CBIZ, Inc. Annual Report 2013

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FY2013 Annual Report · CBIZ, Inc.

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STRENGTH.
MOMENTUM.

2013 ANNUAL REPORT

2
CBIZ, INC.

2013 ANNUAL REPORT

CBIZ, INC.

MISSION STATEMENT

Our mission is to help our clients prosper by providing them with the
professional business and individual services, products, and solutions to
better manage their finances and employees. We endeavor to provide
superior client service and build long-term client relationships. Our
unwavering commitment to our clients is equaled by our commitment
to our associates and our focus on improving shareholder value. We
will maintain a professional culture that is supportive and motivating,
fosters and rewards high performance, and creates meaningful career
opportunities.

CORPORATE PROFILE

As a trusted advisor to more than 90,000 businesses and individuals across
the U.S., CBIZ provides our clients with solutions that help them improve
their operations and profitability. From our many service platforms – in areas
ranging from accounting and tax services to employee benefits – we strive
to ensure that our clients receive the most effective professional solutions.
With more than 4,100 associates in 100 offices across the country, CBIZ’s
resources and services are uniquely suited to support the growth and
success of our clients.

TABLE OF CONTENTS

Financial Highlights ............. 3

Letter to Shareholders .... 4-5

Services .................................. 6

Locations ............................... 6

Form 10-K ................................

Board of Directors ................ 7

Key Personnel ....................... 7

Shareholder
Information ....................BACK

CORPORATE OFFICE

6050 Oak Tree Blvd., South
Suite 500
Cleveland, OH 44131
216.447.9000

www.cbiz.com

FINANCIAL HIGHLIGHTS

2013 ANNUAL REPORT

3
CBIZ, INC.

This annual report to shareholders contains forward-looking statements, which by their nature
involve risks and uncertainties. CBIZ’s Annual Report on Form 10-K, which is filed with the
Securities and Exchange Commission, contains a detailed description of certain factors that
may cause actual results to differ from results contemplated from such statements.

TOTAL COMPANY REVENUE
(in millions)

DILUTED EARNINGS PER SHARE

$692.0

$626.5

$574.5 $580.4

$591.3

$0.51

$0.41

$0.36

$0.37

$0.32

8 %

C A G R

4 %

C A G R

2009

2010

2011

2012

2013

2009

20101

20112

20123

2013

ADJUSTED EBITDA
(in millions)

CROSS-SERVING REVENUE
estimated first year annualized (in millions)

$75.6

$63.9

$59.2

$59.7

$56.8

4 %

C A G R

$25.9

$25.5

$23.1

$21.6

$21.3

3 %

C A G R

2009

20101

20112

20123

2013

2009

2010

2011

2012

2013

The above have been adjusted to reflect the impact of discontinued operations.

1Excludes a restructuring charge of $1.7 million or ($0.02) related to the integration of our
Boca Raton, Florida office, and a $2.0 million or ($0.02) charge for the early retirement of Convertible Notes

2Excludes a gain on the sale of the Company’s wealth management business of $2.5 million or $0.02

3Excludes a gain on the sale of the Company’s wealth management business of $2.5 million or
$0.03 and the impact of favorable legal settlements of $1.9 million or $0.02

4
CBIZ, INC.

2013 ANNUAL REPORT

CBIZ, INC.

DEAR FELLOW
SHAREHOLDERS,

It is my pleasure to report that
we posted very strong results for
2013. Our business continued to
gain strength and momentum
throughout the year, in large
part due to the hard work and
dedication of our 4,100 associates
across the nation. Serving our
clients’ financial and employee
needs takes strong commitment,
persistent effort and a sincere
desire to provide the very
best solutions. Our success in
this endeavor is evidenced by
continued high retention rates of
our more than 90,000 clients.

For some time, we described our
former Medical Management
Professionals (“MMP”) operations
as a non-core business. In August
2013, we divested our MMP
operations and it’s important to
note that all financials in this report
have been adjusted to reflect this
transaction. Proceeds from this
sale were used to repurchase 3.85
million shares of our common stock
and pay down our debt. Going
forward, this will provide us greater
flexibility for additional investment
in our business, including future
acquisitions.

2013 RESULTS

For the year ended December
31, 2013, we achieved revenue
growth of 10.5% over 2012. This
increase was due to continued
growth in same-unit revenue, as
well as strong contributions from
our newly acquired operations.

During 2013, we increased
earnings by 24.4% to $0.51 per
diluted share, compared with
normalized earnings of $0.41
per diluted share for 2012. For

comparative purposes the $0.46
per share reported for 2012
has been adjusted for the non-
recurring after-tax gain of $0.03
per diluted share on the sale of
our former Wealth Management
business and the $0.02 per
diluted share impact of favorable
non-recurring legal settlements.
Cash earnings per share, a non-
GAAP measure which includes
certain non-cash charges and
credits to income from continuing
operations, increased by 20.0%
in 2013 over the prior year. Cash
flow continued to be strong, and
adjusted EBITDA increased by
18.3% over 2012.

The strength and
momentum of our
business is evidenced by
the fact that, since 2009,
we have achieved 21%
growth in revenue, 32%
growth in pre-tax earnings,
59% growth in earnings per
share, and 18% growth in
cross-serving revenue.

Our cross-serving efforts
contributed $25.5 million to total
revenue during 2013. Cross-
serving, our strategy of identifying
opportunities to provide
additional products and services
to existing clients, continues to
be an important contributor to
our organic growth and a source
of incremental revenue.

During 2013, we successfully
integrated nine acquisitions
made in 2012 and completed
two additional acquisitions. We
also completed three acquisitions
in early 2014. In 2013, we used

$20.7 million to fund acquisition-
related payments, and $25.7
million to repurchase shares of
our common stock at an average
price of $6.65 per share. Even
after these investments, we
ended the year with only $48.5
million outstanding on our $275
million unsecured credit facility.

BUSINESS SEGMENT
HIGHLIGHTS

The growth in our Financial
Services segment was led
primarily by our national
government health care consulting
business. Organic growth within
Financial Services has improved
year-over-year since 2009, and we
believe our investments in building
our business development team
in select markets will enhance
our future revenue opportunities.
The 2013 acquisition of Knight
Field Fabry further expanded our
Denver, Colorado, operations.
In early 2014, we acquired Lewis,
Birch & Ricardo which expanded
our technical expertise in our
existing Tampa, Florida, market
and as a result of this acquisition,
CBIZ is now one of the largest
accounting services providers in
that market.

In our Employee Services
segment, we recorded organic
growth in our property and
casualty insurance, retirement
plan advisory, HR consulting and
payroll services; and we continued
to see an improving trend in
our employee benefits business
during the year. As a result of our
consultative approach to helping
companies with issues related to
health care reform, we gained
new business in 2013 that we
expect to contribute to stronger
growth in 2014.

CBIZ INC.

2013 ANNUAL REPORT

5
CBIZ, INC.

In 2013, we acquired Associated
Insurance Agents, a property
and casualty firm located in
Minneapolis, Minnesota. The
early 2014 acquisitions of
Clearview National Partners in
Waltham, Massachusetts, and
Centric Insurance Agency in
New Providence, New Jersey, are
expected to enhance both our
employee benefit and property
and casualty operations in 2014.
We will continue to evaluate
potential future acquisition
opportunities that would
complement our current core
financial and employee services.

MARKETING AND
BRANDING

We also saw our social media
strategy continue to take hold
during the past year. By further
expanding our presence on
business-friendly social outlets
such as LinkedIn, Twitter,
YouTube and Slideshare, we have
seen our online influence grow
to exceed the majority of our
key competitors. These efforts
helped to generate significant,
measurable new revenue across
all of our major practice lines.

CULTURE AND
COMMUNITY
INVOLVEMENT

As a professional services
company, we know our associates
are our most valuable asset.
As such, we strive to make
CBIZ a great place to work
by maintaining a professional
and supportive culture while
providing meaningful career
opportunities. Throughout the
year, many of our offices were
recognized as top workplaces in
their local markets. (See side bar).

Our CBIZ Women’s Advantage
(CWA) Program continues
to provide professional
development opportunities
for our women associates and
is also a regular contributor to
our revenue growth. CWA has
become integrated into many
aspects of our business and is
now partnering with external
organizations and vendors to
promote the business case for
gender diversity.

The communities where we work
and live continue to benefit
from CWA’s national support of
Dress for Success (DFS). In 2013,
through the efforts of many of
our associates, CBIZ raised nearly
$55,000 and donated thousands
of articles of clothing and
accessories to local DFS affiliates.

Our company-wide food drive
marked its fifth successful year in
2013 with nearly 650,000 pounds
of food donated to local food
banks in our markets across
the country. This was a great
opportunity for our associates to
come together as one national
company while giving back to
their local communities.

OUTLOOK FOR 2014

In 2014, we expect to see
continued strength and
momentum with improvement in
same-unit revenue growth rates,
as well as 5% to 7% growth in
total revenue. We also expect
diluted earnings per share from
continuing operations to grow by
15% to 18%, assuming a constant
share count compared with 2013.
We expect cash flow to continue
to be positive, and we project
adjusted EBITDA to increase by
8% to 12% over the $75.6 million
reported for 2013.

2013 – 2014

CLEVELAND, OH
Best Place to Work in
Northeast Ohio and
NEO Success Award

MEMPHIS, TN
Top Workplace and
Healthiest Employers

MINNEAPOLIS, MN
100 Best Places to Work

ORANGE COUNTY, CA
Top Workplace

PHILADELPHIA, PA
Partners in
Philanthropy Award

PROVIDENCE, RI
Best Places to Work

ROANOKE, VA
Virginia’s Best Places
to Work

In closing, I would like to thank
all of our dedicated associates
for their unwavering commitment
to our clients and our company. I
am also grateful to our Board of
Directors for their guidance and
insight and to our shareholders
for their continued support.

Sincerely,

Steven L. Gerard
Chairman and
Chief Executive Officer
March 17, 2014

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CBIZ, INC.

2013 ANNUAL REPORT

SERVICES & LOCATIONS

A N C I AL SERVIC

FIN

CLIENT

PLOYEE S E R V I C

E S

FINANCIAL SERVICES

EMPLOYEE SERVICES

Accounting & Tax
Financial Advisory
Government Health Care
Consulting
Valuation
Risk Advisory Services
Litigation Support
Real Estate Advisory
Services

Employee Benefits
Property & Casualty
Insurance
Retirement Services
Payroll / Flex / COBRA
Life Insurance
Executive Search
Compensation Consulting
Human Capital Services

CBIZ is a leading provider of professional services throughout the U.S.
and helps clients succeed by enabling them to better manage their finances and employees.

Major Markets

With more than 4,100 associates in 100 offices across the country, CBIZ’s resources and services
are uniquely suited to support the growth and success of our clients.

BOARD OF DIRECTORS & KEY PERSONNEL

2013 ANNUAL REPORT

7
CBIZ, INC.

STEVEN L. GERARD
Chairman and
Chief Executive Officer

JEROME P. GRISKO, JR.
President and
Chief Operating Officer

WARE H. GROVE
Senior Vice President and
Chief Financial Officer

BOARD OF DIRECTORS

STEVEN L. GERARD
Chairman and Chief Executive
Officer, CBIZ, Inc.

MICHAEL H. DEGROOTE
President, Westbury
International Corporation

RICHARD C. ROCHON
Chairman and Chief Executive
Officer, Royal Palm Capital
Management

DONALD V. WEIR
Vice President of Private
Equity, Sanders Morris
Harris Group, Inc.

RICK L. BURDICK
Senior Partner, Akin Gump
Strauss Hauer & Feld LLP

JOSEPH S. DIMARTINO
Chairman,
The Dreyfus Family of Funds

TODD J. SLOTKIN
Managing Partner,
Newton Pointe LLC

BENAREE PRATT WILEY
Principal, The Wiley Group

KEY PERSONNEL

STEVEN L. GERARD
Chairman and
Chief Executive Officer

CHRIS SPURIO
President, Financial Services

GEORGE A. DUFOUR
Senior Vice President and
Chief Technology Officer

RICHARD E. MILLS
Chief Operating Officer,
Financial Services

JEROME P. GRISKO, JR.
President and
Chief Operating Officer

ROBERT A. O’BYRNE
President, Employee Services

MARK M. WAXMAN
Senior Vice President and
Chief Marketing Officer

BRIAN T. CAREY
Vice President,
Corporate Development

WARE H. GROVE
Senior Vice President and
Chief Financial Officer

DAVID J. SIBITS
Senior Vice President,
Strategic Development,
Financial Services

MICHAEL W. GLEESPEN
Corporate Secretary and
General Counsel

MICHAEL P. KOUZELOS
Senior Vice President, Strategic
Initiatives and Chief Operating
Officer, Employee Services

TERESA E. BUR
Senior Vice President,
Human Resources

SUNNY D. CLAGGETT
Vice President, Talent
Management

KELLY J. MAREK
Corporate Treasurer

BRUCE J. KOWALSKI
Vice President, Corporate Tax

ANDREW K. DAMBROSIO
Corporate Controller

KEVIN P. NUSSBAUM
Vice President, New Business
Development

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

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

For the transition period from _________ to ___________

Commission file number 1-32961

CBIZ, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

22-2769024
(I.R.S. Employer Identification No.)

6050 Oak Tree Boulevard, South, Suite 500, Cleveland, Ohio

(Address of principal executive offices)

Registrant’s telephone number, including area code:

44131

(Zip Code)

(216) 447-9000

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

Common Stock, par value $0.01
(Title of class)

New York Stock Exchange
(Name of exchange on which registered)

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

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90
days.

Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12
months. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. [X]

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

Large accelerated filer [ ]
Non-accelerated filer [ ]

Accelerated filer [X]
Smaller reporting company [ ]

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

The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $341.7 million as of
June 30, 2013.

The number of outstanding shares of the registrant’s common stock is 49,806,319 as of February 28, 2014.

DOCUMENTS INCORPORATED BY REFERENCE

The registrant incorporates by reference in Part III hereof portions of its definitive Proxy Statement for its 2014 Annual Meeting of
Stockholders.

CBIZ, INC.

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2013

Table of Contents

Business ...................................................................................
Risk Factors ..............................................................................
Unresolved Staff Comments ....................................................
Properties .................................................................................
Legal Proceedings....................................................................
Mine Safety Disclosures...........................................................

Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities ............
Selected Financial Data ...........................................................
Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................................
Quantitative and Qualitative Disclosures About Market Risk ...
Financial Statements and Supplementary Data.......................
Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ..................................
Controls and Procedures..........................................................
Other Information......................................................................

Directors, Executive Officers and Corporate Governance .......
Executive Compensation..........................................................
Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters..................
Certain Relationships and Related Transactions, and
Director Independence .......................................................
Principal Accounting Fees and Services..................................

Page

4
11
17
17
18
19

20
23

24
47
47

47
48
49

50
54

54
56

Exhibits, Financial Statement Schedules .................................
Signatures ................................................................................

57
60

PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.

PART II
Item 5.

Item 6.
Item 7.

Item 7A.
Item 8.
Item 9.

Item 9A.
Item 9B.

PART III
Item 10.
Item 11.
Item 12.

Item 13.

Item 14.

PART IV
Item 15.

Forward-Looking Statements

This Annual Report on Form 10-K contains "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of
1934 (“the Exchange Act”). All statements other than statements of historical fact included in this Annual
Report on Form 10-K including, without limitation, "Business" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding CBIZ's financial position, business
strategy and plans and objectives for future performance are forward-looking statements. You can identify
these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking
statements are commonly identified by the use of such terms and phrases as "intends," "believes,"
"estimates," "expects," "projects," "anticipates," "foreseeable future," "seeks," and words or phrases of
similar import in connection with any discussion of future operating or financial performance. In particular,
these include statements relating to future actions, future performance or results of current and
anticipated services, sales efforts, expenses, and financial results. From time to time, the Company may
also provide oral or written forward-looking statements in other materials the Company releases to the
public. Any or all of the Company’s forward-looking statements in this Annual Report on Form 10-K and in
any other public statements that the Company makes, are subject to certain risks and uncertainties that
could cause actual results to differ materially from those projected. Such forward-looking statements can
be affected by inaccurate assumptions the Company might make or by known or unknown risks and
uncertainties. Many factors mentioned in “Item 1A. Risk Factors” will be important in determining future
results. Should one or more of these risks or assumptions materialize, or should the underlying
assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or
projected. Such risks and uncertainties include, but are not limited to: CBIZ's ability to adequately manage
its growth; CBIZ’s dependence on the services of its CEO and other key employees; competitive pricing
pressures; general business and economic conditions; changes in governmental regulation and tax laws
affecting CBIZ’s operations; reversal or decline in the current trend of outsourcing business services;
revenue seasonality or fluctuations in and collectability of receivables; liability for errors and omissions of
the Company’s businesses; regulatory investigations and future regulatory activity (including without
limitation inquiries into compensation arrangements within the insurance brokerage industry); and
reliance on information processing systems and availability of software licenses. Consequently, no
forward-looking statement can be guaranteed. The Company’s actual future results may vary materially,
and CBIZ undertakes no obligation to publicly update any forward-looking statements, whether as a result
of new information, future events or otherwise. You are advised, however, to consult any further
disclosures the Company makes on related subjects in the quarterly, periodic and annual reports the
Company files with the SEC. Also note that the Company provides cautionary discussion of risks,
uncertainties and possibly inaccurate assumptions relevant to its businesses as discussed in Item 1.
These are factors that the Company thinks could cause its actual results to differ materially from expected
and historical results. Other factors besides those described here could also adversely affect operating or
financial performance.

The following text is qualified in its entirety by reference to the more detailed information and consolidated
financial statements (including the notes thereto) appearing elsewhere in this Annual Report on Form
10-K. Unless the context otherwise requires, references in this Annual Report to "we", "our", “us”, "CBIZ",
or the "Company" shall mean CBIZ, Inc., a Delaware corporation, and its wholly-owned subsidiaries. All
references to years, unless otherwise noted, refer to CBIZ’s fiscal year which ends on December 31.

Item 1. Business.

Overview and History

PART I

CBIZ provides professional business services, products and solutions that help its clients grow and
succeed by better managing their finances and employees. These services are provided to businesses of
various sizes, as well as individuals, governmental entities and not-for-profit enterprises throughout the
United States and parts of Canada. CBIZ delivers its integrated services through the following three
practice groups:

 Financial Services
 Employee Services
 National Practices

On August 30, 2013, CBIZ, through its subsidiary CBIZ Operations, Inc., an Ohio Corporation, completed
the sale of all of the issued and outstanding capital stock of each of CBIZ Medical Management
Professionals, Inc., an Ohio corporation, and CBIZ Medical Management, Inc., a North Carolina
corporation, and substantially all of the stock of their subsidiary companies, collectively consisting of all of
CBIZ’s Medical Management Professionals ongoing operations and business (“MMP”) to Zotec Partners,
LLC, an Indiana limited liability company, for a purchase price of $201.6 million, subject to final working
capital adjustments. Prior to the completion of this transaction, MMP was considered one of CBIZ’s
practice groups.

CBIZ believes that its diverse and integrated service offerings result in advantages for both the client and
for CBIZ. By providing custom solutions that help clients manage their finances and employees, CBIZ
enables its clients to focus their resources on their own core business and operational competencies.
Additionally, working with one provider for several solutions enables CBIZ’s clients to utilize their
resources more efficiently by eliminating the need to coordinate with multiple service providers. The ability
to combine several services and offer them through one trusted provider distinguishes CBIZ from other
service providers.

CBIZ has been operating as a professional services business since 1996, and the Company built its
professional services business through acquiring accounting and financial service providers, benefits and
employee services firms, property and casualty brokerage firms, payroll service providers, and valuation
and other service firms throughout the United States. CBIZ is listed on the New York Stock Exchange
(“NYSE”) under the symbol “CBZ”.

Business Strategy

CBIZ strives to maximize shareholder value and believes this is accomplished through growth in revenue
and earnings per share, as well as the strategic allocation and deployment of free cash-flow and capital
resources.

Revenue

CBIZ believes revenue growth will be achieved through internal organic growth, cross-serving additional
services to its existing clients, and targeted acquisitions. Each of these components is critical to the long-
term growth strategy, and CBIZ expects each component to contribute to long-term revenue growth.

 CBIZ believes it can capitalize on organic growth opportunities by offering a higher level of

national resources than traditional local professional service firms, but delivering these services
locally with a higher level of personal service than is expected from traditional national firms.
CBIZ is also able to leverage technology to create efficiencies and to link together aligned
services such as benefits, payroll and human resource services.

 Cross-serving provides CBIZ with the opportunity to offer and deliver multiple services to existing

clients. Cross-serving opportunities are identified by Company employees as they provide
services to their existing clients. Being a trusted advisor to its clients provides CBIZ with the
opportunity to identify the clients’ needs, while the diverse and integrated services offered by
CBIZ allow the Company to provide solutions to satisfy these needs.

 CBIZ’s acquisition strategy is to selectively acquire businesses that expand the Company’s
market position and strengthen its existing service offerings. Strategic businesses that CBIZ
seeks to acquire generally have strong and energetic leadership, a positive local market
reputation, commitment to client service, the potential for cross-serving additional CBIZ services
to their clients, an ability to integrate quickly with existing CBIZ operations and are accretive to
earnings.

Earnings Per Share

CBIZ expects to grow earnings per share by achieving operating leverage. CBIZ believes it can achieve
operating leverage by improving productivity while growing revenue. Operating leverage opportunities
include managing general and administrative infrastructure costs and other costs that are fixed or may
increase at rates slower than revenue growth.

Cash Flows and Capital Resources

CBIZ’s strategy is to utilize capital resources for strategic initiatives that will optimize shareholder return.
The highest priority for the utilization of capital is focused on strategic acquisitions. CBIZ also believes
that repurchasing shares of its common stock is a use of cash that provides stockholder value.
Accordingly, CBIZ has historically adopted a repurchase plan annually and continually evaluates share
repurchase opportunities. CBIZ may repurchase shares of its common stock when, after assessing capital
needed to fund acquisitions and seasonal working capital needs, capital resources are available and such
repurchases are accretive to stockholders.

Business Services

Following the disposition of MMP, CBIZ delivers its integrated services through three operating practice
groups. A general description of services provided by each practice group is provided in the table below.

Financial Services
 Accounting
 Tax
 Financial Advisory
 Valuation
 Litigation Support
 Government Health Care Consulting
 Risk Advisory Services
 Real Estate Advisory

Employee Services
 Employee Benefits
 Property & Casualty
 Retirement Plan Services
 Payroll Services
 Life Insurance
 Human Capital Services
 Compensation Consulting
 Executive Recruiting
 Actuarial Services

National Practices
 Managed Networking and

Hardware Services
 Health Care Consulting

Practice Groups

Revenue by practice group for the years ended December 31, 2013, 2012 and 2011 is provided in the
table below (in thousands):

2013

Year Ended December 31,
2012

2011

Financial Services ........ $
Employee Services ......
National Practices ........
Total CBIZ .................. $

456,649
204,863
30,521
692,033

66.0% $
29.6%
4.4%
100.0% $

410,195
186,217
30,126
626,538

65.5% $
29.7%
4.8%
100.0% $

389,743
171,205
30,322
591,270

65.9%
29.0%
5.1%
100.0%

A discussion of CBIZ’s practice groups and certain external relationships and regulatory factors that
currently impact those practice groups are provided below. See Note 22 of the accompanying
consolidated financial statements for further discussion of CBIZ’s practice groups.

Financial Services

The Financial Services practice group is divided into a Financial Services division, which represents the
various accounting units spread geographically throughout the United States that provide core accounting
services regionally, and a National Services division consisting of those units that provide their specialty
services nationwide. Core accounting services consist mainly of accounting and tax compliance and
consulting, as well as litigation support, while National Services consist primarily of valuation services,
real estate consulting, internal audit outsourcing and federal and state governmental healthcare
compliance. Both the Financial Services and National Services divisions report to the President of
Financial Services. The President of Financial Services reports to CBIZ’s President and Chief Operating
Officer.

Restrictions imposed by independence requirements and state accountancy laws and regulations
preclude CBIZ from rendering audit and attest services (other than internal audit services). As such, CBIZ
and its subsidiaries maintain joint-referral relationships and administrative service agreements (“ASAs”)
with independent licensed Certified Public Accounting (“CPA”) firms under which audit and attest services
may be provided to CBIZ's clients by such CPA firms. These firms are owned by licensed CPAs, a vast
majority of whom are also employed by CBIZ’s subsidiaries. Under these ASAs, CBIZ provides a range of
services to the CPA firms, including (but not limited to): administrative functions such as office
management, bookkeeping and accounting; preparing marketing and promotional materials; providing
office space, computer equipment and systems support; and leasing administrative and professional staff.
Services are performed in exchange for a fee. Fees earned by CBIZ under the ASAs are recorded as
revenue in the accompanying consolidated statements of comprehensive income and totaled
approximately $140.2 million, $116.1 million and $109.1 million for the years ended December 31, 2013,
2012 and 2011, respectively, a majority of which is related to services rendered to privately-held clients
and governmental agencies. In the event that accounts receivable and unbilled work in process become
uncollectible by the CPA firms, the service fee due to CBIZ is typically reduced on a proportional basis.
The ASAs have terms ranging up to eighteen years, are renewable upon agreement by both parties, and
have certain rights of extension and termination.

With respect to CPA firm clients that are required to file audited financial statements with the SEC, the
SEC staff views CBIZ and the CPA firms with which CBIZ has contractual relationships as a single entity
in applying independence rules established by the accountancy regulators and the SEC. Accordingly,
CBIZ does not hold any financial interest in an SEC-reporting attest client of an associated CPA firm,
enter into any business relationship with an SEC-reporting attest client that the CPA firm performing an
audit could not maintain, or sell any non-audit services to an SEC-reporting attest client that the CPA firm
performing an audit could not sell, under the auditor independence limitations set out in the Sarbanes-
Oxley Act of 2002 and other professional accountancy independence standards. Applicable professional
standards generally permit CBIZ to provide additional services to privately-held companies in addition to
those services which may be provided to SEC-reporting attest clients of an associated CPA firm. CBIZ

and the CPA firms with which CBIZ is associated have implemented policies and procedures designed to
enable the Company and the CPA firms to maintain independence and freedom from conflicts of interest
in accordance with applicable standards. Given the policies set by CBIZ on its relationships with SEC-
reporting attest clients of associated CPA firms, and the limited number and size of such clients, the
Sarbanes-Oxley Act independence limitations do not, and are not expected to, materially affect CBIZ
revenues.

The CPA firms with which CBIZ maintains ASAs may operate as limited liability companies, limited liability
partnerships or professional corporations. The firms are separate legal entities with separate governing
bodies and officers. Neither the existence of the ASAs nor the providing of services thereunder
constitutes control of the CPA firms by CBIZ. CBIZ and the CPA firms maintain their own respective
liability and risk of loss in connection with the performance of their respective services. Attest services are
not permitted to be performed by any individual or entity that is not licensed to do so. CBIZ is not
permitted to perform audits, reviews, compilations, or other attest services, does not contract to perform
them and does not provide the associated attest reports. Given this legal prohibition and course of
conduct, CBIZ does not believe it is likely that it would bear the risk of litigation losses related to attest
services provided by the CPA firms.

At December 31, 2013, CBIZ maintained ASAs with four CPA firms. Most of the members and/or
stockholders of the CPA firms are also CBIZ employees, and CBIZ renders services to the CPA firms as
an independent contractor. CBIZ’s primary ASA is with Mayer Hoffman McCann, P.C. (“Mayer Hoffman”),
an independent national CPA firm headquartered in Leawood, Kansas. Mayer Hoffman has 274
stockholders, a vast majority of whom are also employees of CBIZ. Mayer Hoffman maintains an eight
member board of directors. There are no board members of Mayer Hoffman who hold senior officer
positions at CBIZ. CBIZ's association with Mayer Hoffman offers clients access to the multi-state
resources and expertise of a national CPA firm. CBIZ also has an ASA with Myers & Stauffer LLC
(“M&S”), an independent national governmental healthcare consulting firm headquartered in Leawood,
Kansas. M&S has eight equity members, all of whom are also employees of CBIZ. M&S maintains a
three member executive committee, none of whom hold senior officer positions at CBIZ.

Although the ASAs do not constitute control, CBIZ is one of the beneficiaries of the agreements and may
bear certain economic risks. As such, the CPA firms with which CBIZ maintains ASAs qualify as variable
interest entities. See Note 1 of the accompanying consolidated financial statements for further discussion.

Employee Services

CBIZ's Employee Services practice group operates under a divisional President who oversees the
practice group, along with a senior management team aligned along functional, product, and unit
management lines. The Employee Services President reports to CBIZ’s Chief Operating Officer. CBIZ’s
Employee Services group is organized along lines of services such as employee benefits consulting and
brokerage, property and casualty brokerage, retirement plan advisory services, payroll services, human
capital advisory services, actuarial services, life insurance and other services that serve local and
regional clients with national resources.

CBIZ’s Employee Services practice group maintains relationships with many different insurance carriers.
Some of these carriers have compensation arrangements with CBIZ whereby some portion of payments
due may be contingent upon meeting certain performance goals, or upon CBIZ providing client services
that would otherwise be provided by the carriers. These compensation arrangements are provided to
CBIZ as a result of its performance and expertise, and may result in enhancing CBIZ’s ability to access
certain insurance markets and services on behalf of CBIZ clients. The aggregate compensation related to
these arrangements received during the years ended December 31, 2013, 2012 and 2011 were less than
2% of consolidated CBIZ revenue for the respective periods.

National Practices

The National Practices group offers technology and health care consulting services. Both units within the
National Practices group each have a Business Unit President. These Business Unit Presidents report to

a Senior Vice President and CBIZ’s President and Chief Operating Officer, with one unit reporting to
CBIZ’s Chief Executive Officer.

Sales and Marketing

CBIZ’s branding goals are focused on providing CBIZ with a consistent image while at the same time
providing support, tools and resources for each practice and market to utilize within each of the
Company’s distinct geographic and industry markets. Three key strategies are employed to accomplish
these goals: thought leadership, market segmentation, and sales/sales management process
development.

 Thought leadership: CBIZ marketing efforts continue to capitalize on the extensive knowledge and

expertise of CBIZ associates. This has been accomplished through media visibility, social media,
webinars, and the creation of a wide variety of white papers, newsletters, books, and other
information offerings.

 Market segmentation: The majority of CBIZ marketing resources are devoted to the highly

measurable and high return on investment strategies that specifically target those industries and
service areas where CBIZ has particularly deep experience. These efforts typically involve local,
regional or national trade show and event sponsorships, targeted direct mail, email, and
telemarketing campaigns, and practice and industry specific micro-sites and newsletters.

 Sales/sales management process development: CBIZ continues to enhance an accountable business

development culture with several initiatives, including enhanced management visibility, analytics and
forecasting through Salesforce.com and the implementation of performance management scorecards
and business development pipeline reports. Together, these initiatives have helped create a more
effective, efficient and successful sales management process throughout the Company.

CBIZ’s focus has been on developing marketing strategies that specifically support each of the
Company’s major practice areas: Financial Services (accounting) and Employee Services (insurance,
payroll and human resources). In each of these segments, emphasis has been put on marketing
technology that has the highest and most measurable return on investment, including enhanced targeted
email campaigns, webinars, web lead generation, and an evolving web presence.

In 2012, CBIZ launched an initiative to build relationships and reputation through social media. Beginning
with comprehensive training and support for LinkedIn and Twitter, CBIZ’s social media efforts have
expanded to include programs on Facebook, Google+, YouTube and social sharing sites such as
Slideshare and Pinterest.

Customers

CBIZ provides professional services to over 90,000 clients, including over 50,000 business clients. By
providing various professional services and administrative functions, CBIZ enables its clients to focus
their resources on their own operational competencies. Reducing administrative functions allows clients
to enhance productivity, reduce costs and improve service quality and efficiency by focusing on their core
business. Depending on a client's size and capabilities, it may choose to utilize one, some or many of the
diverse and integrated services offered by CBIZ.

CBIZ's clients come from a large variety of industries and markets, including many government agencies,
with the Company targeting mid-sized companies that have between 100 and 2,000 employees and
annual revenues between $5 million and $200 million. CBIZ’s largest client, Edward Jones, comprises
approximately 3% of CBIZ’s consolidated revenue in 2013 and is included in the National Practices
operating practice group. Management believes that its client diversity helps insulate CBIZ from a
downturn in a particular industry or geographic market. Nevertheless, economic conditions among select
clients and groups of clients may have an impact on the demand for services provided by CBIZ. See Note

22 of the accompanying consolidated financial statements for information regarding revenue attributable
to the geographic areas where CBIZ operates.

Competition

The professional business services industry is highly fragmented and competitive, with a majority of
industry participants, such as accounting, employee benefits, payroll providers or professional service
organizations, offering only a limited number of services. Competition is based primarily on client
relationships, quality of professional advice, range and quality of services or product offerings, customer
service, timeliness, geographic proximity, and competitive rates. CBIZ competes with a number of multi-
location regional or national professional services firms and a large number of relatively small
independent firms in local markets. CBIZ's competitors in the professional business services industry
include, but are not limited to, independent consulting services companies, independent accounting and
tax firms, payroll service providers, independent insurance brokers and divisions of diversified services
companies.

Acquisitions and Divestitures

CBIZ seeks to strengthen its operations and customer service capabilities by selectively acquiring
businesses that expand its market position and strengthen its existing service offerings. During the year
ended December 31, 2013, CBIZ acquired two businesses:

 Associated Insurance Agents (“AIA”), located in Minneapolis, Minnesota, is an insurance

brokerage agency specializing in property and casualty insurance, personal lines and health and
benefit insurance. Annualized revenues are estimated to be approximately $3.8 million and are
reported in the Employee Services practice group.

 Knight Field Fabry, LLP (“Knight”), primarily located in Denver, Colorado, was consolidated with
the Company’s existing Denver practice and is a provider of traditional accounting, tax, litigation
support and valuation services. Annual revenues are estimated to be approximately $1.5 million
and are reported in the Financial Services practice group.

During the year ended December 31, 2013, CBIZ also purchased three client lists, two of which are
reported in the Employee Services practice group and one reported in the Financial Services practice
group.

CBIZ will divest business operations that do not contribute to the long-term goals of CBIZ or do not meet
certain growth or service targets. During 2013, CBIZ divested three businesses:

 On August 30, 2013, CBIZ sold all of the issued and outstanding capital stock of CBIZ Medical

Management Professionals, Inc. and CBIZ Medical Management, Inc. and substantially all of the
stock of their subsidiary companies, collectively consisting of all of CBIZ’s MMP’s ongoing
operations and business for a purchase price of $201.6 million, subject to final working capital
adjustments pursuant to a Stock Purchase Agreement among CBIZ Operations, Inc. and Zotec
Partners, LLC dated July 26, 2013. The results of operations for MMP for the years ended
December 31, 2013, 2012 and 2011 are included in “Income for discontinued operations, net of
tax” and the gain on the sale of MMP of approximately $58.3 million is recorded in “Gain on
disposal of discontinued operations, net of tax” on the consolidated statements of comprehensive
income. The assets and liabilities of MMP have been consolidated and are included in “Assets of
discontinued operations” and “Liabilities of discontinued operations” on the consolidated balance
sheets as of December 31, 2012.

 CBIZ made the decision to divest the operations of its property tax business located in Leawood,
Kansas as a result of declining growth and profitability. This business is being held for sale at
December 31, 2013, with the results of operations being included in “Income for discontinued

operations, net of tax” on the consolidated statements of comprehensive income. This business
was previously reported in the Financial Services practice group.

 On December 31, 2013, CBIZ sold its mergers and acquisition business for no gain or loss. The

results of operations for the years ended 2013, 2012 and 2011 are included in continuing
operations and are reported in the National Practices practice group.

In addition, during the years ended December 31, 2012 and 2011, CBIZ recognized gains of $2.5 million
and $2.3 million, respectively, from the sale of its individual wealth management business in January
2011. The gains are recorded in “Gain on sale of operations, net” on the consolidated statements of
comprehensive income.

Regulation

CBIZ's operations are subject to regulation by federal, state, local and professional governing bodies.
Accordingly, CBIZ’s business services may be impacted by legislative changes by these bodies,
particularly with respect to provisions relating to payroll, benefits administration and insurance services,
pension plan administration and tax and accounting. CBIZ remains abreast of regulatory changes
affecting its business, as these changes often affect clients' activities with respect to employment,
taxation, benefits, and accounting. For instance, changes in income, estate, or property tax laws may
require additional consultation with clients subject to these changes to ensure their activities comply with
revised regulations.

CBIZ itself is subject to industry regulation and changes, including changes in laws, regulations, and
codes of ethics governing its accounting, insurance, valuation, registered investment advisory and broker-
dealer operations, as well as in other industries, the interpretation of which may impact CBIZ's operations.

CBIZ is subject to certain privacy and information security laws and regulations, including, but not limited
to those under the Health Insurance Portability and Accountability Act of 1996, The Financial
Modernization Act of 1999 (the Gramm-Leach-Bliley Act), the Health Information Technology for
Economic and Clinical Health Act, and other provisions of federal and state laws which may restrict
CBIZ's operations and give rise to expenses related to compliance.

As a public company, CBIZ is subject to the provisions of the Sarbanes-Oxley Act of 2002 to reform the
oversight of public company auditing, improve the quality and transparency of financial reporting by those
companies and strengthen the independence of auditors.

As of December 31, 2013, CBIZ believes it is in compliance with all governmental and professional
organizations regulations in which it provides services.

Liability Insurance

CBIZ carries insurance policies, including those for commercial general liability, automobile liability,
property, crime, professional liability, directors’ and officers’ liability, fiduciary liability, employment
practices liability and workers' compensation, subject to prescribed state mandates. Excess liability
coverage is carried over the underlying limits provided by the commercial general liability, directors’ and
officers’ liability, professional liability and automobile liability policies.

Employees

At December 31, 2013, CBIZ employed approximately 4,100 employees. CBIZ believes that it has a good
relationship with its employees. A large number of the Company’s employees hold professional licenses
or degrees. As a professional services company that differentiates itself from competitors through the
quality and diversity of its service offerings, CBIZ believes that its employees are its most important asset.

Accordingly, CBIZ strives to remain competitive as an employer while increasing the capabilities and
performance of its employees.

Seasonality

A disproportionately large amount of CBIZ's revenue occurs in the first half of the year. This is due
primarily to accounting and tax services provided by the Company’s Financial Services practice group,
which is subject to seasonality related to heavy volume in the first four months of the year. CBIZ's
Financial Services practice group generated more than 40% of its revenue in the first four months of each
of the past five years. In addition, more than 50% of the Company’s annual earnings per share have been
earned during the first quarter of each of the past five years. Like most professional service companies,
most of CBIZ's operating costs are relatively fixed in the short term, which generally results in higher
operating margins in the first half of the year.

Available Information

CBIZ's principal executive office is located at 6050 Oak Tree Boulevard, South, Suite 500, Cleveland,
Ohio 44131, and the Company’s telephone number is (216) 447-9000. CBIZ’s website is located at
http://www.cbiz.com. CBIZ makes available, free of charge on its website, through the investor
information page, its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, and any amendments to those reports as soon as reasonably practicable after CBIZ files (or
furnishes) such reports with the U.S. Securities and Exchange Commission (the “SEC”). The public may
read and copy materials the Company files (or furnishes) with the SEC at the SEC’s Public Reference
Room at 100 F Street, NE, Washington, D.C. 20549, and may obtain information on the operations of the
Public Reference Room by calling the SEC at 1-800-732-0330. In addition, the SEC maintains an Internet
Website that contains reports, proxy and information statements and other information about CBIZ at
http://www.sec.gov. CBIZ’s corporate code of conduct and ethics and the charters of the Audit
Committee, the Compensation Committee and the Nominating and Governance Committee of the Board
of Directors are available on the investor information page of CBIZ's website, referenced above, and in
print to any shareholder who requests them.

Item 1A. Risk Factors.

The following factors may affect our actual operating and financial results and could cause results to differ
materially from those in any forward-looking statements. You should carefully consider the following
information.

We may be more sensitive to revenue fluctuations than other companies, which could result in
fluctuations in the market price of our common stock.

A substantial majority of our operating expenses, such as personnel and related costs and occupancy
costs, are relatively fixed in the short term. As a result, we may not be able to quickly reduce costs in
response to any decrease in revenue. This factor could cause our quarterly results to be lower than
expectations of securities analysts and stockholders, which could result in a decline in the price of our
common stock.

Payments on accounts receivable may be slower than expected, or amounts due on receivables or
notes may not be fully collectible.

Professional services firms often experience higher average accounts receivable days outstanding
compared to many other industries, which may be magnified if the general economy worsens. If our
collections become slower, our liquidity may be adversely impacted. We monitor the aging of receivables
regularly and make assessments of the ability of customers to pay amounts due. We provide for potential
bad debts each month and recognize additional reserves against bad debts as we deem it appropriate.
Notwithstanding these measures, our customers may face unexpected circumstances that adversely

impact their ability to pay their trade receivables or note obligations to us and we may face unexpected
losses as a result.

We are dependent on the services of our executive officers and other key employees, the loss of
any of whom may have a material adverse effect on our business, financial condition and results
of operations.

Our success depends in large part upon the abilities and continued services of our executive officers and
other key employees, such as our business unit presidents. In the course of business operations,
employees may resign and seek employment elsewhere. Certain principal employees, however, are
bound in writing to non-compete agreements barring competitive employment, client solicitation, and
solicitation of employees for a period of between two and ten years following his or her resignation. We
cannot assure you that we will be able to retain the services of our key personnel. If we cannot retain the
services of key personnel, there could be a material adverse effect on our business, financial condition
and results of operations. While we generally have employment agreements and non-competition
agreements with key personnel, courts are at times reluctant to enforce such non-competition
agreements. In addition, many of our executive officers and other key personnel are either participants in
our stock option plan or holders of a significant amount of our common stock. We believe that these
interests provide additional incentives for these key employees to remain with us. In order to support our
growth, we intend to continue to effectively recruit, hire, train and retain additional qualified management
personnel. Our inability to attract and retain necessary personnel could have a material adverse effect on
our business, financial condition and results of operations.

Restrictions imposed by independence requirements and conflict of interest rules may limit our
ability to provide services to clients of the attest firms with which we have contractual
relationships and the ability of such attest firms to provide attestation services to our clients.

Under these ASAs, CBIZ provides a range of services to the CPA firms, including: administrative
functions such as office management, bookkeeping, and accounting; preparing marketing and promotion
materials; providing office space, computer equipment, and systems support; and leasing administrative
and professional staff. Services are performed in exchange for a fee. Fees earned by CBIZ under the
ASAs are recorded as revenue in the accompanying consolidated statements of comprehensive income.
In the event that accounts receivable and unbilled work in process become uncollectible by the CPA
firms, the service fee due to CBIZ is typically reduced on a proportional basis.

With respect to CPA firm clients that are required to file audited financial statements with the SEC, the
SEC staff views CBIZ and the CPA firms with which we have contractual relationships as a single entity in
applying independence rules established by the accountancy regulators and the SEC. Accordingly, we do
not hold any financial interest in, nor do we enter into any business relationship with, an SEC-reporting
attest client that the CPA firm performing an audit could not maintain; further, we do not sell any non-audit
services to an SEC-reporting attest client that the CPA firm performing an audit could not sell under the
auditor independence limitations set out in the Sarbanes-Oxley Act of 2002 and other professional
accountancy independence standards. SEC staff recently informed us that independence rules that apply
to clients that receive attest services under SEC and PCAOB standards from such CPA firms would
prohibit such clients from holding any stock of CBIZ, Inc. However, applicable professional standards
generally permit CBIZ to provide additional services to privately-held companies, in addition to those
services which may be provided to SEC-reporting attest clients of a CPA firm. CBIZ and the CPA firms
have implemented policies and procedures designed to enable us to maintain independence and freedom
from conflicts of interest in accordance with applicable standards. Given the pre-existing limits set by
CBIZ on its relationships with SEC-reporting attest clients of associated CPA firms, and the limited

number and size of such clients, the imposition of independence limitations under the Sarbanes-Oxley
Act, SEC rule or interpretation, or PCAOB standards do not and are not expected to materially affect
CBIZ revenues.

There can be no assurance that following the policies and procedures implemented by us and the CPA
firms will enable us and the CPA firms to avoid circumstances that would cause us and them to lack
independence from an SEC-reporting attest client; nor can there be any assurance that state, U.S.
Government Accountability Office or U.S. Department Of Labor accountancy authorities will not impose
additional restrictions on the profession. To the extent that the CPA firms for whom we provide
administrative and other services are affected, we may experience a decline in fee revenue from these
businesses as well as expenses related to addressing independence concerns. To date, revenues
derived from providing services in connection with attestation engagements of the attest firms performed
for SEC-reporting clients have not been material.

Our goodwill and intangible assets could become impaired, which could lead to material non-cash
charges against earnings.

We assess potential impairment on our goodwill and intangible asset balances, including client lists, on
an annual basis, or more frequently if there is any indication that the asset may be impaired. Any
impairment of goodwill or intangible assets resulting from this periodic assessment would result in a non-
cash charge against current earnings, which could lead to a material impact on our results of operations,
statements of financial position, and earnings per share. Any decline in future revenues, cash flows or
growth rates as a result of further adverse changes in the economic environment or an adverse change
resulting from new governmental regulations could lead to an impairment of goodwill or intangible assets.

Certain liabilities resulting from acquisitions are estimated and could lead to a material non-cash
impact on earnings.

Through its acquisition activities, CBIZ records liabilities for estimated future contingent earnout
payments. These liabilities are reviewed quarterly and changes in assumptions used to determine the
amount of the liability could lead to a non-cash adjustment that may have a material impact, favorable or
unfavorable, on the consolidated statements of comprehensive income.

Governmental regulations and interpretations are subject to changes, which could have a material
adverse effect on revenue.

Laws and regulations could result in changes in the amount or the type of business services required by
businesses and individuals. We cannot be sure that future laws and regulations will provide the same or
similar opportunities for us to provide business consulting and management services to businesses and
individuals. State insurance regulators have conducted inquiries to clarify the nature of compensation
arrangements within the insurance brokerage industry. Future regulatory actions or laws, including the
Affordable Care Act of 2010, may limit or eliminate our ability to enhance revenue through all current
compensation arrangements and may result in a diminution of future insurance brokerage revenue from
these sources. Accordingly, CBIZ's ability to continue to operate in some states may depend on our
flexibility to modify our operational structure in response to these changes in regulations.

Changes in the United States healthcare environment, including new health care legislation, may
adversely affect the revenue and margins in our healthcare benefit businesses.

Our employee benefits business, specifically our group health consulting and brokerage businesses,
receives commissions for brokering employer-sponsored healthcare policies with insurance carriers on
behalf of the client. In many cases, these commissions consist of a ratable portion of the insurance
premiums on those policies, based upon a sliding scale pertaining to the dollar volume of premiums
and/or the number of participants in the plan.

Changes in the healthcare environment, including, but not limited to, any legislated changes in the U.S.
national health care system, that affect the methods by which insurance carriers remunerate brokers,

could adversely impact our revenues and margins in this business. Specifically, legislation or other
changes could afford our clients and their employees the ability to seek insurance coverage through other
means, including, but not limited to, direct access with insurance carriers or other similar avenues, which
could eliminate or adversely alter the remuneration brokers receive from insurance carriers for their
services.

Higher rates of unemployment in the U.S. could result in a general reduction in the number of individuals
with employer-sponsored health care coverage. This decline in employee participation in healthcare
insurance plans at our clients could result in a reduction in the commissions we receive from insurance
carriers for our brokerage services, which could have an adverse impact on revenues and margins in this
business.

We are subject to risks relating to processing customer transactions for our payroll and other
transaction processing businesses.

The high volume of client funds and data processed by us, or by our out-sourced resources abroad, in our
transaction related businesses entails risks for which we may be held liable if the accuracy or timeliness
of the transactions processed is not correct. In addition, related to our payroll and employee benefits
businesses, we store personal information about some of our clients and their employees for which we
may be liable under the Health Insurance Portability and Accountability Act or other governmental
regulations if the security of this information is breached. We could incur significant legal expense to
defend any claims against us, even those claims without merit. While we carry insurance against these
potential liabilities, we cannot be certain that circumstances surrounding such an error or breach of
security would be entirely reimbursed through insurance coverage. We believe we have controls and
procedures in place to address our fiduciary responsibility and mitigate these risks. However, if we are not
successful in managing these risks, our business, financial condition and results of operations may be
harmed.

Cyber attacks or other security breaches involving our computer systems or the systems of one
or more of our vendors could materially and adversely affect our business.

Our systems, like others in the payroll, retirement and financial services industries, are vulnerable to
cyber security risks, and we are subject to potential disruption caused by such activities. Corporations
such as ours are subject to frequent attacks on their systems. Such attacks may have various goals, from
seeking confidential information to causing operational disruption. Although to date such activities have
not resulted in material disruptions to our operations or, to our knowledge, breach of any security or
confidential information, no assurance can be provided that such disruptions or breach will not occur in
the future. Any significant violations of data privacy could result in the loss of business, litigation,
regulatory investigations, and penalties that could damage our reputation and adversely affect the growth
of our business.

We are subject to risk as it relates to software that we license from third parties.

We license software from third parties, much of which is integral to our systems and our business. The
licenses are terminable if we breach our obligations under the license agreements. If any of these
relationships were terminated or if any of these parties were to cease doing business or cease to support
the applications we currently utilize, we may be forced to spend significant time and money to replace the
licensed software. However, we cannot assure you that the necessary replacements will be available on
reasonable terms, if at all.

We could be held liable for errors and omissions.

All of our business services entail an inherent risk of malpractice and other similar claims resulting from
errors and omissions. Therefore, we maintain errors and omissions insurance coverage. Although we
believe that our insurance coverage is adequate, we cannot be certain that actual future claims or related
legal expenses would not exceed the coverage amounts. In addition, we cannot be certain that the
different insurance carriers which provide errors and omissions coverage for different lines of our

business will not dispute their obligation to cover a particular claim. If we have a large claim, or a large
number of claims, on our insurance, the rates for such insurance may increase, and amounts expended
in defense or settlement of these claims prior to exhaustion of deductible or self-retention levels may
become significant, but contractual arrangements with clients may constrain our ability to incorporate
such increases into service fees. Insurance rate increases, disputes by carriers over coverage questions,
payments by us within deductible or self-retention limits, as well as any underlying claims or settlement of
such claims, could have a material adverse effect on our business, financial condition and results of
operations.

The future issuance of additional shares could adversely affect the price of our common stock.

Future sales or issuances of common stock, including those related to the uses described below, or the
perception that sales could occur, could adversely affect the market price of our common stock and dilute
the percentage ownership held by our stockholders. We have authorized 250 million shares, and have
approximately 49.8 million shares outstanding at February 28, 2014. A substantial number of these
shares have been issued in connection with acquisitions. As part of many acquisition transactions, shares
are contractually restricted from sale for a one-year period, and as of February 28, 2014, approximately
0.4 million shares of common stock were under lock-up contractual restrictions that expire by December
31, 2014. We cannot be sure when sales by holders of our stock will occur, how many shares will be sold
or the effect that sales may have on the market price of our common stock.

In 2006, the Company issued $100.0 million of 3.125% Convertible Senior Subordinated Notes due 2026
(the “2006 Notes”). During 2010 and 2011, $99.3 million of the 2006 Notes were retired by CBIZ, leaving
$750,000 outstanding as of December 31, 2013. Although the Company cannot at this time determine
the number of shares of common stock it will issue upon conversion of the 2006 Notes, if any, the number
of shares of common stock will be calculated as defined in the indenture agreements with U.S. Bank
National Association as trustee. In addition, in September 2010, CBIZ issued $130.0 million of 4.875%
Convertible Senior Subordinated Notes due 2015 (the “2010 Notes”) pursuant to Rule 144A under the
Securities Act of 1933, as amended. The Company cannot at this time determine the number of shares of
common stock it will issue upon conversion of these notes, although the number of shares of common
stock it will issue, if any, will be calculated as defined in the indenture agreements with U.S. Bank
National Association as trustee.

Our principal stockholders may have substantial control over our operations.

At December 31, 2013, the stockholders identified below beneficially owned (within the meaning of Rule
13d-3 of the Exchange Act) the following aggregate amounts and percentages of our common stock:

Burgundy Asset Management Ltd ......................
FMR LLC ............................................................
Lombardia Capital Partners LLC ........................
Westbury (Bermuda) Ltd ....................................
Cardinal Capital Management LLC ....................
First Manhattan Company ..................................
Dimensional Fund Advisors, Inc .........................
Silvercrest Asset Management Group LLC ........
BlackRock Fund Advisors ..................................
Skyline Asset Management LP ..........................
P2 Capital Partners LLC .....................................
Investment Counselors of Maryland LLC ...........
CBIZ Executive Officers and Directors ...............

Number
of Shares
(in
millions)
4.9
4.3
3.9
3.9
3.2
3.0
2.6
2.4
2.4
2.3
2.3
2.2
2.6

% of CBIZ’s
Outstanding
Common
Stock
10.0%
8.8%
8.1%
7.9%
6.5%
6.1%
5.3%
5.0%
4.8%
4.7%
4.6%
4.4%
5.3%

The foregoing as a group ..............................

40.0

81.5%

Because of their stock ownership, these stockholders may exert substantial influence or actions that
require the consent of a majority of our outstanding shares, including the election of directors. CBIZ's
share repurchase activities may result in increased ownership percentages of these individuals and
therefore increase the influence they may exert, if they do not participate in these share repurchase
transactions or otherwise dispose of their common stock.

We require a significant amount of cash for interest payments on our debt and to expand our
business as planned.

At December 31, 2013, our debt consisted of $48.5 million in principal amount outstanding under our
credit facility and $130.8 million principal amount outstanding under our convertible notes. Our debt
requires us to dedicate a significant portion of our cash flow from operations to pay interest on our
indebtedness, thereby reducing the funds available to use for acquisitions, capital expenditures and
general corporate purposes. Our ability to make interest payments on our debt, and to fund acquisitions,
will depend upon our ability to generate cash in the future. Insufficient cash flow could place us at risk of
default under our debt agreements or could prevent us from expanding our business as planned. Our
ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and
other factors that are beyond our control. Our business may not generate sufficient cash flow from
operations and future borrowings may not be available to us under our credit facility in an amount
sufficient to enable us to fund our other liquidity needs.

Terms of our credit facility may adversely affect our ability to run our business and/or reduce
stockholder returns.

The terms of our credit facility, as well as the guarantees of our subsidiaries, could impair our ability to
operate our business effectively and may limit our ability to take advantage of business opportunities. For
example, our credit facility may:



restrict our ability to repurchase or redeem our capital stock or debt, or merge or consolidate with
another entity;
limit our ability to borrow additional funds or to obtain other financing in the future for working
capital, capital expenditures, acquisitions, investments and general corporate purposes;
limit our ability to dispose of our assets, create liens on our assets, to extend credit or to issue
dividends to our stockholders; and

 make us more vulnerable to economic downturns and reduce our flexibility in responding to

changing business and economic conditions.

Our failure to satisfy covenants in our debt instruments will cause a default under those
instruments.

Our debt instruments include a number of covenants relating to financial ratios and tests. Our ability to
comply with these covenants may be affected by events beyond our control, including prevailing
economic, financial and industry conditions. The breach of any of these covenants would result in a
default under these instruments. An event of default would permit our lenders and other debt holders to
declare all amounts borrowed from them to be due and payable, together with accrued and unpaid
interest. If the lenders accelerate the repayment of borrowings, we may not have sufficient assets to
repay our debt.

We are reliant on information processing systems and any failure of these systems could have a
material adverse effect on our business, financial condition and results of operations.

Our ability to provide business services depends on our capacity to store, retrieve, process and manage
significant databases, and expand and upgrade periodically our information processing capabilities.
Interruption or loss of our information processing capabilities through loss of stored data, breakdown or
malfunctioning of computer equipment and software systems, telecommunications failure, or damage
caused by fire, tornadoes, lightning, electrical power outage, or other disruption could have a material
adverse effect on our business, financial condition and results of operations. Although we have disaster

recovery procedures in place and insurance to protect against such contingencies, we cannot be sure
that insurance or these services will continue to be available, cover all our losses or compensate us for
the possible loss of clients occurring during any period that we are unable to provide business services.

We may not be able to acquire and finance additional businesses which may limit our ability to
pursue our business strategy.

CBIZ acquired two businesses and three client lists during 2013, and maintains a healthy pipeline of
potential businesses for acquisition. Targeted acquisitions are part of our growth strategy, and it is our
intention to selectively acquire businesses or client lists that are complementary to existing service
offerings in our target markets. However, we cannot be certain that we will be able to continue identifying
appropriate acquisition candidates and acquire them on satisfactory terms, and we cannot be assured
that such acquisitions, even if completed, will perform as expected or will contribute significant synergies,
revenues or profits. In addition, we may also face increased competition for acquisition opportunities,
which may inhibit our ability to complete transactions on terms that are favorable to us. As discussed
above, there are certain provisions under our credit facility that may limit our ability to acquire additional
businesses. In the event that we are not in compliance with certain covenants as specified in our credit
facility, we could be restricted from making acquisitions, restricted from borrowing funds from our credit
facility for other uses, or required to pay down the outstanding balance on the line of credit. However,
management believes that funds available under the credit facility, along with cash generated from
operations, will be sufficient to meet our liquidity needs, including planned acquisition activity in the
foreseeable future. To the extent we are unable to find suitable acquisition candidates, an important
component of our growth strategy may not be realized.

The business services industry is competitive and fragmented. If we are unable to compete
effectively, our business, financial condition and results of operations may be negatively
impacted.

We face competition from a number of sources in both the business services industry and from specialty
insurance agencies. Competition in both industries has led to consolidation. Many of our competitors are
large companies that may have greater financial, technical, marketing and other resources than us. In
addition to these large companies and specialty insurance agencies, we face competition in the business
services industry from in-house employee services departments, local business services companies and
independent consultants, as well as from new entrants into our markets. We cannot assure you that, as
our industry continues to evolve, additional competitors will not enter the industry or that our clients will
not choose to conduct more of their business services internally or through alternative business services
providers. Although we intend to monitor industry trends and respond accordingly, we cannot assure you
that we will be able to anticipate and successfully respond to such trends in a timely manner. We cannot
be certain that we will be able to compete successfully against current and future competitors, or that
competitive pressure will not have a material adverse effect on our business, financial condition and
results of operations.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

CBIZ's corporate headquarters is located at 6050 Oak Tree Boulevard, South, Suite 500, Cleveland, Ohio
44131, in leased premises. CBIZ and its subsidiaries lease more than 100 offices in 34 states, and one in
Toronto, Canada. Some of CBIZ's properties are subject to liens securing payment of indebtedness of
CBIZ and its subsidiaries. CBIZ believes that its current facilities are sufficient for its current needs.

Item 3. Legal Proceedings.

In 2010, CBIZ, Inc. and its subsidiary, CBIZ MHM, LLC (fka CBIZ Accounting, Tax & Advisory Services,
LLC) (the “CBIZ Parties”), were named as defendants in lawsuits filed in the U.S. District Court for the
District of Arizona and the Superior Court for Maricopa County, Arizona. The federal court case is
captioned Robert Facciola, et al v. Greenberg Traurig LLP, et al, and the state court cases are captioned
Victims Recovery, LLC v. Greenberg Traurig LLP, et al, Roger Ashkenazi, et al v. Greenberg Traurig LLP,
et al, Mary Marsh, et al v. Greenberg Traurig LLP, et al; and ML Liquidating Trust v. Mayer Hoffman
McCann PC, et al. Prior to these suits CBIZ MHM, LLC was named as a defendant in Jeffery C. Stone v.
Greenberg Traurig LLP, et al. The Stone case was subsequently voluntarily dismissed by the plaintiff.

These lawsuits arose out of the bankruptcy of Mortgages Ltd., a mortgage lender to developers in the
Phoenix, Arizona area. Various other professional firms not related to the Company were also named
defendants in these lawsuits.

Mortgages Ltd. had been audited by Mayer Hoffman McCann PC (“Mayer Hoffman”), a CPA firm that has
an administrative services agreement with CBIZ. The lawsuits assert claims against Mayer Hoffman for,
among others things, violations of the Arizona Securities Act, common law fraud, and negligent
misrepresentation, and seek to hold the CBIZ Parties vicariously liable for Mayer Hoffman’s conduct as
either a statutory control person under the Arizona Securities Act or a joint venturer under Arizona
common law. CBIZ is not a CPA firm, does not provide audits, and did not audit any of the entities at
issue in these lawsuits, nor is CBIZ a control person of, or a joint venture with, Mayer Hoffman.

In June 2011, the Facciola court, in which the plaintiffs were seeking to certify a class of all Mortgages
Ltd. investors, granted the motions to dismiss filed by the CBIZ Parties and Mayer Hoffman. After that
dismissal order, the plaintiffs moved the court to amend their complaint in an attempt to state a claim
against the CBIZ Parties and Mayer Hoffman. In November 2011, the Facciola court denied the plaintiffs’
request to amend the complaint as to the CBIZ Parties and Mayer Hoffman. In June 2012, the remaining
defendants in the Facciola case reached a class action settlement, which the court approved in October
2012. Eighteen class members, however, opted out of the settlement before it was finalized and, in
September 2012, filed a new case against all of the defendants in the Facciola case, including the CBIZ
Parties (Rader et al v. Greenberg Traurig, LLC, et al). In December 2012, the Facciola plaintiffs filed an
appeal to the U.S. Court of Appeals for the Ninth Circuit of the dismissal of their case against the CBIZ
Parties and Mayer Hoffman. That appeal is currently pending.

The plaintiffs, except for the ML Liquidating Trust, are all alleged to have directly or indirectly invested in
real estate mortgages through Mortgages Ltd. The Victims Recovery, Ashkenazi and Marsh plaintiffs
seek monetary damages equivalent to their alleged losses on those investments. The ML Liquidating
Trust asserts errors and omissions and breach of contract claims and is seeking monetary damages. The
Ashkenazi complaint alleges damages of approximately $92 million; the Victims Recovery complaint
alleges damages of approximately $53 million; the Marsh, Facciola, Rader, and ML Liquidating Trust
complaints allege damages in excess of approximately $200 million. The plaintiffs in these suits also seek
pre- and post-judgment interest, punitive damages and attorneys’ fees.

The CBIZ Parties filed motions to dismiss in all remaining cases. On March 11, 2013, the court issued a
ruling dismissing the securities fraud and aiding and abetting securities fraud claims against the CBIZ
Parties and Mayer Hoffman in the Marsh, Victims Recovery and Ashkenazi lawsuits, and also dismissed
certain other claims in the Ashkenazi and Victims Recovery cases.

On April 12, 2013, the court denied the CBIZ Parties’ motion to dismiss the remaining claims in the
Ashkenazi lawsuit. On May 7, 2013, the court in the ML Liquidating Trust lawsuit issued a ruling
dismissing claims for deepening insolvency damages, negligence and breach of contract and holding that
any claims related to the 2004 and 2005 Mayer Hoffman audits were barred by the statute of limitations.
The court denied the motion as to the negligent misrepresentation claim. On June 14, 2013, the court
dismissed the RICO, fraud and consumer fraud claims in the Marsh lawsuit, and denied the CBIZ Parties’
motion as to the negligent misrepresentation and aiding and abetting breaches of fiduciary duty claims.

The CBIZ Parties and Mayer Hoffman, without admitting any liability, have reached settlements in the
Victims Recovery, Ashkenazi and Rader lawsuits. In addition, the CBIZ Parties and Mayer Hoffman,
without admitting any liability, reached a settlement with a single plaintiff from the Marsh lawsuit. The
CBIZ Parties did not pay any monetary amounts as part of these settlements. The Victims Recovery
complaint had alleged damages of approximately $53 million, the Ashkenazi complaint had alleged
damages of approximately $92 million and the Rader complaint alleged damages in excess of $15 million.
Discovery is proceeding in the remaining matters (except Facciola, which is on appeal) and no trial dates
have been set.

The CBIZ Parties deny all allegations of wrongdoing made against them in these actions and are
vigorously defending the remaining proceedings. In particular, the CBIZ Parties are not control persons
under the Arizona Securities Act of, or in a joint venture with, Mayer Hoffman. The CBIZ Parties do not
have, in any respects, the legal right to control Mayer Hoffman’s audits or any say in how the audits are
conducted. The Company has been advised by Mayer Hoffman that it denies all allegations of
wrongdoing made against it and that it intends to continue vigorously defending the matters.

In January 2012, the CBIZ Parties were added as defendants to a lawsuit filed in the Superior Court of
California for Orange County (Signature Financial Group, Inc., et al, (“Signature”) v. Mayer Hoffman
McCann, P.C., et al). This lawsuit arises out of a review of the financial statements of Medical Capital
Holdings, Inc. (“Medical Capital”) by Mayer Hoffman. In June 2009, Medical Capital was sued by the SEC
and a receiver was appointed to liquidate Medical Capital. The plaintiffs in the Signature lawsuit are
financial advisors that sold Medical Capital investments to their clients. Those plaintiffs were sued by their
clients for losses related to Medical Capital and now seek to recover damages from the CBIZ Parties and
Mayer Hoffman of approximately $87 million for the losses and expenses they incurred in litigation with
their respective clients and for lost profits. The Signature lawsuit seeks to impose auditor-type liabilities
upon the CBIZ Parties for attest services they did not conduct. Specific claims asserted and relief
requested included fraud, intentional misrepresentation and concealment; negligent misrepresentation;
equitable indemnity; declaratory relief and respondeat superior.

In November 2013, the Court granted the CBIZ Parties motion for summary judgment and the CBIZ
Parties were dismissed from the lawsuit. The Company has been advised by Mayer Hoffman that it
denies all allegations of wrongdoing made against it and that it intends to continue vigorously defending
the matter.

The Company cannot predict the outcome of the above matters or estimate the possible loss or range of
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, management believes that the
allegations are without merit and that the ultimate resolution of these matters will not have a material
adverse effect on the consolidated financial condition, results of operations or cash flows of the Company.

In addition to those items disclosed above, the Company is, from time to time, subject to claims and suits
arising in the ordinary course of business. Although the ultimate disposition of such proceedings is not
presently determinable, management does not believe that the ultimate resolution of these matters will
have a material adverse effect on the consolidated financial condition, results of operations or cash flows
of the Company.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.

Price Range of Common Stock

CBIZ’s common stock is traded on the New York Stock Exchange (“NYSE”) under the trading symbol
“CBZ”. The table below sets forth the range of high and low sales prices for CBIZ’s common stock as
reported on the NYSE for the periods indicated.

2013

2012

First quarter...................

Second quarter .............

Third quarter .................

Fourth quarter ...............

High

$6.59

$6.87

$7.73

$9.40

Low

$5.60

$5.99

$6.54

$6.99

High

$6.79

$6.63

$6.31

$6.22

Low

$5.82

$5.41

$5.07

$5.19

On December 31, 2013, the last reported sale price of CBIZ's common stock as reported on the NYSE
was $9.12 per share. As of February 28, 2014, CBIZ had approximately 2,325 holders of record of its
common stock, and the last sale of CBIZ's common stock as of that date was $9.13.

As required by the NYSE, CBIZ filed its annual CEO certification regarding the Company’s compliance
with the NYSE’s corporate governance listing standards as required by NYSE rule 303A. There were no
qualifications in this certification. In addition, CBIZ has filed Exhibits 31.1 and 31.2 to this Annual Report
on Form 10-K, which represent the certifications of its Chief Executive Officer and Chief Financial Officer
as required under Section 302 of the Sarbanes-Oxley Act of 2002.

Dividend Policy

CBIZ’s credit facility does not permit CBIZ to declare or make any dividend payments, other than dividend
payments made by one of CBIZ’s wholly-owned subsidiaries to the parent company. Historically, CBIZ
has not paid cash dividends on its common stock. CBIZ does not anticipate paying cash dividends in the
foreseeable future. CBIZ's Board of Directors has discretion over the payment and level of dividends on
common stock, subject to the limitations of the credit facility.

Issuer Purchases of Equity Securities

(a) Recent sales of unregistered securities

During the fourth quarter of 2013, CBIZ issued 38,270 shares of its common stock as payment for
contingent consideration for acquisitions that occurred prior to 2013. Also, on December 31, 2013, a total
of 35,658 shares of CBIZ common stock became issuable as contingent consideration owed to former
owners of businesses that were acquired by CBIZ.

The above referenced shares were issued in transactions not involving a public offering in reliance on the
exemption from registration afforded by Section 4(2) of the Securities Act. The persons to whom the
shares were issued had access to full information about CBIZ and represented that they acquired the
shares for their own account and not for the purpose of distribution. The certificates for the shares contain
a restrictive legend advising that the shares may not be offered for sale, sold, or otherwise transferred
without having first been registered under the Securities Act or pursuant to an exemption from the
Securities Act.

Periodically, CBIZ’s Board of Directors authorizes a Share Repurchase Plan which allows the Company
to purchase shares of its common stock in the open market or in a privately negotiated transaction
according to SEC rules. On February 13, 2014, February 6, 2013 and February 22, 2012, CBIZ’s Board of
Directors authorized Share Repurchase Plans, each of which authorized the purchase of up to 5.0 million
shares of CBIZ common stock. Each Share Repurchase Plan is effective beginning April 1 of the
respective plan year, and each expires one year from the respective effective date. The repurchase plans
do not obligate CBIZ to acquire any specific number of shares and may be suspended at any time.

Pursuant to an agreement (the “Westbury Agreement”) entered into on September 14, 2010 by CBIZ with
its largest stockholder at that time, Westbury (Bermuda) Ltd. (“Westbury”), a Bermuda exempted
company organized by CBIZ founder Michael G. DeGroote, Westbury Trust, a Bermuda trust, and
Michael G. DeGroote, CBIZ purchased an option for $5.0 million to purchase up to approximately 7.7
million shares of CBIZ’s common stock at a price of $7.25 per share (the “Option”), which constituted the
remaining shares of CBIZ’s common stock held by Westbury.

On August 30, 2013, CBIZ completed a Stock Purchase Agreement entered into on July 26, 2013, (the
“Purchase Agreement”) with Westbury, pursuant to which CBIZ agreed to purchase from Westbury
3,858,335 shares of CBIZ’s common stock (the “Purchased Shares”), pursuant to the Westbury
Agreement. CBIZ agreed to pay Westbury $25.7 million for the Purchased Shares, which represented a
price per share of $6.65. Following the completion of the purchase of the Purchased Shares under the
Purchase Agreement, the remaining shares subject to the Westbury Agreement (the “Remaining
Shares”), in the amount of 3,858,334 shares, were subject to the Westbury Agreement for the remainder
of its term, which expired on September 30, 2013.

During the year ended December 31, 2013, approximately 126,000 shares were withheld from employees
to satisfy certain tax obligations due in connection with restricted stock that vested during 2013 under the
2002 Amended and Restated CBIZ, Inc. Stock Incentive Plan. No shares were repurchased by CBIZ
during the fourth quarter of 2013 under the Share Repurchase Plans. At December 31, 2013, there were
approximately 4.9 million shares that may yet be purchased under repurchase plans approved by CBIZ’s
Board of Directors.

CBIZ has utilized, and may utilize in the future, a Rule 10b5-1 trading plan to allow for repurchases by the
Company during periods when it would not normally be active in the trading market due to regulatory
restrictions. Subsequent to December 31, 2013 up to the date of this filing, CBIZ repurchased 456,603
shares in the open market at a total cost of approximately $3.9 million under the Rule 10b5-1 trading plan,
which allows CBIZ to repurchase shares below a predetermined price per share. Additionally, the
maximum number of shares that may be purchased by the Company each day is governed by Rule
10b-18.

Performance Graph

The graph below matches the cumulative 5-Year total return of holders of CBIZ, Inc.'s common stock with
the cumulative total returns of the S&P 500 index, the Russell 2000 index and a customized peer group of
five companies that includes: Brown & Brown Inc., H & R Block Inc., Paychex Inc., Resources Connection
Inc. and Towers Watson & Company. The graph tracks the performance of a $100 investment in our
common stock, in each index and in the peer group (with the reinvestment of all dividends) from
12/31/2008 to 12/31/2013.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL
Among CBIZ, Inc., the S&P 500 Index, the Russell 2000 In

and a Peer Group

$300

$250

$200

$150

$100

$50

12/08

12/09

12/10

12/11

12/08

12/09

12/10

12/11

12/12

12/13

CBIZ, Inc.
S&P 500
Russell 2000
Peer Group

$100.00
$100.00
$100.00
$100.00

$ 89.02
$126.46
$127.17
$109.48

$ 72.14
$145.51
$161.32
$101.17

$ 70.64
$148.59
$154.59
$108.81

$ 68.32
$172.37
$179.86
$120.14

$105.43
$228.19
$249.69
$190.51

The stock price performance included in this graph is not necessarily indicative of future stock price
performance.

Item 6. Selected Financial Data.

The following table presents selected historical financial data for CBIZ. The information set forth below
should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and
Results of Operations and the accompanying consolidated financial statements and notes thereto, which
are included elsewhere in this Annual Report.

Statement of Operations Data:

Revenue ...................................................................
Operating expenses .................................................
Gross margin............................................................
Corporate general and administrative expenses ......
Operating income ....................................................
Other income (expense):
Interest expense ..................................................
Gain on sale of operations, net ...........................
Other income (expense), net (2) .........................
Total other (expense) income .........................
Income from continuing operations before
income tax expense ..............................................
Income tax expense .................................................
Income from continuing operations ..........................
Income from operations of discontinued
operations, net of tax .............................................
Gain (loss) on disposal of discontinued
operations, net of tax .............................................
Net income ...............................................................

2013

Year Ended December 31,
2012 (1)
2010 (1)
2011 (1)
(In thousands, except per share data)

2009 (1)

$692,033
608,730
83,303
34,398
48,905

$626,538
555,487
71,051
30,209
40,842

$591,270
518,528
72,742
31,533
41,209

$580,426 $574,528
507,880
66,648
30,702
35,946

511,636
68,790
29,580
39,210

(15,374)
79
7,817
(7,478)

(14,999)
2,766
8,214
(4,019)

41,427
16,438
24,989

36,823
14,071
22,752

(16,047)
2,920
3,201
(9,926)

31,283
12,144
19,139

(13,868)
466
3,232
(10,170)

(11,900)
989
6,322
(4,589)

29,040
10,609
18,431

31,357
11,894
19,463

2,538

8,304

8,854

7,056

11,723

58,336
$ 85,863

90
$ 31,146

14
$ 28,007

(973)

210
$ 24,514 $ 31,396

Basic weighted average common shares .................
Diluted weighted average common shares .............

48,632
49,141

49,002
49,252

49,328
49,599

57,692
58,193

61,200
61,859

Diluted earnings per share:
Continuing operations ............................................
Net income .............................................................

Other Data:
Total assets ..............................................................
Long-term debt (3) ...................................................
Total liabilities...........................................................
Total stockholders' equity .........................................
Adjusted EBITDA (4) ................................................

$
0.51
$ 1.75

$ 0.46
$ 0.63

$ 0.39
$ 0.57

$ 0.32 $ 0.32
$ 0.42 $ 0.51

$ 897,458 $ 970,191 $ 812,357
$ 756,299
$ 713,098
$ 173,756 $ 332,538 $ 265,527
$ 235,663 $ 203,848
$ 523,012 $ 674,959 $ 552,199
$ 442,480
$ 526,627
$ 270,618
$ 374,446 $ 295,232 $ 260,158
$ 229,672
$ 75,606 $ 65,790 $ 59,736 $ 59,209 $ 56,814

(1) Amounts for 2012, 2011, 2010, and 2009 have been reclassified to conform to the current year presentation, including the

impact of discontinued operations.

(2) Other income (expense), net includes gains or losses attributable to assets held in the Company’s deferred compensation plan

which totaled a gain (loss) of $8.2 million, $4.3 million, ($0.4) million, $3.7 million and $5.5 million for 2013, 2012, 2011, 2010
and 2009, respectively. These gains or losses do not impact “income from continuing operations” as they are directly offset by
compensation to the Plan participants. During 2013, 2012, 2011 and 2010, CBIZ recorded other (expense) income of ($0.9)
million, $1.0 million, $3.5 million and $1.5 million, respectively, related to increases/decreases in the fair value of contingent
consideration related to CBIZ’s prior acquisitions. Included in 2012 are proceeds of $1.9 million related to a legal settlement.
During 2010, CBIZ recorded a $2.0 million loss in other income (expense), net from the early retirement of $60 million face
value of its convertible senior subordinated notes that were issued in 2006.

(3) Represents bank debt, the long-term portion of convertible notes, and the long-term portion of notes payable, which are

reported in “other non-current liabilities” in CBIZ’s consolidated balance sheets.

(4) Adjusted EBITDA represents income from continuing operations before income tax expense, interest expense, gain on sale of

operations, net, and depreciation and amortization expense. Adjusted EBITDA for 2010 also excludes the loss resulting from
the retirement of $60 million of its convertible senior subordinated notes. See note (2) above for a description of these items.
The Company has included Adjusted EBITDA because such data is commonly used as a performance measure by analysts
and investors and as a measure of the Company’s ability to service debt. Adjusted EBITDA should not be regarded as an
alternative or replacement to any measurement of performance under generally accepted accounting principles.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion is intended to assist in the understanding of CBIZ's financial position at
December 31, 2013 and 2012, and results of operations and cash flows for each of the years ended
December 31, 2013, 2012 and 2011. This discussion should be read in conjunction with CBIZ's
consolidated financial statements and related notes included elsewhere in this Annual Report on Form
10-K. This discussion and analysis contains forward-looking statements and should also be read in
conjunction with the disclosures and information contained in “Forward-Looking Statements” and “Item
1A. Risk Factors” in this Annual Report on Form 10-K.

Executive Summary

Revenue for the year ended December 31, 2013 increased by 10.5% to $692.0 million from $626.5
million for 2012. The increase in revenue was due to a combination of newly acquired operations, which
resulted in an increase of $50.2 million, or 8.0%, and an increase in same unit revenue of $15.3 million, or
2.5%.

Earnings per share from continuing operations were $0.51 per diluted share for the year ended
December 31, 2013 compared to $0.46 per diluted share for the year ended December 31, 2012.
Earnings per share for the year ended December 31, 2012 included a gain of approximately $0.03 related
to the divestiture of CBIZ’s wealth management business that occurred in January of 2011, as well as
$0.02 resulting from proceeds from a legal settlement which are included in other income, net.

Non-GAAP earnings per diluted share were $1.08 and $0.92 for the years ended December 31, 2013 and
2012, respectively. CBIZ believes Non-GAAP earnings per diluted share illustrates the impact of certain
non-cash charges on income from continuing operations and is a useful performance measure for the
Company, its analysts and its stockholders. Non-GAAP earnings per diluted share is a measurement
prepared on a basis other than generally accepted accounting principles (“GAAP”). As such, the
Company has included this data and has provided a reconciliation to the nearest GAAP measurement,
“income per diluted share from continuing operations”. Reconciliations for the years ended December 31,
2013, 2012 and 2011 are provided in the “Results of Operations – Continuing Operations” section that
follows.

During the year ended December 31, 2013, CBIZ acquired two businesses: Associated Insurance Agents
(“AIA”), located in Minneapolis, Minnesota, an insurance brokerage agency specializing in property and
casualty insurance, personal lines and health and benefit insurance; and Knight Field Fabry, LLP
(“Knight”), primarily located in Denver, Colorado, an accounting service company providing traditional
accounting, tax, litigation support and valuation services. Revenues from these business acquisitions are
estimated to exceed $5.3 million for the year ending December 31, 2014. The operating results of AIA
and Knight are reported in the Employee Services and Financial Services practice groups, respectively.
In addition to the business acquisitions, CBIZ acquired three client lists, two of which are reported in the
Employee Services practice group and the third being reported in the Financial Services practice group.
For more details regarding CBIZ’s acquisitions, refer to Note 19 of the accompanying consolidated
financial statements.

On August 30, 2013, CBIZ sold all of the issued and outstanding capital stock of CBIZ Medical
Management Professionals, Inc. and CBIZ Medical Management, Inc. and substantially all of the stock of
their subsidiary companies, collectively consisting of all of CBIZ’s MMP’s ongoing operations and
business for a purchase price of $201.6 million, subject to final working capital adjustments pursuant to a
Stock Purchase Agreement among CBIZ Operations, Inc. and Zotec Partners, LLC dated July 26, 2013.
After transaction costs and taxes, proceeds from the transaction were approximately $145 million. The
proceeds were used to repurchase shares from Westbury as discussed below and to pay down
outstanding debt on the unsecured credit facility. The results of operations for MMP for the years ended
December 31, 2013, 2012 and 2011 are included in “Income for discontinued operations, net of tax” and
the gain on the sale of MMP of approximately $58.3 million is recorded in “Gain on disposal of
discontinued operations, net of tax” on the consolidated statements of comprehensive income. The
assets and liabilities of MMP have been consolidated and are included in “Assets of discontinued

operations” and “Liabilities of discontinued operations” on the consolidated balance sheets as of
December 31, 2012. Following the closing of the MMP transaction, the Company operates in three
operating practice groups.

CBIZ made the decision to divest the operations of its property tax business located in Leawood, Kansas,
as a result of declining growth and profitability. This business is being held for sale at December 31,
2013, with the results of operations being included in “Income for discontinued operations, net of tax” on
the consolidated statements of comprehensive income. This business was previously reported in the
Financial Services practice group.

On December 31, 2013, CBIZ sold its mergers and acquisition business. The results of operations for the
years ended 2013, 2012 and 2011 are included in continuing operations and are reported in the National
Practices practice group. No gain or loss was recorded as a result of the sale.

During the years ended December 31, 2012 and 2011, CBIZ recognized gains of $2.5 million and $2.3
million, respectively, from the sale of its individual wealth management business that occurred in January
2011. The gains are recorded in “Gain on sale of operations, net” on the consolidated statements of
comprehensive income.

CBIZ believes that repurchasing shares of its common stock provides value to its stockholders. CBIZ
purchased approximately 3.85 million shares of its common stock pursuant to a Stock Purchase
Agreement entered into on July 26, 2013 with Westbury. CBIZ paid approximately $25.7 million for the
shares, which represented a price per share of $6.65. No other shares were repurchased on the open
market during 2013. On February 13, 2014, CBIZ’s Board of Directors authorized the purchase of up to
5.0 million shares of CBIZ common stock through March 31, 2015. The shares may be repurchased in the
open market or through privately negotiated purchases in accordance with SEC rules.

Subsequent to December 31, 2013 up to the date of this filing, CBIZ repurchased 456,603 shares at a
total cost of approximately $3.9 million under the Rule 10b5-1 trading plan, which allows CBIZ to
repurchase shares below a predetermined price per share.

Results of Operations — Continuing Operations

CBIZ provides professional business services that help clients manage their finances and employees.
CBIZ delivers its integrated services through the following three practice groups: Financial Services,
Employee Services and National Practices. A description of these groups' operating results and factors
affecting their businesses is provided below.

Same-unit revenue represents total revenue adjusted to reflect comparable periods of activity for
acquisitions and divestitures. For example, for a business acquired on July 1, 2012, revenue for the
period January 1, 2013 through June 30, 2013 would be reported as revenue from acquired businesses;
same-unit revenue would include revenue for the periods July 1 through December 31 of both years.
Divested operations represent operations that did not meet the criteria for treatment as discontinued
operations. Those businesses that have met the requirements to be treated as a discontinued operation
are eliminated from all periods presented below.

Year Ended December 31, 2013 Compared to Year Ended December 31, 2012

Revenue

The following table summarizes total revenue for the years ended December 31, 2013 and 2012 (in
thousands, except percentages):

Year Ended December 31,

2013

2012

$
Change

%
Change

Same-unit revenue
Financial Services ......................... $
Employee Services .......................
National Practices ........................

Total same-unit revenue .................
Acquired businesses .....................
Divested operations ......................

423,926
187,431
30,074

641,431
50,155
447

410,195
186,217
29,434

625,846
–
692

13,731
1,214
640

15,585
50,155
(245)

3.3 %
0.7%
2.2%

2.5%

Total revenue .................................. $

692,033

626,538

65,495

10.5%

A detailed discussion of revenue by practice group is included under “Operating Practice Groups”.

Gross margin and operating expenses – Operating expenses increased to $608.7 million for the year
ended December 31, 2013 from $555.5 million in 2012, but decreased as a percentage of revenue to
88.0% for the year ended December 31, 2013 from 88.7% for 2012. Excluding the impact of the
Company’s deferred compensation plan, operating expenses as a percentage of revenue decreased by
1.2%. The primary components of operating expenses for the years ended December 31, 2013 and 2012
are illustrated in the following table:

2013

2012

% of
Operating
Expense

% of
Revenue

% of
Operating
Expense

% of
Revenue

Change in

% of
Revenue

Personnel costs ..............................
Occupancy costs ............................
Depreciation and amortization........
Travel and related costs .................
Professional fees ............................
Other (1) .........................................
Subtotal .......................................
Deferred compensation costs ........
Total operating expenses ..........

76.2%
6.1%
3.0%
3.9%
1.3%
8.3%
98.8%
1.2%
100.0%

Gross margin..................................

67.0%
5.4%
2.7%
3.4%
1.2%
7.2%
86.9%
1.1%
88.0%

12.0%

76.6%
6.5%
3.0%
3.5%
0.9%
8.8%
99.3%
0.7%
100.0%

67.9%
5.8%
2.6%
3.1%
0.8%
7.9%
88.1%
0.6%
88.7%

(0.9)%
(0.4)%
0.1 %
0.3 %
0.4 %
(0.7)%
(1.2)%
0.5 %
(0.7)%

11.3%

0.7 %

(1) Other operating expenses include office expenses, equipment costs, restructuring charges, bad debt and
other expenses, none of which are individually significant as a percentage of total operating expenses.

Personnel costs as a percentage of revenue decreased 0.9% to 67.0% for the year ended December 31,
2013 compared to 2012 due to the leveraging of labor costs in relation to the increase in revenues.
Personnel costs as a percentage of revenue experienced by the individual practice groups is discussed in
further detail under “Operating Practice Groups”. The decrease in occupancy costs of 0.4% of revenue
was a result of the fixed nature of occupancy costs. The increase in professional fees primarily relates to
the increase in the use of third party consultants in CBIZ’s expanded governmental audit practice where
outside professional services are needed. The increase in travel and related costs relates to continued
client development efforts. The increase in deferred compensation costs of 0.5% resulted from
adjustments to the fair value of investments held in the deferred compensation plan. The adjustments to

the fair value of investments held in relation to the deferred compensation plan totaled a gain of $7.4
million and $3.8 million for the years ended December 31, 2013 and 2012, respectively. These
adjustments are recorded as compensation expense and are offset by the same adjustments to “other
income, net”, and thus do not have an impact on net income. Although these adjustments are recorded as
operating expenses, they are not allocated to the individual practice groups.

Corporate general and administrative expenses – Corporate general and administrative (“G&A”)
expenses increased by $4.2 million to $34.4 million for the year ended December 31, 2013, from $30.2
million for 2012, and increased as a percent of revenue by 0.1% to 4.9% for the year ended
December 31, 2013.

The primary components of corporate general and administrative expenses for the years ended
December 31, 2013 and 2012 are illustrated in the following table:

2013

% of
G&A
Expense

% of
Revenue

2012

% of
G&A
Expense

% of
Revenue

Change in

% of
Revenue

Personnel costs ............................
Professional fees ..........................
Legal settlement costs .................
Computer costs ............................
Travel and related costs ...............
Occupancy costs ..........................
Depreciation and amortization......
Other (1) .......................................
Subtotal .....................................
Deferred compensation costs ......
Total corporate general and
administrative expenses.........

50.8%
19.7%
1.8%
6.0%
3.4%
2.4%
1.0%
12.6%
97.7%
2.3%

2.5%
1.0%
0.1%
0.3%
0.2%
0.1%
–
0.6%
4.8%
0.1%

56.4%
11.0%
3.5%
6.5%
4.1%
2.9%
1.1%
12.7%
98.2%
1.8%

100.0%

4.9%

100.0%

2.7%
0.5%
0.2%
0.3%
0.2%
0.1%
0.1%
0.6%
4.7%
0.1%

4.8%

(0.2)%
0.5 %
(0.1)%
–
–
–
(0.1)%
–
0.1 %
–

0.1 %

(1) Other corporate general and administrative expenses include office expenses, insurance expense and
other expenses, none of which are individually significant as a percentage of total corporate G&A
expenses.

The increase in G&A expenses as a percentage of revenue is primarily attributable to the increase of
0.5% in professional fees. This increase is a result of CBIZ recording a recovery of legal fees in the fourth
quarter of 2012 that was attributable to reimbursement of incurred legal expenses.

Interest expense – Interest expense increased by $0.4 million to $15.4 million for the year ended
December 31, 2013 from $15.0 million for 2012. The increase is primarily due to an increase in
amortization of the discount related to the 2010 Notes as well as amortization of deferred debt costs
related to the credit facility. Debt is further discussed under “Liquidity and Capital Resources” and in Note
8 of the accompanying consolidated financial statements.

Gain on sale of operations, net – The gain on sale of operations, net was $0.1 million and $2.8 million for
the years ended December 31, 2013 and 2012, respectively. The net gain in 2012 was primarily
comprised of the $2.5 million gain recognized from the 2011 sale of the Company’s individual wealth
management business.

Other income, net – Other income, net is primarily comprised of adjustments to the fair value of
investments held in a rabbi trust related to the deferred compensation plan, adjustments to contingent
purchase price liabilities related to previous acquisitions, gains and losses on sales of assets, and other
miscellaneous income and expenses such as contingent royalties from previous divestitures, proceeds
from legal settlements and interest income. Adjustments to the fair value of investments related to the
deferred compensation plan do not impact CBIZ’s net income as they are offset by the same adjustments
to compensation expense (recorded as operating or corporate general and administrative expenses in the
consolidated statements of comprehensive income). Other income, net for the year ended December 31,

2013 primarily consisted of an $8.2 gain in the fair value of investments related to the deferred
compensation plan and interest income of $0.5 million, offset by adjustments to the fair value of the
Company’s contingent purchase price liability related to prior acquisitions which resulted in other expense
of $0.9 million. Other income, net for the year ended December 31, 2012 primarily consisted of a $4.3
million gain in the fair value of investments related to the deferred compensation plan, proceeds from
various legal settlements of $2.5 million, adjustments to the fair value of the Company’s contingent
purchase price liability related to prior acquisitions which resulted in other income of $1.0 million, and
interest income of $0.3 million.

Income Taxes – CBIZ recorded income tax expense from continuing operations of $16.4 million and
$14.1 million for the years ended December 31, 2013 and 2012, respectively. The effective tax rate for
the years ended December 31, 2013 and 2012 was 39.7% and 38.2%, respectively. The increase in the
effective tax rate is primarily due to an increase in state taxes driven by a release of a valuation
allowance in 2012 with respect to a state tax credit carryforward as well as a lower amount of valuations
allowances released in 2013 compared to 2012 with respect to state net operating losses. For further
discussion regarding income tax expense, see Note 7 to the accompanying consolidated financial
statements.

Earnings per share and Non-GAAP earnings per share – Earnings per share from continuing operations
were $0.51 and $0.46 per diluted share for the years ended December 31, 2013 and 2012, respectively.
Earnings per share for the year ended December 31, 2012 included a gain of approximately $0.02 per
diluted share related to a legal settlement recovery that was recorded in other income and a gain of
approximately $0.03 per diluted share related to the divestiture of the wealth management business that
occurred in the first quarter of 2011.

Non-GAAP earnings per share were $1.08 and $0.92 per diluted share for the years ended December 31,
2013 and 2012, respectively. The Company believes Non-GAAP earnings and Non-GAAP earnings per
diluted share, which are both non-GAAP measures, illustrate the impact of certain non-cash charges to
income from continuing operations and are a useful performance measure for the Company, its analysts
and its stockholders. Management uses these performance measures to evaluate CBIZ’s business,
including ongoing performance and the allocation of resources. Non-GAAP earnings and Non-GAAP
earnings per diluted share are provided in addition to the presentation of GAAP measures and should not
be regarded as a replacement or alternative of performance under GAAP.

The following is a reconciliation of income from continuing operations to Non-GAAP earnings from
operations and earnings per diluted share from continuing operations to Non-GAAP earnings per diluted
share for the years ended December 31, 2013 and 2012.

NON-GAAP EARNINGS AND PER SHARE DATA
Reconciliation of Income from Continuing Operations to Non-GAAP Earnings from Continuing Operations

Year Ended December 31,

2013

Per Share
(In thousands, except per share data)

2012

Per Share

Income from continuing operations ............................ $
Adjustment for gain on sale of operations ..................
Selected non-cash charges:
Amortization expense ..............................................
Depreciation expense .............................................
Non-cash interest on convertible notes ...................
Stock-based compensation .....................................
Adjustment to contingent earnouts ..........................
Non-cash charges ................................................ $

24,989
–

14,056
4,828
2,840
5,655
865
28,244

0.51
–

0.29
0.10
0.06
0.12
0.02
0.57

1.08

22,752 $
(1,547)

11,983
4,751
2,638
5,888
(953)
24,307 $

45,512 $

0.46
(0.03)

0.24
0.10
0.05
0.12
(0.02)
0.49

0.92

Non-GAAP earnings – continuing operations ............. $

53,233

Operating Practice Groups

Financial Services

Revenue
Same-unit .................................. $
Acquired businesses..................
Divested operations ...................
Total revenue .....................

Year Ended December 31,

2013

2012

$
Change

%
Change

(In thousands, except percentages)

423,926 $
32,723
–
456,649

410,195 $

–
–
410,195

13,731
32,723
–
46,454

38,598
7,856

3.3%

11.3%

10.8%
14.9%

Operating expenses ......................
Gross margin ................................. $

395,976

357,378

60,673 $

52,817 $

Gross margin percent ....................

13.3%

12.9%

The growth in same-unit revenue was approximately 65% attributable to stronger performance in the units
that provide certain national services and 35% attributable to the traditional accounting and tax services.
Growth in the national units was primarily due to increased project work in the federal and state
governmental health care compliance industry as well as in risk and advisory services. The growth in the
traditional accounting and tax services was due to a 0.7% increase in billable hours and a 1.3% increase
in revenue per hour for the year ended December 31, 2013 compared to the same period a year ago.
Revenue from acquired businesses was the result of the acquisition of PHBV Partners, L.L.P. (“PHBV”),
which occurred on December 31, 2012.

CBIZ provides a range of services to affiliated CPA firms under joint referral and ASAs. Fees earned by
CBIZ under the ASAs are recorded as revenue in the accompanying consolidated statements of
comprehensive income and were approximately $140.2 million and $116.1 million for the years ended
December 31, 2013 and 2012, respectively. The increase in ASA fees was primarily the result of the
PHBV acquisition.

The largest components of operating expenses for the Financial Services practice group are personnel
costs, occupancy costs, and travel and related costs which represented 89.3% and 89.1% of total
operating expenses for the years ended December 31, 2013 and 2012, respectively. Personnel costs
increased $30.9 million during the year ended December 31, 2013 compared to the same period in 2012,
and represented 68.7% and 68.9% of revenue for the years ended December 31, 2013 and 2012,
respectively. The increase was largely attributable to the acquisition of PHBV, comprising $23.0 million of
the variance, as well as a same-unit increase of $7.1 million due to increased headcount. Occupancy
costs are relatively fixed in nature and were $25.2 million and $24.3 million, or 5.5% and 5.9% of revenue,
for the years ended December 31, 2013 and 2012, respectively. The increase in occupancy costs is
related primarily to the PHBV acquisition. Travel and related costs were $14.8 million and $11.4 million, or
3.2% and 2.8% of total revenue, for the years ended December 31, 2013 and 2012, respectively. The
increase in travel and related costs was due to a higher volume of engagement-related costs (which are
billed to clients) and professional staff training efforts, as well as from the impact of the PHBV acquisition.
In addition to the expenses discussed above, professional service costs were $6.2 million and $3.3
million, or 1.4% and 0.8% of total revenue, for the years ended December 31, 2013 and 2012,
respectively. The increase in professional service costs was associated with outside services related to
client engagements for our federal and state governmental health care contracts.

Employee Services

Revenue
Same-unit ................................ $
Acquired businesses................
Divested operations .................
Total revenue ...................

Year Ended December 31,

2013

2012

$
Change

%
Change

(In thousands, except percentages)

187,431 $
17,432
–
204,863

186,217 $

–
–
186,217

1,214
17,432
–
18,646

13,385
5,261

0.7%

10.0%

8.6%
17.0%

Operating expenses ....................
Gross margin ............................... $

168,696

155,311

36,167 $

30,906 $

Gross margin percent ..................

17.7%

16.6%

The increase in same-unit revenue was attributable to several factors. Property and casualty revenues
increased 5.1% due to better pricing throughout the industry as well as strong performance within the
specialty program businesses. Payroll business revenues increased 5.0% primarily due to an increase in
volume resulting from new clients coupled with pricing increases for core services. Retirement consulting
revenues increased 4.3% due to net growth in assets resulting from client contributions and favorable
equity market conditions. These increases were partially offset by a decline in the life insurance business
of $2.5 million due to several large non-recurring policies that were placed in 2012. Excluding the impact
of the life insurance business, same-unit revenue increased 2.1% for the year ended December 31, 2013
compared to the year ended December 31, 2012.

The growth in revenue from acquisitions was provided by:

 Strategic Employee Benefit Services, an employee benefits client list in the Chicago, Illinois

market that was acquired in the first quarter of 2012;

 Primarily Care, Inc., an employee benefits business located in Cranston, Rhode Island that was

acquired in the second quarter of 2012;

 Stoltz and Company, LTD., L.L.P., a property and casualty insurance and employee benefits
business headquartered in Midland, Texas that was acquired in the third quarter of 2012;

 Trinity Risk Advisors, Inc., a property and casualty insurance business located in Atlanta, Georgia

that was acquired in the third quarter of 2012;

 Strategic Employee Benefit Services – The Pruett Group, Inc., an employee benefits business
headquartered in Nashville, Tennessee that was acquired in the fourth quarter of 2012;

 The employee benefit division of Leavitt Pacific Insurance Brokers, Inc., located in the San Jose,

California market that was acquired in the fourth quarter of 2012;

 Diversified Industries, Inc. d/b/a Payroll Control Systems, a payroll business in Minneapolis,

Minnesota that was acquired in the fourth quarter of 2012; and

 Associated Insurance Agents, a property and casualty and employee benefits business located in

Minneapolis, Minnesota, that was acquired in the second quarter of 2013.

The largest components of operating expenses for the Employee Services group are personnel costs,
including commissions paid to third party brokers, and occupancy costs, representing 82.1% and 82.6%
of total operating expenses for the year ended December 31, 2013 and 2012, respectively. Excluding
costs related to the acquired businesses of $9.7 million, personnel costs increased approximately $0.5
million, primarily due to commissions paid to producers relating to increased revenue in the property and
casualty, payroll, and retirement services businesses. Occupancy costs are relatively fixed and were
$11.3 million and $10.7 million the years ended December 31, 2013 and 2012, respectively, and
increased due to the acquisitions in 2013.

National Practices

Revenue
Same-unit .................................. $
Acquired businesses..................
Divested operations ...................
Total revenue .....................

Year Ended December 31,

2013

2012

$
Change

%
Change

(In thousands, except percentages)

30,074 $
–
447
30,521

29,434 $
–
692
30,126

640
–
(245)
395

876
(481)

2.2 %

1.3 %

3.3 %
(14.1)%

Operating expenses ......................
Gross margin ................................. $

27,589

26,713

2,932 $

3,413 $

Gross margin percent ....................

9.6%

11.3%

The National Practices group is primarily comprised of a cost-plus contract with CBIZ’s largest client
(Edward Jones) and CBIZ’s healthcare consulting business. Revenues from the Edward Jones business
accounted for approximately 70% of the National Practice group’s revenue, with the healthcare consulting
accounting for the remaining revenue. Effective December 31, 2013, CBIZ sold its mergers and
acquisition business which comprises the divested operations reflected in the table above.

The increase in same-unit revenue was attributable to an increase of $1.4 million resulting from an
increase in services provided to Edward Jones as a result of an increase in required technology support
as well as an increase in reimbursement dollars due to an increase in compensation.

The largest components of operating expenses for the National Practices group are personnel costs,
occupancy costs, and travel and related costs representing 94.5% and 94.0% of total operating expenses
for the years ended December 31, 2013 and 2012, respectively. Personnel costs increased $1.0 million
for the year ended December 31, 2013 compared to the same period in 2012, and increased as a
percentage of revenue to 82.9% of revenue for the year ended December 31, 2013 compared to 80.6% of
revenue for the same period last year. The increase in personnel costs is due primarily to increases in
demand for services provided under the Edward Jones cost-plus contract arrangement as well as an
increase in wages for annual raises. Travel and related costs were relatively consistent in both periods
and were $0.3 million and $0.4 million for the years ended December 31, 2013 and 2012, respectively.
Occupancy costs are relatively fixed in nature and were $0.5 million for the years ended December 31,
2013 and 2012.

Year Ended December 31, 2012 Compared to Year Ended December 31, 2011

Revenue

The following table summarizes total revenue for the years ended December 31, 2012 and 2011 (in
thousands, except percentages):

Year Ended December 31,

2012

2011

$
Change

%
Change

Same-unit revenue
Financial Services ......................... $
Employee Services .......................
National Practices ........................

Total same-unit revenue .................
Acquired businesses .....................
Divested operations ......................

399,920
171,103
30,126

601,149
25,389
–

389,743
171,205
30,322

591,270
–
–

Total revenue .................................. $

626,538

591,270

10,177
(102)
(196)

9,879
25,389
–

35,268

2.6 %
(0.1)%
(0.6)%

1.7 %

6.0 %

A detailed discussion of revenue by practice group is included under “Operating Practice Groups”.

Gross margin and operating expenses – Operating expenses increased to $555.5 million for the year
ended December 31, 2012 from $518.5 million in 2011, and increased as a percentage of revenue to
88.7% for the year ended December 31, 2012 from 87.7% for 2011. The primary components of
operating expenses for the years ended December 31, 2012 and 2011 are illustrated in the following
table:

2012

2011

% of
Operating
Expense

% of
Revenue

% of
Operating
Expense

% of
Revenue

Change in

% of
Revenue

Gross margin..................................

76.6%
6.5%
3.0%
3.5%
0.9%
8.8%
99.3%
0.7%
100.0%

67.9%
5.8%
2.6%
3.1%
0.8%
7.9%
88.1%
0.6%
88.7%

11.3%

76.7 %
6.7 %
2.9 %
3.5 %
0.8 %
9.5 %
100.1 %
(0.1)%
100.0 %

67.3 %
5.9 %
2.5 %
3.0 %
0.7 %
8.4 %
87.8%
(0.1)%
87.7 %

0.6 %
(0.1)%
0.1 %
0.1 %
0.1 %
(0.5)%
0.3 %
0.7 %
1.0 %

12.3 %

(1.0)%

Personnel costs as a percentage of revenue increased 0.6% to 67.9% for the year ended December 31,
2012 compared to 2011. The increase in personnel costs as a percentage of revenue was primarily the
result of a 0.3% increase in incentive compensation and a 0.3% increase in salaries and wages and
related benefits costs resulting from an increase in headcount and personnel investments made in the
Financial Services practice group. Personnel costs as a percentage of revenue experienced by the
individual practice groups is discussed in further detail under “Operating Practice Groups”. The increase
in deferred compensation costs of 0.7% resulted from adjustments to the fair value of investments held in
the deferred compensation plan. The adjustments to the fair value of investments held in relation to the
deferred compensation plan totaled a gain of $3.8 million and a loss of $0.7 million for the years ended
December 31, 2012 and 2011, respectively. These adjustments are recorded as compensation expense
and are offset by the same adjustments to “other income, net”, and thus do not have an impact on net

income. Although these adjustments are recorded as operating expenses, they are not allocated to the
individual practice groups.

Corporate general and administrative expenses – Corporate general and administrative (“G&A”)
expenses decreased by $1.3 million to $30.2 million for the year ended December 31, 2012, from $31.5
million for 2011, and decreased as a percent of revenue by 0.5% to 4.8% for the year ended
December 31, 2012.

The primary components of corporate general and administrative expenses for the years ended
December 31, 2012 and 2011 are illustrated in the following table:

2012

% of
G&A
Expense

% of
Revenue

2011

% of
G&A
Expense

% of
Revenue

Change in

% of
Revenue

56.4%
11.0%
3.5%
6.5%
4.1%
2.9%
1.1%
12.7%
98.2%
1.8%

2.7%
0.5%
0.2%
0.3%
0.2%
0.1%
0.1%
0.6%
4.7%
0.1%

52.4%
14.8%
7.1%
5.5%
3.9%
2.5%
1.1%
11.6%
98.9%
1.1%

100.0%

4.8%

100.0%

2.8%
0.8%
0.4%
0.3%
0.2%
0.1%
0.1%
0.6%
5.3%
–

5.3%

(0.1)%
(0.3)%
(0.2)%
–
–
–
–
–
(0.6)%
0.1 %

(0.5)%

(2) Other corporate general and administrative expenses include office expenses, insurance expense and
other expenses, none of which are individually significant as a percentage of total corporate G&A
expenses.

The decrease in G&A expenses as a percentage of revenue is primarily attributable to the decrease of
0.3% in professional fees and 0.2% in legal settlement costs. The decrease in professional fees is a result
of a reimbursement of incurred legal expenses in the fourth quarter of 2012. Also during the fourth quarter
of 2012, CBIZ received favorable legal settlements.

Interest expense – Interest expense decreased by $1.0 million to $15.0 million for the year ended
December 31, 2012 from $16.0 million for 2011. The decrease in interest expense is primarily due to the
retirement of CBIZ’s 2006 Notes in 2011, which resulted in a $1.4 million decrease in interest expense.
This was partially offset by an increase in amortization of the discount related to the 2010 Notes. Debt is
further discussed under “Liquidity and Capital Resources” and in Note 8 of the accompanying
consolidated financial statements.

Gain on sale of operations, net – The gain on sale of operations, net was $2.8 million and $2.9 million for
the years ended December 31, 2012 and 2011, respectively. The net gain in each period was primarily
comprised of gains recognized from the 2011 sale of the Company’s individual wealth management
business of $2.5 million and $2.3 million during the years ended December 31, 2012 and 2011,
respectively. The operating results of the individual wealth management business were included in the
Employee Services practice group.

consolidated statements of comprehensive income). Other income, net for the year ended December 31,
2012 primarily consisted of a $4.3 million gain in the fair value of investments related to the deferred
compensation plan, proceeds from various legal settlements of $2.5 million, adjustments to the fair value
of the Company’s contingent purchase price liability related to prior acquisitions which resulted in other
income of $1.0 million, and interest income of $0.3 million. Other income, net for the year ended
December 31, 2011 primarily consisted of adjustments to the fair value of the Company’s contingent
purchase price liability related to prior acquisitions which resulted in other income of $3.5 million and
interest income of $0.2 million. The adjustment to the contingent liability and interest income was partially
offset by a $0.4 million loss in the fair value of investments related to the deferred compensation plan and
a reserve of $0.4 million established on a note receivable.

Income Taxes – CBIZ recorded income tax expense from continuing operations of $14.1 million and
$12.1 million for the years ended December 31, 2012 and 2011, respectively. The effective tax rate for
the years ended December 31, 2012 and 2011 was 38.2% and 38.8%, respectively. The decrease in the
effective tax rate for the year ended December 31, 2012 from 2011 primarily relates to the release of a
valuation allowance with respect to a state tax credit carryforward in 2012. For further discussion
regarding income tax expense, see Note 7 to the accompanying consolidated financial statements.

Earnings per share and Non-GAAP earnings per share – Earnings per share from continuing operations
were $0.46 and $0.39 per diluted share for the years ended December 31, 2012 and 2011, respectively.
Earnings per share for the year ended December 31, 2012 included a gain of approximately $0.02 per
diluted share related to a legal settlement recovery that was recorded in other income, net. Earnings per
share for the years ended December 31, 2012 and 2011 included a gain of approximately $0.03 and
$0.02, respectively, per diluted share related to the divestiture of the wealth management business that
occurred in the first quarter of 2011.

Non-GAAP earnings per share were $0.92 and $0.79 per diluted share for the years ended December 31,
2012 and 2011, respectively. The Company believes Non-GAAP earnings and Non-GAAP earnings per
diluted share, which are both non-GAAP measures, illustrate the impact of certain non-cash charges to
income from continuing operations and are a useful performance measure for the Company, its analysts
and its stockholders. Management uses these performance measures to evaluate CBIZ’s business,
including ongoing performance and the allocation of resources. Non-GAAP earnings and Non-GAAP
earnings per diluted share are provided in addition to the presentation of GAAP measures and should not
be regarded as a replacement or alternative of performance under GAAP.

NON-GAAP EARNINGS AND PER SHARE DATA
Reconciliation of Income from Continuing Operations to Non-GAAP Earnings from Continuing Operations

Year Ended December 31,

2012

Per Share
(In thousands, except per share data)

2011

Per Share

Income from continuing operations ............................ $
Adjustment for gain on sale of operations ..................
Selected non-cash charges:
Amortization ............................................................
Depreciation ............................................................
Non-cash interest on convertible notes ...................
Stock-based compensation .....................................
Adjustment to contingent earnouts ..........................
Non-cash charges ................................................ $

22,752

(1,547)

0.46
(0.03)

19,139 $
(933)

11,983
4,751
2,638
5,888
(953)
24,307

0.24
0.10
0.05
0.12
(0.02)
0.49

0.92

10,560
4,766
3,201
5,954
(3,467)
21,014 $

39,220 $

0.39
(0.02)

0.21
0.10
0.06
0.12
(0.07)
0.42

0.79

Non-GAAP earnings – continuing operations ............. $

45,512

Operating Practice Groups

Financial Services

Year Ended December 31,

2012

2011

$
Change

%
Change

Revenue
Same-unit .................................. $
Acquired businesses..................
Divested operations ...................
Total revenue .....................

(In thousands, except percentages)

399,920 $
10,275
–
410,195

389,743 $

–
–
389,743

10,177
10,275
–
20,452

Operating expenses ......................
Gross margin ................................. $

357,378

336,206

52,817 $

53,537 $

21,172
(720)

2.6 %

5.2 %

6.3 %
(1.3)%

Gross margin percent ....................

12.9%

13.7%

The increase in same-unit revenue was primarily the result of strong performance in the units that provide
certain national services, offset in part by a decrease in revenue in the core accounting units. Growth in
the national units of 18.6% was primarily due to increased project work, primarily in the federal and state
governmental health care consulting and compliance business. Revenue in the core accounting units
decreased 1% due to a corresponding decrease in hours charged. Revenue from acquired businesses
was the result of the acquisition of Thompson Dunavant PLC (“Thompson Dunavant”), located in
Memphis, Tennessee, that was acquired on August 1, 2011, and Gresham Smith LLC (“Gresham Smith”),
located in Tulsa, Oklahoma and St. Louis, Missouri, that was acquired on October 1, 2011.

CBIZ provides a range of services to affiliated CPA firms under joint referral and administrative service
agreements (“ASAs”). Fees earned by CBIZ under the ASAs are recorded as revenue in the
accompanying consolidated statements of comprehensive income and were approximately $116.1 million
and $109.1 million for the years ended December 31, 2012 and 2011, respectively. The increase in ASA
fees was the result of growth in the units that provide national services, as well as the impact of the
acquisitions.

The largest components of operating expenses for the Financial Services practice group are personnel
costs, occupancy costs, and travel and related costs which represented 89.1% and 88.5% of total
operating expenses for the years ended December 31, 2012 and 2011, respectively. Personnel costs
increased $19.1 million during the year ended December 31, 2012 compared to the same period in 2011,
and represented 79.1% and 78.4% of total operating expenses and 68.9% and 67.7% of revenue for the
years ended December 31, 2012 and 2011, respectively. The increase was primarily due to investments
in resources expected to enhance revenue growth at several units, including the addition of teams of
professionals to enhance the Company’s state and local tax services and the forensic accounting
practice, as well as a team of business development managers located throughout the country. These
investments account for approximately $1.9 million of the increase in personnel costs. In addition to these
investments, headcount at the units providing national services increased in response to the increase in
demand. Included in the increase in personnel costs is the impact of the acquisitions of Thompson
Dunavant and Gresham Smith, which accounted for approximately $6.8 million of the increase. Lastly,
overall incentive compensation increased for the year ended December 31, 2012 compared to 2011.
Occupancy costs are relatively fixed in nature and were $24.3 million for the year ended December 31,
2012 compared to $23.7 million for the same period in the prior year and were 5.9% and 6.1% of total
revenue, respectively. Travel and related costs were $11.4 million for the year ended December 31, 2012
compared to $10.2 million in 2011, and represented 2.8% and 2.6% of total revenue, respectively. The
increase in travel and related costs was due mostly to increased client development. Bad debt expense
decreased $0.9 million for the year ended December 31, 2012 compared to the same period a year ago,
and was 1.2% and 1.5% of revenue for the year ended December 31, 2012 and 2011, respectively.

Employee Services

Year Ended December 31,

2012

2011

$
Change

%
Change

Revenue
Same-unit ................................ $
Acquired businesses................
Divested operations .................
Total revenue ...................

(In thousands, except percentages)

171,103 $
15,114
–
186,217

171,205 $

–
–
171,205

(102)
15,114
–
15,012

Operating expenses ....................
Gross margin ............................... $

155,311

144,528

30,906 $

26,677 $

10,783
4,229

(0.1)%

8.8 %

7.5 %
15.9 %

Gross margin percent ..................

16.6%

15.6%

The decrease in same-unit revenue was primarily attributable to declines in the Company’s employee
benefits and life insurance businesses, offset by increases in the property and casualty, payroll services,
and retirement plan consulting businesses. The decrease in employee benefits revenue of $2.3 million is
primarily due to continued competitive pressures and client plan design changes. The decrease in life
insurance revenue of $1.7 million is due to lower client demand for life insurance plans. Partially offsetting
these decreases was an increase in the Company’s property and casualty brokerage revenue of $1.7
million due to pricing increases and an increase in volume-based carrier bonus payments, an increase in
the Company’s payroll business of $1.4 million due to higher pricing trends for payroll and related
services, and an increase in retirement plan consulting services of $1.0 million due to favorable trends in
equity markets and an increase in demand for actuarial consulting services.

The growth in revenue from acquisitions was provided by:

 Multiple Benefits Services, an employee benefits business located in Atlanta, Georgia that was

acquired on August 1, 2011;

 PSA Insurance, a retirement advisory business located in Baltimore, Maryland that was acquired

on November 1, 2011;

 Advantage Benefit Planning, an employee benefits business located in Pleasantville, New Jersey

that was acquired on December 30, 2011;

 Meridian, a property and casualty insurance and employee benefits business headquartered in
Boca Raton, Florida with an office in Atlanta, Georgia that was acquired on January 1, 2012;

 Strategic Employee Benefit Services, an employee benefits client list in the Chicago, Illinois

market that was acquired on February 1, 2012;

 PCI, an employee benefits business located in Cranston, Rhode Island that was acquired on May

1, 2012;

 Stoltz, a property and casualty insurance and employee benefits business headquartered in

Midland, Texas that was acquired on July 1, 2012;

 Trinity, a property and casualty insurance business located in Atlanta, Georgia that was acquired

on September 1, 2012;

 SEBS-Pruett, an employee benefits business headquartered in Nashville, Tennessee that was

acquired on October 1, 2012;

 Leavitt, an employee benefits business in the San Jose, California market that was acquired on

November 1, 2012.

The largest components of operating expenses for the Employee Services group are personnel costs,
which include commissions paid to third party brokers, and occupancy costs, representing 82.6% and
82.8% of total operating expenses for the years ended December 31, 2012 and 2011, respectively.
Personnel costs increased approximately $7.7 million, primarily as a result of the acquired businesses.
Personnel costs represented 63.1% and 64.2% of revenue for the years ended December 31, 2012 and
2011, respectively. Occupancy costs are relatively fixed in nature and were $10.7 million and $9.8 million

for the years ended December 31, 2012 and 2011, respectively. The increase in occupancy costs was
primarily due to business acquisitions.

National Practices

Year Ended December 31,

2012

2011

$
Change

%
Change

(In thousands, except percentages)

Revenue
Same-unit .................................. $
Acquired businesses..................
Divested operations ...................
Total revenue .....................

30,126 $
–
–
30,126

30,322 $
–
–
30,322

Operating expenses ......................
Gross margin ................................. $

26,713

26,222

3,413 $

4,100 $

Gross margin percent ....................

11.3%

13.5%

(196)
–
–
(196)

491
(687)

(0.6)%

1.9 %
(16.8)%

The National Practices group is primarily comprised of a cost-plus contract with CBIZ’s largest client
(Edward Jones), healthcare consulting, and the Company’s mergers and acquisition business. Revenues
from the Edward Jones business account for approximately two-thirds of the National Practice group’s
revenue, with the healthcare consulting and mergers and acquisitions accounting for the remaining
revenue.

The decrease in revenue was attributable to a decrease of $1.1 million in the mergers and acquisitions
business as a result of earning success fees of $0.7 million for completing one transaction during the year
ended December 31, 2012 compared to success fees of $1.8 million for completing three transactions in
2011. This decrease was substantially offset by an increase of $0.5 million in services provided to Edward
Jones and $0.4 million from the healthcare consulting business. The increase in the Edward Jones
revenue was primarily a result of an increase in required technology support as well as an increase in
reimbursement dollars due to an increase in compensation. The increase in the healthcare consulting
business was primarily due to an increase in Medicaid eligibility services provided to clients and an
increase in consulting fees related to healthcare reform regulations.

The largest components of operating expenses for the National Practices group are personnel costs,
occupancy costs, and travel and related costs representing 94.0% and 94.2% of total operating expenses
for the years ended December 31, 2012 and 2011, respectively. Personnel costs increased $0.4 million
for the year ended December 31, 2012 compared to the same period in 2011, and increased as a
percentage of revenue to 80.6% of revenue for the year ended December 31, 2012 compared to 78.6% of
revenue for the same period in 2011. The increase in personnel costs is due primarily to increases in
wages for annual raises. Travel and related costs were consistent in both periods and were $0.4 million
for the years ended December 31, 2012 and 2011. Occupancy costs are relatively fixed in nature and
were $0.5 million for the years ended December 31, 2012 and 2011.

Financial Condition

Total assets were $897.5 million at December 31, 2013, a decrease of $72.7 million versus December 31,
2012. Current assets of $350.5 million exceeded current liabilities of $267.4 million by $83.1 million.

Cash and cash equivalents decreased by $0.1 million to $0.8 million at December 31, 2013 from $0.9
million at December 31, 2012. CBIZ historically maintains low cash levels and applies any available cash
to pay down the outstanding debt balance. Restricted cash was $22.1 million at December 31, 2013, an
increase of $2.5 million from $19.6 million at December 31, 2012. Restricted cash represents those funds
held in connection with CBIZ's Financial Industry Regulatory Authority (“FINRA”) regulated businesses
and funds held in connection with the pass through of insurance premiums to various carriers. Cash and
restricted cash fluctuate during the year based on the timing of cash receipts and cash payments.
Accounts receivable, net, were $143.1 million at December 31, 2013, an increase of $8.1 million from
December 31, 2012, and days sales outstanding (“DSO”) from continuing operations were 74 days and
76 days at December 31, 2013 and December 31, 2012, respectively. DSO represents accounts
receivable and unbilled revenue (net of realization adjustments) at the end of the period, divided by
trailing twelve months daily revenue. CBIZ provides DSO data because such data is commonly used as a
performance measure by analysts and investors and as a measure of the Company's ability to collect on
receivables in a timely manner.

Deferred income taxes – current decreased by $3.3 million to $4.6 million at December 31, 2013 from
$7.9 million at December 31, 2012. The decrease in the net deferred current asset was primarily due to a
change in tax accounting method that accelerated the tax deduction for certain accrued expenses and the
transfer of certain deferred tax liabilities from deferred income taxes – non-current to deferred income
taxes – current.

Other current assets were $14.4 million and $10.9 million at December 31, 2013 and December 31, 2012,
respectively. Other current assets are primarily comprised of prepaid assets, rent deposits, and notes
receivable. Balances may fluctuate during the year based upon the timing of cash payments, amortization
of prepaid expenses, and activity related to notes receivable.

Funds held for clients of $164.4 million and $154.4 million at December 31, 2013 and 2012, respectively,
and client fund obligations of $164.3 million and $154.1 million at December 31, 2013 and 2012,
respectively, primarily relate to CBIZ’s payroll services business. The balances in these accounts
fluctuate with the timing of cash receipts and the related cash payments. Client fund obligations can differ
from funds held for clients due to changes in the market value of the underlying investments. The nature
of these accounts is further described in Note 1 of the accompanying consolidated financial statements.

Property and equipment, net, increased by $1.4 million to $19.2 million at December 31, 2013 from $17.8
million at December 31, 2012. The increase is the result of capital expenditures of $6.2 million partially
offset by depreciation and amortization expense of $4.8 million. CBIZ’s property and equipment is
primarily comprised of software, hardware, furniture and leasehold improvements.

Goodwill and other intangible assets, net decreased by $0.5 million to $469.1 at December 31, 2013 from
$469.6 at December 31, 2012. This decrease is the result of amortization expense of $14.1 million, offset
by $9.6 million and $4.0 million of net additions to goodwill and intangible assets from acquisitions,
respectively.

Assets of the deferred compensation plan represent participant deferral accounts and are directly offset
by deferred compensation plan obligations. Assets of the deferred compensation plan were $52.0 million
and $39.8 million at December 31, 2013 and December 31, 2012, respectively. The increase in assets of
the deferred compensation plan of $12.2 million consisted of net participant contributions of $4.1 million
and an increase in the fair value of the investments of $8.1 million for the year ended December 31, 2013.
The plan is described in further detail in Note 13 of the accompanying consolidated financial statements.

The accounts payable balances of $37.5 million and $35.4 million at December 31, 2013 and
December 31, 2012, respectively, reflect amounts due to suppliers and vendors. Balances fluctuate

during the year based on the timing of cash payments. Accrued personnel costs were $38.6 million and
$34.9 million at December 31, 2013 and December 31, 2012, respectively, and represent amounts due
for payroll, payroll taxes, employee benefits and incentive compensation. Balances fluctuate during the
year based on the timing of payments and adjustments to the estimate of incentive compensation costs.

Income taxes payable was $25 thousand and $1.4 million at December 31, 2013 and 2012, respectively,
and was primarily due to timing differences between current income taxes expense and related tax
payments.

Notes payable – current decreased by $3.9 million to $1.6 million at December 31, 2013 from $5.5 million
at December 31, 2012. The decrease was primarily due to payments made to owners of businesses
acquired by CBIZ as a result of purchase price adjustments and deferred payments in the amount of $5.0
million as well as guaranteed purchase price payments made of $0.5 million related to prior year business
acquisitions. This decrease was partially offset due to long-term portions of notes related to guaranteed
purchase price of $1.2 million being reclassified from non-current to current and new notes payable of
$0.4 million resulting from businesses acquired in 2013.

Contingent purchase price liabilities (current and non-current) are comprised of purchase price liabilities
that arise from business acquisitions. Contingent purchase price liabilities (current and non-current)
decreased by $4.8 million to $25.2 million at December 31, 2013 from $30.0 million at December 31,
2012. The decrease in the contingent liability was due to payments of $11.5 million made during 2013,
partially offset by an increase of $5.5 million from current year business acquisitions, adjustments to the
fair value of the contingency purchase price liabilities of $1.1 million and $0.1 of net present value
adjustments to the liabilities.

Other liabilities (current and non-current) decreased by $1.0 million to $23.5 million at December 31, 2013
from $24.5 million at December 31, 2012. The decrease is primarily attributable to the decrease of $1.6
million in unearned revenues due to the completion of performance of services, a decrease of $1.2 million
of guaranteed purchase price related to business acquisitions, a decrease of $0.8 million to the self-
funded health insurance accrual due to expected decreases in payments for claims not reported until after
year end, a decrease of $0.4 million in the fair value adjustment related to the Company’s swap
agreement and a decrease of $0.3 million in restructuring liabilities as a result of payments made. These
decreases were partially offset by an increase of $2.7 million in accrued lease costs due to entering into
new lease agreements related to recently acquired businesses and an increase of $0.8 million in legal
reserves based on current claim activities.

CBIZ’s convertible notes are carried at face value less unamortized discount. The $2.8 million increase in
the carrying value of the convertible notes at December 31, 2013 compared to December 31, 2012
represents the discount amortization on the 2010 Notes, which is recognized as non-cash interest
expense in the consolidated statements of comprehensive income. The convertible notes are further
described in Note 8 of the accompanying consolidated financial statements.

Bank debt for amounts due on CBIZ’s credit facility decreased $160.4 million to $48.5 million at
December 31, 2013 from $208.9 million at December 31, 2012. This decrease was primarily attributable
to using the proceeds from the sale of MMP to pay down outstanding debt.
Income taxes payable – non-current at December 31, 2013 and December 31, 2012 was $6.2 million and
$4.0 million, respectively, and represents the accrual for uncertain tax positions. The increase of $2.2
million primarily relates to reserves for state income taxes. Income taxes are further discussed in Note 7
of the accompanying consolidated financial statements.

Stockholders’ equity increased by $79.2 million to $374.4 million at December 31, 2013 from $295.2
million at December 31, 2012. The increase in stockholders’ equity was primarily attributable to net
income of $85.9 million, CBIZ’s stock award programs which contributed $17.7 million and the issuance
of $2.1 million in common shares related to business acquisitions. These increases were partially offset
by CBIZ’s repurchase of 3.9 shares at a cost of $25.7 million subject to the Westbury Agreement and the
repurchase of 0.1 million shares at a cost of $0.8 million related to shares repurchased in conjunction with
the settlement of restricted stock transactions.

Liquidity and Capital Resources

CBIZ's principal source of net operating cash is derived from the collection of fees and commissions for
professional services and products rendered to its clients. CBIZ supplements net operating cash with a
$275 million unsecured credit facility and $130 million in 2010 Notes.

CBIZ maintains a $275 million unsecured credit facility with Bank of America as agent bank for a group of
seven participating banks. The credit facility also has a letter of credit sub-facility. On April 11, 2011, the
credit facility was amended to extend the maturity date one year to June 2015, reduce interest on
outstanding balances, reduce commitment fees on the unused borrowing limit, and adjust the leverage
ratio limits to provide CBIZ with more flexibility. On August 30, 2012, the credit facility was further
amended to modify the senior and total leverage requirements and provide a temporary increase in the
leverage ratios for twelve months, at which time the leverage ratios will step down to the leverage
schedule prescribed by the 2011 amendment. The purpose of the amendment was to provide additional
flexibility to support CBIZ’s strategic acquisitions. At December 31, 2013, CBIZ had $48.5 million
outstanding under its credit facility and had letters of credit and performance guarantees totaling $4.4
million. Available funds under the credit facility, based on the terms of the commitment, were
approximately $99.8 million at December 31, 2013. Management believes that cash generated from
operations, combined with the available funds from the credit facility, provides CBIZ the financial
resources needed to meet business requirements for the foreseeable future, including capital
expenditures and working capital requirements.

The credit facility also allows for the allocation of funds for strategic initiatives, including acquisitions and
the repurchase of CBIZ common stock. Under the credit facility, CBIZ is required to meet certain financial
covenants with respect to (i) minimum net worth; (ii) maximum total and senior leverage ratios; and (iii) a
minimum fixed charge coverage ratio. CBIZ believes it is in compliance with its covenants as of
December 31, 2013. CBIZ’s ability to service its debt and to fund strategic initiatives will depend upon its
ability to generate cash in the future.

The 2010 Notes were issued to qualified institutional buyers on September 27, 2010 and mature on
October 1, 2015. The holders of the 2010 Notes may convert their 2010 Notes any time on or after
July 31, 2015. Concurrent with the closing of the 2010 Notes, a portion of the proceeds was used to
repurchase $60 million of the $100 million outstanding 2006 Notes through privately negotiated
transactions. During 2011, an additional $39.3 million of the 2006 Notes were repurchased, which leaves
a remaining balance of $750,000 of 2006 Notes outstanding at December 31, 2013. See Note 8 to the
accompanying financial statements for further discussion of CBIZ’s debt instruments.

In addition to the debt instruments previously mentioned, CBIZ may obtain, at a future date, additional
funding by offering equity securities or debt through public or private markets.

Sources and Uses of Cash

As a result of the classification of MMP as a discontinued operation and the subsequent sale of MMP in
2013, the Consolidated Statement of Cash Flows has been restated to reflect the net income from MMP
operations as an adjustment to reconcile net income to net cash provided by operating activities. In
addition, the cash flows from MMP operations are reflected in a separate line item within the operating
and investing sections of the Consolidated Statements of Cash Flows.

Included in cash flows used in operating activities for the year ended December 31, 2013 was cash paid
for taxes of $47.5 million related to the gain on sale of MMP. Cash flows provided by operating activities
from continuing operations were $41.5 million, $39.5 million and $42.8 million for the years ended
December 31, 2013, 2012 and 2011, respectively.

The following table summarizes cash flows from operating, investing and financing activities for the years
ended December 31, 2013, 2012 and 2011 (in thousands):

Total cash provided by (used in):
Operating activities ................................................. $
Investing activities ..................................................
Financing activities .................................................
(Decrease) increase in cash
and cash equivalents ....................................... $

2013
(1,518)
174,992
(173,602)

2012
54,048
(104,315)
49,553

2011
58,174
(55,572)
(1,713)

(128)

(714)

889

Operating Activities

Cash flows from operating activities represent net income adjusted for certain non-cash items and
changes in assets and liabilities. CBIZ typically experiences a net use of cash from operations during the
first quarter of its fiscal year, as accounts receivable balances grow in response to the seasonal increase
in first quarter revenue generated by the Financial Services practice group (primarily for accounting and
tax services). This net use of cash is followed by strong operating cash flow during the second and third
quarters, as a significant amount of revenue generated by the Financial Services practice group during
the first four months of the year are billed and collected in subsequent quarters. Non-cash adjustments to
net income mentioned below mainly consist of depreciation of fixed assets, amortization of intangible
assets including client lists and non-compete agreements, amortization of the discount on convertible
notes and deferred financing fees, provision for bad debts, adjustments to contingent purchase price
liabilities, deferred income tax expense and stock-based compensation expense.

During the year ended December 31, 2013, net cash used in operating activities was $1.5 million and
primarily consisted of net gains on the sale of operations and the discontinued operations transactions
totaling $61.0 million and negative changes in working capital of $17.7 million. These uses were offset by
net income of $85.9 million and non-cash adjustments to net income of $34.3 million. Net gains on the
sale of operations and discontinued operations primarily result from the sale of MMP. Working capital use
of cash primarily resulted from an increase in accounts receivable due to the growth in revenue. Cash
used in discontinued operations was $43.0 million, which included $47.5 million cash paid for income
taxes related to the gain on sale of MMP.

During the year ended December 31, 2012, net cash provided by operating activities was $54.0 million
and primarily consisted of net income of $31.1 million and non-cash adjustments to net income of $29.6
million, partially offset by net gains on the sale of operations and the discontinued operations transactions
totaling $11.2 million and negative changes in working capital of $10.1 million. Working capital resulted in
a use of cash primarily from an increase in accounts receivable due to an increase in revenue resulting
from the fourth quarter business acquisitions. Other impacts to the change in working capital include an
increase in accounts payable due to increased activity from the acquisitions and the ongoing effort to
manage payables, the increase in accrued compensation incentive accruals and the increase in income
taxes payable due to the timing of tax payments. Cash provided by discontinued operations was $14.5
million.

During the year ended December 31, 2011, net cash provided by operating activities was $58.2 million
and primarily consisted of net income of $28.0 million and non-cash adjustments to net income of $27.0
million. Partially offsetting these sources of cash were a net gain on the sale of operations and
discontinued operations transactions totaling $11.8 million and net changes in working capital of $0.4
million. Cash provided by discontinued operations was $15.4 million.

Investing Activities

CBIZ’s investing activities typically result in a net use of cash, and generally consist of payments for
business acquisitions and client lists, contingent payments associated with business acquisitions that
occurred prior to 2009, purchases of capital equipment, net activity related to funds held for clients, and
proceeds received from sales of divestitures and discontinued operations. Capital expenditures consisted
of investments in technology, leasehold improvements and purchases of furniture and equipment.

Cash provided by investing activities for the year ended December 31, 2013 primarily consisted of $200.9
million from proceeds from the sale of divested and discontinued operations (primarily the sale of MMP)
and $0.5 million from net additions to notes receivable resulting from acquisition activities in 2013 and
from the sale of MMP. Cash provided by investing activities was partially offset by $9.7 million of net cash
used for business acquisitions and contingent payments on prior acquisitions, net activity related to funds
held for clients of $10.2 million and capital expenditures of $6.2 million. Cash used in discontinued
operations was $0.3 million.

Investing uses of cash during the year ended December 31, 2012 primarily consisted of $88.3 million of
net cash used for business acquisitions and contingent payments on prior acquisitions, net activity related
to funds held for clients of $5.1 million, capital expenditures of $2.4 million, and additions to notes
receivable of $3.4 million relating to acquisition activities. These uses of cash were partially offset by $1.5
million of proceeds from the sale of divested and discontinued operations. Cash used in discontinued
operations was $6.7 million.

Investing uses of cash during the year ended December 31, 2011 primarily consisted of $27.4 million of
net cash used for business acquisitions and contingent payments on prior acquisitions, net activity related
to funds held for clients of $24.9 million, and capital expenditures of $3.9 million. These uses of cash
were partially offset by $1.0 million of proceeds from the sale of divested and discontinued operations.
Cash used in discontinued operations was $0.4 million.

Financing Activities

CBIZ’s financing cash flows typically consist of net borrowing and payment activity from the credit facility,
the issuance and repayment of debt instruments, repurchases of CBIZ common stock, payments of
contingent consideration on business acquisitions, net change in client fund obligations, and proceeds
from the exercise of stock options.

Net cash used in financing activities during the year ended December 31, 2013 included $160.4 million
used to pay down the credit facility, $26.5 million used to repurchase shares of CBIZ common stock,
$10.4 million in payments for contingent consideration included as part of the initial measurement of prior
business acquisitions and $0.6 million in payments on notes payable. These uses of cash were partially
offset by $14.0 million in proceeds from the exercise of stock options and a $10.2 million net change in
client fund obligations as a result of timing of cash received and payments made.

Net cash provided by financing activities during the year ended December 31, 2012 primarily consisted of
$63.9 million in net proceeds on the credit facility and a net change of $5.1 million in client fund
obligations as a result of timing of cash received and payments made. These proceeds were partially
offset by $13.2 million in payments for contingent consideration included as part of the initial
measurement of prior business acquisitions, $5.7 million to repurchase shares of CBIZ common stock
and $0.6 million for debt issuance costs related to the amendment to the credit facility.

Net cash used in financing activities during the year ended December 31, 2011 included $39.3 million
used to repay the 2006 Notes at par, $9.5 million used to repurchase shares of CBIZ common stock, $1.8
million in payments for contingent consideration included as part of the initial measurement of prior
business acquisitions, and $0.6 million in cash used to pay for debt issuance costs related to the
amendment of the credit facility. These uses of cash were substantially offset by sources of cash which
include $26.1 million in net proceeds on the credit facility, net change of $22.4 million in client fund
obligations as a result of timing of cash received and payments made, and $0.9 million in proceeds from
the exercise of stock options, including tax benefits.

Obligations and Commitments

CBIZ's aggregate amount of future obligations for the next five years and thereafter is set forth below (in
thousands):

Total

2014

2015

2016

2017

2018

Thereafter

Convertible notes (1) ..................... $ 130,750 $

–

$ 130,000

750

– $

6,362

48,500

6,154

–

9,623

1,239

–

3,235

1,135

–

451

–

467

–

Interest on convertible notes .........

12,736

6,362

Credit facility (2) ............................

48,500

Income taxes payable ...................

6,179

–

1,602

25,196

12,243

4,534

1,201

Notes payable ...............................
Contingent purchase price
liabilities (3) ..............................
Restructuring lease
obligations (4) ..........................
Non-cancelable operating
lease obligations (4) .................
Letters of credit in lieu of cash
security deposits ......................
Performance guarantees for
non-consolidated affiliates .......
License bonds and other letters
of credit ....................................

152,619

30,738

28,717

27,009

21,948

17,075

27,132

2,516

1,934

2,402

295

1,934

2,253

–

131

834

–

1,387

–

Total ......................................... $ 388,968 $

56,653

$ 230,726

32,983

22,504 $

18,929 $

27,173

(1) Represents $130 million par value of 2010 Notes which mature on October 1, 2015 and $750 thousand par value of 2006

Notes which mature on June 1, 2026. The 2006 Notes may be putable by the holders of the convertible notes on June 1, 2016
and can be redeemed by the Company at anytime.
Interest on the credit facility is not included as the amount is not determinable due to the revolving nature of the credit facility
and the variability of the related interest rate.

(2)

(3) Represents contingent earnout liability that is expected to be paid over the next four years to businesses CBIZ acquired on or

after January 1, 2009.

(4) Excludes cash expected to be received under subleases.

The above table does not reflect $5.5 million of unrecognized tax benefits, which the Company has
recorded for uncertain tax positions as CBIZ is unable to determine a reasonably reliable estimate of the
timing of the future payments.

Off-Balance Sheet Arrangements

CBIZ maintains ASA’s with independent CPA firms (as described more fully under “Business – Financial
Services” and in Note 1 of the accompanying consolidated financial statements), which qualify as variable
interest entities. The accompanying consolidated financial statements do not reflect the operations or
accounts of variable interest entities as the impact is not material to the consolidated financial condition,
results of operations, or cash flows of CBIZ.

CBIZ provides guarantees of performance obligations for a CPA firm with which CBIZ maintains an ASA.
Potential obligations under the guarantees totaled $1.9 million at December 31, 2013 and 2012. CBIZ has

recognized a liability for the fair value of the obligations undertaken in issuing these guarantees. The
liability is recorded as other current liabilities in the accompanying consolidated balance sheets. CBIZ
does not expect it will be required to make payments under these guarantees.

CBIZ provides letters of credit to landlords (lessors) of its leased premises in lieu of cash security
deposits. Letters of credit totaled $2.5 million at December 31, 2013 and 2012. In addition, CBIZ provides
license bonds to various state agencies to meet certain licensing requirements. The amount of license
bonds outstanding was $2.4 million and $2.7 million at December 31, 2013 and 2012, respectively.

CBIZ has various agreements under which the Company 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 CBIZ under such
indemnification clauses are generally conditioned upon the other party making a claim. Such claims are
typically subject to challenge by CBIZ and to dispute resolution procedures specified in the particular
contract. Further, CBIZ’s obligations under these agreements may be limited in terms of time and/or
amount and, in some instances, CBIZ may have recourse against third parties for certain payments made
by CBIZ. It is not possible to predict the maximum potential amount of future payments under these
indemnification agreements due to the conditional nature of CBIZ’s obligations and the unique facts of
each particular agreement. Historically, CBIZ has not made any payments under these agreements that
have been material individually or in the aggregate. As of December 31, 2013, CBIZ was not aware of
any obligations arising under indemnification agreements that would require material payments.

Interest Rate Risk Management

CBIZ periodically uses interest rate swaps to manage interest rate risk exposure. The interest rate swaps
effectively mitigate CBIZ’s exposure to interest rate risk, primarily through converting portions of the
floating rate debt under the credit facility to a fixed rate basis. These agreements involve the receipt or
payment of floating rate amounts in exchange for fixed rate interest payments over the life of the
agreements without an exchange of the underlying principal amounts. At December 31, 2013 and 2012,
CBIZ had a total of $40.0 million notional amount of interest rate swaps, of which $15 million will expire in
June 2014 and the remaining $25 million will expire in June 2015. Management will continue to evaluate
the potential use of interest rate swaps as it deems appropriate under certain operating and market
conditions. CBIZ does not enter into derivative instruments for trading or speculative purposes.

CBIZ carries $130.0 million in 2010 Notes bearing a fixed interest rate of 4.875%. The 2010 Notes mature
on October 1, 2015 and may not be converted before July 31, 2015. CBIZ believes the fixed nature of
these borrowings mitigate its interest rate risk.

In connection with payroll services provided to clients, CBIZ collects funds from its clients’ accounts in
advance of paying these client obligations. These funds held for clients are segregated and invested in
accordance with the Company’s investment policy, which requires that all investments carry an
investment grade rating at the time of initial investment. The interest income on these investments
mitigates the interest rate risk for the borrowing costs of CBIZ’s credit facility, as the rates on both the
investments and the outstanding borrowings against the credit facility are based on market conditions.

Critical Accounting Policies

Significant accounting policies are described more fully in Note 1 to the accompanying consolidated
financial statements. The preparation of financial statements in conformity with GAAP requires the
Company to make estimates and assumptions about future events that affect the amounts reported in its
financial statements. CBIZ’s management bases its estimates on historical experience and assumptions
that it believes are reasonable under the related facts and circumstances. The application of these critical
accounting policies involves the exercise of judgment and use of assumptions for future uncertainties.

Accordingly, actual results could differ significantly from these estimates. The policies discussed below
address the most critical accounting policies which are the most important to the portrayal of CBIZ’s
financial statements and require the most difficult, subjective and complex judgments.

Revenue Recognition

Revenue is recognized only when all of the following are present: persuasive evidence of an arrangement
exists, delivery has occurred or services have been rendered, the fee to the client is fixed or
determinable, and collectability is reasonably assured. Contract terms are typically contained in a signed
agreement with the client (or when applicable, other third parties) which generally defines the scope of
services to be provided, pricing of services, and payment terms generally ranging from invoice date to 90
days after invoice date. Billing may occur prior to, during, or upon completion of the service. CBIZ typically
does not have acceptance provisions or right of refund arrangements included in these agreements.
Contract terms vary depending on the scope of services provided, the deliverables, and the complexity of
the engagement. CBIZ offers a vast array of products and business services to its clients. Those services
are delivered through three practice groups. A description of revenue recognition, as it relates to those
groups, is provided in more detail in Note 1 to the accompanying consolidated financial statements.

Valuation of Accounts Receivable and Notes Receivable

Management determines the valuation of accounts receivable (including unbilled accounts receivable)
and notes receivable, and the adequacy of the allowance for doubtful accounts based on estimates of
losses related to the respective receivable balance. Management analyzes historical bad debts, client
credit-worthiness, the age of accounts receivable and current economic trends and conditions when
evaluating the adequacy of the allowance for doubtful accounts and the collectability of notes receivable.
Significant management judgments and estimates must be made and used in connection with
establishing the allowance for doubtful accounts for each accounting period. Material differences may
result if facts and circumstances change in relation to the original estimation.

Valuation of Goodwill

CBIZ utilizes the acquisition method of accounting for all business combinations. In accordance with
GAAP, goodwill is not amortized, but rather is tested for impairment annually during the fourth quarter of
each year. Impairment testing may be performed between annual tests if an event occurs or
circumstances change that would more likely than not reduce the fair value of a reporting unit below its
carrying value.

During the fourth quarter of 2013 and 2012, CBIZ applied the principles as prescribed in Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350 “Intangibles
– Goodwill and Other” in order to complete its goodwill impairment tests. CBIZ based its goodwill
impairment testing on a qualitative assessment for each of its reporting units that carried a goodwill
balance. The qualitative assessment included an in-depth analysis of many factors, including general
economic conditions, industry and market conditions, a broad scope of financial factors, the Company’s
weighted average cost of capital, changes in management and key personnel, the price of the Company’s
common stock, as well as other drivers of a fair value analysis. As part of the qualitative analysis, many
estimates and assumptions were made that related to future economic trends, client behaviors, and other
factors, all of which are beyond the control of management. As a result of the Company’s qualitative
assessment, it was concluded that it was more-likely-than-not that the fair value of each of its reporting
units was greater than its carrying value.

Long-Lived Assets

on a comparison of the undiscounted cash flows to the recorded value of the asset. If an impairment is
indicated, the asset is written down to its estimated fair value based on a discounted cash flow analysis or
market comparable method. Determining the fair value of long-lived assets includes significant judgment
by management, and different judgments could yield different results.

Loss Contingencies

Loss contingencies, including litigation claims, are recorded as liabilities when it is probable that a liability
has been incurred and the amount of the loss is reasonably estimable. Contingent liabilities are often
resolved over long time periods. Estimating probable losses requires analysis that often depends on
judgment about potential actions by third parties.

Incentive Compensation

Determining the amount of expense to recognize for incentive compensation at interim and annual
reporting dates involves management judgment. Expenses accrued for incentive compensation are based
upon expected financial results for the year, and the ultimate determination of incentive compensation is
unable to be made until after year-end results are finalized. Thus, amounts accrued are subject to change
in future interim periods if actual future financial results are higher or lower than expected. In arriving at
the amount of expense to recognize, management believes it makes reasonable judgments using all
significant information available.

Income Taxes

Determining the consolidated provision for income tax expense, income tax liabilities and deferred tax
assets and liabilities involves management judgment. Management estimates an annual effective tax rate
(which takes into consideration expected full-year results), which is applied to the Company’s quarterly
operating results to determine the provision for income tax expense. In the event there is a significant,
unusual or infrequent item recognized in the quarterly operating results, the tax attributable to that item is
recorded in the interim period in which it occurs. In addition, reserves are established for uncertain tax
positions and contingencies. See Note 1 and Note 7 to the accompanying consolidated financial
statements for further information.

Circumstances that could cause CBIZ’s estimates of effective income tax rates to change include the
impact of information that subsequently becomes available as CBIZ prepares its corporate income tax
returns; the level of actual pre-tax income; revisions to tax positions and valuation allowances taken as a
result of further analysis and consultation; the receipt and expected utilization of federal and state income
tax credits; and changes mandated as a result of audits by taxing authorities. Management believes it
makes reasonable judgments using all significant information available when estimating income taxes.

Other Significant Policies

Other significant accounting policies, not involving the same level of management judgment and
uncertainty as those discussed above, are also critical in understanding the consolidated financial
statements. Those policies are described in Note 1 to the accompanying consolidated financial
statements.

New Accounting Pronouncements

In July 2013, the FASB issue Accounting Standards Update (“ASU”) No. 2013-11 (“ASU 2013-11”)
“Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss
Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”. ASU 2013-11 states that an
unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial
statements as a reduction to a deferred tax asset for a net operating loss (“NOL”) carryforward, a similar
tax loss, or a tax credit carryforward. The exception to this treatment is as follows: to the extent an NOL
carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date or if the

entity is not required to use and does not intend to use the deferred tax asset, then the unrecognized tax
benefit should be presented in the financial statements as a liability and should not be combined with
deferred tax assets. ASU 2013-11 will not require any additional recurring disclosures. ASU 2013-11 will
be effective for the reporting periods beginning after December 15, 2013. CBIZ is currently evaluating the
impact of adopting ASU 2013-11, but currently believes there will be no significant impact on its
consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

CBIZ's floating rate debt under its credit facility exposes the Company to interest rate risk. Interest rate
risk results when the maturity or repricing intervals of interest-earning assets and interest-bearing
liabilities are different. A change in the Federal Funds Rate, or the reference rate set by Bank of America,
N.A., would affect the rate at which CBIZ could borrow funds under its credit facility. CBIZ’s balance
outstanding under its credit facility at December 31, 2013 was $48.5 million, of which only $8.5 million is
subject to rate risk as $40.0 million is subject to CBIZ’s interest rate swap. If market rates were to
increase or decrease 100 basis points from the levels at December 31, 2013, interest expense would
increase or decrease approximately $0.1 million annually.

CBIZ does not engage in trading market risk sensitive instruments. CBIZ periodically uses interest rate
swaps to manage interest rate risk exposure. The interest rate swaps effectively modify the Company’s
exposure to interest rate risk, primarily through converting portions of its floating rate debt under the credit
facility to a fixed rate basis. These agreements involve the receipt or payment of floating rate amounts in
exchange for fixed rate interest payments over the life of the agreements without an exchange of the
underlying principal amounts. At December 31, 2013, CBIZ had a total of $40.0 million notional amount of
interest rate swaps, of which $15 million will expire in June 2014 and the remaining $25 million will expire
in June 2015. Management will continue to evaluate the potential use of interest rate swaps as it deems
appropriate under certain operating and market conditions. See Note 5 to the accompanying consolidated
financial statements for further discussion regarding interest rate swaps.

In connection with CBIZ’s payroll business, funds held for clients are segregated and invested in short-
term investments, such as corporate and municipal bonds. In accordance with the Company’s investment
policy, all investments carry an investment grade rating at the time of the initial investment. At each
respective balance sheet date, these investments are adjusted to fair value with fair value adjustments
being recorded to other comprehensive income or loss for the respective period. See Notes 5 and 6 to the
accompanying consolidated financial statements for further discussion regarding these investments and
the related fair value assessments.

Item 8. Financial Statements and Supplementary Data.

The Financial Statements, together with the notes thereto and the reports of KPMG LLP dated March 14,
2014 thereon, and the Supplementary Data required hereunder, are included in this Annual Report as set
forth in Item 15(a) hereof and are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Management has evaluated the effectiveness of the Company’s disclosure controls and procedures
(“Disclosure Controls”) as of the end of the period covered by this report. This evaluation (“Controls
Evaluation”) was done with the participation of CBIZ’s Chairman and Chief Executive Officer (“CEO”) and
Chief Financial Officer (“CFO”). Disclosure Controls are controls and other procedures that are designed
to ensure that information required to be disclosed by the Company in the reports that CBIZ files or
submits under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms. Disclosure Controls include, without limitation, controls
and procedures designed to ensure that information required to be disclosed by CBIZ in the reports that it
files under the Exchange Act is accumulated and communicated to management, including the CEO and
CFO, as appropriate to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Controls

Management, including the Company’s CEO and CFO, does not expect that its Disclosure Controls or its
internal control over financial reporting (“Internal Controls”) will prevent all error and all fraud. Although
CBIZ’s Disclosure Controls are designed to provide reasonable assurance of achieving their objective, a
control system, no matter how well conceived and operated, can provide only reasonable, but not
absolute, assurance that the objectives of a control system are met. Further, any control system reflects
limitations on resources, and the benefits of a control system must be considered relative to its costs.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within CBIZ have been detected. These
inherent limitations include the realities that judgments in decision-making can be faulty and that
breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by
the individual acts of some persons, by collusion of two or more people, or by management override of a
control. A design of a control system is also based upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions; over time, controls may become inadequate because of changes in conditions,
or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent
limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not
be detected.

Conclusions

Based upon the Controls Evaluation, the Company’s CEO and CFO have concluded that as of the end of
the period covered by this report, CBIZ’s Disclosure Controls are effective at the reasonable assurance
level described above.

There were no changes in the Company’s Internal Controls that occurred during the quarter ended
December 31, 2013 that have materially affected, or are reasonably likely to materially affect, CBIZ’s
Internal Controls.

Management’s Report on Internal Control Over Financial Reporting.

The Company’s management is responsible for establishing and maintaining adequate internal control
over financial reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act.
Under the supervision of management, including the Company’s CEO and CFO, CBIZ conducted an
evaluation of its internal control over financial reporting based on the framework provided in Internal
Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (the COSO Framework). Based on this evaluation, the Company’s management
has concluded that CBIZ’s internal control over financial reporting was effective as of December 31, 2013.

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

Item 9B. Other Information.

None.

Item 10. Directors, Executive Officers and Corporate Governance.

PART III

Information with respect to this item not included below is incorporated by reference from CBIZ's
Definitive Proxy Statement for the 2014 Annual Stockholders' Meeting to be filed with the SEC no later
than 120 days after the end of CBIZ's fiscal year.

CBIZ has adopted a Code of Professional Conduct and Ethics Guide that applies to its principal executive
officer, principal financial officer, principal accounting officer or controller, or persons performing similar
functions. CBIZ’s Code of Professional Conduct and Ethics Guide is available on the investor information
page of CBIZ's website, located at http://www.cbiz.com, and in print to any shareholder who requests
them. Any waiver or amendment to the code will be posted on CBIZ’s website.

Executive Officers, Directors and Key Employees of the Registrant:

The following table sets forth certain information regarding the directors, executive officers and certain
key employees of CBIZ. Each executive officer and director of CBIZ named in the following table has
been elected to serve until his successor is duly appointed or elected or until his earlier removal or
resignation from office. No arrangement or understanding exists between any executive officer of CBIZ
and any other person pursuant to which he or she was selected as an officer.

Name

Age

Position(s)

Executive Officers and
Directors:
Steven L. Gerard (1) ...............
Rick L. Burdick (1) ..................
Michael H. DeGroote ..............
Joseph S. DiMartino (3)(4) ......
Richard C. Rochon (2)(3)(4) ....
Todd J. Slotkin (2)(3)(4) ...........
Donald V. Weir (2)(3) ..............
Benaree Pratt Wiley (3)(4) ......
Jerome P. Grisko, Jr. (1) .........
Ware H. Grove .......................
Michael W. Gleespen .............

Other Key Employees:
Chris Spurio ............................
Robert A. O'Byrne ..................
David J. Sibits .........................
Michael P. Kouzelos ...............
George A. Dufour ...................
Mark M. Waxman ...................
Teresa E. Bur .........................
Kelly J. Marek .........................
Andrew K. Dambrosio ............

68
62
53
70
56
60
72
67
52
63
55

48
57
62
45
67
57
49
43
56

Chairman and Chief Executive Officer
Lead Director and Vice Chairman
Director
Director
Director
Director
Director
Director
President and Chief Operating Officer
Senior Vice President and Chief Financial Officer
Secretary and General Counsel

President, Financial Services
President, Employee Services
Senior Vice President, Strategic Development
Senior Vice President, Strategic Initiatives
Senior Vice President and Chief Technology Officer
Senior Vice President and Chief Marketing Officer
Senior Vice President, Human Resources
Treasurer
Controller

(1) Member of Executive Management Committee
(2) Member of Audit Committee
(3) Member of Nominating & Governance Committee
(4) Member of Compensation Committee

Steven L. 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. Mr. Gerard was Chairman and CEO 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 CEO of Triangle Wire & Cable, Inc. and its successor Ocean View Capital,
Inc. Mr. Gerard's prior experience includes 16 years with Citibank, N.A. in various senior corporate

finance and banking positions. Further, Mr. Gerard served seven years with the American Stock
Exchange, where he last served as Vice President of the Securities Division. Mr. Gerard also serves on
the Boards of Directors of Lennar Corporation and Joy Global, Inc.

Rick L. 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. Mr. Burdick has been a partner at the law firm of Akin Gump Strauss Hauer & Feld LLP
since April 1988. Mr. Burdick serves on the Board of Directors of AutoNation, Inc.

Michael H. DeGroote, son of CBIZ founder Michael G. DeGroote, was appointed a Director of CBIZ in
November 2006. Mr. DeGroote currently serves as President of Westbury International, a full-service real
estate development company, specializing in commercial/industrial land, residential development and
property management. Prior to joining Westbury, Mr. DeGroote was Vice President of MGD Holdings and
previously held a management position with Cooper Corporation, and previously served on the Board of
Directors of Progressive Waste Solutions Ltd. He also serves on the Board of Governors of McMaster
University in Hamilton, Ontario.

Joseph S. DiMartino has served as a Director of CBIZ since November 1997, when he was elected as an
independent director. Mr. DiMartino has been Chairman of the Boards of the funds in The Dreyfus Family
of Funds since January 1995. Mr. DiMartino served as President, Chief Operating Officer and Director of
The Dreyfus Corporation from October 1982 until December 1994 and also served as a director of Mellon
Bank Corporation. Mr. DiMartino served on the Boards of SunAir Services Corp., LEVCOR International,
Inc., The Newark Group and the Muscular Dystrophy Association.

Richard C. Rochon has served as a Director of CBIZ since October 1996, when he was elected as an
independent director. Mr. Rochon is Chairman and Chief Executive Officer of Royal Palm Capital
Management, a private investment and management firm that he founded in March 2002. From 1985 to
February 2002 Mr. Rochon served in various capacities with Huizenga Holdings, Inc., a management and
holding company owned by H. Wayne Huizenga, where he last served as President. Mr. Rochon has also
served as a director of Devcon International, a provider of electronic security services, from July 2004
until September 2009. Additionally, Mr. Rochon had been a director of SunAir Services Corp., a provider
of pest-control and lawn care services from February 2005 until December 2009. Mr. Rochon was also a
director of Bancshares of Florida, a full-service commercial bank from 2002 through February 2007. Mr.
Rochon was Chairman and CEO of Coconut Palm Acquisition Corp., a newly organized blank check
company from September 2005 through June 2007. Mr. Rochon was also employed as a certified public
accountant by the public accounting firm of Coopers and Lybrand from 1979 to 1985. Mr. Rochon
received his B.S. in accounting from Binghamton University in 1979 and Certified Public Accounting
designation in 1981.

Todd J. Slotkin has served as a Director of CBIZ since September 2003, when he was elected as an
independent director. Mr. Slotkin is an independent director of the Apollo Closed End Fund Complex
(Apollo Floating Rate Fund, Apollo Tactical Income Fund). In 2011, Mr. Slotkin was appointed the
Managing Partner of Newton Pointe LLC, an advisory firm, a position he also held during the period 2007-
2008. Mr. Slotkin served on the Board of Martha Stewart Living Omnimedia from 2008 to 2012, and was
head of its Audit Committee and Special Committee. Between 2008 and 2010, Mr. Slotkin was a Senior
Managing Director of Irving Place Capital. From 2006 to 2007 Mr. Slotkin served as a Managing Director
of Natixis Capital Markets. From 1992 to 2006, Mr. Slotkin served as a SVP (1992-1998) and EVP and
Chief Financial Officer (1998-2006) of MacAndrews & Forbes Holdings Inc. Additionally, he was the EVP
and CFO of publicly owned M&F Worldwide (1998-2006). Prior to 1992, Mr. Slotkin spent 17 years with
Citigroup, ultimately serving as Senior Managing Director and Senior Credit Officer. Mr. Slotkin is
Chairman, Director and co-founder of the Food Allergy Research & Education, Inc., formerly known as
the Food Allergy Initiative.

Donald V. Weir has served as a Director of CBIZ since September 2003, when he was elected as an
independent director. Mr. Weir is Vice President of Private Equity for Sanders Morris Harris Group Inc.
(“SMHG”) and has been with SMHG for the past thirteen years. Prior to this Mr. Weir was CFO and

director of publicly-held Deeptech International and two of its subsidiaries, Tatham Offshore and
Leviathan Gas Pipeline Company, both of which were publicly-held companies. Prior to his employment
with Deeptech, Mr. Weir worked for eight years with Sugar Bowl Gas Corporation, as Controller and
Treasurer and later in a consulting capacity. Mr. Weir was associated with Price Waterhouse, an
international accounting firm, from 1966 to 1979.

Benaree Pratt Wiley has served as a Director of CBIZ since May 2008, when she was elected as an
independent director. Ms. Wiley is a Principal of The Wiley Group, a firm specializing in personnel
strategy, talent management, and leadership development primarily for global insurance and consulting
firms. Ms. Wiley served as the President and Chief Executive Officer of The Partnership, Inc., a talent
management organization for multicultural professionals in the greater Boston region for fifteen years
before retiring in 2005. Ms. Wiley is currently a director on the boards of The Dreyfus Family of Funds and
Blue Cross and Blue Shield of Massachusetts. Her civic activities include serving on the boards of The
Boston Foundation, the Efficacy Institute, Howard University and Dress for Success Boston.

Jerome P. Grisko, Jr. has served as President and Chief Operating Officer of CBIZ since February 2000.
Mr. 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. Grisko was associated with the law firm of Baker & Hostetler LLP, where he practiced from
September 1987 until September 1998, serving as a partner of such firm from January 1995 to
September 1998. While at Baker & Hostetler, Mr. Grisko concentrated his practice in the area of mergers,
acquisitions and divestitures.

Ware H. Grove has served as Senior Vice President and Chief Financial Officer of CBIZ since December
2000. Before joining CBIZ, Mr. Grove served as Senior Vice President and Chief Financial Officer of
Bridgestreet Accommodations, Inc., which he joined in early 2000 to restructure financing, develop
strategic operating alternatives, and assist with merger negotiations. Prior to joining Bridgestreet, Mr.
Grove served for three years as Vice President and Chief Financial Officer of Lesco, Inc. Since beginning
his career in corporate finance in 1972, Mr. Grove has held various financial positions with large
companies representing a variety of industries, including Revco D.S., Inc., Computerland/Vanstar,
Manville Corporation, The Upjohn Company, and First of America Bank. Mr. Grove served on the Board
of Directors for Applica, Inc. (NYSE: APN) from September 2004 through January 2007, at which time the
company was sold to a private equity firm.

Michael W. Gleespen has served as Corporate Secretary since April 2001 and General Counsel since
June 2001. Mr. Gleespen is an attorney and has served as CBIZ's Vice President of Regulatory
Compliance and Accountancy Compliance Officer and Technical Director since February 1998. Prior to
joining CBIZ, Mr. Gleespen was an Assistant Ohio Attorney General in the Business & Government
Regulation Section and the Court of Claims Defense Section from 1988 until 1998, during which time he
was counsel to the Ohio Accountancy Board, the Ohio State Teachers Retirement System and
represented many other state departments and agencies. Mr. Gleespen also held the post of Associate
Attorney General for Pension, Disability and Annuity Plans and was the Co-Chairman of the Public
Pension Plan Working Group.

Other Key Employees:

Chris Spurio was appointed Senior Vice President of CBIZ and President of CBIZ’s Financial Services
practice group, effective January 1, 2014. Mr. Spurio joined CBIZ in January 1998 and served as
Corporate Controller until July 1999. He then served as Vice President of Finance from July 1999 until
September 2008. Mr. 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. Mr. Spurio was associated with KPMG LLP, an international
accounting firm, from July 1988 to January 1998. Mr. Spurio is a CPA, CGMA and a member of the
American Institute of Certified Public Accountants and the Ohio Society of Certified Public Accountants.

Robert A. O'Byrne has served as Senior Vice President of CBIZ and President of CBIZ’s Employee
Services practice group since December 1998. Mr. O'Byrne served as President and Chief Executive

Officer of employee benefits brokerage/consulting firms Robert D. O'Byrne and Associates, Inc. and The
Grant Nelson Group, Inc. prior to their acquisition by CBIZ in December 1997. Mr. O'Byrne has more than
35 years of experience in the insurance and benefits consulting field.

David J. Sibits was appointed Senior Vice President, Strategic Development of CBIZ’s Financial Services
practice group, effective January 1, 2014. From 2007 through 2013, Mr. Sibits served as President of the
Financial Services Group. Prior to joining CBIZ in May 2007, Mr. Sibits was Executive Managing Director
of RSM McGladrey’s Ohio region from 2005 to 2007. Prior to RSM McGladrey’s acquisition of American
Express Tax and Business Services (“TBS”), he was the Executive Managing Director of the TBS Eastern
Region, which included 35 offices in 13 states. Mr. Sibits was an integral member of the TBS senior
leadership team and worked with his colleagues at RSM McGladrey to ensure a smooth integration with
TBS. Mr. Sibits was also the Managing Shareholder of Hausser & Taylor LLC from 1992 to January 2004.

Michael P. Kouzelos joined CBIZ in June 1998, was appointed Senior Vice President of Strategic
Initiatives in September 2005 and also currently serves as the Chief Operating Officer of the Employee
Services Division. Mr. Kouzelos served 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. Mr. Kouzelos was associated with KPMG LLP, an
international accounting firm, from 1990 to September 1996 and received his Masters in Business
Administration from The Ohio State University in May of 1998.

George A. Dufour was appointed Senior Vice President and Chief Technology Officer in July 2001. Prior
to joining CBIZ, Mr. Dufour served as Corporate Director of Information Access Services for University
Hospitals Health Systems (“UHHS”), where he achieved substantial cost savings by consolidating
information systems resources throughout the health system. Prior to joining UHHS in 1999, Mr. Dufour
served as Vice President and CIO for Akron General Health Systems. From 1986 through 1994, Mr.
Dufour was with Blue Cross/Blue Shield of Ohio (“BCBSO”) and served most recently there as Director of
Information Systems Development. Mr. Dufour also served as Vice President of Management Information
Systems (“MIS”) for Mutual Health Services, a subsidiary of BCBSO. Prior to BCBSO, Mr. Dufour was the
Director of MIS for the Automotive Aftermarket Division of the Sherwin Williams Company. Mr. Dufour
commenced his career in information technology, which includes tenures at Cook United, Cole National
Corporation, General Tire & Rubber, Picker Corporation, and the Institute of Computer Management, a
division of Litton Industries. Mr. Dufour is a member of the northeast Ohio chapter of Society for
Information Management, a member of the Large Agent Roundtable for Technology (LART) and the
National Information Technology Alliance for Professional Services firms. Mr. Dufour is a past board
member and Chairman of the Board of Directors of the Information Technology Alliance, is an advisory
member for the Northeast Ohio CIO Symposium, a member of the Technology Advisory Committee for
the Cleveland Sight Center, a member of the Tri C Economic Development Employer Board and an
advisory member of the Cleveland CIO Forum and Executive IT Summit. Mr. Dufour was awarded the
2007 Northeast Ohio CIO of the Year award from the Northeast Ohio Software Association. Mr. Dufour
earned his MBA from Baldwin Wallace College.

Mark M. Waxman has served as Chief Marketing Officer since 2001. Mr. Waxman has over twenty-five
years experience in marketing and branding. Prior to joining CBIZ, he was CEO/Creative Director of one
of Silicon Valley's most well-known advertising agencies, Carter Waxman. He was also a founding partner
of SK Consulting (acquired by CBIZ in 1998) providing strategic marketing and branding services to a
wide range of companies and industries. Mr. Waxman has been a featured marketing columnist and
contributor to many business and trade publications, and currently serves on the Advisory Board of
several Silicon Valley start ups. He currently serves on the Board of Trustees of Silicon Valley Creates
and the West Valley Mission Foundation, and has served as the Chairman of the Board of for the Silicon
Valley Chamber of Commerce, Artsopolis.com, and The San Jose Repertory Theatre.

Teresa E. Bur served as Vice President of Human Resources since January 1999 and was appointed
Senior Vice President in 2006. From 1995 to 1999 Ms. Bur served as Director of Human Resources for
Robert D. O'Byrne & Associates, Inc. and The Grant Nelson Group, Inc., subsidiaries of CBIZ now known
as CBIZ Employee Services, Inc. Ms. Bur has over 20 years of experience in human resources, is an
active member of the Society of Human Resources Management, and is certified as a Senior

Professional in Human Resources. In addition, Ms. Bur is an Executive Board member of CBIZ Women’s
Advantage.

Kelly J. Marek joined CBIZ in December 1998 and was appointed Corporate Treasurer in April 2005. Mrs.
Marek served as Corporate Controller from July 1999 through March 2005, and as Manager of External
Reporting from December 1998 to June 1999. Prior to joining CBIZ, Mrs. Marek was associated with
KPMG LLP, an international accounting firm, from 1992 to December 1998, serving as a Senior Manager
of such firm from July 1998 to December 1998. Mrs. Marek is a CPA (inactive) and a member of the
American Institute of Certified Public Accountants, the Ohio Society of Certified Public Accountants and
the Association for Financial Professionals. Mrs. Marek held several leadership roles for the Northeastern
Ohio Treasury Management Association (“NEOTMA”) including President, Vice President, and member of
the Board of Trustees from 2010 through 2013.

Andrew K. Dambrosio joined CBIZ in September 2012 as Corporate Controller. Prior to joining CBIZ, Mr.
Dambrosio served as Controller and Executive Director of Financial Planning and Analysis for American
Greetings Corporation’s North American Greeting Card Division from January 2004 through February
2012. Prior to joining American Greetings Corporation, Mr. Dambrosio was Corporate Controller for
LESCO, Inc. from December 2000 through January 2004. Since beginning his career in 1979, Mr.
Dambrosio has held various financial and accounting positions with companies representing a variety of
industries, including American Greetings.COM, Picker International, Inc., Medusa Corporation and
NACCO Industries, Inc. Mr. Dambrosio is a CPA and a member of the American Institute of Certified
Public Accountants and the Ohio Society of Certified Public Accountants.

Item 11. Executive Compensation.

Information with respect to this item is incorporated by reference from CBIZ's Definitive Proxy Statement
for the 2014 Annual Stockholders' Meeting to be filed with the SEC no later than 120 days after the end of
CBIZ's fiscal year.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Information with respect to this item not included below is incorporated by reference from CBIZ’s
Definitive Proxy Statement for the 2014 Annual Stockholders’ Meeting to be filed with the SEC no later
than 120 days after the end of CBIZ’s fiscal year.

The following is a summary of certain agreements and transactions between or among CBIZ and certain
related parties. It is CBIZ's policy to enter into transactions with related parties on terms that, on the
whole, are no less favorable than those that would be available from unaffiliated parties. Based on CBIZ's
experience and the terms of its transactions with unaffiliated parties, it is the Audit Committee of the
Board of Directors' and managements’ belief that the transactions described below met these standards
at the time of the transactions. Management reviews these transactions as they occur and monitors them
for compliance with the Company’s Code of Conduct, internal procedures and applicable legal
requirements. The Audit Committee reviews and ratifies such transactions annually, or as they are more
frequently brought to the attention of the Audit Committee by the Company’s Director of Internal Audit,
General Counsel or other members of management.

A director is considered independent under NYSE rules if the Board of Directors determines that the
director does not have any direct or indirect material relationship with CBIZ. Mr. Gerard is an employee of
CBIZ and therefore has been determined by the Nominating and Governance Committee and the full
Board to fall outside the definition of “independent director”. Rick L. Burdick, Michael H. DeGroote,
Joseph S. DiMartino, Richard C. Rochon, Todd J. Slotkin, Donald V. Weir and Benaree Pratt Wiley are
Non-Employee Directors of CBIZ. The Nominating and Governance Committee and the Board of
Directors have determined that each of Rick L. Burdick, Joseph S. DiMartino, Richard C. Rochon, Todd J.
Slotkin, Donald V. Weir and Benaree Pratt Wiley are “independent directors” within the meaning of the
rules of the NYSE, since they had no material relationship with the Company other than their status and
payment as Non-Employee Directors and as Stockholders. The Nominating and Governance Committee
and the Board of Directors have determined that Mssrs. Rochon, Slotkin and Weir are independent under
the SEC’s audit committee independence standards.

In connection with these independence determinations, the Nominating and Governance Committee and
the Board of Directors considered all of the relationships between each director and CBIZ, and in
particular the following relationships:

 Rick L. Burdick, a Director of CBIZ, is a partner of Akin Gump Strauss Hauer & Feld LLP (“Akin

Gump”). Akin Gump performed legal work for CBIZ during 2013, 2012 and 2011 for which the firm
received approximately $0.4 million, $0.2 million and $0.5 million, respectively, from CBIZ. The
Nominating and Governance Committee and the Board of Directors have determined that
Mr. Burdick should be considered an “independent director” under the meaning of the NYSE
rules, since the amounts paid to the law firm of Akin Gump for legal representation of CBIZ
throughout 2013 were not collectively significant under the NYSE rules governing director
independence.

 The Committee and the Board determined that Michael H. DeGroote should not be considered an
“independent director” under the meaning of the NYSE rules, primarily in light of his relationship
to a significant stockholder of the Company. Mr. DeGroote is the son of Michael G. DeGroote, the
beneficiary of a trust which is the largest single stockholder for the purposes of determining
independence. He is also an officer or director of various privately held companies that obtain
several types of insurance coverage through a CBIZ subsidiary. The commissions paid to CBIZ
were approximately $0.2 million, $0.1 million and $0.1 million for the years ended December 31,
2013, 2012 and 2011, respectively.

 Richard C. Rochon, a Director of CBIZ, is an officer or director of, or holds or controls a significant

but not controlling interest in, various entities which obtained business advisory and tax services
provided by a CBIZ subsidiary. The fees paid to this subsidiary totaled approximately $0.3 million,
$0.3 million and $0.4 million for the years ended December 31, 2013, 2012 and 2011,
respectively. The Nominating and Governance Committee and the Board of Directors determined
that Mr. Rochon should be considered an “independent director” since the amounts paid were not
collectively significant under the NYSE rules governing director independence.

Pursuant to an agreement (the “Westbury Agreement”) entered into on September 14, 2010 by CBIZ with
its largest shareholder at that time, Westbury, a company organized by CBIZ founder Michael G.
DeGroote, CBIZ purchased 7,716,669 shares of CBIZ’s common stock at $6.25 per share for a total cost
of approximately $48.5 million. Pursuant to the Westbury Agreement, CBIZ also purchased an option for
$5.0 million to purchase up to approximately 7.7 million shares of CBIZ’s common stock at a price of
$7.25 per share, which constituted the remaining shares of CBIZ’s common stock held by Westbury. On
August 30, 2013, CBIZ repurchased 3.85 million shares from Westbury, which was 50% of Westbury’s
then current holdings of the Company’s common stock, at a price of $6.65 per share, which represented
the 60-day moving average share price at July 1, 2013. The total cost of this repurchase was $25.7
million. The option to repurchase shares from Westbury expired on September 30, 2013.

A number of the businesses acquired by CBIZ are located in properties that are indirectly owned by
persons employed by CBIZ, none of whom are members of CBIZ’s senior management. In the aggregate,

CBIZ paid approximately $2.1 million, $2.0 million and $2.0 million for the years ended December 31,
2013, 2012 and 2011, respectively, under such leases which management believes were at market rates.

CBIZ maintains joint-referral relationships and ASAs with independent licensed CPA firms under which
CBIZ provides administrative services in exchange for a fee. These firms are owned by licensed CPAs
who are employed by CBIZ subsidiaries and provide audit and attest services to clients including CBIZ’s
clients. The CPA firms with which CBIZ maintains administrative service agreements operate as limited
liability companies or professional corporations. The firms are separate legal entities with separate
governing bodies and officers. CBIZ has no ownership interest in any of these CPA firms, and neither the
existence of the ASAs nor the providing of services there under is intended to constitute control of the
CPA firms by CBIZ. CBIZ and the CPA firms maintain their own respective liability and risk of loss in
connection with performance of each of its respective services, and CBIZ does not believe that its
arrangements with these CPA firms should result in additional risk of loss.

CBIZ acted as guarantor for letters of credit for a CPA firm with which it has an affiliation. The letters of
credit totaled $1.9 million as of December 31, 2013 and 2012. CBIZ has recognized a liability for the fair
value of the obligations undertaken in issuing these guarantees, which is recorded as other current
liabilities in the accompanying consolidated financial statements. Management does not expect any
material changes to result from these instruments as performance is not expected to be required.

Item 14. Principal Accounting Fees and Services.

Item 15. Exhibits, Financial Statement Schedules.

PART IV

(a) The following documents are filed as part of this Annual Report or incorporated by reference:

Financial Statements.

As to financial statements and supplementary information, reference is made to "Index to
Financial Statements" on page F-1 of this Annual Report.

Financial Statement Schedules.

As to financial statement schedules, reference is made to "Index to Financial Statements" on
page F-1 of this Annual Report.

Exhibits.

The following documents are filed as exhibits to this Form 10-K pursuant to Item 601 of
Regulation S-K. Since its incorporation, CBIZ has operated under various names including:
Republic Environmental Systems, Inc.; International Alliance Services, Inc.; Century Business
Services, Inc.; and CBIZ, Inc. Exhibits listed below refer to these names collectively as “the
Company”.

Exhibit
No.

2.1

2.2

3.1

3.2

3.3

3.4

3.5

3.6

Description

Purchase Agreement, dated November 24, 2008, among CBIZ, Inc., CBIZ Accounting Tax &
Advisory of New York, LLC, Mahoney Cohen & Company, CPA, P.C., Mahoney Cohen
Consulting Corp., Mahoney Cohen Family Office Services LLC and the members of Mahoney
Cohen Family Office Services LLC (filed as Exhibit 2.1 to the Company’s Report on Form 8-K,
File No. 001-32961, dated November 25, 2008, and incorporated herein by reference).

Stock Purchase Agreement dated July 26, 2013, among CBIZ Operations, Inc. and Zotec
Partners, LLC (filed as Exhibit 2.1 to the Company’s Report on Form 8-K, File No. 001-32961,
dated August 1, 2013, and incorporated herein by reference).

Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the
Company’s Registration Statement on Form 10, File No. 0-25890, and incorporated herein by
reference).

Certificate of Amendment of the Certificate of Incorporation of the Company dated October 17,
1996 (filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended
December 31, 1996, File No. 000-25890, dated March 31, 1997, and incorporated herein by
reference).

Certificate of Amendment to the Certificate of Incorporation of the Company effective
December 23, 1997 (filed as Exhibit 3.3 to the Company’s Annual Report on Form 10-K for the
year ended December 31, 1997, File No. 000-25890, dated February 18, 1998, and
incorporated herein by reference).

Certificate of Amendment of the Certificate of Incorporation of the Company dated
September 10, 1998 (filed as Exhibit 3.4 to the Company’s Annual Report on Form 10-K for
the year ended December 31, 1998, File No. 000-25890, dated March 4, 1999, and
incorporated herein by reference).

Certificate of Amendment of the Certificate of Incorporation of the
Company, effective August 1, 2005 (filed as Exhibit 3.5 to the Company’s Annual Report on
Form 10-K for the year ended December 31, 2005, File No. 000-25890, dated March 16, 2006,
and incorporated herein by reference).

Amended and Restated Bylaws of the Company (filed as Exhibit 3.2 to the Company’s
Registration Statement on Form 10, File No. 000-25890, and incorporated herein by
reference).

3.7

4.1

4.2

4.3

4.4

4.5

10.1†

10.2†

10.3†

10.4†

10.5†

10.6

10.7

10.8

10.9

Amendment to Amended and Restated Bylaws of the Company dated November 1, 2007 (filed
as Exhibit 3.1 to the Company’s Report on Form 8-K, File No. 001-32961, dated November 1,
2007, and incorporated herein by reference).

Form of Stock Certificate of Common Stock of the Company (filed as Exhibit 4.1 to the
Company’s Annual Report Form 10-K for the year ended December 31, 1998, File No. 000-
25890, dated March 4, 1999, and incorporated herein by reference).

Employee Stock Investment Plan (filed as Exhibit 4.4 to the Company’s Report on Form S-8,
File No. 000-333-62148, dated June 1, 2001, and incorporated herein by reference).

Indenture, dated as of May 30, 2006, between CBIZ, Inc. and U.S. Bank National Association
as Trustee (filed as Exhibit 4.1 to the Company’s Report on Form 8-K, File No. 000-25890,
dated May 30, 2006, and incorporated herein by reference).

Registration Rights Agreement, dated as of May 30, 2006, between CBIZ, Inc. and Banc of
America Securities, LLC (filed as Exhibit 4.2 to the Company’s Report on Form 8-K, File No.
000-25890, dated May 30, 2006, and incorporated herein by reference).

Indenture, dated as of September 27, 2010, between CBIZ, Inc. and U.S. Bank National
Association as Trustee (filed as Exhibit 4.1 to the Company’s Report on Form 8-K, File No.
0001-32961, dated September 27, 2010, and incorporated herein by reference).

2002 Stock Incentive Plan (filed as Appendix A to the Company’s Proxy Statement for the
2002 Annual Meeting of Stockholders, File No. 000-25890, dated April 1, 2002, and
incorporated herein by reference).

Severance Protection Agreement by and between the Company and Jerome P. Grisko, Jr.
(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).

Employment Agreement by and between the Company and Ware H. Grove (filed as Exhibit
10.14 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).

First Amended and Restated Employment Agreement by and between the Company and
Steven L. Gerard dated March 22, 2007 (filed as Exhibit 99.1 to the Company’s Report on
Form 8-K, File No. 001-32961, dated March 23, 2007, and incorporated herein by reference).

Employment Agreement by and between the Company and David J. Sibits, dated April 17,
2007 (filed as Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2007, File No. 001-32961, dated March 17, 2008, and incorporated herein by
reference).

Credit agreement dated as of June 4, 2010 by and among CBIZ, Inc., Bank of America, N.A., as
agent, lender, issuing band and swing line bank, and the other financial institutions from time to time
party to the Credit Agreement (filed as Exhibit 10.1 to the Company’s Report on Form 8-K, File No.
001-32961, dated June 10, 2010, and incorporated herein by reference).

Stock and Option Purchase Agreement dated September 14, 2010, by and among Westbury
(Bermuda) Ltd., Westbury Trust, Michael G. DeGroote, and CBIZ, Inc. (filed as Exhibit 10.1 to the
Company’s Report on Form 8-K, File No. 001-32961, dated September 17, 2010, and incorporated
herein by reference).

First Amendment to Credit Agreement, dated as of September 14, 2010, by and among CBIZ, Inc.,
the Guarantors (as defined in the Credit Agreement), the several financial institutions from time to
time party thereto, and Bank of America, N.A., as administrative agent (filed as Exhibit 10.2 to the
Company’s Report on Form 8-K, File No. 001-32961, dated September 17, 2010, and incorporated
herein by reference).

Purchase Agreement, dated as of September 21, 2010, between CBIZ, Inc. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as representative of the initial purchasers named in Schedule A thereto
(filed as Exhibit 10.1 to the Company’s Report on Form 8-K, File No. 001-32961, dated
September 27, 2010, and incorporated herein by reference).

10.10†

Amended Employment Agreement by and between the Company and Ware H. Grove, dated
November 22, 2010 (filed as Exhibit 99.1 to the Company’s Report on Form 8-K, File No. 001-
32961, dated November 24, 2010, and incorporated herein by reference).

10.11

10.12†

10.13

Second Amendment to the Credit Agreement, dated as of April 11, 2011, by and among CBIZ,
Inc., Bank of America, N.A., as administrative agent, and the other financial institutions from
time to time party to the Credit Agreement (filed as Exhibit 10.1 to the Company’s Report on
Form 8-K, File No. 001-32961, dated April 13, 2011, and incorporated herein by reference).

CBIZ, Inc. 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. 001-
32961, dated August 9, 2011, and incorporated herein by reference).

Third Amendment to the Credit Agreement, dated as of August 30, 2012, by and among CBIZ,
Inc., the Guarantors (as defined in the Credit Agreement), the several financial institutions from
time to time party thereto, and Bank of America, N.A., as administrative agent (filed as Exhibit
10.1 to the Company’s Report on Form 8-K, File No. 001-32961, filed with the SEC on
September 4, 2012, and incorporated herein by reference).

10.14

Stock Purchase Agreement, dated July 26, 2013, among CBIZ, Inc., Westbury (Bermuda) Ltd.,
Westbury Trust, and Michael G. DeGroote (filed as Exhibit 10.1 to the Company’s Report on
Form 8-K, File No. 001-32961, dated August 1, 2013, and incorporated herein by reference).

21.1*

List of Subsidiaries of CBIZ, Inc.

23*

24*

31.1*

31.2*

32.1**

32.2**

101*

Consent of KPMG LLP

Powers of attorney (included on the signature page hereto).

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002

Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002

Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002

The following materials from CBIZ, Inc.’s Annual Report on Form 10-K for the year ended
December 31, 2013, formatted in XBRL (eXtensible Business Reporting Language); (i)
Consolidated Statements of Comprehensive Income for the years ended December 31, 2013,
2012 and 2011, (ii) Consolidated Balance Sheets at December 31, 2013 and 2012, (iii)
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and
2011, (iv) Consolidated Statements of Stockholders’ Equity for the years ended December 31,
2013, 2012 and 2011, and (v) Notes to the Consolidated Financial Statements.

Indicates documents filed herewith.

Indicates documents furnished herewith.

† Management contract or compensatory plan contract or arrangement filed pursuant to Item 601 of
Regulation S-K.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly
authorized.

CBIZ, INC.
(REGISTRANT)

By /s/ WARE H. GROVE
Ware H. Grove

Chief Financial Officer

March 14, 2014

KNOW ALL MEN AND WOMEN BY THESE PRESENTS that each person whose signature appears
below on this Annual Report hereby constitutes and appoints Steven L. Gerard and Ware H. Grove, and
each of them, with full power to act without the other, his true and lawful attorney-in-fact and agent, with
full power of substitution for him and her and his and her name, place and stead, in all capacities (until
revoked in writing), to sign any and all amendments to this Annual Report of CBIZ, Inc. and to file the
same, with all exhibits thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto each attorney-in-fact and agent, full power and authority to do and
perform each and every act and thing requisite and necessary fully to all intents and purposes as he
might or could do in person, thereby ratifying and confirming all that each attorney-in-fact and agent, or
their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the date
indicated above.

/s/ STEVEN L. GERARD
Steven L. Gerard
Chairman and Chief Executive Officer
(Principal Executive Officer)

/s/ WARE H. GROVE
Ware H. Grove
Chief Financial Officer
(Principal Financial and Accounting
Officer)

/s/ RICK L. BURDICK
Rick L. Burdick
Director

/s/ MICHAEL H. DEGROOTE
Michael H. DeGroote
Director

/s/ JOSEPH S. DIMARTINO
Joseph S. DiMartino
Director

/s/ RICHARD C. ROCHON
Richard C. Rochon
Director

/s/ TODD SLOTKIN
Todd Slotkin
Director

/s/ DONALD V. WEIR
Donald V. Weir
Director

/s/ BENAREE PRATT WILEY
Benaree Pratt Wiley
Director

CBIZ, INC. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

Page

Reports of Independent Registered Public Accounting Firm ..............................

F-2 - F-3

Consolidated Balance Sheets as of December 31, 2013 and 2012 ...................

F-4

Consolidated Statements of Comprehensive Income for the years ended
December 31, 2013, 2012 and 2011..............................................................

Consolidated Statements of Stockholders' Equity for the years ended
December 31, 2013, 2012 and 2011..............................................................

Consolidated Statements of Cash Flows for the years ended
December 31, 2013, 2012 and 2011..............................................................

Notes to the Consolidated Financial Statements ................................................

F-5

F-6

F-7

F-8

Schedule II — Valuation and Qualifying Accounts and Reserves for the
years ended December 31, 2013, 2012 and 2011.........................................

F-50

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
CBIZ, Inc.:

We have audited CBIZ, Inc.’s (the Company) internal control over financial reporting as of
December 31, 2013, based on criteria established in Internal Control – Integrated Framework (1992)
issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s
management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control Over Financial Reporting included in Item
9A. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained
in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk. Our audit also included
performing such other procedures as we considered necessary in the circumstances. We believe that
our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2013, based on criteria established in Internal Control –
Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway
Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of CBIZ, Inc. and subsidiaries as of
December 31, 2013 and 2012, and the related consolidated statements of comprehensive income,
stockholders’ equity, and cash flows for each of the years in the three-year period ended
December 31, 2013, and our report dated March 14, 2014 expressed an unqualified opinion on those
consolidated financial statements.

/s/ KPMG LLP
Cleveland, Ohio
March 14, 2014

F-2

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
CBIZ, Inc.:

We have audited the accompanying consolidated balance sheets of CBIZ, Inc. and subsidiaries (the
Company) as of December 31, 2013 and 2012, and the related consolidated statements of
comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year
period ended December 31, 2013 as listed in the accompanying index on page F-1. In connection with
our audits of the consolidated financial statements, we have also audited the financial statement
schedule listed in the accompanying index on page F-1. These consolidated financial statements and
financial statement schedule are the responsibility of the Company’s management. Our responsibility
is to express an opinion on these consolidated financial statements and financial statement schedule
based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of the Company as of December 31, 2013 and 2012, and the results of
its operations and its cash flows for each of the years in the three-year period ended December 31,
2013, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial statements taken as a
whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the Company’s internal control over financial reporting as of December 31,
2013, based on criteria established in Internal Control – Integrated Framework (1992) issued by the
Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March
14, 2014 expressed an unqualified opinion on the effectiveness of the Company’s internal control over
financial reporting.

/s/ KPMG LLP
Cleveland, Ohio
March 14, 2014

F-3

CBIZ, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2013 AND 2012
(In thousands, except per share data)

ASSETS

Current assets:
Cash and cash equivalents ...................................................... $
Restricted cash .........................................................................
Accounts receivable, net ..........................................................
Deferred income taxes – current, net .......................................
Other current assets .................................................................
Assets of discontinued operations ............................................
Current assets before funds held for clients........................
Funds held for clients .................................................................
Total current assets .............................................................
Property and equipment, net ......................................................
Goodwill and other intangible assets, net...................................
Assets of deferred compensation plan .......................................
Deferred income taxes – non-current, net..................................
Other assets ...............................................................................
Total assets ......................................................................... $

LIABILITIES

Current liabilities:
Accounts payable ..................................................................... $
Income taxes payable ...............................................................
Accrued personnel costs ..........................................................
Notes payable – current ...........................................................
Contingent purchase price liability – current ............................
Other current liabilities..............................................................
Liabilities of discontinued operations ........................................
Current liabilities before client fund obligations...................
Client fund obligations ..............................................................
Total current liabilities ..........................................................
Convertible notes, net .................................................................
Bank debt ...................................................................................
Income taxes payable – non-current ..........................................
Deferred compensation plan obligations .......................................
Contingent purchase price liability – non-current .......................
Other non-current liabilities.........................................................
Total liabilities ......................................................................

STOCKHOLDERS' EQUITY

Common stock, par value $0.01 per share; shares
authorized 250,000; shares issued 114,957 and
112,374; shares outstanding 48,964 and 50,365..................
Additional paid-in capital .............................................................
Retained earnings ......................................................................
Treasury stock, 65,993 and 62,009 shares ................................
Accumulated other comprehensive loss.....................................
Total stockholders' equity ....................................................
Total liabilities and stockholders' equity .............................. $

2013

2012

(As Adjusted)

771
22,112
143,107
4,640
14,364
1,092
186,086
164,389
350,475
19,167
469,083
51,953
542
6,238
897,458

37,529
25
38,568
1,602
12,243
12,766
370
103,103
164,311
267,414
125,256
48,500
6,154
51,953
12,953
10,782
523,012

899
19,627
134,979
7,862
10,934
105,126
279,427
154,447
433,874
17,783
469,571
39,779
621
8,563
970,191

35,384
1,372
34,855
5,464
12,844
14,880
14,181
118,980
154,119
273,099
122,416
208,900
4,009
39,779
17,168
9,588
674,959

1,149
580,576
190,994
(397,548)
(725)
374,446
897,458

1,124
560,810
105,131
(371,080)
(753)
295,232
970,191

See the accompanying notes to the consolidated financial statements
F-4

CBIZ, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(In thousands, except per share data)

Revenue .......................................................................... $
Operating expenses ........................................................
Gross margin ...................................................................
Corporate general and administrative expenses.............
Operating income ............................................................

Other income (expense):
Interest expense .........................................................
Gain on sale of operations, net ..................................
Other income, net .......................................................
Total other expense, net ........................................

Income from continuing operations before income tax
expense ......................................................................
Income tax expense ........................................................
Income from continuing operations .................................

Income from operations of discontinued operations,
net of tax .....................................................................
Gain on disposal of discontinued operations,
net of tax .....................................................................
Net income ...................................................................... $

Earnings per share:
Basic:
Continuing operations ................................................. $
Discontinued operations .............................................
Net income ................................................................. $

Diluted:
Continuing operations ................................................. $
Discontinued operations .............................................
Net income ................................................................. $
Basic weighted average common shares outstanding....
Diluted weighted average common shares outstanding .

Comprehensive income:
Net income ...................................................................... $
Other comprehensive income:
Net unrealized (loss) gain on available-for-sale
securities, net of income taxes ....................................
Net unrealized gain (loss) on interest rate swaps,
net of income taxes .....................................................
Foreign currency translation ..........................................
Total other comprehensive income .................................
Total comprehensive income .......................................... $

2013
692,033
608,730
83,303
34,398
48,905

(15,374)
79
7,817
(7,478)

41,427
16,438
24,989

2,538

58,336
85,863

0.51
1.26
1.77

0.51
1.24
1.75
48,632
49,141

2012

2011

$ 626,538
555,486
71,052
30,210
40,842

$ 591,270
518,528
72,742
31,533
41,209

(14,999)
2,766
8,214
(4,019)

(16,047)
2,920
3,201
(9,926)

36,823
14,071
22,752

8,304

90
31,146

0.46
0.17
0.63

0.46
0.17
0.63
49,002
49,252

31,283
12,144
19,139

8,854

14
28,007

0.39
0.18
0.57

0.39
0.17
0.56
49,328
49,599

85,863

31,146

28,007

(142)

181

638

230
(60)
28
85,891

(93)
(62)
26
31,172

(412)
(65)
161
28,168

See the accompanying notes to the consolidated financial statements
F-5

CBIZ, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(In thousands)

Issued
Common
Shares

Common
Stock

Additional
Paid-In
Capital

Retained
Earnings

Treasury
Shares

Treasury
Stock

Accumulated
Other
Comprehensive
Loss

Totals

December 31, 2010 ....................................

109,626

$ 1,096

$ 539,389

$ 45,978

59,578

$(355,851)

$ (940)

$229,672

Net income ..................................................
Other comprehensive income ......................
Share repurchases ......................................
Restricted stock ...........................................
Stock options exercised ...............................
Share-based compensation .........................
Tax benefit from employee share plans .......
Business acquisitions ..................................

—

—
483
220
—
—
731

—

—
6
2
—
—
7

—

28,007

—

—
(6)
766
5,954
76
5,026

—
—
—
—
—
—

1,446
—
—
—
—
—

—

(9,513)
—
—
—
—
—

—
161
—
—
—
—
—
—

28,007
161
(9,513)
—
768
5,954
76
5,033

December 31, 2011 .....................................

111,060

$ 1,111

$ 551,205

$ 73,985

61,024

$(365,364)

$ (779)

$260,158

Net income ..................................................
Other comprehensive income ......................
Share repurchases ......................................
Restricted stock ...........................................
Share-based compensation .........................
Tax expense from employee share plans ....
Business acquisitions ..................................

—

—
489
—
—
825

—

—
5
—
—
8

—

31,146

—
(5)
5,888
(1,057)
4,779

—
—
—
—
—

—

985
—
—
—
—

—

(5,716)
—
—
—
—

—
26
—
—
—
—
—

31,146
26
(5,716)
—
5,888
(1,057)
4,787

December 31, 2012 .....................................

112,374

$ 1,124

$ 560,810

$105,131

62,009

$(371,080)

$ (753)

$295,232

Net income ..................................................
Other comprehensive income ......................
Share repurchases ......................................
Restricted stock ...........................................
Stock options exercised ...............................
Share-based compensation .........................
Tax expense from employee share plans ....
Business acquisitions ..................................

—

—
438
1,846
—
—
299

—

—
4
18
—
—
3

—

85,863

—

—
(4)
13,958
5,655
(1,913)
2,070

—
—
—
—
—
—

3,984
—
—
—
—
—

—

(26,468)
—
—
—
—
—

—
28
—
—
—
—
—
—

85,863
28
(26,468)
—
13,976
5,655
(1,913)
2,073

December 31, 2013 .....................................

114,957

$1,149

$580,576

$190,994

65,993

$(397,548)

$(725)

$374,446

See the accompanying notes to the consolidated financial statements
F-6

CBIZ, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(In thousands)

Cash flows from operating activities:
Net income ......................................................................................... $
Adjustments to reconcile net income to net cash (used in) provided
by operating activities:
Gain from discontinued operations activities, net of tax ..................
Gain on sale of operations, net ........................................................
Depreciation and amortization expense ..........................................
Amortization of discount on notes and deferred financing costs.....
Amortization of discount on contingent earnout liability ..................
Provision for credit losses and bad debt, net of recoveries.............
Adjustment to contingent earnout liability ........................................
Deferred income taxes .....................................................................
Employee stock awards ...................................................................
Excess tax benefits from share based payment arrangements
Changes in assets and liabilities, net of acquisitions and
divestitures:
Restricted cash ................................................................................
Accounts receivable, net ..................................................................
Other assets.....................................................................................
Accounts payable ............................................................................
Income taxes payable ......................................................................
Accrued personnel costs .................................................................
Other liabilities .................................................................................
Net cash provided by continuing operations .....................................
Operating cash flows (used in) provided by
discontinued operations ................................................................
Net cash (used in) provided by operating activities...................

Cash flows from investing activities:
Business acquisitions and contingent consideration, net of
cash acquired .................................................................................
Purchases of client fund investments ................................................
Proceeds from the sales and maturities of client fund investments ..
Proceeds on sales of divested and discontinued operations ............
Increase in funds held for clients .......................................................
Additions to property and equipment, net ..........................................
Payments on notes receivable, net ...................................................
Other ..................................................................................................
Net cash provided by (used in) continuing operations .................
Investing cash flows used in discontinued operations .................
Net cash provided by (used in) investing activities....................

Cash flows from financing activities:
Proceeds from bank debt ...................................................................
Payment of bank debt ........................................................................
Repurchase of convertible notes .......................................................
Payment for acquisition of treasury stock ..........................................
Increase in client funds obligations ....................................................
Payment of contingent consideration of acquisitions ........................
Proceeds from exercise of stock options ...........................................
Payment of notes payable .................................................................
Deferred financing costs ....................................................................
Excess tax benefit from exercise of stock awards.............................
Net cash (used in) provided by financing activities ...................
Net (decrease) increase in cash and cash equivalents.....................
Cash and cash equivalents at beginning of year...............................
Cash and cash equivalents at end of year ........................................ $

2013

2012

2011

85,863

31,146

28,007

(60,874)
(79)
18,884
4,568
106
4,430
1,102
(416)
5,655
(53)

(2,507)
(11,116)
(3,113)
1,174
(273)
3,447
(5,312)
41,486

(43,004)
(1,518)

(9,747)
(5,650)
4,896
200,934
(9,438)
(6,208)
515
(10)
175,292
(300)
174,992

312,400
(472,800)
–
(26,468)
10,192
(10,361)
13,976
(594)
–
53
(173,602)
(128)
899
771

(8,394)
(2,766)
16,734
4,227
181
5,117
(1,135)
(1,376)
5,888
–

518
(15,431)
(5,982)
4,407
4,786
5,045
(3,433)
39,532

14,516
54,048

(88,260)
(5,742)
6,926
1,540
(6,256)
(2,442)
(3,384)
(22)
(97,640)
(6,675)
(104,315)

549,450
(485,550)
–
(5,716)
5,126
(13,183)
–
–
(574)
–
49,553
(714)
1,613
899

(8,868)
(2,920)
15,326
4,820
186
6,572
(3,479)
(2,225)
5,954
(171)

333
(1,865)
187
3,419
(1,176)
(108)
(1,223)
42,769

15,405
58,174

(27,443)
(19,643)
11,507
1,036
(16,734)
(3,897)
58
(22)
(55,138)
(434)
(55,572)

484,150
(458,050)
(39,250)
(9,513)
22,438
(1,824)
768
–
(603)
171
(1,713)
889
724
1,613

See the accompanying notes to the consolidated financial statements
F-7

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

Organization

CBIZ, Inc. is a diversified services company which, acting through its subsidiaries, provides
professional business services primarily to small and medium-sized businesses, as well as
individuals, governmental entities, and not-for-profit enterprises throughout the United States and
parts of Canada. CBIZ Inc. manages and reports its operations along three practice groups:
Financial Services, Employee Services and National Practices. A further description of products and
services offered by each of the practice groups is provided in Note 22.

Divestiture of Medical Management Professionals

On July 26, 2013, CBIZ, Inc., through its subsidiary CBIZ Operations, Inc., an Ohio Corporation,
entered into an agreement with Zotec Partners, LLC, an Indiana limited liability company, to sell all
of the issued and outstanding capital stock of each of CBIZ Medical Management Professionals,
Inc., an Ohio corporation, and CBIZ Medical Management, Inc., a North Carolina corporation, and
substantially all of the stock of their subsidiary companies, collectively consisting of all of CBIZ Inc.’s
Medical Management Professionals ongoing operations and business (“MMP”). The sale of MMP
was completed on August 30, 2013 for a total purchase price of $201.6 million, subject to final
working capital adjustments. As a result of the completion of the divestiture of MMP, the assets and
liabilities as well as the operations of MMP are reflected as discontinued operations on this Form
10-K. See Note 20 for further discussion of discontinued operations and divestitures.

Stock Purchase Agreement with Westbury Ltd.

On August 30, 2013, concurrent with the sale of MMP, CBIZ Inc. completed an agreement with
Westbury (Bermuda) Ltd., a Bermuda exempted company (“Westbury”), Westbury Trust, a Bermuda
trust, and Michael G. DeGroote, the founder of CBIZ, Inc., to purchase from Westbury 3.85 million
shares of the Company’s common stock, which was 50% of Westbury’s current holdings of the
Company’s common stock, at a price of $6.65 per share for a total of approximately $25.7 million.
See Note 14 for further discussion regarding CBIZ’s common stock.

Principles of Consolidation

The accompanying consolidated financial statements reflect the operations of CBIZ, Inc. and all of
its wholly-owned subsidiaries (“CBIZ” or the “Company”). All intercompany accounts and
transactions have been eliminated in consolidation.

CBIZ has determined that its relationship with certain Certified Public Accounting (“CPA”) firms with
whom it maintains administrative service agreements (“ASAs”) qualify as variable interest entities.
The accompanying consolidated financial statements do not reflect the operations or accounts of
variable interest entities as the impact is not material to the consolidated financial condition, results
of operations or cash flows of CBIZ.

The CPA firms with which CBIZ maintains ASAs may operate as limited liability companies or
professional corporations. The firms are separate legal entities with separate governing bodies and
officers. CBIZ has no ownership interest in any of these CPA firms, and neither the existence of the
ASAs nor the providing of services thereunder is intended to constitute control of the CPA firms by
CBIZ. CBIZ and the CPA firms maintain their own respective liability and risk of loss in connection
with performance of each of their respective services.

Fees earned by CBIZ under the ASAs are recorded as revenue (at net realizable value) in the
consolidated statements of comprehensive income and were approximately $140.2 million, $116.1
million and $109.1 million for the years ended December 31, 2013, 2012 and 2011, respectively, the
majority of which was related to services rendered to privately-held clients. In the event that

F-8

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

accounts receivable and unbilled work in process become uncollectible by the CPA firms, the
service fee due to CBIZ is typically reduced on a proportional basis. Although the ASAs do not
constitute control, CBIZ is one of the beneficiaries of the agreements and may bear certain
economic risks.

Use of Estimates

The preparation of consolidated financial statements in conformity with United States generally
accepted accounting principles (“GAAP”) requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.
Management’s estimates and assumptions include, but are not limited to, estimates of collectability
of accounts receivable and unbilled revenue, the realizability of goodwill and other intangible assets,
the fair value of certain assets, the valuation of stock options in determining compensation expense,
estimates of accrued liabilities (such as incentive compensation, self-funded health insurance
accruals, legal reserves, income tax uncertainties, future contingent purchase price obligations, and
consolidation and integration reserves), the provision for income taxes, the realizability of deferred
tax assets and other factors. Management’s estimates and assumptions are derived from and are
continually evaluated based upon available information, judgment and experience. Actual results
could differ from those estimates.

Reclassifications

Certain amounts in the 2012 and 2011 consolidated financial statements and disclosures have been
reclassified to conform to the current year presentation, including the impact of discontinued
operations.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and short-term highly liquid investments with an
original maturity of three months or less at the date of purchase.

Restricted Cash

Funds held by CBIZ in relation to its capital and investment advisory services are recorded in
restricted cash as those funds are restricted in accordance with applicable Financial Industry
Regulatory Authority regulations. Funds on deposit from clients in connection with the pass-through
of insurance premiums to the carrier are also recorded in restricted cash; the related liability for
these funds is recorded in accounts payable. Funds held in escrow related to sales of operations
are also classified as restricted cash.

Funds Held for Clients and Client Fund Obligations

Services provided by CBIZ’s payroll operations include the preparation of payroll checks, federal,
state, and local payroll tax returns, and flexible spending account administration. In relation to these
services, as well as other similar service offerings, CBIZ collects funds from its clients’ accounts in
advance of paying client obligations. Funds that are collected before they are due are segregated
and reported separately as “Funds Held for Clients” in the consolidated balance sheets. Other than
certain federal and state regulations pertaining to flexible spending account administration, there are
no regulatory or other contractual restrictions placed on these funds.

Funds Held for Clients are reported as current assets and Client Fund Obligations are reported as
current liabilities. Funds Held for Clients include cash, overnight investments and corporate and
municipal bonds (see Note 5 for further discussion of investments). If the par value of investments
held does not approximate fair value, the balance in Funds Held for Clients may not be equal to the
balance in Client Fund Obligations. The amount of collected but not yet remitted funds may vary
significantly during the year based on the timing of clients’ payroll periods.

F-9

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Derivative Instruments and Hedging Activities

Derivatives are recognized as either assets or liabilities in the consolidated balance sheets and are
measured at fair value. The treatment of gains and losses resulting from changes in the fair values
of derivative instruments is dependent on the use of the respective derivative instruments and
whether they qualify for hedge accounting. See Note 5 for further discussion of derivative
instruments.

Accounts Receivable and Allowance for Doubtful Accounts

CBIZ carries accounts receivable at their face amount less allowances for doubtful accounts, and
carries unbilled revenues at estimated net realizable value. Assessing the collectability of
receivables (billed and unbilled) requires management judgment. When evaluating the adequacy of
the allowance for doubtful accounts and the overall collectability of receivables, CBIZ analyzes
historical bad debts, client credit-worthiness, the age of accounts receivable and current economic
trends and conditions.

Goodwill

CBIZ utilizes the acquisition method of accounting for all business combinations. Goodwill is not
amortized, but rather is tested for impairment annually, or in between annual tests if an event occurs
or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit
below its carrying value. CBIZ tests for impairment of its goodwill during the fourth quarter of each
calendar year. See Note 4 for additional discussion regarding goodwill impairment testing.

Long-Lived Assets

Long-lived assets primarily consist of property and equipment and intangible assets, which include
client lists and non-compete agreements. The intangible assets are amortized over their expected
periods of benefit, which generally ranges from two to fifteen years. Long-lived assets are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying value of
such assets or groups of assets may not be recoverable. Recoverability of long-lived assets or
groups of assets is assessed based on a comparison of the undiscounted cash flows to the
recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair
value based on a discounted cash flow analysis or market comparable method. Determining the fair
value of long-lived assets includes significant judgment by management, and different judgments
could yield different results.

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation and amortization.
Depreciation and amortization are provided on a straight-line basis over the following estimated
useful lives:

Buildings ................................................... 25 to 40 years
Furniture and fixtures ................................ 5 to 10 years
Capitalized software ................................. 2 to 7 years
Equipment ................................................ 3 to 7 years

Leasehold improvements are amortized over the shorter of their estimated useful lives or the
remaining term of the respective lease. The cost of software purchased or developed for internal
use is capitalized and amortized to expense using the straight-line method over an estimated useful
life not to exceed seven years. Capitalized software is classified as “property and equipment, net” in
the consolidated balance sheets.

F-10

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the consolidated financial
statements and consist of taxes currently payable and deferred taxes. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their respective tax basis,
and operating losses and tax credit carryforwards. State income tax credits are accounted for using
the flow-through method.

A valuation allowance is provided when it is more-likely-than-not that some portion of a deferred tax
asset will not be realized. CBIZ determines valuation allowances based on all available evidence.
Such evidence includes historical results, the reversal of deferred tax liabilities, expectations of
future consolidated and/or separate company profitability and the feasibility of tax-planning
strategies. Determining valuation allowances includes significant judgment by management, and
different judgments could yield different results.

Accounting for uncertain tax positions requires a more-likely-than-not threshold for recognition in the
consolidated financial statements. The Company recognizes a tax benefit based on whether it is
more-likely-than-not that a tax position will be sustained. The Company records a liability to the
extent that a tax position taken or expected to be taken on a tax return exceeds the amount
recognized in the consolidated financial statements.

Revenue Recognition and Valuation of Unbilled Revenues

Revenue is recognized only when all of the following are present: persuasive evidence of an
arrangement exists, delivery has occurred or services have been rendered, the fee to the client is
fixed or determinable, and collectability is reasonably assured. Contract terms are typically
contained in a signed agreement with the client (or when applicable, other third parties) which
generally defines the scope of services to be provided, pricing of services, and payment terms
generally ranging from invoice date to 90 days after invoice date. Billing may occur prior to, during,
or upon completion of the service. CBIZ typically does not have acceptance provisions or right of
refund arrangements included in these agreements. Contract terms vary depending on the scope of
service provided, the deliverables, and the complexity of the engagement.

CBIZ offers a vast array of products and business services to its clients. Those services are
delivered through three practice groups. A description of revenue recognition, as it relates to those
groups, is provided below.

Financial Services — Revenue primarily consists of fees for services rendered to the Company’s
client for accounting services, preparation of tax returns, consulting services, compliance projects,
services pursuant to administrative service agreements (described under “Principles of
Consolidation”), and valuation services including fairness opinions, business plans, litigation
support, purchase price allocations and derivative valuations. Clients are billed for these services
based upon a time and expense model, a predetermined agreed-upon fixed fee, or as a percentage
of savings.

Revenue recognition as it pertains to each of these arrangements is as follows:

 Time and Expense Arrangements – Revenue is recognized based upon actual hours

incurred on client projects at expected net realizable rates per hour, plus agreed-upon out-
of-pocket expenses. The cumulative impact on any subsequent revision in the estimated
realizable value of unbilled fees for a particular client project is reflected in the period in
which the change becomes known.

 Fixed Fee Arrangements – Revenue for fixed-fee arrangements is recognized over the

performance period based upon progress towards completion, which is determined based

F-11

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

upon actual hours incurred on the client project compared to estimated total hours to
complete the client project.

 Contingent Revenue Arrangements – Revenue is recognized when savings to the client is

determined and collection is reasonably assured.

 Administrative Service Agreement Revenue – Revenue for administrative service fees is

recognized as services are provided, based upon actual hours incurred.

Employee Services — Revenue consists primarily of brokerage and agency commissions, fee
income for administering health and retirement plans and payroll service fees. Revenue also
includes investment income related to client payroll funds that are held in CBIZ accounts, as is
industry practice. A description of the revenue recognition, based on the service provided, insurance
product sold, and billing arrangement, is provided below:

 Commissions Revenue – Commissions relating to brokerage and agency activities whereby

CBIZ has primary responsibility for the collection of premiums from the insured (agency or
indirect billing) are recognized as of the later of the effective date of the insurance policy or
the date billed to the customer; commissions to be received directly from insurance
companies (direct billing) are recognized when the data necessary from the carriers to
properly record revenue becomes available; and life insurance commissions are recognized
when the policy becomes effective. Commission revenue is reported net of reserves for
estimated policy cancellations and terminations. The cancellation and termination reserve is
based upon estimates and assumptions using historical cancellation and termination
experience and other current factors to project future experience. CBIZ periodically reviews
the adequacy of the reserve and makes adjustments as necessary. The use of different
estimates or assumptions could produce different results.

Commissions which are based upon certain performance targets are recognized at the
earlier of written notification that the target has been achieved or cash collection.

 Fee income – Fee income is recognized in the period in which services are provided and

may be based on predetermined agreed-upon fixed fees, actual hours incurred on an hourly
fee basis, or asset-based fees. Revenue for fixed-fee arrangements is recognized on a
straight-line basis over the contract period, as these services are provided to clients
continuously throughout the term of the arrangement. Revenue which is based upon actual
hours incurred is recognized as services are performed.

Revenue for asset-based fees is recognized when the data necessary to compute revenue
is determinable, which is typically when either market valuation information is available, the
data necessary to compute fees is made available by third party administrators or when
cash is received. CBIZ only recognizes revenue when cash is received for those
arrangements where the data necessary to compute the Company’s fee is not available to
the Company in a timely manner.

 Payroll – Revenue related to payroll processing fees is recognized when the actual payroll

processing occurs. Revenue related to investment income earned on payroll funds is based
upon actual amounts earned on those funds and is recognized in the period that the income
is earned.

National Practices — The business units that comprise the National Practices group offer a variety
of services. A description of revenue recognition associated with the primary services is provided
below.

F-12

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

 Technology Consulting – Revenue consists of services that primarily relate to the

installation, maintenance and repair of hardware. These services are charged to customers
based on cost plus an agreed-upon markup percentage.

 Health Care Consulting – Clients are billed for health care consulting services based upon a
predetermined agreed-upon fixed fee, a time and expense model, or as a percentage of
savings. Revenue for fixed fee and time and expense arrangements is recognized over the
performance period based upon actual hours incurred, and revenue that is contingent upon
savings is recognized after contingencies have been resolved and verified by a third party.

Operating Expenses

Operating expenses represent costs of service and other costs incurred to operate CBIZ’s business
units and are primarily comprised of personnel costs and occupancy related expenses. Personnel
costs include base compensation, commissions, payroll taxes, gains or losses earned on assets of
the deferred compensation plan, and benefits, which are recognized as expense as they are
incurred. Personnel costs also include share-based and incentive compensation costs, which are
estimated and accrued on a monthly basis. The ultimate determination of incentive compensation is
made after year-end results are finalized. Total personnel costs were $471.1 million, $429.4 million
and $397.2 million for the years ended December 31, 2013, 2012 and 2011, respectively.

The largest components of occupancy costs are rent expense and utilities. Base rent expense is
recognized over respective lease terms, while utilities and common area maintenance charges are
recognized as incurred. Total occupancy costs were $37.3 million, $36.4 million and $35.0 million
for the years ended December 31, 2013, 2012 and 2011, respectively.

Operating Leases

CBIZ leases most of its office facilities and equipment under various operating leases. Rent
expense under such leases is recognized evenly throughout the term of the lease obligation when
the total lease commitment is a known amount, and recorded on a cash basis when future rent
payment increases under the obligation are unknown due to rent escalations being tied to factors
that are not currently measurable (such as increases in the consumer price index). Differences
between rent expense recognized and the cash payments required under operating lease
agreements are recorded in the consolidated balance sheets as other non-current liabilities.

CBIZ may receive incentives to lease office facilities in certain areas. Such incentives are recorded
as a deferred credit and recognized as a reduction to rent expense on a straight-line basis over the
lease term.

Share-Based Awards

The measurement and recognition of compensation cost for all share-based payment awards made
to employees and non-employee directors is based on the fair value of the award. Accordingly,
CBIZ recognizes share-based compensation costs for only those shares expected to vest on a
straight-line basis over the requisite service period of the award, which is generally the vesting term
of up to four years. Share-based compensation expense is recorded in the consolidated statements
of comprehensive income as operating expenses or corporate general and administrative expenses,
depending on where the respective individual’s compensation is recorded.

New Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (“FASB”) issue Accounting Standards
Update (“ASU”) No. 2013-11 (“ASU 2013-11”) “Income Taxes (Topic 740): Presentation of an
Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax
Credit Carryforward Exists”. ASU 2013-11 states that an unrecognized tax benefit, or a portion of an

F-13

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

unrecognized tax benefit, should be presented in the financial statements as a reduction to a
deferred tax asset for a net operating loss (“NOL”) carryforward, a similar tax loss, or a tax credit
carryforward. The exception to this treatment is as follows: to the extent an NOL carryforward, a
similar tax loss, or a tax credit carryforward is not available at the reporting date or if the entity is not
required to use and does not intend to use the deferred tax asset, then the unrecognized tax benefit
should be presented in the financial statements as a liability and should not be combined with
deferred tax assets. ASU 2013-11 will not require any additional recurring disclosures. ASU 2013-
11 will be effective for the reporting periods beginning after December 15, 2013. CBIZ is currently
evaluating the impact of adopting ASU 2013-11 and believes there will be no significant impact on
its consolidated financial statements.

2. Accounts Receivable, Net

Accounts receivable, net balances at December 31, 2013 and 2012 were as follows (in thousands):

Trade accounts receivable ................................................................ $

109,739

106,282

Unbilled revenue, at net realizable value ..........................................

43,546

Total accounts receivable ............................................................

153,285

Allowance for doubtful accounts .......................................................

(10,178)

40,498

146,780

(11,801)

Accounts receivable, net .............................................................. $

143,107

134,979

2013

2012
(As Adjusted)

3. Property and Equipment, Net

Property and equipment, net at December 31, 2013 and 2012 consisted of the following (in
thousands):

2013

2012

Buildings and leasehold improvements............................................. $

18,459

17,892

Furniture and fixtures ........................................................................
Capitalized software..........................................................................
Equipment .........................................................................................

Total property and equipment ......................................................
Accumulated depreciation and amortization .....................................

22,407
34,983
10,416

86,265
(67,098)

20,506
33,739
10,184

82,321
(64,538)

Property and equipment, net ........................................................ $

19,167

17,783

Depreciation and amortization expense related to property and equipment for the years ended
December 31, 2013, 2012 and 2011 was as follows (in thousands):

Operating expenses.........................................................
Corporate general and administrative expenses .............

Total depreciation and amortization expense .............

2013

4,497
331

4,828

2012

4,444
307

4,751

2011

4,427
339

4,766

Included in total depreciation and amortization expense is amortization of capitalized software of
$0.9 million, $0.8 million and $0.9 million for the years ended December 31, 2013, 2012 and 2011,
respectively.

F-14

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

4. Goodwill and Other Intangible Assets, Net

The components of goodwill and other intangible assets, net at December 31, 2013 and 2012 were
as follows (in thousands):

Goodwill .............................................................................. $
Intangibles:
Client lists ..........................................................................
Other intangibles ...............................................................
Total intangibles .............................................................
Total goodwill and other intangibles assets.................

Accumulated amortization:
Client lists ..........................................................................
Other intangibles ...............................................................
Total accumulated amortization .....................................

2013

2012

384,697

(As Adjusted)
375,122

132,637
7,956
140,593
525,290

(51,016)
(5,191)
(56,207)

134,987
8,501
143,488
518,610

(44,293)
(4,746)
(49,039)

Goodwill and other intangible assets, net.................... $

469,083

469,571

Goodwill

Changes in the carrying amount of goodwill by operating segment for the years ended
December 31, 2013 and 2012 were as follows (in thousands):

December 31, 2011 ......... $
Additions (as adjusted) ....
December 31, 2012 ......... $
Additions ..........................
December 31, 2013 ......... $

Financial
Services
233,163
25,875
259,038
1,677
260,715

Employee
Services
82,605
31,813
114,418
7,898
122,316

National
Practices
1,666
–
1,666
–
1,666

Total
Goodwill
317,434
57,688
375,122
9,575
384,697

Businesses acquired during 2013 resulted in additions to goodwill of approximately $9.3 million, of
which $1.4 million was recorded in the Financial Services practice group and $7.9 million was
recorded in the Employee Services practice group. Businesses acquired during 2012 resulted in
additions to goodwill of approximately $57.2 million, of which $25.4 million was recorded in the
Financial Services practice group and $31.8 million was recorded in the Employee Services practice
group. These additions include purchase price adjustments made in 2013 that retrospectively
adjusted 2012 goodwill by a total of $1.4 million. These purchase price adjustments resulted from
finalizing working capital arrangements pertaining to two acquisitions made in 2012. The result of
these adjustments was a $0.7 million reduction of goodwill for each of the Financial Services and
Employee Services operating segments. The remaining increases in goodwill during 2013 and 2012
were a result of contingent purchase price earned by businesses acquired in prior years. Refer to
Note 19 for further discussion of acquisition activities.

Goodwill Impairment

During the fourth quarter of 2013, CBIZ performed its goodwill impairment testing utilizing a
qualitative assessment for each of its reporting units that carried a goodwill balance. The qualitative
assessment included an in-depth analysis of many factors, including general economic conditions,
industry and market conditions, a broad scope of financial factors, the Company’s weighted average
cost of capital, changes in management and key personnel, the Company’s price of its common
stock, as well as other drivers of a fair value analysis. As a result of the Company’s qualitative

F-15

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

assessment, it was concluded that it was more-likely-than-not that the fair value of each of its
reporting units was greater than their respective carrying values, thus resulting in no indication of
impairment of goodwill.

Client Lists and Other Intangibles

At December 31, 2013, the weighted average amortization period remaining for total intangible
assets was 8.3 years. Client lists are amortized over their expected period of benefit and had a
weighted-average amortization period of 8.5 years remaining at December 31, 2013. Other
intangibles, which consist primarily of non-compete agreements and trade-names, are amortized
over periods ranging from two to ten years, and had a weighted-average amortization period of 3.1
years remaining at December 31, 2013. Amortization expense related to client lists and other
intangible assets for the years ended December 31, 2013, 2012 and 2011 was as follows (in
thousands):

Operating expenses............................................................ $

14,041

Corporate general and administrative expenses ................

Total amortization expense ............................................ $

14,056

11,967 $

10,543

11,983 $

10,560

2013

2012

2011

Amortization expense for existing client lists and other intangible assets for each of the next five
years ending December 31 is estimated to be (in thousands):

2014 .......................................... $
2015 .......................................... $
2016 .......................................... $
2017 .......................................... $
2018 .......................................... $

13,655
12,311
11,437
10,765
10,031

Future amortization expense excludes the impact of events that may occur subsequent to
December 31, 2013, including acquisitions and divestitures.

5. Financial Instruments

The carrying amounts of CBIZ's cash and cash equivalents, accounts receivable and accounts
payable approximate fair value because of the short maturity of these instruments. The carrying
value of bank debt approximates fair value, as the interest rate on the bank debt is variable and
approximates current market rates. The fair value of CBIZ’s convertible senior subordinated notes is
based upon quoted market prices. These convertible senior subordinated notes have fixed interest
rates and conversion features which are based upon the market value of CBIZ’s common stock.
Therefore, the fair value of the convertible senior subordinated notes will fluctuate as market rates
of interest and the market value of CBIZ’s common stock fluctuate.

Concentrations of Credit Risk

Financial instruments that may subject CBIZ to concentration of credit risk consist primarily of cash
and cash equivalents and accounts receivable. CBIZ places its cash and cash equivalents with
highly-rated financial institutions, limiting the amount of credit exposure with any one financial
institution. CBIZ’s client base consists of large numbers of geographically diverse customers
dispersed throughout the United States; thus, concentration of credit risk with respect to accounts
receivable is not significant.

F-16

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Bonds

CBIZ held corporate and municipal bonds with par values totaling $29.0 million and $28.2 million at
December 31, 2013 and 2012, respectively. All bonds are investment grade and are classified as
available-for-sale. CBIZ’s bonds have maturity dates or callable dates ranging from February 2014
through September 2018, and are included in “Funds held for clients – current” on the consolidated
balance sheets based on the intent and ability of the Company to sell these investments at any time
under favorable conditions.

The following table summarizes CBIZ’s bond activity for the years ended December 31, 2013 and
2012 (in thousands):

Fair value at January 1 ............................................................. $
Purchases ...............................................................................
Sales.......................................................................................
Maturities and calls .................................................................
Decrease in bond premium .....................................................
Fair market value adjustment .................................................

2013

29,776
5,650
(845)
(4,050)
(270)
(250)

2012

30,923
5,742
(2,000)
(4,900)
(290)
301

Fair value at December 31 ....................................................... $

30,011

29,776

Interest Rate Swaps

CBIZ uses interest rate swaps to manage interest rate risk exposure primarily through converting
portions of floating rate debt under the credit facility to a fixed rate basis. These agreements involve
the receipt or payment of floating rate amounts in exchange for fixed rate interest payments over the
life of the agreements without an exchange of the underlying principal amounts. CBIZ does not
enter into derivative instruments for trading or speculative purposes.

The CBIZ interest rate swap is designated as a cash flow hedge. Accordingly, the interest rate swap
is recorded as either an asset or liability in the consolidated balance sheets at fair value. Changes in
fair value are recorded as a component of accumulated other comprehensive loss (“AOCL”), net of
tax, to the extent the swap is effective. Amounts recorded to AOCL are reclassified to interest
expense as interest on the underlying debt is recognized. Amounts due related to the swap are
recorded as adjustments to interest expense when incurred or payable.

At inception, the critical terms of the interest rate swap matched the underlying risk being hedged,
and as such the interest rate swap is expected to be highly effective in offsetting fluctuations in the
designated interest payments resulting from changes in the benchmark interest rate. The interest
rate swap is assessed for effectiveness and continued qualification for hedge accounting on a
quarterly basis. For the years ended December 31, 2013 and 2012, the interest rate swap was
deemed to be highly effective.

As a result of the use of derivative instruments, CBIZ is exposed to risks that the counterparties
would fail to meet their contractual obligations. To mitigate the counterparty credit risk, CBIZ only
entered into contracts with selected major financial institutions based upon their credit ratings and
other factors, and continually assesses the creditworthiness of counterparties. At December 31,
2013 and 2012, all of the counterparties to CBIZ’s interest rate swap had investment grade
ratings. There are no credit risk-related contingent features in CBIZ’s interest rate swap nor does
the swap contain provisions under which the Company would be required to post collateral.

F-17

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

At December 31, 2013 and 2012, the interest rate swap was classified as a liability derivative. The
following table summarizes CBIZ’s outstanding interest rate swap and its classification on the
consolidated balance sheets at December 31, 2013 and 2012 (in thousands).

December 31, 2013

Notional
Amount

Fair
Value (2)

Balance Sheet
Location

Interest rate swap (1) .................... $

40,000

(452)

Other current and non-current
liabilities

December 31, 2012

Notional
Amount

Fair
Value (2)

Balance Sheet
Location

Interest rate swap (1) ..................... $

40,000

(817)

Other current and non-current
liabilities

(1) Represents interest rate swap with a notional value of $40.0 million, of which $15.0 million will expire in
June 2014 and the remaining $25.0 million will expire in June 2015. Under the terms of the interest rate
swap, CBIZ pays interest at a fixed rate of 1.41% plus applicable margin as stated in the agreement,
and receives interest that varies with the three-month LIBOR.

(2) See additional disclosures regarding fair value measurements in Note 6.

The following table summarizes the effects of the interest rate swap on CBIZ’s consolidated
statements of comprehensive income for the years ended December 31, 2013 and 2012 (in
thousands):

Gain (loss) Recognized
in AOCL, net of tax

Twelve Months Ended
December 31,

Loss Reclassified
from AOCL into Expense

Twelve Months Ended
December 31,

2013

2012

2013

2012

Location

Interest rate swap ......... $

230

(93)

(459)

(387)

Interest expense

6. Fair Value Measurements

The valuation hierarchy under GAAP categorizes assets and liabilities measured at fair value into
one of three different levels depending on the observability of the inputs employed in the
measurement. The three levels are defined as follows:

 Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for

identical assets or liabilities in active markets.

 Level 2 – inputs to the valuation methodology include quoted prices for similar assets
and liabilities in active markets, and inputs that are observable for the asset or liability,
either directly or indirectly, for substantially the full term of the financial instrument.

 Level 3 – inputs to the valuation methodology are unobservable and are significant to

the fair value measurement.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level
of input that is significant to the fair value measurement. The Company’s assessment of the
significance of a particular input to the fair value measurement in its entirety requires judgment and
considers factors specific to the asset or liability.

F-18

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

The following table summarizes CBIZ’s assets and liabilities at December 31, 2013 and 2012 that
are measured at fair value on a recurring basis subsequent to initial recognition and indicates the
fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value
(in thousands):

Level

December 31,
2013

December 31,
2012

Deferred compensation plan assets ..................
Corporate and municipal bonds .........................
Interest rate swap ..............................................
Contingent purchase price liabilities ..................

1
1
2
3

$
$
$
$

51,953
30,011
(452)
(25,196)

$
$
$
$

39,779
29,776
(817)
(30,012)

For the years ended December 31, 2013 and 2012, there were no transfers between the valuation
hierarchy Levels 1, 2 and 3. The following table summarizes the change in fair value of the
Company’s contingent purchase price liabilities identified as Level 3 for the years ended
December 31, 2013 and 2012 (pre-tax basis, in thousands):

Beginning balance – January 1, 2012 .................................................... $

Additions from business acquisitions ...................................................
Payment of contingent purchase price payable....................................
Change in fair value of contingency .....................................................
Change in net present value of contingency ........................................
Balance – December 31, 2012 ............................................................... $

Additions from business acquisitions ...................................................
Payment of contingent purchase price payable....................................
Change in fair value of contingency .....................................................
Change in net present value of contingency ........................................
Balance – December 31, 2013 ............................................................... $

Contingent
Purchase Price
Liabilities

(25,325)

(17,611)
11,970
1,135
(181)
(30,012)

(5,487)
11,511
(1,102)
(106)
(25,196)

Contingent Purchase Price Liabilities - Contingent purchase price liabilities result from business
acquisitions and are classified as Level 3 due to the utilization of a probability weighted discounted
cash flow approach to determine the fair value of the contingency. A contingent liability is
established for each acquisition that has a contingent purchase price component and normally
extends over a term of three to six years. The significant unobservable input used in the fair value
measurement of the contingent purchase price liabilities is the future performance of the acquired
business. The future performance of the acquired business directly impacts the contingent purchase
price that is paid to the seller, thus performance that exceeds target could result in a higher payout,
and a performance under target could result in a lower payout. Changes in the expected amount of
potential payouts are recorded as adjustments to the initial contingent purchase price liability, with
the same amount being recorded in the consolidated statements of comprehensive income. These
liabilities are reviewed quarterly and adjusted if necessary. See Note 19 for further discussion of
contingent purchase price liabilities.

F-19

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

The following table presents financial instruments that are not carried at fair value but which require
fair value disclosure as of December 31, 2013 and 2012 (in thousands):

December 31, 2013

December 31, 2012

Carrying

Value

Fair
Value

Carrying
Value

Fair
Value

2006 Notes .................................... $
2010 Notes .................................... $

750
124,506

$
$

750
173,779

$
$

750 $
121,666 $

750
135,181

The fair value was determined based upon their most recent quoted market price and as such, is
considered to be a Level 1 fair value measurement. The 2006 Notes and 2010 Notes are carried at
face value less any unamortized debt discount. See Note 8 for further discussion of CBIZ’s debt
instruments.

7. Income Taxes

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

2013

2012

2011

United States ..........................................................................
Foreign (Canada) ...................................................................

41,280
147

Total ..................................................................................

41,427

36,636
187

31,106
177

36,823

31,283

Income tax expense included in the consolidated statements of comprehensive income for the years
ended December 31, 2013, 2012 and 2011 was as follows (in thousands):

Continuing operations:
Current:
Federal ..............................................................................
Foreign ..............................................................................
State and local ...................................................................
Total .............................................................................
Deferred:
Federal ..............................................................................
State and local ...................................................................
Total .............................................................................
Total income tax expense from
continuing operations ...........................................
Discontinued operations:
Operations of discontinued operations:
Current ..............................................................................
Deferred ............................................................................
Total .............................................................................
Gain on disposal of discontinued operations:
Current ..............................................................................
Deferred……………………………………………………….
Total……………………………………………………….
Total income tax expense from
discontinued operations ........................................
Total income tax expense ........................................

2013

2012

2011

13,695
47
2,357
16,099

(394)
733
339

13,124
47
2,983
16,154

(1,423)
(660)
(2,083)

12,788
34
3,095
15,917

(3,261)
(512)
(3,773)

16,438

14,071

12,144

3,246
(653)
2,593

49,973
(776)
49,197

51,790
68,228

4,883
361
5,244

52
–
52

4,999
874
5,873

193
–
193

5,296
19,367

6,066
18,210

F-20

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

The provision for income taxes attributable to income from continuing operations differed from the
amount obtained by applying the federal statutory income tax rate to income from continuing
operations before income taxes, as follows (in thousands, except percentages):

Tax at statutory rate (35%) .....................................................
State taxes (net of federal benefit) .........................................
Business meals and entertainment – non-deductible .............
Reserves for uncertain tax positions ......................................
Other, net ...............................................................................

2013

14,499
2,066
624
(531)
(220)

2012

2011

12,888 $

1,176
674
(432)
(235)

10,949
1,343
610
(844)
86

Provision for income taxes from continuing operations ..........

16,438

14,071 $

12,144

Effective income tax rate ........................................................

39.7%

38.2%

38.8%

The income tax benefits associated with the exercise of non-qualified stock options and restricted
stock awards and reflected in additional paid-in-capital were $0.1 million, $0 and $0.2 million for the
years ended December 31, 2013, 2012 and 2011, respectively.

The tax effects of temporary differences that gave rise to significant portions of the deferred tax
assets and deferred tax liabilities at December 31, 2013 and 2012, were as follows (in thousands):

Deferred tax assets:
Net operating loss carryforwards ........................................... $
Allowance for doubtful accounts ............................................
Employee benefits and compensation ...................................
Lease costs ............................................................................
State tax credit carryforwards ................................................
Other deferred tax assets ......................................................
Total gross deferred tax assets ............................................
Less: valuation allowance ....................................................
Total deferred tax assets, net ............................................ $

Deferred tax liabilities:
Accrued interest ..................................................................... $
Client list intangible assets .....................................................
Goodwill and other intangibles ...............................................
Contingent purchase price liabilities.......................................
Other deferred tax liabilities ...................................................
Total gross deferred tax liabilities....................................... $
Net deferred tax asset ...................................................... $

2013

2012

2,026
2,663
23,774
4,398
2,240
3,581
38,682
(926)
37,756

8,584
3,915
17,876
1,977
222
32,574
5,182

$
$

2,370
2,771
23,967
3,539
2,258
2,598
37,503
(1,138)
36,365

9,633
6,425
8,987
2,476
361
27,882
8,483

CBIZ has established valuation allowances for certain states’ deferred tax assets, primarily related
to portions of the state net operating loss (“NOL”) carryforwards and state income tax credit
carryforwards at December 31, 2013 and December 31, 2012. The net decrease in the valuation
allowance for the year ended December 31, 2013 of $0.2 million primarily related to changes in the
valuation allowance for NOL’s. The net decrease in the valuation allowance for the year ended
December 31, 2012 of $1.1 million consisted of $0.6 million related to changes in the valuation
allowance for NOL’s and $0.5 million related to changes in the valuation allowance for state income
tax credit carryforwards.

In assessing the realizability 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. Based upon review of these

F-21

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

items, management believes it is more-likely-than-not that the Company will realize the benefits of
these deferred tax assets, net of the existing valuation allowances.

CBIZ and its subsidiaries file income tax returns in the United States, Canada, and most state
jurisdictions. In October 2013, the Internal Revenue Service completed its audit of the Company’s
2010 federal income tax return. The Company paid a nominal amount related to the settlement of
the audit. CBIZ’s federal income tax returns for years ending prior to January 1, 2010 are no longer
subject to examination. With limited exceptions, CBIZ’s state and local income tax returns and non-
U.S. income tax returns are no longer subject to tax authority examinations for years ending prior to
January 1, 2009 and January 1, 2008, respectively.

The availability of NOL’s and state tax credits are reported as deferred tax assets, net of applicable
valuation allowances, in the accompanying consolidated balance sheets. At December 31, 2013,
the Company has state net operating loss carryforwards of $41.2 million and state tax credit
carryforwards of $2.2 million. The state net operating loss carryforwards expire on various dates
between 2015 and 2028 and the state tax credit carryforwards expire on various dates between
2018 and 2036.

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

2013

2012

2011

Balance at January 1 ........................................................ $
Additions for tax positions of the current year.................
Additions for tax positions of prior years.........................
Reductions for tax positions of prior years......................
Lapse of statutes of limitation .........................................

3,618
2,647
–
–
(757)

3,979
212
323
–
(896)

4,794
188
103
(260)
(846)

Balance at December 31 .................................................. $

5,508

3,618

3,979

Included in the balance of unrecognized tax benefits at December 31, 2013 are $3.2 million of
unrecognized tax benefits that, if recognized, would affect the effective tax rate. The Company
believes it is reasonably possible that certain of these unrecognized tax benefits could change in the
next twelve months. CBIZ expects reductions in the liability for unrecognized tax benefits of
approximately $1.1 million within the next twelve months due to expiration of statutes of limitation.
Given the number of years that are currently subject to examination, the Company is unable to
estimate the range of potential adjustments to the remaining balance of unrecognized tax benefits at
this time.

CBIZ recognizes interest income, interest expense, and penalties related to unrecognized tax
benefits as a component of income tax expense. During 2013, the Company accrued interest
expense of $0.2 million and penalties of $0.2 million and, as of December 31, 2013, had recognized
a liability for interest expense and penalties of $0.3 million and $0.3 million, respectively, relating to
unrecognized tax benefits. During 2012, the Company accrued interest expense of $0.2 million and,
as of December 31, 2012, had recognized a liability for interest expense and penalties of $0.3
million and $0.1 million, respectively, related to unrecognized tax benefits.

8. Borrowing Arrangements

CBIZ has two primary debt arrangements at December 31, 2013 that provide the Company with the
capital to meet its working capital needs as well as the flexibility to continue with its strategic
initiatives, including business acquisitions and share repurchases: the 2010 Convertible Senior
Subordinated Notes (“2010 Notes”) totaling $130 million and a $275 million unsecured credit facility.
A third debt arrangement, the 2006 Convertible Senior Subordinated Notes (“2006 Notes”), has
been significantly reduced as a result of the repurchase of most of the outstanding 2006 Notes in
2010 and 2011 as is discussed more fully below.

F-22

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

2010 Convertible Senior Subordinated Notes

On September 27, 2010, CBIZ sold and issued $130.0 million of 2010 Notes to qualified institutional
buyers pursuant to Rule 144A of the Securities Act of 1933, as amended. The 2010 Notes are
direct, unsecured, senior subordinated obligations of CBIZ and rank (i) junior in right of payment to
all of CBIZ’s existing and future senior indebtedness, (ii) equal in right of payment with any other
future senior subordinated indebtedness, and (iii) senior in right of payment to all existing and future
obligations, if any, that are designated as subordinated to the 2010 Notes. In connection with the
issuance and sale of the 2010 Notes, CBIZ entered into an indenture (the “2010 Indenture”) dated
as of September 27, 2010, with U.S. Bank National Association as trustee.

The terms of the 2010 Notes are governed by the 2010 Indenture. The 2010 Notes bear interest at
a rate of 4.875% per annum, payable in cash semi-annually in arrears on April 1 and October 1
beginning April 1, 2011. The 2010 Notes mature on October 1, 2015 unless earlier redeemed,
repurchased or converted. The holders of the 2010 Notes may convert their 2010 Notes beginning
July 31, 2015, or earlier if the market price per share of CBIZ common stock exceeds 135% of the
conversion price for at least 20 days during the period of 30 consecutive trading days ending on the
final trading day of the preceding quarter. The 2010 Notes are convertible into CBIZ common stock
at a rate equal to 134.9255 shares per $1,000 principal amount of the 2010 Notes (equal to an initial
conversion price of approximately $7.41 per share), subject to adjustment as described in the 2010
Indenture. Upon conversion, CBIZ will deliver for each $1,000 principal amount of 2010 Notes, an
amount consisting of cash equal to the lesser of $1,000 or the conversion value (as defined in the
2010 Indenture) and, to the extent that the conversion value exceeds $1,000, at CBIZ’s election or
as required by the rules of the New York Stock Exchange, cash or shares of CBIZ common stock in
respect to the remainder.

If CBIZ undergoes a “fundamental change” (as defined in the 2010 Indenture), holders of the 2010
Notes will have the right, subject to certain conditions, to require CBIZ to repurchase for cash all or
a portion of their 2010 Notes at a repurchase price equal to 100% of the principal amount of the
2010 Notes to be repurchased plus accrued and unpaid interest, including additional amounts, if
any.

CBIZ separately accounts for the debt and equity components of the 2010 Notes. The carrying
amount of the debt and equity components at December 31, 2013 and 2012 were as follow (in
thousands):

Principal amount of notes .................................................. $
Unamortized discount .......................................................
Net carrying amount ..........................................................

2013
130,000
(5,494)
124,506

Additional paid-in-capital, net of tax .................................. $

8,555

2012
130,000
(8,334)
121,666

8,555

The discount on the liability component of the 2010 Notes is being amortized using the effective
interest method based upon an annual effective rate of 7.5%, which represented the market rate for
similar debt without a conversion option at the issuance date. The discount is being amortized over the
term of the 2010 Notes which is five years from the date of issuance. At December 31, 2013, the
unamortized discount had a remaining amortization period of approximately 21 months.

2006 Convertible Senior Subordinated Notes

On May 30, 2006, CBIZ sold and issued $100.0 million in convertible senior subordinated notes.
These 2006 Notes are direct, unsecured, senior subordinated obligations of CBIZ and rank (i) junior
in right of payment to all of CBIZ’s existing and future senior indebtedness, (ii) equal in right of
payment with any other future senior subordinated indebtedness, and (iii) senior in right of payment
to all subordinated indebtedness. The terms of the 2006 Notes are governed by the Indenture dated
as of May 30, 2006, with U.S. Bank National Association as trustee (“2006 Indenture”). The 2006

F-23

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Notes bear interest at a rate of 3.125% per annum, payable in cash semi-annually in arrears on
each June 1 and December 1. The 2006 Notes are convertible into CBIZ common stock at a rate
equal to 94.1035 shares per $1,000 principal amount of the 2006 Notes (equal to an initial
conversion price of approximately $10.63 per share), subject to adjustment as described in the 2006
Indenture. Upon conversion, CBIZ will deliver for each $1,000 principal amount of 2006 Notes, an
amount consisting of cash equal to the lesser of $1,000 and the conversion value (as defined in the
2006 Indenture) and, to the extent that the conversion value exceeds $1,000, at CBIZ’s election,
cash or shares of CBIZ common stock in respect of the remainder.

On September 27, 2010, concurrent with the closing of the 2010 Notes, CBIZ repurchased $60.0
million of the 2006 Notes. The 2006 Notes were purchased at par through privately negotiated
transactions. On June 1, 2011, the note holders provided notice to the Company to redeem an
additional $39.3 million of the 2006 Notes. The 2006 Notes were settled in cash for the principal
amount and any accrued and unpaid interest. The remaining $750,000 of 2006 Notes may be
redeemed by CBIZ at any time until the due date of June 1, 2026. In addition, holders of the 2006
Notes will have the right to require CBIZ to repurchase for cash all or a portion of their 2006 Notes
on June 1, 2016 and June 1, 2021, at a repurchase price equal to 100% of the principal amount of
the 2006 Notes to be repurchased plus accrued and unpaid interest, including contingent interest
and additional amounts, if any, up to but not including, the date of repurchase. At December 31,
2013 and 2012, the 2006 Notes were classified as a non-current liability since the remaining note
holders cannot cause the redemption of their notes until June 1, 2016.

CBIZ separately accounts for the debt and equity components of the 2006 Notes. The carrying
amount of the debt and equity components at December 31, 2013 and 2012 were as follow (in
thousands):

2013
750
–
750

Additional paid-in-capital, net of tax .................................. $

11,425

2012
750
–
750

11,425

For the years ended December 31, 2013 and 2012, CBIZ recognized interest expense on the 2010
Notes and the 2006 Notes as follows (in thousands):

Contractual coupon interest ................................................ $
Amortization of discount ......................................................
Amortization of deferred financing costs .............................

2013
6,361
2,840
720

Total interest expense ............................................... $

9,921

2012
6,361
2,638
720

9,719

Bank Debt

Effective June 4, 2010, CBIZ entered into a new credit agreement with Bank of America as agent for
a group of seven participating banks under which CBIZ maintains a $275 million unsecured credit
facility (“credit facility”). On September 14, 2010, CBIZ amended its credit facility to allow CBIZ to
consummate the buy back and option transactions with CBIZ’s largest shareholder (see Note 14), to
issue new senior subordinated convertible notes (see 2010 Notes above), and use up to $30 million
of the proceeds from the new convertible notes to repurchase shares of common stock concurrent
with the new convertible note transaction. In addition, the amendment increased the total and senior
leverage ratios to accommodate these transactions and also to allow CBIZ to continue its strategic
growth strategy, which includes future acquisitions. On April 11, 2011, the credit facility was
amended to extend the maturity date one year to June 2015, reduce interest on outstanding

F-24

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

balances, reduce commitment fees on the unused amount, and adjust the leverage ratio limits to
provide CBIZ with more flexibility. On August 30, 2012, the credit facility was further amended to
modify the senior and total leverage requirements and provide a temporary increase in the leverage
ratios until December 31, 2013, at which time the leverage ratios were reset to the leverage
schedule as prescribed in the 2011 amendment. The purpose of the amendment was to provide
additional temporary flexibility to support CBIZ’s strategic acquisitions.

The balance outstanding under the credit facility was $48.5 million and $208.9 million at
December 31, 2013 and 2012, respectively. The significant decrease in the balance outstanding
from December 31, 2012 to December 31, 2013 was due to a portion of the proceeds from the sale
of MMP being applied to the credit facility. Rates for the years ended December 31, 2013 and 2012
were as follows:

Weighted average rates .........................................

2013

2.99%

2012

3.15%

Range of effective rates..........................................

1.88% - 3.91%

2.68% - 3.91%

CBIZ had approximately $99.8 million of available funds under the credit facility at December 31,
2013. 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 and outstanding borrowings on the credit facility. Under the 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.

The credit facility provides CBIZ operating flexibility and funding to support seasonal working capital
needs and other strategic initiatives such as acquisitions and share repurchases. The credit facility
is subject to certain financial covenants that may limit CBIZ’s ability to borrow up to the total
commitment amount. Covenants require CBIZ to meet certain requirements with respect to (i)
minimum net worth; (ii) maximum total and senior leverage ratios; and (iii) a minimum fixed charge
coverage ratio. As of December 31, 2013, CBIZ believes it is in compliance with its debt covenants.
The credit facility also places restrictions on CBIZ's ability to create liens or other encumbrances, to
make certain payments, investments, loans and guarantees and to sell or otherwise dispose of a
substantial portion of assets, or to merge or consolidate with an unaffiliated entity. According to the
terms of the credit facility, CBIZ is not permitted to declare or make any dividend payments, other
than dividend payments made by one of its wholly-owned subsidiaries to the parent company. The
credit facility contains a provision that, in the event of a defined change in control, the credit facility
may be terminated.

9. Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss at December 31, 2013 and 2012 were
as follows (in thousands):

Net unrealized gains on available-for-sale securities, net of
income tax expense of $37 and $134, respectively......................................... $
Net unrealized loss on interest rate swap, net of income tax
benefit of $167 and $302, respectively ............................................................

Foreign currency translation ..............................................................................

(285)

(499)

Accumulated other comprehensive loss ............................................................ $

(725)

F-25

2013

2012

201

(515)

(439)

(753)

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

The following table is a summary of other comprehensive income and discloses the tax impact of
each component of other comprehensive income for the years ended December 31, 2013, 2012
and 2011 (in thousands):

Net unrealized (loss) gain on available-for-sale securities, net of
income tax (benefit) expense of ($97), $120 and $276 ..................... $
Net unrealized gain (loss) on interest rate swaps, net of income
tax expense (benefit) of $135, ($54) and ($242) ...............................

Foreign currency translation ................................................................

Total other comprehensive income ................................................. $

2013

2012

2011

(142)

181

638

230

(60)

(93)

(62)

(412)

(65)

161

10. Lease Commitments

Operating Leases

CBIZ leases certain of its office facilities and equipment under various operating leases. Future
minimum cash commitments under operating leases as of December 31, 2013 were as follows (in
thousands):

Year Ending
December 31,
2014 .....................
2015 .....................
2016 .....................
2017 .....................
2018 .....................
Thereafter .............

Gross Operating
Lease
Commitments (1)

Sub-Leases (2)

Net Operating
Lease
Commitments (1)

31,939
29,956
28,144
22,399
17,543
27,172

1,562
1,279
1,103
404
235
–

4,583

30,377
28,677
27,041
21,995
17,308
27,172

152,570

Total ................

157,153

(1) Includes lease commitments accrued in the consolidation and integration reserve as of

December 31, 2013 as further described in Note 12.

(2) A substantial portion of the sub-leases relate to restructuring lease obligations and are reflected

in the consolidation and integration reserve as further described in Note 12.

Rent expense for continuing operations (excluding consolidation and integration charges) incurred
under operating leases was $35.1 million, $33.7 million and $32.6 million for the years ended
December 31, 2013, 2012 and 2011, respectively. Rent expense does not necessarily reflect cash
payments, as described under “Operating Leases” in Note 1.

11. Commitments and Contingencies

Acquisitions

The purchase price that CBIZ normally pays for businesses and client lists consists of two
components: an up-front non-contingent portion, and a portion which is contingent upon the
acquired businesses or client lists’ actual future performance. The fair value of the purchase price
contingency related to businesses is recorded at the date of acquisition and remeasured each
reporting period until the liability is settled. Shares of CBIZ common stock that are issued in
connection with acquisitions may be contractually restricted from sale for periods up to one year.
Acquisitions are further disclosed in Note 19.

F-26

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Indemnifications

CBIZ has various agreements in which it 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 CBIZ 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 CBIZ under such
indemnification clauses are generally conditioned upon the other party making a claim. Such claims
are typically subject to challenge by CBIZ and to dispute resolution procedures specified in the
particular contract. Further, CBIZ’s obligations under these agreements may be limited in terms of
time and/or amount and, in some instances, CBIZ may have recourse against third parties for
certain payments made by CBIZ. It is not possible to predict the maximum potential amount of
future payments under these indemnification agreements due to the conditional nature of CBIZ’s
obligations and the unique facts of each particular agreement. Historically, CBIZ has not made any
payments under these agreements that have been material individually or in the aggregate. As of
December 31, 2013, CBIZ was not aware of any obligations arising under indemnification
agreements that would require material payments.

Employment Agreements

CBIZ maintains severance and employment agreements with certain of its executive officers,
whereby such officers may be entitled to payment in the event of termination of their employment.
CBIZ also has arrangements with certain non-executive employees which may include severance
and other employment provisions. CBIZ accrues for amounts payable under these contracts and
arrangements as triggering events occur and obligations become known. During the years ended
December 31, 2013, 2012 and 2011, payments regarding such contracts and arrangements were
not material.

Letters of Credit and Guarantees

CBIZ provides letters of credit to landlords (lessors) of its leased premises in lieu of cash security
deposits which totaled $2.5 million at December 31, 2013 and 2012. In addition, CBIZ provides
license bonds to various state agencies to meet certain licensing requirements. The amount of
license bonds outstanding was $2.4 million and $2.7 million at December 31, 2013 and 2012,
respectively.

CBIZ acted as guarantor on various letters of credit for a CPA firm with which it has an affiliation,
which totaled $1.9 million at December 31, 2013 and 2012. CBIZ has recognized a liability for the
fair value of the obligations undertaken in issuing these guarantees, which is recorded as other
current liabilities in the accompanying consolidated balance sheets. Management does not expect
any material changes to result from these instruments as performance under the guarantees is not
expected to be required.

Self-Funded Health Insurance

CBIZ maintains a self-funded comprehensive health benefit plan. Total expenses under this
program are limited by stop-loss coverages on individually large claims. A third party administrator
processes claims and payments, and CBIZ assumes responsibility for funding the plan benefits out
of general assets. Employees partially contribute to the costs of covered benefits through premium
charges, deductibles and co-pays.

The third party administrator provides the Company with reports and other information which
provides a basis for the estimate of the liability at the end of each reporting period. Although
management believes that it uses the best available information to determine the amount of the
liability, unforeseen health claims could result in adjustments and higher costs incurred if
circumstances differ from the assumptions used in estimating the liability. The liability for the self-

F-27

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

funded health insurance plan is included in other current liabilities in the consolidated balance
sheets and was $2.6 million and $3.5 million at December 31, 2013 and 2012, respectively. CBIZ’s
healthcare costs include health claims, administration fees to third-party administrators and
premiums for stop-loss coverage.

Legal Proceedings

In 2010, CBIZ, Inc. and its subsidiary, CBIZ MHM, LLC (fka CBIZ Accounting, Tax & Advisory
Services, LLC) (the “CBIZ Parties”), were named as defendants in lawsuits filed in the U.S. District
Court for the District of Arizona and the Superior Court for Maricopa County, Arizona. The federal
court case is captioned Robert Facciola, et al v. Greenberg Traurig LLP, et al, and the state court
cases are captioned Victims Recovery, LLC v. Greenberg Traurig LLP, et al, Roger Ashkenazi, et al
v. Greenberg Traurig LLP, et al, Mary Marsh, et al v. Greenberg Traurig LLP, et al; and ML
Liquidating Trust v. Mayer Hoffman McCann PC, et al. Prior to these suits CBIZ MHM, LLC was
named as a defendant in Jeffery C. Stone v. Greenberg Traurig LLP, et al. The Stone case was
subsequently voluntarily dismissed by the plaintiff.

These lawsuits arose out of the bankruptcy of Mortgages Ltd., a mortgage lender to developers in
the Phoenix, Arizona area. Various other professional firms not related to the Company were also
named defendants in these lawsuits.

Mortgages Ltd. had been audited by Mayer Hoffman McCann PC (“Mayer Hoffman”), a CPA firm
that has an administrative services agreement with CBIZ. The lawsuits assert claims against Mayer
Hoffman for, among others things, violations of the Arizona Securities Act, common law fraud, and
negligent misrepresentation, and seek to hold the CBIZ Parties vicariously liable for Mayer
Hoffman’s conduct as either a statutory control person under the Arizona Securities Act or a joint
venturer under Arizona common law. CBIZ is not a CPA firm, does not provide audits, and did not
audit any of the entities at issue in these lawsuits, nor is CBIZ a control person of, or a joint venture
with, Mayer Hoffman.

In June 2011, the Facciola court, in which the plaintiffs were seeking to certify a class of all
Mortgages Ltd. investors, granted the motions to dismiss filed by the CBIZ Parties and Mayer
Hoffman. After that dismissal order, the plaintiffs moved the court to amend their complaint in an
attempt to state a claim against the CBIZ Parties and Mayer Hoffman. In November 2011, the
Facciola court denied the plaintiffs’ request to amend the complaint as to the CBIZ Parties and
Mayer Hoffman. In June 2012, the remaining defendants in the Facciola case reached a class
action settlement, which the court approved in October 2012. Eighteen class members, however,
opted out of the settlement before it was finalized and, in September 2012, filed a new case against
all of the defendants in the Facciola case, including the CBIZ Parties (Rader et al v. Greenberg
Traurig, LLC, et al). In December 2012, the Facciola plaintiffs filed an appeal to the U.S. Court of
Appeals for the Ninth Circuit of the dismissal of their case against the CBIZ Parties and Mayer
Hoffman. That appeal is currently pending.

The plaintiffs, except for the ML Liquidating Trust, are all alleged to have directly or indirectly
invested in real estate mortgages through Mortgages Ltd. The Victims Recovery, Ashkenazi and
Marsh plaintiffs seek monetary damages equivalent to their alleged losses on those investments.
The ML Liquidating Trust asserts errors and omissions and breach of contract claims and is seeking
monetary damages. The Ashkenazi complaint alleges damages of approximately $92 million; the
Victims Recovery complaint alleges damages of approximately $53 million; the Marsh, Facciola,
Rader, and ML Liquidating Trust complaints allege damages in excess of approximately $200
million. The plaintiffs in these suits also seek pre- and post-judgment interest, punitive damages and
attorneys’ fees.

The CBIZ Parties filed motions to dismiss in all remaining cases. On March 11, 2013, the court
issued a ruling dismissing the securities fraud and aiding and abetting securities fraud claims

F-28

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

against the CBIZ Parties and Mayer Hoffman in the Marsh, Victims Recovery and Ashkenazi
lawsuits, and also dismissed certain other claims in the Ashkenazi and Victims Recovery cases.

On April 12, 2013, the court denied the CBIZ Parties’ motion to dismiss the remaining claims in the
Ashkenazi lawsuit. On May 7, 2013, the court in the ML Liquidating Trust lawsuit issued a ruling
dismissing claims for deepening insolvency damages, negligence and breach of contract and
holding that any claims related to the 2004 and 2005 Mayer Hoffman audits were barred by the
statute of limitations. The court denied the motion as to the negligent misrepresentation claim. On
June 14, 2013, the court dismissed the RICO, fraud and consumer fraud claims in the Marsh
lawsuit, and denied the CBIZ Parties’ motion as to the negligent misrepresentation and aiding and
abetting breaches of fiduciary duty claims.

The CBIZ Parties and Mayer Hoffman, without admitting any liability, have reached settlements in
the Victims Recovery, Ashkenazi and Rader lawsuits. In addition, the CBIZ Parties and Mayer
Hoffman, without admitting any liability, reached a settlement with a single plaintiff from the Marsh
lawsuit. The CBIZ Parties did not pay any monetary amounts as part of these settlements. The
Victims Recovery complaint had alleged damages of approximately $53 million, the Ashkenazi
complaint had alleged damages of approximately $92 million and the Rader complaint alleged
damages in excess of $15 million. Discovery is proceeding in the remaining matters (except
Facciola which is on appeal) and no trial dates have been set.

The CBIZ Parties deny all allegations of wrongdoing made against them in these actions and are
vigorously defending the remaining proceedings. In particular, the CBIZ Parties are not control
persons under the Arizona Securities Act of, or in a joint venture with, Mayer Hoffman. The CBIZ
Parties do not have, in any respects, the legal right to control Mayer Hoffman’s audits or any say in
how the audits are conducted. The Company has been advised by Mayer Hoffman that it denies all
allegations of wrongdoing made against it and that it intends to continue vigorously defending the
matters.

In January 2012, the CBIZ Parties were added as defendants to a lawsuit filed in the Superior Court
of California for Orange County (Signature Financial Group, Inc., et al, (“Signature”) v. Mayer
Hoffman McCann, P.C., et al). This lawsuit arises out of a review of the financial statements of
Medical Capital Holdings, Inc. (“Medical Capital”) by Mayer Hoffman. In June 2009, Medical Capital
was sued by the SEC and a receiver was appointed to liquidate Medical Capital. The plaintiffs in the
Signature lawsuit are financial advisors that sold Medical Capital investments to their clients. Those
plaintiffs were sued by their clients for losses related to Medical Capital and now seek to recover
damages from the CBIZ Parties and Mayer Hoffman of approximately $87 million for the losses and
expenses they incurred in litigation with their respective clients and for lost profits. The Signature
lawsuit seeks to impose auditor-type liabilities upon the CBIZ Parties for attest services they did not
conduct. Specific claims asserted and relief requested included fraud, intentional misrepresentation
and concealment; negligent misrepresentation; equitable indemnity; declaratory relief and
respondeat superior.

The Company cannot predict the outcome of the above matters or estimate the possible loss or
range of 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,
management believes that the allegations are without merit and that the ultimate resolution of these
matters will not have a material adverse effect on the consolidated financial condition, results of
operations or cash flows of the Company.

F-29

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

In addition to those items disclosed above, the Company is, from time to time, subject to claims and
suits arising in the ordinary course of business. Although the ultimate disposition of such
proceedings is not presently determinable, management does not believe that the ultimate
resolution of these matters will have a material adverse effect on the consolidated financial
condition, results of operations or cash flows of the Company.

12. Consolidation and Integration Reserve

CBIZ recognizes a liability for non-cancelable lease obligations at abandoned properties based
upon the net present value of remaining lease payments, net of estimated sublease payments. The
liability is determined and recognized as of the cease-use date and adjustments to the liability are
made for changes in estimates in the period in which a change becomes known.

Consolidation and integration charges are comprised of expenses associated with CBIZ’s on-going
efforts to consolidate operations and locations in fragmented markets to promote and strengthen
cross-serving between various practice groups. These expenses result from individual actions in
several markets and are not part of a company-wide program. Consolidation and integration
charges include costs for moving facilities, non-cancelable lease obligations, adjustments to lease
accruals based on changes in sublease assumptions, severance obligations, and other related
expenses.

During the years ended December 31, 2013 and 2012, there were no significant consolidation or
integration activities. Other charges against income for the years ended December 31, 2013 and
2012 related to net present value of interest and changes in assumptions for spaces under sub-
lease. Activity during the years ended December 31, 2013 and 2012 was as follows (in thousands):

Reserve balance at December 31, 2011 .......................... $
Adjustments against income (1) ............................................
Payments (2) .............................................................................
Reserve balance at December 31, 2012 ..........................
Adjustments against income (1)........................................
Payments (2) .....................................................................
Reserve balance at December 31, 2013 .......................... $

Consolidation
and Integration
Reserve
1,731
750
(1,217)
1,264
642
(895)
1,011

(1) Adjustments against income are included in “operating expenses” in the accompanying

consolidated statements of comprehensive income.
(2) Payments are net of sub-lease payments received.

Cash commitments required under these obligations are included in the schedule of future minimum
cash commitments in Note 10. Determination of the consolidation and integration reserve includes
significant judgment and estimates by management, primarily with respect to CBIZ’s ability to
sublease vacated space. Actual results could differ from those estimates.

Consolidation and integration charges primarily consist of lease consolidation and abandonment
charges and were $0.6 million, $0.8 million and $0.8 million for the years ended December 31,
2013, 2012 and 2011, respectively. Lease consolidation and integration charges are recorded as
operating expenses in the consolidated statements of comprehensive income.

F-30

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

13. Employee Benefits

Employee Savings Plan

CBIZ sponsors a qualified 401(k) defined contribution plan that covers substantially all of its
employees. Participating employees may elect to contribute, on a tax-deferred basis, up to 80% of
their pre-tax annual compensation (subject to a maximum permissible contribution under Section
401(k) of the Internal Revenue Code). Matching contributions by CBIZ are 50% of the first 6% of
base compensation that the participant contributes, and additional amounts may be contributed at
the discretion of the Board of Directors. Participants may elect to invest their contributions in various
funds including: equity, fixed income, stable value, and balanced – lifecycle funds. Employer
contributions (net of forfeitures) made to the plan during the years ended December 31, 2013, 2012
and 2011 were approximately $8.1 million, $7.4 million and $6.9 million, respectively.

Deferred Compensation Plan

CBIZ sponsors a 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. The amount of
compensation deferred under the plan is credited to each participant’s deferral account and a
deferred compensation plan obligation is established by CBIZ. An amount equal to each
participant’s compensation deferral is transferred into a rabbi trust and invested in various debt and
equity securities as directed by the participants. The assets of the rabbi trust are held by CBIZ and
recorded as “Assets of deferred compensation plan” in the accompanying consolidated balance
sheets.

Assets of the deferred compensation plan consist primarily of investments in mutual funds, money
market funds and equity securities. The values of these investments are based on published market
prices at the end of the period. 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 corporate general and administrative expenses in the consolidated
statements of comprehensive income). For the years ended December 31, 2013, 2012 and 2011,
CBIZ recorded gains or (losses) of $8.2 million, $4.3 million and ($0.4) million, respectively, related
to these investments. These investments are specifically designated as available to CBIZ solely for
the purpose of paying benefits under the deferred compensation plan. However, the investments in
the rabbi trusts would be available to all unsecured general creditors in the event that CBIZ
becomes insolvent.

Deferred compensation plan obligations represent amounts due to plan participants and consist of
accumulated participant deferrals and changes in fair value of investments thereon since the
inception of the plan, net of withdrawals. This liability is an unsecured general obligation of CBIZ
and is recorded as “Deferred compensation plan obligations” in the consolidated balance sheets.

14. Common Stock

CBIZ's authorized common stock consists of 250 million shares of common stock, par value $0.01
per share (“Common Stock”). The holders of CBIZ's Common Stock are entitled to one vote for
each share held on all matters submitted to a vote of stockholders. There are no cumulative voting
rights with respect to the election of directors. Accordingly, the holder or holders of a majority of the
outstanding shares of Common Stock will be able to elect the directors of CBIZ then standing for
election as terms expire. Holders of Common Stock have no preemptive rights and are entitled to
such dividends as may be declared by the Board of Directors of CBIZ out of funds legally available.
The holders of CBIZ’s Common Stock are not entitled to any sinking fund, redemption or conversion
rights. On liquidation, dissolution or winding up of CBIZ, the holders of Common Stock are entitled
to share ratably in the net assets of CBIZ remaining after the payment to any and all creditors. The

F-31

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

outstanding shares of Common Stock are duly authorized, validly issued, fully paid and non-
assessable.

In 2006, CBIZ filed a registration statement with the SEC to register an undeterminable number of
shares of Common Stock issuable by the Company upon conversion (the “Conversion Shares”) of
the Company’s issued and outstanding 2006 Notes. The registration statement was declared
effective on August 4, 2006. In September 2010 and June 2011, $60 million and $39.3 million,
respectively, of the 2006 Notes were retired by CBIZ, leaving $750,000 outstanding as of
December 31, 2013. Although the Company cannot at this time determine the number of
Conversion Shares it will issue upon conversion of the remaining 2006 Notes, if any, the number of
Conversion Shares will be calculated as set out in the S-3 Registration Statement filed by the
Company with the SEC on July 21, 2006. In addition, in September 2010, CBIZ issued the 2010
Notes pursuant to Rule 144A of the Securities Act of 1933, as amended. The Company cannot at
this time determine the number of shares of Common Stock it will issue upon conversion of these
notes, although the number of shares of Common Stock it will issue, if any, will be calculated as
defined in the indenture agreements with U.S. Bank National Association as trustee. The 2006
Notes and 2010 Notes are further discussed in Note 8.

Treasury Stock

CBIZ’s Board of Directors approved various share repurchase programs that were effective during
the years ended December 31, 2013, 2012 and 2011. Under these programs, shares may be
purchased in the open market or in privately negotiated transactions according to SEC rules.
The repurchase programs do not obligate CBIZ to acquire any specific number of shares and may
be suspended at any time. 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 CBIZ’s amended credit facility (described in Note 8), there are no limitations on CBIZ's ability
to repurchase CBIZ Common Stock provided that the Senior Leverage Ratio, as defined by the
credit facility, is less than 2.0.

On September 14, 2010, CBIZ’s Board of Directors authorized a supplemental share repurchase
program allowing for an additional 7,716,669 shares of CBIZ’s Common Stock to be repurchased
from CBIZ’s largest shareholder at that time, Westbury, a company organized by CBIZ founder
Michael G. DeGroote. In addition, on September 16, 2010, CBIZ’s Board of Directors authorized a
second supplemental repurchase program allowing for an additional 4,578,894 shares of CBIZ’s
Common Stock to be repurchased using a portion of the proceeds from the 2010 Notes transaction.
The total cost of these two share repurchases was $48.5 million and $25.1 million for the Westbury
and 2010 Notes transactions, respectively.

On August 30, 2013, concurrent with the sale of MMP, CBIZ repurchased an additional 3.85 million
shares from Westbury, which was 50% of Westbury’s then current holdings of the Company’s
common stock, at a price of $6.65 per share, which represented the 60-day moving average share
price at July 1, 2013. The total cost of this repurchase was $25.7 million. See Note 18 for further
discussion of the Westbury transactions.

Not including the shares repurchased from the 2010 supplemental share repurchase plans as well
as the shares repurchased from Westbury in 2013 as discussed above, CBIZ repurchased 1.0
million shares under the share repurchase programs during each of the years ended December 31,
2012 and 2011, at a cost (including fees and commissions) of $5.7 million and $9.5 million,
respectively. No shares were repurchased in 2013.

F-32

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

15. Employee Share Plans

Employee Stock Purchase Plan

The 2007 Employee Stock Purchase Plan (“ESPP”), which has a termination date of June 30, 2017,
allows qualified employees to purchase shares of common stock through payroll deductions up to a
limit of $25,000 of stock per calendar year. The price an employee pays for shares is 85% of the fair
market value of CBIZ Common Stock on the last day of the purchase period. Purchase periods
begin on the sixteenth day of the month and end on the fifteenth day of the subsequent month.
Other than a one-year holding period from the date of purchase, there is no vesting or other
restrictions on the stock purchased by employees under the ESPP.

Under the ESPP, the total number of shares of Common Stock that can be purchased shall not
exceed two million shares. For the years ended December 31, 2013 and 2012, approximately 0.1
million and 0.2 million shares were purchased under the ESPP, respectively, and approximately
$0.1 million and $0.2 million was recorded as compensation expense, respectively.

Stock Awards

Stock awards outstanding at December 31, 2013 were granted pursuant to the 2002 Amended and
Restated Stock Incentive Plan (“the Plan”), which expires in 2021. A maximum of 15.0 million stock
options, restricted stock or other stock based compensation awards may be granted under the Plan.
Shares subject to award under the Plan may be authorized and unissued shares of CBIZ Common
Stock or may be treasury shares.

CBIZ granted stock options and restricted stock awards under the Plan. The terms and vesting
schedules for stock-based awards vary by type and date of grant. At December 31, 2013,
approximately 2.3 million shares were available for future grant.

CBIZ utilized the Black-Scholes-Merton option-pricing model to determine the fair value of stock
options on the date of grant. The fair value of stock options granted during the years ended
December 31, 2013, 2012 and 2011 were determined using the following weighted average
assumptions:

Expected volatility (1) ......................................................
Expected option life (years) (2) .....................................
Risk-free interest rate (3) ................................................
Expected dividend yield (4) ............................................

2013
33.46%
4.85
0.75%
0.00%

2012
32.86%
4.85
0.78%
0.00%

2011
32.24%
4.85
2.20%
0.00%

(1) The expected volatility assumption was determined based upon the historical volatility of CBIZ’s

stock price, using daily price intervals.

(2) The expected option life was determined based upon CBIZ’s historical data using a midpoint

scenario, which assumes all options are exercised halfway between the expiration date and the
weighted average time it takes the option to vest.

(3) The risk-free interest rate assumption was based upon zero-coupon U.S. Treasury bonds with a

term approximating the expected life of the respective options.

(4) The expected dividend yield assumption was determined in view of CBIZ’s historical and

estimated dividend payouts. CBIZ does not expect to change its dividend payout policy in the
foreseeable future.

F-33

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

During the years ended December 31, 2013, 2012 and 2011, CBIZ recognized compensation
expense for these awards as follows (in thousands):

Stock options ...................................................... $ 2,748
2,907
Restricted stock awards .....................................

$ 2,981
2,907

$ 3,137
2,817

Total stock-based compensation expense
before income tax benefit ................................ $ 5,655

$ 5,888

$ 5,954

2013

2012

2011

Stock Options

Stock options granted during the years ended December 31, 2013, 2012 and 2011 were generally
subject to a 25% incremental vesting schedule over a four-year period commencing from the date of
grant. Stock options expire six years from the date of grant and are awarded with an exercise price
equal to the market value of CBIZ’s Common Stock on the date of grant. At the discretion of the
Compensation Committee of the Board of Directors, options awarded under the plan may vest in a
time period shorter than four years. Under each of the plans, stock options awarded to non-
employee directors have generally been granted with immediate vesting. Stock options may be
granted alone or in addition to other awards and may be of two types: incentive stock options and
nonqualified stock options. In the event the optionee of an incentive stock option owns, at the time
such stock option is awarded or granted, more than ten percent of the voting power of all classes of
stock of CBIZ, the option price shall not be less than 110% of such fair market value. During the
years ended December 31, 2013, 2012 and 2011, no individual who may receive options had an
ownership in excess of ten percent of the voting power of all classes of CBIZ stock. Stock option
activity during the year ended December 31, 2013 was as follows:

Number of
Options
(in
thousands)

Weighted
Average
Exercise
Price Per
Share

Weighted
Average
Remaining
Contractual
Term

Aggregate
Intrinsic

Value

(in millions)

Outstanding at December 31, 2012 ......

Granted .................................................

Exercised ..............................................

Expired or canceled ..............................

Outstanding at December 31, 2013 ......
Vested and exercisable at
December 31, 2013 .........................

7,541

1,497

(1,846)

(1,157)

6,035

$ 7.18

$ 6.52

$ 7.57

$ 7.28

$ 6.88

3.34 years

$ 13.5

2,695

$ 7.33

2.06 years

$ 4.8

The weighted-average grant-date fair value of stock options granted during the years ended
December 31, 2013, 2012 and 2011 was $2.9 million, $2.5 million and $3.5 million, respectively.
The aggregate intrinsic value of stock options exercised during each of the years ended
December 31, 2013, 2012 and 2011 was $2.0 million, $0.8 million and $0.8 million, respectively.
The intrinsic value is calculated as the difference between CBIZ’s stock price on the exercise date
and the exercise price of each option exercised. At December 31, 2013, CBIZ had unrecognized
compensation cost for non-vested stock options of $6.6 million to be recognized over a weighted
average period of approximately 1.4 years.

Restricted Stock Awards

Under the Plan, certain employees and non-employee directors were granted restricted stock
awards. Restricted stock awards are independent of option grants and are granted at no cost to the
recipients. The awards are subject to forfeiture if employment terminates prior to the release of
restrictions, generally one to four years from the date of grant. Recipients of restricted stock awards

F-34

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

are entitled to the same dividend and voting rights as holders of other CBIZ Common Stock, subject
to certain restrictions during the vesting period, and the awards are considered to be issued and
outstanding from the date of grant. Shares granted under the plan cannot be sold, pledged,
transferred or assigned during the vesting period.

Restricted stock award activity during the year ended December 31, 2013 was as follows:

Number of
Shares
(in thousands)

Weighted
Average
Grant-Date
Fair Value (1)

Non-vested at December 31, 2012 .........

1,078

Granted ...................................................

Vested .....................................................

Forfeited ..................................................

530

(433)

(92)

Non-vested at December 31, 2013 .........

1,083

$ 6.66

$ 6.44

$ 6.87

$ 6.56

$ 6.48

(1) Represents weighted average market value of the shares as the awards are granted

at no cost to the recipients.

At December 31, 2013, CBIZ had unrecognized compensation cost for restricted stock awards of
$7.0 million to be recognized over a weighted average period of approximately 1.3 years. The total
fair value of shares vested during the years ended December 31, 2013, 2012 and 2011 was
approximately $3.0 million, $2.9 million and $2.4 million, respectively. The market value of shares
awarded during the years ended December 31, 2013, 2012 and 2011 was $3.4 million, $3.0 million
and $3.6 million, respectively. This market value was recorded as unearned compensation and is
being expensed ratably over the periods which the restrictions lapse. Awards outstanding at
December 31, 2013 will be released from restrictions at dates ranging from February 2014 through
May 2017.

16. Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of
common shares outstanding during the period. Diluted earnings per share is computed by dividing
net income by diluted weighted average shares. Diluted weighted average shares are determined
using the weighted average number of common shares outstanding during the period plus the
dilutive effect of potential future issues of common stock relating to CBIZ’s stock award programs,
CBIZ’s convertible senior subordinated notes, business acquisitions, and other potentially dilutive
securities. In calculating diluted earnings per share, the dilutive effect of stock awards is computed
using the average market price for the period, in accordance with the treasury stock method.

As described in Note 8, CBIZ’s 2006 Notes and 2010 Notes may result in future issuances of CBIZ
common stock. Under the net share settlement method, potential shares issuable under the 2006
Notes and 2010 Notes will be considered dilutive, and will be included in the calculation of diluted
weighted average shares, if the Company’s market price per share exceeds the conversion price of
$10.63 for the 2006 Notes and $7.41 of the 2010 Notes. As of December 31, 2013, 2012 and 2011,
the Company’s average annual market price per share had not exceeded the conversion price of
the 2006 Notes or 2010 Notes.

F-35

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

The following table sets forth the computation of basic and diluted earnings per share from
continuing operations (in thousands, except per share data):

Year Ended December 31,
2012

2011

2013

Numerator:

Income from continuing operations ................................ $

24,989 $

22,752 $

19,139

Denominator:

Basic

Weighted average common shares outstanding ..........

48,632

49,002

49,328

Diluted
Stock Options (1) ..........................................................
Restricted stock awards (1) ..........................................
Contingent shares (2) ...................................................
Diluted weighted average common shares
outstanding .................................................................

194
263
52

–
186
64

61
179
31

49,141

49,252

49,599

Earnings Per Share:

Basic earnings per share from continuing operations ..... $

Diluted earnings per share from continuing operations .. $

0.51

0.46 $

0.39

(1) For the years ended December 31, 2013, 2012 and 2011, a total of 6.1 million, 8.2 million and 6.4

million stock based awards, respectively, were excluded from the calculation of diluted earnings per
share as their exercise prices would render them anti-dilutive.

(2) Contingent shares represent additional shares to be issued for purchase price earned by former
owners of businesses acquired by CBIZ once future conditions have been met. See Note 19 for
further discussion of acquisitions.

17. Supplemental Cash Flow Disclosures

Cash paid for interest and income taxes during the years ended December 31, 2013, 2012, and
2011 were as follows (in thousands):

Interest ................................................................... $

Income taxes (1) ..................................................... $

2013

10,783

67,941

2012

11,089

12,902

2011

11,712

16,735

(1) Approximately $47.5 million related to the gain on sale of MMP is included in cash paid for income

taxes for the year ended December 31, 2013.

Supplemental Disclosures of Non-Cash Investing and Financing Activities

Non-cash investing and financing activities during the years ended December 31, 2013, 2012 and
2011 were as follows (in thousands):

Business acquisitions, including contingent
consideration earned .........................................

Estimated contingent purchase price payable ........ $

2013

2,417

5,288

2012

2011

11,849

15,659

19,601

9,735

F-36

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Non-cash consideration paid for business acquisitions and intangible assets were generally in the
form of notes receivable, notes payable and CBIZ Common Stock.

18. Related Parties

The following is a summary of certain agreements and transactions between or among CBIZ and
certain related parties. It is CBIZ's policy to enter into transactions with related parties on terms that
are no less favorable than those that would be available from unaffiliated parties. Based on CBIZ's
experience and the terms of its transactions with unaffiliated parties, it is the Audit Committee of the
Board of Directors' and managements’ belief that the transactions described below met these
standards at the time of the transactions. Management reviews these transactions as they occur
and monitors them for compliance with the Company’s Code of Conduct, internal procedures and
applicable legal requirements. The Audit Committee reviews and ratifies such transactions annually,
or as they are more frequently brought to the attention of the Audit Committee by the Company’s
Director of Internal Audit, General Counsel or other members of Management.

Pursuant to an agreement (the “Westbury Agreement”) entered into on September 14, 2010 by
CBIZ with its largest shareholder at that time, Westbury, CBIZ purchased 7,716,669 shares of
CBIZ’s common stock at $6.25 per share for a total cost of approximately $48.5 million. Pursuant to
the Westbury Agreement, CBIZ also purchased an option for $5.0 million to purchase up to
approximately 7.7 million shares of CBIZ’s common stock at a price of $7.25 per share, which
constituted the remaining shares of CBIZ’s common stock held by Westbury. On August 30, 2013,
concurrent with the sale of MMP, CBIZ repurchased 3.85 million shares from Westbury, which was
50% of Westbury’s then current holdings of the Company’s common stock, at a price of $6.65 per
share, which represented the 60-day moving average share price at July 1, 2013. The total cost of
this repurchase was $25.7 million. The option to repurchase the remaining shares from Westbury
expired on September 30, 2013.

A number of the businesses acquired by CBIZ are located in properties owned indirectly by and
leased from persons employed by CBIZ, none of whom are members of CBIZ’s senior
management. In the aggregate, CBIZ paid approximately $2.1 million, $2.0 million and $2.0 million
during the years ended December 31, 2013, 2012 and 2011, respectively, under such leases which
management believes were at market rates.

Rick L. Burdick, a director of CBIZ, is a partner of Akin Gump Strauss Hauer & Feld LLP (“Akin
Gump”). Akin Gump performed legal work for CBIZ during the years ended December 31, 2013,
2012 and 2011 for which the firm received approximately $0.4 million, $0.2 million and $0.5 million
from CBIZ, respectively.

Richard C. Rochon, a Director of CBIZ, is an officer or director of, or holds or controls a significant
but not controlling interest in, various entities which obtained business advisory and tax services
provided by a CBIZ subsidiary. The fees paid to this subsidiary totaled approximately $0.3 million,
$0.3 million and $0.4 million for the years ended December 31, 2013, 2012 and 2011, respectively.

CBIZ maintains joint-referral relationships and administrative service agreements with independent
licensed CPA firms under which CBIZ provides administrative services in exchange for a fee. These
firms are owned by licensed CPAs who are employed by CBIZ subsidiaries and provide audit and
attest services to clients including CBIZ’s clients. The CPA firms with which CBIZ maintains
administrative service agreements operate as limited liability companies, limited liability partnerships
or professional corporations. The firms are separate legal entities with separate governing bodies
and officers. CBIZ has no ownership interest in any of these CPA firms, and neither the existence of
the administrative service agreements nor the providing of services thereunder is intended to
constitute control of the CPA firms by CBIZ. CBIZ and the CPA firms maintain their own respective
liability and risk of loss in connection with performance of each of its respective services, and CBIZ
does not believe that its arrangements with these CPA firms result in additional risk of loss.

F-37

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

CBIZ acted as guarantor for letters of credit for a CPA firm with which it has an affiliation. The letters
of credit totaled $1.9 million as of December 31, 2013 and 2012. CBIZ has recognized a liability for
the fair value of the obligations undertaken in issuing these guarantees, which is recorded as other
current liabilities in the consolidated financial statements. Management does not expect any
material changes to result from these instruments as performance is not expected to be required.

19. Acquisitions

During the year ended December 31, 2013, CBIZ acquired substantially all of the assets of two
companies: Associated Insurance Agents (“AIA”), an insurance brokerage agency specializing in
property and casualty insurance, located in Minneapolis, Minnesota and Knight Field Fabry LLP
(“Knight”), an accounting and financial services company located in Denver, Colorado. The
operating results of AIA are reported in the Employee Services practice group and the operating
results of Knight are reported in the Financial Services practice group.

Aggregate consideration for these acquisitions is expected to be approximately $10.8 million, which
consists of $4.9 million in cash paid at closing, $0.4 million in guaranteed future consideration, and
$5.5 million net present value in contingent consideration to be settled in cash, subject to the
acquired operations achieving certain performance targets.

The aggregate purchase price for these acquisitions was allocated as follows (in thousands):

Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash .............................................................................................. $
Accounts receivable, net ................................................................
Other assets ..................................................................................
Identifiable intangible assets ..........................................................
Accounts payable ..........................................................................
Accrued liabilities ...........................................................................
Deferred Taxes ..............................................................................
Total identifiable net assets ...................................................... $
Goodwill .........................................................................................
Aggregate purchase price ................................................................... $

202
578
137
3,002
(835)
(416)
(1,165)
1,503
9,278
10,781

Under the terms of the acquisition agreements, a portion of the purchase price is contingent on
future performance of the businesses acquired. The maximum potential undiscounted amount of all
future payments that CBIZ could be required to make under the contingent arrangements is $6.1
million. CBIZ is required to record the fair value of this obligation at the acquisition date. CBIZ
determined, utilizing a probability weighted income approach, that the fair value of the contingent
consideration arrangement was $5.5 million, of which $1.2 million was recorded in “Contingent
purchase price liability – current” and $4.3 million was recorded in “Contingent purchase price
liability – non-current” in the consolidated balance sheets at December 31, 2013.

The goodwill of $9.3 million arising from the acquisitions in 2013 consists largely of expected future
earnings and cash flows from the existing management team, as well as the synergies created by
the integration of the new businesses within the CBIZ organization, including cross-selling
opportunities expected with the Company’s Financial Services group and the Employee Services
group, to help strengthen the Company’s existing service offerings and expand the Company’s
market position. Goodwill totaling $1.4 million is expected to be deductible for income tax purposes.

During the year ended December 31, 2013, CBIZ purchased three client lists, two of which are
reported in the Employee Services practice group and one reported in the Financial Services
practice group. Total consideration for these client lists was $0.3 million cash paid at closing and an

F-38

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

additional $0.3 million in cash, which is contingent upon future financial performance of the client
list.

In addition, CBIZ paid $10.1 million in cash and issued approximately 184,000 shares of common
stock during the year ended December 31, 2013 as contingent earnouts for previous acquisitions.
During the year ended December 31, 2013, CBIZ also increased the fair value of the contingent
purchase price liability related to CBIZ’s prior acquisitions by $1.1 million due to higher than
originally projected future results of the acquired businesses. This increase of $1.1 million is
included in “Other income, net” in the consolidated statements of comprehensive income. Refer to
Note 6 for further discussion of contingent purchase price liabilities.

During the year ended December 31, 2012, CBIZ acquired substantially all of the assets of eight
companies, Meridian Insurance Group, LLC (“Meridian”), Primarily Care, Inc. (“PCI”) Stoltz and
Company, LTD., L.L.P (“Stoltz”), Trinity Risk Advisors, Inc.(“Trinity”), Strategic Employee Benefit
Services – The Pruett Group, Inc. (“SEBS-Pruett”), the employee benefit division of Leavitt Pacific
Insurance Brokers, Inc. (“Leavitt”), Diversified Industries, Inc. d/b/a Payroll Control Systems (“PCS”)
and PHBV Partners, L.L.P. (“PHBV”). Meridian, with offices in Boca Raton, Florida and Atlanta,
Georgia, is an insurance brokerage specializing in multiple insurance products and services
including property and casualty, bonding, personal lines and employee benefits. PCI, located in
Cranston, Rhode Island, is an employee benefits brokerage firm that offers long-term healthcare
cost reduction strategies through a unique system comprised of technology, innovative plan design,
educational tools and tangible financial health incentives. Stoltz, with offices in Midland, San
Antonio and Amarillo, Texas, is an insurance brokerage offering multiple insurance products and
services including property and casualty, personal lines and employee benefits with specialization in
oil and gas related risk management. Trinity, located in Atlanta, Georgia, is a specialty property and
casualty brokerage firm focused primarily on medical malpractice insurance to the healthcare
industry and specialized insurance to the transportation industry. SEBS-Pruett, with offices in
Nashville, Chattanooga, Johnson City and Knoxville, Tennessee, is an employee benefit and
consulting firm for mid-sized businesses. Leavitt, located in Campbell, California, provides
employee benefits, retirement plan services and ancillary business support and services to clients in
the San Jose region. PCS, located in Brooklyn Center, Minnesota, provides payroll, payroll tax, time
and labor and human resources solutions to small and mid-sized clients. PHBV, with offices in
Richmond, Virginia; Baltimore, Maryland; Indianapolis, Indiana; Austin, Texas; Cranford, New
Jersey; and Raleigh, North Carolina, is a professional consulting and accounting service provider
specializing in health care compliance on behalf of federal and state government agencies. The
operating results of Meridian, Primarily Care, Stoltz, Trinity, SEBS-Pruett, Leavitt and PCS are
reported in the Employee Services practice group, and the operating results of PHBV are reported
in the Financial Services practice group. As a result of these acquisitions, revenue of approximately
$25.4 million was recorded during the year ended December 31, 2012.

During the year ended December 31, 2012, CBIZ also acquired substantially all of the assets of
ProMedical, Inc. (“ProMedical”), a full-service provider of medical billing and practice management
services for hospital-based anesthesiology practices, located in Ocala, Florida. This acquired unit
was subsequently sold on August 30, 2013 as part of the sale of the MMP. Accordingly, the
disclosures below have been restated to exclude the acquisition of ProMedical. The acquisition of
ProMedical resulted in recording a $2.2 million contingent liability, which remains the responsibility
of CBIZ.

Aggregate consideration for these acquisitions consisted of approximately $74.2 million in cash,
$3.6 million in CBIZ Common Stock, $4.5 million in short-term notes payable, $1.7 million in
guaranteed future consideration, and $15.4 million in contingent consideration.

F-39

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

The aggregate purchase price for these acquisitions was allocated as follows (in thousands):

Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash .............................................................................................. $
Funds held for clients .....................................................................
Accounts receivable, net (as adjusted) ..........................................
Fixed assets and other ..................................................................
Identifiable intangible assets ..........................................................
Accrued liabilities ...........................................................................
Client fund obligations ...................................................................
Deferred tax liability .......................................................................
Total identifiable net assets ...................................................... $
Goodwill (as adjusted) ...................................................................
Aggregate purchase price ................................................................... $

422
39,193
7,618
1,300
39,300
(5,113)
(39,193)
(1,236)
42,291
57,190
99,481

Under the terms of the acquisition agreements, a portion of the purchase price is contingent on
future performance of the businesses acquired. The maximum potential undiscounted amount of all
future payments that CBIZ could be required to make under the contingent arrangements is $18.5
million. CBIZ is required to record the fair value of this obligation at the acquisition date. CBIZ
determined, utilizing a probability weighted income approach, that the fair value of the contingent
consideration arrangement was $15.4 million, of which $4.6 million was recorded in “Contingent
purchase price liability – current” and $10.8 million was recorded in “Contingent purchase price
liability – non-current ” in the consolidated balance sheet at December 31, 2012.

The goodwill of $57.2 million arising from the acquisitions for the year ended December 31, 2012
consists largely of expected future earnings and cash flow from the existing management team, as
well as the synergies created by the integration of the new business .within the CBIZ organization,
including cross-selling opportunities expected with the Company’s Financial Services group and the
Employee Services group, to help strengthen the Company’s existing service offerings and expand
the Company’s market position. Goodwill totaling $53.0 million is expected to be deductible for
income tax purposes.

On February 1, 2012, CBIZ also purchased an employee benefits and consulting client list which is
reported in the Employee Services practice group. Aggregate consideration for this client list
consisted of up to $2.5 million in cash, which is contingent upon future financial performance of the
client list.

In addition, CBIZ paid $25.6 million in cash and issued approximately 402,000 shares of Common
Stock and 41,314 shares of Common Stock became issuable during the year ended December 31,
2012 as contingent earnouts for previous acquisitions. During the year ended December 31, 2012,
CBIZ also reduced the fair value of the contingent purchase price liability related to CBIZ’s prior
acquisitions by $1.1 million due to lower than originally projected future results of the acquired
businesses. This reduction of $1.1 million is included in “Other (expense) income, net” in the
consolidated statements of comprehensive income. Refer to Note 6 for further discussion of
contingent purchase price liabilities.

During the year ended December 31, 2011, CBIZ acquired four companies: Thompson Dunavant
PLC, Multiple Benefit Services, Inc. (“MBS”), Gresham Smith LLC and Atlantic MDR, LLC (d/b/a
Advantage Benefit Planning) (“ABP”). Thompson Dunavant PLC, a full-service accounting and
financial services company located in Memphis, Tennessee, provides tax and financial consulting
services to clients of various sizes and in a variety of industries. MBS, an employee benefits
company located in Atlanta, Georgia, provides employee benefit consulting and support services to
clients in a wide variety of industries. Gresham Smith LLC, with offices in Tulsa, Oklahoma and St.
Louis, Missouri, provides traditional accounting services to privately held, for profit clients. ABP,
located in Pleasantville, New Jersey, provides employee benefits and retirement planning services.
The operating results of Thompson Dunavant PLC and Gresham Smith LLC are reported in the

F-40

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Financial Services practice group. The operating results of MBS and ABP are reported in the
Employee Services practice group.

Aggregate consideration for these acquisitions is expected to be approximately $29.6 million, which
consists of $11.8 million in cash and $3.3 million in CBIZ Common Stock that was paid at closing,
$1.1 million in guaranteed future consideration, and $13.4 million net present value in contingent
consideration to be settled primarily in cash and a portion in Common Stock, subject to the acquired
operations achieving certain performance targets.

The aggregate purchase price for these acquisitions was allocated as follows (in thousands):

Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash .............................................................................................. $
Accounts receivable, net ................................................................
Fixed assets and other ..................................................................
Identifiable intangible assets ..........................................................
Deferred income taxes – non-current ............................................
Accrued liabilities ...........................................................................
Total identifiable net assets ...................................................... $
Goodwill .........................................................................................
Aggregate purchase price ................................................................... $

273
3,606
437
11,072
(1,775)
(924)
12,689
16,869
29,558

Under the terms of the acquisition agreements, a portion of the purchase price is contingent on
future performance of the businesses acquired. The potential undiscounted amount of all future
payments that CBIZ could be required to make under the contingent arrangements is between $0
and $15.1 million. CBIZ is required to record the fair value of these obligations at the acquisition
date. CBIZ determined, utilizing a probability weighted income approach, that the fair value of the
contingent consideration arrangements was $13.4 million, of which $4.1 million was recorded in
“Other current liabilities” and $9.3 million was recorded in “Other non-current liabilities” in the
consolidated balance sheets at December 31, 2011.

The goodwill of $16.9 million arising from the acquisitions in 2011 consists largely of expected future
earnings and cash flow from the existing management team, as well as the synergies created by the
integration of the new businesses within the CBIZ organization, including cross-selling opportunities
expected with the Company’s Financial Services group and the Employee Services group, to help
strengthen the Company’s existing service offerings and expand the Company’s market position.
Goodwill totaling $11.8 million is expected to be deductible for income tax purposes.

CBIZ also purchased one client list in 2011 which is reported in the Employee Services practice
group. Consideration for this acquisition consisted of $0.8 million cash paid at closing and up to an
additional $0.6 million in cash which is contingent upon future financial performance of the client list.

During the year ended December 31, 2011, CBIZ reduced the fair value of the contingent purchase
price liability related to CBIZ’s prior acquisitions by $3.5 million due to lower than originally projected
future results of the acquired businesses. This reduction of $3.5 million is included in “Other income,
net” in the consolidated statements of comprehensive income. See Note 6 for further discussion of
contingent purchase price liabilities.

In addition, CBIZ paid $16.7 million in cash, issued approximately 38,900 shares of Common Stock,
and 251,100 shares of Common Stock became issuable during the year ended December 31, 2011
as contingent proceeds and payments against notes payable for previous acquisitions.

The operating results of all acquired businesses are included in the accompanying consolidated
financial statements since the dates of acquisition. Client lists and non-compete agreements are
recorded at fair value at the time of acquisition. The excess of purchase price over the fair value of
net assets acquired, (including client lists and non-compete agreements) is allocated to goodwill.

F-41

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Additions to goodwill, client lists and other intangible assets resulting from acquisitions and
contingent consideration earned during the years ended December 31, 2013 and 2012 were as
follows (in thousands):

Goodwill ................................... $

Client lists ................................. $

Other intangible assets ............ $

2013

9,575

3,819

182

2012

57,688

40,165

1,450

The additions to goodwill include purchase price adjustments made in 2013 that retrospectively
adjusted 2012 goodwill by a total of $1.4 million. These purchase price adjustments resulted from
finalizing net working capital arrangements pertaining to two acquisitions made in 2012. The result
of these adjustments was a $0.7 million reduction of goodwill for each of the Financial Services and
Employee Services operating segments.

As a result of CBIZ’s acquisition activities in 2012, the following table provides unaudited pro forma
financial information for CBIZ as if all the acquisitions were acquired on January 1, 2012. The
unaudited pro forma financial information includes the effect of financing resulting in interest
expense of approximately $2.0 million, amortization expense of $2.6 million resulting from acquired
intangible assets, and other adjustments to normalize certain expenses such as benefits,
commissions and incentive compensation. The unaudited pro forma results of operations are
presented for illustrative purposes only and are not necessarily indicative of the results of operation
that would have been obtained had these businesses actually been acquired at January 1, 2012,
nor are they intended to be a projection of future results of operations. No pro forma information is
presented for the year ended December 31, 2011 due to lack of available data.

Twelve Months Ended December 31, 2012
Pro Forma
Adjustments

Pro Forma
Consolidated

Consolidated
As Reported

Revenue ................................................ $

626,538

Net income ............................................ $

Earnings per share:
Basic................................................... $
Diluted ................................................ $

Weighted average common
shares outstanding:
Basic...................................................
Diluted ................................................

31,146

0.63
0.63

49,002
49,252

$
$

44,879

4,585

0.09
0.09

435
419

671,417

35,731

0.72
0.72

49,437
49,671

20. Discontinued Operations and Divestitures

CBIZ will divest (through sale or closure) business operations that do not contribute to the
Company’s long-term objectives for growth, or that are not complementary to its target service
offerings and markets. Divestitures are classified as discontinued operations provided they meet the
criteria as provided in FASB ASC 205 “Presentation of Financial Statements – Discontinued
Operations – Other Presentation Matters”.

Discontinued Operations

During the year ended December 31, 2013, CBIZ sold all of the issued and outstanding capital
stock of CBIZ Medical Management Professionals, Inc. and CBIZ Medical Management, Inc. and

F-42

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

substantially all of the stock of their subsidiary companies, collectively consisting of all of CBIZ’s
MMP’s ongoing operations and business for a purchase price of $201.6 million, subject to final
working capital adjustments pursuant to a Stock Purchase Agreement among CBIZ Operations, Inc.
and Zotec Partners, LLC dated July 26, 2013. Certain adjustments were determined to be
necessary to reflect the operating results and financial position of MMP as discontinued operations.
These adjustments include an allocation for interest expense and tax expense, as well as an
allocation of deferred tax accounts that specifically relate to MMP. The interest charges were based
on the assumption that $40.0 million of the credit facility debt was related to MMP, thus the interest
related to the $40.0 million was charged to MMP at the respective annual rate of interest for the
credit facility. Tax expense was allocated to MMP at its respective individual tax rate. The assets
and liabilities of MMP have been consolidated and are included in “Assets of discontinued
operations” and “Liabilities of discontinued operations” on the consolidated balance sheets as of
December 31, 2012. The results of operations for MMP for the years ended December 31, 2013,
2012 and 2011 are included in “Income for discontinued operations, net of tax,” and the gain on the
sale of MMP is recorded in “Gain on sale of discontinued operations, net of tax” on the consolidated
statements of comprehensive income.

In addition, during the fourth quarter of 2013, CBIZ made the decision to divest the operations of its
property tax business located in Leawood, Kansas, as a result of declining growth and profitability.
This business is being held for sale at December 31, 2013, with the results of operations being
included in “Income for discontinued operations, net of tax” on the consolidated statements of
comprehensive income. This business was previously reported in the Financial Services practice
group.

During the year ended December 31, 2012, CBIZ did not sell any operations. Gains recorded for the
year ended December 31, 2012 related to contingent proceeds of $0.1 million for a National
Practices operation that was sold during 2010.

During the year ended December 31, 2011, CBIZ sold a business from the Financial Services
practice group and will receive contingent proceeds from this sale transaction based on revenue
over the three-year period ending December 31, 2014. As part of the sale of this business, CBIZ
reduced its goodwill balance by approximately $0.3 million.

Revenue and results from operations of discontinued operations for the years ended December 31,
2013, 2012 and 2011 are separately reported as “Income from operations of discontinued
operations, net of tax” in the consolidated statements of comprehensive income and were as follows
(in thousands):

Revenue .......................................................................... $
Income from operations of discontinued operations
before income tax expense .......................................... $
Income tax expense ........................................................
Income from operations of discontinued operations
operations, net of tax .................................................... $

2013

2012

2011

92,007

$ 139,574

$ 143,478

5,131
2,593

2,538

13,548
5,244

$ 14,727
5,873

8,304

8,854

Gains or losses from the sale of discontinued operations are recorded as “Gain on disposal of
discontinued operations, net of tax”, in the accompanying consolidated statements of
comprehensive income. Additionally, proceeds that are contingent upon a divested operation’s
actual future performance are recorded as gain on sale of discontinued operations in the period they
are earned.

F-43

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Gains on disposals of discontinued operations for the years ended December 31, 2013, 2012 and
2011 were as follows (in thousands):

Gain on disposal of discontinued operations,
before income tax expense .......................................... $ 107,533
Income tax expense ........................................................
49,197
Gain on disposal of discontinued operations,
net of tax ...................................................................... $

58,336

142
52

207
193

2013

2012

2011

At December 31, 2013 and 2012, the assets and liabilities of businesses classified as discontinued
operations are reported separately in the accompanying consolidated financial statements and
consisted of the following (in thousands):

Assets:
Accounts receivable, net .............................................. $
Goodwill and other intangible assets, net.....................
Property and equipment, net ........................................
Other assets .................................................................
Assets of discontinued operations ........................... $

Liabilities:
Accounts payable ......................................................... $
Accrued personnel .......................................................
Accrued expenses .......................................................
Other liabilities .............................................................
Liabilities of discontinued operations ....................... $

2013

2012

1,068
0
0
24
1,092

19,751
80,222
2,609
2,544
$ 105,126

72
161
139
(2)
370

4,099
4,256
2,296
3,530
14,181

Divestitures

Gains or losses from divested operations and assets that do not qualify for treatment as
discontinued operations are recorded as “Gain on sale of operations, net” in the consolidated
statements of comprehensive income. On December 31, 2013, CBIZ sold its mergers and
acquisition business. No gain or loss was recorded as a result of the sale. Gains totaling $0.1
million, $2.8 million and $2.9 million the years ended December 31, 2013, 2012 and 2011,
respectively, were recorded and relate to sales made in the respective period, contingent
consideration earned on sales made in previous periods, and deferred gains that are recognized as
cash payments are received. CBIZ received cash proceeds for divestiture activity totaling $0.1
million, $1.4 million and $0.9 million for the years ended December 31, 2013, 2012 and 2011,
respectively. As a result of the sale of CBIZ’s individual wealth management business on January 1,
2011, goodwill was reduced by $2.2 million.

F-44

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

21. Quarterly Financial Data (Unaudited)

The following is a summary of the unaudited quarterly results of operations for the years ended
December 31, 2013 and 2012 (in thousands, except per share amounts).

Revenue ........................................................ $
Operating expenses ......................................
Gross margin .................................................
Corporate general and administrative ...........
Operating income (loss) ................................
Other income (expense):
Interest expense ........................................
Gain on sale of operations, net .................
Other income, net ..........................................
Total other expense, net ........................
Income (loss) from continuing operations
before income tax expense (benefit) .........
Income tax expense (benefit) ........................
Income (loss) from continuing operations ......
Income (loss) from operations of
discontinued operations, net of tax ............
Gain on disposal of discontinued
operations, net of tax .................................
Net income (loss) .......................................... $

Earnings (loss) per share:
Basic:
Continuing operations ............................... $
Discontinued operations ............................
Net income ................................................ $
Diluted:
Continuing operations ............................... $
Discontinued operations ............................
Net income ................................................ $

March 31,
201,189
159,389
41,800
9,984
31,816

(4,056)
18
1,728
(2,310)

29,506
12,385
17,121

1,159

23
18,303

0.35
0.02
0.37

0.34
0.02
0.37

Basic weighted average common shares ......

49,417

Diluted weighted average common shares ...

49,836

2013

June 30,
172,229
151,091
21,138
7,649
13,489

September 30,
$

168,779
150,258
18,521
8,944
9,577

December 31,
$

149,836
147,992
1,844
7,821
(5,977)

(4,145)
48
515
(3,582)

9,907
4,287
5,620

1,622

1,905
9,147

0.11
0.07
0.18

49,639

49,929

(3,815)
6
2,371
(1,438)

8,139
2,663
5,476

569

56,315
62,360

0.11
1.17
1.28

0.11
1.16
1.27

48,504

49,003

(3,358)
7
3,203
(148)

(6,125)
(2,897)
(3,228)

(812)

93
(3,947)

(0.07)
(0.01)
(0.08)

46,981

F-45

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Revenue ........................................................ $
Operating expenses .......................................
Gross margin .................................................
Corporate general and administrative ............
Operating income (loss) .................................
Other income (expense):
Interest expense ........................................
Gain on sale of operations, net ..................
Other income (expense), net ........................
Total other income (expense), net .........
Income (loss) from continuing operations
before income tax expense (benefit) ..........
Income tax expense (benefit) .........................
Income (loss) from continuing operations ......
Income from operations of discontinued
operations, net of tax .................................
Gain on disposal of discontinued
operations, net of tax .................................
Net income ..................................................... $

Earnings (loss) per share:
Basic:
Continuing operations ................................ $
Discontinued operations ............................
Net income ................................................. $
Diluted:
Continuing operations ................................ $
Discontinued operations ............................
Net income ................................................. $

March 31,
187,325
149,172
38,153
10,545
27,608

(3,791)
2,590
3,365
2,164

29,772
12,487
17,285

1,478

22
18,785

0.35
0.03
0.38

Basic weighted average common shares ......

49,103

Diluted weighted average common shares ....

49,531

2012

June 30,
153,936
135,564
18,372
7,575
10,797

September 30,
$

149,312
136,773
12,539
7,475
5,064

December 31,
$

135,965
133,977
1,988
4,615
(2,627)

(3,831)
49
(884)
(4,666)

6,131
2,267
3,864

1,966

18
5,848

0.08
0.04
0.12

49,041

49,244

(3,576)
21
2,542
(1,013)

4,051
1,032
3,019

2,256

32
5,307

0.06
0.05
0.11

48,895

49,109

(3,801)
106
3,191
(504)

(3,131)
(1,715)
(1,416)

2,604

18
1,206

(0.03)
0.05
0.02

48,967

During the fourth quarter of 2012, CBIZ recorded proceeds of $1.9 million in other income
(expense), net resulting from a legal settlement. In addition, CBIZ reduced the fair value of the
contingent purchase price liability related to CBIZ’s prior acquisitions by $0.7 million due to lower
than originally projected future results of the acquired businesses. These items are included in
“Other income (expense), net” in the consolidated statements of comprehensive income.

F-46

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

22. Segment Disclosures

CBIZ's business units have been aggregated into three practice groups: Financial Services,
Employee Services and National Practices. The business units have been aggregated based on the
following factors: similarity of the products and services provided to clients, similarity of the
regulatory environment and similarity of economic conditions affecting long-term performance. The
business units are managed along these segment lines. A general description of services provided
by practice group is provided in the table below.

Financial Services
 Accounting
 Tax
 Financial Advisory
 Valuation
 Litigation Support
 Government Health Care

Consulting

 Risk Advisory Services
 Real Estate Advisory

National Practices
 Managed Networking and

Hardware Services
 Health Care Consulting

Corporate and Other. Included in Corporate and Other are operating expenses that are not directly
allocated to the individual business units. These expenses are primarily comprised of certain health
care costs, gains or losses attributable to assets held in the Company’s deferred compensation
plan, share-based compensation, consolidation and integration charges, certain professional fees,
certain advertising costs and other various expenses.

Accounting policies of the practice groups are the same as those described in Note 1. Upon
consolidation, intercompany accounts and transactions are eliminated, thus inter-segment revenue
is not included in the measure of profit or loss for the practice groups. Performance of the practice
groups is evaluated on operating income excluding those costs listed above, which are reported in
the “Corporate and Other” segment.

CBIZ operates in the United States and Canada and revenue generated from such operations
during the years ended December 31, 2013, 2012 and 2011 was as follows (in thousands):

Year Ended December 31,
2012

2011

2013

United States ........................... $
Canada ....................................

690,329
1,704

Total Revenue .................... $

692,033

624,883
1,655

626,538

589,605
1,665

591,270

There is no one customer that represents a significant portion of CBIZ’s revenue.

F-47

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Segment information for the years ended December 31, 2013, 2012 and 2011 was as follows (in
thousands):

Year Ended December 31, 2013

Financial
Services

Employee
Services

National
Practices

Corporate
and Other

Total

Revenue .......................................... $ 456,649

204,863

30,521

–

692,033

Operating expenses ........................

395,976

168,696

Gross margin ...................................
Corporate general & admin .............
Operating income (loss) ..................
Other income (expense):
Interest expense ...........................
Gain on sale of operations, net .....
Other income, net .........................
Total other income (expense) .....
Income (loss) from continuing
operations before income
tax expense ................................

60,673
–
60,673

–
–
492
492

36,167
–
36,167

(24)
–
297
273

27,589

2,932
–
2,932

–
–
1
1

16,469

(16,469)
34,398
(50,867)

(15,350)
79
7,027
(8,244)

608,730

83,303
34,398
48,905

(15,374)
79
7,817
(7,478)

61,165

36,440

2,933

(59,111)

41,427

Year Ended December 31, 2012

Financial
Services

Employee
Services

National
Practices

Corporate
and Other

Total

Revenue .......................................... $ 410,195

186,217

30,126

–

626,538

Operating expenses ........................

357,378

155,311

52,817
–
52,817

–
–
2,063
2,063

30,906
–
30,906

(30)
–
1,086
1,056

26,713

3,413
–
3,413

–
–
2
2

16,084

(16,084)
30,210
(46,294)

(14,969)
2,766
5,063
(7,140)

555,486

71,052
30,210
40,842

(14,999)
2,766
8,214
(4,019)

54,880

31,962

3,415

(53,434)

36,823

Year Ended December 31, 2011

Financial
Services

Employee
Services

National
Practices

Corporate
and Other

Total

Revenue .......................................... $ 389,743

171,205

30,322

–

591,270

Operating expenses ........................

336,206

144,528

53,537
–
53,537

26,677
–
26,677

(2)
–
26
24

(28)
–
780
752

26,222

4,100
–
4,100

–
–
10
10

11,572

(11,572)
31,533
(43,105)

(16,017)
2,920
2,385
(10,712)

518,528

72,742
31,533
41,209

(16,047)
2,920
3,201
(9,926)

53,561

27,429

4,110

(53,817)

31,283

F-48

CBIZ, INC. AND SUBSIDIARES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (continued)

23. Subsequent Events

Effective January 1, 2014, CBIZ acquired substantially all the assets of two companies, Clearview
National Partners, L.L.C. (“Clearview”) and Centric Insurance Agency (“Centric”). Clearview, located
in Waltham, Massachusetts, is a specialized employee benefits broker focused on providing
employee benefit solutions to clients with more than 100 employees. Centric, located in New
Providence, New Jersey, is an insurance broker providing property and casualty insurance, with a
specialty in education and public schools. Annualized revenue for Clearview and Centric is
expected to be approximately $2.5 million and $1.6 million, respectively, and will be reported in the
Employee Services practice group.

Effective February 1, 2014, CBIZ acquired Lewis, Birch & Ricardo, L.L.C. (“LBR”), located in
Tampa, Florida. LBR is a professional tax, accounting and consulting service provider with expertise
in matrimonial and family law litigation support, not-for-profit entities and healthcare provider
services. Annualized revenue is estimated to be approximately $9.8 million and will be reported in
the Financial Services practice group.

Subsequent to December 31, 2013 up to the date of this filing, CBIZ repurchased 456,603 shares at
a total cost of approximately $3.9 million under the Rule 10b5-1 trading plan, which allows CBIZ to
repurchase shares below a predetermined price per share.

F-49

CBIZ, INC. AND SUBSIDIARIES

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS AND
RESERVES FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
(In thousands)

COLUMN A

COLUMN B

COLUMN C

COLUMN D

COLUMN E

Balance at
Beginning of
Period

Charged to
Cost and
Expense

Additions
Charged
to Other
Accounts

Acquisitions
and
Divestitures

Charge-offs,
Net of
Recoveries

Balance at
End of
Period

Year ended December 31, 2013
Allowance deducted from
assets to which they apply:

Allowance for doubtful accounts .......

11,801

4,767

–

Year ended December 31, 2012
Allowance deducted from
assets to which they apply:

Allowance for doubtful accounts .......

9,170

5,325

–

Year ended December 31, 2011
Allowance deducted from
assets to which they apply:

Allowance for doubtful accounts ....... $

10,263

6,507

–

(6,390)

10,178

(2,694)

11,801

(7,600)

9,170

F-50

SHAREHOLDER INFORMATION

INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP: One Cleveland Center | 1375 East Ninth Street, Suite 2600 | Cleveland, OH 44114-1796

SECURITY MARKETS
Shares of CBIZ, Inc. are listed on the New York Stock Exchange under the ticker symbol “CBZ”

SHAREHOLDERS’ INFORMATION
Copies of the Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the
Securities and Exchange Commission are available without charge to stockholders upon request to:

INVESTOR RELATIONS: CBIZ, Inc. | 6050 Oak Tree Blvd., South, Suite 500 | Cleveland, OH 44131 | 216.447.9000

LEGAL COUNSEL
AKIN GUMP STRAUSS HAUER & FELD LLP: Robert S. Strauss Building
1333 New Hampshire Avenue, NW | Washington, DC 20036-1564

STOCK TRANSFER AGENT AND REGISTRAR
Shareholders requiring a change of name, address, or ownership of stock, as well as
information about shareholder records or lost or stolen certificates should contact:

First Class/Registered/Certified Mail: COMPUTERSHARE INVESTOR SERVICES, LLC
P.O. Box 43078 | Providence, RI 02940-3078

Courier Services : COMPUTERSHARE INVESTOR SERVICES, LLC
250 Royall Street | Canton, MA 02021

ANNUAL MEETING
The Annual Meeting of Shareholders will be held on Thursday, May 15, 2014, at 11:00 a.m.
at Park Center Plaza II | 6150 Oak Tree Blvd., South, Lower Level | Independence, OH 44131

ELECTRONIC VERSION
www.cbiz.com

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