we invoice the gross billings concurrently with each periodic payroll of our worksite employees . revenues , which exclude the payroll cost component of gross billings , and therefore , consist solely of the markup , are recognized ratably over the payroll period as worksite employees perform their service at the client worksite . this markup includes pricing components associated with our estimates of payroll taxes , benefits and workers ' compensation costs , plus a separate component related to our hr services . we include revenues that have been recognized but not invoiced in unbilled accounts receivable on our consolidated balance sheets . - 29 - our revenues are primarily dependent on the number of clients enrolled , the resulting number of worksite employees paid each period and the number of worksite employees enrolled in our benefit plans . because our total markup is computed as a percentage of payroll cost , certain revenues are also affected by the payroll cost of worksite employees , which may fluctuate based on the composition of the worksite employee base , inflationary effects on wage levels and differences in the local economies of our markets . direct costs the primary direct costs associated with our workforce optimization revenue-generating activities are : · employment-related taxes ( “ payroll taxes ” ) · costs of employee benefit plans · workers ' compensation costs payroll taxes consist of the employer 's portion of social security and medicare taxes under fica , federal unemployment taxes and state unemployment taxes . payroll taxes are generally paid as a percentage of payroll cost . the federal tax rates are defined by federal regulations . state unemployment tax rates are subject to claim histories and vary from state to state . employee benefits costs are comprised primarily of health insurance premiums and claims costs ( including dental and pharmacy costs ) , but also include costs of other employee benefits such as life insurance , vision care , disability insurance , education assistance , adoption assistance , a flexible spending account and a worklife program . workers ' compensation costs include administrative and risk charges paid to the insurance carrier , and claims costs , which are driven primarily by the frequency and severity of claims . gross profit our gross profit per worksite employee is primarily determined by our ability to accurately estimate and control direct costs and our ability to incorporate changes in these costs into the gross billings charged to workforce optimization clients , which are subject to contractual arrangements that are typically renewed annually . we use gross profit per worksite employee per month as our principal measurement of relative performance at the gross profit level . operating expenses · salaries , wages and payroll taxes – salaries , wages and payroll taxes are primarily a function of the number of corporate employees and their associated average pay and any additional incentive compensation . our corporate employees include client services , sales and marketing , benefits , legal , finance , information technology , administrative support personnel and those associated with our abus . · stock-based compensation – our stock-based compensation relates to the recognition of non-cash compensation expense over the vesting period of restricted stock awards . · commissions – commission expense consists primarily of amounts paid to sales managers and bpas . commissions are based on the number of new accounts sold and a percentage of revenue generated by such personnel . · advertising – advertising expense primarily consists of media advertising and other business promotions in our current and anticipated sales markets , including the insperity championship tm presented by unitedhealthcare ® sponsorship . in 2011 , certain costs incurred as a result of our rebranding initiative are also included in advertising . - 30 - · general and administrative expenses – our general and administrative expenses primarily include : · rent expenses related to our service centers and sales offices · outside professional service fees related to legal , consulting and accounting services , and acquisition transaction expenses · administrative costs , such as postage , printing and supplies · employee travel expenses · technology and facility repairs and maintenance costs · rebranding initiative costs in 2011 · depreciation and amortization – depreciation and amortization expense is primarily a function of our capital investments in corporate facilities , service centers , sales offices , technology infrastructure and that associated with our acquisitions . · impairment charge – non-cash expense associated with the decline in fair value of intangible assets , including goodwill . please read note 5 to the consolidated financial statements , “ goodwill and other intangible assets , ” for additional information . income taxes our provision for income taxes typically differs from the u.s. statutory rate of 35 % , due primarily to state income taxes and non-deductible expenses . deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes . significant items resulting in deferred income taxes include prepaid assets , accruals for workers ' compensation expenses , stock-based compensation and depreciation . changes in these items are reflected in our financial statements through a deferred income tax provision . critical accounting policies and estimates the discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states ( “ gaap ” ) . the preparation of these financial statements requires our management to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . story_separator_special_tag during 2012 , new client sales and client retention declined , while the net change in existing clients remained flat compared to 2011. as a result , our year-over-year growth in worksite employees paid per month during 2012 was 7.5 % compared to 9.2 % during 2011. gross profit gross profit increased 8.7 % to $ 382.2 million compared to 2011. the average gross profit per worksite employee increased 0.8 % to $ 253 per month in 2012 versus $ 251 in 2011. our pricing objectives attempt to maintain or improve the gross profit per worksite employee by increasing revenue per worksite employee to match or exceed changes in primary direct costs and operating expenses . while our revenues per worksite employee per month increased 1.6 % to $ 1,432 in 2012 versus 2011 , our direct costs , which primarily include payroll taxes , benefits and workers ' compensation expenses , increased 1.7 % to $ 1,179 per worksite employee per month . the primary direct cost components changed as follows : · benefits costs – the cost of group health insurance and related employee benefits increased $ 8 per worksite employee per month , or 3.5 % , on a per covered employee basis compared to 2011. the percentage of worksite employees covered under our health insurance plan was 72.1 % in 2012 versus 73.7 % in 2011. please read “ —critical accounting policies and estimates – benefits costs ” for a discussion of our accounting for health insurance costs . · workers ' compensation costs – workers ' compensation costs increased 9.8 % , or $ 1 per worksite employee per month compared to 2011. as a percentage of non-bonus payroll cost , workers ' compensation costs remained flat at 0.54 % compared to 2011. during 2012 , we recorded reductions in workers ' compensation costs of $ 13.1 million , or 0.14 % of non-bonus payroll costs , for changes in estimated losses related to prior reporting periods , compared to $ 11.4 million , or 0.13 % of non-bonus payroll costs in 2011. the 2012 period costs include the impact of a 0.6 % discount rate used to accrue workers ' compensation loss claims , compared to a 1.1 % discount rate used in the 2011 period . please read “ —critical accounting policies and estimates – workers ' compensation costs ” for a discussion of our accounting for workers ' compensation costs . - 36 - · payroll tax costs – payroll taxes increased 9.9 % , or $ 11 per worksite employee per month compared to 2011 , due primarily to an 11.4 % increase in total payroll cost in 2012 as compared to 2011. payroll taxes as a percentage of payroll cost decreased to 7.05 % in 2012 compared to 7.15 % in 2011. operating expenses the following table presents certain information related to our operating expenses : replace_table_token_12_th operating expenses increased 6.9 % to $ 314.7 million compared to 2011. the 2012 operating expenses included a $ 4.2 million impairment charge incurred in connection with our annual goodwill impairment assessment of our performance management reporting unit . please read note 5 to the consolidated financial statements , “ goodwill and other intangible assets , ” for additional information . operating expenses per worksite employee per month decreased to $ 208 in 2012 from $ 210 in 2011. the components of operating expenses changed as follows : · salaries , wages and payroll taxes of corporate and sales staff increased 8.7 % , or $ 1 per worksite employee per month compared to 2011 , primarily due to a 6.1 % rise in headcount . · stock-based compensation increased 14.1 % , or $ 1 per worksite employee per month compared to 2011 , due primarily to an increase in the weighted average market value on the date of grant associated with restricted stock awards . the stock-based compensation expense represents amortization of restricted stock awards granted to employees and the annual stock grant made to non-employee directors . please read note 1 to the consolidated financial statements , “ accounting policies , ” for additional information . · commissions expense increased 7.9 % , but remained flat on a per worksite employee per month basis compared to 2011 . · advertising costs decreased 18.9 % , or $ 5 per worksite employee per month compared to 2011 , primarily due to the non-recurrence of expenses related to our 2011 rebranding initiative . · general and administrative expenses increased 2.9 % , but decreased $ 3 per worksite employee per month , primarily due to increased professional fees and office expenses , partially offset by the non-recurrence of expenses related to our 2011 rebranding initiative . · depreciation and amortization expense increased 19.9 % , or $ 1 per worksite employee per month compared to 2011 , primarily due to investments in our technology infrastructure and amortization associated with our acquisitions . other income ( expense ) other income was $ 0.8 million in 2012 compared to other expense of $ 6.5 million in 2011 , primarily due to a $ 4.4 million loss in 2011 related to the exchange of an aircraft , and a $ 3.1 million loss in 2011 related to a settlement with the state of california . please read note 13 to the consolidated financial statements , “ commitments and contingencies , ” for additional information on the settlement with the state of california . - 37 - income tax expense during 2012 we incurred federal and state income tax expense of $ 27.9 million on pre-tax income of $ 68.3 million . our provision for income taxes differed from the us statutory rate of 35 % primarily due to state income taxes and non-deductible expenses , offset slightly by tax-exempt interest income . our effective income tax rate was 40.8 % in 2012 compared to 40.0 % in 2011. net income net income for 2012 was

liquidity and capital resources we periodically evaluate our liquidity requirements , capital needs and availability of resources in view of , among other things , our expansion plans , potential acquisitions , debt service requirements and other operating cash needs . to meet short-term liquidity requirements , which are primarily the payment of direct and operating expenses , we rely primarily on cash from operations . longer-term projects or significant acquisitions may be financed with debt or equity . we have in the past sought , and may in the future seek , to raise additional capital or take other steps to increase or manage our liquidity and capital resources . we had $ 281.4 million in cash , cash equivalents and marketable securities at december 31 , 2012 , of which approximately $ 158.2 million was payable in early january 2013 for withheld federal and state income taxes , employment taxes and other payroll deductions , and $ 13.5 million were customer prepayments that were payable in january 2013. at december 31 , 2012 , we had working capital of $ 115.7 million compared to $ 126.6 million at december 31 , 2011. we currently believe that our cash on hand , marketable securities , cash flows from operations and availability under our credit facility will be adequate to meet our liquidity requirements for 2013. we will rely on these same sources , as well as public and private debt or equity financing , to meet our longer-term liquidity and capital needs . in september 2011 , we completed the financing for a four-year , $ 100 million revolving credit facility ( “ facility ” ) , with a syndicate of financial institutions . the facility is available for working capital and general corporate purposes , including acquisitions , and was undrawn at december 31 , 2012. please read note 7 to the consolidated financial statements , “ revolving credit facility , ” for additional information .


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```liquidity and capital resources we periodically evaluate our liquidity requirements , capital needs and availability of resources in view of , among other things , our expansion plans , potential acquisitions , debt service requirements and other operating cash needs . to meet short-term liquidity requirements , which are primarily the payment of direct and operating expenses , we rely primarily on cash from operations . longer-term projects or significant acquisitions may be financed with debt or equity . we have in the past sought , and may in the future seek , to raise additional capital or take other steps to increase or manage our liquidity and capital resources . we had $ 281.4 million in cash , cash equivalents and marketable securities at december 31 , 2012 , of which approximately $ 158.2 million was payable in early january 2013 for withheld federal and state income taxes , employment taxes and other payroll deductions , and $ 13.5 million were customer prepayments that were payable in january 2013. at december 31 , 2012 , we had working capital of $ 115.7 million compared to $ 126.6 million at december 31 , 2011. we currently believe that our cash on hand , marketable securities , cash flows from operations and availability under our credit facility will be adequate to meet our liquidity requirements for 2013. we will rely on these same sources , as well as public and private debt or equity financing , to meet our longer-term liquidity and capital needs . in september 2011 , we completed the financing for a four-year , $ 100 million revolving credit facility ( “ facility ” ) , with a syndicate of financial institutions . the facility is available for working capital and general corporate purposes , including acquisitions , and was undrawn at december 31 , 2012. please read note 7 to the consolidated financial statements , “ revolving credit facility , ” for additional information .
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 Suspicious Activity Report : we invoice the gross billings concurrently with each periodic payroll of our worksite employees . revenues , which exclude the payroll cost component of gross billings , and therefore , consist solely of the markup , are recognized ratably over the payroll period as worksite employees perform their service at the client worksite . this markup includes pricing components associated with our estimates of payroll taxes , benefits and workers ' compensation costs , plus a separate component related to our hr services . we include revenues that have been recognized but not invoiced in unbilled accounts receivable on our consolidated balance sheets . - 29 - our revenues are primarily dependent on the number of clients enrolled , the resulting number of worksite employees paid each period and the number of worksite employees enrolled in our benefit plans . because our total markup is computed as a percentage of payroll cost , certain revenues are also affected by the payroll cost of worksite employees , which may fluctuate based on the composition of the worksite employee base , inflationary effects on wage levels and differences in the local economies of our markets . direct costs the primary direct costs associated with our workforce optimization revenue-generating activities are : · employment-related taxes ( “ payroll taxes ” ) · costs of employee benefit plans · workers ' compensation costs payroll taxes consist of the employer 's portion of social security and medicare taxes under fica , federal unemployment taxes and state unemployment taxes . payroll taxes are generally paid as a percentage of payroll cost . the federal tax rates are defined by federal regulations . state unemployment tax rates are subject to claim histories and vary from state to state . employee benefits costs are comprised primarily of health insurance premiums and claims costs ( including dental and pharmacy costs ) , but also include costs of other employee benefits such as life insurance , vision care , disability insurance , education assistance , adoption assistance , a flexible spending account and a worklife program . workers ' compensation costs include administrative and risk charges paid to the insurance carrier , and claims costs , which are driven primarily by the frequency and severity of claims . gross profit our gross profit per worksite employee is primarily determined by our ability to accurately estimate and control direct costs and our ability to incorporate changes in these costs into the gross billings charged to workforce optimization clients , which are subject to contractual arrangements that are typically renewed annually . we use gross profit per worksite employee per month as our principal measurement of relative performance at the gross profit level . operating expenses · salaries , wages and payroll taxes – salaries , wages and payroll taxes are primarily a function of the number of corporate employees and their associated average pay and any additional incentive compensation . our corporate employees include client services , sales and marketing , benefits , legal , finance , information technology , administrative support personnel and those associated with our abus . · stock-based compensation – our stock-based compensation relates to the recognition of non-cash compensation expense over the vesting period of restricted stock awards . · commissions – commission expense consists primarily of amounts paid to sales managers and bpas . commissions are based on the number of new accounts sold and a percentage of revenue generated by such personnel . · advertising – advertising expense primarily consists of media advertising and other business promotions in our current and anticipated sales markets , including the insperity championship tm presented by unitedhealthcare ® sponsorship . in 2011 , certain costs incurred as a result of our rebranding initiative are also included in advertising . - 30 - · general and administrative expenses – our general and administrative expenses primarily include : · rent expenses related to our service centers and sales offices · outside professional service fees related to legal , consulting and accounting services , and acquisition transaction expenses · administrative costs , such as postage , printing and supplies · employee travel expenses · technology and facility repairs and maintenance costs · rebranding initiative costs in 2011 · depreciation and amortization – depreciation and amortization expense is primarily a function of our capital investments in corporate facilities , service centers , sales offices , technology infrastructure and that associated with our acquisitions . · impairment charge – non-cash expense associated with the decline in fair value of intangible assets , including goodwill . please read note 5 to the consolidated financial statements , “ goodwill and other intangible assets , ” for additional information . income taxes our provision for income taxes typically differs from the u.s. statutory rate of 35 % , due primarily to state income taxes and non-deductible expenses . deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes . significant items resulting in deferred income taxes include prepaid assets , accruals for workers ' compensation expenses , stock-based compensation and depreciation . changes in these items are reflected in our financial statements through a deferred income tax provision . critical accounting policies and estimates the discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states ( “ gaap ” ) . the preparation of these financial statements requires our management to make estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses , and related disclosure of contingent assets and liabilities . story_separator_special_tag during 2012 , new client sales and client retention declined , while the net change in existing clients remained flat compared to 2011. as a result , our year-over-year growth in worksite employees paid per month during 2012 was 7.5 % compared to 9.2 % during 2011. gross profit gross profit increased 8.7 % to $ 382.2 million compared to 2011. the average gross profit per worksite employee increased 0.8 % to $ 253 per month in 2012 versus $ 251 in 2011. our pricing objectives attempt to maintain or improve the gross profit per worksite employee by increasing revenue per worksite employee to match or exceed changes in primary direct costs and operating expenses . while our revenues per worksite employee per month increased 1.6 % to $ 1,432 in 2012 versus 2011 , our direct costs , which primarily include payroll taxes , benefits and workers ' compensation expenses , increased 1.7 % to $ 1,179 per worksite employee per month . the primary direct cost components changed as follows : · benefits costs – the cost of group health insurance and related employee benefits increased $ 8 per worksite employee per month , or 3.5 % , on a per covered employee basis compared to 2011. the percentage of worksite employees covered under our health insurance plan was 72.1 % in 2012 versus 73.7 % in 2011. please read “ —critical accounting policies and estimates – benefits costs ” for a discussion of our accounting for health insurance costs . · workers ' compensation costs – workers ' compensation costs increased 9.8 % , or $ 1 per worksite employee per month compared to 2011. as a percentage of non-bonus payroll cost , workers ' compensation costs remained flat at 0.54 % compared to 2011. during 2012 , we recorded reductions in workers ' compensation costs of $ 13.1 million , or 0.14 % of non-bonus payroll costs , for changes in estimated losses related to prior reporting periods , compared to $ 11.4 million , or 0.13 % of non-bonus payroll costs in 2011. the 2012 period costs include the impact of a 0.6 % discount rate used to accrue workers ' compensation loss claims , compared to a 1.1 % discount rate used in the 2011 period . please read “ —critical accounting policies and estimates – workers ' compensation costs ” for a discussion of our accounting for workers ' compensation costs . - 36 - · payroll tax costs – payroll taxes increased 9.9 % , or $ 11 per worksite employee per month compared to 2011 , due primarily to an 11.4 % increase in total payroll cost in 2012 as compared to 2011. payroll taxes as a percentage of payroll cost decreased to 7.05 % in 2012 compared to 7.15 % in 2011. operating expenses the following table presents certain information related to our operating expenses : replace_table_token_12_th operating expenses increased 6.9 % to $ 314.7 million compared to 2011. the 2012 operating expenses included a $ 4.2 million impairment charge incurred in connection with our annual goodwill impairment assessment of our performance management reporting unit . please read note 5 to the consolidated financial statements , “ goodwill and other intangible assets , ” for additional information . operating expenses per worksite employee per month decreased to $ 208 in 2012 from $ 210 in 2011. the components of operating expenses changed as follows : · salaries , wages and payroll taxes of corporate and sales staff increased 8.7 % , or $ 1 per worksite employee per month compared to 2011 , primarily due to a 6.1 % rise in headcount . · stock-based compensation increased 14.1 % , or $ 1 per worksite employee per month compared to 2011 , due primarily to an increase in the weighted average market value on the date of grant associated with restricted stock awards . the stock-based compensation expense represents amortization of restricted stock awards granted to employees and the annual stock grant made to non-employee directors . please read note 1 to the consolidated financial statements , “ accounting policies , ” for additional information . · commissions expense increased 7.9 % , but remained flat on a per worksite employee per month basis compared to 2011 . · advertising costs decreased 18.9 % , or $ 5 per worksite employee per month compared to 2011 , primarily due to the non-recurrence of expenses related to our 2011 rebranding initiative . · general and administrative expenses increased 2.9 % , but decreased $ 3 per worksite employee per month , primarily due to increased professional fees and office expenses , partially offset by the non-recurrence of expenses related to our 2011 rebranding initiative . · depreciation and amortization expense increased 19.9 % , or $ 1 per worksite employee per month compared to 2011 , primarily due to investments in our technology infrastructure and amortization associated with our acquisitions . other income ( expense ) other income was $ 0.8 million in 2012 compared to other expense of $ 6.5 million in 2011 , primarily due to a $ 4.4 million loss in 2011 related to the exchange of an aircraft , and a $ 3.1 million loss in 2011 related to a settlement with the state of california . please read note 13 to the consolidated financial statements , “ commitments and contingencies , ” for additional information on the settlement with the state of california . - 37 - income tax expense during 2012 we incurred federal and state income tax expense of $ 27.9 million on pre-tax income of $ 68.3 million . our provision for income taxes differed from the us statutory rate of 35 % primarily due to state income taxes and non-deductible expenses , offset slightly by tax-exempt interest income . our effective income tax rate was 40.8 % in 2012 compared to 40.0 % in 2011. net income net income for 2012 was

