May 2, 2024 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

    ☒

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

For the Quarterly Period Ended March 31, 2024

    ☐

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

For the Transition Period From to

Commission File Number 0-21886

BARRETT BUSINESS SERVICES, INC.

(Exact name of registrant as specified in its charter)


Maryland		52-0812977
(State or other jurisdiction of Incorporation or organization)		(IRS Employer Identification No.)

8100 NE Parkway Drive, Suite 200
Vancouver, Washington		98662
(Address of principal executive offices)		(Zip Code)

(360) 828-0700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

    Title of each class

    Trading Symbol(s)

    Name of each exchange on which registered

    Common Stock, Par Value $0.01 Per Share

    BBSI

    The NASDAQ Stock Market LLC

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

    Large accelerated filer

    ☐

    Accelerated filer

    ☒

    Non-accelerated filer 

    ☐

    Smaller reporting company

    ☐

     
    Emerging growth company

    ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of April 17, 2024, 6,541,799 shares of the registrant’s common stock ($0.01 par value) were outstanding.

BARRETT BUSINESS SERVICES, INC.

INDEX TO FORM 10-Q


Part I - Financial Information (Unaudited)
		Page
Item 1.	Unaudited Interim Condensed Consolidated Financial Statements	3

	Condensed Consolidated Balance Sheets - March 31, 2024 and December 31, 2023	3

	Condensed Consolidated Statements of Operations - Three Months Ended March 31, 2024 and 2023	4

	Condensed Consolidated Statements of Comprehensive (Loss) Income - Three Months Ended March 31, 2024 and 2023	5

	Condensed Consolidated Statements of Stockholders’ Equity - Three Months Ended March 31, 2024	6

	Condensed Consolidated Statements of Stockholders’ Equity - Three Months Ended March 31, 2023	7

	Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2024 and 2023	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

Part II - Other Information

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 6.	Exhibits	27

Signatures		27

PART I – FINANCIAL INFORMATION

Item 1. Unaudited Interim Condensed Consolidated Financial Statements

Barrett Business Services, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In Thousands, Except Par Value)


	March 31,			December 31,
	2024			2023
ASSETS
Current assets:
Cash and cash equivalents	$	51,267		$	71,168
Investments		72,410			81,027
Trade accounts receivable, net		200,368			171,407
Income taxes receivable		7,727			7,987
Prepaid expenses and other		18,513			18,443
Restricted cash and investments		125,010			97,470
Total current assets		475,295			447,502
Property, equipment and software, net		51,222			50,295
Operating lease right-of-use assets		20,719			19,898
Restricted cash and investments		141,609			145,583
Goodwill		47,820			47,820
Other assets		6,346			6,222
Deferred income taxes		4,789			4,218
Total assets	$	747,800		$	721,538
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	5,697		$	6,593
Accrued payroll, payroll taxes and related benefits		256,061			234,080
Current operating lease liabilities		6,345			6,623
Current premium payable		65,820			35,276
Other accrued liabilities		7,516			10,674
Workers' compensation claims liabilities		46,555			50,006
Total current liabilities		387,994			343,252
Long-term workers' compensation claims liabilities		111,499			117,757
Long-term premium payable		33,435			37,812
Long-term operating lease liabilities		15,594			14,590
Customer deposits and other long-term liabilities		9,689			8,987
Total liabilities		558,211			522,398
Commitments and contingencies (Notes 4 and 6)
Stockholders' equity:
Common stock, $.01 par value; 20,500 shares authorized, 6,536 and 6,572 shares issued and outstanding		65			66
Additional paid-in capital		37,696			36,940
Accumulated other comprehensive loss		(22,297	)		(20,801	)
Retained earnings		174,125			182,935
Total stockholders' equity		189,589			199,140
Total liabilities and stockholders' equity	$	747,800		$	721,538

The accompanying notes are an integral part of these condensed consolidated financial statements.

Barrett Business Services, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In Thousands, Except Per Share Amounts)


	Three Months Ended
	March 31,
	2024			2023
Revenues:
Professional employer services	$	246,189		$	232,307
Staffing services		19,593			22,360
Total revenues		265,782			254,667
Cost of revenues:
Direct payroll costs		14,717			16,871
Payroll taxes and benefits		161,895			144,582
Workers' compensation		49,603			51,670
Total cost of revenues		226,215			213,123
Gross margin		39,567			41,544
Selling, general and administrative expenses		42,414			41,226
Depreciation and amortization		1,852			1,677
Loss from operations		(4,699	)		(1,359	)
Other income (expense):
Investment income, net		3,274			2,315
Interest expense		(44	)		(38	)
Other, net		66			36
Other income, net		3,296			2,313
(Loss) income before income taxes		(1,403	)		954
(Benefit from) provision for income taxes		(1,267	)		135
Net (loss) income	$	(136	)	$	819
Basic (loss) income per common share	$	(0.02	)	$	0.12
Weighted average number of basic common shares outstanding		6,570			6,866
Diluted (loss) income per common share	$	(0.02	)	$	0.12
Weighted average number of diluted common shares outstanding		6,570			6,985

The accompanying notes are an integral part of these condensed consolidated financial statements.

Barrett Business Services, Inc.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(Unaudited)

(In Thousands)


	Three Months Ended
	March 31,
	2024			2023
Net (loss) income	$	(136	)	$	819
Unrealized (losses) gains on investments, net of tax of ($571) and $1,397 in 2024 and 2023, respectively		(1,496	)		3,652
Comprehensive (loss) income	$	(1,632	)	$	4,471

The accompanying notes are an integral part of these condensed consolidated financial statements.

Barrett Business Services, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended March 31, 2024

(Unaudited)

(In Thousands)



										Accumulated
							Additional			Other
	Common Stock						Paid-in			Comprehensive			Retained
	Shares			Amount			Capital			Loss			Earnings			Total
Balance, December 31, 2023		6,572		$	66		$	36,940		$	(20,801	)	$	182,935		$	199,140
Common stock issued on exercise of options, purchase of ESPP shares and vesting of restricted stock units and performance awards		35			—			376			—			—			376
Common stock repurchased on vesting of restricted stock units and performance awards		(12	)		—			(1,456	)		—			—			(1,456	)
Share-based compensation expense		—			—			2,187			—			—			2,187
Company repurchases of common stock		(59	)		(1	)		(351	)		—			(6,704	)		(7,056	)
Cash dividends on common stock ($0.30 per share)		—			—			—			—			(1,970	)		(1,970	)
Unrealized loss on investments, net of tax		—			—			—			(1,496	)		—			(1,496	)
Net loss		—			—			—			—			(136	)		(136	)
Balance, March 31, 2024		6,536		$	65		$	37,696		$	(22,297	)	$	174,125		$	189,589

The accompanying notes are an integral part of these condensed consolidated financial statements.

Barrett Business Services, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended March 31, 2023

(Unaudited)

(In Thousands)


										Accumulated
										Other
							Additional			Comprehensive
	Common Stock						Paid-in			(Loss)			Retained
	Shares			Amount			Capital			Income			Earnings			Total
Balance, December 31, 2022		6,871		$	69		$	32,744		$	(27,594	)	$	172,623		$	177,842
Common stock issued on exercise of options, purchase of ESPP shares and vesting of restricted stock units and performance awards		31			—			339			—			—			339
Common stock repurchased on vesting of restricted stock units and performance awards		(11	)		—			(1,005	)		—			—			(1,005	)
Share-based compensation expense		—			—			1,928			—			—			1,928
Company repurchases of common stock		(91	)		(1	)		(447	)		—			(7,582	)		(8,030	)
Cash dividends on common stock ($0.30 per share)		—			—			—			—			(2,067	)		(2,067	)
Unrealized gain on investments, net of tax		—			—			—			3,652			—			3,652
Net income		—			—			—			—			819			819
Balance, March 31, 2023		6,800		$	68		$	33,559		$	(23,942	)	$	163,793		$	173,478

The accompanying notes are an integral part of these condensed consolidated financial statements.

Barrett Business Services, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In Thousands)


	Three Months Ended
	March 31,
	2024			2023
Cash flows from operating activities:
Net (loss) income	$	(136	)	$	819
Reconciliations of net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		1,852			1,677
Non-cash lease expense		1,711			1,756
Net investment (accretion) amortization		(396	)		237
Share-based compensation		2,187			1,928
Changes in certain operating assets and liabilities:
Trade accounts receivable		(28,961	)		(24,175	)
Income taxes		260			112
Prepaid expenses and other		(70	)		(818	)
Accounts payable		(896	)		(2,880	)
Accrued payroll, payroll taxes and related benefits		22,048			13,944
Other accrued liabilities		(3,135	)		(1,224	)
Premium payable		26,167			(1,413	)
Workers' compensation claims liabilities		(9,835	)		(14,412	)
Operating lease liabilities		(1,806	)		(1,819	)
Other assets and liabilities, net		(11	)		(247	)
Net cash provided by (used in) operating activities		8,979			(26,515	)
Cash flows from investing activities:
Purchase of property, equipment and software		(2,779	)		(2,995	)
Proceeds from sales and maturities of investments		8,290			233
Purchase of restricted investments		(4,649	)		(1,725	)
Proceeds from sales and maturities of restricted investments		13,253			2,446
Net cash provided by (used in) investing activities		14,115			(2,041	)
Cash flows from financing activities:
Repurchases of common stock		(7,056	)		(8,030	)
Common stock repurchased on vesting of stock awards		(1,456	)		(1,005	)
Dividends paid		(1,970	)		(2,067	)
Proceeds from exercise of stock options and purchase of ESPP		376			339
Net cash used in financing activities		(10,106	)		(10,763	)
Net increase (decrease) in cash, cash equivalents and restricted cash		12,988			(39,319	)
Cash, cash equivalents and restricted cash, beginning of period		74,841			107,378
Cash, cash equivalents and restricted cash, end of period	$	87,829		$	68,059

The accompanying notes are an integral part of these condensed consolidated financial statements.

Barrett Business Services, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 - Basis of Presentation of Interim Period Statements

The accompanying condensed consolidated financial statements are unaudited and have been prepared by Barrett Business Services, Inc. (“BBSI”, the “Company”, “our” or “we”), pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and note disclosures typically included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented. The accompanying condensed financial statements are prepared on a consolidated basis. All intercompany account balances and transactions have been eliminated in consolidation. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results may differ from such estimates and assumptions. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2023 Annual Report on Form 10-K at pages 33 - 61. The results of operations for an interim period are not necessarily indicative of the results of operations for a full year.

Revenue recognition

Professional employer (“PEO”) services are normally used by organizations to satisfy ongoing needs related to the management of human capital and are governed by the terms of a client services agreement which covers all employees at a particular work site. Staffing revenues relate primarily to short-term staffing, contract staffing and on-site management services. The Company’s performance obligations for PEO and staffing services are satisfied, and the related revenue is recognized, as services are rendered by our workforce.

Our PEO client service agreements have a minimum term of one year, are renewable on an annual basis and typically require 30 days’ written notice to cancel or terminate the contract by either party. In addition, our client service agreements provide for immediate termination upon any payment default of the client regardless of when notice is given. PEO customers are invoiced following the end of each payroll processing cycle, with payment generally due on the invoice date. Staffing customers are generally invoiced weekly based on agreed rates per employee and actual hours worked, typically with payment terms of 30 days. The amount of earned but unbilled revenue is classified as a receivable on the condensed consolidated balance sheets.

We report PEO revenues net of direct payroll costs because we are not the primary obligor for these payments to our clients’ employees. Direct payroll costs include salaries, wages, health insurance, and employee out-of-pocket expenses incurred incidental to employment.

Cost of revenues

Our cost of revenues for PEO services includes employer payroll-related taxes, workers’ compensation costs and employee benefits costs. Our cost of revenues for staffing services includes direct payroll costs, employer payroll-related taxes, and workers’ compensation costs. Direct payroll costs represent the gross payroll earned by staffing services employees based on salary or hourly wages. Payroll taxes and benefits consist of the employer’s portion of Social Security and Medicare taxes, federal and state unemployment taxes, and employee benefit costs, which primarily comprise health insurance premiums paid to third-party insurers and underwriting and benefit consultant payroll. Workers’ compensation costs consist primarily of premiums paid to third-party insurers, claims reserves, claims administration fees, legal fees, medical cost containment (“MCC”) expense, state administrative agency fees, third-party broker commissions, and risk manager payroll, as well as costs associated with operating our two wholly owned insurance companies, Associated Insurance Company for Excess (“AICE”) and Ecole Insurance Company (“Ecole”).

Cash and cash equivalents

We consider non-restricted short-term investments that are highly liquid, readily convertible into cash, and have maturities at acquisition of less than three months to be cash equivalents for purposes of the condensed consolidated statements of cash flows and condensed consolidated balance sheets. The Company maintains cash balances in bank accounts that normally exceed FDIC insured limits. The Company has not experienced any losses related to its cash concentration.

Investments

The Company classifies investments as available-for-sale. The Company’s investments are reported at fair value with unrealized gains and losses, net of taxes, shown as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Investments are recorded as current on the condensed consolidated balance sheets as the invested funds are available for current operations. Management considers available evidence in evaluating potential impairment of investments, including the extent to which fair value is less than cost and adverse conditions related to the security. In the event of a credit loss, an allowance would be recognized to the extent that the fair value of the security is less than the present value of the expected future cash flows. Realized gains and losses on sales of investments are included in investment income in our condensed consolidated statements of operations.

Restricted cash and investments

The Company holds restricted cash and investments primarily for the future payment of insurance premiums and workers’ compensation claims. These investments are categorized as available-for-sale. They are reported at fair value with unrealized gains and losses, net of taxes, shown as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Restricted cash and investments are classified as current and noncurrent on the condensed consolidated balance sheets based on the nature of the restriction. Management considers available evidence in evaluating potential impairment of restricted investments, including the extent to which fair value is less than cost and adverse conditions related to the security. In the event of a credit loss, an allowance would be recognized to the extent that the fair value of the security is less than the present value of the expected future cash flows. Realized gains and losses on sales of restricted investments are included in investment income in our condensed consolidated statements of operations.

Restricted cash and investments also includes investments held as part of the Company’s deferred compensation plan. These investments are classified as trading securities and are recorded at fair value with unrealized gains and losses reported as a component of income (loss) from operations.

Allowance for doubtful accounts

The Company had an allowance for doubtful accounts of $0.9 million at March 31, 2024 and December 31, 2023. We make estimates of the collectability of our accounts receivable for services provided to our customers based on future expected credit losses. Management analyzes historical bad debts, customer concentrations, customer credit-worthiness, current economic trends and changes in customers’ payment trends when evaluating the adequacy of the allowance for doubtful accounts. If the financial condition of our customers deteriorates resulting in an impairment of their ability to make payments, additional allowances may be required.

Workers’ compensation claims liabilities

Our workers’ compensation claims liabilities do not represent an exact calculation of liability but rather management’s best estimate, utilizing actuarial expertise and projection techniques, at a given reporting date. The estimated liability for open workers’ compensation claims is based on an evaluation of information provided by our third-party administrator for workers’ compensation claims, coupled with an actuarial estimate of future loss development with respect to reported claims and incurred but not reported claims (together, “IBNR”). Workers’ compensation claims liabilities include case reserve estimates for reported losses, plus additional amounts for estimated IBNR claims, MCC and legal costs, unallocated loss adjustment expenses and estimated future recoveries. The estimate of incurred costs expected to be paid within one year is included in current liabilities, while the estimate of incurred costs expected to be paid beyond one year is included in long-term liabilities on our condensed consolidated balance sheets. These estimates are reviewed at least quarterly and adjustments to estimated liabilities are reflected in current operating results as they become known.

The process of arriving at an estimate of unpaid claims and claims adjustment expense involves a high degree of judgment and is affected by both internal and external events, including changes in claims handling practices, changes in reserve estimation procedures, inflation, trends in the litigation and settlement of pending claims, and legislative changes.

Our estimates are based on actuarial analysis and informed judgment, derived from individual experience and expertise applied to multiple sets of data and analyses. We consider significant facts and circumstances known both at the time that loss reserves are initially established and as new facts and circumstances become known. Due to the inherent uncertainty underlying loss reserve estimates, the expenses incurred through final resolution of our liability for our workers’ compensation claims will likely vary from the related loss reserves at the reporting date. Therefore, as specific claims are paid out in the future, actual paid losses may be materially different from our current loss reserves.

A basic premise in most actuarial analyses is that historical data and past patterns demonstrated in the incurred and paid historical data form a reasonable basis upon which to project future outcomes, absent a material change. Significant structural changes to the available data can materially impact the reserve estimation process. To the extent a material change affecting the ultimate claim liability becomes known, such change is quantified to the extent possible through an analysis of internal Company data and, if available and when appropriate, external data. Nonetheless, actuaries exercise a considerable degree of judgment in the evaluation of these factors and the need for such actuarial judgment is more pronounced when faced with material uncertainties.

Customer deposits

We require deposits from certain PEO customers to cover a portion of our accounts receivable due from such customers in the event of default of payment.

Comprehensive income (loss)

Comprehensive income (loss) includes all changes in equity during a period except those that resulted from investments by or distributions to the Company’s stockholders.

Other comprehensive income (loss) refers to revenues, expenses, gains and losses that under U.S. generally accepted accounting principles (“GAAP”) are included in comprehensive income (loss), but excluded from net income (loss) as these amounts are recorded directly as an adjustment to stockholders’ equity. Our other comprehensive income (loss) comprises unrealized holding gains and losses on our available-for-sale investments.

Statements of cash flows

Interest paid during the three months ended March 31, 2024 and 2023 did not materially differ from interest expense. Income taxes paid by the Company during the three months ended March 31, 2024 and 2023 totaled $0.04 million and $0.01 million, respectively.

Bank deposits and other cash equivalents that are restricted for use are classified as restricted cash. The table below reconciles the cash, cash equivalents and restricted cash balances from our condensed consolidated balance sheets to the amounts reported on the condensed consolidated statements of cash flows (in thousands):


	March 31,		December 31,		March 31,		December 31,
	2024		2023		2023		2022
Cash and cash equivalents	$	51,267	$	71,168	$	52,635	$	91,423
Restricted cash, included in restricted cash and investments		36,562		3,673		15,424		15,955
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	87,829	$	74,841	$	68,059	$	107,378

Basic and diluted earnings per share

Basic earnings per share are computed based on the weighted average number of common shares outstanding for each year using the treasury method. Diluted earnings per share reflect the potential effects of the issuance of shares in connection with the exercise of outstanding stock options, vesting of outstanding restricted stock units and performance share units, and the Company’s employee stock purchase plan. Basic and diluted shares outstanding are summarized as follows (in thousands):


	Three Months Ended
	March 31,
	2024		2023
Weighted average number of basic shares outstanding		6,570		6,866
Effect of dilutive securities		—		119
Weighted average number of diluted shares outstanding		6,570		6,985

As a result of the net loss for the three months ended March 31, 2024, 135,405 potential common shares have been excluded from the calculation of diluted loss per share because their effect would be anti-dilutive.

Accounting estimates

The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions. These affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates are used for fair value measurement of investments, allowance for doubtful accounts, deferred income taxes, carrying values for goodwill and property, equipment and software, and accrued workers’ compensation liabilities. Actual results may or may not differ from such estimates.

Reclassifications

To conform to the current period’s presentation, safety incentives liability of $1.3 million was reclassified to other accrued liabilities in the prior period condensed consolidated balance sheets, and net cash outflows related to safety incentives liability of $0.3 million was reclassified to other accrued liabilities in the prior period condensed consolidated statements of cash flows. Additionally, to conform the current period’s presentation to reclassifications made in 2023, net cash outflows associated with premiums payable to third party insurance carriers of $1.4 million were reclassified from other accrued liabilities to premium payable in the prior period condensed consolidated statements of cash flows.

Recent accounting pronouncements

The following Accounting Standards Updates (ASUs) have been recently issued by the Financial Accounting Standards Board (FASB).

ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, which expands annual and interim reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. All disclosure requirements under the new guidance are also required for public entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. We are evaluating the impact of applying this new accounting guidance to our financial statement disclosures.

ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The ASU applies to all entities subject to income taxes. The new requirements will be effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. We are evaluating the impact of applying this new accounting guidance to our income tax disclosures.

Note 2 - Fair Value Measurement

The following table summarizes the Company’s investments at March 31, 2024 and December 31, 2023 measured at fair value on a recurring basis (in thousands):


	March 31, 2024							December 31, 2023

			Gross							Gross
			Unrealized			Recorded				Unrealized			Recorded
			(Losses)							(Losses)
	Cost		Gains			Basis		Cost		Gains			Basis
Current:
Cash equivalents:
Money market funds	$	18,549	$	—		$	18,549	$	19,539	$	—		$	19,539
Total cash equivalents		18,549		—			18,549		19,539		—			19,539
Investments:
Corporate bonds		32,319		(3,123	)		29,196		34,472		(3,159	)		31,313
U.S. government agency securities		12,806		(395	)		12,411		12,830		(408	)		12,422
U.S. treasuries		12,451		(1,369	)		11,082		12,448		(1,253	)		11,195
Mortgage backed securities		12,908		(2,677	)		10,231		13,084		(2,454	)		10,630
Asset backed securities		9,647		(157	)		9,490		13,659		(187	)		13,472
Emerging markets		—		—			—		2,003		(8	)		1,995
Total current investments		80,131		(7,721	)		72,410		88,496		(7,469	)		81,027
Restricted cash and investments (1):
U.S. treasuries		125,052		(7,032	)		118,020		109,020		(6,415	)		102,605
Corporate bonds		82,816		(9,022	)		73,794		82,481		(8,454	)		74,027
Mortgage backed securities		42,418		(5,874	)		36,544		42,077		(5,216	)		36,861
U.S. government agency securities		16,854		(1,170	)		15,684		16,863		(1,199	)		15,664
Mutual funds		9,641		—			9,641		8,941		—			8,941
Asset backed securities		799		(2	)		797		799		—			799
Emerging markets		200		3			203		200		2			202
Money market funds		107		—			107		337		—			337
Total restricted cash and investments		277,887		(23,097	)		254,790		260,718		(21,282	)		239,436
Total investments	$	376,567	$	(30,818	)	$	345,749	$	368,753	$	(28,751	)	$	340,002

(1) Included in restricted cash and investments within the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023 is restricted cash of $

Form: 10-Q

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