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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
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)
6801 Brecksville Rd, Door N, Independence, Ohio
(Address of principal executive offices)
22-2769024
(I.R.S. Employer
Identification No.)
44131
(Zip Code)
(216) 447-9000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 Par ValueCBZNew York Stock Exchange

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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No 

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Class of Common StockOutstanding at October 24, 2022
Common Stock, par value $0.01 per share50,832,709



CBIZ, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
 
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PART I – FINANCIAL INFORMATION
Item 1.    Financial Statements
CBIZ, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
September 30,
2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents$2,040 $1,997 
Restricted cash39,555 30,383 
Accounts receivable, net398,970 242,168 
Other current assets17,065 19,217 
Current assets before funds held for clients457,630 293,765 
Funds held for clients125,451 157,909 
Total current assets583,081 451,674 
Non-current assets:
Property and equipment, net45,469 43,423 
Goodwill and other intangible assets, net957,186 840,783 
Assets of deferred compensation plan111,060 136,321 
Operating lease right-of-use assets, net191,699 151,145 
Other non-current assets11,123 4,588 
Total non-current assets1,316,537 1,176,260 
Total assets$1,899,618 $1,627,934 
LIABILITIES
Current liabilities:
Accounts payable$74,247 $65,757 
Income taxes payable14,037 1,671 
Accrued personnel costs125,310 114,032 
Contingent purchase price liabilities61,355 34,373 
Operating lease liabilities36,519 30,586 
Other current liabilities19,045 18,755 
Current liabilities before client fund obligations330,513 265,174 
Client fund obligations128,091 158,115 
Total current liabilities458,604 423,289 
Non-current liabilities:
Bank debt271,100 155,300 
Debt issuance costs(2,164)(449)
Total long-term debt, net268,936 154,851 
Income taxes payable2,069 1,727 
Deferred income taxes, net22,566 15,440 
Deferred compensation plan obligations111,060 136,321 
Contingent purchase price liabilities79,853 44,766 
Operating lease liabilities181,841 145,808 
Other non-current liabilities564 1,184 
Total non-current liabilities666,889 500,097 
Total liabilities1,125,493 923,386 
STOCKHOLDERS' EQUITY
Common stock1,361 1,352 
Additional paid in capital793,514 770,117 
Retained earnings745,614 628,762 
Treasury stock(769,981)(694,716)
Accumulated other comprehensive income (loss)3,617 (967)
Total stockholders’ equity774,125 704,548 
Total liabilities and stockholders’ equity$1,899,618 $1,627,934 

See the accompanying notes to the unaudited condensed consolidated financial statements
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CBIZ, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In thousands, except per share data)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Revenue$363,262 $282,719 $1,116,936 $862,097 
Operating expenses306,017 238,328 886,052 699,233 
Gross margin57,245 44,391 230,884 162,864 
Corporate general and administrative expenses15,893 13,035 43,128 41,334 
Legal settlement, net   30,468 
Operating income41,352 31,356 187,756 91,062 
Other income (expense):
Interest expense(2,305)(1,016)(5,209)(2,852)
Gain on sale of operations, net176  311 6,385 
Other (expense) income, net(2,618)(1,133)(24,919)12,029 
Total other (expense) income, net(4,747)(2,149)(29,817)15,562 
Income from continuing operations before income tax expense36,605 29,207 157,939 106,624 
Income tax expense9,131 7,512 41,074 26,100 
Income from continuing operations27,474 21,695 116,865 80,524 
Loss from discontinued operations, net of tax(4)(4)(13)(17)
Net income$27,470 $21,691 $116,852 $80,507 
Earnings per share:
Basic:
Continuing operations$0.53 $0.41 $2.25 $1.52 
Discontinued operations    
Net income$0.53 $0.41 $2.25 $1.52 
Diluted:
Continuing operations$0.53 $0.41 $2.22 $1.50 
Discontinued operations    
Net income$0.53 $0.41 $2.22 $1.50 
Basic weighted average shares outstanding51,457 52,425 51,827 52,885 
Diluted weighted average shares outstanding52,238 53,226 52,720 53,796 
Comprehensive income:
Net income$27,470 $21,691 $116,852 $80,507 
Other comprehensive income, net of tax2,179 159 4,584 1,071 
Comprehensive income$29,649 $21,850 $121,436 $81,578 

See the accompanying notes to the unaudited condensed consolidated financial statements
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CBIZ, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
(In thousands)

Issued
Common
Shares
Treasury
Shares
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
 Income (Loss)
Totals
June 30, 2022135,823 84,221 $1,358 $781,142 $718,144 $(737,559)$1,438 $764,523 
Net income— — — — 27,470 — — 27,470 
Other comprehensive income— — — — — — 2,179 2,179 
Share repurchases— 744 — — — (32,422)— (32,422)
Restricted stock units and awards1 — — — — — — — 
Stock options exercised254 — 2 4,096 — — — 4,098 
Stock-based compensation— — — 5,559 — — — 5,559 
Business acquisitions68 — 1 2,717 — — — 2,718 
September 30, 2022136,146 84,965 $1,361 $793,514 $745,614 $(769,981)$3,617 $774,125 


Issued
Common
Shares
Treasury
Shares
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Income (Loss)
Totals
June 30, 2021134,892 82,173 $1,349 $757,421 $616,691 $(661,772)$(1,357)$712,332 
Net income— — — — 21,691 — — 21,691 
Other comprehensive income— — — — — — 159 159 
Share repurchases— 650 — — — (21,445)— (21,445)
Stock options exercised142 — 1 1,694 — — — 1,695 
Stock-based compensation— — — 2,905 — — — 2,905 
Business acquisitions99 — 1 3,309 — — — 3,310 
September 30, 2021135,133 82,823 $1,351 $765,329 $638,382 $(683,217)$(1,198)$720,647 









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CBIZ, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
(In thousands)

Issued
Common
Shares
Treasury
Shares
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Income (Loss)
Totals
December 31, 2021135,187 83,149 $1,352 $770,117 $628,762 $(694,716)$(967)$704,548 
Net income— — — — 116,852 — — 116,852 
Other comprehensive income— — — — — — 4,584 4,584 
Share repurchases— 1,628 — — — (67,976)— (67,976)
Indirect repurchase of shares for minimum tax withholding— 188 — — — (7,289)— (7,289)
Restricted stock units and awards120 — 1 (1)— — —  
Performance share units211 — 2 (2)— — —  
Stock options exercised541 — 5 7,989 — — — 7,994 
Stock-based compensation— — — 11,987 — — — 11,987 
Business acquisitions87 — 1 3,424 — — — 3,425 
September 30, 2022136,146 84,965 $1,361 $793,514 $745,614 $(769,981)$3,617 $774,125 

Issued
Common
Shares
Treasury
Shares
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Income (Loss)
Totals
December 31, 2020134,144 80,045 $1,341 $740,970 $557,875 $(595,297)$(2,269)$702,620 
Net income— — — — 80,507 — — 80,507 
Other comprehensive income— — — — — — 1,071 1,071 
Share repurchases— 2,686 — — — (84,883)— (84,883)
Indirect repurchase of shares for minimum tax withholding— 92 — — — (3,037)— (3,037)
Restricted stock units and awards80 — 1 (1)— — —  
Stock options exercised635 — 6 7,137 — — — 7,143 
Stock-based compensation— — — 8,359 — — — 8,359 
Business acquisitions274 — 3 8,864 — — — 8,867 
September 30, 2021135,133 82,823 $1,351 $765,329 $638,382 $(683,217)$(1,198)$720,647 

See the accompanying notes to the unaudited condensed consolidated financial statements
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CBIZ, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Nine Months Ended September 30,
20222021
Cash flows from operating activities:  
Net income$116,852 $80,507 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense24,707 19,921 
Gain on sale of operations, net(311)(6,385)
Bad debt expense, net of recoveries1,295 562 
Adjustment to contingent earnout liability1,917 1,599 
Stock-based compensation expense11,987 8,359 
Deferred income taxes5,690 7,141 
Other, net(2,083)(373)
Changes in assets and liabilities, net of acquisitions and divestitures:
Accounts receivable, net(125,700)(66,017)
Other assets(2,610)53 
Accounts payable6,203 12,126 
Income taxes payable12,709 5,245 
Accrued personnel costs18,863 15,329 
Other liabilities(9,447)2,897 
Operating cash flows provided by continuing operations60,072 80,964 
Operating cash flows used in discontinued operations(13)(18)
Net cash provided by operating activities60,059 80,946 
Cash flows from investing activities:
Business acquisitions and purchases of client lists, net of cash acquired(79,289)(66,155)
Purchases of client fund investments(19,771)(13,050)
Proceeds from the sales and maturities of client fund investments11,500 10,800 
Proceeds from sales of divested operations2,906 9,785 
Change in funds held for clients(171)(5,708)
Additions to property and equipment(6,030)(6,451)
Other, net(4,695)51 
Net cash used in investing activities(95,550)(70,728)
Cash flows from financing activities:
Proceeds from bank debt655,500 680,400 
Payment of bank debt(539,700)(598,200)
Payment for acquisition of treasury stock(65,976)(84,950)
Indirect repurchase of shares for minimum tax withholding(7,289)(3,037)
Changes in client funds obligations(30,024)8,375 
Proceeds from exercise of stock options7,994 7,143 
Payment of contingent consideration for acquisitions(12,408)(7,883)
Other, net(2,072)(170)
Net cash provided by financing activities6,025 1,678 
Net (decrease) increase in cash, cash equivalents and restricted cash(29,466)11,896 
Cash, cash equivalents and restricted cash at beginning of year150,474 170,335 
Cash, cash equivalents and restricted cash at end of period$121,008 $182,231 
Reconciliation of cash, cash equivalents and restricted cash to the
  Condensed Consolidated Balance Sheets:
Cash and cash equivalents$2,040 $2,749 
Restricted cash39,555 37,320 
Cash equivalents included in funds held for clients79,413 142,162 
Total cash, cash equivalents and restricted cash$121,008 $182,231 

See the accompanying notes to the unaudited condensed consolidated financial statements
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CBIZ, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Selected Terms Used in Notes to the Condensed Consolidated Financial Statements
ASA – Administrative Service Agreement
ASC – Accounting Standards Codification
ASU – Accounting Standards Update
CPA firm – Certified Public Accounting firm
FASB – The Financial Accounting Standards Board
GAAP – United States Generally Accepted Accounting Principles
SOFR – Secured Overnight Financing Rate
LIBOR – London Interbank Offered Rate
SEC – United States Securities and Exchange Commission
Description of Business: CBIZ, Inc. is a diversified services company which, acting through its subsidiaries, has been providing professional business services since 1996, 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, Benefits and Insurance Services and National Practices. A further description of products and services offered by each of the practice groups is provided in Note 12, Segment Disclosures, to the accompanying unaudited condensed consolidated financial statements.
Basis of Consolidation: The accompanying unaudited condensed consolidated financial statements include the operations of CBIZ, Inc. and all of its wholly-owned subsidiaries (“CBIZ”, the “Company”, “we”, “us”, or “our”), after elimination of all intercompany balances and transactions. These unaudited condensed consolidated financial statements do not reflect the operations or accounts of variable interest entities as the impact is not material to the financial condition, results of operations or cash flows of CBIZ.
Unaudited Interim Financial Statements: The unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and applicable rules and regulations of the SEC regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
In the opinion of CBIZ management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows for the interim periods presented, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2022.
Use of Estimates: The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Changes in circumstances could cause actual results to differ materially from these estimates.
Changes in Accounting Policies: We have consistently applied the accounting policies for the periods presented as described in Note 1, Basis of Presentation and Significant Accounting Policies, to the consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
In 2021, CBIZ formed a grantor trust (the “Trust”) with Wilmington Savings Funds Society, FSB, a Federal savings bank, serving as trustee. The Trust holds the majority of the funds provided by CBIZ’s clients for payroll processing pending remittance to employees of those clients, tax authorities, and
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other payees. CBIZ is the sole beneficial owner of the Trust. The Trust is considered a variable interest entity in accordance with Accounting Standards Codification 810, Consolidation. CBIZ has both the power to direct the activities that most significantly impact the economic performance of the Trust (including the power to make all investment decisions for the Trust) and the right to receive benefits that could potentially be significant to the Trust (in the form of investment returns). As a result, CBIZ consolidates the Trust in its unaudited condensed consolidated financial statements.
NOTE 2. NEW ACCOUNTING PRONOUNCEMENTS
The FASB ASC is the sole source of authoritative GAAP other than the SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an accounting standard to communicate changes to the FASB codification. We assess and review the impact of all accounting standards. Any accounting standards not listed below were reviewed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements of the Company.
Accounting Standards Adopted in 2022
Reference Rate Reform: In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU are effective for all entities through December 31, 2022.
Subsequently, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope, which provides optional temporary guidance for entities transitioning away from the LIBOR and other interbank offered rates to new reference rates so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions within Topic 848. This ASU clarifies that the derivative instruments affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions provided in Topic 848. ASU 2021-01 is effective immediately for all entities. Entities may elect to apply the amendments on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued. The amendments provided in this ASU do not apply to contract modifications made, as well as new hedging relationships entered into, after December 31, 2022, and to existing hedging relationships evaluated for effectiveness for periods after December 31, 2022, except for certain hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship.
On May 4, 2022, we entered into a Second Amended and Restated Credit Agreement (the "2022 credit facility" or the "credit facility"), by and among CBIZ Operations, Inc. ("CBIZ Operations"), and Bank of America, N.A., as administrative agent, and other financial institutions. The 2022 credit facility amends the Amended and Restated Credit Agreement, dated as of April 3, 2018 (the "2018 credit facility"). Among other things, the 2022 Credit Facility amended the base interest rate from LIBOR to Term SOFR. Consequently, we amended the interest rate swap agreements with respect to the existing swaps. Effective May 16, 2022, the scheduled reset date, the interest rate of the swaps were set to one-month Term SOFR to align the swaps to Term SOFR in the 2022 credit facility. No other terms under the swap agreements were amended. As a result, we early adopted ASC Topic 848, Reference Rate Reform. This adoption had immaterial impact on our consolidated financial statements. Refer to Note 4, Debt and Financing Arrangements and Note 6, Financial Instruments, for further discussion of the transaction.

NOTE 3. ACCOUNTS RECEIVABLE, NET
Accounts receivable, less allowance for doubtful accounts, reflects the net realizable value of receivables and approximates fair value. Unbilled revenue is recorded at estimated net realizable value. Assessing the collectability of the receivables (billed and unbilled) requires management judgment based on a combination of factors, including but not limited to, an evaluation of our historical incurred loss experience, credit-worthiness of our clients, age of the trade receivable balance, current economic
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conditions that may affect a client’s ability to pay, and reasonable and supportable forecasts. Receivables are charged-off against the allowance when the balance is deemed uncollectible.
Accounts receivable, net, at September 30, 2022 and December 31, 2021 was as follows (in thousands):

September 30,
2022
December 31,
2021
Trade accounts receivable$252,251 $190,710 
Unbilled revenue, at net realizable value167,083 67,616 
Total accounts receivable419,334 258,326 
Allowance for doubtful accounts(20,364)(16,158)
Accounts receivable, net$398,970 $242,168 

Changes to the allowance for doubtful accounts for the nine months ended September 30, 2022 and twelve months ended December 31, 2021 are as follows (in thousands):
September 30,
2022
December 31,
2021
Balance at beginning of period$(16,158)$(14,894)
Provision(9,796)(9,422)
Charge-offs, net of recoveries5,590 8,158 
Allowance for doubtful accounts$(20,364)$(16,158)

NOTE 4. DEBT AND FINANCING ARRANGEMENTS
On May 4, 2022, we entered into the 2022 credit facility, which amends the 2018 credit facility.
The 2022 credit facility increased our borrowing capacity from $400 million to $600 million, which provides us with the capital necessary to meet our working capital needs as well as the flexibility to continue with our strategic initiatives, including business acquisitions and share repurchases. Other important key terms of the 2022 credit facility include: (i) an accordion feature that permits lenders to extend an additional $200 million at later date; (ii) no change in pricing from the 2018 credit facility; (iii) upsizing of baskets and various sublimits to reflect the increased size of the Company's business; (iv) a swing line facility increase from $25 million to $50 million, which provides for same-day funds to cover daily liquidity needs; and (v) base interest rate amended from LIBOR to Term SOFR. The 2022 credit facility extends the maturity date from 2023 to 2027.
In connection with our 2022 credit facility, we incurred approximately $2.1 million of financing costs during the second quarter of 2022. The financing costs are deferred and reported as a reduction of debt on the accompanying unaudited Condensed Consolidated Balance Sheets, are included as a component of cash flow from financing activities on the accompanying unaudited Condensed Consolidated Statements of Cash Flows, and are being amortized as interest expense over the term of the 2022 credit facility. In addition, we wrote-off approximately $41 thousand of unamortized deferred cost associated with the 2018 credit facility as additional interest expense in the second quarter of 2022.
The balance outstanding under the 2022 credit facility was $271.1 million at September 30, 2022. The balance outstanding under the 2018 credit facility was $155.3 million at December 31, 2021. The combined effective interest rates under the 2018 and 2022 credit facilities, including the impact of interest rate swaps associated with those credit facilities, were as follows:
Nine Months Ended
September 30,
20222021
Weighted average rates2.29%1.89%
Range of effective rates
1.08% - 4.18%
1.06% - 3.64%
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We had approximately $310.9 million of available funds under the 2022 credit facility at September 30, 2022, net of outstanding letters of credit of $5.7 million. Available funds under the credit facility are based on a multiple of earnings before interest, taxes, depreciation and amortization as defined in the credit facility, and are reduced by letters of credit, other indebtedness and outstanding borrowings under the credit facility. Under the 2022 credit facility, loans are charged an interest rate consisting of a base rate or Term SOFR rate plus an applicable margin, letters of credit are charged based on the same applicable margin, and a commitment fee is charged on the unused portion of the credit facility.
The 2022 credit facility contains certain restrictive covenants customary for facilities of this type, including restrictions on indebtedness, liens or other encumbrances, making certain payments, investments, or to sell or otherwise dispose of a substantial portion of assets, or to merge or consolidate with an unaffiliated entity. The 2022 credit facility also limits our ability to make dividend payments. Historically, we have not paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. Our Board of Directors has discretion over the payment and level of dividends on common stock, subject to the limitations of the credit facility and applicable law. The credit facility contains a provision that, in the event of a defined change in control, the credit facility may be terminated. In addition, the 2022 credit facility contains financial covenants that require us to meet certain requirements with respect to (i) a total leverage ratio and (ii) minimum interest coverage ratio which may limit our ability to borrow up to the total commitment amount. As of September 30, 2022, we are in compliance with all covenants.
Other Line of Credit - We have an unsecured $20.0 million line of credit by and among CBIZ Benefits and Insurance, Inc. and Huntington National Bank. We utilize this line to support our short-term funding requirements of payroll client fund obligations due to the investment of client funds, rather than liquidating client funds that have already been invested in available-for-sale securities. The line of credit, which was renewed on August 1, 2022 and will terminate on August 3, 2023, did not have a balance outstanding at September 30, 2022.
Interest Expense - Interest expense, including amortization of deferred financing costs, commitment fees, line of credit fees, and other applicable bank charges, was as follows (in thousands):
Three Months Ended September 30,
20222021
Credit facilities$2,301 $1,010 
Other line of credit4  
Other 6 
Total$2,305 $1,016 
Nine Months Ended September 30,
20222021
Credit facilities$5,204 $2,833 
Other line of credit5  
Other 19 
Total$5,209 $2,852 

NOTE 5. COMMITMENTS AND CONTINGENCIES
Letters of Credit and Guarantees - We provide letters of credit to landlords (lessors) of our leased premises in lieu of cash security deposits, which totaled $5.7 million and $3.4 million at September 30, 2022 and December 31, 2021, respectively. In addition, we provide license bonds to various state agencies to meet certain licensing requirements. The amount of license bonds outstanding was $2.3 million and $2.3 million at September 30, 2022 and December 31, 2021, respectively.
Legal Proceedings - On December 19, 2016, CBIZ Operations was named as a defendant in a lawsuit filed by Zotec Partners, LLC (“Zotec”) in the Marion County Indiana Superior Court. After various amendments, the lawsuit asserts claims under Indiana law for securities, statutory and common law fraud or deception, unjust enrichment, breach of contract, and vicarious liability against CBIZ Operations and a former employee of CBIZ MMP in connection with the sale of the CBIZ MMP medical billing practice to Zotec. The plaintiff claims that CBIZ Operations had a duty to disclose the fact,
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unknown to employees of CBIZ Operations at the time of the transaction, that the former employee had a financial arrangement with a Zotec vendor at the time CBIZ Operations sold CBIZ MMP to Zotec. The plaintiff is seeking damages of up to $177.0 million out of the $200.0 million transaction price. Trial was held in October 2021. The jury found in favor of CBIZ on all fraud, contract and other claims before it. Zotec’s remaining claim for Indiana statutory securities fraud and CBIZ’s counterclaim for breach of contract against Zotec will be addressed by the trial Judge at a later date.
In addition to the item disclosed above, the Company is, from time to time, subject to claims and lawsuits arising in the ordinary course of business. We cannot predict the outcome of all such matters or estimate the possible loss, if any. Although the proceedings are subject to uncertainties in the litigation process and the ultimate disposition of these proceedings is not presently determinable, we intend to vigorously defend these matters.

NOTE 6. FINANCIAL INSTRUMENTS
Available-For-Sale Debt Securities - In connection with certain services provided by our payroll operations, we collect funds from our clients’ accounts in advance of paying client obligations. These funds held for clients are segregated and invested in accordance with our investment policy, which requires all investments carry an investment grade rating at the time of initial investment. These investments, primarily consisting of corporate and municipal bonds, are classified as available-for-sale and are included in the “Funds held for clients” line item on the accompanying unaudited Condensed Consolidated Balance Sheets. The par value of these investments totaled $45.3 million and $37.0 million at September 30, 2022 and December 31, 2021, respectively, and had maturity or callable dates ranging from October 2022 through November 2025.
At September 30, 2022, unrealized losses on the securities were not material and have not been recognized as a credit loss because the bonds are investment grade quality and management is not required or does not intend to sell prior to an expected recovery in value. The bond issuers continue to make timely principal and interest payments.
The following table summarizes activities related to these investments for the nine months ended September 30, 2022 and the twelve months ended December 31, 2021 (in thousands):
Nine Months Ended September 30, 2022Twelve Months Ended December 31, 2021
Fair value at beginning of period$38,670 $25,708 
Purchases19,771 26,980 
Redemptions(5,630)(6,530)
Maturities (5,870)(8,347)
Change in bond premium(350)1,517 
Fair market value adjustment(2,218)(658)
Fair value at end of period$44,373 $38,670 
In addition to the available-for-sale debt securities discussed above, we also held other depository assets in the amount of $1.7 million and $1.1 million at September 30, 2022 and December 31, 2021, respectively. Those depository assets are classified as Level 1 in the fair value hierarchy.
Interest Rate Swaps - We utilize interest rate swaps to manage interest rate risk exposure associated with our floating-rate debt under our credit facility, or the forecasted acquisition of such liability. We do not purchase or hold any derivative instruments for trading or speculative purposes. Refer to the Annual Report on Form 10-K for the year ended December 31, 2021 for further discussion on our interest rate swaps.
As a result of the 2022 credit facility, CBIZ amended the interest rate swap agreements with respect to the existing swaps. Effective May 16, 2022, the scheduled reset date, the interest rate of the swaps are set to one-month Term SOFR to align the swaps to Term SOFR in the 2022 credit facility as a result of reference rate reform. No other terms under the swap agreements were amended.
During the third quarter of 2022, we entered into a new 5-year interest rate swap with a notional value of $20 million and fixed rate of 2.45%
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Under the terms of the interest rate swaps, we pay interest at a fixed rate of interest plus applicable margin as stated in the amended agreements, and receive interest that varies with the one-month Term SOFR.
The following table summarizes our outstanding interest rate swaps and their classification in the accompanying unaudited Condensed Consolidated Balance Sheets at September 30, 2022 and December 31, 2021 (amounts in thousands):
September 30, 2022
Notional
Amount
Fixed RateExpirationFair
Value
Balance Sheet Location
Interest rate swap$15,000 2.571 %6/1/2023$130 Other current asset
Interest rate swap$50,000 0.834 %4/14/2025$3,820 Other non-current asset
Interest rate swap$30,000 1.186 %12/14/2026$3,020 Other non-current asset
Interest rate swap$20,000 2.450 %8/14/2027$1,147 Other non-current asset
December 31, 2021
Notional
Amount
Fixed RateExpirationFair
Value
Balance Sheet Location
Interest rate swap$20,000 1.770 %5/14/2022$(120)Other current liability
Interest rate swap $15,000 2.640 %6/1/2023$(432)Other non-current liability
Interest rate swap$50,000 0.885 %4/14/2025$405 Other non-current asset
Interest rate swap$30,000 1.249 %12/14/2026$(64)Other non-current liability
Refer to Note 7, Fair Value Measurements, for additional disclosures regarding fair value measurements.
The following table summarizes the effects of the interest rate swaps on the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2022 and 2021 (in thousands):
Gain Recognized
in AOCI, net of tax
Gain (Loss) Reclassified
from AOCL into Expense
Three Months Ended
September 30,
Three Months Ended
September 30,
2022202120222021
Interest rate swaps$2,815 $66 $220 $(285)
Nine Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Interest rate swaps$6,009 $718 $(278)$(850)

NOTE 7. FAIR VALUE MEASUREMENTS
The following table summarizes our assets and (liabilities) at September 30, 2022 and December 31, 2021, respectively, 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 us to determine such fair value (in thousands):
LevelSeptember 30, 2022December 31, 2021
Deferred compensation plan assets1$111,060 $136,321 
Available-for-sale debt securities144,373 38,670 
Other depository assets11,665 1,144 
Deferred compensation plan liabilities1(111,060)(136,321)
Interest rate swaps28,117 (211)
Contingent purchase price liabilities3(141,208)(79,139)
During the nine months ended September 30, 2022 and 2021, there were no transfers between the valuation hierarchy Levels 1, 2 and 3. The following table summarizes the change in Level 3 fair values
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of our contingent purchase price liabilities for the nine months ended September 30, 2022 and 2021 (pre-tax basis) (in thousands):
20222021
Beginning balance – January 1$(79,139)$(54,391)
Additions from business acquisitions(74,199)(38,149)
Settlement of contingent purchase price liabilities14,047 9,511 
Change in fair value of contingencies461 (336)
Change in net present value of contingencies(2,378)(1,263)
Ending balance – September 30$(141,208)