Discontinued Operations and Divestitures

12 Months Ended

Dec. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations and Divestitures

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, 2014, CBIZ made the decision to divest the operations of two small businesses under the Financial Services segment. These businesses are being held for sale at December 31, 2014, with the results of operations for these businesses being included in “(Loss) income from operations of discontinued operations, net of tax” on the accompanying Consolidated Statements of Comprehensive Income.

For the year ended December 31, 2014, CBIZ sold the assets of its property tax business located in Leawood, Kansas for a purchase price of $1.2 million. An insignificant gain was recorded in “Gain on disposal of discontinued operations, net of tax” on the accompanying Consolidated Statements of Comprehensive Income during the year ended December 31, 2014. The property tax business was classified as held for sale during the comparable period in 2013 and was previously reported in the Financial Services practice group.

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 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 which were and recorded in “Gain on disposal of discontinued operations, net of tax” on the accompanying Consolidated Statements of Comprehensive Income for the year ended December 31, 2014, 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 results of operations for MMP for the years ended December 31, 2013 and 2012 are included in “(Loss) income from operations of 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 accompanying Consolidated Statements of Comprehensive Income.

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.

Revenue and results from operations of discontinued operations for the years ended December 31, 2014, 2013 and 2012 are separately reported as “(Loss) income from operations of discontinued operations, net of tax” in the accompanying Consolidated Statements of Comprehensive Income and were as follows (in thousands):

	2014			2013		2012
Revenue	$	14,589		$	106,869	$	153,405
(Loss) income from operations of discontinued operations before income tax expense	$	(925	)	$	4,602	$	12,214
Income tax (benefit) expense		(171	)		2,454		4,951
(Loss) income from operations of discontinued operations operations, net of tax	$	(754	)	$	2,148	$	7,263

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.

Gains on disposals of discontinued operations for the years ended December 31, 2014, 2013 and 2012 were as follows (in thousands):

	2014		2013		2012
Gain on disposal of discontinued operations, before income tax expense	$	133	$	107,533	$	143
Income tax expense		34		49,197		53
Gain on disposal of discontinued operations, net of tax	$	99	$	58,336	$	90

At December 31, 2014 and 2013, 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):

	2014		2013
Assets:
Accounts receivable, net	$	4,699	$	6,113
Goodwill and other intangible assets, net		301		1,435
Property and equipment, net		171		212
Other assets		58		89
Assets of discontinued operations	$	5,229	$	7,849
Liabilities:
Accounts payable	$	388	$	309
Accrued personnel		591		1,000
Accrued expenses		324		641
Liabilities of discontinued operations	$	1,303	$	1,950

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 accompanying Consolidated Statements of Comprehensive Income. During the year ended December 31, 2014, CBIZ sold a business from the Financial Services practice group for $2.9 million. A gain of $1.2 million was recorded as a result of the sale. 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, $0.1 million and $2.8 million the years ended December 31, 2014, 2013 and 2012, respectively, were recorded and relate to contingent consideration earned on sales made in previous periods.