TRUEBLUE, INC., 10-Q filed on 4/30/2018
Quarterly Report
v3.8.0.1
Document and Entity Information - shares
3 Months Ended
Apr. 01, 2018
Apr. 16, 2018
Document and Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Apr. 01, 2018  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q1  
Entity Registrant Name TBI  
Entity Central Index Key TrueBlue, Inc.  
Current Fiscal Year End Date 0000768899  
Well-Known Seasoned Issuer --12-30  
Voluntary Filer Yes  
Reporting Status No  
Filer Category Yes  
Filer Category Large Accelerated Filer  
Common Stock Shares Outstanding (in shares)   41,346,095
v3.8.0.1
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Apr. 01, 2018
Dec. 31, 2017
Current assets:    
Cash and cash equivalents $ 26,636 $ 28,780
Accounts receivable, net of allowance for doubtful accounts of $4,447 and $4,344 322,388 374,273
Prepaid expenses, deposits and other current assets 22,424 20,605
Income tax receivable 7,382 4,621
Total current assets 378,830 428,279
Property and equipment, net 57,142 60,163
Restricted cash and investments 242,766 239,231
Deferred income taxes, net 2,414 3,783
Goodwill 224,099 226,694
Intangible assets, net 99,369 104,615
Other assets, net 49,331 46,266
Total assets 1,053,951 1,109,031
Current liabilities:    
Accounts payable and other accrued expenses 51,296 55,091
Accrued wages and benefits 66,903 76,894
Current portion of workers’ compensation claims reserve 75,692 77,218
Other current liabilities 3,862 3,216
Total current liabilities 197,753 212,419
Workers’ compensation claims reserve, less current portion 194,052 197,105
Long-term debt, less current portion 69,621 116,489
Long-term deferred compensation liabilities 22,458 21,866
Other long-term liabilities 6,131 6,305
Total liabilities 490,015 554,184
Commitments and contingencies (Note 8)
Shareholders’ equity:    
Preferred stock, $0.131 par value, 20,000 shares authorized; No shares issued and outstanding 0 0
Common stock, no par value, 100,000 shares authorized; 41,334 and 41,098 shares issued and outstanding 1 1
Accumulated other comprehensive loss (9,713) (6,804)
Retained earnings 573,648 561,650
Total shareholders’ equity 563,936 554,847
Total liabilities and shareholders’ equity $ 1,053,951 $ 1,109,031
v3.8.0.1
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($)
$ in Thousands
Apr. 01, 2018
Dec. 31, 2017
Allowance for doubtful accounts $ 4,447  
Preferred stock, par value (in dollars per share) $ 0.131 $ 0.131
Preferred stock, shares authorized 20,000,000 20,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value (in dollars per share) $ 0 $ 0
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 41,334,000  
Common stock, shares outstanding 41,334,000  
v3.8.0.1
CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended
Apr. 01, 2018
Apr. 02, 2017
Revenue from services $ 554,388 $ 568,244
Cost of services 411,120 428,815
Gross profit 143,268 139,429
Selling, general and administrative expense 125,763 121,844
Depreciation and amortization 10,090 11,174
Income from operations 7,415 6,411
Interest expense (890) (1,232)
Interest and other income 3,094 1,306
Interest and other income (expense), net 2,204 74
Income before tax expense 9,619 6,485
Income tax expense 864 1,811
Net income $ 8,755 $ 4,674
Net income per common share:    
Basic (in dollars per share) $ 0.22 $ 0.11
Diluted (in dollars per share) $ 0.22 $ 0.11
Weighted average shares outstanding:    
Basic (in shares) 40,443 41,637
Diluted (in shares) 40,694 41,937
Other comprehensive income:    
Total other comprehensive income (loss), net of tax $ (1,384) $ 2,537
Comprehensive income 7,371 7,211
Foreign currency translation adjustment    
Other comprehensive income:    
Foreign currency translation adjustment (1,384) 1,800
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]    
Other comprehensive income:    
Unrealized gain on investments, net of tax $ 0 $ 737
v3.8.0.1
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
3 Months Ended
Apr. 01, 2018
Apr. 02, 2017
Cash flows from operating activities:    
Net income $ 8,755 $ 4,674
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 10,090 11,174
Provision for doubtful accounts 2,209 1,446
Stock-based compensation 3,409 3,304
Deferred income taxes 1,370 726
Other operating activities (572) 1,080
Changes in operating assets and liabilities:    
Accounts receivable 42,679 49,077
Income tax receivable (2,842) 9,565
Other assets (1,964) 3,627
Accounts payable and other accrued expenses (4,878) (15,015)
Accrued wages and benefits (9,991) (16,071)
Workers’ compensation claims reserve (4,579) (1,957)
Other liabilities 1,149 2,488
Net cash provided by operating activities 44,835 54,118
Cash flows from investing activities:    
Capital expenditures (1,911) (6,167)
Divestiture of business 8,500 0
Purchases of restricted investments (3,299) (14,975)
Maturities of restricted investments 6,417 4,423
Net cash provided by (used in) investing activities 9,707 (16,719)
Cash flows from financing activities:    
Net proceeds from stock option exercises and employee stock purchase plans 395 491
Common stock repurchases for taxes upon vesting of restricted stock (2,086) (2,400)
Net change in Revolving Credit Facility (46,301) (57,367)
Payments on debt (567) (567)
Net cash used in financing activities (48,559) (59,843)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (760) (339)
Net change in cash, cash equivalents and restricted cash 5,223 (22,783)
Cash, cash equivalents and restricted cash, beginning of period 73,831 103,222
Cash, cash equivalents and restricted cash, end of period 79,054 80,439
Supplemental Cash Flow Information [Abstract]    
Interest 827 755
Income taxes 2,342 (8,487)
Property, plant, and equipment purchased but not yet paid 581 1,161
Divestiture non-cash consideration $ 1,957 $ 0
v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Apr. 01, 2018
Accounting Policies [Abstract]  
Significant Accounting Policies
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial statement preparation
The accompanying unaudited consolidated financial statements (“financial statements”) of TrueBlue, Inc. (the “company,” “TrueBlue,” “we,” “us,” and “our”) are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures usually found in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The financial statements reflect all adjustments which, in the opinion of management, are necessary to fairly state the financial statements for the interim periods presented. We follow the same accounting policies for preparing both quarterly and annual financial statements.
These financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The results of operations for the thirteen weeks ended April 1, 2018, are not necessarily indicative of the results expected for the full fiscal year or for any other fiscal period.
Recently adopted accounting standards
In May 2017, the FASB issued guidance to provide clarity and reduce diversity in practice when accounting for a change to the terms or conditions of share-based payment awards. The objective is to reduce the scope of transactions that would require modification accounting. Disclosure requirements remain unchanged. This amended guidance is effective for fiscal years and interim periods beginning after December 15, 2017 (Q1 2018 for TrueBlue), with early adoption permitted. We adopted this guidance for our fiscal first quarter of 2018. The adoption of the new standard did not have a material impact on our financial statements.
In November 2016, the FASB issued guidance to amend the presentation of restricted cash and restricted cash equivalents on the statement of cash flows. The standard requires restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This amended guidance is effective for fiscal years and interim periods beginning after December 15, 2017 (Q1 2018 for TrueBlue). We adopted this guidance for our fiscal first quarter of 2018 using the retrospective transition method. Accordingly, the change in restricted cash and cash equivalents is no longer segregated in our statement of cash flows and the $14.0 million previously presented in the investing section for the thirteen weeks ended April 2, 2017 is now included when reconciling the beginning-of-period and end-of-period cash, cash equivalents and restricted cash shown on the statement of cash flows.
In October 2016, the FASB issued guidance on the accounting for income tax effects of intercompany sales or transfers of assets other than inventory. The guidance requires entities to recognize the income tax impact of an intra-entity sale or transfer of an asset other than inventory when the sale or transfer occurs, rather than when the asset has been sold to an outside party. This guidance is effective for fiscal years and interim periods beginning after December 15, 2017 (Q1 2018 for TrueBlue). The guidance requires a modified retrospective application with a cumulative catch-up adjustment to opening retained earnings. We adopted this guidance for our fiscal first quarter of 2018. The adoption of the new standard did not have a material impact on our financial statements.
In August 2016, the FASB issued guidance relating to how certain cash receipts and cash payments should be presented and classified in the statement of cash flows. The update is intended to reduce the existing diversity in practice. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 (Q1 2018 for TrueBlue). We adopted this guidance for our fiscal first quarter of 2018. The adoption of the new standard did not have an impact on our financial statements.
In January 2016, the FASB issued guidance on the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The guidance is effective for annual and interim periods beginning after December 15, 2017 (Q1 2018 for TrueBlue). Early adoption of the amendments in the guidance was not permitted, with limited exceptions. The guidance requires a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. We adopted this guidance for our fiscal first quarter of 2018. The adoption of the new standard did not have a material impact on our financial statements.
In May 2014, the FASB issued guidance outlining a single comprehensive model for accounting for revenue arising from contracts with clients, which supersedes the current revenue recognition guidance. This guidance requires an entity to recognize revenue when it transfers promised goods or services to clients in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted this new guidance as of January 1, 2018 using the modified retrospective transition method. The adoption of this new guidance did not have a material impact on our consolidated financial statements as of the adoption date, nor for the thirteen weeks ended April 1, 2018, except for expanded disclosures. Refer to Note 2: Revenue Recognition for additional accounting policy and transition disclosures.
Recently issued accounting pronouncements not yet adopted
In February 2016, the FASB issued guidance on lease accounting. The new guidance will continue to classify leases as either finance or operating, but will result in the lessee recognizing a right-of-use asset and a corresponding lease liability on its balance sheet, with classification affecting the pattern of expense recognition in the statement of income. This guidance is effective for annual and interim periods beginning after December 15, 2018 (Q1 2019 for TrueBlue), and early adoption is permitted. A modified retrospective approach is required for all leases existing or entered into after the beginning of the earliest comparative period in the consolidated financial statements. We plan to adopt the guidance on the effective date. We are currently evaluating the impact of this guidance on our financial statements and expect that, upon adoption, a majority of our operating lease commitments will be recognized on our Consolidated Balance Sheets as operating lease liabilities and right-of-use assets. We do not expect the adoption to have a material impact on the pattern of expense recognition in our Consolidated Statements of Operations and Comprehensive Income.
Other accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption.
Subsequent events
We evaluated events and transactions occurring after the balance sheet date through the date the financial statements were issued, and identified no other events that were subject to recognition or disclosure.
v3.8.0.1
REVENUE RECOGNITION
3 Months Ended
Apr. 01, 2018
Revenue Recognition [Abstract]  
REVENUE RECOGNITION
REVENUE RECOGNITION
Adoption of new revenue recognition guidance
On January 1, 2018, we adopted new revenue recognition guidance using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue recognition guidance, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting guidance. The adoption of this new guidance did not have a material impact on our consolidated financial statements as of the adoption date, nor for the thirteen weeks ended April 1, 2018, except for expanded disclosures.
Revenue recognition
We account for a contract when both parties to the contract have approved the contract, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. Revenues are recognized over time, using an output measure, as the control of the promised services is transferred to the client in an amount that reflects the consideration we expect to be entitled to in exchange for those services. The majority of our contracts are short-term in nature as they are filling the temporary staffing needs of our clients, or include termination clauses that allows either party to cancel within a short termination period, without cause. Revenue includes billable travel and other reimbursable costs and are reported net of sales, use, or other transaction taxes collected from clients and remitted to taxing authorities. Payment terms vary by client and the services offered. We consider payment terms that exceed one year to be extended payment terms. Substantially all of our contracts include payment terms of 90 days or less and we do not extend payment terms beyond one year.
We primarily record revenue on a gross basis as a principal versus on a net basis as an agent in the Consolidated Statements of Operations and Comprehensive Income. We have determined that gross reporting as a principal is the appropriate treatment based upon the following key factors:
We maintain the direct contractual relationship with the client and are responsible for fulfilling the service promised to the client.
We maintain control over our workers while the services to the client are being performed.
We establish our worker’s billing rate.
Contingent labor
We recognize revenue for our contingent staffing services over time as services are performed in an amount that reflects the consideration we expect to be entitled to in exchange for our services, which is generally calculated as hours worked multiplied by the agreed-upon hourly bill rate. The client simultaneously receives and consumes the benefits of the services as they are provided. We do not incur costs to obtain our contingent staffing contracts. Costs are incurred to fulfill some contingent staffing contracts, however these costs are de minimis and expensed as incurred.
Human resource outsourcing
We primarily recognize revenue for our outsourced recruitment of permanent employees over time in an amount that reflects the consideration we expect to be entitled to in exchange for our services. The client simultaneously receives and consumes the benefits of the services as they are provided. We do not incur costs to obtain our outsourced recruitment of permanent employees’ contracts. The costs to fulfill these contracts are de minimis and expensed as incurred.
Unsatisfied performance obligations
As a practical expedient, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an expected original duration of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.
Disaggregated revenue
The following table presents our revenue disaggregated by major source:
 
Thirteen weeks ended
 
April 1, 2018
(in thousands)
PeopleReady
PeopleManagement
PeopleScout
Consolidated
Revenue from services:
 
 
 
 
Contingent staffing
$
316,835

$
183,892

$

$
500,727

Human resource outsourcing


53,661

53,661

Total company
$
316,835

$
183,892

$
53,661

$
554,388

v3.8.0.1
DIVESTITURE
3 Months Ended
Apr. 01, 2018
Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract]  
DIVESTITURE
DIVESTITURE
In mid-March 2018, the company entered into an asset purchase agreement to sell substantially all the assets and certain liabilities of its PlaneTechs service line to Launch Technical Workforce Solutions (“Launch”) for a purchase price of $11.4 million, of which $8.5 million was paid in cash, and $1.6 million in a note due within six months following the closing date, which is included in prepaid expenses, deposits and other current assets on the Consolidated Balance Sheet. The remaining balance consists of the preliminary working capital adjustment to be paid in cash during the fiscal second quarter of 2018, which is included in prepaid expenses, deposit and other current assets on the Consolidated Balance Sheet. The company recognized a preliminary pre-tax gain on the divestiture of $1.4 million, which is included in interest and other income on the Consolidated Statements of Operations and Comprehensive Income for the thirteen weeks ended April 1, 2018. Fiscal first quarter revenue through the closing date of the divestiture for the PlaneTechs service line of $8.0 million was reported in the PeopleManagement reportable segment.
The divestiture of PlaneTechs did not represent a strategic shift with a major effect on the company’s operations and financial results and, therefore was not reported as discontinued operations in the Consolidated Balance Sheets or Consolidated Statements of Operations and Comprehensive Income for the periods presented.
The company has agreed to provide certain transition services to Launch for a period not to exceed seven months, which includes various back office services to support the PlaneTechs branch offices until personnel and systems are transferred to Launch.
v3.8.0.1
FAIR VALUE MEASUREMENT
3 Months Ended
Apr. 01, 2018
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT
Our assets and liabilities measured at fair value on a recurring basis consisted of the following:
 
April 1, 2018
(in thousands)
Total fair value
Quoted prices in active markets for identical assets (level 1)
Significant other observable inputs (level 2)
Significant unobservable inputs (level 3)
Financial assets:
 
 
 
 
Cash and cash equivalents
$
26,636

$
26,636

$

$

Restricted cash and cash equivalents
52,418

52,418



Cash, cash equivalents and restricted cash (1)
$
79,054

$
79,054

$

$

 
 
 
 
 
Deferred compensation mutual funds classified as available-for-sale
$
24,093

$
24,093

$

$

 
 
 
 
 
Municipal debt securities
$
78,643

$

$
78,643

$

Corporate debt securities
81,182


81,182


Agency mortgage-backed securities
3,630


3,630


U.S. government and agency securities
991


991


Restricted investments classified as held-to-maturity
$
164,446

$

$
164,446

$

 
December 31, 2017
(in thousands)
Total fair value
Quoted prices in active markets for identical assets (level 1)
Significant other observable inputs (level 2)
Significant unobservable inputs (level 3)
Financial assets:
 
 
 
 
Cash and cash equivalents
$
28,780

$
28,780

$

$

Restricted cash and cash equivalents
45,051

45,051



Cash, cash equivalents and restricted cash (1)
$
73,831

$
73,831

$

$

 
 
 
 
 
Deferred compensation mutual funds classified as available-for-sale
$
22,428

$
22,428

$

$

 
 
 
 
 
Municipal debt securities
$
83,366

$

$
83,366

$

Corporate debt securities
83,791


83,791


Agency mortgage-backed securities
4,062


4,062


U.S. government and agency securities
1,019


1,019


Restricted investments classified as held-to-maturity
$
172,238

$

$
172,238

$

(1)
Cash, cash equivalents and restricted cash consist of money market funds, deposits, and investments with original maturities of three months or less.
There were no material transfers between Level 1, Level 2, and Level 3 of the fair value hierarchy during the thirteen weeks ended April 1, 2018 nor April 2, 2017.
v3.8.0.1
RESTRICTED CASH AND INVESTMENTS
3 Months Ended
Apr. 01, 2018
Restricted Cash and Investments [Abstract]  
RESTRICTED CASH AND INVESTMENTS
RESTRICTED CASH AND INVESTMENTS
Restricted cash and investments consist principally of collateral that has been provided or pledged to insurance carriers for workers’ compensation and state workers’ compensation programs. Our insurance carriers and certain state workers’ compensation programs require us to collateralize a portion of our workers’ compensation obligation. The collateral typically takes the form of cash and cash equivalents and highly rated investment grade securities, primarily in debt and asset-backed securities. The majority of our collateral obligations are held in a trust at the Bank of New York Mellon (“Trust”).
The following is a summary of the carrying value of our restricted cash and investments:
(in thousands)
April 1,
2018
December 31,
2017
Cash collateral held by insurance carriers
$
23,035

$
22,926

Cash and cash equivalents held in Trust
28,981

16,113

Investments held in Trust
166,255

171,752

Deferred compensation mutual funds
24,093

22,428

Other restricted cash and cash equivalents
402

6,012

Total restricted cash and investments
$
242,766

$
239,231


The amortized cost and estimated fair value of our held-to-maturity investments held in trust, aggregated by investment category as of April 1, 2018 and December 31, 2017, were as follows:
 
April 1, 2018
(in thousands)
Amortized cost
Gross unrealized gain
Gross unrealized loss
Fair value
Municipal debt securities
$
79,291

$
262

$
(910
)
$
78,643

Corporate debt securities
82,302

20

(1,140
)
81,182

Agency mortgage-backed securities
3,663

12

(45
)
3,630

U.S. government and agency securities
999


(8
)
991

Total held-to-maturity investments
$
166,255

$
294

$
(2,103
)
$
164,446

 
December 31, 2017
(in thousands)
Amortized cost
Gross unrealized gain
Gross unrealized loss
Fair value
Municipal debt securities
$
82,770

$
974

$
(378
)
$
83,366

Corporate debt securities
83,916

309

(434
)
83,791

Agency mortgage-backed securities
4,066

22

(26
)
4,062

U.S. government and agency securities
1,000

19


1,019

Total held-to-maturity investments
$
171,752

$
1,324

$
(838
)
$
172,238


The estimated fair value and gross unrealized losses of all investments classified as held-to-maturity, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of April 1, 2018 and December 31, 2017, were as follows:
 
April 1, 2018
 
Less than 12 months
 
12 months or more
 
Total
(in thousands)
Estimated fair value
Unrealized losses
 
Estimated fair value
Unrealized losses
 
Estimated fair value
Unrealized losses
Municipal debt securities
$
42,461

$
(452
)
 
$
9,369

$
(458
)
 
$
51,830

$
(910
)
Corporate debt securities
66,664

(927
)
 
9,982

(213
)
 
76,646

(1,140
)
Agency mortgage-backed securities
1,216

(22
)
 
802

(23
)
 
2,018

(45
)
U.S. government and agency securities
991

(8
)
 


 
991

(8
)
Total held-to-maturity investments
$
111,332

$
(1,409
)
 
$
20,153

$
(694
)
 
$
131,485

$
(2,103
)
 
December 31, 2017
 
Less than 12 months
 
12 months or more
 
Total
(in thousands)
Estimated fair value
Unrealized losses
 
Estimated fair value
Unrealized losses
 
Estimated fair value
Unrealized losses
Municipal debt securities
$
23,078

$
(124
)
 
$
9,631

$
(254
)
 
$
32,709

$
(378
)
Corporate debt securities
48,952

(311
)
 
10,081

(123
)
 
59,033

(434
)
Agency mortgage-backed securities
1,362

(10
)
 
888

(16
)
 
2,250

(26
)
Total held-to-maturity investments
$
73,392

$
(445
)

$
20,600

$
(393
)

$
93,992

$
(838
)

The total number of held-to-maturity securities that had unrealized losses as of April 1, 2018 and December 31, 2017 were 112 and 83, respectively. The unrealized losses were the result of interest rate increases. Since the decline in estimated fair value is attributable to changes in interest rates and not credit quality, and the company has the intent and ability to hold these debt securities until recovery of amortized cost or maturity, the company does not consider these investments other than temporarily impaired.
The amortized cost and fair value by contractual maturity of our held-to-maturity investments are as follows:
 
April 1, 2018
(in thousands)
Amortized cost
Fair value
Due in one year or less
$
17,960

$
17,892

Due after one year through five years
86,743

85,910

Due after five years through ten years
61,552

60,644

Total held-to-maturity investments
$
166,255

$
164,446


Actual maturities may differ from contractual maturities because the issuers of certain debt securities have the right to call or prepay their obligations without penalty. We have no significant concentrations of counterparties in our held-to-maturity investment portfolio.
v3.8.0.1
GOODWILL
3 Months Ended
Apr. 01, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill
GOODWILL
The following table reflects changes in the carrying amount of goodwill during the period by reportable segments:
(in thousands)
PeopleReady
PeopleManagement
PeopleScout
Total company
Balance at December 31, 2017
 
 
 
 
Goodwill before impairment
$
106,304

$
100,146

$
132,323

$
338,773

Accumulated impairment loss
(46,210
)
(50,700
)
(15,169
)
(112,079
)
Goodwill, net
60,094

49,446

117,154

226,694

 
 
 
 
 
Divested goodwill before impairment (1)

(19,054
)

(19,054
)
Divested accumulated impairment loss (1)

17,000


17,000

Foreign currency translation


(541
)
(541
)
 
 
 
 
 
Balance at April 1, 2018
 
 
 
 
Goodwill before impairment
106,304

81,092

131,782

319,178

Accumulated impairment loss
(46,210
)
(33,700
)
(15,169
)
(95,079
)
Goodwill, net
$
60,094

$
47,392

$
116,613

$
224,099

(1)
In mid-March 2018, the company entered into an asset purchase agreement for the sale of its PlaneTechs service line to Launch Technical Workforce Solutions. As a result of this divestiture, we eliminated the remaining goodwill balance of the PlaneTechs service line, which was a part of our PeopleManagement reportable segment. For additional information, see Note 3: Divestiture.
v3.8.0.1
WORKERS' COMPENSATION INSURANCE AND RESERVES
3 Months Ended
Apr. 01, 2018
Workers' Compensation Insurance and Reserves [Abstract]  
WORKERS' COMPENSATION INSURANCE AND RESERVES
WORKERS’ COMPENSATION INSURANCE AND RESERVES
We provide workers’ compensation insurance for our temporary and permanent employees. The majority of our current workers’ compensation insurance policies cover claims for a particular event above a $2.0 million deductible limit, on a “per occurrence” basis. This results in our being substantially self-insured.
Our workers’ compensation reserve for claims below the deductible limit is discounted to its estimated net present value using discount rates based on average returns of “risk-free” U.S. Treasury instruments available during the year in which the liability was incurred. The weighted average discount rate was 1.9% and 1.8% at April 1, 2018 and December 31, 2017, respectively. Payments made against self-insured claims are made over a weighted average period of approximately five years as of April 1, 2018.
The table below presents a reconciliation of the undiscounted workers’ compensation reserve to the discounted workers’ compensation reserve for the periods presented as follows:
(in thousands)
April 1,
2018
December 31,
2017
Undiscounted workers’ compensation reserve
$
288,942

$
293,600

Less discount on workers’ compensation reserve
19,198

19,277

Workers’ compensation reserve, net of discount
269,744

274,323

Less current portion
75,692

77,218

Long-term portion
$
194,052

$
197,105


Payments made against self-insured claims were $17.2 million and $15.9 million for the thirteen weeks ended April 1, 2018 and April 2, 2017, respectively.
Our workers’ compensation reserve includes estimated expenses related to claims above our self-insured limits (“excess claims”), and we record a corresponding receivable for the insurance coverage on excess claims based on the contractual policy agreements we have with insurance carriers. We discount this reserve and corresponding receivable to its estimated net present value using the discount rates based on average returns of “risk-free” U.S. Treasury instruments available during the year in which the liability was incurred. At April 1, 2018 and December 31, 2017, the weighted average rate was 2.5%. The claim payments are made and the corresponding reimbursements from our insurance carriers are received over an estimated weighted average period of approximately 15 years. The discounted workers’ compensation reserve for excess claims was $48.5 million and $48.8 million as of April 1, 2018 and December 31, 2017, respectively. The discounted receivables from insurance companies, net of valuation allowance, were $44.6 million and $45.0 million as of April 1, 2018 and December 31, 2017, respectively, and are included in other assets, net on the accompanying Consolidated Balance Sheets.
Workers’ compensation expense of $16.6 million and $19.8 million was recorded in cost of services for the thirteen weeks ended April 1, 2018 and April 2, 2017, respectively.
v3.8.0.1
COMMITMENTS AND CONTINGENCIES
3 Months Ended
Apr. 01, 2018
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES
Workers’ compensation commitments
We have provided our insurance carriers and certain states with commitments in the form and amounts listed below:
(in thousands)
April 1,
2018
December 31,
2017
Cash collateral held by workers’ compensation insurance carriers
$
22,255

$
22,148

Cash and cash equivalents held in Trust
28,981

16,113

Investments held in Trust
166,255

171,752

Letters of credit (1)
7,748

7,748

Surety bonds (2)
22,014

19,829

Total collateral commitments
$
247,253

$
237,590


(1)
We have agreements with certain financial institutions to issue letters of credit as collateral.
(2)
Our surety bonds are issued by independent insurance companies on our behalf and bear annual fees based on a percentage of the bond, which are determined by each independent surety carrier. These fees do not exceed 2.0% of the bond amount, subject to a minimum charge. The terms of these bonds are subject to review and renewal every one to four years and most bonds can be canceled by the sureties with as little as 60 days’ notice.
Legal contingencies and developments
We are involved in various proceedings arising in the normal course of conducting business. We believe the liabilities included in our financial statements reflect the probable loss that can be reasonably estimated. The resolution of those proceedings is not expected to have a material effect on our results of operations or financial condition.
v3.8.0.1
INCOME TAXES
3 Months Ended
Apr. 01, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
INCOME TAXES
Our income tax provision or benefit for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes we make a cumulative adjustment. Our quarterly tax provision and quarterly estimate of our annual effective tax rate are subject to variation due to several factors, including variability in accurately predicting our pre-tax and taxable income and loss by jurisdiction, tax credits, government audit developments, changes in laws, regulations and administrative practices, and relative changes in expenses or losses for which tax benefits are not recognized. Additionally, our effective tax rate can be more or less volatile based on the amount of pre-tax income. For example, the impact of discrete items, tax credits, and non-deductible expenses on our effective tax rate is greater when our pre-tax income is lower. Except as required under U.S. tax law, we do not provide for U.S. taxes on undistributed earnings of our foreign subsidiaries since we consider those earnings to be permanently invested outside of the U.S.
Our effective tax rate for the thirteen weeks ended April 1, 2018 was 9.0%. The difference between the statutory federal income tax rate of 21.0% and our effective income tax rate results primarily from the federal Work Opportunity Tax Credit. This tax credit is designed to encourage employers to hire workers from certain targeted groups with higher than average unemployment rates. Other differences between the statutory federal income tax rate of 21.0% and our effective tax rate result from state and foreign income taxes, certain non-deductible expenses, tax exempt interest, and tax effects of share based compensation.

On December 22, 2017, Staff Accounting Bulletin No. 118 was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act. For the thirteen weeks ended April 1, 2018, we have not identified any needed adjustments to our transition tax and revaluation of net deferred tax assets recorded at December 31, 2017. Any subsequent adjustment to these amounts will be recorded to current tax expense in the fiscal 2018 quarter in which the analysis is complete.
v3.8.0.1
NET INCOME (LOSS) PER SHARE
3 Months Ended
Apr. 01, 2018
Earnings Per Share [Abstract]  
NET INCOME (LOSS) PER SHARE
NET INCOME PER SHARE
Diluted common shares were calculated as follows:
 
Thirteen weeks ended
(in thousands, except per share data)
April 1,
2018
April 2,
2017
Net income
$
8,755

$
4,674

 
 
 
Weighted average number of common shares used in basic net income per common share
40,443

41,637

Dilutive effect of non-vested restricted stock
251

300

Weighted average number of common shares used in diluted net income per common share
40,694

41,937

Net income per common share:
 
 
Basic
$
0.22

$
0.11

Diluted
$
0.22

$
0.11

 
 
 
Anti-dilutive shares
548

159

v3.8.0.1
ACCUMULATED OTHER COMPREHENSIVE LOSS
3 Months Ended
Apr. 01, 2018
Equity [Abstract]  
ACCUMULATED OTHER COMPREHENSIVE LOSS
ACCUMULATED OTHER COMPREHENSIVE LOSS
Changes in the balance of each component of accumulated other comprehensive loss during the reporting periods were as follows:
 
Thirteen weeks ended
 
April 1, 2018
April 2, 2017
(in thousands)
Foreign currency translation adjustment
Unrealized gain (loss) on investments, net of tax (1)
Total other comprehensive (loss), net of tax
 
Foreign currency translation adjustment
Unrealized gain on investments, net of tax (1)
Total other comprehensive income (loss), net of tax
Balance at beginning of period
$
(8,329
)
$
1,525

$
(6,804
)
 
$
(11,684
)
$
251

$
(11,433
)
Current period other comprehensive income
(1,384
)

(1,384
)
 
1,800

737

2,537

Change in accounting standard cumulative-effect adjustment (2)

(1,525
)
(1,525
)
 



Balance at end of period
$
(9,713
)
$

$
(9,713
)
 
$
(9,884
)
$
988

$
(8,896
)

(1)
Consisted of deferred compensation plan accounts, comprised of mutual funds classified as available-for-sale securities, prior to our adoption of the new accounting standard for equity investments in the fiscal first quarter of 2018. The tax impact on the unrealized gain on available-for-sale securities was de minimis for the thirteen weeks ended April 2, 2017.
(2)
As a result of our adoption of the new accounting standard for equity investments, $1.5 million in unrealized gains on available-for-sale equity securities were reclassified from accumulated other comprehensive loss to retained earnings at April 1, 2018. There were no material reclassifications out of accumulated other comprehensive loss during the thirteen weeks ended April 2, 2017. For additional information, see Note 1: Summary of Significant Accounting Policies.
v3.8.0.1
SEGMENT INFORMATION
3 Months Ended
Apr. 01, 2018
Segment Reporting [Abstract]  
SEGMENT INFORMATION
SEGMENT INFORMATION
Our operating segments are based on the organizational structure for which financial results are regularly reviewed by our chief operating decision-maker, our Chief Executive Officer, to determine resource allocation and assess performance. Our operating segments, also referred to as service lines, and our reportable segments are described below:
Our PeopleReady reportable segment provides blue-collar, contingent staffing through the PeopleReady service line. PeopleReady provides on-demand and skilled labor in a broad range of industries that include construction, manufacturing and logistics, warehousing and distribution, waste and recycling, hospitality, general labor and others.
Our PeopleManagement reportable segment provides contingent labor and outsourced industrial workforce solutions, primarily on-premise at the client’s facility, through the following operating segments, which we aggregated into one reportable segment in accordance with U.S. GAAP:
Staff Management | SMX: Exclusive recruitment and on-premise management of a facility’s contingent industrial workforce;
SIMOS Insourcing Solutions: On-premise management and recruitment of warehouse/distribution operations; and
Centerline Drivers: Recruitment and management of temporary and dedicated drivers to the transportation and distribution industries.
Effective March 12, 2018, we divested the PlaneTechs service line within our PeopleManagement reportable segment to Launch Technical Workforce Solutions. For additional information, see Note 3: Divestiture.
Our PeopleScout reportable segment provides high-volume, permanent employee recruitment process outsourcing, and management of outsourced labor service providers through the following operating segments, which we aggregated into one reportable segment in accordance with U.S. GAAP:
PeopleScout: Outsourced recruitment of permanent employees on behalf of clients; and
PeopleScout MSP: Management of multiple third party staffing vendors on behalf of clients.
We evaluate performance based on segment revenue and segment profit. Inter-segment revenue is minimal. Commencing in the fiscal first quarter of 2018, we revised our internal segment performance measure to be segment profit, rather than the previously reported segment earnings before interest, taxes, depreciation and amortization (segment EBITDA). Segment profit includes revenue, related cost of services, and ongoing operating expenses directly attributable to the reportable segment. Segment profit excludes goodwill and intangible impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest, other income and expense, income taxes, and costs not considered to be ongoing costs of the segment. The prior year amounts have been recast to reflect this change for consistency purposes.
The following table presents a reconciliation of segment revenue from services to total company revenue:
 
Thirteen weeks ended
(in thousands)
April 1,
2018
April 2,
2017
Revenue from services:
 
 
PeopleReady
$
316,835

$
332,624

PeopleManagement
183,892

191,686

PeopleScout
53,661

43,934

Total company
$
554,388

$
568,244


The following table presents a reconciliation of Segment profit to income before tax expense:
 
Thirteen weeks ended
(in thousands)
April 1,
2018
April 2,
2017
Segment profit:
 
 
PeopleReady
$
9,525

$
9,994

PeopleManagement
5,649

5,533

PeopleScout
11,905

8,665

 
27,079

24,192

Corporate unallocated
(7,664
)
(6,335
)
Work Opportunity Tax Credit processing fees
(195
)
(272
)
Cloud-based software implementation costs
(1,715
)

Depreciation and amortization
(10,090
)
(11,174
)
Income from operations
7,415

6,411

Interest and other income (expense), net
2,204

74

Income before tax expense
$
9,619

$
6,485


Asset information by reportable segment is not presented since we do not manage our segments on a balance sheet basis.
v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
3 Months Ended
Apr. 01, 2018
Accounting Policies [Abstract]  
Basis of presentation
Financial statement preparation
The accompanying unaudited consolidated financial statements (“financial statements”) of TrueBlue, Inc. (the “company,” “TrueBlue,” “we,” “us,” and “our”) are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures usually found in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The financial statements reflect all adjustments which, in the opinion of management, are necessary to fairly state the financial statements for the interim periods presented. We follow the same accounting policies for preparing both quarterly and annual financial statements.
These financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The results of operations for the thirteen weeks ended April 1, 2018, are not necessarily indicative of the results expected for the full fiscal year or for any other fiscal period.
New accounting pronouncements and changes in accounting principles
Recently adopted accounting standards
In May 2017, the FASB issued guidance to provide clarity and reduce diversity in practice when accounting for a change to the terms or conditions of share-based payment awards. The objective is to reduce the scope of transactions that would require modification accounting. Disclosure requirements remain unchanged. This amended guidance is effective for fiscal years and interim periods beginning after December 15, 2017 (Q1 2018 for TrueBlue), with early adoption permitted. We adopted this guidance for our fiscal first quarter of 2018. The adoption of the new standard did not have a material impact on our financial statements.
In November 2016, the FASB issued guidance to amend the presentation of restricted cash and restricted cash equivalents on the statement of cash flows. The standard requires restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This amended guidance is effective for fiscal years and interim periods beginning after December 15, 2017 (Q1 2018 for TrueBlue). We adopted this guidance for our fiscal first quarter of 2018 using the retrospective transition method. Accordingly, the change in restricted cash and cash equivalents is no longer segregated in our statement of cash flows and the $14.0 million previously presented in the investing section for the thirteen weeks ended April 2, 2017 is now included when reconciling the beginning-of-period and end-of-period cash, cash equivalents and restricted cash shown on the statement of cash flows.
In October 2016, the FASB issued guidance on the accounting for income tax effects of intercompany sales or transfers of assets other than inventory. The guidance requires entities to recognize the income tax impact of an intra-entity sale or transfer of an asset other than inventory when the sale or transfer occurs, rather than when the asset has been sold to an outside party. This guidance is effective for fiscal years and interim periods beginning after December 15, 2017 (Q1 2018 for TrueBlue). The guidance requires a modified retrospective application with a cumulative catch-up adjustment to opening retained earnings. We adopted this guidance for our fiscal first quarter of 2018. The adoption of the new standard did not have a material impact on our financial statements.
In August 2016, the FASB issued guidance relating to how certain cash receipts and cash payments should be presented and classified in the statement of cash flows. The update is intended to reduce the existing diversity in practice. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 (Q1 2018 for TrueBlue). We adopted this guidance for our fiscal first quarter of 2018. The adoption of the new standard did not have an impact on our financial statements.
In January 2016, the FASB issued guidance on the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The guidance is effective for annual and interim periods beginning after December 15, 2017 (Q1 2018 for TrueBlue). Early adoption of the amendments in the guidance was not permitted, with limited exceptions. The guidance requires a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. We adopted this guidance for our fiscal first quarter of 2018. The adoption of the new standard did not have a material impact on our financial statements.
In May 2014, the FASB issued guidance outlining a single comprehensive model for accounting for revenue arising from contracts with clients, which supersedes the current revenue recognition guidance. This guidance requires an entity to recognize revenue when it transfers promised goods or services to clients in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted this new guidance as of January 1, 2018 using the modified retrospective transition method. The adoption of this new guidance did not have a material impact on our consolidated financial statements as of the adoption date, nor for the thirteen weeks ended April 1, 2018, except for expanded disclosures. Refer to Note 2: Revenue Recognition for additional accounting policy and transition disclosures.
Recently issued accounting pronouncements not yet adopted
In February 2016, the FASB issued guidance on lease accounting. The new guidance will continue to classify leases as either finance or operating, but will result in the lessee recognizing a right-of-use asset and a corresponding lease liability on its balance sheet, with classification affecting the pattern of expense recognition in the statement of income. This guidance is effective for annual and interim periods beginning after December 15, 2018 (Q1 2019 for TrueBlue), and early adoption is permitted. A modified retrospective approach is required for all leases existing or entered into after the beginning of the earliest comparative period in the consolidated financial statements. We plan to adopt the guidance on the effective date. We are currently evaluating the impact of this guidance on our financial statements and expect that, upon adoption, a majority of our operating lease commitments will be recognized on our Consolidated Balance Sheets as operating lease liabilities and right-of-use assets. We do not expect the adoption to have a material impact on the pattern of expense recognition in our Consolidated Statements of Operations and Comprehensive Income.
Other accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption.
Subsequent events
Subsequent events
We evaluated events and transactions occurring after the balance sheet date through the date the financial statements were issued, and identified no other events that were subject to recognition or disclosure.
Revenue recognition
Revenue recognition
We account for a contract when both parties to the contract have approved the contract, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. Revenues are recognized over time, using an output measure, as the control of the promised services is transferred to the client in an amount that reflects the consideration we expect to be entitled to in exchange for those services. The majority of our contracts are short-term in nature as they are filling the temporary staffing needs of our clients, or include termination clauses that allows either party to cancel within a short termination period, without cause. Revenue includes billable travel and other reimbursable costs and are reported net of sales, use, or other transaction taxes collected from clients and remitted to taxing authorities. Payment terms vary by client and the services offered. We consider payment terms that exceed one year to be extended payment terms. Substantially all of our contracts include payment terms of 90 days or less and we do not extend payment terms beyond one year.
We primarily record revenue on a gross basis as a principal versus on a net basis as an agent in the Consolidated Statements of Operations and Comprehensive Income. We have determined that gross reporting as a principal is the appropriate treatment based upon the following key factors:
We maintain the direct contractual relationship with the client and are responsible for fulfilling the service promised to the client.
We maintain control over our workers while the services to the client are being performed.
We establish our worker’s billing rate.
Contingent labor
We recognize revenue for our contingent staffing services over time as services are performed in an amount that reflects the consideration we expect to be entitled to in exchange for our services, which is generally calculated as hours worked multiplied by the agreed-upon hourly bill rate. The client simultaneously receives and consumes the benefits of the services as they are provided. We do not incur costs to obtain our contingent staffing contracts. Costs are incurred to fulfill some contingent staffing contracts, however these costs are de minimis and expensed as incurred.
Human resource outsourcing
We primarily recognize revenue for our outsourced recruitment of permanent employees over time in an amount that reflects the consideration we expect to be entitled to in exchange for our services. The client simultaneously receives and consumes the benefits of the services as they are provided. We do not incur costs to obtain our outsourced recruitment of permanent employees’ contracts. The costs to fulfill these contracts are de minimis and expensed as incurred.
Unsatisfied performance obligations
As a practical expedient, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an expected original duration of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.
v3.8.0.1
REVENUE RECOGNITION Revenue Recognition (Policies)
3 Months Ended
Apr. 01, 2018
Revenue Recognition [Abstract]  
Revenue recognition
Revenue recognition
We account for a contract when both parties to the contract have approved the contract, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. Revenues are recognized over time, using an output measure, as the control of the promised services is transferred to the client in an amount that reflects the consideration we expect to be entitled to in exchange for those services. The majority of our contracts are short-term in nature as they are filling the temporary staffing needs of our clients, or include termination clauses that allows either party to cancel within a short termination period, without cause. Revenue includes billable travel and other reimbursable costs and are reported net of sales, use, or other transaction taxes collected from clients and remitted to taxing authorities. Payment terms vary by client and the services offered. We consider payment terms that exceed one year to be extended payment terms. Substantially all of our contracts include payment terms of 90 days or less and we do not extend payment terms beyond one year.
We primarily record revenue on a gross basis as a principal versus on a net basis as an agent in the Consolidated Statements of Operations and Comprehensive Income. We have determined that gross reporting as a principal is the appropriate treatment based upon the following key factors:
We maintain the direct contractual relationship with the client and are responsible for fulfilling the service promised to the client.
We maintain control over our workers while the services to the client are being performed.
We establish our worker’s billing rate.
Contingent labor
We recognize revenue for our contingent staffing services over time as services are performed in an amount that reflects the consideration we expect to be entitled to in exchange for our services, which is generally calculated as hours worked multiplied by the agreed-upon hourly bill rate. The client simultaneously receives and consumes the benefits of the services as they are provided. We do not incur costs to obtain our contingent staffing contracts. Costs are incurred to fulfill some contingent staffing contracts, however these costs are de minimis and expensed as incurred.
Human resource outsourcing
We primarily recognize revenue for our outsourced recruitment of permanent employees over time in an amount that reflects the consideration we expect to be entitled to in exchange for our services. The client simultaneously receives and consumes the benefits of the services as they are provided. We do not incur costs to obtain our outsourced recruitment of permanent employees’ contracts. The costs to fulfill these contracts are de minimis and expensed as incurred.
Unsatisfied performance obligations
As a practical expedient, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an expected original duration of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.
v3.8.0.1
REVENUE RECOGNITION (Tables)
3 Months Ended
Apr. 01, 2018
Revenue Recognition [Abstract]  
Disaggregation Of Revenue
The following table presents our revenue disaggregated by major source:
 
Thirteen weeks ended
 
April 1, 2018
(in thousands)
PeopleReady
PeopleManagement
PeopleScout
Consolidated
Revenue from services:
 
 
 
 
Contingent staffing
$
316,835

$
183,892

$

$
500,727

Human resource outsourcing


53,661

53,661

Total company
$
316,835

$
183,892

$
53,661

$
554,388

v3.8.0.1
FAIR VALUE MEASUREMENT (Tables)
3 Months Ended
Apr. 01, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurements, Recurring and Nonrecurring
Our assets and liabilities measured at fair value on a recurring basis consisted of the following:
 
April 1, 2018
(in thousands)
Total fair value
Quoted prices in active markets for identical assets (level 1)
Significant other observable inputs (level 2)
Significant unobservable inputs (level 3)
Financial assets:
 
 
 
 
Cash and cash equivalents
$
26,636

$
26,636

$

$

Restricted cash and cash equivalents
52,418

52,418



Cash, cash equivalents and restricted cash (1)
$
79,054

$
79,054

$

$

 
 
 
 
 
Deferred compensation mutual funds classified as available-for-sale
$
24,093

$
24,093

$

$

 
 
 
 
 
Municipal debt securities
$
78,643

$

$
78,643

$

Corporate debt securities
81,182


81,182


Agency mortgage-backed securities
3,630


3,630


U.S. government and agency securities
991


991


Restricted investments classified as held-to-maturity
$
164,446

$

$
164,446

$

 
December 31, 2017
(in thousands)
Total fair value
Quoted prices in active markets for identical assets (level 1)
Significant other observable inputs (level 2)
Significant unobservable inputs (level 3)
Financial assets:
 
 
 
 
Cash and cash equivalents
$
28,780

$
28,780

$

$

Restricted cash and cash equivalents
45,051

45,051



Cash, cash equivalents and restricted cash (1)
$
73,831

$
73,831

$

$

 
 
 
 
 
Deferred compensation mutual funds classified as available-for-sale
$
22,428

$
22,428

$

$

 
 
 
 
 
Municipal debt securities
$
83,366

$

$
83,366

$

Corporate debt securities
83,791


83,791


Agency mortgage-backed securities
4,062


4,062


U.S. government and agency securities
1,019


1,019


Restricted investments classified as held-to-maturity
$
172,238

$

$
172,238

$

(1)
Cash, cash equivalents and restricted cash consist of money market funds, deposits, and investments with original maturities of three months or less.
v3.8.0.1
RESTRICTED CASH AND INVESTMENTS (Tables)
3 Months Ended
Apr. 01, 2018
Restricted Cash and Investments [Abstract]  
Schedule of restricted cash and investments
The following is a summary of the carrying value of our restricted cash and investments:
(in thousands)
April 1,
2018
December 31,
2017
Cash collateral held by insurance carriers
$
23,035

$
22,926

Cash and cash equivalents held in Trust
28,981

16,113

Investments held in Trust
166,255

171,752

Deferred compensation mutual funds
24,093

22,428

Other restricted cash and cash equivalents
402

6,012

Total restricted cash and investments
$
242,766

$
239,231

Schedule of held-to-maturity investments
The amortized cost and estimated fair value of our held-to-maturity investments held in trust, aggregated by investment category as of April 1, 2018 and December 31, 2017, were as follows:
 
April 1, 2018
(in thousands)
Amortized cost
Gross unrealized gain
Gross unrealized loss
Fair value
Municipal debt securities
$
79,291

$
262

$
(910
)
$
78,643

Corporate debt securities
82,302

20

(1,140
)
81,182

Agency mortgage-backed securities
3,663

12

(45
)
3,630

U.S. government and agency securities
999


(8
)
991

Total held-to-maturity investments
$
166,255

$
294

$
(2,103
)
$
164,446

 
December 31, 2017
(in thousands)
Amortized cost
Gross unrealized gain
Gross unrealized loss
Fair value
Municipal debt securities
$
82,770

$
974

$
(378
)
$
83,366

Corporate debt securities
83,916

309

(434
)
83,791

Agency mortgage-backed securities
4,066

22

(26
)
4,062

U.S. government and agency securities
1,000

19


1,019

Total held-to-maturity investments
$
171,752

$
1,324

$
(838
)
$
172,238

Schedule of continuous unrealized loss position
The estimated fair value and gross unrealized losses of all investments classified as held-to-maturity, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of April 1, 2018 and December 31, 2017, were as follows:
 
April 1, 2018
 
Less than 12 months
 
12 months or more
 
Total
(in thousands)
Estimated fair value
Unrealized losses
 
Estimated fair value
Unrealized losses
 
Estimated fair value
Unrealized losses
Municipal debt securities
$
42,461

$
(452
)
 
$
9,369

$
(458
)
 
$
51,830

$
(910
)
Corporate debt securities
66,664

(927
)
 
9,982

(213
)
 
76,646

(1,140
)
Agency mortgage-backed securities
1,216

(22
)
 
802

(23
)
 
2,018

(45
)
U.S. government and agency securities
991

(8
)
 


 
991

(8
)
Total held-to-maturity investments
$
111,332

$
(1,409
)
 
$
20,153

$
(694
)
 
$
131,485

$
(2,103
)
 
December 31, 2017
 
Less than 12 months
 
12 months or more
 
Total
(in thousands)
Estimated fair value
Unrealized losses
 
Estimated fair value
Unrealized losses
 
Estimated fair value
Unrealized losses
Municipal debt securities
$
23,078

$
(124
)
 
$
9,631

$
(254
)
 
$
32,709

$
(378
)
Corporate debt securities
48,952

(311
)
 
10,081

(123
)
 
59,033

(434
)
Agency mortgage-backed securities
1,362

(10
)
 
888

(16
)
 
2,250

(26
)
Total held-to-maturity investments
$
73,392

$
(445
)

$
20,600

$
(393
)

$
93,992

$
(838
)
Schedule of held-to-maturity investments by contractual maturity
The amortized cost and fair value by contractual maturity of our held-to-maturity investments are as follows:
 
April 1, 2018
(in thousands)
Amortized cost
Fair value
Due in one year or less
$
17,960

$
17,892

Due after one year through five years
86,743

85,910

Due after five years through ten years
61,552

60,644

Total held-to-maturity investments
$
166,255

$
164,446

v3.8.0.1
GOODWILL (Tables)
3 Months Ended
Apr. 01, 2018
Goodwill [Line Items]  
Schedule of Goodwill
The following table reflects changes in the carrying amount of goodwill during the period by reportable segments:
(in thousands)
PeopleReady
PeopleManagement
PeopleScout
Total company
Balance at December 31, 2017
 
 
 
 
Goodwill before impairment
$
106,304

$
100,146

$
132,323

$
338,773

Accumulated impairment loss
(46,210
)
(50,700
)
(15,169
)
(112,079
)
Goodwill, net
60,094

49,446

117,154

226,694

 
 
 
 
 
Divested goodwill before impairment (1)

(19,054
)

(19,054
)
Divested accumulated impairment loss (1)

17,000


17,000

Foreign currency translation


(541
)
(541
)
 
 
 
 
 
Balance at April 1, 2018
 
 
 
 
Goodwill before impairment
106,304

81,092

131,782

319,178

Accumulated impairment loss
(46,210
)
(33,700
)
(15,169
)
(95,079
)
Goodwill, net
$
60,094

$
47,392

$
116,613

$
224,099

(1)
In mid-March 2018, the company entered into an asset purchase agreement for the sale of its PlaneTechs service line to Launch Technical Workforce Solutions. As a result of this divestiture, we eliminated the remaining goodwill balance of the PlaneTechs service line, which was a part of our PeopleManagement reportable segment. For additional information, see Note 3: Divestiture.
v3.8.0.1
WORKERS' COMPENSATION INSURANCE AND RESERVES (Tables)
3 Months Ended
Apr. 01, 2018
Workers' Compensation Insurance and Reserves [Abstract]  
Reconciliation of workers' compensation claims reserve
The table below presents a reconciliation of the undiscounted workers’ compensation reserve to the discounted workers’ compensation reserve for the periods presented as follows:
(in thousands)
April 1,
2018
December 31,
2017
Undiscounted workers’ compensation reserve
$
288,942

$
293,600

Less discount on workers’ compensation reserve
19,198

19,277

Workers’ compensation reserve, net of discount
269,744

274,323

Less current portion
75,692

77,218

Long-term portion
$
194,052

$
197,105

v3.8.0.1
COMMITMENTS AND CONTINGENCIES (Tables)
3 Months Ended
Apr. 01, 2018
Commitments and Contingencies Disclosure [Abstract]  
Schedule of workers’ compensation collateral commitments
We have provided our insurance carriers and certain states with commitments in the form and amounts listed below:
(in thousands)
April 1,
2018
December 31,
2017
Cash collateral held by workers’ compensation insurance carriers
$
22,255

$
22,148

Cash and cash equivalents held in Trust
28,981

16,113

Investments held in Trust
166,255

171,752

Letters of credit (1)
7,748

7,748

Surety bonds (2)
22,014

19,829

Total collateral commitments
$
247,253

$
237,590


(1)
We have agreements with certain financial institutions to issue letters of credit as collateral.
(2)
Our surety bonds are issued by independent insurance companies on our behalf and bear annual fees based on a percentage of the bond, which are determined by each independent surety carrier. These fees do not exceed 2.0% of the bond amount, subject to a minimum charge. The terms of these bonds are subject to review and renewal every one to four years and most bonds can be canceled by the sureties with as little as 60 days’ notice.
v3.8.0.1
NET INCOME (LOSS) PER SHARE (Tables)
3 Months Ended
Apr. 01, 2018
Earnings Per Share [Abstract]  
Schedule of adjusted net income and diluted common shares
Diluted common shares were calculated as follows:
 
Thirteen weeks ended
(in thousands, except per share data)
April 1,
2018
April 2,
2017
Net income
$
8,755

$
4,674

 
 
 
Weighted average number of common shares used in basic net income per common share
40,443

41,637

Dilutive effect of non-vested restricted stock
251

300

Weighted average number of common shares used in diluted net income per common share
40,694

41,937

Net income per common share:
 
 
Basic
$
0.22

$
0.11

Diluted
$
0.22

$
0.11

 
 
 
Anti-dilutive shares
548

159

v3.8.0.1
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)
3 Months Ended
Apr. 01, 2018
Equity [Abstract]  
Schedule of Comprehensive Loss
Changes in the balance of each component of accumulated other comprehensive loss during the reporting periods were as follows:
 
Thirteen weeks ended
 
April 1, 2018
April 2, 2017
(in thousands)
Foreign currency translation adjustment
Unrealized gain (loss) on investments, net of tax (1)
Total other comprehensive (loss), net of tax
 
Foreign currency translation adjustment
Unrealized gain on investments, net of tax (1)
Total other comprehensive income (loss), net of tax
Balance at beginning of period
$
(8,329
)
$
1,525

$
(6,804
)
 
$
(11,684
)
$
251

$
(11,433
)
Current period other comprehensive income
(1,384
)

(1,384
)
 
1,800

737

2,537

Change in accounting standard cumulative-effect adjustment (2)

(1,525
)
(1,525
)
 



Balance at end of period
$
(9,713
)
$

$
(9,713
)
 
$
(9,884
)
$
988

$
(8,896
)

(1)
Consisted of deferred compensation plan accounts, comprised of mutual funds classified as available-for-sale securities, prior to our adoption of the new accounting standard for equity investments in the fiscal first quarter of 2018. The tax impact on the unrealized gain on available-for-sale securities was de minimis for the thirteen weeks ended April 2, 2017.
(2)
As a result of our adoption of the new accounting standard for equity investments, $1.5 million in unrealized gains on available-for-sale equity securities were reclassified from accumulated other comprehensive loss to retained earnings at April 1, 2018. There were no material reclassifications out of accumulated other comprehensive loss during the thirteen weeks ended April 2, 2017. For additional information, see Note 1: Summary of Significant Accounting Policies.
v3.8.0.1
SEGMENT INFORMATION (Tables)
3 Months Ended
Apr. 01, 2018
Segment Reporting [Abstract]  
Schedule of Segment Information
The following table presents a reconciliation of segment revenue from services to total company revenue:
 
Thirteen weeks ended
(in thousands)
April 1,
2018
April 2,
2017
Revenue from services:
 
 
PeopleReady
$
316,835

$
332,624

PeopleManagement
183,892

191,686

PeopleScout
53,661

43,934

Total company