What changed in this filing

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Item 9A. Controls and Procedures

2023-02-24 compared with 2022-02-25 · 277 added, 266 removed, 1292 unchanged (30% of the section changed)

18 unchanged sentences

Based on this evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2022.

Management has excluded from the scope of its assessment of the effectiveness of internal control over financial reporting as of December 31, 2022, the operations and related assets of Marks Paneth LLP and Stinnett & Associates, LLC, which were acquired on January 1, 2022 and July 1, 2022, respectively.

The aggregated total assets and revenue from Marks Paneth LLP and Stinnett & Associates, LLC were $95.4 million and $148.1 million, which represents approximately 5.1% and 10.5% of our respective consolidated total assets and total revenue as of December 31, 2022.

Our independent auditor, KPMG LLP, an independent registered public accounting firm, has issued an audit report on the effectiveness of our internal control over financial reporting which appears in Item 8 of this Annual Report.

OTHER INFORMATION.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

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Executive Officers and Directors:

60 President & Chief Executive Officer, Director

Burdick (2)(3)

70 Lead Director and Vice Chairman

61 President & Chief Executive Officer, Director

DiMartino (2)(3)

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Benaree Pratt Wiley (2)(3)

Young 67 Director

Grove 72 Senior Vice President and Chief Financial Officer

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Waxman 64 Senior Vice President and Chief Marketing Officer

Farrell 59 Chief Human Resources Officer

(1) Member of Executive Management Committee

(1) Member of Audit Committee

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(3) Member of Compensation & Human Capital Committee

Gerard was elected by the Board to serve as its Chairman in October 2002.

He was appointed Chief Executive Officer and Director in October 2000, and served as CEO until March 2016.

Gerard continues to serve as non-executive Chairman.

Gerard was Chairman and Chief Executive Officer of Great Point Capital, Inc., a provider of operational and advisory services from 1997 to October 2000.

From 1991 to 1997, he was Chairman and Chief Executive Officer of Triangle Wire & Cable, Inc.

and its successor Ocean View Capital, Inc.

Gerard’s prior experience includes 16 years with Citibank, N.A.

in various senior corporate finance and banking positions.

Gerard served seven years with the American Stock Exchange, where he last served as Vice President of the Securities Division.

Gerard also serves on the Boards of Directors of Lennar Corporation and AutoNation, Inc.

He previously served on the Board of the Las Vegas Sands Corporation and was a member of the Board of Directors of Joy Global, Inc.

until its acquisition by Komatsu Limited in 2017.

Burdick has served as a Director of CBIZ since October 1997, when he was elected as an independent director.

On August 11, 2022, Mr.

Burdick was appointed by the Board as its independent Chairman of the Board.

Previously, in May 2007, Mr.

Burdick was elected by the Board as its Lead Director, a non-officer position, and in October 2002, he was elected by the Board as Vice Chairman, a non-officer position.

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.

was appointed to the CBIZ Board in November, 2015.

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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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Grisko concentrated his practice in the area of mergers and acquisitions and general corporate law.

Burdick has served as a Director of CBIZ since October 1997, when he was elected as an independent director.

On May 17, 2007, Mr.

Burdick was elected by the Board to be its Lead Director, a non-officer position.

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

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 was a Senior Advisor at Alvarez & Marsal from 2020 to 2021, 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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He previously served as a director of PlainsCapital from September 2009 to November 2012.

He previously served as a member of the board of directors of Salient MLP & Energy Infrastructure Fund, Blue Dolphin Energy Company, Miller Energy Resources, Inc.

and ZaZa Energy Corp.

Sherman has served as an adjunct professor of law at The University of Texas School of Law.

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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.

He is also the Chairman of the Metal Services Center Institute (MSCI) and has also served on the Board of Trustees for the University of Mount Union since 2021.

He 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.

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Her civic activities include serving on the boards of the Efficacy Institute, Howard University Dress for Success Boston, Partners Continuing Care and Spaulding Hospital.

Young has served as a Director since February 6, 2023, when he was appointed as an independent director.

Young is the Chief Executive Officer of Delta Dental of Minnesota, one of the nation's largest oral health insurance companies.

Young has held this role since 2012.

Prior to joining Delta Dental of Minnesota, Mr.

Young was the Chief Executive Officer and President of Angeion Corporation (now MGC Diagnostics Corporation), a public medical technology cardio-pulmonary diagnostic and consumer health management company.

Young also previously held the Chair for the Board of Directors, Director, Chief Executive Officer and President roles for LecTec Corporation, a public disposable medical products and over-the-counter pharmaceuticals company.

Young currently serves as a Board Director and the Diversity, Equity and Inclusion Committee Chair of the Minnesota Business Partnership.

Young received The Sanneh Foundation's Business Honoree Award in 2019 in recognition of his business leadership and community impact.

Grove has served as Senior Vice President and Chief Financial Officer of CBIZ since December 2000.

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Spurio served as Executive Managing Director of the Financial Services Group’s Midwest Region from September 2008 through March 2010, and as the Group’s Chief Operating Officer from March 2010 through December 2013.

Spurio was associated with KPMG LLP, an international accounting firm, from July 1988 to January 1998.

associated with KPMG LLP, an international accounting firm, from July 1988 to January 1998.

Spurio is a CPA, CGMA and a member of the American Institute of Certified Public Accountants and the Ohio Society of Certified Public Accountants.

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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 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:

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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.

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

Prior to joining CBIZ, Ms.

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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000-25890, dated April 1, 2002, and incorporated herein by reference).

Severance Protection Agreement by and between the Company and Jerome P.

(filed as Exhibit 10.11 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000, File No.

000-25890, dated April 2, 2001, and incorporated herein by reference).

2002 Amended and Restated Stock Incentive Plan (Amended and Restated as of May 12, 2011), (filed as Exhibit 10.1 to the Company’s Report on Form 10-Q, File No.

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001-32961, on November 1, 2018, and incorporated herein by reference).

Amended and Restated Credit Agreement by and among CBIZ Operations, Inc., CBIZ, Inc., and Bank of America, N.A., as administrative agent, and the other financial institutions from time to time party thereto, dated April 3, 2018 (filed as Exhibit 10.1 to the Company’s Report on Form 8-K, File No.

001-32961, on April 5, 2018, and incorporated herein by reference).

Second Amended and Restated Credit Agreement, dated May 4,2022, by and among CBIZ Operations, Inc., CBIZ, Inc., and Bank of America, N.A., as administrative agent, and the other financial institutions from time to time party thereto (filed as Exhibit 10.1 to the Company's Report on Form 8-K, File No.

001-32961, on May 6, 2022, and incorporated herein by reference).

2019 CBIZ, Inc.

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333-197284, and incorporated herein by reference).

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

First Amendment to Loan Agreement, dated August 8, 2019, 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 November 1, 2019, and incorporated herein by reference).

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

Second Amendment to Loan Agreement, dated August 6, 2020, 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 November 1, 2020, and incorporated herein by reference).

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

Third Amendment to Loan Agreement, dated August 5, 2021, 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).

Fourth Amendment to Loan Agreement, dated August 1, 2022, by and among CBIZ Benefit and Insurance, Inc.

and the Huntington National Bank.

Purchase Agreement, dated January 6, 2022, among CBIZ, Inc., CBIZ Acquisition 42, LLC, Marks Paneth LLP and all of the individuals who are equity partners of Marks Paneth (filed as Exhibit 2.1 to the Company’s Report on Form 8-K, File No.

001-32961, dated January 10, 2022, and incorporated herein by reference).

List of Subsidiaries of CBIZ, Inc.

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(Principal Financial and Accounting Officer) February 24, 2023

/s/ STEVEN L.

GERARD Chairman February 25, 2022

BURDICK Lead Director and Vice Chairman February 25, 2022

BURDICK Chairman February 24, 2023

/s/ MICHAEL H.

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Benaree Pratt Wiley

/s/ RODNEY A.

YOUNG Director February 24, 2023

AND SUBSIDIARIES

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

The Company acquired Marks Paneth LLP and Stinnett & Associates, LLC during 2022, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022, Marks Paneth LLP and Stinnett & Associates, LLC’s internal control over financial reporting associated with total assets of $95.4 million and total revenues of $148.1 million included in the consolidated financial statements of the Company as of and for the year ended December 31, 2022.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Marks Paneth LLP and Stinnett & Associates, LLC.

Basis for Opinions

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Definition and Limitations of Internal Control Over Financial Reporting

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.

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;

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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.

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.

There is a high degree of subjectivity in assessing the assumptions, which are used in estimating losses related to billed and unbilled receivables.

The assumptions include the probability of the Company’s collection of receivables based on historical experience, the consideration of economic conditions that may affect the ability of clients to pay billed and unbilled fees, and the Company’s ability to successfully execute the contracts in line with the current estimated level of effort.

Estimation of losses on certain trade accounts receivable

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

As of December 31, 2022, the allowance for doubtful accounts was $20.8 million, a portion of which related to the Financial Services practice group.

The allowance for doubtful accounts is 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 trade accounts receivable of the Financial Services practice group as a critical audit matter.

A high degree of subjective auditor judgment was required to assess the assumptions used in estimating losses related to trade accounts receivable.

The assumptions included the probability of the Company’s collection of receivables based on historical experience and the consideration of economic conditions that may affect the ability of clients to pay.

The following are the primary procedures we performed to address the critical audit matter.

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 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 receivables, and contract realization analyses.

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

• 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.

On a total and per unit basis, we calculated certain key performance indicators using the allowance for doubtful accounts and compared them to our established expectations based on the Company’s historical experience.

For any results which were outside the established expectations, we performed the following additional procedures to evaluate the reasonableness of the allowance for doubtful accounts determined by the Company:

• we inquired of relevant Company personnel

• we evaluated the Company’s cash collections, historical trends, and age of receivables

• we evaluated industry, economic, and other external factors as applicable

• we inspected relevant underlying documents, including contractual documents with clients.

We have served as the Company’s auditor since 1996.

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Assets of deferred compensation plan 118,862 136,321

Operating lease right-of-use asset, net 151,145 147,843

Right-of-use asset, net 184,043 151,145

Other non-current assets 10,907 4,588

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Contingent purchase price liability 63,262 34,373

Operating lease liability 30,586 30,483

Lease liability 36,358 30,586

Other current liabilities 26,532 18,755

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Contingent purchase price liability 68,748 44,766

Operating lease liability 145,808 142,020

Lease liability 174,454 145,808

Other non-current liabilities 573 1,184

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( 824,778 ) ( 694,716 )

Accumulated other comprehensive loss ( 967 ) ( 2,269 )

Accumulated other comprehensive income (loss) 3,604 ( 967 )

Total stockholders’ equity 713,452 704,548

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Operating income 168,344 72,672 92,480

Other income (expense):

Other (expense) income:

Interest expense ( 8,039 ) ( 3,868 ) ( 4,983 )

Gain (loss) on sale of operations, net 413 5,995 ( 509 )

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

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

Other (expense) income, net ( 19,225 ) 18,241 16,500

Total other (expense) income, net ( 26,851 ) 20,368 11,008

Income from continuing operations before income tax expense 141,493 93,040 103,488

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Net income $ 105,354 $ 70,887 $ 78,299

Other comprehensive income:

Net unrealized (loss) gain on available-for-sale securities, net of income tax (benefit) expense of $( 179 ), $( 14 ) and $ 351

Other comprehensive income (loss):

Net unrealized loss on available-for-sale securities, net of income tax benefit of $ 520 , $ 179 and $ 14

( 1,391 ) ( 478 ) ( 42 )

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Comprehensive

Income (Loss) Totals

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

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

Restricted stock units and awards 25 — — — — — — —

Stock options exercised 634 — 6 6,480 — — — 6,486

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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 25 — — — — — — —

Restricted stock units and awards 80 — 1 ( 1 ) — — — —

Stock options exercised 647 — 7 7,304 — — — 7,311

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Indirect repurchase of shares for minimum tax withholding — 188 — — — ( 7,289 ) — ( 7,289 )

Restricted stock 80 — 1 ( 1 ) — — — —

Restricted stock units and awards 120 — 1 ( 1 ) — — — —

Performance share units 211 2 ( 2 ) —

Stock options exercised 670 — 7 10,028 — — — 10,035

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

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

(Gain) loss on sale of operations, net of tax ( 413 ) ( 5,995 ) 509

Depreciation and amortization expense 32,895 27,078 23,139

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Proceeds from the sales and maturities of client fund investments 12,400 14,877 37,487

Proceeds from sales of divested operations 9,710 711 3

Proceeds from sales of assets and divested operations 3,022 9,710 711

Additions to property and equipment ( 8,641 ) ( 8,984 ) ( 11,576 )

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Payment for acquisition of treasury stock ( 122,538 ) ( 97,450 ) ( 56,496 )

Indirect repurchase of shares for minimum tax withholding ( 7,289 ) ( 3,037 ) ( 2,040 )

Changes in client funds obligations 15,352 ( 8,874 ) ( 13,747 )

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LIBOR - London Interbank Offered Rate.

SOFR - The Secured Overnight Financing Rate.

New Lease Standard - ASC Topic 842, Leases

ROU- Right of Use.

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Refer to Note 17, Related Parties, for further discussion regarding the ASAs.

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

In 2021, CBIZ formed a grantor trust (the “Trust”) with Wilmington Savings Funds Society, FSB, a Federal savings bank, serving as trustee.

The Trust holds the majority of the funds provided by CBIZ’s clients for payroll processing

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

amounts reported in the consolidated financial statements and accompanying notes.

pending remittance to employees of those clients, tax authorities, and other payees.

CBIZ is the sole beneficial owner of the Trust.

The Trust is considered a variable interest entity in accordance with ASC 810, Consolidation.

CBIZ has both the power to direct the activities that most significantly impact the economic performance of the Trust (including the power to make all investment decisions for the Trust) and the right to receive benefits that could potentially be significant to the Trust (in the form of investment returns).

As a result, CBIZ consolidates the Trust in its condensed consolidated financial statements.

Certain prior period amounts have been reclassified to conform to current year's presentation.

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

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Effective January 1, 2019, we adopted the New Lease Standard using the modified retrospective method of applying the new standard at the adoption date.

Under the New Lease Standard, all of our leases are classified as operating leases and the majority of which are for office space and facilities.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

accounting policy election, we elected not to apply the recognition requirements under the New Lease Standards to short term leases (a lease at commencement date that has a lease term of 12 months or less and does not contain a purchase option that we are reasonably certain to exercise).

The ROU assets and lease liabilities are recognized as of the commencement date based on the present value of the lease payments over the lease term.

The discount rate utilized for the measurement purpose is based on our secured fixed rate to borrow over a comparable term for the lease because the rate implicit in the lease is not determinable.

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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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.

AND SUBSIDIARIES

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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treasury bills, are classified as available-for-sale and are included in the “Funds held for clients” line item on the accompanying Consolidated Balance Sheets.

The underlying obligation is recorded as “Client fund obligation” on the Consolidated Balance Sheets.

The underlying obligation is recorded as “Client fund obligations” on the Consolidated Balance Sheets.

The balances in these accounts fluctuate with the timing of cash receipts and the related cash payments and may vary significantly during the year based on the timing of client’s payroll periods.

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Depreciation and amortization are provided on a straight-line basis over the following estimated useful lives:

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Buildings 25 to 40 years

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Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or the remaining respective lease term.

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 .

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 five years .

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.

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

AND SUBSIDIARIES

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.

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State income tax credits are accounted for using the flow-through method.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

A valuation allowance is provided when it is more-likely-than-not that all or some portion of a deferred tax asset will not be realized.

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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

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

liabilities using a probability-weighted discounted cash flow model.

We estimate the fair value of our contingent purchase price 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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Any change in the fair value estimate, including the revaluation of common stock, is recorded in the earnings of that period.

For the years ended December 31, 2021, 2020 and 2019, we recorded other income (expense) of ($ 2.4 ) million, $ 0.6 million and $( 1.6 ) million, respectively, related to net changes in the fair value of contingent consideration.

For the years ended December 31, 2022, 2021 and 2020, we recorded other (expense) income of ($ 2.4 ) million, ($ 2.4 ) million and $ 0.6 million, respectively, related to net changes in the fair value of contingent consideration.

Refer to Note 7, Fair Value Measurements, and Note 18, Business Combinations, for further discussion of our contingent purchase price liabilities and acquisitions.

Interest Rate Derivative Instruments - We maintain interest rate swaps that are designated as cash flow hedges to manage the market risk from changes in interest rates on our floating-rate debt under our $ 600.0 million unsecured credit facility, by and among CBIZ Operations, Inc., CBIZ, Inc.

and Bank of America, N.A., as administrative agent and bank, and other participating banks (the “2018 credit facility”).

and Bank of America, N.A., as administrative agent and bank, and other participating banks.

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.

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We assess and review the impact of all ASUs.

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 Issued But Not Yet Adopted

ASUs not listed below were

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

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 2022

Reference Rate Reform:

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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 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.

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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.

AND SUBSIDIARIES

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 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 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.

On May 4, 2022, we entered into a Second Amended and Restated Credit Agreement (the "2022 credit facility" or the "credit facility"), by and among CBIZ Operations, Inc.

("CBIZ Operations"), and Bank of America, N.A., as administrative agent, and other financial institutions.

The 2022 credit facility amends the Amended and Restated Credit Agreement, dated as of April 3, 2018 (the "2018 credit facility").

Among other things, the 2022 Credit Facility amends the base interest rate from LIBOR to term SOFR.

Consequently, we amended the interest rate swap agreements with respect to the existing swaps.

Effective May 16, 2022, the scheduled reset date, the interest rate of the swaps was set to one month term SOFR to align the swaps to term SOFR in the 2022 credit facility.

No other terms under the swap agreements were amended.

As a result, we early adopted ASC Topic 848, Reference Rate Reform.

This adoption had immaterial impact on our consolidated financial statements.

Refer to Note 9, Debt and Financing Arrangements, and Note 6, Financial Instruments, for further discussion of the transaction.

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

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Total revenue $ 1,010,068 $ 358,007 $ 43,904 $ 1,411,979

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

For the Year Ended December 31, 2021

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

Failure to remain employed at the date the commission is payable results in the forfeiture of commissions that would otherwise be due.

We pay commissions monthly and require the recipient of the commission to be employed as of the end of the month in which the commissions are earned (as opposed to at the time of actual payment).

Failure to remain employed at the date the

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

commission is payable results in the forfeiture of commissions that would otherwise be due.

Therefore, we have determined that the requirement of continued employment is substantive and accordingly, do not consider the commissions to be incremental costs of obtaining the customer contract and consequently a contract acquisition cost is not recognized for those commissions.

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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.

• Advisory revenue is based on the value of assets under management, as provided by a third party, multiplied by an agreed upon rate.

Advisory services revenue is calculated monthly or quarterly based on the estimated value of assets under management, as it is earned over the duration of the reporting period and relates to performance obligations satisfied during that period.

• Advisory revenue is either (i) based on the value of assets under management, as provided by a third party, multiplied by an agreed upon rate, (ii) fee based, or (iii) a combination of fixed fee and value of assets under management.

Advisory services revenue, derived from the value of assets under management, is calculated monthly or quarterly based on the estimated value of assets under management, as it is earned over the duration of the reporting period and relates to performance obligations satisfied during that period.

The variability related to the estimated asset values used to recognize revenue during the reporting period is resolved and the amount of related revenue recognized is adjusted when the actual value of assets under management is known.

• Third party administration revenue is recognized over the contract period as these services are provided to clients continuously throughout the term of the arrangement.

Fee based Advisory revenue is recognized over the contract period as these services are provided to clients continuously throughout the term of the arrangement.

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

• Third party administration revenue is recognized over the contract period as these services are provided to clients continuously throughout the term of the arrangement.

Our clients benefit from each

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

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

• Actuarial revenue is recognized over the contract period with performance measured in hours in relation to the expected total hours.

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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.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

ACCOUNTS RECEIVABLE, NET

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Accounts receivable, net $ 334,498 $ 242,168

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Changes in the allowance for doubtful accounts on accounts receivable are as follows (in thousands):

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A summary of changes in the carrying amount of goodwill by operating segment for the years ended December 31, 2022 and 2021 were as follows (in thousands):

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Services Benefits and

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Additions 58,646 1,800 — 60,446

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

Divestitures — ( 2,786 ) — ( 2,786 )

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

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Additions 79,147 — — 79,147

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

Other adjustment 27 — — 27

Gross 549,906 320,125 33,873 903,904

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No goodwill impairment was recognized as a result of the annual evaluation.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

The components of goodwill and other intangible assets, net at December 31, 2022 and 2021 were as follows (in thousands):

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

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.

Based on the amount of intangible assets subject to amortization at December 31, 2022, the estimated amortization expense is $ 20.7 million for 2023, $ 19.2 million for 2024, $ 17.8 million for 2025, $ 15.8 million for 2026, $ 14.7 million for 2027, and $ 43.5 million thereafter.

FINANCIAL INSTRUMENTS

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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.

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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

The following table summarizes our bond activity for the years ended December 31, 2022 and 2021 (in thousands):

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Fair value at December 31 $ 43,485 $ 38,670

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.

In addition to the available-for-sale securities discussed above, we also held other depository assets in the amount of $ 0.9 million and $ 1.1 million at December 31, 2022 and December 31, 2021, respectively.

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 2022 credit facility, or the forecasted acquisition of such liability.

Under these interest rate swap contracts, we receive cash flows from counterparties at variable rates based on LIBOR and pay the counterparties a fixed rate.

To mitigate counterparty credit risk, we only enter into contracts with selected major financial institutions with investment grade ratings and continually assess their creditworthiness.

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For the years ended December 31, 2022 and 2021, the interest rate swaps were deemed to be highly effective.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

As a result of the 2022 credit facility, CBIZ amended the interest rate swap agreements with respect to the existing swaps.

Effective May 16, 2022, the scheduled reset date, the interest rate of the swaps are set to one-month term SOFR to align the swaps to term SOFR in the 2022 credit facility as a result of reference rate reform.

No other terms under the swap agreements were amended.

The following table summarizes our outstanding interest rate swaps and their classification in the accompanying Consolidated Balance Sheets at December 31, 2022 and 2021 (in thousands).

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December 31, 2022

Amount Fixed Rate Expiration Fair

Value Balance Sheet Location

Interest rate swap $ 20,000 $ ( 120 ) Other current liability

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

Interest rate swap $ 15,000 2.571 % 6/1/2023 $ 133 Other current asset

Interest rate swap $ 50,000 0.834 % 4/14/2025 $ 3,726 Other non-current asset

Interest rate swap $ 30,000 1.186 % 12/14/2026 $ 2,871 Other non-current asset

Interest rate swap $ 20,000 2.450 % 8/14/2027 $ 1,079 Other non-current asset

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

December 31, 2021

Amount Fixed Rate Expiration Fair

Value Balance Sheet Location

Interest rate swap $ 20,000 1.770 % 5/14/2022 $ ( 120 ) Other current liability

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

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.

Interest rate swap $ 15,000 2.640 % 6/1/2023 $ ( 432 ) Other non-current liability

Interest rate swap $ 50,000 0.885 % 4/14/2025 $ 405 Other non-current asset

Interest rate swap $ 30,000 1.249 % 12/14/2026 $ ( 64 ) Other non-current liability

During the third quarter of 2022, we entered into a new 5-year interest rate swap with a notional value of $ 20 million and fixed rate of 2.450 %.

One interest rate swap with a notional value of $ 20 million and fixed rate of 1.770 % expired during the second quarter of 2022.

As of December 31, 2022, we have four interest rate swaps outstanding.

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.

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

During the next twelve months, the amount of the December 31, 2022 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, 2022 and 2021 (in thousands):

Gain (loss) recognized in

AOCL, net of tax Loss reclassified from

Gain recognized in

AOCL, net of tax Gain (loss) reclassified from

AOCL into expense

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Interest rate swaps $ 6,255 $ 929 $ 357 $ ( 1,152 ) Interest expense

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

FAIR VALUE MEASUREMENTS

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• 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.

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Contingent purchase price liabilities 3 ( 132,010 ) ( 79,139 )

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.

Contingent Purchase Price Liabilities - During the years ended December 31, 2022 and 2021, we recorded expense of $ 2.4 million and expense of $ 2.4 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 (expense) 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.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

The following table summarizes the change in fair value of our contingent purchase price liabilities identified as Level 3 for the years ended December 31, 2022 and 2021 (pre-tax basis, in thousands):

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Balance — December 31, 2022 $ ( 132,010 )

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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):

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Total $ 141,493 $ 93,040 $ 103,488

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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):

Income tax expense included in the accompanying Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 2020 was as follows (in thousands):

2022 2021 2020

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Current ( 7 ) ( 5 ) ( 11 )

Deferred — — ( 1 )

Total income tax expense from discontinued

Total income tax benefit from discontinued

operations ( 7 ) ( 5 ) ( 11 )

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State taxes (net of federal benefit) 9,019 4,498 5,354

Business meals and entertainment — non-deductible 190 458 987

Change in valuation allowance 435 176 932

Reserves for uncertain tax positions 337 ( 104 ) ( 1,290 )

Share-based compensation ( 6,832 ) ( 4,187 ) ( 2,394 )

Non-deductible expenses 1,408 787 713

Non-deductible officers' compensation 2,507 1,267 538

Other, net 1,376 1,117 1,200

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Lease costs 6,871 5,726

State tax credit carryforwards 189 1,291

Deferral of employer FICA taxes — 1,961

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Deferred tax liabilities:

Client list intangible assets 250 524

Goodwill and other intangibles 68,306 57,990

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Deferred income taxes, net $ ( 24,763 ) $ ( 15,440 )

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

We have established valuation allowances for deferred tax assets related to certain employee benefits and compensation and state net operating loss (“NOL”) carryforwards at December 31, 2022 and December 31, 2021.

The net increase in the valuation allowance of $ 1.2 million for the year ended December 31, 2022 related to changes in the valuation allowance for NOLs and certain employee benefits and compensation.

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.

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At December 31, 2022, we had state net operating loss carryforwards of $ 48.0 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.

The state net operating loss carryforwards expire on various dates between 2023 and 2042 and the state tax credit carryforward expires in 2027.

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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

2022 2021 2020

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Balance at December 31 $ 2,111 $ 1,594 $ 1,536

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Included in the balance of unrecognized tax benefits at December 31, 2022 are $ 1.4 million of unrecognized tax benefits that, if recognized, would affect the effective tax rate.

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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 2022, we recorded an immaterial increase in accrued interest, and, as of December 31, 2022, we had recognized a liability for interest expense and penalties of $ 0.3 million and $ 0.2 million, respectively, relating to unrecognized tax benefits.

During 2021, we recorded an immaterial decrease 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.

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2022 credit facility

Our primary financing arrangement is the 2018 credit facility, which provides us with the capital necessary to meet our working capital needs as well as the flexibility to continue with our strategic initiatives, including business acquisitions and share repurchases.

The 2018 credit facility matures on April 3, 2023.

The balance outstanding under the 2018 credit facility was $ 155.3 million and $ 108.0 million at December 31, 2021 and 2020, respectively.

Effective interest rates, including the impact of interest rate swaps associated with the 2018 credit facility, were as follows:

On May 4, 2022, we entered into the 2022 credit facility, which amends the 2018 credit facility.

The 2022 credit facility increased our borrowing capacity from $ 400 million to $ 600 million, which provides us with the capital necessary to meet our working capital needs as well as the flexibility to continue with our strategic initiatives, including business acquisitions and share repurchases.

Other important key terms of the 2022 credit facility include:

(i) an accordion feature that permits lenders to extend an additional $ 200 million at later date;

(ii) no change in pricing from the 2018 credit facility;

(iii) upsizing of baskets and various sublimits to reflect the increased size of the Company's business;

(iv) a swing line facility increase from $ 25 million to $ 50 million, which provides for same-day funds to cover daily liquidity needs;

and (v) base interest rate amended from LIBOR to term SOFR.

In connection with our 2022 credit facility, we incurred approximately $ 2.1 million of financing costs during the second quarter of 2022.

The financing costs are deferred and reported as a reduction of debt on the accompanying Consolidated Balance Sheets, are included as a component of cash flow from financing activities on the accompanying Consolidated Statements of Cash Flows, and are being amortized as interest expense over the term of the 2022 credit facility.

In addition, we wrote-off approximately $ 41 thousand of unamortized deferred cost associated with the 2018 credit facility as additional interest expense in the second quarter of 2022.

The 2022 credit facility matures on May 4, 2027.

The balance outstanding under the 2022 credit facility was $ 265.7 million at December 31, 2022.

The balance outstanding under the 2018 credit facility was $ 155.3 million at December 31, 2021.

The combined effective interest rates under the 2018 and 2022 credit facilities, including the impact of interest rate swaps associated with those credit facilities, were as follows:

Weighted average rates 2.67 % 1.88 %

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1.06 % - 3.64 %

We have approximately $ 234.5 million of available funds under the 2018 credit facility at December 31, 2021, based on the terms of the commitment.

Available funds under the credit facility are based on a multiple of earnings before interest, taxes, depreciation and amortization as defined in the credit facility, and are reduced by letters of credit, performance guarantees, other indebtedness and outstanding borrowings under the credit facility.

Under the 2018 credit facility, loans are charged an interest rate consisting of a base rate or Eurodollar rate plus an applicable margin, letters of credit are charged based on the same applicable margin, and a commitment fee is charged on the unused portion of the credit facility.

We had approximately $ 319.9 million of available funds under the 2022 credit facility at December 31, 2022, based on the terms of the commitment.

Available funds under the credit facility are based on a multiple of earnings before interest, taxes, depreciation and amortization as defined in the credit facility, and are reduced by letters of credit, other indebtedness and outstanding borrowings under the credit facility.

Under the 2022 credit facility, loans are charged an interest rate consisting of a base rate or term SOFR rate plus an applicable margin, letters of credit are charged based on the same applicable margin, and a commitment fee is charged on the unused portion of the credit facility.

The 2022 credit facility contains certain restrictive covenants customary for facilities of this type, including restrictions on indebtedness, liens or other encumbrances, making certain payments, investments, or to sell or otherwise dispose of a substantial portion of assets, or to merge or consolidate with an unaffiliated entity.

The 2022 credit facility also limits our ability to make dividend payments.

Historically, we have not paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future.

Our Board of Directors has discretion over the payment and level of dividends on common stock, subject to the limitations of the credit facility and applicable law.

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

Historically, we have not paid cash dividends on our common stock.

Our Board of Directors has discretion over the payment and level of dividends on common stock,

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

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

subject to the limitations of the credit facility and applicable law.

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 2022 credit facility contains financial covenants that require us to meet certain requirements with respect to (i) a total leverage ratio and (ii) minimum interest charge coverage ratio which may limit our ability to borrow up to the total commitment amount.

As of December 31, 2022, we are in compliance with all covenants.

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2022 2021 2020

2018 credit facility

Credit facilities

$ 8,033 $ 3,843 $ 4,919

2 unchanged sentences

$ 8,039 $ 3,868 $ 4,983

ACCUMULATED OTHER COMPREHENSIVE LOSS

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

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

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The components of accumulated other comprehensive income (loss) at December 31, 2022 and 2021 were as follows (in thousands):

Net unrealized loss on available-for-sale securities, net of income tax benefit of $ 571 and $ 51 , respectively

$ ( 1,518 ) $ ( 127 )

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

Net unrealized income (loss) on interest rate swap, net of income tax expense (benefit) of $ 1,924 and $( 41 ), respectively

5,885 ( 101 )

Foreign currency translation ( 763 ) ( 739 )

Accumulated other comprehensive loss $ ( 967 ) $ ( 2,269 )

Accumulated other comprehensive income (loss) $ 3,604 $ ( 967 )

COMMITMENTS AND CONTINGENCIES

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Indemnifications - We have various agreements in which we may be obligated to indemnify the other party with respect to certain matters.

Generally, these indemnification clauses are included in contracts arising in the normal course of business under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations, warranties, covenants or agreements, related to matters such as title to assets sold and certain tax matters.

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

Generally, these indemnification clauses are included in contracts arising in the normal

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

procedures specified in the particular contract.

course of business under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations, warranties, covenants or agreements, related to matters such as title to assets sold and certain tax matters.

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.

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The amount of license bonds outstanding was $ 2.3 million and $ 2.3 million at December 31, 2022 and 2021, respectively.

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.

Legal Proceedings - On December 19, 2016, CBIZ Operations was named as a defendant in a lawsuit filed by Zotec Partners, LLC ("Zotec") in the Marion County Indiana Superior Court.

After various amendments, the lawsuit asserts claims under Indiana law for securities, statutory and common law fraud or deception, unjust enrichment, breach of contract, and vicarious liability against CBIZ Operations and a former employee of CBIZ MMP in connection with the sale of the CBIZ MMP medical billing practice to Zotec.

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

The plaintiff claims that CBIZ Operations had a duty to disclose the fact, unknown to employees of CBIZ Operations at the time of the transaction, 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 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.

On November 14, 2022, the trial court ruled in favor of CBIZ and against Zotec’s claim for statutory securities fraud.

The court also ruled in favor of CBIZ on its counterclaim for indemnification under contract.

The trial court is expected to set further proceedings to determine the amount of damages owed by Zotec to CBIZ.

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

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

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

EMPLOYEE BENEFITS

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

Employer contributions (net of forfeitures) made to the plan during the years ended December 31, 2022, 2021 and 2020 were approximately $ 16.1 million, $ 13.2 million and $ 12.2 million, respectively.

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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.

Non-qualified Deferred Compensation Plan - We sponsor a non-qualified deferred compensation plan, under which certain members of management and other highly compensated employees may elect to defer receipt of a portion of their annual compensation, subject to maximum and minimum percentage limitations.

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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 $ 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.

We recorded a loss of $ 19.6 million related to those investments for the year ended December 31, 2022.

In 2021 and 2020, respectively, we recorded income of $ 19.5 million and $ 15.4 million related to these investments.

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

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Repurchased shares are held in treasury and may be reserved for future use in connection with acquisitions, employee share plans and other general purposes.

Under our credit facility, described in Note 9, Debt and Financing Arrangements, share repurchases are unlimited when total leverage is less than 3.0 .

Under the 2022 credit facility, described in Note 9, Debt and Financing Arrangements, share repurchases are unlimited when total leverage is less than 3.0 .

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

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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

Purchase periods begin on the sixteenth day of 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.

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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.

The total number of shares of common stock that can be purchased under the ESPP shall not exceed 2.0 million shares.

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Outstanding at December 31, 2021 1,223 $ 17.71

Granted 50 $ 32.64

Exercised ( 670 ) $ 14.98

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

• At December 31, 2022, we didn't have any unrecognized compensation cost for stock options.

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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.

We utilized the Black-Scholes-Merton option-pricing model to determine the fair value of stock options on the date of grant.

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(4) The expected dividend yield assumption was determined in view of our historical and estimated dividend payouts.

We do not expect to change our dividend payout policy in the foreseeable future.

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

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Vested ( 238 ) $ 23.47

Forfeited ( 4 ) $ 34.04

Non-vested at December 31, 2022 277 $ 32.62

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

• Awards outstanding at December 31, 2022 will be released from restrictions at dates ranging from February, 2023 through February, 2025.

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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.

Performance Share Units (“PSUs”) - PSUs are earned based on our financial performance over a contractual term of three years and the associated expense is recognized over that period based on the fair value of the award.

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For performance achieved above specified levels, the recipient may earn additional shares of stock, not to exceed 200 % of the number of PSUs initially granted.

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

The following table presents our PSUs award activity during the twelve months ended December 31, 2022 (in thousands, except per share data):

Performance Share Units Weighted

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Granted 103 $ 38.15

Vested ( 211 ) $ 19.82

Adjustments for performance results (2)

Forfeited ( 5 ) $ 33.21

Outstanding at December 31, 2022 482 $ 28.84

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Stock options (1)

683 802 1,288

Restricted stock awards 141 192 195

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Diluted earnings per share from continuing operations $ 2.01 $ 1.32 $ 1.42

(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)

(1) For the years ended December 31, 2022, 2021 and 2020, a total of 68 thousand, 23 thousand and 253 thousand stock based awards, respectively, were excluded from the calculation of diluted earnings per share as their exercise prices would render them anti-dilutive.

(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.

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In the aggregate, we paid approximately $ 1.9 million, $ 2.3 million and $ 2.2 million during the years ended December 31, 2022, 2021 and 2020, respectively, under such leases.

Jerome Grisko, President and CEO of CBIZ, is a board member of Global Prairie PBC, Inc.

("Global Prairie").

Global Prairie performed consulting work for us during the year ended December 31, 2022 for which we paid approximately $ 0.2 million.

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

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During the year ended December 31, 2022, we completed the following acquisitions:

◦ 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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Financial Services practice group.

Operating results are reported in the Financial Services practice group.

◦ Effective July 1, 2022, we acquired substantially all the assets of Stinnett & Associates, LLC ("Stinnett").

Stinnett, located in Tulsa, Oklahoma, is a professional advisory firm and certified Women's Business Enterprise providing internal audit, Sarbanes-Oxley compliance, cybersecurity reviews, business continuity and disaster recovery, and fraud investigations to businesses of all sizes including Fortune 1000 organizations in a variety of industries.

Operating results are reported in the Financial Services practice group.

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”).

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Operating results are reported in the Financial Services practice group.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

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

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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").

◦ Effective May 1, 2021, we acquired substantially all of the non-attest assets of Berntson 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.

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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.

("Alliance"), a provider of insurance and advisory services based in Washington DC.

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

• Effective February 1, 2020, we acquired substantially all the assets of Pension Dynamics, LLC ("PD"), a full service retirement and benefits plan advisor based in Pleasant Hill, California.

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

• 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.

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

("PWI"), a provider of financial insurance and advisory services based in Woodbridge, Virginia.

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

• Effective September 1, 2020, we acquired substantially all the assets of ARC Consulting LLC and ARC Placement Group LLC (collectively "ARC"), a provider of financial, insurance and advisory services based in San Francisco, California.

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

The acquisitions of Marks Paneth and Stinnett added approximately $ 148.1 million in incremental revenue in 2022.

During the year ended December 31, 2022, we recorded approximately $ 10.5 million in non-recurring transaction, retention and integration related costs associated with the Marks Paneth acquisition.

Pro forma results of operations for these acquisitions have not been presented because the effects of these acquisitions were not material, either individually or in aggregate, to our total revenue, income from continuing operations, and net income for year ended December 31, 2022 and 2021, respectively.

The following table summarizes the aggregated consideration and purchase price allocation for the acquisitions completed during the year ended December 31, 2022 and 2021, respectively (in thousands):

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

• Effective December 1, 2020, we acquired substantially all the assets of BeyondPay, Inc., a full service human capital management and payroll service provider based in Clinton, New Jersey.

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

• Effective December 31, 2020, we acquired substantially all the assets of Borden Perlman Insurance Agency, Inc.

("BP"), a leading provider of financial, insurance and advisory services located in Ewing, New Jersey.

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

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

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) 42 207

1 unchanged sentence

Cash paid 79,141 66,651

Other payable — 59

Recorded contingent consideration 74,199 39,665

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Maximum potential contingent consideration $ 77,075 $ 41,720

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, 2022 and 2021, respectively (in thousands):

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Twelve Months Ended December 31,

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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, 2022 and 2021, respectively (in thousands):

Net expense (income) 2,367 ( 629 )

Net expense 2,435 2,367

Cash settlement paid 21,113 13,785

Shares issued (number) 65 109

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.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Divestitures and Sale of Assets

In 2022, we sold one small book of business for $ 2.5 million in the Benefits and Insurance Services practice group and recorded a gain of $ 2.4 million.

This gain is recorded as "Other (expense) income, net" in the accompanying Condensed Consolidated Statements of Comprehensive Income.

Gain on book of business sales in 2021 was immaterial.

Divested operations and assets that do not qualify for treatment as discontinued operations are recorded as “Gain (loss) 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.

SEGMENT DISCLOSURES

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

and similarity of

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

economic conditions affecting long-term performance.

and similarity of economic conditions affecting long-term performance.

The business units are managed along these segment lines.

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There is no one customer that represents a significant portion of our revenue.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

Segment information for the years ended December 31, 2022, 2021 and 2020 is presented below (in thousands).

We do not manage our assets on a segment basis, therefore segment assets are not presented below.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)

For the Year Ended December 31, 2022

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Corporate general and administrative expenses — — — 55,023 55,023

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

Operating income (loss) 160,030 67,620 4,703 ( 64,009 ) 168,344

1 unchanged sentence

Interest expense — ( 6 ) — ( 8,033 ) ( 8,039 )

(Loss) gain on sale of operations, net ( 289 ) 6,284 — — 5,995

Other income, net 263 827 3 17,148 18,241

Total other (expense) income ( 26 ) 7,111 3 13,280 20,368

Gain on sale of operations, net 413 — — — 413

Other income (expense), net 269 2,392 10 ( 21,896 ) ( 19,225 )

Total other income (expense) 682 2,386 10 ( 29,929 ) ( 26,851 )

Income (loss) from continuing operations before income tax expense $ 160,712 $ 70,006 $ 4,713 $ ( 93,938 ) $ 141,493

8 unchanged sentences

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

1 unchanged sentence

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 .

Subsequent to December 31, 2022 and up to February 22, 2023, we repurchased approximately 0.1 million shares of our common stock on the open market at a total cost of approximately $ 4.5 million.

On February 7, 2023, our Board of Directors authorized the continuation of the Share Repurchase Program, which has been renewed annually for the past nineteen years .

It is effective beginning March 31, 2023, to which the amount of shares to be purchased will be reset to 5.0 million, and expires one year from the respective effective date.

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.

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.

Somerset Acquisition

Effective February 1, 2023, we acquired the non-attest assets of Somerset CPAs and Advisors ("Somerset").

Somerset, based in Indianapolis, IN, is a provider of a full range of accounting, tax, and financial advisory services to clients in a wide array of industries.

Mayer Hoffman, with whom we maintain an ASA, acquired the attest assets from Somerset in a separate transaction.

Annualized revenue from Somerset is estimated at $ 55.0 million.

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

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