XML 62 R11.htm IDEA: XBRL DOCUMENT v2.4.0.8
Financial Instruments
 6 Months Ended
Jun. 30, 2013
Derivative Instruments And Hedging Activities Disclosure [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 $28.2 million at June 30, 2013 and December 31, 2012, respectively. All bonds are investment grade and are classified as available-for-sale. These bonds have maturity or callable dates ranging from July 2013 through April 2018, 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 six months ended June 30, 2013 and the twelve months ended December 31, 2012 (in thousands):

 

     Six
Months Ended
June 30,
2013		     Twelve
Months Ended
December 31,
2012		  

Fair value at beginning of period

    $ 29,776      $ 30,923   

Purchases

      4,390        5,742   

Sales

      (345 )      (2,000 ) 

Maturities and calls

      (3,000 )      (4,900 ) 

Decrease in bond premium

      (154 )      (290 ) 

Fair market value adjustment

      (295 )      301   
  

 

 

    

 

 

  

Fair value at end of period

    $ 30,372      $ 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. See the Annual Report on Form 10-K for the year ended December 31, 2012 for further discussion on CBIZ’s interest rate swaps.

At June 30, 2013 and December 31, 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 June 30, 2013 and December 31, 2012 (in thousands).

 

    June 30, 2013
    Notional     Fair     Balance Sheet
    Amount     Value (2)    

Location

Interest rate swap (1)

   $ 40,000      $ (591 )    Other current and non-current liabilities

 

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

Interest rate swap (1)

    $ 40,000       $ (817 )      Other 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 received interest that varied with the three-month LIBOR.
(2) See additional disclosures regarding fair value measurements in Note 8.

 

The swap was deemed to be effective for the three and six months ended June 30, 2013 and 2012. The following table summarizes the effects of the interest rate swap on CBIZ’s consolidated statements of comprehensive income for the three and six months ended June 30, 2013 and 2012 (in thousands):

 

     Gain (loss) Recognized in
AOCL, net of tax		     Loss Reclassified from
AOCL into Expense		  
     Three Months Ended     Three Months Ended  
     June 30,     June 30,  
     2013      2012     2013      2012  

Interest rate swap

    $ 78       $ (50 )    $ 114       $ 95   
     Six Months Ended     Six Months Ended  
     June 30,     June 30,  
     2013      2012     2013      2012  

Interest rate swap

    $ 143       $ (93 )    $ 225       $ 185