What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-25 compared with 2021-02-26 · 285 added, 382 removed, 1273 unchanged (34% of the section changed)

43 unchanged sentences

Other Key Employees:

Mills 65 Chief Operating Officer, Financial Services

Gleespen 63 Secretary and General Counsel

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Waxman 63 Senior Vice President and Chief Marketing Officer

Kowalski 60 Vice President, Tax

Sobe 53 Treasurer

Noftsinger 50 Vice President of Finance and Corporate Controller

Farrell 59 Chief Human Resources Officer

(1) Member of Executive Management Committee

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He was also Chief Operating Officer from February 2000 until his appointment as Chief Executive Officer.

Grisko joined CBIZ as Vice President, Mergers & Acquisitions in September 1998 and was promoted to Senior Vice President, Mergers & Acquisitions and Legal Affairs in December of 1998.

Grisko joined CBIZ as Vice

President, Mergers & Acquisitions in September 1998 and was promoted to Senior Vice President, Mergers & Acquisitions and Legal Affairs in December of 1998.

Prior to joining CBIZ, Mr.

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Previously, in October 2002, he was elected by the Board as Vice Chairman, a non-officer position.

Burdick is a Partner Emeritus at the law firm of Akin Gump Strauss Hauer & Feld LLP, and was a Partner in the firm from 1988 until 2019.

Burdick serves as Lead Director on the Board of Directors of AutoNation, Inc.

Burdick was a Partner at the law firm of Akin Gump Strauss Hauer & Feld LLP, and was a Partner in the firm from 1988 until his retirement in 2019.

Burdick serves a non-executive Chairman on the Board of Directors of AutoNation, Inc.

DeGroote, son of CBIZ founder Michael G.

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Slotkin is President & COO of KMP Music LLC, a music publishing firm.

He is also currently a Senior Advisor at Alvarez & Marsal, and between 2014 and 2020 he served as the Global Business Head of Alvarez &

Marsal’s Asset Management Services.

He is also currently a Senior Advisor at Alvarez & Marsal, and between 2014 and 2020 he served as the Global Business Head of Alvarez & Marsal’s Asset Management Services.

Slotkin is also an independent director of the Apollo Closed End Fund Complex (Apollo Floating Rate Fund, Apollo Tactical Income Fund).

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Sherman has served as the Chief Executive Officer and a director of Tectonic Financial, Inc.

(and its predecessor), a banking and financial holding company, since February 2015.

(and its predecessor), a banking and financial holding company with a preferred stock quoted on Nasdaq Global Markets, since February 2015.

Prior thereto, Mr.

Sherman co-founded Salient Partners, LP, a Huston-based investment firm, in 2002 and served in various executive positions, including Chief Executive Officer and Chief Investment Officer, through October 2011.

Sherman co-founded Salient Partners, LP, a Houston-based investment firm, in 2002 and served in various executive positions, including Chief Executive Officer and Chief Investment Officer, through October 2011.

In addition, he previously served as an executive officer and partner of The Redstone Companies from 1998 to 2002 where he, among other things, managed a private equity portfolio.

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Sherman is an attorney and certified public accountant.

Marabito has served as a Director of CBIZ since August 2021, when he was appointed as an independent director.

Marabito is Chief Executive Officer of Olympic Steel, a national metals service center headquartered in Cleveland, Ohio that focuses on the direct sale of processed carbon, coated and stainless flat-rolled sheet, coil and plate steel, aluminum, tin plate, and metal-intensive branded products.

Marabito became CEO in 2018 after serving as the Chief Financial Officer.

He joined the company in 1994 as Corporate Controller.

He is also the Chairman of the Metal Services Center Institute (MSCI) and served on the Board of Directors and as Audit Committee Chairman for Hawk Corporation from 2008 until the company’s sale in November 2010.

Marabito has served on numerous non-profit boards over the course of his career including as Chair of the Northeast Ohio Regional Board for the Make-A-Wish Foundation.

Benaree Pratt Wiley has served as a Director of CBIZ since May 2008, when she was elected as an independent director.

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He was appointed President of the Benefits & Insurance practice group in May 2015, and was appointed Senior Vice President of Strategic Initiatives in September 2005.

Kouzelos also served as the Chief Operating Officer of the Benefits &

Insurance division between April 2007 and May 2015, as Vice President of Strategic Initiatives from April 2001 through August 2005, as Vice President of Shared Services from August 2000 to March 2001, and as Director of Business Integration from June 1998 to July 2000.

Kouzelos was associated with KPMG LLP, an international accounting firm, from 1990 to September 1996 and received his Master of Business Administration degree from The Ohio State University in May of 1998.

Kouzelos also served as the Chief Operating Officer of the Benefits & Insurance division between April 2007 and May 2015, as Vice President of Strategic Initiatives from April 2001 through August 2005, as Vice President of Shared Services from August 2000 to March 2001, and as Director of Business Integration from June 1998 to July 2000.

Kouzelos was associated with KPMG LLP, an international

accounting firm, from 1990 to September 1996 and received his Master of Business Administration degree from The Ohio State University in May of 1998.

Other Key Employees:

Mills has served as the Chief Operating Officer of CBIZ’s Financial Services practice group since January 2014.

Prior to this appointment, Mr.

Mills was President of CBIZ MHM, LLC — Kansas City, and responsible for offices in St.

Louis, Topeka, Wichita and Tulsa.

His responsibilities at a corporate level include business development, marketing, strategic planning, national training and organizational efficiency.

Mills has also served as the Kansas City and Midwest Regional Attest Leader, and for many years consulted with clients on a variety of topics, including acquisitions, strategic planning, succession planning and improving profitability.

His clients included not-for-profit organizations, construction companies, manufacturing and distribution companies.

Mills began his career with Mayer Hoffman McCann in 1978.

Gleespen has served as Corporate Secretary since April 2001 and General Counsel since June 2001.

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He has served as the Chairman of the Board for organizations including the Silicon Valley Chamber of Commerce, Artsopolis.com, the Silicon Valley Ad Club, and The San Jose Repertory Theatre.

Kowalski joined CBIZ in December 2003 as Corporate Tax Manager and was appointed Vice President — Tax in April 2008.

Kowalski has more than thirty years of corporate tax experience, beginning his career in 1982 with Price Waterhouse and holding various corporate tax positions with The Scott Fetzer Company and UCAR Carbon Company Inc.

Kowalski is a CPA (inactive) and received his Masters of Taxation degree from the University of Akron.

Sobe joined CBIZ in August 2016 as Treasurer.

Farrell has served as the Chief Human Resources Officer since 2021.

Prior to joining CBIZ, Ms.

Sobe served as Vice President, Corporate Treasurer for Crowne Group, LLC from November 2014 through January 2016.

Prior to joining Crowne Group, LLC, Ms.

Sobe was Vice President, Chief Financial Officer of AMRESCO, LLC (a division of VWR) from October 2012 to October 2014.

Prior to joining AMRESCO, LLC, Ms.

Sobe held various financial and accounting positions with companies representing a variety of industries, including Associated Materials, LLC, Jo-Ann Stores, LLC, Revco D.S., Inc., and Ernst & Young, LLP.

Sobe is a CPA (inactive), and she received a

Master of Business Administration from Case Western Reserve University in May 2000.

Sobe is a member of the American Institute of Certified Public Accountants and the Association for Financial Professionals.

Noftsinger was appointed Vice President of Finance and Corporate Controller for CBIZ in March 2020.

Prior to his current role, Mr.

Noftsinger has served in various leadership positions within CBIZ organizations, particularly as President of CBIZ's Employee Service Organization and President of CBIZ Payroll.

Noftsinger also created the CBIZ Small Business Employment Index, which is a metric designed to gauge hiring in companies with less than 300 employees across the United States.

Noftsinger can be seen on Fox Business, CNBC and Bloomberg on occasion to discuss the state of small business hiring and employment.

His comments on the state of small businesses have also been carried in multiple print and web outlets including Smart Money, Accounting Today and The Wall Street Journal.

Prior to joining CBIZ in September of 2004, Mr.

Noftsinger was controller of Fortegra, Incorporated, a highly specialized IT consultation and integration firm in the energy and health-care industries.

Noftsinger is a CPA and a member of the American Institute of Certified Public Accountants.

Farrell held human resources leadership roles at Alternate Health Solutions Network, Orvis and Lincoln Electric.

An attorney by training, Ms.

Farrell began her career at Jones Day before becoming a consultant focused on human capital.

Farrell graduated from The Ohio State University and received her Juris Doctor from the Case Western Reserve School of Law.

She remains civically active in the Northeast, Ohio community and served on the Board of numerous non-profit organizations.

EXECUTIVE COMPENSATION.

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PRINCIPAL ACCOUNTING FEES AND SERVICES.

Our independent registered public accounting firm is KPMG LLP , Cleveland, OH , Auditor Firm ID:

Information with respect to this item is incorporated by reference from our Definitive Proxy Statement for the 2022 Annual Stockholders’ Meeting to be filed with the SEC no later than 120 days after the end of our fiscal year.

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001-32961, on November 1, 2020, and incorporated herein by reference).

Third Amendment to Loan Agreement by and among CBIZ Benefit and Insurance, Inc.

and the Huntington National Bank (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, File No.

001-32961, on October 29, 2021, and incorporated herein by reference).

List of Subsidiaries of CBIZ, Inc.

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A.Haag Sherman

/s/ RICHARD T.

MARABITO Director February 25, 2022

/s/ BENAREE PRATT WILEY Director February 25, 2022

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We have audited the accompanying consolidated balance sheets of CBIZ, Inc.

and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2021 and December 31, 2020, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with U.S.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and December 31, 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Financial Accounting Standards Board Accounting Standards Codification Topic 842, Leases .

Basis for Opinions

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A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting

includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

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The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of the estimation of losses for certain billed and unbilled receivables

As discussed in Note 1 to the consolidated financial statements, the Company maintains allowances for doubtful accounts and unbilled services for estimated losses.

As of December 31, 2020, the allowance for doubtful accounts was $14.9 million, or 6.4% of total accounts receivable.

The allowance for doubtful accounts and unbilled services is recorded based on the Company’s historical experience, client credit-worthiness, the age of accounts receivable, and economic trends and conditions.

Estimation of losses for certain billed and unbilled receivables

As discussed in Note 1 to the consolidated financial statements, the Company maintains an allowance for doubtful accounts for estimated losses.

Unbilled receivables are recorded at estimated net realizable value.

As of December 31, 2021, the allowance for doubtful accounts was $16.2 million, or 6.3% of total accounts receivable, and unbilled receivables were $67.6 million.

The allowance for doubtful accounts and unbilled receivables are recorded based on the Company’s historical experience, client credit-worthiness, age of receivables, and economic trends and conditions.

We have identified the evaluation of the Company’s estimation of losses related to the Financial Services practice for billed and unbilled receivables as a critical audit matter.

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We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s process to develop the assumptions used to estimate losses related to billed and unbilled receivables.

For specific clients, we evaluated the established allowance for doubtful accounts and unbilled services by inquiring of relevant Company personnel.

For specific clients, we evaluated the established allowance for doubtful accounts and unbilled receivables by inquiring of relevant Company personnel.

For a selection of clients, we evaluated the Company’s cash collections and billings subsequent to December 31, 2021.

We assessed the Company’s loss estimation by inspecting relevant underlying documentation, including contractual documents, historical trends, age of accounts receivable, and contract realization analyses.

We assessed the Company’s loss estimation by inspecting relevant underlying documentation, including contractual documents, historical trends, age of receivables, and contract realization analyses.

We performed the following analyses over billed and unbilled receivables and related accounts:

• Compared actual incurred bad debt for certain billed and unbilled receivables to the corresponding previously established allowance for doubtful accounts and unbilled services, and

• Compared actual incurred losses for certain billed and unbilled receivables to the corresponding previously established allowance for doubtful accounts, and

• Compared the age of the current billed and unbilled receivables as of December 31, 2021, which represents the days outstanding for the current billed and unbilled receivables to the age of the Company’s billed and unbilled receivables in prior periods.

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Corporate general and administrative expenses 56,150 46,066 44,406

Legal settlement, net 30,468 — —

Operating income 72,672 92,480 80,522

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Interest expense ( 3,868 ) ( 4,983 ) ( 5,765 )

(Loss) gain on sale of operations, net ( 509 ) 417 1,025

Other income (expense), net 16,500 17,715 ( 7,087 )

Total other income (expense), net 11,008 12,367 ( 12,707 )

Gain (loss) on sale of operations, net 5,995 ( 509 ) 417

Other income, net 18,241 16,500 17,715

Total other income, net 20,368 11,008 12,367

Income from continuing operations before income tax expense 93,040 103,488 92,889

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( 478 ) ( 42 ) 940

Net unrealized (loss) on interest rate swaps, net of income tax (benefit) of $( 494 ), $( 380 ) and $( 8 )

Net unrealized gain (loss) on interest rate swaps, net of income tax expense (benefit) of $ 577 , $( 494 ) and $( 380 )

1,799 ( 1,525 ) ( 1,222 )

Foreign currency translation ( 19 ) ( 22 ) ( 17 )

Total other comprehensive loss ( 1,589 ) ( 299 ) ( 300 )

Total other comprehensive income (loss) 1,302 ( 1,589 ) ( 299 )

Total comprehensive income $ 72,189 $ 76,710 $ 70,415

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Cumulative-effect adjustment — — — — ( 101 ) — 101 —

Adjusted balance at January 1, 2018 130,075 75,484 1,301 675,504 347,393 ( 491,046 ) ( 182 ) 532,970

Net income — — — — 70,714 — — 70,714

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Share repurchases — 1,210 — — — ( 25,300 ) — ( 25,300 )

Indirect repurchase of shares for minimum tax withholding — 95 — — — ( 1,863 ) — ( 1,863 )

Restricted stock 228 — 2 ( 2 ) — — — —

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December 31, 2019 133,056 77,637 1,331 714,704 479,576 ( 535,693 ) ( 680 ) 659,238

Cumulative-effect adjustment ( 101 ) 101 —

Net income — — — — 78,299 — — 78,299

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Share repurchases — 2,311 — — — ( 57,564 ) — ( 57,564 )

Indirect repurchase of shares for minimum tax withholding — 97 — — — ( 2,040 ) — ( 2,040 )

Restricted stock 25 — — — — — — —

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Net income — — — — 70,887 — — 70,887

Other comprehensive loss — — — — — — ( 1,589 ) ( 1,589 )

Other comprehensive income — — — — — — 1,302 1,302

Share repurchases — 3,012 — — — ( 96,382 ) — ( 96,382 )

Indirect repurchase of shares for minimum tax withholding — 92 — — — ( 3,037 ) — ( 3,037 )

Restricted stock 80 — 1 ( 1 ) — — — —

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Adjustments to reconcile net income to net cash provided by operating activities:

Gain on sale of operations, net of tax 509 ( 417 ) ( 1,025 )

Loss (gain) on sale of operations, net of tax ( 5,995 ) 509 ( 417 )

Depreciation and amortization expense 27,078 23,139 22,345

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Deferred income taxes 9,234 ( 770 ) 9,695

Employee stock awards 8,869 7,254 6,866

Excess tax benefits from share based payment arrangements ( 2,394 ) ( 4,773 ) ( 3,260 )

Stock-based compensation expense 11,407 8,869 7,254

Other, net ( 126 ) 485 1,077

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Proceeds from the sales and maturities of client fund investments 14,877 37,487 23,958

Proceeds from sales of divested operations 9,710 711 3

Additions to property and equipment ( 8,984 ) ( 11,576 ) ( 13,873 )

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Payment for acquisition of treasury stock ( 100,487 ) ( 58,536 ) ( 27,163 )

(Decrease) increase in client funds obligations ( 13,747 ) 10,069 ( 41,509 )

Changes in client funds obligations ( 8,874 ) ( 13,747 ) 10,069

Payment of contingent consideration of acquisitions ( 14,084 ) ( 12,859 ) ( 17,457 )

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ASU - Accounting Standards Update.

CECL - Current expected credit losses.

CPA firm - Certified Public Accounting firm.

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LIBOR - London Interbank Offered Rate.

Legacy ASC Topic 840 - ASC Topic 840, Leases

New Lease Standard - ASC Topic 842, Leases

ROU- Right of Use.

SEC - United States Securities & Exchange Commission.

Topic 326 - ASU No.

2016-13, Financial Instruments - Credit Losses.

Organization - CBIZ, Inc.

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Fees earned by us under the ASAs are recorded at net realizable value as a component of “Revenue” in the accompanying Consolidated Statements of Comprehensive Income and were approximately $ 174.8 million, $ 159.4 million and $ 157.6 million for the years ended December 31, 2021, 2020 and 2019, respectively, the majority of which was related to services rendered to privately-held clients.

In the event that accounts receivable and unbilled work in process become uncollectible by the CPA firms, the service fee due to us is typically reduced on a

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

proportional basis.

In the event that accounts receivable and unbilled work in process become uncollectible by the CPA firms, the service fee due to us is typically reduced on a proportional basis.

Although the ASAs do not constitute control, we are one of the beneficiaries of the agreements and may bear certain economic risks.

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Significant Accounting Policies - We consider the following policies to be beneficial in understanding the judgments that are involved in the preparation of our consolidated financial statements and the uncertainties that could impact our financial condition, results of operations and cash flows.

Use of Estimates - The preparation of consolidated financial statements in conformity with GAAP and pursuant to the rules and regulations of the SEC requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

amounts reported in the consolidated financial statements and accompanying notes.

Management’s estimates and assumptions are derived from and are continually evaluated based upon available information, judgment and experience.

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The grant date fair value of stock options is based on the Black-Scholes-Merton pricing model, which incorporates assumptions regarding the expected volatility, the expected option life, the risk-free interest rate and the expected dividend yield.

The grant date fair value of restricted stock and restricted stock unit is based on the closing price of the underlying stock on the date of issuance.

The grant date fair value of the performance share unit is based on the closing price of the underlying stock on the date of issuance and recorded based on achievement of target performance metrics.

The expense related to stock options, restricted stock, and restricted stock units is recognized over the requisite service period which is generally three to four years .

The grant date fair value of restricted stock awards and restricted stock units is based on the closing price of the underlying stock on the date of issuance.

The grant date fair value of the performance share units is based on the closing price of the underlying stock on the date of issuance and recorded based on achievement of target performance metrics.

The expense related to stock options, restricted stock awards, and restricted stock units is recognized over the requisite service period which is generally three to four years .

The expense related to performance share units is recorded over the three-year performance period based on the fair value on the grant date and adjusted each reporting period for the achievement of the performance metrics, based on our best estimate using available information.

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The lease term may include the options to extend or terminate the lease when it is reasonably certain that we will exercise the applicable option.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

unknown due to rent escalations being tied to factors that are not currently measurable (such as increases in the consumer price index).

Related rent expense under such leases is recognized evenly throughout the term of the lease when the total lease commitment is a known amount, and recorded on an as incurred basis when future rent payment increases under the obligation are unknown due to rent escalations being tied to factors that are not currently measurable (such as increases in the consumer price index).

Differences between rent expense recognized and the cash payments required under these leases are recorded as a component of “Operating lease liability” in the Non-current liabilities section of the accompanying Consolidated Balance Sheets.

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Cash and Cash Equivalents - Cash and cash equivalents consist of cash on hand and investments with an original maturity of three months or less when purchased.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Restricted Cash - Restricted cash consists of funds held by us in relation to our capital and investment advisory services as those funds are restricted in accordance with applicable Financial Industry Regulatory Authority regulations.

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The cost of software purchased or developed for internal use is capitalized and amortized using the straight-line method over an estimated useful life not to exceed seven years .

We periodically review long-lived assets for impairment whenever events or changes in business circumstances

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

indicate that the carrying value of the assets may not be recoverable.

We periodically review long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable.

Under those circumstances, if the fair value were less than the carrying amount of the asset, we would recognize a loss for the difference.

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We carry client lists and non-compete agreements at cost, less accumulated amortization, in the accompanying Consolidated Balance Sheets.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Goodwill is reviewed for impairment annually during the fourth quarter or more frequently in the event of an impairment indicator.

We are required to consider whether it is more likely than not (defined as a likelihood of more than 50%) that the fair value of each reporting unit has fallen below its carrying value, thus requiring us to perform an interim goodwill impairment test.

Intangible assets with definite lives, such as client lists and non-compete agreements, are amortized using the straight-line method over their estimated useful lives (generally ranging from two to fifteen years ).

We review these assets for impairment whenever events or changes in circumstances indicate an asset’s carrying value may not be recoverable.

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We record a liability to the extent that a tax position taken or expected to be taken on a tax return exceeds the amount recognized in the consolidated financial statements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Business Combinations - We recognize and measure identifiable tangible and intangible assets acquired and liabilities assumed as of the acquisition date at fair value.

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Contingent Purchase Price Liabilities - Contingent purchase price liabilities consisting of cash payments and common stock issuances result from our business acquisitions and are recorded at fair value at the time of acquisition as “Contingent purchase price liability - current” and “Contingent purchase price liability - non-current” in the accompanying Consolidated Balance Sheets.

We estimate the fair value of our contingent purchase price liabilities using a probability-weighted discounted cash flow model.

We estimate the fair value of our contingent purchase price

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

liabilities using a probability-weighted discounted cash flow model.

We probability weight risk-adjusted estimates of future performance of acquired businesses, then calculate the contingent purchase price based on the estimates and discount them to present value representing management’s best estimate of fair value.

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ASUs not listed below were reviewed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements.

Accounting Standards Adopted in 2020

Credit Losses:

Effective January 1, 2020, we adopted Topic 326, which replaces the incurred loss model with an expected loss model that is referred to as the current expected credit loss model.

The CECL model requires the Company to immediately recognize an estimate of credit losses that are expected to occur over the life of financial instruments recorded at amortized cost, including trade receivables.

Topic 326 also amends the other-than-temporary impairment model for available-for-sale securities by requiring the recognition of credit loss impairments as an allowance rather than a write-down on available-for-sale securities.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists.

For financial instruments recorded at amortized cost, we did not recognize a cumulative-effect adjustment to retained earnings as the adoption of Topic 326 did not have a material impact on our consolidated financial statements.

For available-for-sale securities, the updated guidance was applied prospectively.

Fair Value Measurement:

On January 1, 2020, we adopted ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.

This standard amends existing fair value measurement disclosure requirements by adding, changing, or removing certain disclosures.

The adoption of this guidance did not have a material impact on our consolidated financial statements.

Income Taxes:

On January 1, 2020, we adopted ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

The adoption of this guidance did not have a material impact on our consolidated financial statements.

Accounting Standards Issued But Not Yet Adopted

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The amendments in this ASU are effective for all entities through December 31, 2022.

We are currently evaluating the effect of this new standard on our consolidated financial statements.

We are currently evaluating the effect of this new standard on our consolidated financial statements and have not adopted any of the transition relief available under the new guidance as of December 31, 2021.

Subsequently, in January 2021, the FASB issued ASU No.

2021-01, Reference Rate Reform (Topic 848):

Scope, which provides optional temporary guidance for entities transitioning away from the LIBOR and other interbank offered rates to new reference rates so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions within Topic 848.

This ASU clarifies that the derivative instruments affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions provided in Topic 848.

ASU 2021-01 is effective immediately for all entities.

Entities may elect to apply the amendments on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued.

The amendments provided in this ASU do not apply to contract modifications made, as well as new hedging relationships entered into, after December 31, 2022, and to existing hedging relationships evaluated for

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

effectiveness for periods after December 31, 2022, except for certain hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship.

The following tables disaggregate our revenue by source (in thousands):

For the Year Ended December 31, 2021

Services Benefits &

Insurance National

Services Benefits and

Insurance Services National

Practices Consolidated

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For the Year Ended December 31, 2020

Services Benefits &

Insurance National

Services Benefits and

Insurance Services National

Practices Consolidated

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Total revenue $ 629,778 $ 297,758 $ 36,361 $ 963,897

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

For the Year Ended December 31, 2019

Services Benefits &

Insurance National

Services Benefits and

Insurance Services National

Practices Consolidated

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At the end of each reporting period, we evaluate the work performed to date to ensure that the amount of revenue recognized in each reporting period for the client arrangement is equal to the performance obligations met.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Time and expense arrangement revenue is recognized over time with progress measured towards completion with value being transferred through our hourly fee arrangement at expected net realizable rates per hour, plus agreed-upon out-of-pocket expenses.

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Revenue also includes investment income related to client payroll funds that are held in CBIZ accounts, as is industry practice.

We capitalize the cost to obtain a contract unless the contract period is one year or less.

We pay commissions monthly and require the recipient of the commission to be employed by us at the time of the payment.

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• Commission revenue and fee income are recognized over the contract period as these services are provided to clients continuously throughout the term of the arrangement.

Our customers benefit from

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

each month of service on its own and although volume and the number of participants may differ month to month, our obligation to perform substantially remains the same.

Our customers benefit from each month of service on its own and although volume and the number of participants may differ month to month, our obligation to perform substantially remains the same.

• Contingent revenue arrangements are related to carrier-based performance targets.

10 unchanged sentences

Contingent revenue is not a significant revenue stream to our consolidated financial position or results of operations.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Revenue related to retirement plan services consist of advisory, third party administration and actuarial services.

11 unchanged sentences

Non-core Benefits and Insurance Services consists of transactional businesses that tend to fluctuate.

These include life insurance, wholesale benefits agency and talent and compensation services.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

These include life insurance, talent and compensation services.

National Practices

8 unchanged sentences

We have applied the provisions of Topic 606 and the FASB Transition Resource Group memo number 10-14, and note that the definition of contract duration does not extend beyond the goods and services already transferred for contracts that provide both the Company and the client with the right to cancel or terminate the contract with no substantial penalty.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

ACCOUNTS RECEIVABLE, NET

13 unchanged sentences

Property and equipment, net at December 31, 2021 and 2020 consisted of the following (in thousands):

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Buildings and leasehold improvements $ 41,894 $ 37,022

8 unchanged sentences

A summary of changes in the carrying amount of goodwill by operating segment for the years ended December 31, 2021 and 2020 were as follows (in thousands):

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Services Benefits and

1 unchanged sentence

Practices Total

December 31, 2018 $ 329,626 $ 233,008 $ 1,666 $ 564,300

Gross $ 378,294 $ 260,033 $ 33,873 $ 672,200

Accumulated impairment $ ( 44,047 ) $ ( 7,733 ) $ ( 32,207 ) $ ( 83,987 )

Net at December 31, 2019 $ 334,247 $ 252,300 $ 1,666 $ 588,213

Additions 34,785 62,654 — 97,439

Divestitures and other adjustment ( 993 ) ( 1,576 ) — ( 2,569 )

December 31, 2019 $ 334,247 $ 252,300 $ 1,666 $ 588,213

Gross 412,086 321,111 33,873 767,070

Accumulated impairment ( 44,047 ) ( 7,733 ) ( 32,207 ) ( 83,987 )

Net at December 31, 2020 $ 368,039 $ 313,378 $ 1,666 $ 683,083

Additions 58,646 1,800 — 60,446

Divestitures and other adjustment — ( 2,786 ) — ( 2,786 )

December 31, 2020 $ 368,039 $ 313,378 $ 1,666 $ 683,083

Gross 470,732 320,125 33,873 824,730

Accumulated impairment ( 44,047 ) ( 7,733 ) ( 32,207 ) ( 83,987 )

Net at December 31,2021 $ 426,685 $ 312,392 $ 1,666 $ 740,743

We review goodwill at the reporting unit level at least annually, as of November 1, for impairment.

16 unchanged sentences

Other intangible assets are amortized over periods ranging from 3 to 15 years.

Based on the amount of intangible assets subject to amortization at

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

December 31, 2020, the estimated amortization expense is $ 14.0 million for 2021, $ 12.3 million for 2022, $ 11.1 million for 2023, $ 9.6 million for 2024 and $ 8.2 million for 2025.

Based on the amount of intangible assets subject to amortization at December 31, 2021, the estimated amortization expense is $ 16.7 million for 2022, $ 15.5 million for 2023, $ 13.8 million for 2024, $ 12.3 million for 2025 and $ 10.4 million for 2026.

FINANCIAL INSTRUMENTS

2 unchanged sentences

As a result, the fair value measurement of our bank debt is classified as Level 2 in the fair value hierarchy.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Concentrations of Credit Risk - Financial instruments that may subject us to concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable.

2 unchanged sentences

thus, concentration of credit risk with respect to accounts receivable is not significant.

Available-For-Sale Debt Securities - Available-for-sale debt securities consist primarily of corporate and municipal bonds and US treasury bills.

Available-For-Sale Debt Securities - Available-for-sale debt securities consist primarily of corporate and municipal bonds.

The net par values of these securities total $ 37.0 million and $ 24.9 million at December 31, 2021 and 2020, respectively.

The bonds have maturity dates or callable dates ranging from January 2022 through November 2025, and are included in “Funds held for clients — current” in the accompanying Consolidated Balance Sheets based on our intent and ability to sell these investments at any time under favorable conditions.

At December 31, 2020, unrealized losses on the securities totaling approximately $ 0.1 million have not been recognized as a credit loss because the bonds are investment grade quality and management is not required or does not intend to sell prior to an expected recovery in value.

At December 31, 2021, unrealized losses on the securities were not material and have not been recognized as a credit loss because the bonds are investment grade quality and management is not required or does not intend to sell prior to an expected recovery in value.

The bond issuers continue to make timely principal and interest payments.

2 unchanged sentences

Purchases 26,980 3,447

Sales ( 22,078 ) ( 1,686 )

Maturities and calls ( 15,409 ) ( 22,272 )

Decrease in bond premium ( 857 ) ( 460 )

Redemptions ( 6,530 ) ( 22,078 )

Maturities ( 8,347 ) ( 15,409 )

Change in bond premium 1,517 ( 857 )

Fair market value adjustment ( 658 ) ( 54 )

Fair value at December 31 $ 38,670 $ 25,708

In addition to the available-for-sale securities discussed above, we also held certified deposits and other depository assets in the amount of $ 2.5 million at December 31, 2019.

In addition to the available-for-sale securities discussed above, we also held other depository assets in the amount of $ 1.1 million at December 31, 2021.

We did no t have any depository items at December 31, 2020.

Those depository assets are classified as Level 1 in the fair value hierarchy.

Interest Rate Swaps - We utilize interest rate swaps to manage interest rate risk exposure associated with our floating-rate debt under the 2018 credit facility, or the forecasted acquisition of such liability.

4 unchanged sentences

The designation of a derivative instrument as a hedge and its ability to meet the hedge accounting criteria determine how we reflect the change in fair value of the derivative instrument.

A derivative qualifies for hedge accounting

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

treatment if, at inception, it meets defined correlation and effectiveness criteria.

A derivative qualifies for hedge accounting treatment if, at inception, it meets defined correlation and effectiveness criteria.

These criteria require that the anticipated cash flows and/or changes in fair value of the hedging instrument substantially offset those of the position being hedged.

5 unchanged sentences

For the years ended December 31, 2021 and 2020, the interest rate swaps were deemed to be highly effective.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

The following table summarizes our outstanding interest rate swaps and their classification in the accompanying Consolidated Balance Sheets at December 31, 2021 and 2020 (in thousands).

4 unchanged sentences

Interest rate swaps $ 45,000 $ ( 496 ) Other non-current liabilities

Interest rate swap $ 50,000 $ 405 Other non-current asset

December 31, 2020

Value Balance Sheet Location

Interest rate swap $ 10,000 $ ( 13 ) Other current liability

Interest rate swaps $ 85,000 $ ( 2,552 ) Other non-current liabilities

Interest rate swap $ 25,000 $ 66 Other current assets

During 2020, we entered into a new 5-year interest rate swap with a notional value of $ 50.0 million and terminated one interest rate swap with a notional value of $ 25.0 million.

During the fourth quarter of 2021, we entered into a new 5-year interest rate swap with a notional value of $ 30 million and fixed rate of 1.249 %.

One interest rate swap with a notional value of $ 10 million and fixed rate of 1.120 % expired during the first quarter of 2021.

As of December 31, 2021, we have four interest rate swaps outstanding.

Under the terms of the interest rate swaps, we pay interest at a fixed rate of interest plus applicable margin as stated in the agreement, and receive interest that varies with the one-month LIBOR.

The notional value, fixed rate of interest and expiration date of each interest rate swap as of December 31, 2020 is (i) $ 10 million – 1.120 % - February, 2021, (ii) $ 20 million – 1.770 % - May, 2022, (iii) $ 15 million – 2.640 % - June, 2023 and (iv) $ 50.0 million - 0.885 % - April, 2025.

Under the terms of the interest rate swaps, we pay interest at a fixed rate plus applicable margin as stated in the agreements, and receive interest that varies with the one-month LIBOR.

The notional value, fixed rate of interest and expiration date of each interest rate swap as of December 31, 2021 is (i) $ 20.0 million – 1.770 % - May, 2022, (ii) $ 15.0 million – 2.640 % - June, 2023, (iii) $ 50.0 million - 0.885 % - April, 2025 and (iv) $ 30.0 million - 1.249 % - December, 2026.

During the next twelve months, the amount of the December 31, 2021 AOCL balance that will be reclassified to earnings is expected to be immaterial.

The following table summarizes the effects of the interest rate swap on our accompanying Consolidated Statements of Comprehensive Income for the years ended December 31, 2021 and 2020 (in thousands):

Loss recognized in

AOCL, net of tax (Loss) Gain reclassified from

Gain (loss) recognized in

AOCL, net of tax Loss reclassified from

AOCL into expense

4 unchanged sentences

FASB ASC Topic 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy that requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Fair value is defined as the price that would be received on the sale of an asset or paid to transfer a liability in an

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

orderly transaction between market participants at the measurement date (exit price).

Fair value is defined as the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).

The inputs used to measure fair value are classified into the following hierarchy:

2 unchanged sentences

• Level 3 — Unobservable inputs for the asset or liability

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

We endeavor to utilize the best available information in measuring fair value.

6 unchanged sentences

Available-for-sale debt securities 1 38,670 25,708

Other depository assets 1 1,144 —

Deferred compensation plan liabilities 1 ( 136,321 ) ( 127,332 )

1 unchanged sentence

Contingent purchase price liabilities 3 ( 79,139 ) ( 54,391 )

Contingent Purchase Price Liabilities - During the years ended December 31, 2020 and 2019, we recorded income of $ 0.6 million and expense of $ 1.6 million, respectively, due to accretion, adjusting for expected results of acquired businesses and the revaluation of stock related to contingent payments.

These changes are included in Other income (expense), net in the accompanying Consolidated Statements of Comprehensive Income.

Contingent Purchase Price Liabilities - During the years ended December 31, 2021 and 2020, we recorded expense of $ 2.4 million and income of $ 0.6 million, respectively, due to accretion, adjusting for expected results of acquired businesses and the revaluation of stock related to contingent payments.

These changes are included in Other income, net in the accompanying Consolidated Statements of Comprehensive Income.

Refer to Note 18, Business Combinations, for further discussion of our acquisitions and contingent purchase price liabilities.

11 unchanged sentences

Balance — December 31, 2021 $ ( 79,139 )

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

For financial reporting purposes, income from continuing operations before income taxes includes the following components (in thousands):

3 unchanged sentences

Total $ 93,040 $ 103,488 $ 92,889

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Income tax expense (benefit) included in the accompanying Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019 was as follows (in thousands):

48 unchanged sentences

Total gross deferred tax liabilities 60,223 52,766

Net deferred tax liability $ ( 8,752 ) $ ( 11,720 )

Deferred income taxes, net $ ( 15,440 ) $ ( 8,752 )

We have established valuation allowances for deferred tax assets related to certain employee benefits and compensation, state net operating loss (“NOL”) carryforwards and state income tax credit carryforwards at December 31, 2021 and December 31, 2020.

The net decrease in the valuation allowance of $ 0.1 million for the year ended December 31, 2020 primarily related to changes in the valuation allowance for NOLs.

The net decrease in the valuation allowance of $ 0.6 million for the year ended December 31, 2021 primarily related to changes in the valuation allowance for NOLs and state tax credit carryforwards.

In assessing the realization of deferred tax assets, management considers all available positive and negative evidence, including projected future taxable income, scheduled reversal of deferred tax liabilities, historical financial operations and tax planning strategies.

1 unchanged sentence

We file income tax returns in the United States, Canada, and most state jurisdictions.

CBIZ's federal income tax returns for years ending prior to January 1, 2018 are no longer subject to examination.

With limited exceptions, our state and local income tax returns and non-U.S.

1 unchanged sentence

The availability of NOLs and state tax credits are reported as deferred tax assets, net of applicable valuation allowances, in the accompanying Consolidated Balance Sheets.

At December 31, 2020, we had state net operating loss carryforwards of $ 34.4 million and state tax credit carryforwards of $ 1.3 million.

The state net operating loss carryforwards expire on various dates between 2021 and 2040 and the state tax credit carryforwards expire on various dates between 2021 and 2029.

At December 31, 2021, we had state net operating loss carryforwards of $ 36.4 million and a state tax credit carryforward of $ 0.2 million.

The state net operating loss carryforwards expire on various dates between 2022 and 2041 and the state tax credit carryforward expires on various dates between 2022 and 2029.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

4 unchanged sentences

Additions for tax positions of the current year 161 150 145

Additions for positions of prior years 400 — —

Settlements of prior year positions ( 374 ) — ( 282 )

6 unchanged sentences

We recognize interest expense, and penalties related to unrecognized tax benefits as a component of income tax expense.

During 2021, we recorded a decrease of $ 0.2 million in accrued interest, and, as of December 31, 2021, we had recognized a liability for interest expense and penalties of $ 0.2 million and $ 0.2 million, respectively, relating to unrecognized tax benefits.

During 2020, we recorded an immaterial decrease in accrued interest, and, as of December 31, 2020, we had recognized a liability for interest expense and penalties of $ 0.4 million and $ 0.2 million, respectively, relating to unrecognized tax benefits.

During 2019, we accrued interest expense of less than $ 0.1 million and, as of December 31, 2019, had recognized a liability for interest expense and penalties of $ 0.7 million and $ 0.2 million, respectively, relating to unrecognized tax benefits.

DEBT AND FINANCING ARRANGEMENTS

15 unchanged sentences

The credit facility contains a provision that, in the event of a defined change in control, the credit facility may be terminated.

In addition, the 2018 credit facility contains financial covenants that require us to meet certain requirements with respect to (i) a total leverage ratio and (ii) minimum fixed charge coverage ratio which may limit our ability to borrow up to the total commitment amount.

As of December 31, 2020, we are in compliance with all covenants.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

may limit our ability to borrow up to the total commitment amount.

As of December 31, 2021, we are in compliance with all covenants.

Other line of credit

14 unchanged sentences

The components of accumulated other comprehensive loss at December 31, 2021 and 2020 were as follows (in thousands):

Net unrealized gain on available-for-sale securities, net of income tax expense of $ 128 and $ 220 , respectively

Net unrealized (loss) gain on available-for-sale securities, net of income tax (benefit) expense of $( 51 ) and $ 128 , respectively

$ ( 127 ) $ 351

Net unrealized loss on interest rate swap, net of income tax (benefit) of $( 41 ) and $( 618 ), respectively

11 unchanged sentences

Payment by us under such indemnification clauses are generally conditioned upon the other party making a claim.

Such claims are typically subject to challenge by us and to dispute resolution procedures specified in the particular contract.

Further, our obligations under these agreements may be limited in terms of time and/or amount and, in some instances, we may have recourse against third parties for certain payments made by us.

It is not possible to predict the maximum potential amount of future payments under these

Such claims are typically subject to challenge by us and to dispute resolution

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

indemnification agreements due to the conditional nature of our obligations and the unique facts of each particular agreement.

procedures specified in the particular contract.

Further, our obligations under these agreements may be limited in terms of time and/or amount and, in some instances, we may have recourse against third parties for certain payments made by us.

It is not possible to predict the maximum potential amount of future payments under these indemnification agreements due to the conditional nature of our obligations and the unique facts of each particular agreement.

Historically, we have not made any payments under these agreements that have been material individually or in the aggregate.

7 unchanged sentences

The amount of license bonds outstanding was $ 2.3 million and $ 2.2 million at December 31, 2021 and 2020, respectively.

Legal Proceedings - In 2010, CBIZ, Inc.

and its subsidiary, CBIZ MHM, LLC (fka CBIZ Accounting, Tax & Advisory Services, LLC) (the “CBIZ Parties”), were named as defendants in lawsuits filed in the U.S.

District Court for the District of Arizona and the Superior Court for Maricopa County, Arizona.

The federal court case is captioned Robert Facciola, et al v.

Greenberg Traurig LLP, et al, and the state court cases are captioned Victims Recovery, LLC v.

Greenberg Traurig LLP, et al, Roger Ashkenazi, et al v.

Greenberg Traurig LLP, et al, Mary Marsh, et al v.

Greenberg Traurig LLP, et al;

and ML Liquidating Trust v.

Mayer Hoffman McCann, P.C.

(“Mayer Hoffman”), et al.

Prior to these suits CBIZ MHM, LLC was named as a defendant in Jeffrey C.

Greenberg Traurig LLP, et al.

These lawsuits arose out of the bankruptcy of Mortgages Ltd., a mortgage lender to developers in the Phoenix, Arizona area.

Various other professional firms and individuals not related to the Company were also named defendants in these lawsuits.

The lawsuits asserted claims for, among others things, violations of the Arizona Securities Act, common law fraud, and negligent misrepresentation, and sought to hold the CBIZ Parties vicariously liable for Mayer Hoffman’s conduct as Mortgage Ltd.’s auditor, as either a statutory control person under the Arizona Securities Act or a joint venturer under Arizona common law.

With the exception of claims being pursued by two plaintiffs from the Ashkenazi lawsuit (“Baldino Group”), all other related matters have been dismissed or settled without payment by the CBIZ Parties.

The Baldino Group’s claims, which allege damages of approximately $ 16.0 million, are currently pending, though no trial date has been set.

On September 16, 2016, CBIZ, Inc.

and its subsidiary CBIZ Benefits & Insurance Services, Inc.

(“CBIZ Benefits”) were named as defendants in a lawsuit filed in the U.S.

District Court for the Western District of Pennsylvania.

The federal court case is brought by UPMC, d/b/a University of Pittsburgh Medical Center, and a health system it acquired, UPMC Altoona (formerly, Altoona Regional Health System).

The lawsuit asserts professional negligence, breach of contract, and negligent misrepresentation claims against CBIZ, CBIZ Benefits and a former employee of CBIZ Benefits in connection with actuarial services provided by CBIZ Benefits to Altoona Regional Health System.

The plaintiff now seeks compensatory damages of between $ 124.0 million and $ 266.0 million, plus punitive damages.

The Court recently denied CBIZ Benefits’ motion for a summary judgment and trial is set for June 2021.

On December 19, 2016, CBIZ Operations, Inc.

Legal Proceedings - On December 19, 2016, CBIZ Operations, Inc.

(“CBIZ Operations”) was named as a defendant in a lawsuit filed by Zotec Partners, LLC ("Zotec") in the Marion County Indiana Superior Court.

1 unchanged sentence

The plaintiff claims that CBIZ Operations had a duty to disclose the unknown fact that the former employee had a financial arrangement with a Zotec vendor at the time CBIZ Operations sold CBIZ MMP to Zotec.

The plaintiff is now seeking damages of up to $ 177.0 million out of the $ 200.0 million transaction price.

Trial is scheduled for August 2021.

We cannot predict the outcome of the above matters or estimate the possible loss or range of possible loss, if any.

Although the proceedings are subject to uncertainties inherent in the litigation process and the ultimate

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

disposition of these proceedings is not presently determinable, we intend to vigorously defend these cases and we believe we have meritorious defenses to these claims.

In addition to those items disclosed above, we are, from time to time, subject to claims and suits arising in the ordinary course of business.

The plaintiff has been seeking damages of up to $ 177.0 million out of the $ 200.0 million transaction price.

Trial was held in October 2021.

The jury found in favor of CBIZ on all fraud, contract and other claims before it.

Zotec’s remaining claim for Indiana statutory securities fraud and CBIZ’s counterclaim for breach of contract against Zotec will be addressed by the trial Judge at a later date.

In addition to the item disclosed above, the Company is, from time to time, subject to claims and suits arising in the ordinary course of business.

We cannot predict the outcome of all such matters or estimate the possible loss or range of possible loss, if any.

Although the proceedings are subject to uncertainties inherent in the litigation process and the ultimate disposition of these proceedings is not presently determinable, we intend to vigorously defend these matters.

On June 24, 2021, CBIZ settled the case previously brought by UPMC, d/b/a University of Pittsburgh Medical Center, and a health system it acquired in connection with actuarial services provided by the Company.

Under the terms of the settlement, CBIZ paid a total settlement amount of $ 41.5 million and recorded a settlement loss of $ 30.5 million.

On September 27, 2021, the Superior Court for Maricopa County, Arizona, granted CBIZ’s motion to dismiss with prejudice all of the remaining claims filed in connection with the previously disclosed lawsuits arose out of the bankruptcy of Mortgages Ltd, a mortgage lender to developers in the Phoenix, Arizona area.

Therefore, all litigation related to these matters has been dismissed or settled without payment by CBIZ.

EMPLOYEE BENEFITS

4 unchanged sentences

equity, fixed income, stable value, and balanced-lifecycle funds.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Employer contributions (net of forfeitures) made to the plan during the years ended December 31, 2021, 2020 and 2019 were approximately $ 13.2 million, $ 12.2 million and $ 11.1 million, respectively.

6 unchanged sentences

Adjustments to the fair value of these investments are recorded in “Other income, net,” offset by the same adjustments to compensation expense (recorded as “Operating expenses” or “G&A expenses” in the accompanying Consolidated Statements of Comprehensive Income).

We recorded income of $ 15.4 million for the year ended December 31, 2020 and income of $ 19.2 million for the year ended December 31, 2019 and expense of $ 4.9 million for the year ended December 31, 2018, related to these investments.

We recorded income of $ 19.5 million, $ 15.4 million, and $ 19.2 million related to these investments for the year ended December 31, 2021, 2020 and 2019, respectively.

These investments are specifically designated as available to us solely for the purpose of paying benefits under the non-qualified deferred compensation plan.

9 unchanged sentences

When leverage is greater than 3.0 , the annual share repurchase is limited to $ 35.0 million.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Under the Share Repurchase Program, we repurchased 3.0 million and 2.3 million shares on the open market at a cost (including fees and commissions) of $ 96.4 million and $ 57.6 million during the years ended December 31, 2021 and 2020, respectively.

3 unchanged sentences

The price an employee pays for shares is 85 % of the fair market value of our common stock on the last day of the purchase period.

Purchase periods begin on the sixteenth day of the month and end on the fifteenth day of the subsequent month.

Purchase periods begin on the sixteenth day of

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

the month and end on the fifteenth day of the subsequent month.

Other than a one-year holding period from the date of purchase, there are no vesting or other restrictions on the stock purchased by employees under the ESPP.

15 unchanged sentences

Total share-based compensation expense $ 11,407 $ 8,869 $ 7,254

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Stock Options - Certain employees and non-employee directors were granted stock options.

5 unchanged sentences

incentive stock options and non-qualified stock options.

During the year ended December 31, 2020, we granted 50 thousand stock options to a non-employee director.

During the year ended December 31, 2021 and 2020, we granted 50 thousand and 50 thousand stock options to non-employee directors, respectively.

We did no t grant any stock options during the year ended December 31, 2019.

8 unchanged sentences

Exercised ( 647 ) $ 11.30

Expired or canceled ( 8 ) $ 18.15

Outstanding at December 31, 2021 1,223 $ 17.71 1.98 years $ 26.2

3 unchanged sentences

The intrinsic value is calculated as the difference between our stock price on the exercise date and the exercise price of each option exercised.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

• At December 31, 2021, we had unrecognized compensation cost for non-vested stock options of $ 0.2 million to be recognized over a weighted average period of approximately 0.35 years.

13 unchanged sentences

Restricted Stock Units and Awards - Under the 2019 Plan, certain employees and non-employee directors were granted restricted stock units and awards.

Restricted stock units and awards are independent of option grants and

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

vest at no cost to the recipients.

Restricted stock units and awards are independent of option grants and vest at no cost to the recipients.

Restricted stock units and awards are subject to forfeiture if employment terminates prior to the release of restrictions, generally one to four years from the date of grant.

6 unchanged sentences

Vested ( 246 ) $ 20.00

Forfeited ( 18 ) $ 19.56

Non-vested at December 31, 2021 389 $ 25.07

4 unchanged sentences

This market value was recorded as unearned compensation and is recognized as expense ratably over the periods which the restrictions lapse.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

• Awards outstanding at December 31, 2021 will be released from restrictions at dates ranging from February, 2022 through February, 2024.

4 unchanged sentences

The following table presents our PSU award activity during the twelve months ended December 31, 2021 (in thousands, except per share data):

(in thousands) Grant-Date

Performance Share Units Weighted

Fair Value Per Unit (1)

Outstanding at December 31, 2020 307 $ 22.18

Granted 140 $ 27.56

Expired or cancelled ( 25 ) $ 22.14

Adjustments for performance results (2)

Outstanding at December 31, 2021 473 $ 23.64

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

( 1) Represents weighted average market value of the shares;

awards are granted at no cost to the recipients.

(2) Represents the change in the number of performance awards earned based on performance achievement for the performance period.

EARNINGS PER SHARE

8 unchanged sentences

Contingent shares (2)

Performance share units 211 — —

Diluted weighted average common shares outstanding (3)

3 unchanged sentences

Diluted earnings per share from continuing operations $ 1.32 $ 1.42 $ 1.27

(1) For the years ended December 31, 2020, 2019 and 2018, a total of 0.3 million, 0.5 million and 0.4 million stock based awards, respectively, were excluded from the calculation of diluted earnings per share as their exercise prices would render them anti-dilutive.

(1) For the years ended December 31, 2021, 2020 and 2019, a total of 23 thousand, 253 thousand and 482 thousand stock based awards, respectively, were excluded from the calculation of diluted earnings per share as their exercise prices would render them anti-dilutive.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

(2) Contingent shares represent additional shares to be issued for purchase price earned by former owners of businesses acquired by us once future conditions have been met.

5 unchanged sentences

All of our leases are classified as operating leases and the majority of which are for office space and facilities.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Supplemental balance sheet information related to the Company’s operating leases as of December 31, 2021 and 2020 was as follows (in thousands):

10 unchanged sentences

Because the Company is not reasonably certain to exercise these renewal options, the options are not included in the lease term, and associated potential option payments are excluded from lease payments.

Lease expense, as accounted for under Legacy ASC Topic 840, was $ 38.0 million for the year ended December 31, 2018.

Maturities of operating lease liabilities at December 31, 2021 and minimum cash commitments under operating leases at December 31, 2020 were as follows (in thousands):

5 unchanged sentences

Total lease liabilities $ 176,394

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

December 31, 2020

5 unchanged sentences

RELATED PARTIES

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

The following is a summary of certain agreements and transactions between or among us and certain related parties.

3 unchanged sentences

In the aggregate, we paid approximately $ 2.3 million, $ 2.2 million and $ 2.4 million during the years ended December 31, 2021, 2020 and 2019, respectively, under such leases.

We maintain joint-referral relationships and administrative service agreements with independent licensed CPA firms under which we provide administrative services in exchange for a fee.

Fees earned by us under the ASAs are recorded as “Revenue” (at net realizable value) in the accompanying Consolidated Statements of Comprehensive Income and were approximately $ 159.4 million in 2020, $ 157.6 million in 2019 and $ 154.0 million in 2018.

We maintain joint-referral relationships and ASAs with independent licensed CPA firms under which we provide administrative services in exchange for a fee.

These firms are owned by licensed CPAs who are employed by our subsidiaries and provide audit and attest services to clients including our clients.

The CPA firms with which we maintain administrative service agreements operate as limited liability companies, limited liability partnerships or professional corporations.

The CPA firms with which we maintain ASAs operate as limited liability companies, limited liability partnerships or professional corporations.

The firms are separate legal entities with separate governing bodies and officers.

We have no ownership interest in any of these CPA firms, and neither the existence of the administrative service agreements nor the providing of services thereunder is intended to constitute control of the CPA firms by us.

We have no ownership interest in any of these CPA firms, and neither the existence of the ASAs nor the providing of services thereunder is intended to constitute control of the CPA firms by us.

CBIZ and the CPA firms maintain their own respective liability and risk of loss in connection with performance of each of its respective services, and we do not believe that our arrangements with these CPA firms result in additional risk of loss.

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During the year ended December 31, 2021, we completed the following acquisitions:

◦ Effective January 1, 2021, we acquired substantially all the assets of Middle Market Advisory Group (“MMA”).

MMA, based in Englewood, Colorado, is a provider of tax compliance and consulting services to middle market companies and family groups in the real estate, automotive, technology and SAAS, construction, and manufacturing industries.

Operating results are reported in the Financial Services practice group.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

◦ Effective April 1, 2021, we acquired substantially all the assets of Wright Retirement Services, LLC ("Wright").

Wright, located in Valdosta, Georgia, specializes in third party administration services for retirement plan sponsors.

Operating results are reported in the Benefits and Insurance practice group.

◦ Effective May 1, 2021, we acquired substantially all of the non-attest assets of Bernston Porter & Company, PLLC ("BP").

BP, based in Bellevue, Washington, is a provider of comprehensive accounting and financial consulting services including tax, forensic, economic and valuation services and transaction services to a wide range of industries with specialties including construction, real estate, hospitality, manufacturing and technology.

Operating results are reported in the Financial Services practice group.

◦ Effective June 1, 2021, we acquired all of the issued and outstanding membership interests of Schramm Health Partners, LLC dba Optumas ("Optumas").

Optumas, based in Scottsdale, Arizona, is a provider of actuarial services to state government health care agencies to assist in the administration of Medicaid programs.

Operating results are reported in the Financial Services practice group.

◦ Effective September 1, 2021, we acquired all of the non-attest assets of Shea Labagh Dobberstein ("SLD").

SLD, based in San Francisco, California, is a provider of professional accounting, tax and advisory services to privately held businesses, individuals and nonprofit organizations.

Operating results are reported in the Financial Services practice group.

◦ Effective December 1, 2021, we acquired substantially all the assets of Kenneth Weiss & Company, P.C.

dba Weiss & Company (“Weiss”).

Weiss, based in San Diego, California, is a provider of tax compliance and consulting services to family groups and individuals.

Operating results are reported in the Financial Services practice group.

Annualized aggregated revenue for these acquisitions is estimated to be approximately $ 74.4 million.

Pro forma results of operations for these acquisitions are not presented because the effects of these acquisitions were not significant either individually or in aggregate to our consolidated “Income from continuing operations before income taxes.”

During the year ended December 31, 2020, we acquired substantially all of the assets of the following businesses.

• Effective February 1, 2020, we acquired substantially all the assets of Alliance Insurance Services, Inc.

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• Effective February 1, 2020, we acquired substantially all the assets of Sunshine Systems, Inc.

("Sunshine"), a payroll solutions provider based in Massachusetts.Sunshine is included as a component of our Benefits and Insurance Services practice group.

("Sunshine"), a payroll solutions provider based in Massachusetts.

Sunshine is included as a component of our Benefits and Insurance Services practice group.

• Effective July 1, 2020, we acquired substantially all the assets of Prince-Wood Insurance, L.L.C.

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BP is included as a component of our Benefits and Insurance practice group.

Aggregated consideration for these seven acquisitions consisted of approximately $ 73.4 million in cash (including $ 1.7 million acquired client funds and $ 0.5 million cash acquired), $ 8.7 million in our common stock, and $ 38.9 million in contingent consideration.

The maximum potential undiscounted amount of all future payments that we could be required to make under the contingent arrangement is $ 43.0 million.

As of December 31, 2020, the aggregated fair value of the contingent consideration related to these acquisitions was $ 38.0 million, of which $ 10.9 million was recorded in “Contingent purchase price liability – current” and $ 27.1 million was recorded in “Contingent purchase price liability – non-current” in the accompanying Consolidated Balance Sheets.

Refer to Note 7, Fair Value Measurements, for additional information regarding contingent purchase price liability fair value and fair value adjustments.

Annualized aggregated revenue for these acquisitions is estimated to be approximately $ 45.2 million.

During the year ended December 31, 2019, we acquired substantially all of the assets of the following businesses.

• Effective January 1, 2019, we acquired substantially all of the assets of Wenner Group, LLC (“Wenner”), located in Denver, Colorado.

Wenner is a full service accounting, tax, compliance and financial consulting firm.

Wenner is included as a component of our Financial Services practice group.

• Effective July 1, 2019, we acquired substantially all of the assets of Paydayta, Inc.

Paytime) (“Paytime”), an Ohio-based payroll service provider.

Paytime is included as a component of our Benefit and Insurance Services practice group.

• Effective July 1, 2019, we acquired substantially all of the assets of Gavion, LLC (“Gavion”), a registered investment advisor based in Memphis, Tennessee.

Gavion provides investment consulting services to a diverse base of institutional clients.

Gavion is included as a component of our Benefit and Insurance Services practice group.

• Effective August 1, 2019, we acquired substantially all of the assets of QBA Benefits, LLC.

(“QBA”), an employee benefits agency based in Cleveland, Ohio.

QBA provides employee benefits related services to small and mid-sized clients across multiple industries such as services, technology, energy, and manufacturing.

QBA is included as a component of our Benefit and Insurance Services practice group.

• Effective August 1, 2019, we acquired substantially all of the assets of Ericson CPAs (“Ericson”), an accounting firm based in San Luis Obispo, California.

Ericson provides tax compliance, consulting, and planning services to a diverse base of clients.

Ericson is included as a component of our Financial Services practice group.

• Effective September 1, 2019, we acquired substantially all of the assets of Brinig Taylor Zimmer, Inc.

(“BTZ”), a specialized financial consulting firm based in San Diego, California.

BTZ provides forensic accounting, litigation consulting and business valuation services to a wide range of clients from individual to small business and large public traded entities.

BTZ is included as a component of our Financial Services practice group.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Aggregated consideration for these six acquisitions consisted of approximately $ 19.4 million in cash (including $ 6.9 million acquired client funds and $ 0.8 million cash acquired), $ 2.0 million in our common stock, and $ 11.2 million in contingent consideration.

The maximum potential undiscounted amount of all future payments that we could be required to make under the contingent arrangement is $ 11.5 million .

As of December 31, 2019, the aggregated fair value of the contingent consideration related to these acquisitions was $ 10.3 million, of which $ 2.8 million was recorded in “Contingent purchase price liability – current” and $ 7.5 million was recorded in “Contingent purchase price liability – non-current” in the accompanying Consolidated Balance Sheets.

Refer to Note 7.

Fair Value Measurements, for additional information regarding contingent purchase price liability fair value and fair value adjustments.

Annualized aggregated revenue for these acquisitions is estimated to be approximately $ 17.4 million.

We anticipate completion of the purchase accounting for certain 2021 acquisitions by June 30, 2022, and, as such, provisional amounts of certain assets acquired, liabilities assumed, and purchase price are reported as of December 31, 2021.

The following table summarizes the amounts of identifiable assets acquired, liabilities assumed and aggregate purchase price for the acquisitions in 2020 and 2019 (in thousands):

Cash $ 536 $ 826

Accounts receivable, net 5,381 1,843

Funds held for clients 1,716 6,878

Operating lease right-of-use asset, net 2,746 2,789

Other assets 431 99

Identifiable intangible assets 20,703 7,725

Operating lease liability - current ( 793 ) ( 1,013 )

Other current liabilities ( 3,460 ) ( 2,245 )

Operating lease liability - noncurrent ( 1,953 ) ( 1,776 )

Client fund obligations ( 1,716 ) ( 6,878 )

Total identifiable net assets 23,591 8,248

Adjustments made in 2021 related to 2020 acquisitions were immaterial.

The following table summarizes the aggregated consideration and preliminary purchase price allocation for the acquisitions completed during the year ended December 31, 2021 and 2020, respectively (in thousands):

Common stock issued (number) 207 339

Common stock value $ 6,940 $ 8,698

Cash paid 66,651 73,372

Other payable — 59

Recorded contingent consideration 39,665 38,901

Total recorded purchase price $ 113,256 $ 121,030

Accounts receivable acquired, net $ 9,838 $ 5,381

Fixed assets acquired 1,473 —

Identifiable intangible assets acquired 42,422 20,703

Operating lease right-of-use asset acquired, net 19,153 2,746

Other assets acquired, net 848 967

Operating lease liability acquired - current ( 3,020 ) ( 793 )

Other current liabilities acquired ( 1,771 ) ( 3,460 )

Operating lease liability acquired - noncurrent ( 16,133 ) ( 1,953 )

Goodwill 60,446 97,439

Aggregate purchase price $ 121,030 $ 32,617

The goodwill of $ 97.4 million and $ 24.4 million arising from the acquisitions in 2020 and 2019, respectively, primarily resulted from expected future cash flows as well as the synergies created by the integration of the new businesses within the CBIZ organization, including cross-selling opportunities expected with our Financial Services group and the Benefit and Insurance Services group, to help strengthen our existing service offerings and expand our market position.

All of the goodwill is deductible for income tax purposes.

Acquisitions of client lists

In 2020, we purchased three client lists reported in the Benefits and Insurance Services practice group and one client list reported in the Financial Services practice group.

Total consideration for these client lists was $ 0.6 million, of which $ 0.4 million was contingent.

In 2019, we purchased one client list, which was recorded in the Benefits and Insurance Services practice group.

Total consideration for this client list was $ 0.3 million in cash paid at closing and an additional $ 0.2 million in contingent consideration.

Change in Contingent Purchase Price Liability for Previous Acquisitions

We are required to evaluate in subsequent reporting periods the fair value of contingent consideration related to previous acquisitions.

We decreased the fair value of the contingent purchase price liability related to prior acquisitions in 2020 by $ 0.6 million due to expected results of acquired businesses and the revaluation of stock

Total net assets acquired $ 113,256 $ 121,030

Maximum potential contingent consideration $ 41,720 $ 43,052

Provisional estimates of fair value are established at the time of each acquisition and are subsequently reviewed within the first year of operations subsequent to the acquisition date to determine the necessity for adjustments.

Fair value estimates were provisional for some of the 2021 acquisitions as of December 31, 2021, primarily related to the value established for certain identifiable intangible assets and contingent purchase price consideration associated with those acquisitions.

The following table summarizes the aggregated goodwill and intangible asset amounts resulting from those acquisitions for the twelve months ended December 31, 2021 and 2020, respectively (in thousands):

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

related to contingent payments.

We increased the fair value of the contingent purchase price liability related to prior acquisitions in 2019 by $ 1.6 million, due to expected results of acquired businesses and the revaluation of stock related to contingent payments.

The changes are included in "Other income (expense), net" in the accompanying Consolidated Statements of Comprehensive Income.

For further discussion on contingent purchase price liabilities, refer to Note 7, Fair Value Measurements, to the accompanying consolidated financial statements.

Contingent Payments for Previous Business Acquisitions and Client Lists

Under the terms of the acquisition agreements, we pay cash consideration and issue shares of our common stock as contingent earnout for previous acquisitions.

In the years ended December 31, 2020 and 2019, we paid cash of $ 12.5 million and $ 16.9 million respectively, and issued shares of our common stock of approximately 0.1 million shares in each year.

In the years ended December 31, 2020 and 2019, we paid $ 0.4 million and $ 0.9 million, respectively, in cash for previous client list purchases.

Twelve Months Ended December 31,

Financial Services Benefits & Insurance Financial Services Benefits & Insurance

Goodwill $ 58,646 $ 1,800 $ 34,785 $ 62,654

Client list 40,950 1,290 — 19,350

Other intangibles 136 46 485 868

Total $ 99,732 $ 3,136 $ 35,270 $ 82,872

Goodwill is calculated as the difference between the aggregated purchase price and the fair value of the net assets acquired.

Goodwill represents the value of expected future earnings and cash flows, as well as the synergies created by the integration of the new businesses within our organization, including cross-selling opportunities expected with our Financial Services practice group and the Benefits and Insurance Services practice group, to help strengthen our existing service offerings and expand our market position.

Client lists generally have an expected life of 10 years, and other intangibles, primarily non-compete agreements, have an expected life of 3 years.

Client lists and non-compete agreements are valued using a discounted cash flow technique based on management estimates of future cash flows from such assets.

The following table summarizes the changes in contingent purchase price consideration for previous acquisitions and contingent payments made for previous business acquisitions during the year ended December 31, 2021 and 2020, respectively (in thousands):

Net expense (income) 2,367 ( 629 )

Cash settlement paid 13,785 12,461

Shares issued (number) 109 91

Divested operations and assets that do not qualify for treatment as discontinued operations are recorded as “(Loss) gain on sale of operations, net” in the accompanying Consolidated Statements of Comprehensive Income.

In 2021, we sold one business for $ 9.7 million in the Benefit and Insurance practice group and recorded a gain of $ 6.3 million.

In 2020, we sold a small book of business in the Benefit and Insurance practice group and two small accounting firms in the Financial Services practice group and recorded a loss of $ 0.5 million.

In 2019, we sold a small office in the Financial Services practice group and recorded a gain of $ 0.4 million.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of the unaudited quarterly results of operations for the years ended December 31, 2020 and 2019 (in thousands, except per share amounts).

March 31, June 30, September 30, December 31,

Revenue $ 277,455 $ 236,943 $ 238,389 $ 211,110

Operating expenses 199,827 209,016 204,760 211,748

Gross margin 77,628 27,927 33,629 ( 638 )

Corporate general and administrative expenses 10,489 11,160 11,339 13,078

Operating income (loss) 67,139 16,767 22,290 ( 13,716 )

Other (expense) income:

Interest expense ( 1,119 ) ( 2,074 ) ( 974 ) ( 816 )

Gain (loss) on sale of operations, net 95 57 ( 74 ) ( 587 )

Other (expense) income, net ( 15,800 ) 13,336 5,914 13,050

Total other (expense) income, net ( 16,824 ) 11,319 4,866 11,647

Income (loss) from continuing operations before income tax expense 50,315 28,086 27,156 ( 2,069 )

Income tax expense (benefit) 13,453 6,607 7,060 ( 1,979 )

Income (loss) from continuing operations 36,862 21,479 20,096 ( 90 )

Loss from operations of discontinued operations, net of tax ( 14 ) ( 11 ) ( 19 ) ( 4 )

Net income (loss) $ 36,848 $ 21,468 $ 20,077 $ ( 94 )

Earnings (loss) per share:

Continuing operations $ 0.68 $ 0.40 $ 0.37 $ —

Discontinued operations — — — —

Net income (loss) $ 0.68 $ 0.40 $ 0.37 $ —

Continuing operations $ 0.66 $ 0.39 $ 0.36 $ —

Discontinued operations — — — —

Net income (loss) $ 0.66 $ 0.39 $ 0.36 $ —

Basic weighted average common shares 54,571 54,142 54,403 54,039

Diluted weighted average common shares 55,945 55,116 55,360 54,039

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

March 31, June 30, September 30, December 31,

Revenue $ 269,998 $ 235,498 $ 239,790 $ 203,138

Operating expenses 215,496 198,148 209,146 200,706

Gross margin 54,502 37,350 30,644 2,432

Corporate general and administrative expenses 11,680 10,566 11,670 10,490

Operating income (loss) 42,822 26,784 18,974 ( 8,058 )

Other income (expense):

Interest expense ( 1,401 ) ( 1,587 ) ( 1,521 ) ( 1,256 )

Gain (loss) on sale of operations, net 497 50 ( 145 ) 15

Other income (expense), net 9,260 ( 3,311 ) 6,767 4,999

Total other income (expense), net 8,356 ( 4,848 ) 5,101 3,758

Income (loss) from continuing operations before income tax expense 51,178 21,936 24,075 ( 4,300 )

Income tax expense (benefit) 13,613 5,322 6,069 ( 3,164 )

Income (loss) from continuing operations 37,565 16,614 18,006 ( 1,136 )

Loss from operations of discontinued operations, net of tax ( 96 ) ( 22 ) ( 200 ) ( 17 )

Net income (loss) $ 37,469 $ 16,592 $ 17,806 $ ( 1,153 )

Earnings (loss) per share:

Continuing operations $ 0.69 $ 0.31 $ 0.33 $ ( 0.02 )

Discontinued operations — — — —

Net income (loss) $ 0.69 $ 0.31 $ 0.33 $ ( 0.02 )

Continuing operations $ 0.67 $ 0.30 $ 0.32 $ ( 0.02 )

Discontinued operations — — — —

Net income (loss) $ 0.67 $ 0.30 $ 0.32 $ ( 0.02 )

Basic weighted average common shares 54,287 54,090 54,268 54,547

Diluted weighted average common shares 55,915 55,495 55,816 54,547

Quarterly earnings per share amounts do not always add to the full-year amounts due to the averaging of common shares outstanding.

SEGMENT DISCLOSURES

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(i) Financial Services, (ii) Benefits and Insurance Services and (iii) National Practices, based on the following factors:

similarity of the products and services provided to clients, similarity of the regulatory environment and similarity of economic conditions affecting

similarity of the products and services provided to clients, similarity of the regulatory environment in which they operate;

and similarity of

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

long-term performance.

economic conditions affecting long-term performance.

The business units are managed along these segment lines.

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Financial Services Benefits and Insurance Services National Practices

Accounting and Tax Group Health Benefits Consulting Managed Networking and Hardware Services

Government Healthcare Consulting Payroll Healthcare Consulting

Financial Advisory Property and Casualty

Valuation Retirement Plan Services

Risk & Advisory Services

Accounting and Tax Employee Benefits Consulting Information Technology Managed Networking and Hardware Services

Financial Advisory Payroll / Human Capital Management Healthcare Consulting

Valuation Property and Casualty Insurance

Risk and Advisory Services Retirement and Investment Services

Government Healthcare Consulting

Corporate and Other - Included in Corporate and Other are operating expenses that are not directly allocated to the individual business units.

These expenses are primarily comprised of certain healthcare costs, gains or losses attributable to assets held in our non-qualified deferred compensation plan, share-based compensation, consolidation and integration charges, certain professional fees, certain advertising costs and other various expenses.

These expenses primarily consist of certain healthcare costs, gains or losses attributable to assets held in our non-qualified deferred compensation plan, stock-based compensation, consolidation and integration charges, certain professional fees, certain advertising costs and other various expenses.

Upon consolidation, intercompany accounts and transactions are eliminated, thus inter-segment revenue is not included in the measure of profit or loss for the practice groups.

Performance of the practice groups is evaluated on operating income excluding those costs listed above, which are reported in the “Corporate and Other” segment.

Performance of the practice groups is evaluated on income (loss) from continuing operations before income tax expense (benefit) excluding those costs listed above, which are reported in the “Corporate and Other”.

We operate in the United States and Canada and revenue generated from such operations during the years ended December 31, 2021, 2020 and 2019 was as follows (in thousands):

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Corporate general and administrative expenses — — — 56,150 56,150

Legal settlement, net — — — 30,468 30,468

Operating income (loss) 125,788 60,673 4,082 ( 117,871 ) 72,672

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Interest expense — ( 34 ) — ( 4,949 ) ( 4,983 )

Gain (loss) on sale of operations, net 578 — — ( 161 ) 417

Other (expense) income, net ( 121 ) 238 1 17,597 17,715

Total other income 457 181 1 11,728 12,367

(Loss) gain on sale of operations, net ( 612 ) 103 — — ( 509 )

Other income, net 262 196 1 16,041 16,500

Total other (expense) income ( 350 ) 265 1 11,092 11,008

Income (loss) from continuing operations before income tax expense $ 104,219 $ 49,666 $ 3,725 $ ( 54,122 ) $ 103,488

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Interest expense — ( 57 ) — ( 5,708 ) ( 5,765 )

Gain on sale of operations, net — — — 1,025 1,025

Gain (loss) on sale of operations, net 578 — — ( 161 ) 417

Other (expense) income, net ( 121 ) 238 1 17,597 17,715

Total other (expense) income ( 263 ) 391 3 ( 12,838 ) ( 12,707 )

Total other income 457 181 1 11,728 12,367

Income (loss) from continuing operations before income tax expense $ 101,784 $ 50,164 $ 3,156 $ ( 62,215 ) $ 92,889

SUBSEQUENT EVENTS

Subsequent to December 31, 2020 up to February 16, 2021, we repurchased approximately 0.6 million shares of our common stock in the open market at a total cost of approximately $ 16.2 million.

Share Repurchase Program

On February 10, 2022, our Board of Directors authorized the continuation of the Share Repurchase Program, which has been renewed annually for the past seventeen years .

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This authorization allows us to purchase shares of our common stock (i) in the open market, (ii) in privately negotiated transactions, or (iii) under Rule 10b5-1trading plans.

Effective January 1, 2021, we acquired substantially all the assets of the Middle Market Advisory Group (“MMA”).

MMA, based in Englewood, CO, is a provider of tax compliance and consulting services to middle market companies and family groups in the real estate, automotive, technology and SAAS, construction, and manufacturing industries.

Annualized revenue is estimated to be approximately $ 3.6 million.

MMA will be included as a component of our Financial Services practice group.

Marks Paneth Acquisition

Effective January 1, 2022, we acquired all of the non-attest assets of Marks Paneth LLP ("Marks Paneth").

Marks Paneth, based in New York City, is a provider of a full range of accounting, tax and consulting services to a wide range of industries.

Marks Paneth is included as a component of our Financial Services practice group.

Mayer Hoffman, an unrelated party, acquired the attest assets from Marks Paneth in a separate transaction.

Purchase price consideration consisted of approximately $ 81.25 million in cash paid at closing, subject to a customary working capital adjustment, and a contingent purchase consideration, or earnout, of up to a maximum of $ 75.25 million which consisted of cash and shares of CBIZ common stock.

The earnout is payable contingent upon Marks Paneth's future performance.

The cash portion of the initial purchase price and the earnout amounts discussed above will be reduced by the purchase price paid by Mayer Hoffman for the assets related to the attestation services of Marks Paneth in a separate transaction.

According to the terms of the purchase agreement, we agreed to issue up to approximately $ 7.52 million in CBIZ shares of common stock as part of the earnout (representing 10 % of the earnout).

These shares will be offered and issued to the limited number of sellers in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

The shares of common stock to be issued pursuant to the terms of the purchase agreement may not be sold, assigned, transferred, pledged, made subject of any hedging transaction, or otherwise disposed of for a period of one year following the date of each issuance of common stock, subject to certain exceptions in the purchase agreement.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures