Goodwill and Other Intangible Assets, Net

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets, Net

4. Goodwill and Other Intangible Assets, Net

The components of goodwill and other intangible assets, net at December 31, 2015 and 2014 were as follows (in thousands):


	2015			2014
Goodwill	$	447,685		$	435,231
Intangibles:
Client lists		147,706			140,187
Other intangibles		6,977			6,482

Total intangibles		154,683			146,669

Total goodwill and other intangibles assets		602,368			581,900
Accumulated amortization:
Client lists		(65,037	)		(54,213	)
Other intangibles		(1,678	)		(1,225	)

Total accumulated amortization		(66,715	)		(55,438	)

Goodwill and other intangible assets, net	$	535,653		$	526,462

Goodwill

Changes in the carrying amount of goodwill by operating segment for the years ended December 31, 2015 and 2014 were as follows (in thousands):


	Financial Services			Employee Services		National Practices		Total Goodwill
December 31, 2013	$	260,715		$	122,316	$	1,666	$	384,697
Additions		9,452			42,619		—		52,071
Divestitures		(1,537	)		—		—		(1,537	)

December 31, 2014	$	268,630		$	164,935	$	1,666	$	435,231
Additions		409			13,599		—		14,008
Divestitures		(1,554	)		—		—		(1,554	)

December 31, 2015	$	267,485		$	178,534	$	1,666	$	447,685

Additions to Goodwill

•

Businesses acquired during 2015 resulted in additions to goodwill of approximately $13.5 million, which was recorded in the Employee Services practice group.

•

Businesses acquired during 2014 resulted in additions to goodwill of approximately $51.9 million, of which $42.6 million was recorded in the Employee Services practice group and $9.3 million was recorded in the Financial Services practice group.

•

The remaining increases in goodwill during 2015 and 2014 were a result of final working capital adjustments. Refer to Note 18 to the accompanying consolidated financial statements for further discussion of acquisition activities.

Decreases to Goodwill

•

During the year ended December 31, 2015, CBIZ sold three businesses within the Financial Services practice group, two of which were discontinued in 2014. This resulted in a decrease to goodwill of $1.6 million.

•

During the year ended December 31, 2014, CBIZ sold one business within the Financial Services practice group resulting in a decrease to goodwill of $1.5 million.

Goodwill Impairment

During the fourth quarter of 2015 and 2014, CBIZ applied the principles as prescribed in FASB ASC Topic 350 “Intangibles — Goodwill and Other” in order to complete its goodwill impairment tests.

•

Quantitative Assessment: In the fourth quarter of 2015, CBIZ based its goodwill assessment on a quantitative assessment for each of its reporting units that carried a goodwill balance using both a discounted cash flow valuation technique and a market-based approach. The impairment test incorporated estimates of future cash flows; allocation of certain assets, liabilities, and cash flows among reporting units; future growth rates; and the applicable weighted-average cost of capital used to discount those estimated cash flows.

•

At December 31, 2015, goodwill totaled $447.7 million. No goodwill impairment was recognized as a result of the annual evaluation performed as of November 1, 2015. The estimated fair value of the five reporting units was substantially in excess of its carrying value as of the annual test date.

•

Qualitative Assessment: In the fourth quarter of 2014, CBIZ based its goodwill assessment 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.

•

At December 31, 2014, goodwill totaled $435.2 million. 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

Client Lists and Other Intangibles

At December 31, 2015, the weighted average amortization period remaining for total intangible assets was 7.8 years. Client lists are amortized over their expected period of benefit and had a weighted-average amortization period of 7.6 years remaining at December 31, 2015. Other intangibles are amortized over periods ranging from 2 to 15 years, and had a weighted-average amortization period of 10.0 years remaining at December 31, 2015.

Amortization expense related to client lists and other intangible assets for the years ended December 31, 2015, 2014 and 2013 was as follows (in thousands):


	2015		2014		2013
Operating expenses	$	14,714	$	14,462	$	13,520
Corporate general and administrative expenses		17		16		15

Total amortization expense	$	14,731	$	14,478	$	13,535

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):


2016	$	14,871
2017	$	14,410
2018	$	13,360
2019	$	9,376
2020	$	8,306

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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