v2.4.0.6
Financial Instruments
 3 Months Ended
Mar. 31, 2012
Financial Instruments [Abstract]  
Financial Instruments
7. Financial Instruments

Bonds

In connection with CBIZ’s payroll business and the collection of client funds, CBIZ invests a portion of these funds in corporate and municipal bonds. CBIZ held corporate and municipal bonds with par values totaling $29.3 million and $29.4 million at March 31, 2012 and December 31, 2011, respectively. All bonds are investment grade and are classified as available-for-sale. These bonds have maturity dates or callable dates ranging from April 2012 through February 2017, and are included in “Funds held for clients” 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 three months ended March 31, 2012 and the twelve months ended December 31, 2011 (in thousands):

 

                 
    Three
Months Ended
March 31,
2012		     Twelve
Months Ended
December 31,
2011		  

Fair value at beginning of period

   $ 30,923     $ 15,255  

Purchases

     2,160       19,643  

Sales

     (2,000 )      (3,000 ) 

Maturities and calls

     (275 )      (1,916 ) 

(Decrease) increase in bond premium

     (116 )      914  

Fair market value adjustment

     231       27  
   

 

 

    

 

 

  

Fair value at end of period

   $ 30,923     $ 30,923  
   

 

 

    

 

 

  

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. See the Annual Report on Form 10-K for the year ended December 31, 2011 for further discussion on CBIZ’s interest rate swaps.

At March 31, 2012 and December 31, 2011, 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 March 31, 2012 and December 31, 2011 (in thousands).

 

                         
    March 31, 2012  
     Notional
Amount		     Fair
Value (2)		     Balance Sheet Location  

Interest rate swap (1)

   $ 40,000     $ (738 )      Other non-current liabilities  

 

                         
    December 31, 2011  
     Notional
Amount		     Fair
Value (2)		     Balance Sheet Location  

Interest rate swap (1)

   $ 40,000     $ (670 )      Other non-current liabilities  

 

  (1) Represents interest rate swap with a notional value of $40.0 million, of which $25.0 million will expire in June 2014 and the remaining $15.0 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 8.

The following table summarizes the effects of interest rate swap on CBIZ’s consolidated statements of comprehensive income for the three months ended March 31, 2012 and 2011 (in thousands).

 

                                         
    (Loss) Gain Recognized
in AOCL, net of tax		     Loss Reclassified
from AOCL into Expense		  
    Three Months Ended     Three Months Ended        
    March 31,     March 31,        
    2012     2011     2012     2011     Location  

Interest rate swap

   $ (43 )    $ 10     $ 90     $ 15       Interest expense