS guidancedo not expresslyaddressthe issueof whethersmallbusinessclientsof a professionalemployerorganizationmaystillqualifyas small businesseseligibleforsuch taxcredits.As a resultof thisuncertainty,we arenot yetableto determinetheimpacts to our business,and to our clients,resultingfromtheAct. In futureperiods,thechangesmayresultin increased coststo us and our clientsand couldaffectour abilityto attractand retainclients.Additionally,we maybe limitedor delayedin our abilityto increaseservicefeesto offsetany associatedpotentialincreasedcosts resultingfromcompliancewith theAct. Furthermore,theuncertaintysurroundingthetermsand applicationof theAct maydelayor inhibitthedecisionsof potentialclientsto outsourcetheirHRneeds.Any of these developmentscouldharmour business,resultsof operationsand financialcondition.

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We mayhave additionaltax liabilities,which could harm our business,operatingresults,financial conditionand prospects.

Significantjudgmentsand estimatesarerequiredin determiningour provisionforincometaxesand other taxliabilities.Our provisionforincometaxes,resultsof operationsand cashflowsmaybe impactedifany of our taxpositionsarechallengedand successfullydisputedby thetaxauthorities.In determiningtheadequacyof our taxprovision,we assessthelikelihoodof adverseoutcomesthatcouldresultifour taxpositionswere challenged by theIRS and othertaxauthorities.The taxauthoritiesin theUnitedStatesregularlyexamineour incomeand othertaxreturns.For example,in connectionwith an IRS examinationof priorfederalincometaxreturnsfiled by Gevity,a companywe acquiredin 2009, we receiveda technicaladvicememorandumfromtheIRS takingthepositionthatapproximately$10.1 millionof taxcreditstakenby Gevity,and an additional approximately$2.0 milliontakenby us afteracquiringGevity,shouldbe reversed,which positionwe dispute. The ultimateoutcomeof theseexaminationsand taxdisputescannotbe predictedwith certainty.Should theIRS or othertaxauthoritiesassessadditionaltaxesas a resultof examinations,we maybe requiredto recordcharges to operationsthatcouldhave a materialimpacton our resultsof operations,financialpositionor cashflows.

Our businessand operationshave experiencedrapidgrowth in recentperiods,and ifwe are unable to effectivelymanage thisgrowth, our businessand resultsof operationsmaysuffer.

Wehaveexperiencedrapidgrowthandhavesignificantlyexpandedouroperationsinrecentperiods,whichhas placedastrainonourmanagement and ouradministrative,operationalandfinancialinfrastructure.Managingthisgrowth requiresustofurtherrefineouroperational,financialandmanagementcontrolsandreportingsystemsandprocedures.

Our abilityto effectivelymanageany significantgrowth of our businesswilldepend on a numberof factors, includingour abilityto do thefollowing:

· effectivelyrecruit,integrate,trainand motivatea largenumberof new employees,includingour direct salesforce,whileretainingour existingemployees,maintainingthebeneficialaspectsof our corporate cultureand effectivelyexecutingour businessplan;

· satisfyour existingclientsand identifyand acquirenew clients;

· enhancethebreadthand qualityof our services;

· continueto improveour operational,financialand managementcontrols;and

· makesound businessdecisionsin lightof thescrutinyassociatedwith operatingas a publiccompany.

These activitieswillrequiresignificantoperatingand capitalexpendituresand allocationof valuable managementand employeeresources,and we expectthatour growth willcontinueto placesignificantdemands on our managementand on our operationaland financialinfrastructure.

Our futurefinancialperformanceand our abilityto executeon our businessplanwilldepend, in part,on our abilityto effectivelymanageany futuregrowth. We cannotassureyou thatwe willbe ableto do so in an efficient or timelymanner,or atall.In particular,any failureto successfullyimplementsystemsenhancementsand improvementswilllikelynegativelyimpactour abilityto manageour expectedgrowth, ensureuninterrupted operationof key businesssystemsand complywith therulesand regulationsthatareapplicableto public companies.Ifwe failto manageour growth effectively,our costsand expensesmayincreasemorethanwe expectthemto, which in turncouldharmour business,resultsof operationsand financialcondition.

We maynot be ableto sustainour revenuegrowth rateor profitabilityin the future.

Whilewe have achievedprofitabilityon an annualbasisin eachof thelasttwo and fourof thelastfive fiscalyears,we expectour operatingexpensesto increasesubstantiallyin thenearterm,particularlyas we make significantinvestmentsin our salesand marketingorganization,expand our operationsand infrastructureand enhancethebreadthand qualityof our services.Ifour revenuesdo not increaseto offsettheseincreasesin our operatingexpenses,we maynot be profitablein futureperiods.

Moreover,you shouldnot considerour historicalrevenuegrowth to be indicativeof our futureperformance. As we grow our business,our revenuegrowth ratesmayslow in futureperiodsdue to a numberof reasons,which mayincludeslowingdemandforour services,increasingcompetition,a decreasein thegrowth of our overall market,our failure,forany reason,to continueto capitalizeon growth opportunities,thematurationof our businessor thedeclinein thenumberof SMBs in our targetmarkets.

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Our industryishighlycompetitive,which maylimitour abilityto maintainor increaseour marketshare or improveour resultsof operations.

We facesignificantcompetitionon a nationaland regionallevelfroma numberof companiespurportingto delivera rangeof bundledservicesthataregenerallysimilarto theserviceswe provide,includinglarge professionalemployerorganizationssuch as theTotalSourceunitof AutomaticData Processing,Inc.and Insperity,Inc.,as wellas specializedand smallprofessionalemployerorganizationserviceproviders.Ifand to theextentthatwe and othercompaniesprovidingtheseservicesaresuccessfulin growing our businesses,we anticipatethatfuturecompetitorswillenterthisindustry.Some of our current,and any future,competitorshave or mayhave greatermarketingand financialresourcesthanwe do, and maybe betterpositionedthanwe arein certainmarkets.Increasedcompetitionin our industrycouldresultin pricereductionsor lossof marketshare, any of which couldharmour business.We expectthatwe willcontinueto experiencecompetitivepricing pressure.Ifwe cannotcompeteeffectively,our marketshare,business,resultsof operationsand financial conditionmaysuffer.

Inadditiontocompetitionfromotherprofessionalemployerorganizations,wealsofacecompetitioninthe formofcompaniesandthirdpartiesservingHRneedsintraditionalmanners.Theseformsofcompetitioninclude:

· HRand informationsystemsdepartmentsand personnelof companiesthatperformtheirown administrationof benefits,payrolland otherHRfunctions;

· providersof certainendpointHRservices,includingpayroll,benefitsand businessprocessoutsourcers with high-volumetransactionand administrativecapabilities,such as AutomaticData Processing,Inc., Paychex, Inc.and otherthird-partyadministrators;and

· benefitsexchangesthatprovidebenefitsadministrationservicesovertheInternetto companiesthat otherwisemaintaintheirown benefitplans.

We believethatour servicesareattractiveto manySMBs in partbecauseof our abilityto provideworkers compensation,healthcareand otherbenefitsprogramsto themon a cost-effectivebasis.We competewith insurancebrokersand otherprovidersof thiscoveragein thisregard,and our offeringsmustbe priced competitivelywith thoseprovidedby thesecompetitorsin orderforus to attractand retainour clients.

Wemaynotbesuccessfulinconvincingpotentialclientsthattheuseofourservicesisasuperior,cost-effective meansofsatisfyingtheirHRobligationsrelativetothewayinwhichtheycurrentlysatisfytheseobligations.

Ifwe cannotcompeteeffectivelyagainstotherprofessionalemployerorganizationsor againstthealternative meansby which companiesmeettheirHRobligations,our marketshare,business,resultsof operationsand financialconditionmaysuffer.

Adversechanges in our relationshipswith key vendorscould impairthe qualityof our solution.

Our successdependsin parton our abilityto establishand maintainarrangementsand relationshipswith vendorsthatsupplyus with essentialcomponentsof our services.These serviceprovidersincludeinsurance carriersto providehealthand workerscompensationinsurancecoverageforWSEs, as wellas othervendorssuch as couriersused to deliverclientpayrollchecksand banks used to electronicallytransferfundsfromclientsto theiremployees.Failureby theseserviceproviders,forany reason,to delivertheirservicesin a timelymanner couldresultin materialinterruptionsto our operations,impactclientrelations,and resultin significantpenalties or otherliabilitiesto us. Our agreementswith manyof theseserviceproviderstypicallyhave a termof one year. However, we engagesomeserviceproviders,such as payrollcouriers,on an as neededbasisatpublishedrates. In addition,manyof our employeebenefitplanagreementsmaybe terminatedby theinsurancecompanieson 90 days’notice.Ifany of thesevendorsdecidedto terminateitsrelationshipwith us, we mayhave difficulty obtainingreplacementservicesatreasonableratesor on a timelybasis,ifatall.The lossof any one or moreof our key vendors,or our inabilityto partnerwith certainvendorsthatarebetter-knownor moredesirableto our clientsor potentialclients,couldimpairthequalityof our solutionand harmour business.

We depend on licensesto third-partysoftwarein orderto provideour services.

We licensea substantialportionof thesoftwareon which we depend to provideservicesto our clientsfrom third-partyvendors,includingOracleAmerica,Inc.Ifwe areunableto maintaintheselicenses,or ifwe are requiredto makesignificantchangesin thetermsand conditionsof theselicenses,we mayneed to seek replacementvendorsor changeour softwarearchitectureto addresslicensingrevisionswith our currentvendors, eitherof which couldincreaseour expensesand impairthequalityof our services.In addition,we cannotassure you thatour key vendorswillcontinueto supporttheirtechnology.Financialor otherdifficultiesexperiencedby thesevendorsmayadverselyaffectthetechnologieswe incorporateintoour productsand services.Ifthis softwareceasesto be available,we maybe unableto findsuitablealternativeson reasonableterms,or atall.

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Ifwe are deemedto be an insuranceagent or third-partyadministrator,we mayincur significant additionalcostsand expenses,which could harm our resultsof operations.

Stateregulatoryauthoritiesgenerallyrequirelicensesforcompaniesthatdo businessin theirstatesas insuranceagentsor third-partyadministrators,such as thosethathandlehealthor retirementplanfundingand claimprocessing.Insuranceand third-partyadministratorregulationcoversa hostof activities,includingsales, underwriting,rating,claimspaymentsand recordkeepingby companiesand agents.We do not believethatour servicesconstituteactingas an insuranceagentor third-partyadministrator.Ifregulatoryauthoritiesin any state determinethatthenatureof our businessrequiresthatwe be licensedas an insuranceagentor as a third-party administrator,we mayneed to hireadditionalpersonnelto manageregulatorycomplianceand becomeobligated to pay annualregulatoryfees,which couldadverselyaffectour resultsof operations.

Mostof our clientsare concentratedin a relativelysmallnumber of industries,makingus vulnerableto downturns in thoseindustries.

Mostof our clientsoperatein thetechnology,lifesciences,propertymanagement,professionalservices, bankingand financialservices,retail,manufacturingand hospitalityservicesindustries.As a result,ifany of thoseindustriessuffersa downturn, theportionof our businessattributableto clientsin thatindustrycouldbe adverselyaffected.For example,in July2013, we acquiredAmbroseEmployerGroup, LLC, or Ambrose, a NewYork-based companythatprovidesHRservicesprimarilyto WSEs in thefinancialservicesindustryin theNewYork area.Ifthefinancialservicesindustrywere to suffera downturn similarto theone that began in thefallof 2008, our Ambroseproductlinewould likelysuffer.

We have a substantialamount of indebtedness,which could adverselyaffectour financialconditionand our operatingflexibility.

AsofSeptember 30, 2014,wehad $550.0 millioninoutstandingindebtednessunderourcreditfacility,allof whichwassecuredindebtednessofoursubsidiary,TriNetHRCorporation,guaranteedonaseniorsecuredbasisby usandcertainofoursubsidiaries.Ourlevelofindebtednessandthelimitationsimposedonusbyourcredit facilitycouldaffectourbusinessinvariousways,includingthefollowing:

· we willhave to use a portionof our cashflowsfromoperatingactivitiesfordebtserviceratherthanfor otheroperationalactivities;

· wemaynotbeabletoborrowadditionalfundsorobtainadditionalfinancingforfutureworkingcapital, acquisitions,capitalexpendituresorothercorporatepurposes,ormayhavetopaymoreforsuchfinancing;

· someor allof theindebtednessunderour currentor futurecreditfacilitiesbearsinterestatvariable interestrates,makingus morevulnerableto interestrateincreases;

· we couldbe lessableto takeadvantageof significantbusinessopportunities,such as acquisition opportunities,and to reactto changesin marketor industryconditions;and

· we maybe morevulnerableto generaladverseeconomicand industryconditionsas a resultof our inabilityto reduceour debtservicecostsin responseto reducedrevenues.

Becauseborrowingsunderourcreditfacilitybearinterestat a variablerate,ourinterestexpensecould increaseeventhoughtheamountborrowedremainsthesame,exacerbatingtheserisks.Ourabilitytomeetthese expensesdependsonourfuturebusinessperformance,whichwillbeaffectedbyvariousfactors,includingtherisks describedinthis“RiskFactors”section.Wearenotabletocontrolmanyofthesefactors,suchaseconomic conditionsinthemarketswhereweoperateandpressurefromcompetitors.Ouroperationsmayprovideinsufficient cashtopaytheprincipalandinterestonourcreditfacilityandtomeetourotherdebtobligations.Ifso,wemaybe requiredtorefinanceallorpartofourexistingindebtednessorborrowadditionalfunds,whichwemaynotbeable todoontermsthatareacceptabletous,ifatall.Inaddition,thetermsofourexistingorfuturedebtagreementsmay restrictourabilitytotakesomeoralloftheseresponsiveactions.Ifwewereunabletopaytheprincipalandinterest onourcreditfacilityormeetourotherdebtobligations,thelendersunderourcreditfacilitycouldterminatetheircommitmentstoextendfurthercredittousandaccelerateasubstantialpartofourindebtedness.Ifthatwereto happen,wemaynotbeabletorepayalloftheamountsthatwouldbecomedueunderourindebtednessorrefinance ourdebt.Ifwewereunabletorepaythoseamountsorrefinanceourdebt,thelendersunderourcredit facilitycouldproceedagainstthecollateralgrantedtothemtosecurethatindebtedness.Ifthatweretohappen,our resultsofoperationsandfinancialconditioncouldbeharmedandwemightbeforcedtoseekbankruptcyprotection.

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The termsof our creditfacilitymayrestrictour currentand futureoperations,which would impairour abilityto respond to changes in our businessand to manage our business.

Ourcreditfacilitycontains,andanyfutureindebtednessofourswouldlikelycontain,anumberofrestrictive covenantsthatimposesignificantoperatingandfinancialrestrictionsonus,includingrestrictingourabilityto:

· incur,assumeor guaranteeadditionaldebt;

· pay dividendsor distributionsor redeemor repurchasecapitalstock;

· incuror assumeliens;

· makeloans,investmentsand acquisitions;

· engagein salesof assetsand subsidiarystock;

· enterintosale-leasebacktransactions;

· enterintocertaintransactionswith affiliates;

· completedividends,loansor assettransfersfromour subsidiaries;

· enterintonew linesof business;

· prepayotherindebtedness;

· transferallor substantiallyallof our assetsor enterintomergeror consolidationtransactionswith another person;and

· makecapitalexpenditures.

Under therevolvingcreditfacility,we arerequiredto complywith a financialcovenantthatrequiresus and our subsidiariesto maintaina maximumleverageratioso long as thereisany indebtednessoutstandingunderthe revolvingcreditfacility(excludinglettersof creditissuedand outstandingof up to $15.0 millionotherthan lettersof creditthathave been cashcollateralized).Our abilityto meettheleverageratiocan be affectedby eventsbeyond our control,and we maybe unableto complywith it.Our failureto complywith thisfinancial covenantor otherrestrictivecovenantsunderour creditfacilityand otherdebtinstrumentscouldresultin a defaultunderour creditfacilityand/orotherdebtinstruments,which in turncouldresultin the terminationof thelenders’commitmentsto extendfurthercreditto us underour revolvingcreditfacilityand accelerationof a substantialportionof our indebtednessthenoutstandingunderour creditfacility.If thatwere to happen, we maynot be ableto repayallof theamountsthatwould becomedue underour indebtednessor refinanceour debt.Ifwe were unableto repaythoseamountsor refinanceour debt,thelenders underour creditfacilitycouldproceedagainstthecollateralgrantedto themto securethat indebtedness.Ifthatwere to happen, our resultsof operationsand financialconditioncouldbe harmedand we mightbe forcedto seekbankruptcyprotection.

Volatilityin the financialand economicenvironmentcould harm our business.

Demandforourservicesissensitivetochangesinthelevelofoveralleconomicactivityinthemarketsin whichweoperate.Duringperiodsofweakeconomicconditions,employmentlevelstendtodecrease,small businessfailurestendtoincreaseandinterestratesmaybecomemorevolatile.Currentorpotentialclientsmayalso reacttoweakeconomicconditionsorforecastedweakeconomicconditionsbyreducingtheiremployeeheadcount orbyloweringtheirwage,bonusorbenefitslevels,anyofwhichwouldaffectourrevenues,andmayaffectour margins,becausewemaybeunabletoreduceourselling,administrativeorotherexpensessufficienttooffsetthe dropinrevenues.Itisdifficultforustoforecastfuturedemandforourservicesduetotheinherentdifficultyin forecastingthedirectionandstrengthofeconomiccycles.Theseconditionsmayaffectthewillingnessofourclients andpotentialclientstopayoutsidevendorsforserviceslikeours,andmayimpacttheirabilitytopaytheir obligationstousontime,oratall.Inaddition,ifbusinesseshavedifficultyobtainingcredit,businessgrowthand newbusinessformationmaybeimpaired,whichcouldalsoharmourbusiness.Evenmodestdownturnsineconomic activityortheavailabilityofcreditonaregionalornationallevelcouldharmourbusiness.

Ifwefailtoretainourkeypersonnelorfailtoattractadditionalskilledpersonnel,ourbusinessmaysuffer.

Our operationsaredependenton thecontinuedeffortsof our officersand executivemanagementand the performanceand productivityof our regionalmanagersand fieldpersonnel.Our abilityto attractand retain businessdependson thequalityof our servicesand therelationshipsthatwe maintainwith our clients.Ifwe lose key personnelwith significantexperiencein managingour business,thiscouldimpairour abilityto deliver serviceseffectivelyor profitably,coulddivertotherseniormanagementtimein seekingreplacements,and could adverselyaffectour reputationwith our clientsand potentialclients.Some of our mostimportantclient relationshipsdepend on thecontinuedinvolvementof individualmanagersor salespersonnel,and any lossof thoseindividualscouldjeopardizethoserelationshipsand in turnadverselyaffectour operatingresults.

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Our futuresuccesswilldepend on our abilityto attract,hire,trainand retainhighlyskilledtechnical,sales and marketingand supportpersonnel,particularlywith expertisein outsourcedsolutionsand thetechnology platformsthatwe deploytodayand willdeployin thefuture.Qualifiedpersonnelarein greatdemandthroughout theHRindustry.Our failureto attractand retaintheappropriatepersonnelmaylimittherateatwhich we can expand our business,includingdevelopingnew servicesand attractingnew clients.

Improperdisclosureof sensitiveor confidentialcompany,employeeor clientdata, includingpersonal data, could resultin liabilityand harm our reputation.

Our businessinvolvestheuse, storageand transmissionof informationaboutour corporateemployees, WSEs and clients.This informationincludessensitiveor confidentialdata,such as employees’SocialSecurity numbers,bank accountnumbers,retirementaccountinformationand medicalinformation.We and our third-partyserviceprovidershave establishedpoliciesand proceduresto helpprotectthesecurityand privacyof this information,but itispossiblethatour securitycontrolsoversensitiveor confidentialdatamaynot preventthe improperaccessto or disclosureof thisinformation.Thirdparties,includingvendorsthatprovideservicesforour operations,couldalsobe a sourceof securityriskto us in theeventof a failureof theirown securitysystemsand infrastructure.Any such disclosurecouldharmour reputationand exposeus to liabilityunderour contractsand underthemanyand sometimescontradictorylaws and regulationsregardingdataprivacyin thevariousmarkets in which we operate.Any failureto adhereto applicablelaws and regulationsor to our contractualcommitments with respectto thepreservationand use of confidentialinformationcouldresultin legalliabilityand could damageour reputation.

Any failurein our businesssystemscould reducethe qualityof our businessservices,which could harm our reputationand exposeus to liability.

Our businesssystemsrelyon thecomplexintegrationof numeroushardwareand softwaresubsystemsto managethetransactionsinvolvedin managingtheclientrelationshipthroughtheprocessingof employee,payroll and benefitsdata.These systemscan be disruptedby, amongotherthings,equipmentfailures,computerserveror systemsfailures,networkoutages,maliciousacts,softwareerrorsor defects,vendorperformanceproblemsand power failures.Any delayor failurein our systemsthatimpairsour abilityto communicateelectronicallywith our clients,employeesor vendorsor our abilityto storeor processdatacouldharmour reputationand our business.Ifwe areunableto meetclientdemandsor serviceexpectations,we mayloseexistingclientsand we mayhave difficultyattractingnew clients.In addition,errorsin our productsand services,such as theerroneous denialof healthcarebenefitsor delaysin makingpayroll,couldexposeour clientsto liabilityclaimsfrom improperlyservicedWSEs, forwhich we arecontractuallyobligatedto provideindemnification.

We have disasterrecovery,businesscontinuity,and crisismanagementplansand proceduresdesignedto protectour businessagainsta multitudeof events,includingnaturaldisasters,militaryor terroristactions,power or communicationfailures,or similarevents.Despiteour preparations,our plansmaynot be successfulin preventingthelossof clientdata,serviceinterruptions,and disruptionsto our operations,or damageto our importantfacilities.The precautionsthatwe have takento protectourselvesagainstthesetypesof eventsmay proveto be inadequate.Ifwe sufferdamageto our dataor operationscenters,experiencea telecommunications failureor experiencea securitybreach,our operationscouldbe interrupted.Any interruptionor otherlossmay not be coveredby our insuranceand couldharmour reputation.

Ifour systemswere to failforany of thesereasonsduringpayrollprocessing,preventingtheproperpayment of employees,or theproperremissionof payrolltaxes,we couldbe liableforwage paymentdelaypenaltiesand payrolltaxpenalties,as wellas othercontractualpenalties.Any inaccuraciesin theprocessingof health insurancebenefitscouldresultin our beingliableforlapsesin insurance.Ifany of our systemsfailsto operate properlyor becomesdisabledeven fora briefperiodof time,we couldsufferfinancialloss,a disruptionof our businesses,liabilityto clients,regulatoryintervention,or damageto our reputation.

Securitybreachescould compromiseour data and the data of our clientsand WSEs, exposingus to liability,which would cause our businessand reputationto suffer.

Our abilityto ensuresecureelectronicprocessing,maintenanceand transmissionof payroll,insuranceand othersensitiveclientand WSE informationiscriticalto our operations.We relyon standardinternetand other securitysystemsto providethesecurityand authenticationnecessaryto effectsecuretransmissionof data. Despiteour securitymeasures,our informationtechnologyand infrastructuremaybe vulnerableto cybersecurity threats,includingattacksby hackersand othermalfeasance.Any such securitybreachcouldcompromiseour networksand resultin theinformationstoredor transmittedthereto be accessed,publiclydisclosed,lostor stolen.Any such access,disclosureor otherlossof informationcouldresultin legalclaimsor proceedings leadingto liability,includingunderlaws thatprotecttheprivacyof personalinformation,disruptour operations and theserviceswe provideto our clients,damageour reputationand causea lossof confidencein our products and services,which couldadverselyaffectour business,operationsand competitiveposition.

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In thecourseof providingour servicesto our clients,we alsorelyon certainthird-partyserviceproviders and products,such as insurancecarriers,to processinformationrelatedto our clientsand WSEs. Through contractualprovisions,we takestepsto requirethatour serviceprovidersprotectsensitiveinformation.However, we cannotprovideassurancesas to thesecuritystepstakenby such providers.Any securitybreachor other disruptionof our third-partyserviceprovidersthatresultsin an inadvertentdisclosureor lossof confidential informationcouldadverselyaffectour reputationand our business.

We mustkeep pace with rapidtechnologicalchange in orderto succeed.

Our businessdependsupon theuse of software,hardwareand networkingtechnologiesthatmustbe frequentlyand rapidlyupgradedin responseto technologicaladvances,competitivepressuresand consumer expectations.To succeed,we willneed to effectivelydevelopor licenseand integratethesenew technologiesas theybecomeavailableto improveour servicescommensuratewith clientrequirements.In particular,we relyon enterprisesoftwareapplicationslicensedfromthirdpartiesthatareupgradedfromtimeto time,such as PeopleSoftHRinformationsystemsand Oracledatabases,thatprovidethebasisforour HRinformationsystem platformsupportingpayroll,benefitsand otherHRfunctions.Any difficultieswe encounterin adapting applicationsupgradesto our systemscouldharmour performanceor delayor preventthesuccessful development,introductionor marketingof new services.Newproductsor upgradesmaynot be released accordingto schedule,or maycontaindefectswhen released.Difficultiesin integratingnew technologiescould resultin adversepublicity,lossof sales,delayin marketacceptanceof our services,or clientclaimsagainstus, any of which couldharmour business.We couldalsoincursubstantialcostsin modifyingour servicesor infrastructureto adaptto thesechanges.In addition,we couldlosemarketshareifour competitorsdevelop technologicallysuperiorproductsand services.

Our co-employmentrelationshipwith our worksiteemployeesexposesus to businessrisks.

We area co-employerof our WSEs, and thereisa possibilitythatwe maybe subjectto liabilityfor violationsof employmentlaws by our clientsand actsor omissionsof our WSEs, who maybe deemedto be our agents,even ifwe do not participatein any such actsor violations.Such laws include,but arenot limitedto, laws relatingto paymentof wages, employmentdiscrimination,laborrelationsand whistleblowerprotection. Although our clientagreementsestablishthecontractualdivisionof responsibilitiesbetweenus and our clients forvariouspersonnelmanagementmatters,includingcompliancewith and liabilityundervariousgovernmental regulations,as wellas providingforclientsto indemnifyus forany liabilityattributableto clients’or their employees’conduct,we maynot be ableto effectivelyenforceor collectthesecontractualobligationswith our clients,which couldharmour business.We maintainemploymentpracticesliabilityinsurancecoverage (includingcoverageforour clients)to manageour and our clients’exposureforvariousemployee-related claims,and as a result,our incurredcostswith respectto thisexposurehave historicallybeen insignificantto our operatingresults.Employmentpracticesliabilityinsurancegenerallyexcludescoverageforclaimsrelatingto compliancewith laws associatedwith theclassificationof employeesas exemptor non-exempt,such as overtime pay and minimumwage law compliance.We cannotassureyou thatour insurancewillbe sufficientin amountor scopeto coverallclaimsthatmaybe assertedagainstus and forwhich we areunableto obtainindemnification fromour clients.Ifjudgmentsor settlementsrelatedto WSEs thatwe and our clientsemployexceedour insurancecoverage,itcouldharmour resultsof operationsand financialcondition.We cannotassureyou thatwe willbe ableto obtainappropriatetypesand levelsof insurancein thefuture,thatwe willbe ableto replace existingpolicieson acceptableterms,or atall,or thatour insurerswillbe ableto pay allclaimsthatwe may makeunderour policies,any of which couldharmour business.

Our failureto maintainor enhance our reputationor brand recognitioncould harm our business.

We believethatmaintainingand enhancingour reputationand theTriNetbrandidentityiscriticalto maintainingour relationshipswith our clientsand vendorsand our abilityto attractnew clientsand vendors.We alsobelievethatour reputationand brandidentitywillbecomemoreimportantas competitionin our industry continuesto develop.Our abilityto maintainand enhanceour reputationand brandidentitywillbe affectedby a numberof factors,someof which arebeyond our control,including:

· theeffectivenessof our marketingefforts;

· our abilityto attractand retainnew salespersonnelto expand our directsalesforce;

· our abilityto retainour existingclientsand attractnew clients;

· thequalityand perceivedvalueof our services;

· our abilityto successfullydifferentiateour servicesfromthoseof our competitors;

· actionsof our competitorsand otherthirdparties;

· positiveor negativepublicityaboutus or our industryin general;

· interruptions,delaysor attackson our website;and

· litigationor regulatorydevelopments.

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Any brandpromotionactivitiesin which we engagemaynot be successfulor yieldincreasedrevenues. Furthermore,negativepublicity,whetheror not justified,relatingto eventsor activitiesattributedto us, our corporateemployees,our WSEs, our vendors,othercompaniesin our industryor othersassociatedwith any of theseparties,maytarnishour reputationand reducethevalueof our brand.Damageto our reputationand lossof brandequitymayreducedemandforour servicesand harmour business,resultsof operationsand financial condition.Moreover,any attemptsto rebuildour reputationand restorethevalueof our brandmaybe costlyand time-consuming,and any such effortsmaynot ultimatelybe successful.

Ifwe are unable to protectour intellectualproperty,or ifwe infringeon the intellectualpropertyrightsof others,our businessmaybe harmed.

Our successdependsin parton intellectualpropertyrightsto theservicesthatwe develop.We relyon a combinationof contractualrights,includingnon-disclosureagreements,tradesecrets,copyrightsand trademarks, to establishand protectour intellectualpropertyrightsin our names,services,methodologiesand related technologies.Ifwe loseintellectualpropertyprotectionor theabilityto secureintellectualpropertyprotectionon any of our names,confidentialinformationor technology,thiscouldharmour business.Our intellectualproperty rightsmaynot preventcompetitorsfromindependentlydevelopingservicesand methodologiessimilarto ours, and thestepswe takemightbe inadequateto deterinfringementor misappropriationof our intellectualproperty by competitors,formeremployeesor otherthirdparties,any of which couldharmour business.We currently have one pending U.S. patentapplicationcoveringour technology.We own registeredtrademarksin theUnitedStates,Canada and the European Union thathave variousexpirationdatesunlessrenewedthrough customaryprocesses.Our trademarkregistrationsmaybe unenforceableor ineffectivein protectingour trademarks.Our trademarksmaybe unenforceablein countriesoutsideof theUnitedStates,which mayadversely affectour abilityto buildour brandoutsideof theUnitedStates.

Althoughwebelievethatourconductofourbusinessdoesnotinfringeontheintellectualpropertyrightsof others,thirdpartiesmayneverthelessassertinfringementclaimsagainstusinthefuture.Wemayberequiredto modifyourproducts,services,internalsystemsortechnologies,orobtainalicensetopermitourcontinueduseof thoserights.Wemaybeunabletodosoinatimelymanner,oruponreasonabletermsandconditions,whichcould harmourbusiness.Inaddition,futurelitigationoverthesematterscouldresultinsubstantialcostsandresource diversion.Adversedeterminationsinanylitigationorproceedingsofthistypecouldsubjectustosignificant liabilitiestothirdpartiesandcouldpreventusfromusingsomeofourservices,internalsystemsortechnologies.

Our use of open sourcesoftwarecould subjectus to possiblelitigation.

A portionof our technologiesincorporatesopen sourcesoftware,and we expectto continueto incorporate open sourcesoftwareintoour platformin thefuture.Few of thelicensesapplicableto open sourcesoftwarehave been interpretedby courts,and theirapplicationto theopen sourcesoftwareintegratedintoour proprietary technologyplatformmaybe uncertain.Ifwe failto complywith theselicenses,thenpursuantto thetermsof theselicenses,we maybe subjectto certainrequirements,includingrequirementsthatwe makeavailablethe sourcecode forour softwarethatincorporatestheopen sourcesoftware.We cannotassureyou thatwe have not incorporatedopen sourcesoftwarein our softwarein a mannerthatisinconsistentwith thetermsof the applicablelicensesor our currentpoliciesand procedures.Ifan authoror otherthirdpartythatdistributessuch open sourcesoftwarewere to allegethatwe had not compliedwith theconditionsof one or moreof these licenses,we couldincursignificantlegalexpensesdefendingagainstsuch allegations.Litigationcouldbe costly forus to defend,have a negativeeffecton our operatingresultsand financialconditionor requireus to devote additionalresearchand developmentresourcesto changeour technologyplatform.

Ifwe are unable to implementand maintaineffectiveinternalcontroloverfinancialreportingin the future,investorsmayloseconfidencein the accuracyand completenessof our financialreportsand the marketpriceof our commonstockmaybe negativelyaffected.

As a publiccompany,we are requiredto maintaininternalcontroloverfinancialreportingand to report any materialweaknessesin such internalcontrols.Section404 of theSarbanes-OxleyAct requiresthatwe evaluateand determinetheeffectivenessof our internalcontroloverfinancialreportingand, beginningwith our annualreportfortheyearendingDecember31, 2015, providea managementreporton our internalcontrolover financialreporting.This reportmustbe attestedto by our independentregisteredpublicaccountingfirm.Ifwe have a materialweaknessin our internalcontroloverfinancialreporting,we maynot detecterrorson a timely basisand our financialstatementsmaybe materiallymisstated.

We arein theprocessof designingand implementingour internalcontroloverfinancialreporting,which processwillbe timeconsuming,costlyand complicated.Ifwe identifymaterialweaknessesin our internal controloverfinancialreportingin thefuture,we areunableto complywith therequirementsof Section404 in a timelymanner,we areunableto assertthatour internalcontroloverfinancialreportingiseffectiveor our independentregisteredpublicaccountingfirmisunableto expressan opinionas to theeffectivenessof our internalcontroloverfinancialreportingwhen requiredto do so, investorsmayloseconfidencein theaccuracy and completenessof our financialreportsand themarketpriceof our commonstockcouldbe negatively affected,and we couldbecomesubjectto investigationsby thestockexchangeon which our securitiesarelisted, theSecuritiesand Exchange Commission,or SEC,or otherregulatoryauthorities,which couldrequireadditional financialand managementresources.

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Ifwe are unable to successfullyremediatethe existingmaterialweakness in our internalcontrolover financialreporting,the accuracyand timingof our financialreportingmaybe adverselyaffected.

In preparingand reviewingour consolidatedfinancialstatementsas of and fortheninemonthsended September30, 2013, and in connectionwith our restatementof previouslyissuedconsolidatedfinancial statementsfortheyearsended December31, 2010 and 2011, we and our independentregisteredpublic accountingfirmidentifieda materialweaknessin our internalcontroloverfinancialreporting.A material weaknessisa deficiency,or a combinationof deficiencies,in internalcontroloverfinancialreportingsuch that thereisa reasonablepossibilitythata materialmisstatementof our financialstatementswillnot be preventedor detectedon a timelybasis.The materialweaknessidentifiedrelatedto our incorrectlyrecordinga deferredtax assetin connectionwith our accountingforour acquisitionof Ambrosethatshouldhave been reportedas goodwillas of September30, 2013, and to incorrectlyrecordinga true-upto theincometaxprovisionin 2011 relatedto theallocationof stockcompensationbetweenqualifiedand nonqualifiedstockoptionsthatshouldhave been identifiedand recordedin 2010. As a result,therewere adjustmentsrequiredin connectionwith closingour books and recordsand preparingour consolidatedfinancialstatementsfortheninemonthsended September30, 2013 and a restatementwas requiredforour consolidatedfinancialstatementsfortheyearsended December 31, 2010 and 2011.

In response to this material weakness, we have hired a Director of Income Tax Accounting, who reports directly to our Chief Accounting Officer. We will continue to engage external technical advisers to assist us with the evaluation of complex tax issues and improve our process, procedures and documentation standards relating to preparation of income tax provision calculations.  We will continue to assess and develop our tax professionals to provide appropriate technical and accounting expertise commensurate with our needs to properly consider and apply GAAP for income taxes.  However, we cannotassureyou thatwe willbe successfulin pursuingthese measuresor thatthesemeasureswillsignificantlyimproveor remediatethematerialweaknessdescribedabove. We alsocannotassureyou thatwe have identifiedallof our existingmaterialweaknesses,or thatwe willnot in thefuturehave additionalmaterialweaknesses.

Neitherwe nor our independentregisteredpublicaccountingfirmhas performedan evaluationof our internalcontroloverfinancialreportingduringany periodin accordancewith theprovisionsof theSarbanes-Oxley Act. In lightof thematerialweaknessthatwas identifiedas a resultof thelimitedproceduresperformed, we believethatitispossiblethat,had we and our independentregisteredpublicaccountingfirmperformedan evaluationof our internalcontroloverfinancialreportingin accordancewith theprovisionsof theSarbanes-Oxley Act, additionalmaterialweaknessesor significantcontroldeficienciesmayhave been identified.

Ifwe failto remediatethematerialweaknessor to meetthedemandsthatwillbe placedupon us as a public company,includingtherequirementsof theSarbanes-OxleyAct, we maybe unableto accuratelyreportour financialresults,or reportthemwithinthetimeframesrequiredby law or stockexchangeregulations.Failureto complywith Section404 of theSarbanes-OxleyAct couldalsopotentiallysubjectus to sanctionsor investigationsby theSECor otherregulatoryauthorities.We cannotassureyou thatwe willbe ableto remediate thematerialweaknessin a timelymanner,or atall,or thatin thefuture,additionalmaterialweaknesseswillnot existor otherwisebe discovered.Ifour effortsto remediatethematerialweaknessidentifiedarenot successful, or ifothermaterialweaknessesor othersignificantcontroldeficienciesoccur,our abilityto accuratelyand timely reportour financialresultscouldbe impaired,which couldresultin latefilingsof our annualand quarterly reportsundertheSecuritiesExchange Act of 1934, as amended,or theExchange Act, restatementsof our consolidatedfinancialstatements,a declinein our stockprice,suspensionor delistingof our commonstockfrom theNewYork Stock Exchange, or NYSE,and couldadverselyaffectour reputation,resultsof operationsand financialcondition.

We incur substantialincreasedcostsas a resultof being a publiccompany.

As a publiccompany,we incursignificantlevelsof legal,accountingand otherexpensesthatwe did not incuras a privatecompany.We are subjectto thereportingrequirementsof theExchange Act, the Sarbanes-OxleyAct, theDodd-Frank Act, thelistingrequirementsof theNYSEand otherapplicablesecurities rulesand regulations.Compliancewith theserulesand regulationshas increasedour legaland financial compliancecosts,madesomeactivitiesmoredifficult,time-consumingor costlyand increaseddemandon our systemsand resources.The Exchange Act requires,amongotherthings,thatwe fileannual,quarterlyand current reportswith respectto our businessand resultsof operations.The Sarbanes-OxleyAct requires,amongother things,thatwe maintaineffectivedisclosurecontrolsand proceduresand internalcontroloverfinancialreporting. In orderto maintainand, ifrequired,improveour disclosurecontrolsand proceduresand internalcontrolover financialreportingto meetthisstandard,significantresourcesand managementoversightmaybe required.As a result,management’sattentionmaybe divertedfromotherbusinessconcerns,which couldadverselyaffectour businessand resultsof operations.Although we have alreadyhiredadditionalcorporateemployeesto comply with theserequirements,we mayneed to hiremorecorporateemployeesin thefutureor engageoutside consultants,which would increaseour costsand expenses.

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In addition,changinglaws, regulationsand standardsrelatingto corporategovernanceand publicdisclosure arecreatinguncertaintyforpubliccompanies,increasinglegaland financialcompliancecostsand makingsome activitiesmoretime-consuming.These laws, regulationsand standardsaresubjectto varyinginterpretations,in manycasesdue to theirlackof specificity,and, as a result,theirapplicationin practicemayevolveovertimeas new guidanceisprovidedby regulatoryand governingbodies.This couldresultin continuinguncertainty regardingcompliancemattersand highercostsnecessitatedby ongoing revisionsto disclosureand governance practices.We intendto investresourcesto complywith evolvinglaws, regulationsand standards,and this investmentmayresultin increasedgeneraland administrativeexpensesand a diversionof management’stime and attentionfromrevenue-generatingactivitiesto complianceactivities.Ifour effortsto complywith new laws, regulationsand standardsdifferfromtheactivitiesintendedby regulatoryor governingbodiesdue to ambiguities relatedto theirapplicationand practice,regulatoryauthoritiesmayinitiatelegalproceedingsagainstus and our businessmaybe adverselyaffected.

As a resultof disclosureof informationin thisreportand the other filingsthatwe are requiredto make as a publiccompany,our business,resultsof operationsand financialconditionaremorevisible,which mayresultin threatenedor actuallitigation,includingby competitorsand otherthirdparties.Ifany such claims aresuccessful,our business,resultsof operationsand financialconditioncouldbe adverselyaffected,and even if theclaimsdo not resultin litigationor areresolvedin our favor,theseclaims,and thetimeand resources necessaryto resolvethem,coulddiverttheresourcesof our managementand adverselyaffectour business, resultsof operationsand financialcondition.

Risks Relatedto Ownership of Our Common Stock

Our stockpricemaybe volatileor maydeclineregardlessof our operatingperformance,resultingin substantiallossesforour stockholders.

Themarketpriceof our commonstockhas been, and is likely to continue to be, volatilefortheforeseeablefuture. For example, since shares of our common stock were sold in our initial public offering in March 2014 at a price of $16.00 per share, the daily closing price of our common stock has ranged from $19.10 to $29.14 per share through September 30, 2014. The marketpriceof our commonstockmayfluctuatesignificantlyin responseto numerousfactors,manyof which arebeyond our control,includingthefactorslistedbelow and other factorsdescribedin this“Risk Factors”section:

· actualor anticipatedfluctuationsin our resultsof operations;

· any financialprojectionswe provideto thepublic,any changesin theseprojectionsor our failureto meet theseprojections;

· failureof securitiesanalyststo initiateor maintaincoverageof our company,changesin financial estimatesby any securitiesanalystswho followour company,or our failureto meettheseestimatesor the expectationsof investors;

· ratingschangesby any securitiesanalystswho followour company;

· announcementsby us or our competitorsof significantinnovations,acquisitions,strategicpartnerships, jointventuresor capitalcommitments;

· changesin operatingperformanceand stockmarketvaluationsof otherbusinessservicescompanies generally,or thosein our industryin particular;

· priceand volumefluctuationsin theoverallstockmarket,includingas a resultof trendsin theeconomy as a whole;

· changesin our boardof directorsor management;

· salesof largeblocksof our commonstock,includingsalesby our executiveofficers,directorsand significantstockholders;

· lawsuitsthreatenedor filedagainstus;

· shortsales,hedgingand otherderivativetransactionsinvolvingour capitalstock;

· generaleconomicconditionsin theUnitedStatesand abroad;and

· othereventsorfactors,includingthoseresultingfromwar,incidentsofterrorismorresponsestotheseevents.

In addition,stockmarketshave experiencedextremepriceand volumefluctuationsthathave affectedand continueto affectthemarketpricesof equitysecuritiesof manybusinessservicescompanies.Stock pricesof manybusinessservicescompanieshave fluctuatedin a mannerunrelatedor disproportionateto theoperating performanceof thosecompanies.In thepast,stockholdershave institutedsecuritiesclassactionlitigation followingperiodsof marketvolatility.Ifwe were to becomeinvolvedin securitieslitigation,itcouldsubjectus to substantialcosts,divertresourcesand theattentionof managementfromour businessand adverselyaffectour business,resultsof operationsand financialcondition.

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Substantialfuturesalesof sharesof our commonstockcould cause the marketpriceof our common stockto decline.

We may issue additional shares of common stock or securities convertible into shares of our common stock in one or more transactions and at prices and in a manner as we may determine from time to time. Salesof a substantialnumberof sharesof our commonstockin thepublicmarket,or the perceptionthatthesesalesmightoccur,coulddepressthemarketpriceof our commonstockand impairour abilityto raisecapitalthroughthesaleof additionalequitysecurities.We cannotpredicttheeffectthatsuch sales mayhave on theprevailingmarketpriceof our commonstock.

All of our executiveofficersand directorsand certain of our stockholdersaresubjectto lock-upagreementsthatrestricttheirabilityto transfersharesof our capitalstockfor 90 days fromthedateof our recent secondary offering.Approximately33 millionsharesof our commonstock, basedon the numberof sharesoutstandingas of September 30, 2014, will becomeeligibleforsaleupon expirationof the90-daylock-upperiod.J.P. MorganSecuritiesLLCand Morgan Stanley& Co. LLCmay,in theirsolediscretion,permitthepartiesto theselock-upagreementsto sellshares priorto theexpirationof thelock-upagreements.

As of September 30, 2014, therewere 7,554,070 sharesof commonstocksubjectto outstanding optionsand 33,500 sharesof commonstockissuableupon settlementof restrictedstockunits.We have registeredallof thesharesof commonstockissuableupon exerciseof theseoutstandingoptionsand settlementof theseoutstandingrestrictedstockunits,and upon exerciseor settlementof any optionsor otherequityincentives we maygrantin thefuture, as well as the shares we have reserved for future issuance under our Employee Stock Purchase Plan, or ESPP, forpublicresaleundertheSecuritiesAct of 1933, as amended.Accordingly,these sharesareeligibleforsalein thepublicmarketto theextentsuch optionsareexercisedor such restrictedstockunitssettle, or such shares are purchased pursuant to our ESPP, subjectto thelock- up agreementsdescribedabove and compliancewith applicablesecuritieslaws.

As of September 30, 2014, the holdersof 22,015,708 sharesof commonstockhave rights,subjectto someconditions,to requireus to fileregistrationstatementsforthepublicresaleof such sharesor to includesuch sharesin registrationstatementsthat we mayfileforTriNetor our stockholders.

The existingownership of capitalstockby our executiveofficers,directorsand theiraffiliateshas the effectof concentratingvotingcontrolwith our executiveofficers,directorsand theiraffiliatesforthe foreseeablefuture,which limitsyour abilityto influencecorporatematters.

As of September 30, 2014, fundsaffiliatedwith GeneralAtlantic, our largest stockholder,beneficiallyown approximately 28.6% of our outstandingcommonstock,and allof our directors,officersand theiraffiliatesbeneficially own, in theaggregate,approximately46.4% of our outstandingcommonstock.As a result,thesestockholderswillbe ableto determinesubstantiallyallmattersrequiringstockholderapproval,includingtheelectionof directorsand approvalof significantcorporatetransactions,such as a mergeror othersaleof our companyor itsassets.This concentrationof ownershipcouldlimittheabilityof otherstockholdersto influencecorporatemattersand may have theeffectof delayingor preventinga thirdpartyfromacquiringcontroloverus.

Ifsecuritiesor industryanalystsdo not publishresearchor reportsabout our business,or publish negativereportsabout our business,our share priceand tradingvolumecould decline.

The tradingmarketforour commonstockwilldepend in parton theresearchand reportsthatsecuritiesor industryanalystspublishaboutus or our business,our marketand our competitors.We do not have any control overtheseanalysts.Ifone or moreof theanalystswho coverus downgrade our sharesor changetheiropinionof our shares,our sharepricewould likelydecline.Ifone or moreof theseanalystsceasecoverageof our company or failto regularlypublishreportson us, we couldlosevisibilityin thefinancialmarkets,which couldcauseour sharepriceor tradingvolumeto decline.

Anti-takeoverprovisionsin our charterdocumentsand under Delaware law could makean acquisitionof our companymoredifficult,limitattemptsby our stockholdersto replaceor removeour currentmanagement and limitthe marketpriceof our commonstock.

Provisionsin our certificateof incorporationand bylaws mayhave theeffectof delayingor preventinga changeof controlor changesin our management.Our amendedand restatedcertificateof incorporationand bylaws includeprovisionsthat:

· establisha classifiedboardof directorsso thatnot allmembersof our boardof directorsareelectedatone time;

· permitour boardof directorsto establishthenumberof directors;

· providethatdirectorsmayonly be removed“forcause”;

· requiresuper-majorityvotingto amendsomeprovisionsin our certificateof incorporationand bylaws;

· authorizetheissuanceof “blankcheck”preferredstockthatour boardof directorscoulduse to implement a stockholderrightsplan;

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· eliminatetheabilityof our stockholdersto callspecialmeetingsof stockholders;

· prohibitstockholderactionby writtenconsent,which requiresallstockholderactionsto be takenata meetingof our stockholders;

· providethatour boardof directorsisexpresslyauthorizedto make,alteror repealour bylaws;and

· establishadvancenoticerequirementsfornominationsforelectionto our boardof directorsor for proposingmattersthatcan be actedupon by stockholdersatannualstockholdermeetings.

These provisionsmayfrustrateor preventany attemptsby our stockholdersto replaceor removeour current managementby makingitmoredifficultforour stockholdersto replacemembersof our boardof directors,which isresponsibleforappointingthemembersof our management.In addition,becausewe areincorporatedin Delaware,we aregovernedby theprovisionsof Section203 of theDelawareGeneralCorporationLaw, which generallyprohibitsa Delawarecorporationfromengagingin any of a broadrangeof businesscombinationswith any holderof atleast15% of our capitalstockfora periodof threeyearsfollowingthedateon which the stockholderbecamea 15% stockholder.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) Sales of Unregistered Securities

None.

(b) Use of Proceeds

On March 31, 2014, we closed our IPO, pursuant to which we sold 15,000,000 shares of our common stock at a public offering price of $16.00 per share, for an aggregate offering price of $240 million, resulting in net proceeds to us of $218.6 million, after deducting underwriting discounts and commissions of approximately $16.8 million and offering expenses payable by us of approximately $5.6 million. An additional 2,250,000 shares were sold by certain selling stockholders pursuant to the underwriters’ option to purchase additional shares. We did not receive any proceeds from the sale by the selling stockholders. The offer and sale of all of the shares in the IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-192465), which was declared effective by the SEC on March 26, 2014. The offering commenced on March 26, 2014, closed on March 31, 2014, and did not terminate before all of the shares that were registered in the registration statement were sold. J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Deutsche Bank Securities Inc., Jefferies LLC, Stifel, Nicolaus & Company, Incorporated and William Blair & Company, L.L.C acted as underwriters. No payments were made by us to directors, officers or persons owning ten percent or more of our common stock or to their associates, or to our affiliates in connection with the issuance and distribution of the securities registered. On March 31, 2014, we used $216.6 million from the offering to repay the indebtedness outstanding under our credit facilities, as described in our final prospectus filed pursuant to Rule 424(b) with the SEC on March 27, 2014.

(c) Issuer Purchases of Equity Securities

None.

Item 3. Defaults Upon Senior Securities.

Not applicable

Item 4. Mine Safety Disclosures.

Not applicable

Item 5. Other Information

Not applicable

Item 6. Exhibits

A list of exhibits filed with this report or incorporated herein by reference is found in the Exhibit Index immediately following the signature page of this report and is incorporated into this Item 6 by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TRINETGROUP, INC.
Date:  November 6, 2014		By:	/s/ Burton M. Goldfield
			Burton M. Goldfield
			ChiefExecutiveOfficer
Date:  November 6, 2014		By:	/s/ William Porter
			William Porter
			ChiefFinancialOfficer

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EXHIBIT INDEX

		Incorporated by Reference
Exhibit No.	Exhibit	Form	File No.	Exhibit	Filing Date	Filed Herewith
3.1	Amended and Restated Certificate of Incorporation of TriNet Group, Inc.	8-K	001-36373	3.1	4/1/2014
3.2	Amended and Restated Bylaws of TriNet Group, Inc.	S-1/A	333-192465	3.4	3/4/2014
10.1	Amended and Restated First Lien Credit Agreement, dated as of August 20, 2013, as amended and restated as of July 9, 2014, among TriNet HR Corporation, as borrower, TriNet Group, Inc., the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent.	8-K	001-36373	10.1	7/10/2014
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
32.1*	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Linkbase Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

*Document has been furnished, is deemed not filed and is not to be incorporated by reference into any of the Company's filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, irrespective of any general incorporation language contained in any such filing.

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EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Burton Goldfield, certify that:

1. I have reviewed this quarterly report on Form 10-Q of TriNet Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2014	/s/ Burton M. Goldfield
	Burton M. Goldfield
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, William Porter, certify that:

1. I have reviewed this quarterly report on Form 10-Q of TriNet Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2014	/s/ William Porter
	William Porter
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of TriNet Group, Inc., a Delaware corporation (the “Company”), on Form 10-Q for the period ending September 30, 2014 as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company does hereby certify, pursuant to 18 U.S.C. § 1350 (section 906 of the Sarbanes-Oxley Act of 2002), that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

The foregoing certification (i) is given to such officers’ knowledge, based upon such officers’ investigation as such officers reasonably deem appropriate; and (ii) is being furnished solely pursuant to 18 U.S.C. § 1350 (section 906 of the Sarbanes-Oxley Act of 2002) and is not being filed as part of the Report or as a separate disclosure document and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.

Date:	November 6, 2014	/s/ Burton M. Goldfield
		Burton M. Goldfield
		Chief Executive Officer
		/s/ William Porter
Date:	November 6, 2014	William Porter
		Chief Financial Officer

XML

Stockholders' Equity - Additional Information (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended					9 Months Ended								9 Months Ended		1 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 Employee Stock Option	Dec. 31, 2013 Employee Stock Option	Sep. 30, 2014 Employee Stock Purchase Plan	Sep. 30, 2014 Restricted Stock Unit	Sep. 30, 2013 Restricted Stock Unit	Sep. 30, 2014 Nonemployee Directors	Sep. 30, 2014 Maximum	Sep. 30, 2014 Maximum Employee Stock Option	Sep. 30, 2014 Maximum Restricted Stock Unit	Sep. 30, 2014 Maximum Nonemployee Directors	Sep. 30, 2014 Minimum	Sep. 30, 2014 Minimum Employee Stock Option	Sep. 30, 2014 Minimum Restricted Stock Unit	Feb. 28, 2014 2009 Plan	Sep. 30, 2014 2009 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Additional shares available for grant																		3,000,000
Shares reserved for future issuance expressed as a percentage of outstanding shares																		4.50%
Plan description								The fair value of restricted stock units is equal to the fair value of the Company’s common stock on the date of grant. The restricted stock units vest at a rate of 25% at the end of the first year and then pro rata monthly thereafter over the remaining vesting term of three or two years, as applicable.		Options issued to recipients other than nonemployee directors generally vest over four years with a one year cliff and monthly thereafter, and have a maximum contractual term of 10 years.									The amended 2009 Plan also provides that the number of shares reserved for issuance under the 2009 Plan will increase on January 1 of each year for a period of up to five years by 4.5% of the total number of shares of capital stock outstanding on December 31 of the preceding calendar year, which will begin on January 1, 2015 and continue through January 1, 2019
Contractual term											5 years			10 years
Stock options granted percentage of fair market value			110.00%
Ownership percentage															10.00%
Term of stock options			4 years										3 years				2 years
Stock options vesting percentage																	25.00%
Weighted-average grant-date fair value of stock options granted	$ 15.83	$ 5.97	$ 6.99	$ 3.89
Total fair value of options vested	$ 1.7	$ 0.7	$ 6.2	$ 3.1
Total intrinsic value of options exercised	6.8	41.1	16.8	48.3
Cash received from options exercised	0.5	5.6	1.1	6.9
Unrecognized compensation expense, net of forfeitures	22.9		22.9					0.8
Unrecognized compensation expense, expected to be recognized over a weighted-average period			2 years 11 months 23 days					3 years 8 months 27 days
Total grant date fair value of restricted stock units granted								0.7	0
Total grant date fair value of restricted stock units									$ 0.1
Stockholders' equity note, stock split			On March 7, 2014, the Company’s board of directors and stockholders approved and effected an amendment to the amended and restated certificate of incorporation providing for a 2-for-1 stock split of the outstanding common stock. All of the share numbers, share prices, and exercise prices have been adjusted within these financial statements, on a retroactive basis, to reflect this 2-for-1stock split.
Stockholders' equity, stock split conversion ratio			2
ESPP approved a reserve of shares of common stock for future issuance					1,100,000
Common stock for future issuance percentage increased							1.00%
Common stock for future issuance number increase						1,800,000
Stock options granted percentage of fair market value on offering date					85.00%
Stock options granted percentage of fair market value on purchase date					85.00%
Employee stock purchase plan offering periods					Offering periods will be six months in duration and will end on or about May 15 and November 15 of each year, with the exception of the initial offering period which commenced on March 26, 2014 and that ends on November 14, 2014.
Employees contribution on earnings												15.00%				1.00%

XML

Marketable Securities and Fair Value Measurements - Additional Information (Details) (USD $)	3 Months Ended		9 Months Ended						9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 Level II	Dec. 31, 2013 Level II	Sep. 30, 2014 U.S. Treasuries Security	Dec. 31, 2013 U.S. Treasuries Security	Sep. 30, 2014 U.S. Treasuries Minimum	Dec. 31, 2013 U.S. Treasuries Minimum	Sep. 30, 2014 U.S. Treasuries Maximum	Dec. 31, 2013 U.S. Treasuries Maximum	Sep. 30, 2014 WSE
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale marketable securities	$ 30,200,000		$ 30,200,000										$ 22,800,000
Cash Collateral	32,200,000		32,200,000
Certificates of deposit	2,300,000		2,300,000
Realized gains or losses	0	0	0	0
Contractual maturities									2 years	2 years	3 years	3 years
Percentage of total fair value of available for sale securities in unrealized loss position	39.00%		39.00%
Unrealized loss			10,000
Number of securities in unrealized loss position for more than 12 months							0	0
Carrying value of notes payable					$ 550,000,000	$ 818,400,000

XML

Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Schedule of Earnings Per Share

The following table sets forth the computation of the Company’s basic and diluted net income per share attributable to common stock (in thousands, except per share data):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014		2013			2014			2013
Numerator (basic)
Net income	$	725	$	(7,740	)	$	8,486		$	7,140
Less net income allocated to participating securities		–		–			(1,658	)		(5,484	)
Net income attributable to common stock	$	725	$	(7,740	)	$	6,828		$	1,656
Denominator (basic)
Weighted average shares of common stock outstanding		69,135		12,835			51,655			11,502
Basic EPS	$	0.01	$	(0.60	)	$	0.13		$	0.14
Numerator (diluted)
Net income	$	725	$	(7,740	)	$	8,486		$	7,140
Less net income allocated to participating securities		–		–			(1,576	)		(5,103	)
Net income attributable to common stock	$	725	$	(7,740	)	$	6,910		$	2,037
Denominator (diluted)
Weighted average shares of common stock		69,135		12,835			51,655			11,502
Dilutive effect of stock options and restricted stock units		3,819		–			3,349			3,695
Weighted average shares of common stock outstanding		72,954		12,835			55,004			15,197
Diluted EPS	$	0.01	$	(0.60	)	$	0.13		$	0.13
Common stock equivalents excluded from income per diluted share    because of their anti-dilutive effect		129		1,609			595			1,639

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Stockholders' Equity - Summary of Restricted Unit Activity under the Company's Equity-Based Plans (Details) (USD $)	9 Months Ended
	Sep. 30, 2014
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Number of Units, Beginning Balance	40,000
Number of Units, Granted	25,000
Number of Units, Vested	(3,500)
Number of Units, Forfeited	(28,000)
Number of Units, Ending Balance	33,500
Weighted Average Grant Date Fair Value, Beginning Balance	$ 13.21
Weighted Average Grant Date Fair Value, Granted	$ 28.59
Weighted Average Grant Date Fair Value, Vested	$ 13.21
Weighted Average Grant Date Fair Value, Forfeited	$ 13.21
Weighted Average Grant Date Fair Value, Ending Balance	$ 13.21

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Notes Payable and Borrowings under Capital Leases - Additional Information (Details) (USD $)	3 Months Ended		9 Months Ended				9 Months Ended							1 Months Ended									1 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 Maximum	Sep. 30, 2014 Minimum	Sep. 30, 2014 Tranche A Term Loans	Sep. 30, 2014 Tranche B Term Loans	Sep. 30, 2014 Revolving Credit Facility	Sep. 30, 2014 Guarantor Subsidiaries	Jul. 09, 2014 Guarantor Subsidiaries Tranche A Term Loans	Jul. 09, 2014 Guarantor Subsidiaries Tranche B Term Loans	Jul. 09, 2014 Guarantor Subsidiaries Revolving Credit Facility	Aug. 31, 2014 First Lien Credit Facility Guarantor Subsidiaries	May 31, 2014 First Lien Credit Facility Guarantor Subsidiaries	Mar. 31, 2014 First Lien Credit Facility Guarantor Subsidiaries	Sep. 30, 2014 First Lien Credit Facility Guarantor Subsidiaries	Aug. 31, 2013 First Lien Credit Facility Guarantor Subsidiaries	Sep. 30, 2014 First Lien Credit Facility Guarantor Subsidiaries Letter of Credit	Sep. 30, 2014 First Lien Credit Facility Guarantor Subsidiaries Swingline	Aug. 31, 2013 First Lien Credit Facility Guarantor Subsidiaries Term Loan B One	Aug. 31, 2013 First Lien Credit Facility Guarantor Subsidiaries Term Loan B Two	Mar. 31, 2014 Second Lien Credit Facility Guarantor Subsidiaries	Aug. 31, 2013 Second Lien Credit Facility Guarantor Subsidiaries
Debt Instrument [Line Items]
Debt, face amount																		$ 705,000,000			$ 175,000,000	$ 455,000,000		$ 190,000,000
Line of credit facility											375,000,000	200,000,000	75,000,000				75,000,000	75,000,000	30,000,000	10,000,000
Payoff of second lien credit facility																							190,000,000
Repayments of lines of credit			268,425,000	450,104,000										25,000,000	25,000,000	25,000,000
Lien of credit amount amortized										6,100,000				600,000	500,000	5,000,000
Penalty paid																							3,800,000
Credit facility, maturity date							Jul. 09, 2019	Jul. 09, 2017	Jul. 09, 2019
Unused portion of the revolving credit facility										59,500,000
Debt issuance costs										11,100,000							8,000,000
Interest and debt expense	18,462,000	19,902,000	49,174,000	32,091,000						3,100,000
Gains (losses) on extinguishment of debt			$ 9,000,000
Debt instrument covenant leverage ratio					5.00%
Debt instrument covenant interest coverage ratio						3.50%

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Workers Compensation

9 Months Ended

Sep. 30, 2014

Insurance [Abstract]

Workers Compensation

NOTE 3. WORKERS COMPENSATION

The Company has agreements with various insurance carriers to provide workers compensation insurance coverage for worksite employees. Insurance carriers are responsible for administrating and paying claims. The Company is responsible for reimbursing each carrier up to a deductible limit per occurrence.

The following summarizes the activities in liability for unpaid claims and claims adjustment expenses (in thousands):

	For the nine months ended September 30,			For the year ended December 31,
	2014			2013
Liability for unpaid claims and claims adjustment at beginning of period	$	58,610		$	53,900
Plans acquired through business combinations		–			481
Incurred related to:
Current year		44,567			26,401
Prior years		(4,450	)		(3,319	)
Total incurred		40,117			23,082
Paid related to:
Current year		(8,483	)		(8,055	)
Prior years		(7,364	)		(10,798	)
Total paid		(15,847	)		(18,853	)
Liability for unpaid claims and claims adjustment at end of period		82,880			58,610
Other premiums and collateral liabilities		18,448			10,152
Total workers compensation liabilities at end of period	$	101,328		$	68,762
Current portion included in worksite employee-related liability		34,055			23,453
Long term portion	$	67,273		$	45,309

Under the terms of its agreements with its workers compensation insurance carriers, the Company collects and holds premiums in restricted accounts pending claims payments by the claims administrator. As of September 30, 2014 and December 31, 2013, such restricted amounts of $34.5 million and $21.5 million, respectively, are presented as restricted cash and restricted investment within WSE-related assets in the accompanying consolidated balance sheets. In addition, the Company invests premium collateral in excess of short term claim obligations in certain longer term securities. While it is the intention of the Company to reinvest maturing securities, periodically certain securities will be classified as short term to the extent the Company does not intend to reinvest the proceeds upon maturity.  At September 30, 2014 and December 31, 2013, $62.5 million and $37.0 million, respectively, are presented as restricted long-term investments.

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Earnings Per Share - Schedule of Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Numerator (basic)
Net income	$ 725	$ (7,740)	$ 8,486	$ 7,140
Less net income allocated to participating securities			(1,658)	(5,484)
Net income attributable to common stock	725	(7,740)	6,828	1,656
Denominator (basic)
Weighted average shares of common stock outstanding	69,134,908	12,835,295	51,654,608	11,501,581
Basic EPS	$ 0.01	$ (0.60)	$ 0.13	$ 0.14
Numerator (diluted)
Net income	725	(7,740)	8,486	7,140
Less net income allocated to participating securities			(1,576)	(5,103)
Net income attributable to common stock	$ 725	$ (7,740)	$ 6,910	$ 2,037
Denominator (diluted)
Weighted average shares of common stock outstanding	69,134,908	12,835,295	51,654,608	11,501,581
Dilutive effect of stock options and restricted stock units	3,819,000		3,349,000	3,695,000
Weighted average shares of common stock outstanding	72,954,352	12,835,295	55,003,651	15,196,398
Diluted EPS	$ 0.01	$ (0.60)	$ 0.13	$ 0.13
Common stock equivalents excluded from income per diluted share because of their anti-dilutive effect	129,000	1,609,000	595,000	1,639,000

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Workers Compensation - Summary of Activities in Liability for Unpaid Claims and Claims Adjustment Expenses (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Insurance [Abstract]
Liability for unpaid claims and claims adjustment at beginning of period	$ 58,610	$ 53,900
Plans acquired through business combinations		481
Incurred related to:
Current year	44,567	26,401
Prior years	(4,450)	(3,319)
Total incurred	40,117	23,082
Paid related to:
Current year	(8,483)	(8,055)
Prior years	(7,364)	(10,798)
Total paid	(15,847)	(18,853)
Liability for unpaid claims and claims adjustment at end of period	82,880	58,610
Other premiums and collateral liabilities	18,448	10,152
Total workers compensation liabilities at end of period	101,328	68,762
Current portion included in worksite employee-related liability	34,055	23,453
Workers compensation liabilities	$ 67,273	$ 45,309

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Worksite Employee-Related Assets and Liabilities - Schedule of Components of the Company's WSE-Related Assets and WSE-Related Liabilities (Parenthetical) (Details) (WSE, USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
WSE
Components Of Other Assets And Liabilities [Line Items]
Advance collection	$ 52,144	$ 54,159
Allowance for doubtful accounts	$ 229	$ 865

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Income Taxes - Additional Information (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Jun. 01, 2009	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Disclosure [Abstract]
Effective tax rate		75.50%	38.30%	51.90%	35.20%
Increase in refundable income taxes				$ 29.6		$ 18.8	$ 10.2	$ 2.2
Net operating losses carried forward		36.2		36.2
Employment tax credit	$ 10.5

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Workers Compensation - Additional Information (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Liability For Claims And Claims Adjustment Expense [Line Items]
Restricted long-term investments	$ 62,454,000	$ 36,968,000
WSE
Liability For Claims And Claims Adjustment Expense [Line Items]
Restricted cash and restricted investment	$ 34,500,000	$ 21,500,000

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Property and Equipment, Net - Property and Equipment, Net (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 89,376	$ 74,120
Accumulated depreciation	(57,023)	(48,430)
Property and equipment, net	32,353	25,690
Software
Property Plant And Equipment [Line Items]
Property and equipment, gross	48,813	43,513
Office equipment, including data processing equipment
Property Plant And Equipment [Line Items]
Property and equipment, gross	17,833	14,667
Leasehold improvements
Property Plant And Equipment [Line Items]
Property and equipment, gross	7,030	6,836
Furniture, fixtures, and equipment
Property Plant And Equipment [Line Items]
Property and equipment, gross	5,758	3,998
Projects in progress
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 9,942	$ 5,106

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Worksite Employee-Related Assets and Liabilities

9 Months Ended

Sep. 30, 2014

Other Industries [Abstract]

Worksite Employee-Related Assets and Liabilities

NOTE 2. WORKSITE EMPLOYEE-RELATED ASSETS AND LIABILITIES

The following schedule presents the components of the Company’s WSE-related assets and WSE-related liabilities (in thousands):

	September 30,		December 31,
	2014		2013
Worksite employee-related assets:
Restricted cash	$	39,857	$	19,154
Restricted investment		25,146		2,317
Payroll funds collected		323,923		490,058
Unbilled revenue, net of advance collection of $52,144 and $54,159 at     September 30, 2014 and December 31, 2013, respectively		278,393		200,641
Accounts receivable, net of allowance for doubtful accounts of $229 and $865 at     September 30, 2014 and December 31, 2013, respectively		6,450		10,450
Prepaid health plan expenses		3,438		7,584
Refundable health plan premiums		2,739		17,601
Refundable workers compensation premiums		10,814		20,834
Prepaid workers compensation expenses		2,543		1,414
Other payroll assets		3,744		2,384
Total worksite employee-related assets	$	697,047	$	772,437
Worksite employee-related liabilities:
Unbilled wages accrual	$	310,075	$	243,640
Payroll taxes payable		191,165		358,285
Health benefits payable		96,031		67,132
Customer prepayments		37,323		51,902
Workers compensation payable		34,055		23,453
Other payroll deductions		22,054		23,212
Total worksite employee-related liabilities	$	690,703	$	767,624

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Property and Equipment, Net - Additional Information (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Property Plant And Equipment [Line Items]
Assets under capital leases	$ 1,500,000		$ 1,500,000		$ 1,400,000
Accumulated depreciation - assets under capital leases	800,000		800,000		500,000
Depreciation	3,265,000	3,356,000	9,725,000	8,908,000
Accumulated depreciation	57,023,000		57,023,000		48,430,000
Internally developed software
Property Plant And Equipment [Line Items]
Depreciation			4,000,000	3,800,000
Accumulated depreciation	28,500,000		28,500,000		25,300,000
Impairment loss recognized			$ 100,000	$ 400,000

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Stockholders' Equity - Summary of Stock Option Plan Activity (Details)	9 Months Ended
	Sep. 30, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted	(2,696,000)
Forfeited	372,644
Expired	6,580
Stock Option Plan Activity under 2000 Plan and 2009 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Beginning Balance	2,004,464
Authorized	3,000,000
Granted	(2,721,000)
Forfeited	400,644
Expired	6,580
Ending Balance	2,690,688

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 97,952	$ 94,356
Restricted cash	14,538	15,267
Prepaid income taxes	32,973	3,331
Deferred income taxes	68	68
Prepaid expenses	9,636	7,849
Deferred loan costs and other current assets	5,273	5,238
Worksite employee related assets	697,047	772,437
Total current assets	857,487	898,546
Workers compensation receivable	38,142	25,381
Restricted cash and investments	62,454	36,968
Property and equipment, net	32,353	25,690
Goodwill	288,857	288,857
Other intangible assets, net	94,461	134,020
Deferred income taxes	7,621	1,000
Deferred loan costs and other assets	11,930	24,276
Total assets	1,393,305	1,434,738
Current liabilities:
Accounts payable	11,422	7,315
Accrued corporate wages	31,538	26,264
Deferred income taxes	73,121	16,535
Current portion of notes payable and borrowings under capital leases	20,694	6,669
Other current liabilities	12,736	9,078
Worksite employee related liabilities	690,703	767,624
Total current liabilities	840,214	833,485
Notes payable and borrowings under capital leases, less current portion	529,542	812,208
Workers compensation liabilities	67,273	45,309
Deferred income taxes		8,888
Other liabilities	5,189	5,210
Total liabilities	1,442,218	1,705,100
Commitments and contingencies (Note 11)
Stockholders’ deficit:
Preferred stock value
Common stock, $.000025 per share stated value; 750,000,000 shares authorized; 69,383,359 and 15,259,540 shares issued and outstanding at September 30, 2014 and December 31, 2013	411,449	74,160
Accumulated deficit	(460,120)	(467,209)
Accumulated other comprehensive loss	(242)	(191)
Total stockholders’ deficit	(48,913)	(393,240)
Total liabilities and stockholders’ deficit	1,393,305	1,434,738
Series G Convertible Preferred Stock
Current liabilities:
Convertible preferred stock value		59,059
Series H Convertible Preferred Stock
Current liabilities:
Convertible preferred stock value		$ 63,819

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Commitments and Contingencies - Additional Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Commitments And Contingencies Disclosure [Abstract]
Rent expense incurred but not paid	$ 3.1	$ 2.7	$ 8.7	$ 7.2

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Operating activities
Net income	$ 8,486	$ 7,140
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	67,754	56,313
Deferred income taxes	27,180	(9,534)
Stock-based compensation	8,251	4,360
Excess tax benefit from equity incentive plan activity		(14,281)
Accretion of workers compensation and leases fair value adjustment	(969)	(1,244)
Changes in operating assets and liabilities:
Restricted cash	(7,968)	(6,522)
Prepaid expenses and other current assets	(7,899)	(8,049)
Workers compensation receivables	(11,775)	3,624
Other assets	8,166	3,995
Accounts payable	4,826	1,598
Income tax payable/receivable	(29,057)	12,314
Other current liabilities	11,321	7,447
Other liabilities	22,196	1,968
Worksite employee related assets	75,390	(41,062)
Worksite employee related liabilities	(76,921)	44,013
Net cash provided by operating activities	98,981	62,080
Investing activities
Acquisition of businesses		(193,727)
Proceeds from sale and maturity of debt securities		500
Purchase of debt securities	(16,789)	(7,253)
Purchase of property and equipment	(17,082)	(6,314)
Net cash used in investing activities	(33,871)	(206,794)
Financing activities
Proceeds from issuance of common stock, net of issuance costs	218,572
Proceeds from issuance of common stock on exercised options	1,146	6,889
Excess tax benefit from equity incentive plan activity		14,281
Borrowings under notes payable		970,000
Repayment of notes payable	(268,425)	(450,104)
Payment of debt issuance costs	(11,060)	(24,611)
Payments of special dividend		(310,922)
Repayments under capital leases	(263)	(620)
Repurchase of common stock	(1,422)	(11,767)
Net cash provided by (used in) financing activities	(61,452)	193,146
Effect of exchange rate changes on cash and cash equivalents	(62)	(20)
Net increase in cash and cash equivalents	3,596	48,412
Cash and cash equivalents at beginning of period	94,356	63,749
Cash and cash equivalents at end of period	97,952	112,161
Supplemental disclosures of cash flow information
Cash paid for interest	25,662	18,557
Cash paid for income taxes, net of refunds	10,969	719
Supplemental schedule of noncash investing and financing activities
Payable for purchase of property and equipment	$ 826	$ 378

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Marketable Securities and Fair Value Measurements - Summary of Financial Assets Measured at Fair Value on Recurring Basis (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Schedule Of Available For Sale Securities [Line Items]
Total Fair Value	$ 55,364	$ 39,331
Level I
Schedule Of Available For Sale Securities [Line Items]
Total Fair Value	55,360	39,284
Level II
Schedule Of Available For Sale Securities [Line Items]
Total Fair Value	4	47
Certificates of Deposit
Schedule Of Available For Sale Securities [Line Items]
Total Fair Value	2,317	2,858
Certificates of Deposit | Level I
Schedule Of Available For Sale Securities [Line Items]
Total Fair Value	2,317	2,858
U.S. Treasuries
Schedule Of Available For Sale Securities [Line Items]
Total Fair Value	52,536	35,918
U.S. Treasuries | Level I
Schedule Of Available For Sale Securities [Line Items]
Total Fair Value	52,536	35,918
Mutual Funds
Schedule Of Available For Sale Securities [Line Items]
Total Fair Value	507	508
Mutual Funds | Level I
Schedule Of Available For Sale Securities [Line Items]
Total Fair Value	507	508
Interest Rate Cap
Schedule Of Available For Sale Securities [Line Items]
Total Fair Value	4	47
Interest Rate Cap | Level II
Schedule Of Available For Sale Securities [Line Items]
Total Fair Value	$ 4	$ 47

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Marketable Securities and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

Investments Debt And Equity Securities [Abstract]

Summary of Available-for-Sale Marketable Securities

The available-for-sale marketable securities as of September 30, 2014 and December 31, 2013 consist of the following (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2014
U.S. treasuries	$	52,500	$	49	$	(13	)	$	52,536
Mutual funds		500		7		–			507
Total investments	$	53,000	$	56	$	(13	)	$	53,043
December 31, 2013:
U.S. treasuries	$	35,900	$	38	$	(20	)	$	35,918
Mutual funds		500		8	–				508
Total investments	$	36,400	$	46	$	(20	)	$	36,426

Summary of Financial Assets Measured at Fair Value on Recurring Basis

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis (in thousands):

	Total Fair Value		Level I		Level II		Level III
September 30, 2014
Certificate of deposit	$	2,317	$	2,317	$	–	$	–
U.S. treasuries		52,536		52,536	–		–
Mutual funds		507		507	–		–
Interest rate cap		4	–			4	–
Total	$	55,364	$	55,360	$	4	$	–
December 31, 2013:
Certificates of deposit	$	2,858	$	2,858	$	–	$	–
U.S. treasuries		35,918		35,918	–		–
Mutual funds	508		508		–		–
Interest rate cap	47		–		47		–
Total	$	39,331	$	39,284	$	47	$	–

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Notes Payable and Borrowings under Capital Leases - Components of Company's Notes Payable and Borrowings under Capital Leases Balances (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Debt And Capital Lease Obligations [Abstract]
Carrying value of notes payable	$ 550,000	$ 818,425
Capital leases	236	452
Less current portion	(20,694)	(6,669)
Notes payable and borrowings under capital leases, less current portion	$ 529,542	$ 812,208

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2014

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Stock Option Plan Activity

Activity under the 2000 Plan and the 2009 Plan for the nine months ended September 30, 2014 is summarized as follows:

	Shares Available for Grant
Balance at December 31, 2013		2,004,464
Authorized		3,000,000
Granted		(2,721,000	)
Forfeited		400,644
Expired		6,580
Balance at September 30, 2014		2,690,688

Summary of Stock Option Activity under the Company's Equity-Based Plans

The following table summarizes stock option activity under the Company’s equity-based plans for the nine months ended September 30, 2014:

	Number of Shares			Weighted Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)
Balance at December 31, 2013		6,281,148		$	1.74	8.55		$	53,373
Granted		2,696,000			12.67
Exercised		(1,043,854	)		1.10
Forfeited		(372,644	)		5.02
Expired		(6,580	)		0.50
Balance at September 30, 2014		7,554,070		$	5.57		8.40	$	152,467
Exercisable at September 30, 2014		1,981,686		$	1.04	7.32		$	48,960
Vested and expected to vest at September 30, 2014		7,197,880		$	5.43	8.37		$	146,231

Summary of Restricted Stock Unit Activity under the Company's Equity-Based Plans

The following table summarizes restricted stock unit activity under the Company’s equity-based plans for the nine months ended September 30, 2014:

	Number of Units			Weighted-Average Grant Date Fair Value
Nonvested at December 31, 2013		40,000		$	13.21
Granted		25,000		$	28.59
Vested		(3,500	)	$	13.21
Forfeited		(28,000	)	$	13.21
Nonvested at September 30, 2014		33,500		$	13.21

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Description of Business and Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Description of Business and Significant Accounting Policies

NOTE 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

TriNet Group, Inc. (the Company or TriNet), a Delaware corporation incorporated in January 2000, provides a comprehensive human resources solution for small to medium-sized businesses. The Company’s solution includes payroll processing, human capital consulting, employment law compliance and employee benefits, including health insurance, retirement plans and workers compensation insurance.

The Company provides its services through co-employment relationships with its customers, under which the Company and its customers each take responsibility for certain portions of the employer-employee relationship for worksite employees (WSEs). The Company is the employer of record for most administrative and regulatory purposes, including the following: (i) compensation through wages and salaries; (ii) employer payroll-related taxes payment; (iii) employee payroll-related taxes withholding and payment; (iv) employee benefit programs including health and life insurance, and others; and (v) workers compensation coverage.

Initial Public Offering

In March 2014, the Company completed its initial public offering (IPO) in which the Company issued and sold 15,000,000 shares of common stock at a public offering price of $16.00 per share. In addition, another 2,250,000 shares were sold by certain selling stockholders pursuant to the underwriters’ option to purchase additional shares.  The Company received net proceeds of approximately $217.6 million, after deducting underwriting discounts and commissions of $16.8 million and offering expenses of $5.6 million. The Company did not receive any proceeds from the sale by the selling stockholders.  Upon the closing of the IPO, all shares of the Company’s then-outstanding preferred stock were converted into an aggregate of 38,065,708 shares of common stock.

Segment Information

The Company operates in one reportable segment in accordance with ASC 280. All of the Company’s service revenues are generated from external customers. Less than 1% of revenues are generated outside of the United States of America (U.S.). Substantially all of the Company’s long-lived assets are located in the U.S.

Basis of Presentation

The accompanying unaudited consolidated financial statements and footnotes thereto of the Company and its wholly owned subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933 on March 27, 2014, and the Company’s prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933 on September 12, 2014. There have been no changes to the Company’s significant accounting policies described in the prospectuses that have had a material impact on our consolidated financial statements and related notes. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated balance sheets present the current assets and current liabilities directly related to the processing of human resources transactions as WSE-related assets and WSE-related liabilities, respectively. WSE-related assets are comprised of cash and investments restricted for current workers compensation claim payments, payroll funds collected, accounts receivable, unbilled service revenues, and refundable or prepaid amounts related to the Company-sponsored workers compensation and health plan programs. WSE-related liabilities are comprised of customer prepayments, wages and payroll taxes accrued and payable, and liabilities related to the Company-sponsored workers compensation and health plan programs resulting from workers compensation case reserves, premium amounts due to providers for enrolled employees, and workers compensation and health reserves that are expected to be disbursed within the next 12 months.

The unaudited interim financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for fair presentation. The results of the nine months ended September 30, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014.

Seasonality

Historically, the Company has experienced its highest monthly addition of WSEs, as well as its highest monthly levels of client attrition, in the month of January, primarily because clients that change their payroll service providers tend to do so at the beginning of a calendar year. In addition, the Company experiences higher levels of client attrition in connection with renewals of the health insurance it provides for its WSEs, in the event that such renewals result in increased premiums that it passes on to its clients. The Company has also historically experienced higher insurance claim volumes in the second and third quarters of a fiscal year than in the first and fourth quarters of a fiscal year, as WSEs typically access their health care providers more often in the second and third quarters of a fiscal year, which has negatively impacted the Company’s insurance costs in these quarters. These historical trends may change, and other seasonal trends may develop that make it more difficult for the Company to manage its business.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. These estimates include, but are not limited to, allowances for accounts receivable, workers compensation related assets and liabilities, health plan assets and liabilities, recoverability of goodwill and other intangible assets, income taxes, stock-based compensation and other contingent liabilities. Such estimates are based on historical experience and on various other assumptions that Company management believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-15—Presentation of Financial Statements — Going Concern (Subtopic 205-40), which addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect to early adopt this guidance and does not believe that the adoption of this guidance will have a material impact on its consolidated financial statements.

In June 2014, the FASB issued ASU 2014-12—Compensation-Stock Compensation, which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. The amendments may be applied prospectively to all awards granted or modified after the effective date or retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented. The Company does not expect this guidance to have a material effect on its consolidated financial statements. The Company expects to adopt this guidance in 2016.

In May 2014, the FASB issued ASU 2014-09—Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance under GAAP. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard provides a five-step analysis of transactions to determine when and how revenue is recognized. ASU 2014-09 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. The amendments may be applied retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company expects to adopt this guidance in 2017. The Company has not yet selected a method of adoption and is currently evaluating the effect that the amendments will have on the consolidated financial statements.

In July 2013, the FASB issued ASU 2013-11—Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which requires that an unrecognized tax benefit, or portion of an unrecognized tax benefit, be presented as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. If an applicable deferred tax asset is not available or a company does not expect to use the applicable deferred tax asset, the unrecognized tax benefit should be presented as a liability in the financial statements and should not be combined with an unrelated deferred tax asset. ASU 2013-11 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2013. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date, however retrospective application is permitted. The Company adopted this guidance in 2014. The adoption of ASU 2013-11 did not have a material impact on the Company’s consolidated financial statements.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Series G Convertible Preferred Stock	Dec. 31, 2013 Series G Convertible Preferred Stock	Sep. 30, 2014 Series H Convertible Preferred Stock	Dec. 31, 2013 Series H Convertible Preferred Stock
Convertible preferred stock, per share stated value				$ 0.0001		$ 0.0001
Convertible preferred stock, aggregate liquidation preference, amount				$ 59,306		$ 60,000
Convertible preferred stock, shares authorized			0	5,391,441	0	4,124,986
Convertible preferred stock, shares issued			0	5,391,441	0	4,124,986
Convertible preferred stock, shares outstanding			0	5,391,441	0	4,124,986
Preferred stock, per share stated value	$ 0.000025	$ 0.000025
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, per share stated value	$ 0.000025	$ 0.000025
Common stock, shares authorized	750,000,000	750,000,000
Common stock, shares issued	69,383,359	15,259,540
Common stock, shares outstanding	69,383,359	15,259,540

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2014

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 11. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases office facilities, including its headquarters and other facilities, and equipment under non-cancelable operating leases. The Company also leases certain software and furniture, fixtures, and equipment under capital leases. The lease agreements generally provide for rental payments on a graduated basis and for options to renew, which could increase future minimum lease payments if exercised. The Company recognizes rent expense on a straight-line basis over the lease period and accrues for rent expense incurred but not paid. Rent expense for the three months ended September 30, 2014 and 2013 was $3.1 million and $2.7 million, respectively. Rent expense for the nine months ended September 30, 2014 and 2013 2013 was $8.7 million and $7.2 million, respectively.

Operating Covenants

To meet various states’ licensing requirements and maintain accreditation by Employer Services Assurance Corporation, the Company is subject to various minimum working capital and net worth requirements. As of September 30, 2014, the Company believes it has fully complied in all material respects with all applicable state regulations regarding minimum net worth, working capital and all other financial and legal requirements. Further, the Company has maintained positive working capital throughout the period covered by the financial statements.

Contingencies

The Company may from time to time become involved in various litigation matters arising in the ordinary course of business, including suits by its clients. The unfavorable resolution of any such matter could have a material effect on the Company’s consolidated financial position and results of operations.

Due to the nature of the Company’s relationship with its WSEs, the Company could be subject to liability for federal and state law violations even if the Company does not participate in such violations. While the Company’s agreements with its clients contain indemnification provisions related to the conduct of its clients, the Company historically has not encountered situations requiring enforcement of these indemnification provisions.

The Company has been named as a defendant in various class action lawsuits arising from the nature of the Company’s relationship with its WSEs. At this stage of the lawsuits, management believes an unfavorable outcome to the Company is not probable. There are significant uncertainties involved in any class action litigation. Management is unable to estimate a possible loss or range of loss for these class action lawsuits.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Oct. 31, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Trading Symbol	TNET
Entity Registrant Name	TRINET GROUP INC
Entity Central Index Key	0000937098
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		69,596,136

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Description of Business and Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements and footnotes thereto of the Company and its wholly owned subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933 on March 27, 2014, and the Company’s prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933 on September 12, 2014. There have been no changes to the Company’s significant accounting policies described in the prospectuses that have had a material impact on our consolidated financial statements and related notes. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated balance sheets present the current assets and current liabilities directly related to the processing of human resources transactions as WSE-related assets and WSE-related liabilities, respectively. WSE-related assets are comprised of cash and investments restricted for current workers compensation claim payments, payroll funds collected, accounts receivable, unbilled service revenues, and refundable or prepaid amounts related to the Company-sponsored workers compensation and health plan programs. WSE-related liabilities are comprised of customer prepayments, wages and payroll taxes accrued and payable, and liabilities related to the Company-sponsored workers compensation and health plan programs resulting from workers compensation case reserves, premium amounts due to providers for enrolled employees, and workers compensation and health reserves that are expected to be disbursed within the next 12 months.

The unaudited interim financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for fair presentation. The results of the nine months ended September 30, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014.

Use of Estimates

Seasonality

Historically, the Company has experienced its highest monthly addition of WSEs, as well as its highest monthly levels of client attrition, in the month of January, primarily because clients that change their payroll service providers tend to do so at the beginning of a calendar year. In addition, the Company experiences higher levels of client attrition in connection with renewals of the health insurance it provides for its WSEs, in the event that such renewals result in increased premiums that it passes on to its clients. The Company has also historically experienced higher insurance claim volumes in the second and third quarters of a fiscal year than in the first and fourth quarters of a fiscal year, as WSEs typically access their health care providers more often in the second and third quarters of a fiscal year, which has negatively impacted the Company’s insurance costs in these quarters. These historical trends may change, and other seasonal trends may develop that make it more difficult for the Company to manage its business.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. These estimates include, but are not limited to, allowances for accounts receivable, workers compensation related assets and liabilities, health plan assets and liabilities, recoverability of goodwill and other intangible assets, income taxes, stock-based compensation and other contingent liabilities. Such estimates are based on historical experience and on various other assumptions that Company management believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-15—Presentation of Financial Statements — Going Concern (Subtopic 205-40), which addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect to early adopt this guidance and does not believe that the adoption of this guidance will have a material impact on its consolidated financial statements.

In June 2014, the FASB issued ASU 2014-12—Compensation-Stock Compensation, which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. The amendments may be applied prospectively to all awards granted or modified after the effective date or retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented. The Company does not expect this guidance to have a material effect on its consolidated financial statements. The Company expects to adopt this guidance in 2016.

In May 2014, the FASB issued ASU 2014-09—Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance under GAAP. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard provides a five-step analysis of transactions to determine when and how revenue is recognized. ASU 2014-09 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. The amendments may be applied retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company expects to adopt this guidance in 2017. The Company has not yet selected a method of adoption and is currently evaluating the effect that the amendments will have on the consolidated financial statements.

In July 2013, the FASB issued ASU 2013-11—Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which requires that an unrecognized tax benefit, or portion of an unrecognized tax benefit, be presented as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. If an applicable deferred tax asset is not available or a company does not expect to use the applicable deferred tax asset, the unrecognized tax benefit should be presented as a liability in the financial statements and should not be combined with an unrelated deferred tax asset. ASU 2013-11 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2013. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date, however retrospective application is permitted. The Company adopted this guidance in 2014. The adoption of ASU 2013-11 did not have a material impact on the Company’s consolidated financial statements.

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Statement [Abstract]
Professional service revenues	$ 86,864	$ 75,641	$ 251,999	$ 195,952
Insurance service revenues	469,087	372,476	1,337,870	966,667
Total revenues	555,951	448,117	1,589,869	1,162,619
Costs and operating expenses:
Insurance costs	428,184	343,464	1,209,536	866,593
Cost of providing services (exclusive of depreciation and amortization of intangible assets)	32,575	27,556	100,252	74,042
Sales and marketing	37,396	31,367	104,225	79,387
General and administrative	13,766	14,593	40,785	39,821
Systems development and programming costs	6,776	5,052	19,235	15,140
Amortization of intangible assets	12,743	15,442	39,559	35,926
Depreciation	3,265	3,356	9,725	8,908
Total costs and operating expenses	534,705	440,830	1,523,317	1,119,817
Operating income	21,246	7,287	66,552	42,802
Other income (expense):
Interest expense and bank fees	(18,462)	(19,902)	(49,174)	(32,091)
Other, net	179	75	257	309
Income (loss) before provision for (benefit from) income taxes	2,963	(12,540)	17,635	11,020
Provision for (benefit from) income taxes	2,238	(4,800)	9,149	3,880
Net income (loss)	$ 725	$ (7,740)	$ 8,486	$ 7,140
Net income (loss) per share:
Basic	$ 0.01	$ (0.60)	$ 0.13	$ 0.14
Diluted	$ 0.01	$ (0.60)	$ 0.13	$ 0.13
Weighted average shares:
Basic	69,134,908	12,835,295	51,654,608	11,501,581
Diluted	72,954,352	12,835,295	55,003,651	15,196,398

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Notes Payable and Borrowings under Capital Leases

9 Months Ended

Sep. 30, 2014

Line Of Credit Facility [Abstract]

Notes Payable and Borrowings under Capital Leases

NOTE 6. NOTES PAYABLE AND BORROWINGS UNDER CAPITAL LEASES

The following schedule summarizes the components of the Company’s notes payable and borrowings under capital leases balances (in thousands):

	September 30,			December 31,
	2014			2013
Notes payable under credit facility	$	550,000		$	818,425
Capital leases		236			452
Less current portion		(20,694	)		(6,669	)
	$	529,542		$	812,208

In August 2013, the Company, as guarantor, its subsidiary TriNet HR Corporation, as borrower, and certain of its other subsidiaries as subsidiary guarantors entered into two senior secured credit facilities:

· a $705.0 million first lien credit facility with JPMorgan Chase Bank, N.A., as administrative agent which provided a $75.0 million revolving credit facility, a $175.0 million tranche B-1 term loan and a $455.0 million tranche B-2 term loan; and

· a $190.0 million second lien credit facility with Wilmington Trust, National Association, as administrative agent.

In March 2014, the proceeds from the IPO were used to fully repay the $190.0 million second lien credit facility, which resulted in a prepayment premium of $3.8 million, and to repay $25.0 million of the first lien tranche B-1 term loan. Additionally, the remaining balance of the loan fees associated with the second lien credit facility and a portion of the loan fees associated with the first lien credit facility were fully amortized in March 2014 for a charge of $5.0 million. In May 2014, the Company repaid $25.0 million of the first lien tranche B-1 term loan. As a result, a portion of the loan fees associated with the first lien credit facility was fully amortized in May 2014 for a charge of $0.5 million.

On July 9, 2014, the Company amended and restated its first lien credit facility pursuant to an amended and restated first lien credit agreement (“the Amended and Restated Credit Agreement”). The Amended and Restated Credit Agreement provides for: (i) $375 million principal amount of “tranche A term loans,” (ii) $200 million principal amount of “tranche B term loans,” and (iii) a revolving credit facility of $75 million. The proceeds of the tranche A term loans were used to refinance in part the tranche B-2 term loans outstanding under the original first lien credit facility. The proceeds of the tranche B term loans were used to (i) refinance the remaining tranche B-2 term loans outstanding under the original first lien credit facility, (ii) refinance other amounts outstanding under the original first lien credit facility and (iii) pay fees and expenses related thereto. The revolving credit facility replaced the revolving credit facility under the original first lien credit facility.

The tranche A term loans and the revolving credit facility will mature on July 9, 2019. The tranche B term loans will mature on July 9, 2017. Loans under the revolving credit facility are expected to be used for working capital and other general corporate purposes.

The $75.0 million revolving credit facility includes capacity for a $30.0 million letter of credit facility and a $10.0 million swingline facility. The total unused portion of the revolving credit facility was $59.5 million as of September 30, 2014. In connection with the Amended and Restated Credit Agreement, the Company incurred $11.1 million of debt issuance costs. The Company deferred $8.0 million of the costs, which are being amortized over the term of the credit facility.  The remaining $3.1 million of costs were recorded to interest expense and bank fees.  Additionally, the Company recorded a $9.0 million loss on extinguishment of debt to write-off deferred issuance costs associated with the original first lien credit facility, which was also recorded to interest expense and bank fees.  The remaining $6.1 million of loan fees associated with the previous facility that was deemed to be modified continues to be amortized over the revised remaining term of the Amended and Restated Credit Agreement.

In August 2014, the Company repaid $25.0 million of the first lien tranche B-1 term loan. As a result, a portion of the loan fees associated with the first lien credit facility was fully amortized in August 2014 for a charge of $0.6 million.

The Amended and Restated Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Company and its subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness, and dividends and other distributions. The Amended and Restated Credit Agreement also contains financial covenants that require the Company to maintain a minimum consolidated interest coverage ratio of at least 3.50 to 1.00, beginning with the fiscal quarter ending September 30, 2014, and a maximum total leverage ratio, currently at 5.00 to 1.00.The Company was in compliance with the restrictive covenants under the credit facilities at September 30, 2014. The credit facility is secured by substantially all of the Company’s assets and the assets of the borrower and of the subsidiary guarantors, other than specifically excluded assets.

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Marketable Securities and Fair Value Measurements

9 Months Ended

Sep. 30, 2014

Investments Debt And Equity Securities [Abstract]

Marketable Securities and Fair Value Measurements

NOTE 5. MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS

The Company’s noncurrent restricted cash and investments include $30.2 million of available-for-sale marketable securities and $32.2 million of cash collateral at September 30, 2014. The Company’s restricted investments within WSE-related assets include $22.8 million of available-for-sale marketable securities and $2.3 million of certificates of deposit as of September 30, 2014. The available-for-sale marketable securities as of September 30, 2014 and December 31, 2013 consist of the following (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2014
U.S. treasuries	$	52,500	$	49	$	(13	)	$	52,536
Mutual funds		500		7		–			507
Total investments	$	53,000	$	56	$	(13	)	$	53,043
December 31, 2013:
U.S. treasuries	$	35,900	$	38	$	(20	)	$	35,918
Mutual funds		500		8	–				508
Total investments	$	36,400	$	46	$	(20	)	$	36,426

There were no realized gains or losses for the three and nine months ended September 30, 2014 and 2013. As of September 30, 2014 and December 31, 2013, the contractual maturities of the U.S. treasuries were two to three years.

As of September 30, 2014, certain of the Company’s U.S. treasuries were in unrealized loss position principally due to changes in interest rates and credit spreads. No U.S. treasuries were in an unrealized loss position for more than 12 months as of either September 30, 2014 or December 31, 2013. In analyzing an issuer’s financial condition, the Company considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analysts’ reports. The fair value of these securities in an unrealized loss position represented 39% of the total fair value of all securities available for sale and their unrealized loss was $0.01 million as of September 30, 2014. As the Company has the ability to hold debt securities until maturity, or for the foreseeable future as classified as available for sale, no decline was deemed to be other-than-temporary.

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

As a basis for considering such assumptions, the Company uses a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

· Level I—observable inputs such as quoted prices in active markets

· Level II—inputs other than the quoted prices in active markets that are observable either directly or indirectly

· Level III—unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions

This hierarchy requires the Company to use observable market data when available and to minimize the use of unobservable inputs when determining fair value. On a recurring basis, the Company measures its financial assets at fair value.

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis (in thousands):

	Total Fair Value		Level I		Level II		Level III
September 30, 2014
Certificate of deposit	$	2,317	$	2,317	$	–	$	–
U.S. treasuries		52,536		52,536	–		–
Mutual funds		507		507	–		–
Interest rate cap		4	–			4	–
Total	$	55,364	$	55,360	$	4	$	–
December 31, 2013:
Certificates of deposit	$	2,858	$	2,858	$	–	$	–
U.S. treasuries		35,918		35,918	–		–
Mutual funds	508		508		–		–
Interest rate cap	47		–		47		–
Total	$	39,331	$	39,284	$	47	$	–

There were no transfers between Level I and Level II assets for the three months ended September 30, 2014 or the year ended December 31, 2013.

As of September 30, 2014 and December 31, 2013, certificate of deposit consisted of certificates of deposit held by domestic financial institutions, which are presented as restricted investments within WSE-related assets in the accompanying consolidated balance sheets.

The book value of the Company’s financial instruments not measured at fair value, including cash, restricted cash, WSE-related assets and liabilities, line of credit and accrued corporate wages, approximates fair value due to the relatively short maturity, cash repayments or market interest rates of such instruments. The fair value of such financial instruments, other than cash and restricted cash, is determined using the income approach based on the present value of estimated future cash flows. The fair value of all of these instruments would be categorized as Level II of the fair value hierarchy, with the exception of cash and cash equivalents, which would be categorized as Level I.

At September 30, 2014 and December 31, 2013, the carrying value of our notes payable of $550.0 million and $818.4 million, respectively, approximated fair value. The estimate fair values of our notes payable are considered a Level II valuation in the hierarchy for fair value measurement and are based on a cash flow model discounted at market interest rates that considers the underlying risks of unsecured debt.

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Notes Payable and Borrowings under Capital Leases (Tables)

9 Months Ended

Sep. 30, 2014

Line Of Credit Facility [Abstract]

Components of Company's Notes Payable and Borrowings under Capital Leases Balances

The following schedule summarizes the components of the Company’s notes payable and borrowings under capital leases balances (in thousands):

	September 30,			December 31,
	2014			2013
Notes payable under credit facility	$	550,000		$	818,425
Capital leases		236			452
Less current portion		(20,694	)		(6,669	)
	$	529,542		$	812,208

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Worksite Employee-Related Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2014

Other Industries [Abstract]

Schedule of Components of the Company's WSE-Related Assets and WSE-Related Liabilities

The following schedule presents the components of the Company’s WSE-related assets and WSE-related liabilities (in thousands):

	September 30,		December 31,
	2014		2013
Worksite employee-related assets:
Restricted cash	$	39,857	$	19,154
Restricted investment		25,146		2,317
Payroll funds collected		323,923		490,058
Unbilled revenue, net of advance collection of $52,144 and $54,159 at     September 30, 2014 and December 31, 2013, respectively		278,393		200,641
Accounts receivable, net of allowance for doubtful accounts of $229 and $865 at     September 30, 2014 and December 31, 2013, respectively		6,450		10,450
Prepaid health plan expenses		3,438		7,584
Refundable health plan premiums		2,739		17,601
Refundable workers compensation premiums		10,814		20,834
Prepaid workers compensation expenses		2,543		1,414
Other payroll assets		3,744		2,384
Total worksite employee-related assets	$	697,047	$	772,437
Worksite employee-related liabilities:
Unbilled wages accrual	$	310,075	$	243,640
Payroll taxes payable		191,165		358,285
Health benefits payable		96,031		67,132
Customer prepayments		37,323		51,902
Workers compensation payable		34,055		23,453
Other payroll deductions		22,054		23,212
Total worksite employee-related liabilities	$	690,703	$	767,624

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Earnings Per Share

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 9: EARNINGS PER SHARE

Basic net income per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period and participating convertible preferred stock that were outstanding prior to the IPO. Diluted net income per share is computed by giving effect to all potential shares of common stock, including shares issuable upon the conversion of our convertible preferred stock that were outstanding prior to the IPO, shares issuable upon the exercise of outstanding stock options, and stock related to unvested restricted stock unit awards to the extent dilutive.

The following table sets forth the computation of the Company’s basic and diluted net income per share attributable to common stock (in thousands, except per share data):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014		2013			2014			2013
Numerator (basic)
Net income	$	725	$	(7,740	)	$	8,486		$	7,140
Less net income allocated to participating securities		–		–			(1,658	)		(5,484	)
Net income attributable to common stock	$	725	$	(7,740	)	$	6,828		$	1,656
Denominator (basic)
Weighted average shares of common stock outstanding		69,135		12,835			51,655			11,502
Basic EPS	$	0.01	$	(0.60	)	$	0.13		$	0.14
Numerator (diluted)
Net income	$	725	$	(7,740	)	$	8,486		$	7,140
Less net income allocated to participating securities		–		–			(1,576	)		(5,103	)
Net income attributable to common stock	$	725	$	(7,740	)	$	6,910		$	2,037
Denominator (diluted)
Weighted average shares of common stock		69,135		12,835			51,655			11,502
Dilutive effect of stock options and restricted stock units		3,819		–			3,349			3,695
Weighted average shares of common stock outstanding		72,954		12,835			55,004			15,197
Diluted EPS	$	0.01	$	(0.60	)	$	0.13		$	0.13
Common stock equivalents excluded from income per diluted share    because of their anti-dilutive effect		129		1,609			595			1,639

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Convertible Preferred Stock

9 Months Ended

Sep. 30, 2014

Equity [Abstract]

Convertible Preferred Stock

NOTE 7. CONVERTIBLE PREFERRED STOCK

On June 7, 2005, the Company issued 5,391,441 shares of Series G convertible preferred stock (Series G) at $11.00 per share for an aggregate cash purchase price of $59.3 million. The Company recorded the issuance of Series G at $59.1 million, net of issuance costs of $0.2 million. On June 1, 2009, the Company issued 4,124,986 shares of Series H convertible preferred stock (Series H) at $16.69 per share for an aggregate cash purchase price of $68.8 million. The Company recorded the issuance of Series H at $63.8 million, net of issuance costs of $5.0 million. Upon the issuance of Series H, certain terms related to Series G were amended. In March 2014, upon completion of the Company’s IPO, all of the outstanding shares of Series H and Series G were converted into 38,065,708 shares of common stock.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2014

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stockholders' Equity

NOTE 8: STOCKHOLDERS’ EQUITY

Equity-Based Incentive Plans

In 2000, the Company established the 2000 Equity Incentive Plan (the 2000 Plan), which provided for granting incentive stock options, nonstatutory stock options, bonus awards and restricted stock awards to eligible employees, directors, and consultants of the Company. In December 2009, the Board of Directors approved the 2009 Equity Incentive Plan (the 2009 Plan) as the successor to and continuation of the 2000 Plan. As of the 2009 Plan effective date, remaining shares available for issuance under the 2000 Plan were cancelled and became available for issuance under the 2009 Plan. No additional stock awards will be granted under the 2000 Plan. The 2009 Plan provides for the grant of the following awards to eligible employees, directors, and consultants: incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards, and other stock awards. Incentive stock options may only be granted to employees. Nonemployee directors are eligible to receive nonstatutory stock options automatically at designated intervals over their period of continuous service on the Board. In February 2014, the Board approved an amendment to the 2009 Plan authorizing an additional 3,000,000 shares available for grant. The amended 2009 Plan also provides that the number of shares reserved for issuance under the 2009 Plan will increase on January 1 of each year for a period of up to five years by 4.5% of the total number of shares of capital stock outstanding on December 31 of the preceding calendar year, which will begin on January 1, 2015 and continue through January 1, 2019.

The exercise price per share of all incentive stock options granted under the 2000 Plan and the 2009 Plan must be at least equal to the fair market value of the shares at the date of grant as determined by the Board of Directors. Options issued to recipients other than nonemployee directors generally vest over four years with a one year cliff and monthly thereafter, and have a maximum contractual term of 10 years. Options issued to members of the Board of Directors are issued with varying vesting schedules. Incentive stock options granted at 110% of the fair market value to stockholders who have greater than 10% ownership have a maximum term of five years.

The Company also has granted restricted stock units to members of the Board of Directors and certain executives. These restricted stock units represent rights to receive shares of the Company’s common stock on satisfaction of applicable vesting conditions. The fair value of restricted stock units is equal to the fair value of the Company’s common stock on the date of grant. The restricted stock units vest at a rate of 25% at the end of the first year and then pro rata monthly thereafter over the remaining vesting term of three or two years, as applicable.

Activity under the 2000 Plan and the 2009 Plan for the nine months ended September 30, 2014 is summarized as follows:

	Shares Available for Grant
Balance at December 31, 2013		2,004,464
Authorized		3,000,000
Granted		(2,721,000	)
Forfeited		400,644
Expired		6,580
Balance at September 30, 2014		2,690,688

The following table summarizes stock option activity under the Company’s equity-based plans for the nine months ended September 30, 2014:

	Number of Shares			Weighted Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)
Balance at December 31, 2013		6,281,148		$	1.74	8.55		$	53,373
Granted		2,696,000			12.67
Exercised		(1,043,854	)		1.10
Forfeited		(372,644	)		5.02
Expired		(6,580	)		0.50
Balance at September 30, 2014		7,554,070		$	5.57		8.40	$	152,467
Exercisable at September 30, 2014		1,981,686		$	1.04	7.32		$	48,960
Vested and expected to vest at September 30, 2014		7,197,880		$	5.43	8.37		$	146,231

The weighted-average grant date fair value of stock options granted in each of the three months ended September 30, 2014 and September 30, 2013 was $15.83 and $5.97 per share, respectively. The weighted-average grant date fair value of stock options granted in each of the nine months ended September 30, 2014 and September 30, 2013 was $6.99 and $3.89 per share, respectively. The total fair value of options vested for the three months ended September 30, 2014 and September 30, 2013 was $1.7 million and $0.7 million, respectively. The total fair value of options vested for the nine months ended September 30, 2014 and September 30, 2013 was $6.2 million and $3.1 million, respectively.

The total intrinsic value of options exercised for the three months ended September 30, 2014 and September 30, 2013 was $6.8 million and $41.1 million, respectively. The total intrinsic value of options exercised for the nine months ended September 30, 2014 and September 30, 2013 was $16.8 million and $48.3 million, respectively. Cash received from options exercised during the three months ended September 30, 2014 and September 30, 2013 was $0.5 million and $5.6 million, respectively. Cash received from options exercised during the nine months ended September 30, 2014 and September 30, 2013 was $1.1 million and $6.9 million, respectively. The exercise price of all options granted was equal to the fair value of the common stock on the date of grant.

As of September 30, 2014, unrecognized compensation expense, net of forfeitures, associated with nonvested options outstanding was $22.9 million and is expected to be recognized over a weighted-average period of 2.98 years.

The following table summarizes restricted stock unit activity under the Company’s equity-based plans for the nine months ended September 30, 2014:

	Number of Units			Weighted-Average Grant Date Fair Value
Nonvested at December 31, 2013		40,000		$	13.21
Granted		25,000		$	28.59
Vested		(3,500	)	$	13.21
Forfeited		(28,000	)	$	13.21
Nonvested at September 30, 2014		33,500		$	13.21

The total grant date fair value of restricted stock units granted in the nine months ended September 30, 2014 was $0.7 million. No restricted stock units were granted in the nine months ended September 30, 2013. The total grant date fair value of restricted stock units vested in the nine months ended September 30, 2014 and 2013 was de minimis and $0.1 million, respectively. As of September 30, 2014, unrecognized compensation expense, net of forfeitures, associated with the nonvested restricted stock units outstanding was $0.8 million, and is expected to be recognized over a weighted-average period of 3.74 years.

Stock Split

On March 7, 2014, the Company’s board of directors and stockholders approved and effected an amendment to the amended and restated certificate of incorporation providing for a 2-for-1 stock split of the outstanding common stock. All of the share numbers, share prices, and exercise prices have been adjusted within these financial statements, on a retroactive basis, to reflect this 2-for-1stock split.

Employee Stock Purchase Plan

The Company adopted the 2014 Employee Stock Purchase Plan (ESPP) in February 2014, which became effective on March 26, 2014. The ESPP was approved with a reserve of 1.1 million shares of common stock for future issuance under various terms provided for in the ESPP, which will automatically increase on January 1 of each year from 2015 through 2024 by the lesser of 1% of the total number of shares outstanding on December 31 of the preceding calendar year or 1,800,000 shares. We commenced our first purchase period under the ESPP on March 26, 2014 with the purchase price at the lesser of 85% of the fair market value of the common stock on the offering date and 85% of the fair market value of the common stock on the applicable purchase date.  Offering periods will be six months in duration and will end on or about May 15 and November 15 of each year, with the exception of the initial offering period which commenced on March 26, 2014 and that ends on November 14, 2014. Employees may contribute a minimum of 1% and a maximum of 15% of their earnings.

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Income Taxes

9 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 10. INCOME TAXES

The Company is subject to taxation in the United States and Canada. However, business is conducted primarily in the United States. The effective tax rate differs from the statutory rate primarily due to state taxes, non-deductible stock-based compensation, tax credits and changes in uncertain tax positions. The Company makes estimates and judgments about its future taxable income that are based on assumptions that are consistent with the Company’s plans and estimates. Should the actual amounts differ from these estimates, the amount of the valuation allowance could be materially affected.

Income taxes are computed using the asset and liability method, under which deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Changes in valuation allowances are reflected as a component of provision for income taxes.

The Company’s effective tax rate (ETR) was 75.5% and 38.3% for the three months ended September 30, 2014 and 2013, respectively. The Company’s ETR was 51.9% and 35.2% for the nine months ended September 30, 2014 and 2013, respectively. The increase is primarily due to non-deductible stock-based compensation, a discrete tax charge for the revaluation of deferred taxes, based on a regulatory state tax change and an income tax accounting method change, and non-deductible transaction costs related to our secondary offering. The remainder of the increase is primarily due to the expiration of the federal research and development tax credit in 2014, as well as a release of uncertain tax positions recognized for the three months ended March 31, 2013     

The amount of refundable income taxes increased by $29.6 million primarily due to refund claims filed by the Company in the amount of $18.8 million, $10.2 million and $2.2 million for the tax years ended December 31, 2013, 2012 and 2011, respectively, resulting from an income tax accounting method change approved by the Internal Revenue Service (IRS) in the third quarter of 2014.

  The Company has approximately $36.2 million of net operating losses related to excess tax deductions that were not recorded to deferred tax assets.  When such net operating losses are utilized to reduce the income tax payable, the Company would expect to credit equity.  For purposes of determining when the net operating losses are utilized, the Company has elected to follow the tax law ordering method.

The Company has not been subject to U.S. federal, state and local income tax examinations by tax authorities in material jurisdictions for tax years beginning prior to January 1, 2010.  However, there are outstanding Notices of Proposed Assessment disallowing employment tax credits totaling $10.5 million in connection with the IRS examination of Gevity HR, Inc. and Subsidiaries, which was acquired by TriNet on June 1, 2009.  While Appeals has denied the credits, and the Company plans to exhaust all administrative efforts to resolve this issue, it is likely that the matter will ultimately be resolved through litigation.  With regard to these employment tax credits, the Company believes it is more likely than not that the Company will prevail.  Therefore, no reserve has been recognized related to this matter.     

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Marketable Securities and Fair Value Measurements - Summary of Available-for-Sale Marketable Securities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	$ 53,000	$ 36,400
Gross Unrealized Gains	56	46
Gross Unrealized Losses	(13)	(20)
Estimated Fair Value	53,043	36,426
U.S. Treasuries
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	52,500	35,900
Gross Unrealized Gains	49	38
Gross Unrealized Losses	(13)	(20)
Estimated Fair Value	52,536	35,918
Mutual Funds
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	500	500
Gross Unrealized Gains	7	8
Estimated Fair Value	$ 507	$ 508

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Property and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2014

Property Plant And Equipment [Abstract]

Property and Equipment, Net

Property and equipment, net, consist of the following (in thousands):

	September 30,			December 31,
	2014			2013
Software	$	48,813		$	43,513
Office equipment, including data processing equipment		17,833			14,667
Leasehold improvements		7,030			6,836
Furniture, fixtures, and equipment		5,758			3,998
Projects in progress		9,942			5,106
		89,376			74,120
Accumulated depreciation		(57,023	)		(48,430	)
Property and equipment, net	$	32,353		$	25,690

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Description of Business and Significant Accounting Policies - Additional Information (Details) (USD $) In Millions, except Share data, unless otherwise specified	1 Months Ended	9 Months Ended
	Mar. 31, 2014	Sep. 30, 2014 Segment
Summary Of Significant Accounting Policy [Line Items]
Aggregate number of shares of common stock upon conversion of preferred stock	38,065,708
Number of operating segments		1
Maximum | Geographic Concentration Risk | Sales Revenue, Net
Summary Of Significant Accounting Policy [Line Items]
Percentage of revenues generated outside of the United States of America		1.00%
Initial Public Offering
Summary Of Significant Accounting Policy [Line Items]
Initial public offering shares issued and sold	15,000,000
Public offering share price	$ 16.00
Proceeds from initial public offering net of underwriting discounts, commissions and offering expenses	$ 217.6
Underwriting discounts and commissions	16.8
Offering expenses	$ 5.6
Aggregate number of shares of common stock upon conversion of preferred stock	38,065,708
Initial Public Offering | Additional Issuance
Summary Of Significant Accounting Policy [Line Items]
Initial public offering shares issued and sold	2,250,000

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Stockholders' Equity - Summary of Stock Option Activity under the Company's Equity-Based Plans (Details) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Number of Shares, Beginning Balance	6,281,148
Number of Shares, Granted	2,696,000
Number of Shares, Exercised	(1,043,854)
Number of Shares, Forfeited	(372,644)
Number of Shares, Expired	(6,580)
Number of Shares, Ending Balance	7,554,070	6,281,148
Number of Shares, Exercisable, Ending Balance	1,981,686
Number of Shares, Vested and expected to vest, Ending Balance	7,197,880
Weighted-Average Exercise Price, Beginning Balance	$ 1.74
Weighted-Average Exercise Price, Granted	$ 12.67
Weighted-Average Exercise Price, Exercised	$ 1.10
Weighted-Average Exercise Price, Forfeited	$ 5.02
Weighted-Average Exercise Price, Expired	$ 0.50
Weighted-Average Exercise Price, Ending Balance	$ 5.57	$ 1.74
Weighted-Average Exercise Price, Exercisable, Ending Balance	$ 1.04
Weighted-Average Exercise Price, Vested and expected to vest, Ending Balance	$ 5.43
Weighted-Average Remaining Contractual Term (Years)	8 years 4 months 24 days	8 years 6 months 18 days
Weighted-Average Remaining Contractual Term (Years), Exercisable	7 years 3 months 26 days
Weighted-Average Remaining Contractual Term (Years), Vested and Expected to vest	8 years 4 months 13 days
Aggregate Intrinsic Value, Beginning Balance	$ 53,373
Aggregate Intrinsic Value, Ending Balance	152,467	53,373
Aggregate Intrinsic Value, Exercisable, Ending Balance	48,960
Aggregate Intrinsic Value, Vested and expected to Vest, Ending Balance	$ 146,231

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Statement Of Income And Comprehensive Income [Abstract]
Net income (loss)	$ 725	$ (7,740)	$ 8,486	$ 7,140
Other comprehensive income (loss), net of tax
Unrealized gains (losses) on investments	(10)	45	10	(9)
Unrealized gains on interest rate cap		45		66
Foreign currency translation adjustments	(63)	19	(62)	(20)
Total other comprehensive income (loss), net of tax	(73)	109	(52)	37
Comprehensive income (loss)	$ 652	$ (7,631)	$ 8,434	$ 7,177

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Property and Equipment, Net

9 Months Ended

Sep. 30, 2014

Property Plant And Equipment [Abstract]

Property and Equipment, Net

NOTE 4. PROPERTY AND EQUIPMENT, NET

Property and equipment, net, consist of the following (in thousands):

	September 30,			December 31,
	2014			2013
Software	$	48,813		$	43,513
Office equipment, including data processing equipment		17,833			14,667
Leasehold improvements		7,030			6,836
Furniture, fixtures, and equipment		5,758			3,998
Projects in progress		9,942			5,106
		89,376			74,120
Accumulated depreciation		(57,023	)		(48,430	)
Property and equipment, net	$	32,353		$	25,690

Software and furniture, fixtures, and equipment include amounts for assets under capital leases of $1.5 million and $1.4 million at September 30, 2014 and December 31, 2013, respectively. Accumulated depreciation of these assets was $0.8 million and $0.5 million at September 30, 2014 and December 31, 2013, respectively. Amortization of assets held under capital leases is included with depreciation expense in the accompanying consolidated statements of operations.

Projects in progress consist primarily of software development costs. The Company capitalizes software development costs intended for internal use. The Company recognized depreciation expense for capitalized internally developed software of $4.0 million and $3.8 million for the nine months ended September 30, 2014 and 2013, respectively. Accumulated depreciation for these assets was $28.5 million and $25.3 million at September 30, 2014 and December 31, 2013, respectively. The Company periodically assesses the likelihood of unsuccessful completion of projects in progress, as well as monitoring events or changes in circumstances, which might suggest that impairment has occurred and recoverability should be evaluated. An impairment loss is recognized if the carrying amount of the asset is not recoverable and exceeds the future net cash flows expected to be generated by the asset. There was $0.1 million and $0.4 million losses recognized on internally developed software for the nine months ended September 30, 2014 and 2013, respectively.

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Worksite Employee-Related Assets and Liabilities - Schedule of Components of the Company's WSE-Related Assets and WSE-Related Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Worksite employee-related assets:
Restricted cash	$ 14,538	$ 15,267
Total worksite employee-related assets	697,047	772,437
Worksite employee-related liabilities:
Health benefits payable	31,538	26,264
Workers compensation payable	34,055	23,453
Total worksite employee-related liabilities	690,703	767,624
WSE
Worksite employee-related assets:
Restricted cash	39,857	19,154
Restricted investment	25,146	2,317
Payroll funds collected	323,923	490,058
Unbilled revenue, net of advance collection of $52,144 and $54,159 at September 30, 2014 and December 31, 2013, respectively	278,393	200,641
Accounts receivable, net of allowance for doubtful accounts of $229 and $865 at September 30, 2014 and December 31, 2013, respectively	6,450	10,450
Prepaid health plan expenses	3,438	7,584
Prepaid workers compensation expenses	2,543	1,414
Other payroll assets	3,744	2,384
Total worksite employee-related assets	697,047	772,437
Worksite employee-related liabilities:
Unbilled wages accrual	310,075	243,640
Payroll taxes payable	191,165	358,285
Health benefits payable	96,031	67,132
Customer prepayments	37,323	51,902
Workers compensation payable	34,055	23,453
Other payroll deductions	22,054	23,212
Total worksite employee-related liabilities	690,703	767,624
WSE | Health Plan
Worksite employee-related assets:
Refundable premiums	2,739	17,601
WSE | Workers Compensation
Worksite employee-related assets:
Refundable premiums	$ 10,814	$ 20,834

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Convertible Preferred Stock - Additional Information (Details) (USD $) In Millions, except Share data, unless otherwise specified	1 Months Ended	0 Months Ended			0 Months Ended
	Mar. 31, 2014	Jun. 07, 2005 Series G Convertible Preferred Stock	Sep. 30, 2014 Series G Convertible Preferred Stock	Dec. 31, 2013 Series G Convertible Preferred Stock	Jun. 01, 2009 Series H Convertible Preferred Stock	Sep. 30, 2014 Series H Convertible Preferred Stock	Dec. 31, 2013 Series H Convertible Preferred Stock
Temporary Equity [Line Items]
Convertible preferred stock, shares issued		5,391,441	0	5,391,441	4,124,986	0	4,124,986
Convertible preferred stock, per share		$ 11.00			$ 16.69
Aggregate cash purchase price		$ 59.3			$ 68.8
Convertible preferred stock, net of issuance costs		59.1			63.8
Issuance Costs		$ 0.2			$ 5.0
Total aggregate shares of common stock after conversions	38,065,708

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Workers Compensation (Tables)

9 Months Ended

Sep. 30, 2014

Insurance [Abstract]

Summary of Activities in Liability for Unpaid Claims and Claims Adjustment Expenses

The following summarizes the activities in liability for unpaid claims and claims adjustment expenses (in thousands):

	For the nine months ended September 30,			For the year ended December 31,
	2014			2013
Liability for unpaid claims and claims adjustment at beginning of period	$	58,610		$	53,900
Plans acquired through business combinations		–			481
Incurred related to:
Current year		44,567			26,401
Prior years		(4,450	)		(3,319	)
Total incurred		40,117			23,082
Paid related to:
Current year		(8,483	)		(8,055	)
Prior years		(7,364	)		(10,798	)
Total paid		(15,847	)		(18,853	)
Liability for unpaid claims and claims adjustment at end of period		82,880			58,610
Other premiums and collateral liabilities		18,448			10,152
Total workers compensation liabilities at end of period	$	101,328		$	68,762
Current portion included in worksite employee-related liability		34,055			23,453
Long term portion	$	67,273		$	45,309